Though most retailers blame the poor economy for their dire straits, the state of the economy is not the root cause.  Indeed, according to a Purdue University study, the last good year for retail holiday sales was 1992, when there was a 9.2 percent increase in sales from the previous year.  So even when the economy was booming in the mid- and late-1990s, retailers were seeing slowed growth.

What’s the real problem?  Simply put, a combination of self-imposed isolation and brand commoditization. As things started to look bad, retailers, with few exceptions, decided they could do without consumer research and rely instead on gut instinct about what consumers want to guide merchandising decisions.  Many fashion retailers, for example, touted their belief that consumers wanted conservative and traditional looks earlier this fall, and in the process created very similar—some might say drab—offerings, which it appears were not in great demand. 

Isolation from consumer needs, wants, and motivations compounded the problem of retail sameness.  In a recent survey of consumers by America’s Research, a firm specializing in retail trend analysis, more than 75% reported that they saw no real difference between competing stores.  In the Copernicus and Synovate study, "The Commodization of Brands and Its Implications for Marketers," we also found consumers perceive increasing similarity between discount stores and department stores.

They’re selling the same basic things and offering little else in the way of differentiation other than promotional sales and low prices, which cut into profits and decrease brand value.  Sadly for retailers, in the NPD study, 98 percent of respondents agreed that buying on sale was just as or more important than it was last year, when the profits of retailers fell after they reduced prices to stimulate demand.

We hope the state of retailers gives all companies reason to reflect this holiday season about isolation and commoditization.  After all, the situation facing retailers is really no different than that facing most industries—from packaged goods to airlines, financial services to industrial products.  Management everywhere hides behind the economy even though growth had slowed long before the downturn began (they had just covered it up).  Most have cut spending on buyer research and rely on sales and low prices.  And their brands are suffering.  

Emmperative calculated that as much as 65 percent of a marketing manager’s time is taken up with administrative tasks.  Yet if those tasks could be automated, the administrative burden, so the company claimed, would shrink to 20 percent.  Emmperative maintained it had a software package that could do this, helping marketers build systems which would automate marketing processes from initiating consumer research projects, to getting sign-off, to purchasing.  “Marketing can now be codified—it is a process, and companies go through the same steps to turn a concept into a product or brand,” explained Emmperative’s then CEO, Hunter Hastings, “It’s just seldom looked at this way.”

In spite of an estimated market of over $5 billion dollars, less than a year after its launch, Emmperative folded.  Some point to Emmperative’s business model—clients accessed the software over the Internet, requiring an extensive and fool-proof IT infrastructure—as the reason behind the companies demise, but still predict a bright future for EMM in general.  We, as our readers might expect, have our own thoughts about EMM.

Automation does not necessarily—or even uniformly—equal improvement.  If you read the websites of EMM consultants and harken back to Emmperative’s own materials, the focus is/was also on process efficiency—approvals happen faster, marketers in different places access similar information about brand guidelines and similar protocols for research projects.  We agree that preventing wasted resources is certainly important, nevertheless we still wonder how process efficiency translates into improved marketing performance.  Our own experience suggests that in many instances faster means dumber.

Does a faster approval mean the ad campaign is better (i.e., more effectively delivers a compelling reason to buy message)?  Does access to brand guidelines and research protocols mean better marketing strategy (i.e., one designed to reach financially-optimal targets with motivating positioning with the right products at the right price)?  Does more time to focus on creativity rather than administrative tasks mean that marketers will start to make decisions based on rigorous analysis of unimpeachable data rather than gut instinct—the real problem behind poor marketing performance?

We see little evidence to indicate that the answer to any of these questions is an emphatic yes.  At the end of the day, customers really don’t care if you have the most efficient marketing process—they only care if you have the products and services to solve their problems.  Unless EMM can quantifiably help companies do this more effectively, we don’t think EMM systems are worth the investment at this point.

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Of course, not everyone at the television networks believes that the 18-49- year-old audience is the only game in town.  Jeff Zucker admits he doesn’t think “it ends at 49,” and David Poltrack, vice president of research at CBS, doesn’t think so either.  Says Poltrack, “The fact is, that all of the statistical evidence, all of the marketing research that’s been done, documents that the fastest growing audience of importance is the 55-plus audience.”

While cultivating new customers who are entering the market for a particular product or service is certainly important, it really depends on what’s being sold as to whether going young is the best way to go. The key to making better media buying decisions is to follow the money—in other words, figure out who the people are that are the most profitable to you—not just demographics.  This is different for every product and service; there is no one universally ideal audience.  At the end of his piece, Safer accused marketers of basing decisions on “a kind of fantasy science.”  Let’s prove him wrong.

For more insightful marketing discoveries, visit http://www.copernicusmarketing.com/discover/index.htm

Have a hot discovery for our next release? Contact us at ami.bowen@copernicusmarketing.com

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In Execution, the authors describe execution as “the missing link between aspirations and results” and offer comparison case studies of companies that were able to execute effectively and those that weren’t.  Bossidy and Charan also give their insights into what they believe to be the elements of successful execution.

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