DO SOME RESEARCH AND STOP ACCEPTING MYTHS

Few things infuriate me more than myths perpetuated despite evidence to the contrary. A great example that came up recently is that immunising children causes autism. Another is that climate change is a conspiracy.

However, it is not just health and science that are plagued by myths. Branding, marketing and communication are also impacted. While not life-threatening, these myths inhibit the performance of businesses and individuals and limit the contributions that both can make to their communities.

I could write a book about myths in marketing. I expect someone already has. In this paper, I will address 20 common myths that have limited the performance of individuals and businesses I have come into contact with over recent years.

I will address these myths under four headings:

• Market
• Marketing
• Strategy
• Business

MARKET MYTHS

There are many myths about the markets or audiences to which we market our products. A discussion of five common myths follows.

MYTH 1 – IT IS ALL ABOUT FAMILIES

24.5% of Australians live alone

There is a myth, commonly perpetuated by politicians that Australia and many other OECD countries are primarily comprised of families. As a consequence, politicians develop many of their policies to cater to the needs of families. The following statistics were gathered in the 2016 Census:

• Group household – 4.8%
• Single person household – 24.5%
• One parent family – 9.8%
• Couples with children – 33.3%
• Couples without children – 26.6%

Regardless of the definition of ‘family’, it is evident that nearly 30% of the Australian population lives alone or in a group housing environment. Further, people living in a one-person household is the fastest-growing segment – up from 21.6% in 1994.

It is interesting to note that a higher percentage of Australians live alone than residents of the United States, where 36 million people live alone. This represents 10% of the population. This is one area in which Australia leads the US.

Further, the growth in the number of Australians living alone, for better or for worse, suggests a growing opportunity outside of the traditional family dynamic. To a certain extent, it may explain the rapid growth in social media, unit developments, and coffee shops in Australia. It will no doubt lead to growth in and creation of many other industries while others targeting the traditional family are in decline.

It is very interesting to note that only 33.3% of Australians presently live in a traditional family dynamic. This is despite the fact that children are waiting longer before they set up their own homes. The average age at which offspring leave home in Australia now exceeds 23 years.

Of course, the living dynamic is just one of many characteristics we need to consider in developing branding, marketing or communication strategies. Another obvious consideration is the age of the people in each segment. A high proportion of those living in groups alone or as a couple will be older Australians (including pensioners), and a high percentage will be Generation Y. These groups will have very different needs.

It is important to know the facts rather than relying on old beliefs that have evolved into myths over time. It is only the facts of the matter that will uncover the opportunities that will help your business reach its potential. These findings reinforce the danger of believing politicians.

Study the demographics of the audience from which you intend to draw your market. In doing so, consider the significant trends such as people living alone.

MYTH 2 – PEOPLE BUY ACCORDING TO TASTE

41% of people can identify Coke

In many taste tests, subjects prefer Pepsi over Coke. Some studies suggest that 90% of people in a double-blind test prefer Pepsi. It has been suggested that Pepsi is preferred because it is sweeter than Coke.

Another series of studies found that consumers found it difficult to differentiate these cola drinks in a blind taste test. This has been consistently replicated. One significant study found that:

• 41% of consumers successfully identified Coke
• 38% of consumers successfully identified Pepsi

In both cases, the majority of consumers could not correctly identify these drinks or could not tell them apart.

Despite this, market share figures in the United States suggest a clear preference for Coke:

• Coke – 17% of beverage sales
• Pepsi – 8.9% of beverage sales

Some studies show a preference for Pepsi, and others show that the majority of people cannot distinguish the brand of cola they are drinking. However, Coke outsells Pepsi 2 to 1. This is a clear indication that consumers do not necessarily buy on the basis of taste or anything as rational as taste.

Time and again, research suggests that Coke buyers buy the brand and all it stands for, well ahead of taste, price, or packaging. They are buying into the Coke lifestyle or at least what they perceive to be the Coke lifestyle.

The point is that consumers don’t always buy what they like best. Very often, they don’t even know what they like best because they don’t know the difference. Very often, consumers lack the skills, or, in this case, the taste buds required to differentiate between products objectively. Instead, they buy on the basis of perception, and perception does not always relate to taste or other tangible characteristics of a product.

It is important to know the capacity of the target audience and the criteria they actually use to make decisions. For example, if they cannot distinguish the taste, it is important to identify and leverage what they can and will distinguish. It is also important to remember that, more often than not, consumers don’t buy a product – they buy a brand.

Understand the capabilities of your audience, the factors they can consider, and the factors they will use to make a purchase decision. Then, build a great brand around these factors.

