What should be our priority: effective or efficient marketing?
Question: Last month, we completed our three-day off-site corporate strategic planning. In the first day, we spent half of the day debating what should be our priority agenda: Effective marketing or efficient marketing.
Our facilitator, a popular MBA corstrat professor, told us “our priority should always be effectiveness over efficiency.” He followed Peter Drucker’s definitions. “Effectiveness is doing the right thing.” “Efficiency is doing the right thing right.” Our CEO and COO agreed after every department gave their respective opinion.
Our HRD/OD and Finance concurred. Those of us in Marketing and those in Operations and Supply Chain, and Sales and Distribution took the side of efficiency. My marketing deputy and myself as marketing VP took to task the corstrat facilitator to (as Jack Welsh put it) “face the reality of our business.” When our CEO spoke and asked us to respect what the corstrat facilitator prepared, we stopped arguing.
But what about you and your column? What do you think should be our priority: Effective or efficient marketing?
ANSWER: In my marketing and market research consulting and mentoring engagements, I’ve often been asked that question. Sales people in particular are most concerned because their job is largely one of efficiency than effectiveness, following Drucker’s definitions.
Many of my own clients blame the late Ted Levitt, Harvard Business School marketing professor, for saying that Sales is myopic in their view of the company business. Sales are too focused on selling company products and therefore more concerned with efficiency. Marketing, according to Levitt, has the right wider view. That’s in satisfying customers’ needs.
Way back in 1960, Professor Levitt published his “Marketing Myopia” article in the Harvard Business Review. It was here that Professor Levitt distinguished between thinking of your industry narrowly as selling the products your production manufactured or looking at your business as selling its products to meet customers’ needs and wants.
His example was the buggy whip industry. Before Henry Ford mass manufactured the car, the widespread use of the horse-drawn carriages grew the sales of products of buggy whip manufacturers. When Ford came along, the buggy whip business declined. It fell. It did not fade out. It died.
Professor Levitt said that the buggy whip makers should have redefined their business. They should have participated in the emerging car business and redefined their business as being in the transport industry. If they had done this, they should have been able to get into products needed by the emerging automobile and other transport industries.
But once you’ve made the required transition, you have to do things right. Your day-to-day implementation of your strategic effective change has to be efficient. In other words, marketing effectiveness is about marketing strategy. Marketing efficiency is about tactics, the action plans to execute your marketing plan and strategy. Therefore, you need both. You need to be effective in your definition of the industry and business you’re in, as well as efficient in executing your marketing plan and strategy. It’s not a question of either you’re effective or you’re efficient. You have to be both.
Have we learned this fundamental lesson of marketing history? Some have. but many have not. Consider the case of the Yellow Pages business and ask Professor Levitt’s marketing myopia question: “What business are you in?” Wrong business definition means falling into the marketing myopia trap and therefore eventual business failure.
At least two options are available for Yellow Pages to explore. The first is to think of its industry as an information search business much like Google. The second is to envision the business as being in an advertising media industry, much like the independent ad media houses or even an AOR (Agency of Record).
In the first option, the customers are the users of the directory who don’t pay for their use of the directory. Revenues come from the declining Yellow Pages advertisers. The advertisers decide on the basis of the usage reach, frequency and continuity of the Yellow Pages versus those of competing traditional ad tri-media and non-traditional media, as well as the social media. What competitive advantage does the Yellow Pages have as seen by advertisers and not as claimed by Yellow Pages?
In the second option, the customers are the advertisers. In this case, advertisers are the true customers because they are the source of revenues. The Yellow Pages users are like the print media readers, or the radio listeners, or the TV viewers. Newspapers, magazines and cable TV have paying subscribers, but this revenue sources are dwarfed by advertiser revenues. What’s Yellow Pages competitive advantage here? Because there’s now print nationwide and niche Yellow Pages, eYP or electronic Yellow Pages, and mobile, Yellow Pages is the true all-purpose ad media: annual, monthly, weekly, daily and in real time.
If you were Yellow Pages what will be your anti-marketing myopia choice and option?
Keep your questions coming. Send them to me at [email protected].
