Friday, August 03, 2007

On Marketing

Wednesday's Wall Street Journal contained a review of the book "The Marketing Mavens," by Noel Capon. Mr. Capon, it is noted, is a professor at the Columbia Business School.

If this is the extent of new marketing discoveries at Columbia, they are in trouble.

According to the review, Capon led a team on a four year study

"to examine companies across 25 industries, interviewing 57 executives from an array of concerns."

The book alleges to provide "the lessons of the long-term winners." Nowhere, though, does the review cite what constituted "winners" according to Capon.

Before I reveal Capon's list of five "imperatives," let me recite another list.

Back in 1976, over thirty years ago, in a marketing course I took from Dr. David Lambert at Saint Louis University, he taught us the five bases for successful segmentation of markets:

1. Segments must have differing behavior, in order to have the behavior exploited through segmentation

2. The segments must be identifiable.
3. The segments must be specifically reachable, or targetable.
4. The segments must be of sufficient size to merit segmentation.
5. The segments must be such that serving them uniquely is profitable.

Now to Mr. Capon's imperatives, as reported in the book review in the Journal:

1. "picking markets that matter"
2. "pick the market segments where they can deliver the best product"
3. "securing a 'differential advantage' over competitors"
4. "adjust systems to better serve customers"
5. "measuring what matters"

Maybe it's just me, but I'm not just unimpressed with Capon's list. I find it, at best, derivative of the basic truths about market segmentation that I was taught, as an undergraduate, thirty years ago.

Capon's first imperative echoes Lambert's fourth basis of segmentation. His second, which closely resembles his third, is really just a no-brainer about business in general, and product development/management in general. There's no direct relation between the segmentation bases and Capon's fourth or fifth imperatives.

Having the rare combination of undergraduate and graduate degrees in marketing, I've probably sat through more hours of marketing instruction, by very capable professors, than most business graduates, and anybody I have personally yet met. For me, the most basic facet of marketing is segmentation.

Segmentation, as exploited by the University of Pennsylvania's pioneering, and the nation's first, marketing department, under genius Wroe Alderson, is a direct application of the microeconomic theory of segmenting buyers according to their price inelasticity behaviors. Observing the opportunity to discriminate, profitably, on price, and then provide other bases (product features, delivery, or promotional messages) on which to justify the price differences, is marketing's true core operational mission.

Of course, as Stanton wrote in his classic introductory marketing text, seen from a larger perspective, marketing is dedicated to satisfying consumer needs, over the long term, profitably.

Identifying and satisfying those needs leads, obviously, to segmentation, and, thus, the five bases.

When I reflect on that verity, Capon's work seems superfluous. So much neo-marketing fluff.

At root, marketing, even explicitly and appropriately consumer/customer-centric marketing, begins with segmentation. From this, all other marketing practices and knowledge flows.

To even attempt to speak of marketing fundamentals, and skirt the centrality of segmentation, is, I believe, to mark oneself as sadly, fatally misinformed.

Beyond his somewhat off-the-mark ideas on marketing, Capon, according to the article, chooses some examples that ought to raise eyebrows. Among them are Charles Schwab, Pfizer, and Target. The review doesn't provide details as to when in their life cycles Capon chose to study each company, but the first two are most assuredly not 'winners' on the basis of consistently superior total returns.

I personally respect and laud Target's marketing savvy, but that hasn't made it a consistently superior total return performer, yet, either.

What I conclude from the review of Mr. Capon's book is yet another academic conducting a dubiously-designed study, in order to publish a book and cash in on the resultant consulting business he hopes will follow.

I'm skipping this book. You should, too, now that you know Dave Lambert's five bases of successful market segmentation.

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