81. The Unicorny Manifesto: Why 'phony wars' kill credibility

Dom Hawes:
00:00

In the last show I made the case for us to think carefully about how we use the word marketing. Now I did this because when we use a word like marketing, which is in our job titles and in our department's name, but we then inculcate an inappropriate meaning to the word, we're causing ourselves problems. What do I mean by that? Well, if you call your team the marketing department, but then what people see you doing is communications or promotional marketing, you're teaching them what marketing is by example. They'll believe the practise of marketing is about promotional communication and in time that's what the company's going to resource and that's what the company's going to measure.

Dom Hawes:
00:36

Now I also introduced you or reintroduced you, I should say to the concept that you judge the success of a business's marketing by the success of the business itself, not the marketing output. You'll have heard me talk about outcomes, not outputs, a lot. If you're a regular on this podcast, outputs are often again just the promotional piece of marketing, whereas outcomes are delivered by a whole organisation galvanising effort. And that's where we ended last time. It takes a whole village to bring a product to market.

Dom Hawes:
01:06

Now in my introduction to James Gatoff's episode number 74, I went off one a bit and I was pissed off that day because that dull old trope that marketing's not very good in b two b had been trotted out again and by the way, by someone who I have huge respect and admiration for one of the very best marketing and communication podcasts out there. And I think that's what I probably found hard to take. So I asked what does marketing's not very good in b two b actually mean? I was a little aghast that anyone would make such a statement with such definitive confidence. So today I want to start by exploring that in a calmer and a more considered way.

Dom Hawes:
01:45

Because the proposition that b two B marketing isn't very good or that marketing is somehow in crisis, those things are both trotted out more than they should be. So I'm going to start by giving a big up to business marketers everywhere. Because judging by the success of the companies they serve, their marketing and communication, it's very good indeed. And then I'm going touch on something I trailed last time too. I said the practise of marketing as a standalone could be said to be in a pickle, partly because it's misunderstood and partly because the academics who are driving the science side of the practise aren't playing nicely. I'm going to come back to explain that right after this. Hi, you're listening to unicorny and I am your host, Dom Hawes. I hope you're having a great holiday.

Dom Hawes:
02:33

We're taking a little time out too, which is why for this week and last, we published on Tuesdays only. Next week, we're back to our usual format and welcome Sandra Vollrath to our studio to talk about yoga, among other things. Now, she is a fabulous marketer with an interesting career and the interview is an entertaining and an educational listen. It's designed to ease you back into work after all that summer fun. I'm also really pleased to tell you that Rachel Fairley has been back in the studio to record some more episodes, and we're also planning a few co hosted shows together later in the year. But that is then and this is now. So let's get stuck into the meat of today's marketing meal. Business to business marketing. Right, let's get real.

Dom Hawes:
03:15

In 2022, Lombardo and Weinberg were published in Marketing Week, quoting the LinkedIn B two B institute that business to business accounts for half of the global economy. Half of UK FTSE 350 are business to business organisations. The business intelligence Group reported in 2019 that 40% of UK companies derive all of, or the majority of their income from business to business activity. My view, do you know, I'd be surprised if the number isn't a little bit bigger than that. Maybe 60 or 70% of our GDP comes from trade between businesses and customers that are not end users. By which I mean they either sell through other businesses or they sell to other businesses. Regardless, let's just take the published numbers. We're talking roughly half of the businesses that comprise our economy. Now, in that context, what does they are bad at marketing mean?

Dom Hawes:
04:11

Does it mean they're missing an opportunity? Is that sales? Is it margin, sample churn, something else? All of the above. Like, how do you get half of the FTSE 350 being b, two b, yet being bad at marketing at the same time? Because the implication then is that literally anyone could come along and do it better. Really? The thing is that these companies are all practising marketing every single day. They're creating products and services, they're pricing them to market, they're doing whole product marketing, sorting out distribution channels, resellers and consultants where needed, all those things they need to bring their products to market. And of course, they're doing promotion too. They're using email and direct mail and websites and landing pages and sales presentations and all of the other enablement tools. But here's a are they advertising?