MYTH 3 – SOCIAL MEDIA IS FOR YOUNG PEOPLE

69% of people 50 – 64 use social media

I still hear senior businesspeople suggesting that older people – often like them – don’t use social media. This myth is slowly being challenged. The truth is, it is simply not so!

A recent study found that:

• 64% of people aged 50 to 64 use social media daily
• 40% of people over 64 use social media daily

It is also notable that:

• Over 50s are the fastest-growing age group
• Social media use is greatest among people over 50

The social media channels most commonly used by people over 50 are:

• Facebook
• 50 – 64 years 68%
• 65 years+ 46%
• Instagram
• 50 – 64 years 23%
• 65 years+ 8%
• Linked In
• 50 – 64 years 24%
• 65 years+ 11%

The facts are:

• Older people are using social media and are doing so in greater numbers
• Older people are most inclined to use Facebook (unless they are in business)
• Older people in business tend to use Linked In

Also, the following social media platforms are becoming more popular among older people:

• What’s App
• Facebook Messenger

The point is, in targeting older people, do not fall for the myth that they do not use social media. Certainly, they use some social media channels more than others and are less likely to use multiple channels. However, even this is changing. Social media is quickly becoming ageless.

When it comes to social media, look at the numbers. Don’t make assumptions, and don’t fall for myths perpetrated by younger people. Identify the optimal channels regardless of the age group.

MYTH 4 – AUSTRALIA IS A CHRISTIAN NATION

50% of urban Australians identify as Christian

If you have ever heard politicians saying the Lord’s Prayer at the beginning of Parliament, you could be forgiven for thinking that Australia is a Christian nation. However, there are a number of problems with this notion. While 50% of Australians in the 2016 census identified as Christian:

• This percentage has declined by 7% since 2011 and continues to decline
• Some 30% of Australians identify as having no religion (an increase of 48% since 2011)
• The average age of people attending Catholic or Anglican church is 60
• Only 8% of so-called Christians attend church monthly or more

These numbers suggest that:

• To call Australia a Christian nation is an exaggeration
• Christianity is for the ageing
• Even those who identify as Christian do not practise actively

I would argue that this demonstrates the maturity of a society, as it gradually sheds the stories of a bygone era. My opinions aside, this certainly points to the need for marketers to better understand the country and how it is evolving. The change in religious allegiance will impact on religious practices and views on issues such as abortion, gay marriage, and euthanasia. It will also affect general consumer behaviour.

Australians are increasingly inclined to buy condoms, watch porn, go to the football instead of church, eat whatever they want on any day of the week, treat Easter as a long weekend, view Christmas as nothing more than a time for partying, accept social changes such as gay marriage with ease, reject limitations on retail sales on a Sunday, and buy houses on a Sunday.

In 2019, we all know Catholics who use contraception, Jews who eat pork, Christians who support gay marriage, and Uniting Church members who support euthanasia. We are a society in which religion means less and less and influences consumer behaviour less and less.

This does not, however, mean that Australians are becoming less spiritual. There is evidence to suggest that while our youth are rejecting religion – they are embracing spiritual thinking.

Australia and, indeed, the world are changing quickly. Indications are that the rate of change will accelerate. The changes, the rate of change, and the impact of the changes on consumer behaviour need to be understood if performance is to be maximised.

Don’t just accept what we have always accepted. Understand your audience and avoid oft-repeated statements such as ‘Australia is a Christian nation’. These seem true just because they are often repeated.

MYTH 5 – CONSUMERS ARE ESSENTIALLY RATIONAL

2.81% increase in conversions from 1 cent decrease in price

There is absolutely nothing new in research that has found that a 1 cent decrease in a price from $2.00 to $1.99 can increase conversion rates from 2.39% to 5.2%.

It might be more surprising that other studies have found that:

• $1499 outsells $1,499
• $15 plus $2.99 shipping outsells – $18.00 with free shipping
• $362,798.15 outsells $350,000

Similar findings have been highlighted time and again in research. While psychologists are not sure why these findings arise, they agree that it points to the less than rational think of human beings. The fact is, human beings are not rational. This point is further highlighted by:

• The success of pricing strategies that sell products to women that are identical to those sold to men for an average of 7% more
• The fact that the relative size of an original price and the discount price on a sign can significantly impact sales
• The consistent finding in discount environments that 2 for 1 outsells 50% off

Together, these findings suggest two things:

• Pricing is a complex issue
• Human beings are not rational

Pricing is a complex issue and will be the subject of the next paper in this series.

