Strategic Marketing Myths: Unmasking Ten Dangerous “False Truths”

by Don Blohowiak
© 1996 - 2004 

Something less than scientific rigor surrounds the marketing strategist's discipline. That's especially disconcerting when you consider that massive fortunes can rise and fall on the business strategist's judgment. In place of accounting’s precision, or manufacturing’s consistency, strategy and its operational counterpart marketing are awash in a sea of widely held but misguided truisms that may hold the seeds of a company's destruction.

As the great management thinker Peter Drucker observed, "What everyone knows is usually wrong." When assessing your firm's strategies, consider these challenges to the common, and occasionally dangerous, wisdom.

MYTH 1: Satisfied customers are loyal customers.

It may be self-evident that unhappy customers likely will not spend more money on a product, or with a firm, that they despise. Surprisingly, the opposite is not true. Despite all the popular talk about companies building relationships with their customers, consumer appreciation for a vendor lasts about as long as the first breath after a purchase. While some customers make repeat purchases more out of habit than anything else, others express complete satisfaction with one company even as they are taking their business to another. Happy but disloyal consumers change brands because their satisfaction isn’t sufficient to overcome other factors such as a unique feature of the other product, or the fact that it is easier to obtain, or provides a better value.

Although customer satisfaction research is (rightfully) in fashion, marketers must guard against believing that their happy customers will be repeat customers. One marketing executive jokingly suggested that all his company’s customers would be very happy if the firm would only send money to them every month. In fact, that is what some companies are doing in competitive industries, rebating a percentage of purchases or simply sending a check with a thank you note to customers expressing gratitude for the business.

While customers probably smile as they happily take the windfall to the bank, their loyalty has not been purchased. Loyalty is earned every time a customer faces a purchase decision. Last week’s positive purchase experience may have some influence on today’s buying decision, but today’s transaction depends on what a customer believes the company is doing to earn the business today.

MYTH 2: The customer is king.

In a world awash with similar products available from a variety of producers and sellers, many businesses try to distinguish themselves by their service. Aggressive service competitors offer price guarantees, provide 24-hour a day customer service, maintain computerized databases on customer preferences and purchase history, hire more knowledgeable sales representatives and friendlier customer service representatives, and the like. Pleasing to a fault can extract a high cost.

Some crass customers take advantage of generous service policies, returning products for no valid reason after they’ve used them, returning products to stores from which they did not purchase them, frequently calling support lines with trivial matters, and so on. Happy customers are vitally important to a business’ long-term health. But so are profits. Service policies and practices should be analyzed for their contributions both to customer satisfaction and to the bottom line. Rude or abusive customers should be encouraged ever so nicely to take their business elsewhere.

MYTH 3: Competitors are enemies to be destroyed.

Competition in business is often likened to war. Pundits publish books on “marketing warfare,” or the “business secrets” of Atilla the Hun or Lao Tzu, the Chinese military strategist. Other books promise tactics on how to be a marketing guerrilla or a sales street fighter. Marketers call promotional programs “campaigns;” employees are referred to as “troops.” Executives speak of “launching an offensive” into a market, or killing a competitor on the sales battlefield. In today’s relentlessly competitive marketplace, vying for customer dollars may seem like waging a ruthless, never-ending contest with well armed adversaries on several fronts. Yet, if competing is war, what are customers? Spoils? Casualties?

Astute business people do follow a strategic plan, and do execute tactics designed to accomplish a mission. But that mission is to serve customers extremely well, at a profit. To succeed, being mindful of the competition is both appropriate and necessary. But the focus belongs on building long, prosperous relationships with customers, not plotting the (even metaphoric) destruction of competitors.

MYTH 4: You must match the competition to survive in the market.

Some days, being competitive seems to mean matching leading competitors on pricing, product features, the hours that customer service operates and so on. While businesses need to be aware of their competitors’ practices, they should not automatically assume that imitating such actions makes good business sense. Competitors may offer products or introduce product features that customers simply do not much value—or even some that customers would prefer not to have.

Competitors may price their products without a sound basis—perhaps charging too little or too much. Competitors may promote or distribute their products, or aim them at a market segment, without a considered basis for their actions. When there is virtually no difference between competitors, customers often choose the one with the lowest price. Playing “follow the competitor” is indeed a most dangerous game.

MYTH 5: Market research paves the path to success.

Market research is an absolute necessity in today’s competitive world, and an absolutely terrible vehicle on which to bet a business. Some of the world’s most advanced marketers—in industries as varied as soft drinks, computers, freight delivery, information distribution, and retailing—have lost truckloads of money for misguided decisions based on (or at least supported by) sophisticated marketing research. 

Here’s the problem: Market research, at its best, can give but an indication of what customers think they want or need. Customers frequently don’t seem to know what they want, or their professed opinions don’t match their actual behavior. Moreover, marketers can misunderstand (or simply ignore) the information they get from research.

Practitioners who conduct market research appear to have refined the process to a fine science. Though it appears to be more scientific—and therefore more accurate and dependable—than it really is. Behind all those tables of numbers, multi-variant correlations, and charts, graphs and models, lie many opportunities for imprecision. An old adage suggests that the answers one receives depend on the questions asked. Market research results very much depend on the specific questions that were put to customers, how (and how consistently) those questions were asked, and to whom (and when) the questions were put. In addition, the art of making important business decisions based on research results is also neither refined nor perfected.