Dom Hawes:
04:57

Because in my experience, it's advertising that people are usually complaining about when they say the marketing is no good. Well, if that is the case, it just shows that most people think marketing is just promotion. Just the final one of our four P's. And we talked about that a lot last time and I may come back to it later today, but for now I want to stick to the story. This comment about marketing being no good is symptomatic of the stark polarisation that's blighting our politics, our culture and as it turns out, our businesses. Like you're either one side or the other, you're either right or wrong. And this to me is an important issue that strikes the heart of the marketing is in crisis argument or the marketing in b two b isn't very good argument.

Dom Hawes:
05:40

It's as if the smart central ground's been lost. It's almost impossible to have a grown up, nuanced view. I suppose it's no coincidence that we see the same thing happening in politics and in global conflict. There's a left and a right, but the middle's been vacated. It was really fascinating to see Emmanuel Macron recently adopt a talking structure where he tried to balance both sides of the argument. He was saying things like, on the one hand, such and on the other, so on and so forth. What was noteworthy about this approach was how different it sounded against the barrage of polar opinions dominating the airwaves. It was genuinely refreshing to hear balance. And balance is just as rare in marketing these days. It's as if we're looking for an attention grabbing soundbite that can be consumed in 15 seconds or less.

Dom Hawes:
06:26

We're victims of a short form, scandal loving world that doesn't want nuance that takes too long. It's too hard to explain and where's the entertainment value in evenness? But the truth always lies somewhere in the middle of the extremes. You know, the middle doesn't grab headlines, it doesn't stand out in a social stream, and it doesn't help those who seek power by polarising. But it is where the truth lies. You might think I'm overdramatizing, but don't forget the context. We're being told that marketing is in crisis. We're being told that marketing in b two B is no good. We're being told that marketing that isn't a profit centre is a waste of time. We're being told these things that, by the way, are not true. And there's no better example than the phoney war between differentiation and distinctiveness.

Dom Hawes:
07:12

It's a war that's been waging for years and years, actually. But it feels like it's come to a head recently, especially among under experienced LinkedIn wannabe influencers. And it clearly shows the dangers of being so polar and why ridiculous polarisation leads to us not being taken seriously. The root of the discussion, I think, is actually is a good one. It comes from academia, a quest to codify professional practise, to document it and teach improved effectiveness in what we do. So let's explore them a little bit. And to copy Macron, I'm going to explain. On one hand, we have the older school, the differentiation crowd. Their champion is Philip Kotler, who in 1969 developed a process of marketing called STP, segmentation, targeting and positioning. Now, he believed it would become the essence of strategic marketing.

Dom Hawes:
07:57

I talked about it in the last show when I mentioned the proper marketing club, and you can find a link to them on the show notes for episode 80. But here's a refresher. Segmentation, targeting and positioning, or STP, is a method of breaking down a whole market into manageable segments, finding focus in your best fit customers, then differentiating your business product or service to that segment. I'm going to explain how it works in a little bit more detail in a jiffy. Kotler also embraced Egerrone McCarthy's four P's framework, and together those things have pretty much constituted strategies, strategic marketing as we know it for the last 50 to 60 years. Now, on the other hand, you've got the distinctiveness crowd.

Dom Hawes:
08:37

They're saying all of this is, well, frankly, tripe, that you can't differentiate your product or service anymore, that b two b marketing as we've been practising it for decades, doesn't work anymore because any kind of differentiation you might seek to achieve at product level is just too short lived. So the very best we can do is make our businesses, our products and our services distinctive. Now, in support of this, they're putting forward the market based assets theory of brand competition. I'm going to get into that a little bit in a minute, but for now, that broadly marks out the two sides. So let's examine differentiation a little bit more. Now, as b two b marketers, we've all been, or should have been taught about segmentation, targeting and positioning STP, in case you're a non marketer. And what I said just then sounded like Martian.