Human beings are not rational. This is an important observation to come to grips with. The implications include:

• Facts alone may not change behaviour
• Influencing behaviour is complex
• Marketing is all about psychology

It is important not to assume that consumers are rational. It is important to remember that only 20% of human decision making is top-down, or the outcome of deliberative thought. Some 80% of human decision making, including the vast majority of purchase decisions, involve bottom-up thinking and lack deliberative thinking.

Understand the psychology of pricing and more broadly, the psychology of human behaviour management. If you don’t, engage someone who does. It could save or generate a fortune.

MARKETING

Within the discipline of marketing, there are also many myths, most of which are rarely questioned. The five myths discussed here divert resources and lead to waste.

MYTH 6 – CONTENT IS KING

42% of B2B marketers believe their content marketing is effective

Content marketing is arguably more relevant and effective in the B2B environment than in the B2C environment. Interestingly, one study found that only 42% of B2B marketers consider their content marketing strategy to be effective, despite the resources invested.

This is an important finding, given other research indicating that:

• 60% of marketers produce at least one piece of content every day
• 78% of consumers believe content shows a focus on good relationships
• 57% of marketers report that custom content is their top priority
• 61% of consumer buying decisions are impacted by content

Content presents a real opportunity for most businesses. In the B2B environment, it drives:

• Brand awareness – 84%
• Lead generation – 83%
• Engagement – 81%

The fact is, however, ‘content – per se’ is not king.

The fact is, only high-quality content is king.

Most content is ignored. One study found that 58% of content strategies in the B2B environment are ineffective. Research suggests that there are several factors that require further consideration to maximise the effectiveness of content. These include:

• Engagement – 73%
• Visual content – 55%
• Content optimisation – 43%

It is important to write content that people want to read or view. Some 80% of all content published in 2019 involves video. Visual content is more important than ever. Maximising readership also requires that members of the audience can find content easily.

It is interesting to note that:

• 70% of YouTube viewers watch videos for “help with a problem”.
• 43% of B2C marketers say that pre-produced video is the most successful type of content.
• 62% of B2B marketers have rated video as an effective content marketing tactic.

Content can cut marketing costs significantly – but only if it is the right content.

Develop a content strategy that delivers high quality, engaging content customised to the interests of your target audience, and place a high value on visual imaging and video.

MYTH 7 – CONNECTING IS NETWORKING

4.1 in 150 friends on Facebook are considered dependable

One of the most dangerous myths in marketing is the one that suggests that connecting on social media is networking – or, indeed, that there is an inherent benefit in building the number of people you are connected with on a social media platform.

The fact is, having 10,000 or even 100,000 connections on LinkedIn has no inherent merit!

Whenever someone proudly explains that they have 10,000 connections on LinkedIn, I ask them:

• How many of those people have ever given or referred business to you?
• How many of those people read your content and look at your profile?
• How many of those people could you call now and organise to have coffee with?

Generally, these questions are met with a blank face, suggesting that there is little, if any, commercial benefit behind the connections accumulated. For those who do answer, the numbers are small.

A study completed by Oxford Psychology Professor Robin Dunbar considered 3,375 Facebook users aged 18 – 65 years. These users had an average of 150 ‘connections’ or ‘friends’ on Facebook. Dunbar’s research found that despite having 150 friends an average of just:

• 4.1 of those friends could be considered ‘dependable’.
• 13.6 of those friends would offer sympathy in the event of a family crisis.

This and other findings from research completed by Dunbar suggests that very few connections on social media can be considered true friends. I would argue that still fewer might be considered sources of business on Facebook or any other social media channel.

Connections on social media are not necessarily a potential source of business. The same is true of the people we meet at networking events. I have been to countless networking events where diligent prospectors busily collect business cards. I know many people with multiple boxes of business cards collected at various events. But how many of these ‘connections’ represent potential business?

It is equally relevant to ask the three questions posed above regarding social media connections, of people collecting business cards at networking events.

Business comes from relationships, not contacts. Relationships come from spending time in the prospect’s company and discussing issues of common interest, not simply grabbing a business card or sending an invitation to connect online. The essential element of relationships that leads to business is trust, and this rarely arises from simply connecting.

Stop relying on ‘connecting’ and start the process of building relationships that create the trust required to do business. Use connections – online and off – as just the first step in networking.

MYTH 8 – LOYALTY CARDS BUILD LOYALTY

77% of programmes that focus on rewards alone fail in 24 months

There is a lot of talk about loyalty programmes and the success that large businesses in Australia, such as Coles and Woolworths, have had with their loyalty programmes. There is no doubt that many loyalty programmes do work, but one study found that 77% that rely on rewards alone fail.

