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5 Things I Know About Marketing – John Deighton, Harvard Business School

John Deighton is Baker Foundation Professor of Business Administration at Harvard Business School and MSI’s 2011-2013 Executive Director. An authority on consumer behavior and digital marketing, he spoke with President Marni Clippinger about consumer motivation, marketer biases, and why marketing education should be geared toward “thinking” rather than “knowing.”

1

Overestimating rationality is a mistake. 

For at least the past 40 years, psychology’s big successes have come from studying rationality and its limits. The spillover for professions that need to predict people’s behavior has been to underweight other drivers of behavior. It’s opened the door to, among other things, an engineering approach to marketing that assumes choices can be decomposed into “jobs to be done,” all of which can be intuited from consumers by listening attentively to their rationales and rationalizations. I think living on the rational/irrational dimension is too narrow.

Not all product purchases result from pursuit of individual goals, whether rational, boundedly rational, or even predictably non-rational. Some purchases are the result of motives without choice, for example, impulses not accessible to consciousness. Others are socially patterned. Others are culturally determined, “the way things are done here,” without consciousness or reflection.

In the era before this one, the age of motivational research, marketing and advertising were heavily influenced by people like Ernest Dichter and Pierre Martineau, and before them by Freud and Jung. Many marketers of that generation were just as narrow, and as sensitive to fashions in thinking, as some are today. The most difficult task of marketing professionals is to take from today’s intellectual triumphs without losing touch with the many dimensions of behavior that other psychologies and other thoughtful people, novelists, historians, and anthropologists among them, have to offer.

2

Strong brands are a reward, not a goal. They are what you get for doing everything right other than trying to have a strong brand.

I often hear the word “brand” used in place of the real causes of success in the marketplace. To talk about a strong brand confuses the effect with the cause. The signal that the brand has become strong is like the white smoke coming out of the Vatican. It signals that the Pope has been elected, it doesn’t produce the Pope. 

What’s really dangerous is to apply the reversed causality and say we need a new Pope, let’s make a fire and produce some smoke. Perhaps we should declare a 20-year moratorium on the word “brand.” We can use the time spent measuring brand equity to investigate what really produces satisfied customers, such as product design that keeps ahead of competition, responsive customer service, healthy distributor relationships, and warranties that match claims. 

3

In business as in warfare, what passes for strategy is often luck or superior force, whatever professors in military academies and business schools may say.

It’s human nature to want to attribute success to our actions, not to good fortune. Often luck is a perfectly adequate explanation. It’s human nature to be ashamed of failure and to hide the incriminating details. Business schools, particularly those that teach from examples of practice, need to be alert.

I’ve nothing against carefully documented case studies of particular situations, unless they are dominated by success cases. When we look across a sampling of cases chosen randomly we can learn what independent variables produce outcomes on the dependent variable. If we choose only successful cases, that’s called sampling on the dependent variable. There is not much variation in outcomes, and so not much learning about what makes for success.

There is a corollary. Because so little research has enough variance on the outcomes (and because business success is so multiply determined and complex), the number of valid results and empirical generalizations about business is very few. In general I think the best training we do in our business school is training towards thinking rather than learning secondhand. You just can’t produce a set of generalizations and encourage them to be memorized the way medical doctors are trained. Surprising as this may sound, business is so much more complicated than medicine. Businesses are so much more different one from another than human bodies are.

4

Marketers underprice. Their restraint may be marketing’s greatest contribution to consumer welfare.

Having just argued against generalizing, let me make a generalization. When people set a price, they are more sensitive to the downside than they are hungry for the upside. They can think of a thousand ways in which if you price too high, you get into trouble. They don’t often enough think of the thousand ways to invest the money they’re going to get when they price high. There’s a pervasive bias to price below what the market will bear.

(Some prices are entailed by the place in the market, your power, and your ability to price. I am talking about situations where you have a new product and not much competition to give you a guideline.)

In a course we run for independent businesspeople who come back over several years, I suggest, at the end of the first year, that they “Go away, raise your price and come back and tell me how it went. I bet it will pay for the course.” Generally it does. 

5

Advertising (moving images, sound and plot) is the most powerful rhetorical force of all. Digital interactivity pales by comparison.  

Marketing has invented, in the 15-second or 30-second or at the most 60-second moving image, a little piece of art. It is not restricted to television – sometimes it appears on a mobile device or a laptop computer. Arguably these brief art forms are the most persuasive rhetorical devices available to society.

As we know, digital spending is now equal to television spending, but a big part of digital spending goes to search and display. So, marketers are, in general, investing heavily in media and formats that are rhetorically not very powerful. If you’re trying to change the mind of customers, it’s usually those little stories or moving images that pull together everything that we’ve learned about influencing people, going back to the Greeks.

Second on the list of rhetorical weapons, for good or evil, are sound bites.  They are very, very powerful, but because their argumentation is so slight or absent, their power is sometimes overlooked. They don’t work by appeals to reason, or often even by appeals to rationalization. They recruit deeper, often darker, motives. The Tweet is, of course, the sound bite in modern dress.

But these are just opinions. In marketing, as in all arts, my opinion is that opinions held with just enough conviction to be acted on get you further than what you know.

Five Things I Know About Marketing Series

Related links

Market-Making with Personal Data
John Deighton (2014) [Video]

Q&A with Harvard's John Deighton (2013) [Article]

Comments:

  • 03/09/2017 by daaker@prophet.com

    John’s insight is always proactive and exhibits wisdom.  I particular like the fifth one—I would frame it as—you need to think stories instead of facts and leverage the power of stories.  John was a bit harsh on branding.  My take is that building brands the right way is a good vehicle to get right “product design that keeps ahead of competition, responsive customer service, healthy distributor relationships, and warranties that match claims.”  DAve Aaker 

  • 03/10/2017 by Malcolm.rm@gmail.com

    As usual, John boils it down into clear and useful fundamentals.  Marketing has always been more complex that simple rational, emotional, conscious and subconscious labels allow.  It is all about solving complex consumer motivations that can be used to unlock growth accessing all dimensions that may come into play.  It is what makes our field so much more interesting than some others….and challenging and often misunderstood.  Rob Malcolm, former Chair AMA

  • 03/10/2017 by jdeighton@hbs.edu

    Dave - thanks for the kind words, and the gentle qualifier to my words on brands. In your books the focus is on “building,” with detailed articulation of the steps. Whatever we call the resulting offering, the process is admirable.

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