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October 2021 | Marketing
Don't Forget the Basics: In Marketing, They Still Apply
Acknowledged as the business function that has transformed most in the past decade, marketing now includes digital and multi-channel strategies, word of mouth and brand management, managing the expectations of increasingly empowered consumers, and more. And it's still evolving. But across all of the changes, says Jagmohan Raju, marketing professor and vice dean of Wharton Executive Education, the basics still hold.
As director of the Strategic Marketing for Competitive Advantage program, Raju says that while it is vital for marketers to update their knowledge and skills, understanding and taking advantage of the latest tools, they shouldn't allow themselves to be distracted by trends. "The core business capability that we focus on in the program is how to take an idea to market," he notes. "That is true whether you are an incumbent or a start up and whether it's a new idea or a product that needs to be revitalized."
More than a Numbers Game
Witness the rise of data and analytics. As businesses continue to collect vast amounts of information about their customers, the need to put it to use by developing deep insights has grown. (Wharton Executive Education developed its Customer Analytics for Growth Using Machine Learning, AI, and Big Data program in response to that need.) But embracing customer centricity takes more, says Raju.
"You can't rely on data alone to understand your customers. Analytics is extremely important, and you should take advantage of it, but it can't be everything. To truly understand what the consumer wants and needs, and what their pain points are, nothing can take the place of direct customer observation. The winning combination is data and anthropology."
Jagmohan Raju, PhD, Joseph J. Aresty Professor; Executive Director, Wharton Co-Sponsorship of Indian School of Business; Professor of Marketing, Wharton Executive Education
"You can't rely on data alone to understand your customers. Analytics is extremely important, and you should take advantage of it, but it can't be everything. To truly understand what the consumer wants and needs, and what their pain points are, nothing can take the place of direct customer observation. The winning combination is data and anthropology," Raju explains.
That's especially important during a major shift in consumer preferences and behaviors. "Any time there is a change, before you react to it you should observe it," says Raju. "Being more socially conscious and motivated by environmental concerns, for example, may be a trend or it may be a permanent change. We want to observe and monitor our customers, and then react in an appropriate way. Discern any change in behavior before your competition, and distill it into a go-to-market strategy."
The kind of observation Raju refers to happens well before a new product is developed. "If you are truly making what you can sell, you are relying on customer input before you even start thinking about it. The program emphasizes how to include consumers in the design stage. It's not just about advertising — positioning should follow product development."
Creating an Advantage
New ideas are being introduced and launched at a pace we have never seen before — often from outside previously accepted industry boundaries. Banks are no longer just competing with other banks — they're facing competition from tech, financial services, and retail. Pharma is not alone in vaccine development: biotech companies and universities are now major players. In this hypercompetitive environment, being on the offense is both harder — and more important — than ever. Again, Raju says one answer lies in a marketing basic: taking an "outside in" perspective.
Professor Emeritus George Day, founder of Wharton's Mack Institute for Innovation Management, co-wrote Strategy from the Outside In more than a decade ago. It outlined a method for seeing opportunities in your market before your competitors, whether currently in your market or not. "Developing a more robust customer-centric perspective can help you make the shift from a manager of disruptions to a creator of them," says Raju. "We may have broadened the scope of the Strategic Marketing for Competitive Advantage program to include industries we didn't use to explore, but our approach for capturing or retaining a competitive advantage hasn't changed."
Old Strategies Are New Again
That same idea applies to the recent hype around pricing strategies like bundling, versioning, and subscriptions that have become popular since COVID. "Bundling sounds like a new idea, but it has been around for a long time — and has been studied extensively," says Raju. Citing an example that transcends time and place, he notes that if your left shoe wears out before your right, you can't buy a replacement. "Shoes have always been bundled. Now we are seeing new versions, like a movie ticket with popcorn, or a bundle of TV channels from Comcast. Bundling makes your total cost predictable, and some customers prefer that."
But although choosing the right strategy and applying it correctly are key to maximizing profit and retaining customers, many companies don't know enough about pricing to benefit. "Thinking through available strategies and choosing ones for your firm is one way to prepare for future disruptions," says Raju. "Pricing is powerful because you can extract value from an existing assortment. When there is demand for one product or service, you can add value for your customer by bundling or versioning." An example of the latter is charging more for a hotel room for certain customers by adding something of value to them, whether that's early check-in, breakfast, or some other service. Figure out what people need and are willing to pay for, he advises, again citing the need for that marketing fundamental: know your customer. Based on that knowledge, customize your offering using good, fair pricing strategies.
Marketing Is Everyone's Business
Not only is marketing in today's hypercompetitive markets more complex and necessary to get attention in a crowded field, but it takes buy in and collaboration across the organization to get it right. That message seems clear as evidenced by Strategic Marketing's audience: less than half of those in attendance work in advertising, PR, or marketing. "Everyone needs to learn it," says Raju. "Success requires the efforts of finance, operations, HR, and more."