Other studies found that:

• 80% of people have a primary department store, but only 30% participated in that store’s reward programme, and only 23% were activated
• The average American consumer has 22 loyalty cards, only 10 of which they report having used once in the last 12 months
• Businesses that spend more on loyalty programmes have, on average, a 10% lower EBITDA than businesses who spend less on loyalty programmes

There is a lot of data that questions the success of loyalty programmes. Key issues include:

• Excessively high costs
• Communicating the wrong message
• Unfocussed programmes
• Failure to create loyalty

The last point is perhaps the most interesting. It is predicated on the following:

• Loyalty programmes tend to create loyalty to the programme, not the brand
• The most effective strategies for building loyalty are trust and customer experience

Loyalty cards do not actually create loyalty to the business as much as to the rewards. Consequently, if someone offers similar or better rewards, the customer will move.

To be loyal to a brand, people must trust the brand and enjoy the customer experience. Loyalty cards contribute nothing at all to the customer experience.

Build loyalty through trust and customer experience. Look very critically at claims that a loyalty programme will add value to your business, particularly if you want that value to be loyalty.

MYTH 9 – IT IS THE TRUTH THAT MATTERS

1% not 14% of GDP is spent on foreign aid

Research suggests that while some Australians think our aid budget is too low, most Australians believe that the federal government spends far too much on foreign aid, especially in times of economic hardship – such as those existing in 2019.

Setting aside the debate over whether those complaining about foreign aid are experiencing hardship, or whether we are just selfish and short-sighted about the potential benefits of foreign aid, it is instructive to consider the following:

• Voter perceptions of Australia’s aid budget 2018 – 14% of GDP
• Voter perceptions of the right amount to spend on foreign aid – 10% of GDP
• Actual expenditure on foreign aid – less than 1% of GDP (and falling)

It is also worth considering that the federal government has been explaining the low level of foreign aid and the media has been reporting this disparity for years, and yet – there is still a grossly inaccurate perception on the part of voters.

A recent study in Britain found that:

• The Muslin population of the country was believed to be 24% – while it is actually 5%
• 15% of teenage girls become pregnant each year – when it is 0.5%
• 25% of the population is overweight when it is actually 75%

The last of these findings might well be put down to differing perceptions of what constitutes ‘overweight’. However, the other two are simply wrong. Further, they remain wrong despite a thorough investigation and discussion of these and related issues through the BREXIT debate.

Further, research has found that even when you present the correct figures, people tend to hang on to the erroneous numbers they have in their heads – preferring to believe that you are wrong. Just today, I was told that immunisation causes autism – a myth that was destroyed years ago.

People are inclined to hang on to untruths for a range of reasons. These include a fear of finding they are wrong after years of behaving in one way or another on the basis of a misguided belief – something they would find distressing. Whatever the reason, people are all too inclined to believe what they want to believe. Presenting them with the facts will rarely change their behaviour.

The idea that education will change behaviour is overrated. The idea that people act on the basis of fact is plain wrong, and the idea that they actually want to know the facts is over-stated.

Don’t rely on facts or truth to influence consumer behaviour. Don’t even assume any interest in the facts or a propensity to consider them. Emotions are always more important.

MYTH 10 – SAY IT, AND THEY WILL BELIEVE IT

50% of consumers don’t trust what they read or hear

A couple of years ago, I saw a television commercial for a home builder who claimed to build ‘better’ homes. I emailed an executive of the firm to ask two questions:

• What does better mean?
• Will anyone believe you?

My argument was that very few people would believe the claim, at least in part because very few people would believe an ambiguous and unquantified claim.

I stand by this view and the view that such copywriting and advertising is lazy. As a result, it is a whole lot less effective than it should be.

My experience suggests that the credibility of advertising and the likelihood of advertising being believed are strongly and negatively impacted by the use of:

• Platitudes
• Hyperbole
• Jargon

I would suggest that the phrase ‘better homes’ qualifies as both a platitude and hyperbole.

It is also instructive to consider recent research that found:

• 50% of consumers do not trust advertising messages
• 44% of consumers think that advertisements are dishonest
• 58% want to see stronger ‘truth in advertising’ laws

The fact is, the credibility of advertising is at an all-time low. What is more, the credibility of advertising appears to be lowest in the online environment. A recent study found that:

• Online advertising is seen as trustworthy by just 41% of consumers
• Social media advertising is seen as trustworthy by just 38% of consumers

The credibility of native advertising and online content, in general, is viewed as being more trustworthy than advertising.

The upshot is that telling people is not enough.

Maximise credibility by demonstrating the claims you make. Avoid platitudes, hyperbole and jargon, and quantify what you claim in a way that makes the point more believable to audience members.

STRATEGY

‘Strategy’ may seem like a somewhat arbitrary heading. However, there are several strategy related myths that perpetuate and adversely affect business performance.

