Ritson on eight core marketing concepts some superb some stupid
Renowned Melbourne Business School Professor Mark Ritson says some core marketing concepts lack value, while others’ genuine worth to brands big and small is understated.
First on the Ritson hit list – Millennials
“You can’t get through a day without someone on LinkedIn telling you about how Millennials want this or think that or are changing the rules of marketing once again,” Professor Ritson told the audience at the 2016 Alumni Reunion.
“There are about 12 million millennials in Australia. You can’t believe for a second that the captain of the Australian cricket team and Delta Goodrum and another 12 million people all have the same preferences, attitudes, behaviours and key metrics to qualify as a segment. Cleary that’s not possible.
“Are millennials different? They are because they have a feature often overlooked in marketing called ‘being young’, and that ends with a phase, again sometimes missed by marketers, called ‘getting older’. Are millennials watching less TV? Yes. Are they more socially interactive? Yes. But that’s because they’re 23.”
For Ritson, Millennials are a figment of marketing.
“Millennials endorse marketing’s obsession with youth. We are massively attracted to younger consumers, even though they don’t have any money. Millennials are not just not a segment but defy all the laws of segmentation. There are segments within the group, but they transcend age. Marketers who know their oats know that millennials can’t be a segment.”
“There is a self-induced mania in Australia, a cult of digital obsession,” according to Ritson.
Despite, OzTAM data, released earlier this year, which revealed that 84 per cent of all video is watched on TV,
digital enthusiasts continue to divert their media spend online.
While TV is dying, it’s not dead yet and still has significant merit in marketing.
“Will we in the future be watching more TV? Definitely not. Will my children predominantly experience video on their TV when they turn 18? I don’t know. What I do know is that I don’t care about anything past the next three years when it comes to media planning or strategy and neither should you. In the next three years, TV will be the dominant source of video for every single demographic in Australia. After that I don’t know.”
Verdict: Superb, for now.
Corporate social responsibility
Great in theory, but not in practice, argues Ritson.
“Corporate social responsibility is, for many companies, a smokescreen for tax dodging while they get on with the dirty business of making as much money as possible. It’s a problem and nobody talks about it.”
Don’t believe what you hear, targeting is still the most important step in marketing. When you try to target everybody through mass marketing, you end up with vanilla, argues Ritson.
“Sometimes it makes sense to mass market, but, in many other case, if you’re not a brand like Mars, with the budget to reach everybody, but only have 24 sales reps going out to 850 surgeons, then you need to target because you can’t reach everyone.”
“I think the 80/20 rule still applies in many of the cases I encounter – 80 percent of the profit pool is in 20 per cent of the buyers.”
Just like corporate social responsibility, brand valuation is brilliant in theory, and that’s about it.
Putting a financial value on brand equity itself is valuable as it gives marketers the ability to show their CFO and senior management the worth of marketing in the long term. However, that perceived value is too fluffy to trust.
“Each year, the top-three valuation companies produce an annual league table, measuring brand equity. Apple is the most valuable brand, according to the league tables, than any other brand.
“Interbrand says the Apple brand equity is worth $170 billion. Brand Zee says its worth $247 billion and Brand Finance says it’s worth $128 billion.”
How, Ritson asks, can brand valuations be trusted if “the biggest brand valuation firms can’t agree within 120 billion dollars what a brand is worth?”
It’s not a perfect system but it’s doable and good.
“Zero means I don’t know how much I’m going to spend and invest, and I don’t know what the allocations will be. That’s a problem for Google and Facebook because they want a fixed allocation of your spend at the start of the year before the strategy is developed.”
For zero-base budgeting to work, marketers need to start with no allocation and conduct research, followed by segmentation, targeting, positioning and set objectives. From here, you can see if those objectives come true and brief agencies to execute.
“I present my plan to senior management. I don’t take their £550,000. I go to them with my marketing plan, and it doesn’t end with a ‘thank you’ but a budget proposal. And in that budget proposal, I present how much money I need and how much I’ll give them back.
“I think there is genuine brand purpose out there, particularly if you look at Ben & Jerry’s. However, I don’t think McDonald’s have a brand purpose, other than to sell as many burgers as possible. There’s nothing wrong with that, just don’t distract yourself with a higher purpose if it’s not authentic or legitimate,” argues Ritson.
At Wharton University, 21 years ago, Ritson studied “international marketing”, a course that no longer exists.
“Why? Because, how can you do marketing that isn’t international? The same thing will happen to ‘digital marketing’ in the next 24 months.”
To quote Ivan Menendez, CEO of Diageo: “It’s not about doing digital marketing, it’s about marketing effectively in a digital world.”
Verdict: Digital marketing simply doesn’t exist.