Techniques and Concepts for Marketing Consulting
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Below, I describe techniques that are useful to those in marketing consulting. Words that
are italicized and underlined are defined elsewhere in this list. For
ambiguities or mistakes on the thumbnail sketches, send e-mail to Scott
Armstrong. Revised August 2004.
Action steps: An integral part of any presentation. The idea is to conclude the
presentation with a decisive plan of action. In other words, outline the
steps that should be taken to implement the stated objective. To do
this, it is important to keep in mind the "foot-in-the-door" technique
by which one puts forth small steps with a time deadline in the near
future; these steps should be ones that can be easily applied by the client.
Bootstrapping (or Judgmental bootstrapping):
[As used in forecasting and decision making, not in statistics and computer
science.] The development of a model of an expert by inferring the
experts’ rules. This is analogous to conjoint analysis except that a
small number of experts is used, rather than a large number of potential
customers. The expert is presented with a set of situations, say 20, and
is asked to make predictions (or decisions) for each. Regression
analysis is then used to infer the rules. Judgmental bootstrapping can
be used to forecast sales for
products having alternative designs and alternative marketing mixes.
Few consulting firms offer this approach, and few organizations use it (the Dallas Cowboys being
one that did).
Brainstorming: Paradoxically, this is a highly structured set of rules
to enhance creativity. Groups without rules are not as creative as they could be,
according to the research. The rules have one major guideline: to reduce
evaluation. To make it work, you need to appoint a facilitator and use a
checklist.
A useful alternative for small groups is "brainwriting,”
where you take a period (say eight minutes) and ask people to write down
all their ideas. This is typically used to generate creative solutions,
but the problem can be expanded first by brainstorming problems.
Groups seem to improve after using brainstorming a number of times. This
technique will save much time when working in groups.
Conjoint analysis:
A two-step
procedure where you first prepare a set of alternative designs (using
principles of experimental design that have cleverly been imbedded in
this program); then you try to estimate the probability of purchase for
various designs. Conjoint programs are popular in business. Design your
own experiments and analyze them using regression (all this can be done
with a good spreadsheet program). Conjoint software programs are available.
Core
benefit proposition:
What is the
primary benefit that the product/service provides to the consumer?
Decomposition of judgment: One of the basic strategies of management, science; Break a complex
problem into pieces, solve each piece, than reassemble. Use for
forecasting sales
and for
decision making (especially for group decision making). Checklist rating
scales are one application. Decomposition can be used for both brainstorming and
evaluation.
Delphi: An
iterative survey of experts. Use this for
evaluation.
Delphi provides substantial improvements over ratings by unstructured
groups.
Freeware provides guidelines and
terms to help in the use of Delphi.
Demand and
cost pricing:
When you initially structure the pricing problem, define the feasible
range. The lowest price is defined by your variable cost (assuming that
you are not the Government, in which case the lowest price is determined
politically).
Design for
assembly:
Design the
product such that it will be easy to assemble. IBM did this for one of
their printers and found that they could greatly reduce the number of
parts, thus lowering assembly costs and improving reliability.
Design for
use:
Design the product so that it will be easy for the customer to use and
to repair
(relies on ergonomics). This step is often poorly done, as you may have
noticed.
Devil’s
advocate:
One person in the
group is assigned the task of trying to tear down a proposal - a useful
procedure for evaluating your venture proposal prior to presenting
it to the client. The key is that this be done as a structured approach
with group support and that it be used only for a short period (e.g., ½
hour). If you adopt this role without getting permission of the group,
you can become unpopular quickly. Note that it is the opposite of the
"Build”
philosophy.
Ergonomics: The
study of how people interact with machines and products (and services).
Protocols are useful for learning how people use products
(see protocols).
Expectations: Ask people whether they expect to use a product. This is
more general than intentions.
Experimentation: To learn about the optimal price to charge for a frequently purchased
product, it is necessary to depart from what one believes to be the
optimal procedure and to experiment.
Expert
opinion surveys:
In contrast to
consumer surveys, expert surveys can be done with small samples. The
technology is similar (see
surveys).
Expert
systems
: Explicit rules
derived from experts and from previous studies. Often developed as a set
of conditional statements (“If X then Y”).
Focus group: Use the same procedure as
for a nondirective
interview, but apply it on a group basis. A popular and overused technique
that costs more than $2,000 per session, but you can do a decent job
(with friends) at a low cost. Used early in project to generate ideas
(e.g., about target market needs). It is only useful in rare situations.