MYTH 11 – IDENTIFY OPPORTUNITIES

$12.3 billion and climbing

Forbes suggests that the net worth of James Dyson, inventor of the Dyson vacuum cleaner, currently sits at $12.3 billion, and it continues to rise. This makes Sir James one of the wealthiest men in the world.

Dyson’s wealth was built on the phenomenal success, of the Dyson vacuum cleaner,the Dyson Airwasp Styler, Supersonic hairdryer, heater, and several other products.

The Dyson group has not built its strategy around identifying opportunities for new products and services that consumers may or may not want – but rather on identifying problems with products that are already selling in volume and then solving the problems identified.

There are several advantages in focusing on solving the problems with existing products rather than identifying opportunities for new products. These include:

• Demand for the product has already been established
• The potential impact of changes made can be quantified

When a new product is created, it is relatively difficult to identify demand for it. This is reflected in the finding that 42% of start-ups that fail are marketing a product for which there is no evident demand. The demand for existing products, on the other hand, is relatively easy to estimate with any increase in the market size resulting from the changes proposed – a bonus.

With an existing product, it is also easy to work collaboratively with existing consumers to identify the problems they are having, examine potential solutions, and test the preferred solutions. Steve Jobs was right to question the capacity of market research to identify wants. There are, however, far fewer concerns about the capacity of research to identify problems. Research can be highly effective in this regard and, in addition to driving solutions, collaboration can drive engagement with a brand.

Of course,the principle of addressing problems extends beyond existing products. Problems resulting from the absence of a product can also be productive. Steve Jobs identified a problem with music piracy and all but eliminated it by making music available cheaply through the iPod. Jobs was not looking for an electronic opportunity. He was looking for a solution to a business problem.

Solving problems is potentially the most efficient and least risky form of innovation.

Don’t ignore opportunities. Consider giving priority to identifying problems and solving them. Collaborate with your target audience and use co-design to build a better mousetrap.

MYTH 12 – THE MORE THE MERRIER

6 options outsell 24 and 30

We could all be forgiven for thinking that Chinese restaurant owners believe the adage – ‘the more, the merrier’. Menus in Chinese restaurants tend to offer more options than most patrons could consider or imagine.

There is a view held by many in business that central to maximising customer satisfaction, is offering as many options as possible – on the basis that this will ensure every patron can order or get what they want.

The fact is, however, choice often reduces satisfaction. In just one of many studies addressing this subject, researchers looked at two ranges of jam displayed in a supermarket to examine purchase behaviour. The findings were as follows:

• 6 options
• 40% of customers stopped to look at the display
• People viewing the display tasted an average 1.38 jams
• 30% of consumers made a purchase
• 24 options
• 60% of customers stopped to look at the display
• People viewing the display tasted an average 1.50 jams
• 3% of customers made a purchase

These findings and those of a subsequent study by the same team found that while more options lead to more customers viewing a display, fewer options lead to increased purchases.

The findings of other related studies found that:

• Satisfaction levels are greater when the options are fewer
• Repurchase levels are higher when options are fewer
• The optimal number of options is generally between 3 and 5

These findings put paid to the notion that more items on the menu in a Chinese or any other restaurant is a good thing. There are likely to be differences between product categories, at least concerning the optimal number of options.

Do not offer an unlimited number of options or even a large number of options. Identify the optimum number of options for your product and market to maximise sales and repeat sales.

MYTH 13 – WE CAN’T AFFORD TO DO RESEARCH

25% of businesses trade for 15 years

Research suggests that just 25% of businesses are in business 15 years after they launched. Between 30% and 50% of businesses fail in the first 12 months, and, ultimately, up to 90% fail.

It is surely reasonable to ask the question – to what extent would success rates have increased if these businesses had devoted resources to understand their market better.

Another study found that 42% of the businesses that fail are marketing a product that their target audience does not want to buy. It is surely reasonable to ask how much money was wasted starting a business – that might have been saved if research was undertaken to identify the lack of demand.

Research by Proctor and Gamble found that one of their products would sell in greater numbers when priced at $18.99 than either $15.99 or $12.99. It seems reasonable to ask if the additional profit generated would have been forthcoming without research.

There are two critical issues here:

• Research can identify potential problems
• Research can identify lucrative opportunities

Product research by start-ups might have identified potential problems with products not being ideal, and research by P&G identified the opportunity for higher margins.

There are two other critical issues regarding research:

• Research that focuses on decision making is often cheaper than no research at all
• Research can take many forms and need not attract substantial costs

Mistakes can cost a lot more than research, and missed opportunities will almost certainly cost a lot more than research. Research can involve field studies or focus groups that attract significant fees, but it can also involve structured customer monitoring, desk research, consumer insights, and leveraging academic research – none of which need attract very high costs.

