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The Top 10 Tools from academia

Haven’t the time or inclination for academic theories?
Helen Edwards outlines some of the best to make you think again

It’s become respectable to dismiss the output of academics as irrelevant to real-world marketing. The tortuous language, the lack of hands-on experience – what do they know? Quite a lot, as it turns out – if you know where to look. Over the years, the leading business academics have devised elegant models, frameworks and methodologies to help guide decisions on the fundamentals that underlie the discipline of marketing. A working knowledge of the best of these tools could save hundreds of hours of consultants’ fees. Here are ten that any self-respecting marketer should have in the toolbox.

 

1

Value Innovation and The Value Curve

Who designed it: Professors W. Chan Kim and Renée Mauborgne, Insead. (1997)

What it’s good for: Breakthrough innovation

How it works: The Value Innovation System mounts a challenge to category norms and assumptions by forcing answers to four uncompromising questions. These include the counter-intuitive, “Which factors could be reduced well below the industry’s standard?” In other words, you start by asking how you can make your product worse. But this is the genius of the system, since it liberates resources to make giant leaps in areas that customers value more.

The Value Curve plots your offer compared with the typical industry profile. At the outset, it can be a graphic and humbling reminder of lack of differentiation. The eventual aim is a curve completely out of kilter with the norm for the category.

Who uses it: Accor Hotels is the classic case. Their Formule 1 concept came to dominate the low-price hotel industry in France by drastically reducing room size, service and lobby space in order to provide what a broad mass of customers wanted more: a good night’s sleep at a low price.

What to watch out for: The aim is sweeping change, so it’s not for the fainthearted.

Where to find more: Value Innovation: the Strategic Logic of High Growth, Harvard Business Review, July 2004.

2

Porter’s Five Forces of Competition Framework

Who designed it: Professor Michael E Porter, Harvard. (1979)

What it’s good for: Market entry strategy

How it works: Industries are not equally attractive. Airlines, for example, have traditionally struggled to repay the cost of capital. US guru Michael Porter showed early in his soaraway career that the difference is not accidental, identifying the five forces that govern profit potential: existing rivalry between firms within the industry; the threat of new entrants; the threat of substitution; the bargaining power of suppliers; the bargaining power of buyers.

Porter, whose great gift is for simplifying complex concepts, presents these forces in a convenient five-box format. Each force comes with a check-list of sub-factors to help analyse its role in the risk-reward profile of the industry. Eyeing up new markets is easy; the framework can help show why getting it right is anything but.

Who uses it: A favourite of management consultants.

What to watch out for: Works better in mature industries.

Where to find more: How Competitive Forces Shape Strategy, Harvard Business Review, March-April 1979. Book: Contemporary Strategy Analysis, Blackwell Publishers, 1991.

3

Market-Oriented Ethnography

Who designed it: Professor Eric J Arnould, University of Nebraska, Professor Melanie Wallendorf, University of Arizona. (1994)

What it’s good for: Rich consumer insight

How it works: Ethnographic research stems from anthropology. It starts with a deceptively simple question: ‘What’s going on?’ And it seeks the answer not in what people say, but in what they do. It’s about getting up-close and personal, to observe behaviour in its natural setting. But in its classical form an ethnographic study can take upwards of 6 months. Arnould and Wallendorf streamlined the process for commercial use, introducing in-situ interviews about daily life and routine. Professor Richard Elliott later developed video-logging.

The output is what interpretative academics call ‘thick description’: a finely-textured feel for the sights, sounds, smells and low-down earthiness of real life – and the brand’s place within it.

Who uses it: Far-sighted marketers like Diageo and Whirlpool, to achieve insights that focus groups alone could never produce.

What to watch out for: Interpretation is highly skilled. Good people are rare.

Where to find more: Market-Oriented Ethnography: Interpretation Building and Marketing Strategy Formulation, Journal of Marketing Research, November 1994.

4

Brand Personality Dimensions Framework

Who designed it: Professor Jennifer Aaker, Stanford University. (1997)

What it’s good for: Measuring and comparing brand personality.

How it works: Brand personality is often conceived as analogous to human personality but Aaker showed that this natural comparison can go too far. Her central insight was that the dimensions of brand personality must include some that humans desire but do not actually possess.

Her greater contribution was to take one of the most discussed but least understood aspects of marketing and subject it to measurement. The framework plots five brand personality dimensions: Sincerity, Excitement, Competence, Sophistication and Ruggedness. Each of these is broken down into a set of facets – so ‘sincerity’ comprises down-to-earth, honest, wholesome and cheerful. Each of these, in turn, is divided into several traits, which can be measured on a 1-to-5 scale for any brand.

Who uses it: Savvy planners.

What to watch out for: Not proven across all cultures.

Where to find more: Dimensions of Brand Personality, Journal of Marketing Research, August 1997.

5

Hierarchy of Effects Models

Who designed it: Various luminaries, including Lavidge and Steiner, Lars Finskud, and Professor Nader Tavassoli of London Business School. (1961- 2004)

What it’s good for: Assigning marketing budget.

How it works: Like an old standard that’s been covered by all the top artists, the concept of the hierarchy of effects has spawned numerous practical models. Lavidge and Steiner started things rolling in 1961 with their seminal paper in the Journal of Marketing. It postulated a funnel with six stages that consumers must move through in order for advertising to be effective.

Best of the modern funnels is Lars Finskud’s Customer Choice Chain because it broadens the scope beyond advertising effect. There are seven stages that separate brand ignorance at one end from brand advocacy at the other. By plotting how many customers you lose at each stage, compared with rival brands, you can see where your weaknesses are – and where expenditure would be most justified.