May be useful for ideas about advertising products that are highly
visible and when a buyer’s decision is based on what others think of him
(like have you ever heard of a liberal professor who dives a Cadillac?) One
cannot draw statistical inferences from focus groups. Interestingly, the
skill requirements to run a focus group are not high. In general, non-directive interviewing with
individuals (group depth interviews) are more effective. For more, see "When
Should You Use Focus Groups?".
Foot-in
the-door:
Select a small
operational step and set a time deadline. The foot-in-the door technique
is useful for gaining commitment, such as in presentations to get seed
money or venture capital. Use this on yourself to experiment with new
techniques.
Forcefield
Analysis: List the pros and cons for the attitudes that you would like to change
with the ad. Put the pros on one side of the page and the cons on the
other. Then represent each by a line that approximates the strength of
the attitude from the perspective of the target audience. When designing
the advertising campaign, consider not only how to increase the pro
items, but also how to reduce the cons. You can also use this technique
for group decision making.
Formal
planning:
Improves group
performance only when the group is small enough to reach commitment. Has
four stages: (1) set objectives (2) generate alternative strategies, (3)
evaluate strategies, and (4) monitor results. For example, new product introductions
that do each step explicitly are more likely to succeed. In practice,
few firms do this. See Systems
Approach,
Marketing
Planning,
and
Planning Process
Checklist.
Gatekeepers: Who
is it that makes the purchase decision? This consideration is often
important for industrial products. Consider that you may have to target
advertising to the gatekeepers.
Intentions
surveys:
Ask people
whether they
intend to purchase
your
product. This can provide a useful way to forecast, especially for new
products. Also consider asking people about their expectations. (see expectations.)
Lewin’s
change process: For important attitude or behavioral changes, it is helpful to get those
involved to go through an “unfreezing” phase before attempting the
“change” which is followed by a “refreezing” phase.
Marginal
analysis: When setting the media budget, the optimal budget should have equal
marginal returns. Thus, if you can get a larger return by spending an
additional $100 on radio advertising, rather than on newspaper ads, you
should continue to shift money into radio until the marginal returns are
equal. Also, of course, you want to ensure that the marginal returns are
profitable.
Marketing concept:
Product design
(as well as the rest of the marketing mix) should start with the
customer and it should look at the customers’ needs first at the highest
conceptual level. In practice, this is typically an expensive and
difficult approach.
Marketing
planning framework: This framework first assesses the marketing objectives as well as the
current and future status of the environment (both internal and
external). The next step is to find opportunities/problems that exist
within the market and to translate these into action steps involving the
marketing mix. After a marketing program is designed, it is then carried
out and monitored. The monitoring process brings us back to square one
where we reevaluate the objectives, environmental status, and
implementation of the plan, and then judge the effectiveness of the
marketing plan. This framework enables one to keep abreast of the
changing needs of the consumer, the environment, and the four P’s. For
more, see Marketing Planning.
Monitoring: A formal process to review the performance against the plan.
Non-directive interviewing: The listener follows a
set of rules to help
suspend judgment and to focus the interviewer’s attention on listening.
NPV (Net present
value): New products often require early expenditures in hopes of later
returns. Thus, you should determine a cost-of-capital (given the level
of risk) and apply this to the profit stream (or, more accurately, to
the cash flow stream). In addition to an expected NPV, you should also
estimate the confidence intervals to reflect the risk involved in a
venture.
Objectives: Organizations often confuse objectives (where they want to be) with means
(how to get there). Studies in organizational behavior show that groups
can improve their effectiveness by setting objectives that are (1)
explicit, (2) measurable, (3) relevant, (4), ambitious yet achievable,
and (5) operational.
Parallel
processing:
Divide your group
into two or more subunits and have each unit independently solve the
same problem. Then compare the results to select the best solution (or
to modify it). It is useful for increasing creativity. It also helps to guard against mistakes in
analyses (separate analysts are unlikely to make the same mistakes).
Price
elasticity: The ratio of the percentage change in
units demanded over the percentage change in price. This is useful in marketing
to determine whether a product price is too high or too low.
Product
life cycle:
The marketing
plan will differ depending on what stage the product is in:
Introduction, growth, maturity, or decline.