The bottom line is that research is almost always better than intuition, and intuition is best applied after the research is completed, taking into account the data collected. In the end, the cost of research is almost always negligible compared to the cost of advertising – let alone potential problems and opportunities missed.

Carefully consider the value of market research along with the alternative approaches. Consider carefully not just the cost of completing market research, but also the costs of not doing it.

MYTH 14 – EDUCATION CHANGES BEHAVIOUR

31% of road trauma is caused by speeding

Few subjects receive more publicity than the causes of road trauma, and the behaviours required if it is to be avoided. There are few subjects consumers in western countries have been educated about more than the causes of road trauma and the behaviours required to prevent it.

Some 1226 people were killed on Australian roads in the 12 months to January 2019, bringing the total killed since recording deaths commenced to 190,000. While the number of fatalities has decreased each year since 1970, it remains unacceptably high, and the main driver of the decrease has been stricter laws – rather than changes in behaviour as a result of education.

Recent Australian research highlights the following causes of road trauma:

• Speeding – 31%
• Alcohol – 19%
• Fatigue – 10%
• Inattention – 5%
• Other – 35%

With the exception of some of the crashes in the ‘other’ category, most accidents are avoidable – given appropriate driver behaviour. Further, driver behaviour remains well below the ideal despite the tens of millions of dollars spent each year educating drivers through a variety of means including advertising.

The most significant cause of inattention in 2019 is mobile phones. A recent study in the United States highlighted how ineffective education programmes addressing mobile phone use were. One study involving school leavers found that education had no real impact on mobile phone usage and texting while driving. Despite demonstrating a high level of knowledge of the dangers, respondents reported that they continued to text. When confronted with victims of road trauma caused by mobile phone usage in a car, however, the behaviour of the sample changed markedly.

This study found that education was not changing behaviour, but that an emotional confrontation with victims, especially victims of their own age with horrific injuries, did change behaviour, at least in the medium term. This research highlights the fact that it is an emotional connection and not education that changes behaviour, and there is not necessarily a link between education and emotional connection.

Road trauma is perhaps the starkest demonstration of the fact that education alone is rarely enough to change behaviour.

Don’t rely on education to change behaviour. Use education if you consider it necessary, but also allocate resources to create the emotional connection needed for behaviour change.

MYTH 15 – CHANGING THE ADVERTISEMENT WILL INCREASE ENQUIRIES

seven viewings before registration

There are two solutions commonly recommended by advertising agencies confronted with a need to boost sales:

• Change the creative and launch a new advertisement or campaign
• Increase the media budget and reach out to more people, more often

The focus here is the first of these suggestions. The second will be addressed at a later date.

The question is, will updating the creative and developing a new advertisement or campaign boost sales? Obviously, this will depend on a range of factors, including quality of advertising, duration of the existing campaign, and whether advertising or the lack thereof is making any contribution to the less than satisfactory sales. Two factors might, however, be particularly relevant:

• Whether or not the current campaign has registered with the target audience
• The likely effect of new creative concepts

It is an old rule of thumb (a questionable rule of thumb) that consumers will, on average, see an advertisement 7 times before it registers with them. Whether it is five, six, or seven times is a matter of debate, and will vary according to the quality of the commercial, the product, the media and the message. However, the fact remains, advertisements take time to register with consumers. Consumers take even longer to register consciously, and will generally tire of seeing an advertisement more slowly than the advertising agent or the business under promotion.

It is by no means a given that a long-running advertisement needs to change to boost sales.

Research does, however, suggest that creative execution is very important. One study found that up to 49% of a lift in sales is related to creative execution, compared with media-related issues, which were found to contribute 36%. Setting aside questions that might arise as to how these values were arrived at, research has consistently indicated the importance of creative execution.

This does not mean, however, that the creative needs to be regularly updated.

Another study found that creative execution is important and that the impact of creative can be highly significant. This study also found, however, that:

• The short-term effects of creative are relatively small
• Creative concepts typically gather momentum over time

This research suggested that high-quality creative tends to be more effective the longer and more consistently it is used.

Changing the advertisement is just one of many variables that might be addressed to increase sales. However, it should not be the first one considered. The value of updating the advertising is, at best, unclear.

Consider all the factors impacting on sales before assuming that changing the creative or updating the advertising will increase sales. Consider the data before accepting the agency recommendation.

BUSINESS

Numerous broader business myths can impact on the effectiveness of a marketing strategy. These include the five that follow.

