Marketing today has gone really aggressive. And one of the strategies the industry is adopting the Six Sigma methodology in its operations and logistics.
In the past, finance organizations had been expected to drive results. Marketing has always been viewed just as an important ingredient but not a critical one to achieving profitability. Recently, however, demand for accountability has been the focus of many organizations. BusinessWeek, for example, reported that companies in every segment of American business [are] obsessed with honing the science of measuring marketing performance. And according to Professor Phil Kotler of Northwestern’s Kellogg School, 90% of CMOs surveyed consider marketing performance measurement a significant priority. An Association of National Advertisers survey in 2004 showed that measuring marketing effectiveness was the second most important priority of its members, falling just behind building and maintaining their brands.
This critical look at marketing led organizations to turn to Six Sigma. They are struck by the Six Sigma principle, which is grounded on careful measurement and scientific data analysis to determine why a process is not working as well as it should and the meticulously-managed steps, guided by the data, to fix the problem permanently. They further believe that…
Six Sigma marketing is a call to abide by this code of conduct and develop and launch extraordinary marketing programs that deliver performance well above the disappointing average most programs return these days. A Six Sigma approach to developing the components of marketing strategy, most importantly targeting and positioning, will have a transformational effect on performance.
For marketing to go into a Six Sigma deployment, it needs to perform the following:
Targeting: Consider all possible market drivers: category involvement; buyer motivations; media habits; sociographics, psychographics; lifestyles; lifestage; attitudes; values; database variables; and more. Test all the potential variables to determine which ones are related to current and potential profitability to determine a customer’s (whether an individual or a company) economic value in the market place using several proxies for profitability, such as decision making power, openness to your brand, personal influence, cost to reach and impact, and, importantly, price insensitivity. Finally, take the 10 to 25 most predictive variables to create segments and pick your target.
Positioning: Great positionings, like great products, are often addressed to buyer problems. The bigger the problem your brand can solve for the optimal target—not everyone and anyone, but the specific group of people you’ve determined will be the most profitable—the bigger the market response.
Consider that the typical advertising campaign with average targeting and positioning and its effects on new product market share. For the standard new consumer packaged good, about 2000 GRPs will earn you just short of an 8% share. Meanwhile, a campaign with even just Three Sigma targeting and positioning will earn the same share with a mere 850 GRPs. Two thousand prime time GRPs cost $27 million, while 850 GRPs cost about $12 million. A Three Sigma campaign saves you 55% of your original investment! Add to this that, once you have a Six Sigma targeting and positioning in hand, all the other strategic decisions—product/service configuration, advertising creative, media, customer service—fall into place, saving even more.
With Six Sigma, your brand marketing will definitely take the successful path.