Product/market opportunity matrix: A guide to searching for new business opportunities according to changes
in new versus old products, and new versus old markets. The sources of
information vary according to which of the four resulting categories one
is examining, and strategies would also vary.
Protocols:
An
examination of people as they use a product. People are asked to talk as
they learn to use a product. This provides ideas for better product
design and for product instruction booklets and warnings.
Regression
analysis: A widely misused method of analyzing data. Fits the line by minimizing
the least square errors (but there are also programs to minimize mean
absolute error). For two variables, people can often do as well with a
ruler. So the big gain comes from a systematic analysis (people cannot
solve such problems in their heads). It is especially useful when
analyzing more than two variables where the independent variables are
correlated. Estimate price elasticities
with non-experimental data – providing prices differ in the data.
Role
playing:
See simulated
interaction.
Scenarios:
Written stories that describe the future. They should be written like a
short story and should be in the past tense. Typically one uses a
benchmark scenario (trends continue) an ideal scenario (start with the
ideal and work backwards). Scenarios are misleading when it comes to
forecasting, but they are highly effective in gaining commitment to
future
courses of action.
Especially useful when large changes are contemplated (see
How to Gain
Acceptance for Change).
Second
solution:
Assume that your
preferred solution is not feasible. Develop a new solution. Now compare
the new solution with the old and decide which is best.
Simulated
interaction:
A type of role-playing in which subjects reach a decision by going through the same
typed of interactions as might occur in the real situation (e.g., in
meetings or by exchanging messages). You can have them "pre-enact" the situation to see what
happens when various strategies are employed. For example, Lockheed
Aircraft acted out how its customers (airlines) would react to
alternative aircraft designs. Simulated interaction has been found to be especially
useful for testing alternative approaches in situations involving conflicts among groups. See paper by
Green (2002).
Stakeholder
analysis:
The success of a
firm depends upon the cooperative efforts of various groups that make
contribution (e.g., stockholders, employees, creditors, customers,
suppliers). When making large changes, such as proposing a new product,
be sure to consider the opinions from each group and decide what would be a
satisfactory reward
for each group.
Structured
analogies:
Experts are
asked to think of situations similar to a current situation. The
decisions made in those analogous situations are summarized and used
to forecast for the current situation. See
Green and Armstrong working
paper.
Survey
research:
Useful for
assessing customer needs and also to assess expert opinion about how
customers will react to an ad. Extensive research has led to effective procedures
- the best summary of these
is in Dillman, Don,
Mail and Internet Surveys.
It is easy to look at a survey and tell whether the creators have used
the research in designing it. For more, see
surveys.
SWOT (Strenths, Weaknesses, Opportunities, and Threats). Do not
use SWOT. There is no evidence that it works. To the contrary, it has detrimental side effects.
Systems approach:
Look first at objectives, then at alternative strategies. In each case, start at the
highest conceptual level, then make the objectives and strategies more
operational. It sounds easy, but it requires much time and discipline.
Enables people to go outside of current solutions and to produce
rational yet often very surprising solutions. I sometimes get calls from
former students telling me how they used this procedure to come up with
unusual and effective solutions that differed greatly from the existing
thinking in their company. For details, see Systems Approach.
Time line: The process of allocating one's time in accordance with the tasks they must
accomplish. This method allows one to break down their jobs into small
tasks. One of the essential components of a time
budget is slack time. With slack time, people can deal
with the inevitable setbacks without upsetting their schedules.
PERT (Program Evaluation and Review Technique) can be used to create a
time budget. CPM, the Critical Path Method, is another method.
Do the time line, show relationships, and estimate times. Then figure
what path is determining the time to completion. You might then consider
changes to this critical path to shorten the time or to introduce slack.
(See Time Lines.)
Virtual group: A group in which members work on a common problem,
yet they do not meet face-to-face. They might interact in other ways,
such as via telephone, email, or websites - or they might not interact
at all. Delphi is a form of a virtual group that allows for some
interaction. Markets are another form, but they do not provide for
interaction among group members. Virtual groups avoid many of the
problems of groups, such as "group-think." Thus, they use information
more effectively and they save time. In face-to-face groups, influence
depends on such irrelevant things as how much people talk (people who
talk more do not necessarily know more) and gender (males talk much more
than females). In virtual groups, influence depends more on performance.
Finally, because of the need to write, virtual groups leave a paper
trail that aids in communication.