MYTH 16 – WE CANNOT AFFORD STAFF TRAINING

89% of businesses compete on customer experience

If I had a dollar for every time a businessperson has told me that they cannot afford to invest in staff training, I would be a wealthy man. What is worse, some of these business people have represented international corporations. One commented, ‘it is just not economical to invest in staff training. They don’t stay long enough to get the required return”.

This point of view raises many questions, not least of which are:

• Why are they leaving so quickly?
• Would they stay longer if trained?

In this particular instance, I don’t know the answer to either question. What I do know, however, is that research increasingly highlights the importance and value of training.

A recent study found that some 89% of businesses now compete primarily based on customer experience – with customer experience requiring the consistent performance of well-trained and well-motivated staff.

Customer experience is important because it can:

• Differentiate a business
• Maximise customer satisfaction
• Build customer loyalty
• Increase customer advocacy
• Build trust and personal relationships

Several factors impact on customer experience, including:

• Price
• Availability
• Convenience
• Social responsibility
• Quality
• Service and support

The last two of these factors – service and support – or at least the capacity to deliver both are more important than they have ever been, and all indications are that they will become increasingly important in the months and years ahead. Delivering a high standard of service and support requires well-trained staff.

Great customer experiences are personal, help customers make decisions, and are frictionless – all of which highlights the importance of staff having the skills to deliver a great customer experience.

In an environment in which the customer experience is increasingly important, businesses cannot afford to fail to train and motivate staff.

In addition to reducing staff turnover, use training as an essential element of the strategy to enable staff to offer every customer the best possible customer experience.

MYTH 17 – LOWEST PRICE WINS

$2.50 beer outsells $1.80 beer

One of a number of renowned studies by pricing guru, William Pound, found that:

• Audience 1 offered two beers chose the more expensive more often
• $1.80 – 20% of sales
• $2.50 – 80% of sales
• Audience 2 offered three beers chose the medium-priced option more often
• $1.60 – 0%
• $1.80 – 80%
• $2.50 – 20%
• Audience 3 offered three dearer beers chose the mid-priced option more often:
• $1.80 – 5%
• $2.50 – 85%
• $3.40 – 10%

These findings suggest several conclusions confirmed in other studies:

• Price is a very complex issue, and much more complex than ‘lowest is best’
• Comparing prices is common and can change preferences
• Offering three alternatives can be a very effective strategy

Price is a lot more complex than many think and certainly more complex than lowest is best. Just ask Proctor and Gamble who sold more units of an Olay product at $18.99 than either $15.99 or $12.99.

There is a great deal of evidence to suggest that price is relative and that an option is only cheap or expensive if there is an alternative to compare it with – an anchor price. If there is only one option available and nothing else to compare it with, price and value are difficult to judge.

It is often the case that a consumer will not want to be seen as a cheapskate buying the lowest cost product. At the same time, they cannot justify buying the most expensive product, and, as a result, will buy the mid-priced option. This is a strategy used by many successful businesses, including Apple.

The next article in this series will incorporate 20 blogs entirely devoted to price and the development of optimal pricing strategies – favouring strategies that focus on value ahead of price alone.

Sometimes the lowest price wins, especially where there is little differentiation. The more tangibly differentiated two products are, and the more customised those differences are to the needs and wants of the audience, the less important the lowest price becomes, and the more important value becomes.

Recognise the complexity of price, and understand your market, the product category and the competitive environment well enough to develop a value-based strategy.

MYTH 18 – QUALITY WILL DELIVER SUCCESS

$3.3 billion-dollar loss on touch-pad

Many people in business hold the view that a quality product is the key to success. That is, by developing a quality product, the business is almost guaranteed of success.

Unfortunately, for the likes of HP, which burned $3.3 billion on its failed Touch-Pad, quality is not the key to success. Indeed, quality is not even the starting point of a success story. There are many examples of high-quality products that have failed to find a market and achieve sales targets, including:

• Google Glass
• Samsung Galaxy Note 7
• Nike Fuel-Band
• Amazon Fire Phone

Books could probably have been written about failed quality products.

Equally, there are low-quality products (depending on how one defines quality) that have sold very well, including McDonald’s coffee, French fries – and everything else they sell.

The fact is, rather than a quality product, the starting point for a success story is a product that meets or exceeds the needs, wants and expectations of the target audience. Indeed, given the difficulties associated with quality experienced by the vendor and customer alike – ‘quality’ might best be defined as a measure of the extent to which a product appeals to and is preferred by the target audience.

Quality, after all, is in the eye of the beholder. In this case, the beholder is the target audience.

