Adelaide academic Byron Sharp says marketing needs a lot more science and much less of the so-called conventional wisdom. That’s a revolution he’s more than willing to lead.
Professor Byron Sharp is not afraid to pick a fight. The quietly spoken New Zealand-born academic argues that many of the traditional approaches to marketing are based on flawed theory that has businesses jumping at shadows and wasting millions of dollars.
Five years ago, Sharp became a global business name when he published the book How Brands Grow What Marketers Don’t Know. The man who leads more than 70 researchers at the Ehrenberg-Bass Institute in South Australia blew some commonly held marketing theories out of the water.
Marketing managers – and by proxy the companies they work for – were, he wrote, “like medieval doctors, working on anecdotal experience, impressions and myth-based explanations”.
Beyond the “psychobabble”
Sharp’s key point was that many marketers have for years operated under incorrect assumptions, many of which are parroted by marketing textbooks and “experts”. Those theories were leading to costly mistakes such as wasting time and money on “esoteric quackery” like segmenting the market, differentiating products and over-investing in highly loyal customers. Valuable brands, too, were being damaged by managers not understanding which “distinctive assets”, such as colours, words, fonts and product or pack designs, should never be touched.
Sharp really dug the knife in over marketers spending too much time narrowly defining product categories that often have a much broader appeal or use than they think.
While arguing that “brands largely compete in terms of physical and mental availability” – that is, being on the shelf and able to catch the attention of a potential buyer – “segmentation studies overstate very small differences”. The assumption that brands with different features must sell to very different people, or for very different buying situations, was wrong, Sharp argued.
Furthermore, in what would be music to struggling “old media” proprietors’ ears, he said marketers were wasting precious resources on short bursts of advertising campaigns that – unlike more evenly spread mass marketing – didn’t keep the brand top of customers’ minds.
Originally intended to be read by the Ehrenberg-Bass Institute’s sponsors, the book hit a nerve and was in such demand that it was reprinted four times and released electronically last year through Apple’s iBooks store. How Brands Grow was penned for leaders of companies that live or die on their marketing. The corporations that back the largely privately funded institute are billion-dollar household names, including Colgate-Palmolive, Kraft, General Motors and Procter & Gamble.
The foreword to Sharp’s book featured an affirmation from Coca-Cola’s then global marketing chief, who commented: “Marketers need to move beyond psychobabble and read this book.”
Focusing on real-world research
When INTHEBLACK meets Sharp in Adelaide, he is wearing an elegant suit and a broad, perfect smile that makes him look more marketer than academic. And he is not backing down from his fight for industry rigour. Most marketers, he says, are still “basically rolling the dice all the time”, fooling themselves into thinking that their focus groups, brand recognition surveys and consumer profiling constitute science.
“Marketing is still ruled by fashion rather than evidence,” he says.
Take focus groups. “They are usually an abysmal research method,” says Sharp. He argues that exposing people to a product or pack design in an artificial environment and asking them questions doesn’t reap useful data.
“You’ll have a fake script and the consumers will all put their Steven Spielberg hat on and go ‘I like that ad’ and ‘I like that pack’, which is madness,” he says.
Instead, research methods should use live situations.
“What you want to measure is ‘will this packaging change or in any way slow down the speed of recognition? Will it ideally speed it up?’ You do [that] in real-world situations. You use things like eye-tracking, live testing.”
Trends under fire
One of Sharp’s biggest beefs is trends such as cross-selling and the proliferation of loyalty programs. He argues that they are largely a waste of time.
“Hardly anyone asks, ‘Well, what’s the evidence on loyalty programs?’ before they start one,” he says.
“The late ’90s, early 2000s, there was enormous investment in CRM [customer relationship management] systems and they were sold in by consultants on the basis of ‘you will improve loyalty dramatically’. It was a Harvard Business Review article that said ‘if you reduce defection by 5 per cent, you’ll get 50 per cent and above increases in profitability’.
That was hugely popular and was circulated around top CEOs. Marketing departments demanded CEOs read the article and were asking ‘what are we doing about retention’ without anyone going ‘Well, hang on. That sounds amazing. Is it true?’”
Returning to basics
Sharp and his colleagues say years of research have uncovered seven scientific laws (see below) that show marketers should ditch many of the things they do now. His book gives the back story to these laws, detailing the data from which they’ve been drawn. Overall though, they appear to give a simple message of “get back to basics”.
More than a few marketing and management consultants have taken affront at the institute’s criticisms. That’s hardly surprising, says Sharp.
“If you’ve been selling [the story] that CRM will deliver huge loyalty and if someone comes and says ‘the emperor has no clothes’, then you get offended – particularly if the offence is attached to your hip pocket.”
Generally, he says, marketers themselves are prepared to listen to the argument that marketing decisions should be backed by hard research and that there are science-backed marketing laws.
“Marketers are generally people who like new things, and this is new. It’s a new way of thinking. It gives some surety.”
The making of a research program
Sharp has spent most of his career in academia. He initially fell into it after winning a part-time job marketing the University of South Australia’s commercialisation unit while undertaking his master’s degree.
When he first arrived on the job, Sharp scoured the university’s books and discovered that the schools that were growing and profitable were those heavily involved in “discovering things” through research – at the time that was in fields such as engineering and chemical technology.
“The business school … was just running courses,” he says, “and I thought ‘there’s no future in that’. So I convinced a few people to do master’s degrees by research … and it grew from there.”
Six years later, in 1995, the Marketing Science Centre was formed, with Sharp at its head. Today, after being rebadged as the Ehrenberg-Bass Institute, it houses more than 70 researchers and receives the bulk of its funding from more than 60 corporate sponsors. They each pay upwards of A$55,000 a year to access the institute’s research findings.
“I often get asked by academics ‘wow, you’re really successful at getting international research revenue – how do you do that? How do I get industry to fund my research?’ And I always say ‘do some research’. Industry does not buy ‘I think I’m really great and you should give me some money’.”
After 20 years of research, the institute has grown to be the largest of its kind in the world. Putting the science into marketing, however, is still “very early days”, says Sharp.
“It’s like being at the start of a scientific revolution,” he says. “We won’t wind up in five years’ time because people are saying ‘they already know that’. It’s not going to happen. There’s so much to cover.”
Byron Sharp’s 7 simple rules for marketing
- Focus on reach. Continually reach all the consumers of a brand’s service/product category with physical distribution and marketing communication.
- Be easy to buy. Research what makes your brand easy to purchase.
- Get noticed. Often.
- Understand customers’ positive perceptions about your brand. Work with – not against – these “brand-linked memory structures” to refresh them.
- Create and use distinctive brand assets. These can go beyond brand colour. For example, Apple has its white earbuds, MasterCard its “priceless” phrase and M&M’s its talking characters.
- Be consistent, yet fresh and appealing.
- Keep up the mass appeal, and don’t give customers reasons not to buy the brand.
Who is your favourite business thinker, what are their most important ideas and why?
“Professor Phil Rosenzweig from Switzerland’s IMD Business School published an excellent book called The Halo Effect … and the Eight Other Business Delusions That Deceive Managers
. It exposes the business books that claim to have discovered a new key to highly effective organisations.
Books like In Search of Excellence
or Built to Last
all make the same mistake: they interview managers in currently successful companies and ask if their company has X, and because the company is doing so well, the managers agree. This is the halo effect. It is mistakenly thought to prove that X is the secret to success.
“The first few chapters are hilarious, showing how business press assessments of company strategy or leadership are due entirely to past or current performance, and when this dips the assessment is revised overnight.”
This article is from the December issue of INTHEBLACK