There’s an assumption within business that organisation size correlates strongly with marketing competence, an unfair conclusion according to Mark Ritson.
The Marketing Week columnist and Mini MBA founder believes that while blue chip corporates like Unilever, Procter & Gamble and Coca-Cola are great at marketing, the assumption that marketers in smaller business are somehow deficient is incorrect.
Speaking at the Festival of Marketing: The Year Ahead, Ritson tackled the stereotype of marketers in SMEs.
“There’s the David Brent type figure that does marketing in a small company with 10 employees. We assume he or she doesn’t really get marketing, probably works in sales, is a bit cheesy, underqualified, not very good. As companies get bigger, we assume marketing gets better,” he noted.
This thinking fails to account for the brilliant marketers who work in small businesses, Ritson argued, as well as the bad ones employed by big corporates. However, he recognised that often the traits of good marketing seen in multinational companies appear out of reach for marketers in smaller brands, typically due to budgets, cultural constraints and team size.
So, Ritson has shared the 10 twists to traditional marketing practice he believes help small businesses get big brand results.
1. Qualitative over quantitative
“In most big business cases there’s a standard way of generating insight and data. We do our initial qualitative research – whether that is focus groups, ethnography, netnography, projective – to inductively understand the market. Once we’ve done that, we channel those insights into a quant survey that’s commissioned across a representative sample.
“Smaller businesses will repeatedly tell you: ‘I don’t have the budget to do that kind of massive qual then quant survey. I certainly don’t have the time, I don’t have access to customers, I don’t know how to recruit them’.
“In the last decade the arrival of properly good panel research options means if you’ve got £30,000 in most B2C cases, and a lot of B2B ones, you can work directly with the panel company. If you know what you’re doing and you understand how to build a decent survey, you can get your quant research back, fully analysed for about £30,000.
“I don’t believe there’s any correlation between how much money you spend on research and how much insight and diagnosis you subsequently receive. I’ve seen some complete idiots spend $600,000 on research and produce nothing, and I’ve seen a band of hardy, completely unfunded marketers go out and understand the universe for zero.”
2. Strategy, then research, then positioning
“In big companies the traditional sequence as we teach it is goes from research and diagnosis into segmentation, targeting and positioning. We do market orientation, we gather our data through market research and we complete market segmentation.
“Then we get to the strategy stages and make our targeting choices. Even if we’re doing mass marketing and following the Dark Lord [Professor Byron Sharp], we’re going to have to make some decisions on who we’re going after, how we position to those targets, what our objectives are and then we get into tactical land.
“We get a constant refrain from small marketers that say: ‘I don’t have the research or capability to build a big, proper robust segmentation. I can’t do it.’
“I think you can, but there is a variation I recommend. You’ve got to be market orientated but, rather than going into heavy research mode at this point and using the quant data to build the segments, go immediately into the market segmentation using only secondary descriptive data. At that point you can do targeting in the sense you can identify the size of the different prizes and the potential attractiveness of the segments.
“Then, rather than going into positioning, once you’ve picked your target segments you go into those targets. If you’re in B2B, for example, visit two or three customers in that particular segment group. In those ethnographic visits you’re essentially scoping out: ‘Who is this customer? Do they fit the portrait? What do they want? What do they currently buy? What are the most important buying sequences?’
“You’re building a portrait post-targeting and then you’re well-armed to do positioning, because now you understand who the competition is from the customer and also what they want. You can set your objectives loosely and get on.”
3. Create sub-categories
“This comes back to the Ehrenberg-Bass principle that has taken the world by storm – you shouldn’t do any targeting. What you should be doing is sophisticated mass marketing. You should target everyone in the category.
“The reaction from small companies is: ‘You must be fucking joking. I haven’t got the budget to target everyone in the category and even if I had, I haven’t got the products to supply them.’
“We can’t target everyone in the category, so what do we do? The most likely option is to concentrate on partitioning out a corner of the market, a sub-category, and make that the sophisticated mass market we want to go after.
“This idea of creating a sub-category, which you then dominate because you created it and have a first mover advantage, comes out of the godfather of brand strategy, David Aaker. One of the things he’s talked about recently when he looked at brand growth is it’s very rare once a category is established to see much movement at all.
“The trick is either to be Google at the starting point of a new category that blows up, or be a little more directional and strategically create a sub-category in the market. Your brand is in the middle of it, but essentially position the sub-category, scale it up fast with you at the top and then put your moat around it to prevent anyone else coming in and taking too much control.”
4. Take a ‘versus’ position
“The classic big marketing theory is you’ve got to focus mostly on distinctiveness, on looking like yourself, on salience and, if you believe in differentiation, communicating the benefits you stand for relative to the competition.
“Small brands are always asking: ‘How do I break into this established marketplace when I don’t have the funds to have excess share of voice?’
“The argument here is why not position to the target market, but also position against one or more of the big brands at the same time in a quite combative fashion?
“Avis came up against Hertz, which was literally 10 times bigger when they first started their infamous campaign. Avis made the point that because they were smaller, because they weren’t number one, they were going to work harder and be better, and essentially turned everything on its head.
“What happens when you take a versus position? Three things. You earn shadow salience in the sense that the salience and mental availability that these dominant brands have developed is suddenly borrowed and you can take some of it across to yourself.
“You then have a second mover positioning advantage. You know where the big boy sits and you can pick on the elements of the bigger brand that you want to focus on, partly because it’s a weakness. The best bit about this is only small brands can really do this and only small brands can win, because a big brand doing this would appear to be a bully. They have to pull back and the big brand can’t respond, and if they do respond, all that happens is you win.”