Dom Hawes:
09:22

I'm going to explain those three terms in a little bit more detail and we're going to start with s for segmentation. Well, the clue is in the name. Segmentation is the practise of dividing a market into smaller segments based on common characteristics like age, size, location, market margin, structure, technical infrastructure, behaviours, job titles and many more things. T is for targeting and it's what happens next. Your product or service will appeal more to some people, more to some companies than it does to others. In other words, targeting is the process of deciding which of those segments you are going to target. And we come to P. P is for positioning. Positioning is how a company wants its product, brand or service to be perceived in the minds of its target customers relative to its competitors.

Dom Hawes:
10:08

Or, as April Dunford told us in episode 64, positioning fills the gap between what an existing customer knows about you and what a new prospect is trying to figure out. Nice. So let's put all that together. Here's Kotla and Keller from the revised 2021 version of their classic tame marketing management. A company discovers different needs and groups of consumers in the marketplace, targets those it can satisfy in a superior way, and then develops a value proposition and positions its offerings so the target customers recognise the benefits of its offerings. By clearly articulating its value, position and proposition, companies can deliver high value and satisfaction, which leads to high repeat purchase and ultimately to greater company profitability. Now, before you think, bloody hell, Dom's gone down a bit of a rabbit hole here.

Dom Hawes:
11:00

We've gone down it because this is marketing, this is foundational, and just about every business will be doing STP or, well, they wouldn't be here now to show how polarised we've become, let's flip back to the other side. The distinctiveness crowd. The people who tell us that marketing in b two B is no good are generally working to a different way of thinking. They tell us that differentiation is impossible to achieve in most cases these days, I should say, so we all should be focusing on distinctiveness instead. Now, the absolutism of this claim has a strong whiff of B's to me, and it's no surprise to me that when my non marketing colleagues hear this kind of stuff, they basically think we're full of it. The argument's been dribbling on for years now, and leagues of under thinkers have dived in.

Dom Hawes:
11:44

But then, earlier this year, a paper was published weaponizing the distinctiveness camp's claim to zero sum game victory by claiming Kotler's theories of brand competitiveness are outdated, wrong and actually just don't apply anymore that these days the right way to go to market is to communicate to whole market using market based assets backed up by ease of purchase. For that, think about very wide distribution. Now, market based assets make brands easy to remember or recall at the point of purchase, and distribution makes them easy to buy. These are interesting, academically proven concepts and the work that created this new thinking is genuinely breathtaking, particularly to a marketing nerd like me. How brands grow read how brands grow by Sharpe and Romanjuk to find out more. It is an amazingly excellent book, but the paper.

Dom Hawes:
12:37

Now the sheeple of LinkedIn piled on top of this article to amplify and it has all sort of become a bit too much for me. The first draught of this podcast actually I wrote in February, but it's a full six months ago and I showed the script to trusted colleagues and they basically filed it in the Dom is nuts drawer and banned me from putting it out. But over time I've mellowed enough that I can now talk about the issue without ranting. So I passed my starter script to our excellent scriptwriter, Peter Powell, and helped me hew in to what you hear today, more of a discourse than a rant. I'm still gobsmacked at the published paper, by the way, and you should read it.

Dom Hawes:
13:09

I've put a link to that on the show notes which you can find on this platform or at unicorny dot co dot Uk dot. The thing is this, you see, non marketers don't care about either side of this debate. At best, they think the marketing morons have embarked on another onanistic odyssey. At worst, they're just going to write us off again for being full of shit, for missing the point, for not being connected to the real world. For most of us in complex commercial land, it's not one thing or the other of these two approaches. It's both and which you lean into and when depends on many factors. It's more macron than it is maga. The paper in question, by the way, is called the Journal of Retail and Consumer Science, and the article is titled the market based assets theory of brand competition.