Who uses it: Few do, all should. A proper, fact-based choice chain will often come as a revelation to marketers more used to making assumption-based judgements.

What to watch out for: These are quant tools, not merely illustrative models. They require (and repay) the investment of time and money to get the numbers for each stage in the funnel.

Where to find more: Book: Competing for choice, Vola Press, 2004.

6

Service Mapping

Who designed it: Professor James L Heskett, Harvard. (1980)

What it’s good for: Improving customer service

How it works: A service map makes the reality of service delivery graphic. Each separate step in the process of service is mapped in a strict horizontal sequence. But some steps are separated vertically, too, by a ‘line of visibility’. Above the line, activities are visible to the customer – like taking the order in a restaurant; below the line they are not – like washing up.

The map gives an at-a-glance hint at potential failure points in a number of ways.

Some are vulnerable to supplier delivery; complex loops with lots of steps warn of log-jams; too many steps below the line of visibility indicate lack of value perception from customers. With an accurate map in place, streamlining and improving service becomes dramatically easier.

Who uses it: Auto repair businesses and restaurant chains are cited by Heskett. Ad agencies should give it a try: it would show at a glance why their margins are thin and their clients frustrated.

What to watch out for: People issues. Complexity preserves jobs, so simplifying service loops can be seen as a threat.

Where to find more: Book: Service Breakthroughs, The Free Press, 1990.

7

Brand Relationship Spectrum

Who designed it: Professor David A Aaker, University of California. (2000)

What it’s good for: A strategic approach to brand architecture.

How it works: What is dignified by the term ‘brand architecture’ often more resembles jerry-building. An acquisition here, a line extension there, and you have an architecture that owes more to accident than to design. When the time comes to reorganise the portfolio from strategy up, Aaker is the place to start.

The spectrum model assembles the various options under four ‘basic strategies’: house of brands, endorsed brands, sub-brands under a master house, and a branded house. Working like a family tree, it then plots further divisions for each of these, with relevant examples. Finally, there is a battery of well-conceived questions to help you arrive at the best architecture for your situation.

Who uses it: Any self-respecting brand strategist. Leslie Butterfield is a noted proponent.

What to watch out for: It’s a simple tool without obvious drawbacks. Better to watch out for the problem of ill-conceived architecture in the first place.

Where to find more: Book: Brand Leadership, The Free Press, 2000.

8

Change Equation

Who designed it: Richard Beckhard, Adjunct Professor at MIT Sloan School of Management, based on work by David Gleicher, of Arthur D. Little. (1987)

What it’s good for: Changing the internal culture to match the brand promise.

How it works: Some seemingly great strategies succumb to one simple flaw: no-one thought about getting the troops on-side first. British Gas, United Airlines and Abbey have all recently slipped up on this banana-skin, failing to match the service given to customers with the stratospheric claims made in big-money ad campaigns.

The Change Equation is a tool from Organisational Behaviour, a discipline that marketers will have to embrace if they are serious about inside-out branding. Its formula DxVxF>R provides a quick assessment of the likelihood of effecting change. D=dissatisfaction with the way things are now; V=a clear vision of how things could be; F=achievable first steps that could be taken. If any of these is zero or close to zero then the product will be too, and will be insufficient to overcome R – resistance.

Who uses it: New communications agency krow has adapted the formula, and use it to effect change in consumer behaviour.

What to watch out for: Marketing and HR need to work together.

Where to find more: Book: Changing the Essence, Jossey-Bass, 1992.

9

Balanced Scorecard

Who designed it: Professor Robert S Kaplan and David P Norton, Harvard. (1992)

What it’s good for: Linking measurement to action.

How it works: Would you feel safe flying in a plane that only had two instruments? Kaplan and Norton use this metaphor to stress the dangers of over-reliance on just one or two performance measures in business. Their Balanced Scorecard proposes a whole battery of measurements arranged in a grid reflecting four broad business perspectives: financial, customer, internal and innovation.

Get back on that plane. How would you feel if the pilot didn’t know what to do about the information on one of the dials – say the altimeter? The Balanced Scorecard framework is designed to force you to specify actions for each measurement score. If its adoption by marketers achieves nothing more than that, it will have been worth it.

Who uses it: M&S, Chrysler – and The Royal Canadian Mounted Police!

What to watch out for: This tool was designed to measure overall corporate performance, but can be adapted to focus specifically on brand performance.

Where to find more: The Balanced Scorecard – Measures that Drive Performance, Harvard Business Review, January-February 1992. Book: Creating Passion Brands, Kogan Page, 2005.

10

Doyle’s Five Criteria for Segmentation

Who designed it: Professor Peter Doyle, Warwick University. (1994)

What it’s good for: Segmentation that makes sense in the real world.

How it works: The late, great Peter Doyle contributed so much to the practice of marketing, that it would be remiss to leave him out of this top 10. Although his criteria for segmentation is presented as checklist, rather than a snazzy framework or model, its study will repay all those who suspect that the lure of segmentation can be false. (It can.)

The five criteria are: 1. Effective: are the needs of people within the segment homogenous but different from the needs of people outside? 2. Identifiable: can customers in the segment actually be isolated and measured? 3: Profitable: is the segment large enough to still achieve economies of scale? 4: Accessible: can the segment be reached in media without too much overlap? 5: Actionable: does the business have the resources to segment its offer in the first place?

Who uses it: London Business School MBAs.

What to watch out for: Planners who don’t.

Where to find more: Book: Marketing Management and Strategy, Prentice Hall, 1994.