5. Price high
“If there’s one lesson from pricing, which sounds bizarre but is absolutely true, don’t look down and calculate the variable cost of your product as any kind of basis. Obviously, you have to charge more than the variable cost, but don’t use it as some kind of anchor where you add 20% or 40% to the cost. It’s fundamentally the wrong thing to do.
“If you want some guidance, look to alternative providers of the benefit you offer. Note I’m not saying look to competition directly, as sometimes we end up looking left and right too myopically and under-pricing. So, who else offers the kind of benefit you do and what do they charge?
“Crucial point, aim high, don’t aim low. You can always bring the price down later if you’ve got it wrong. I’m saying that for two reasons. One because there’s tonnes of good research that demonstrates when we get pricing wrong, we usually under-price. We go for volume and we miss value. And secondly, you can always drop prices later in different ways. Getting prices up once you’ve painted them low is very difficult.
“As much as you can in small companies go for single, fixed prices and never discount. Discounts are a stupid thing. They’re unavoidable, but so many small companies get themselves into such a tizz they don’t know if they’re making money on stuff anymore. A single fixed price is great because it’s simple.”
6. Build a killer branded house
“When you look at big companies they tend to be a house of brands, with a portfolio empire of lots of different brands, in lots of different categories, doing lots of different things.
“Unilever has 80 different brands, from Knorr to Lipton. The point is that’s great for Unilever, because they’re a giant company and they’re really good at brand management. If you’re a small company don’t fucking copy the big companies, that would be stupid. You need multiple brands like a third nipple. What you need to do is the opposite and be a branded house. One corporate brand ideally, that’s it.
“If you want more sales have a house of brands, if you want more profit have a branded house. It’s also the best for strategic focus. One brand, one culture, one brand tracker, one system, one sales force.
“Many small brands will say: ‘I’ve got different products and target customers.’ These are not reasons to have multiple brands. Trust me, you need to have some massive, flashing reason, some huge tension between two customers or some incredible legal reason why there has to be two brands in order for that to make sense. And nine times out of 10 it doesn’t.”
7. Pic n’ mix comms
“More is more, and why is that? Well probably a combination of unduplicated reach, the diversity of different tools doing different things and the synergy of putting them all together. The problem is small companies go: ‘We can’t fucking do that. We haven’t got money for all of this shit.’
“The reality is, with respect, you’re totally missing the point. Downscale the tools, not the integration or the principle of synergy. The pic n’ mix still works, it’s just you’re using smaller sweets.
“OK, you can’t afford TV, go with digital video and YouTube. You can’t afford out-of-home, go with digital display. I accept that for smaller brands it probably moves you into a more digital arena, simply because they’re more scaleable and targetable tools. But the point remains, an equally diverse and integrated suite of channels, albeit a different set, will still give you all the advantages of integration and diversity.
8. As much ‘long’ as you can manage
“We get the same feedback from small companies: ‘I can’t spend 60% of my budget on brand building that will take years.’
“The first and most important point is that [Peter] Field and [Les] Binet agree. They’d say, actually it’s almost reversed. Some 65% of your money should go on activation and only 35% should go on brand building, and then gradually you up-load the brand building over the next few years.
“If you’re in a smaller company the question you should ask yourself is, how much money can you, with a good degree of certainty, carve out and invest in long-term brand building and protect it for three years so it doesn’t get sucked back into performance marketing? How much can you ringfence?
“It might not be 60%, it might be 30%, but whatever it is that’s what you need to focus on. Then you create two pots each year – a long pot and a short pot – and the two pots don’t meet except in overall funnel campaign work. The two pots approach is useful, because it prevents short-termism.
“There’s no long without short and there’s no point trying to get 60% of your budget into long-term brand building if you don’t hit enough revenue targets to stay in business. The priority is short, the priority is hitting targets, but try and carve out enough money that allows you to essentially begin the brand building process.”
9. Be choiceful
“Remember strategy is what you do not do. Strategy is choice and for small, new brands it’s doubly important you get that. Don’t do everything, make extreme choices, focus your resources. Be the king and queens of ‘no’ or you’ll spread yourself so thin you’ll evaporate, because you’re small already. Crucially, the only things you say yes to are things the big brands wouldn’t.
“The attractions of being small, exclusive, focused and rare, sometimes we miss those. Don’t play the game like a big brand. Revel in the creativity, the proximity to the customer, the smallness you have, the exclusiveness. Sometimes it’s a pain in the ass to be small and sometimes there are attractions to it. Do not expend your resources, because they’re so much more precious than in the big companies.”
10. Let your brand flex
“If you look at the big brands there’s a real focus on consistency, discipline, execution, getting the countries to do it a certain way. All the touchpoints have to align. It’s the big brand game of consistent look and feel. Often small brands try that and they constrain and contain their brands in an unfortunate way.
“Lots of people from young brands ask me: ‘What elements of brand management do and don’t apply to me?’ Prior to the fifth year, I wouldn’t worry too much about brand management at all. Maybe that brand architecture point, but that’s about it.
“Marketing is still essential. Focus on your customer, on the product and the market, but let your brand move around. The targeting is going to change. I’ve never met a founder down the track whose initial target turned out to be exactly where he or she made money. I’ve never met one where the intended position at the start is how it is today.
“I’m fascinated with how accidents make brands. There’s a random factor in almost every brand I’ve worked for that has been so important to its ultimate success. Let that happen.”