Dom Hawes:
13:51

The heading's quite a mouthful, but it's nothing compared to the body copy. Others have already taken issue with the amount of jargon we market as speak, and they cite this paper, by the way, and the deleterious effect it has on our profession, notably Johnny Corbett in marketing Week, and it's definitely worth looking that up too. But it's not just the linguistic opacity that made me mad when I read it. It was the content. Let's start with an ideological objection that I've already voiced. Not everything is a zero sum game. Plurality is positive. So rather than claiming that Kotler's approach for differentiation STP is wrong, how about leaving the door ajar by saying it's wrong in some circumstances? You see, the thing is this. I know STP isn't wrong because I've used it successfully for years. You probably have too.

Dom Hawes:
14:34

But I also know there are times when STP doesn't seem so effective, as do you. But that's because we've got experience and it's obviously the wrong approach to take in some circumstances. We don't necessarily need research to tell us that. But market based assets theory? Well, that's not right all the time either. I really like some elements of theory. There are proper aha moments in the book especially, and in the paper too, and I can see exactly when and how it might make a better approach sometimes. But it's no panacea. Let's just take a minute to understand it. Market based assets theory of brand competition is a theory that seeks to explain why some brands are more successful than others.

Dom Hawes:
15:12

It suggests that the success of a brand is not determined by segmentation, target and positioning, but rather the assets that the brand builds in the market. And by assets, I mean things like brand reputation, visual devices and distribution. The key concepts in the market based asset theory are mental availability and ease of purchase. Mental availability refers to the ease with which a brand comes to mind when a consumer is making a purchasing decision. It's the result of the brand's presence and visibility. In the consumer's mind, ease of purchase is euphemistic with physical availability or distribution. Simply, the more places in which you sell, the more likely you are to sell. Thus, brands that have high mental availability and high physical availability are more likely to be considered and chosen by customers.

Dom Hawes:
15:59

Market based asset theory promotes building mental availability across entire product categories by the development of distinctive brand assets and a distinctive brand asset is a unique element associated with a brand that's readily identified by customers and helps to distinguish the brand from its competitors. They include things like logos, colours, shapes, characters, jingles, slogans and more. Here's why both STP and market based assets theory matter. In my opinion, STP advocates focusing activity on a segment of the market where successful sales are more likely. Differentiation matters in STP because ideally you promote the genuine and meaningful point of difference that answers your target customers compelling reason to buy market based asset theory advocates whole category communication based on distinctive assets and ease of purchase. Market based asset theorists focus attention on category entry points.

Dom Hawes:
16:52

That's just the reason a buyer wants to buy something in the category, and they aim to be the most mentally available brand in their customers minds. Now, both of these two approaches are empirically proven. So how can one be wrong? How can one be more right than the other? Well, in the real world, which is messy, complex, volatile and irrational. Other things like product maturity, customer life cycles, category maturity and resources. Many more things like this, they matter. If you're a young or small business, you won't have the resources to build mental availability across a whole category. In b two B, you also probably won't have a mature enough product if you're in a market being disrupted. Your category might be too early market to make communication even possible. Now, in these circumstances, STP clearly, in my opinion, is the best option.

Dom Hawes:
17:35

You narrow your focus to make it achievable and you knock over one segment at a time. I've seen plenty of young companies, by the way, who've bet their business by blowing a whole budget on whole category communication. That is not pretty. It does not end well. STP is ideal in early stages of market development. It stops being so useful, though, when the market category is mature and when products and services are either commoditized or undifferentiated. Mass market brands and more mature B two B brands still seek differentiation, but it's often between their own brands so they can get whole category coverage. So in those mature markets, market based asset theory seems to make more sense. If you can't charge a large premium by being different, the economics of maintaining difference across multiple products or services might not make sense.

Dom Hawes:
18:20

Thus, distinctive becomes a much more important lever for sales success. So the grown up, experienced view of all of this is balanced. There's a role for both, and it depends on the circumstances of the business. Yet go online or on social media and you'll see two sides at phoney war. And it's not just over the debate between distinction and differentiation. I dove deep into that one because it's a really good example of what we're like, but we behave exactly the same way as so many other ideologies. In marketing, everyone seems to want to pick a side and then arm themselves with just about any b's they can get their hands on.