While market research isn’t perfect, it can be a valuable tool to aid managerial judgment. Well conceived market research serves as an agenda for decisions and action. Still, it’s worth noting that some of the most successful products came to market not as a result of research but because someone believed the world would welcome them. Such products include portable personal stereos, video recorders, overnight courier services, adhesive-backed note paper, personal computers, even the common telephone (which didn’t see widespread consumer acceptance until decades after its introduction).

MYTH 6: Quality easily distinguishes products.

Quality sounds absolute but is an elusive thing. Structuring a business in pursuit of quality requires a careful and thoughtful definition of what one means by the term. If quality equates with near perfection, there are many costly expenses involved in delivering it to market. There is quality in design, quality in manufacturing, in selling, after-sale support, billing, problem resolution, and so on. Customers want “quality” even in inexpensive products—even if they can’t give a detailed explanation of what exactly that means. One thing it means for certain is that customers want to feel they are getting their money’s worth.

A general definition of quality suggests that a product lives up to a customer’s expectations; that it performs as promised; and lasts a long time without problems—giving customers good value for their investment in the purchase. This description is deceivingly simple. Quality, in these terms, is relative and variable—defined by the customer. Because all customers are not alike, defining quality and value at various price points, presents a marketer with a significant challenge filled with many decision points and trade-offs that inevitably stray far from the path of perfection.

Trying to differentiate a product using quality as the mediator may require significant customer education. Today, nearly every business claims that quality is an essential attribute of its products, and many of the most important pieces in the quality process are invisible to a customer’s unaided eye. While some measures of quality can be precisely quantified by a company, the over-riding measure is a customer’s assessment of value.

MYTH 7: Market domination is the goal.

Market share has long been the objective of organizations striving to secure economies of scale. But bigger isn’t always better. Large operations spawned by serving many customers raise an equally large set of potential liabilities. Changes in consumer preferences may be more difficult to accommodate quickly; the choice of suppliers may be more limited; competitors may initiate programs specifically aimed at damaging the market leader; and so on.

Profit—return on investment—is a more meaningful goal to pursue. Large profits can come through means other than large share of market. Meaningful measures of success include: share of customer budget, dominance and profitability in desirable niches, the lifetime value of customer relationships, and so on. The only size that really counts, is the return to shareholders year after year.

MYTH 8: Charge what the market will bear.

Any old saying suggests that there is no such thing as over-pricing in a free market. It’s willing seller, willing buyer. True, but if you plan to make more than one sale to your customers, you need to consider a longer and broader view of pricing.

The trick is to make a competitive offer that maintains perception of value, without driving the customer into the arms of a competitor or your business into the poor house.

MYTH 9: If sales are slow, increase incentives.

Price-reduction sales and special promotional pricing can stimulate demand that increases business—for a short while. The practice is roughly akin to borrowing money from oneself at an unprofitable rate. It helps in the short-term but at the expense of the long-term. (Introductory pricing, with a declared end-point can be a valid method to stimulate sales for an unfamiliar or discontinued product.)

Because some companies make a habit of periodically rolling out incentives to spur sales, customers come to expect them, and either withhold or advance their purchasing accordingly. When customers adjust their buying behavior in response to incentives, they deny marketers profits they likely would have realized had they not given away the store unnecessarily.

A sale is a transaction that can either begin or terminate a customer relationship. A sale spurred by a low price point is likely neither memorable nor profitable.

MYTH 10: Advertising drives sales.

The familiar adage suggests that, “It pays to advertise.” No it doesn’t and yes it does. Despite mountains of money spent on advertising in a wide variety of media, correlating sales–directly and consistently—to ad spending is an accomplishment that eludes both the biggest and smallest advertisers.

How many ads does it take to create a sale? What is the best ad medium? How frequently should advertisements run? Should ads entertain, sell, appeal to emotion? Opinions abound, facts are scarce.

Advertising works in that it exposes people to favorable information about a product or company. Some people who are ready to buy a product when they see it advertised, may not need to see another ad before rushing out to place a purchase—a purchase they were intending to make anyway. Other times, advertising works cumulatively and much more slowly, exposing people to a brand name or a company over time, building impressions successively to create an opinion that may later influence a purchase decision.

Advertising’s effect can be likened to a friendship. Some people meet and instantly form a bond. Others slowly build from awareness to familiarity to close relationship.

Evaluating an advertising program requires experimentation, good data collection, and a long view. Increasing or decreasing the ad budget today, even dramatically, may have no appreciable impact on sales immediately, with visible effects showing up only some time later.

For help in crafting an effective strategy for your organization, consult our special report on strategic thinking and the process of formulating an effective strategy.

Lead Well® helps organizations to improve measurable results by developing their current and future leaders. For more information, please contact us. By phone, toll-free in the USA: 1-888-LeadWell (532-3935), or 1-609-716-9490. By email, Info@LeadWell.com.

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Don Blohowiak, a management consultant and popular conference speaker, is the author of several business books. The executive director of the Lead Well® Institute in Princeton, NJ, he may be reached at http://www.LeadWell.com/.

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