US venture capitalist, Mark Cuban, once suggested that the most important measure of success is the extent to which a business can demonstrate that the customer ‘owns your ass’. The objective of effective marketing is to achieve commercial and social objectives by maximising the number of your target market behaving in the way you need them to. This necessarily involves addressing what they are looking for, not what you might think is quality.

The key to success is to get as close as possible to the target audience, understand them better than anyone else and give them what they want more effectively than anyone.

Collaborate with your target audience to establish a comprehensive understanding of their problems, needs, and wants, and then develop your product and marketing strategy accordingly.

MYTH 19 – MORE CUSTOMERS ARE EVERYTHING

300% more spent by repeat customers

The obsession with advertising is directly related to the obsession with attracting more customers. Research has demonstrated time and again that gaining more customers is a priority for most businesses.

Research has also demonstrated time and again that an obsession with more customers is not always the best approach to maximising profitability. Consider the following findings from various studies:

• Top-performing companies generate more than 20% of their revenue from repeat customers
• Top-performing businesses get as much as 60% of their revenue from return customers
• While only 32% of first purchases will make a second purchase, 53% of customers who make a second purchase will make a third
• The top 10% of eCommerce customers are worth 6x the industry average, and the top 1% is worth 18x more.

Repeat purchasing customers is one of the keys to maximising profitability. For many established businesses, repeat customers are as important, if not more important, than new customers. Repeat business is so important it has inspired two books by Seth Godin alone. These are well worth a read:

• Permission marketing – 1999
• Tribes – 2008

Repeat customers are better to target than new customers because they are:

• easier to identify and therefore less expensive
• easier to convert and maximise the sale with
• likely to spend more, over and over
• more likely to refer and promote your business

Despite all of these compelling arguments, perhaps as few as 30% have a deliberate strategy in place to drive repeat business and referral, build a tribe, and leverage it with permission marketing. There is no doubt that new customers are helpful – but fully developing and realising the potential of existing customers is every bit as important.

Develop a deliberate strategy to drive both repeat business and referral. Place the highest possible priority on leveraging relationships to maximise unit sales, margins, and average sales.

MYTH 20 – QANTAS IS PLAYING POLITICS

77% of consumers would be prepared to pay extra

This is a very new myth. It is a myth that is currently being perpetrated by politicians. The myth is that by getting involved with environmental issues such as climate change, and social issues such as same-sex marriage, corporations like Qantas are getting involved in politics at the expense of their shareholders. The Australian government has recently called on corporations to stick to their knitting.

The reality is, however, in addressing issues such as climate change and same-sex marriage – these corporations, including Qantas, are most certainly sticking to their knitting and most certainly looking after the interests of shareholders. Consider:

• in the plebiscite, 61.6% of Australians voted in favour of same-sex marriage
• 70 per cent of Australians believe climate change is occurring (up from 64 per cent in 2012)

Given these numbers, it seems reasonable to suggest that Qantas and other corporations are simply reflecting community sentiment and demonstrating that they share the values of the majority of consumers.

Consider these numbers:

• 77% of consumers would be prepared to pay extra for more ecological packaging
• 64% of consumers think that brands and retailers are not doing enough to introduce more environmentally friendly forms of packaging
• 91% of consumers would choose to make purchases in a supermarket or retailer which actively encourages its suppliers to adopt more environmentally friendly forms of packaging

While not directly relevant to the airline industry, these findings have relevance for many corporates in terms of reflecting a desire to see corporations do more for the environment.

Consider these numbers:

• 66% of global consumers are willing to pay more for sustainable goods
• 73% of millennials are willing to pay more for sustainable goods
• In 2015, brands who showed a commitment to sustainability saw sales grow more than 4% while those that had no such commitment grew less than 1%.

These numbers suggest that a corporate commitment to social and environmental issues has a greater appeal to target audiences.

Forget ignorant politicians who suggest that environmentally and socially vocal businesses are being political – and consider the extent to which you also need to address these issues.

IN CONCLUSION

There are few things more important in business, and life in general, than objective and critical thinking. The lasting lesson from my father in childhood was: Question everything and accept nothing on face value. He was most certainly right.

There are many myths in marketing, strategic planning, and business. Many of them impact negatively on the performance of organisations of all shapes and sizes and in all sectors.

The myths addressed in this article are problematic, but they are also just symptoms of lazy thinking in business and broader communities. It is easier to accept myths and the outcomes of groupthink than it is to think for oneself.

These myths reflect a less than scientific approach to business, while the approach recommended here advocates the leveraging of scientific thinking, practice, and evidence to make better decisions that will result in superior performance.

Question everything, apply the science, consider the evidence, and then use the evidence to make better, more profitable decisions.

John - https://www.djohncarlsonesq.com/