Dom Hawes:
18:55

And all the while you'll find a group of execs who don't have marketing in their job titles shaking their head at us while they get on with the job of quietly taking their businesses to market. You know, our job is actually pretty simple. The businesses we work for need to make money in order to help it do so. Our role is to take its products or services to market. Don't judge a business by its marketing. Judge the marketing by the business. It takes me right to the heart of so many of our best episodes where we've examined the problem of focusing on the wrong bits of the operation, like numbers on the performance of marketing. That stuff. That's how we keep score. That's not the game. The game is, was and always will be happy customers. They're the secret to a successful business.

Dom Hawes:
19:39

And in the well functioning business, marketing is the voice of the customer. It's the conduit for the outside in approach. We've been banging on about this podcast for the last 80 episodes. An agency is no different, by the way. Right now, like you, our clients are facing the dreadful call to do more with less. That, by the way, in itself, in my opinion, is a symptom of marketing merely being the promotional department. But that's a whole new rabbit hole. I'm not going to go anywhere near that today. An inside out approach refuses to compromise on creative or ideological standard. But that's polar thinking, too, and it's not helpful to clients under the cosh. So there's no point in us being inside out and refusing to compromise on our creative standards.

Dom Hawes:
20:21

Outside in thinking says that in this market, we need to change our approach as a highly commercially focused partner to client businesses. Our job, actually right now, it's to find the shortest route to results. And it was Simon Hartley who made me realise that in episode 77, when we discussed two lengths of the pool, that's how we make happy customers. That doesn't mean I'm giving up on five star creativity. Far from it. I was delighted to see AML groups shortlisted for an IPA award for its work with asset management firm Vanguard recently. But that's the thing about experience and ability. When you combine the two, that's when you get plurality. You don't have to do all one thing or all the other. You get to choose what works best for each and every occasion.

Dom Hawes:
21:03

Thus, the strategic role of marketing is deciding which customers are right for your business, how to take your product or service to market and what to say to them. And I'm going to conclude today's show in much the same place I concluded last time. I think I've taken a different route to get here, but the result seems to be the same so three of the four p's are now owned by what Ritson called the preeminent strategic thinkers in the business. Nothing necessarily the marketers. I think that's polar thinking rearing its head again. Like who cares who owns parts of the process? The important thing is they're done well and the business thrives. Now, I mentioned the racky framework often. Some might call it racy. By the way, I'm not sure honestly which is right.

Dom Hawes:
21:44

But it's an acronym that stands for responsible, accountable, consulted and informed, and it's used to articulate responsibilities in getting things done. I think it's very helpful where we find ourselves today. So let's just go through them again and I'll explain very quickly. Responsible, those people who do the work, accountable, those people who are accountable for the results where the buck stops consulted, those people that should be consulted before any decisions are made and informed, those people who you need to keep up to date. So in the context of strategic marketing, this is where I think we land in a pragmatic world of plurality marketing, by which I mean the process of taking a business product or service to market. We'll see different execs collaborating across the Rakhi framework.

Dom Hawes:
22:28

In my opinion, ideally the CMO is accountable for brand and marketing strategy and she manages that accountability by operating a promotional marketing department augmented by agencies that are responsible for the promotion of the business. She's accountable for the results of the go to market because she has been consulted on product price and place, so has confidence in the product market. Fitzhe she will know her customers well, understand the maturity of the market, and understand where her product sits in the adoption lifecycle. This knowledge helps her decide whether HTP or market based assets, or even a blended approach is best, and she's therefore able to advise the rest of the exco on the best approach for their business. She is accountable for results. Her job is to create happy customers.

Dom Hawes:
23:15

But let's not forget she doesn't and can't do it alone because it takes a whole village to bring a product to market. You have been listening to unicorny. I'm your host Dom Hawes. Nichola Fairley is the series producer, Laura Taylor McAllister is the production assistant, Pete Allen is the editor and Peter Powell is our scriptwriter.