31 Dec 2013
When marketing goes wrong: lessons for 2014
It’s easy to love the promotional side of marketing – the advertising, videos, brochures, PR, direct marketing, social media and events.
But there’s a cerebral side to marketing that’s more challenging. Useful, insightful, yes, but few call research and analysis, brand mapping, positioning and planning fun. Yet it’s the strategic thinking that underpins the engine that makes marketing work. And it’s where things usually go wrong.
Marketing without the independent, objective, informed checks that research provides is myopic and risky. Research can provide objective facts on trends, market structure, benchmark relative competitive performance, measure satisfaction, perceptions and the dynamics of change. But it can’t do those things if it has been inadvertently or deliberately framed to come up with the answer everyone wants, or it’s done to convince investors, board colleagues and staff on a course of action that’s already been decided.
It even goes wrong for senior management in successful companies. Years of spot-on decision making and impressive results can breed collective complacency. Managers start to believe they have a Midas touch. They welcome research findings and decisions that reflect their preconceptions.
Recently, six years after launch, Tesco’s US Fresh & Easy operations filed for bankruptcy. It’s a mind boggling £1.6bn marketing failure, yet Tesco’s Terry Leahy, Chief Executive at its launch, said: “We can research and design the perfect store for the American consumer in the 21st Century. We did all the research, and we’re good at research.” They spent two years analysing what American shoppers did and what they said they wanted in minute detail. They sent executives to live with US families and built secret test stores. And they got their answers. Or perhaps they got the answers they wanted, because they badly wanted to break into the US and show American retailers how it was done.
Things went badly from the start. After a sluggish launch they changed almost everything. Tesco was surprised to learn Americans prefer fruit and veg without cling film. They had to change pack sizes and tills, and fit doors to fridges.
It’s easy to be wise in hindsight, but the concept appeared wrong from the start. Self-service tills went down badly with a consumer used to high service; a lack of vouchering and couponing alienated many price sensitive shoppers; and unfamiliarity with ready meals meant part of the range was unsuited to local tastes. In tests they liked Tesco’s clean looking grocery store but they preferred the playground-like atmosphere of Trader Joe’s.
Consumers said they wanted a one stop shop, but visit many stores. The research wasn’t wrong, but Tesco drew the wrong conclusions because they didn’t understand the context and saw what they wanted to see. US shoppers like the idea of one stop shopping but see shopping as entertainment and would rather visit many enjoyable stores than one.
Tesco’s timing was unfortunate. The downturn helped grocers like Wallmart, where consumers knew they could save money on low price food, and US retailers fought back with smaller local formats to compete with Fresh & Easy.
But how could Tesco, with all its marketing and research capabilities, have got it so wrong? They thought they were good at research and seeing the bigger picture, but they weren’t. Did any researchers piece the jigsaw together and brave bringing the bad news to senior management or did they just focus on the detail? In any event, Tesco looked at the US through a British lens, and superimposed the market it wanted to see. It’s an old cautionary tale, and it applies whether you’re entering a new geographical area, repositioning, launching a new product or diversifying: know your market! Without the serious strategic side to marketing it could happen to any of us. Only the numbers are bigger.
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