The biggest myths in the world of marketing

Data can define our landscape, inform our worldview, show us the most complete and accurate picture of reality. But if all that’s visible is a limited subset of data – without the metastuff about what’s missing, how far it extends, or even whether it exists – decisions get distorted. Because the representation of reality is distorted too.

And in marketing today – where the customer journey is spread across dozens of channels and multiple interactions – there can be a lot of data distortion. Which leads to false beliefs and muddleheaded assumptions. What you might call myths.

Marketing myths were the subject of a famous marketing text, Byron Sharp’s “How Brands Grow”. Sharp and his colleagues at the University of South Australia’s Ehrenberg-Bass Institute claim that many “established truths” of marketing are wrong – or more accurately, that examples valid in a limited set of circumstances are invalid when applied too generally. (Much like our African hunters.) And over time, groupthink has made these distorted ideas the conventional wisdom. Sharp provides extensive data to back up his claims. Well, we’re Billy Grace, and data is our thing. So let’s look at some of the marketing myths identified by Sharp and others – and see if they agree or disagree with our own approach: that broader and deeper data can solve such issues and bring everything together.

Table of Contents

• Exploding myths: everything you knew about marketing is wrong
• Myth #1: Brand Loyalty Drives Growth
• Myth #2: Targeting is More Effective Than Mass Marketing
• Myth #3: Brands Grow by Converting Competitor’s Customers
• Myth #4: Price Promotions Build Long-Term Loyalty
• Myth #5: Advertising Should Focus on Unique Selling Propositions (USPs)
• Myth #7: Marketing Budgets Should Be Cut During Economic Downturns
• To explode old myths, enjoy the explosive growth of data

Exploding myths: everything you knew about marketing is wrong

Sharp doesn’t go for easy targets. His victims include widely-accepted views about customer retention, brand loyalty, even segmentation; approaches taught as truth in every undergraduate marketing class. But a caveat first: Sharp’s book is about brand growth. Which isn’t the same as sales and profits growth. (Although in practice one usually leads to the other.)

This illustrates a difference between the way small and large businesses do their marketing. 

That difference: small businesses rarely do mass advertising to build their brands, since it needs big thinking and bigger budgets. Meaning their data landscapes tend to be limited. But for those at enterprise scale, the challenge is to engage an audience of millions – needing to reach as many prospects to grow awareness. This means larger organizations are swimming in a bigger pool of data, with bigger opportunities to make use of it.But smaller businesses usually want to be larger ones – and that means growing the brand needs to start early. So if you’re in that category, the right time to question your data worldview is now. Let’s start with brand loyalty.

Myth #1: Brand Loyalty Drives Growth

Happy customers buy from you again. Delighted customers buy from you for life. So the path to brand greatness is to build ever-deeper relationships with a critical set of buyers. For millions of marketers this is unquestioned. Guess what: Sharp argues the opposite. With evidence: according to management consultancy McKinsey, 58% of loyalty scheme members never use any of the scheme’s benefits.

Taking a company’s entire potential market as the data landscape – rather than quarter-to-quarter metrics from its existing customer base – Sharp suggests real growth in brand awareness comes from adding more customers, not just satisfying existing ones. We at Billy Grace agree with this one – enthusiastically.

Because if you can see the true size and shape of your potential market, across all channels – including the millions who haven’t bought from you yet – it’s likely you’ll see how much bigger your brand could be. After all, a brand is at heart a personality; personalities become more familiar the more we hear about them. 

Here’s an example from the tobacco sector. If brand loyalty really drove growth (market share in this diagram, since tobacco sales are mostly static) growth would follow the black line. In reality, it’s more like the red line: very little growth, and mostly flat over time. Of course, brands with a high market share enjoy high customer loyalty to begin with – but this loyalty doesn’t drive growth: it’s new customers that angle the curve upwards.

So by all means continue your retention efforts – but contrary to many marketing theories, retention isn’t everything. Focus more where new customers will come from, by making use of a broader dataset.

TAKEOUT: if you think brand is about depth not breadth, think again. Data suggests a million light touches can be more effective than a thousand up-close-and-personal ones. 

Myth #2: Targeting is More Effective Than Mass Marketing

Another big one. Don’t we all know a precise definition of the customer, with a well-defined persona, is the best way to communicate with a prospect? Not according to Sharp. His work states that a company of scale will see better brand growth from untargeted mass communication than the personalized and individualized stuff. Supported by research from researchers Les Binet and Peter Field, who suggest mass marketing to everyone in a category gives superior long-term brand-building results.

Direct marketers will feel aggrieved. But again, that’s only because their beliefs are based on a limited dataset: the “universe” of the marketing list, with outreach driven by how much is known about each entry. 

What about all the other people who’d be receptive to your brand, but aren’t on your list? You won’t reach them by targeting the same people you’ve always done before.

TAKEOUT: Marketing to a few defined personas misses out on all the people who don’t fit that image. Remember customers come in all shapes and sizes – so make sure your dataset covers them.

Myth #3: Brands Grow by Converting Competitor’s Customers

Here Sharp riffs on older work by Kim and Mauborgne. 2005’s “Blue Ocean Strategy” contended there’s more profit potential in completely new market segments where nobody’s playing than well-known “red oceans” with shoals of competitors. We agree – but so do many marketers. So why does everyone work so hard to acquire customers from their peers rather than finding new ones? 

Again, data is the answer. Companies focus on cutthroat competition, because that’s the data they’ve got to work with! Existing buyers, well-thumbed customer lists, known personas: they’re all easy targets. 

But there’s a far bigger universe of prospects out there – and with greater data you can bring them into your world. In all likelihood, there are customers outside your current dataset who’ll add to your brand growth too.

TAKEOUT: Sticking to segments and sectors you know won’t get you sacked – but it will cost you plenty of brand equity. Data, again, can help you go beyond.

Myth #4: Price Promotions Build Long-Term Loyalty

This myth arguably isn’t one: plenty of marketers know price promotions can damage a brand more than they build it. (Technology writer Chris Worth simplifies this to “Marketing builds brand equity; Sales spends it.”) 

While a good BOGOF or deep discount can get product flying off the shelves, Sharp’s evidence suggests that over time customers come to expect them – and won’t buy unless there’s a promotion. Hardly “loyalty”. (“Opportunism”, perhaps.) Our experience at Billy Grace confirms this: the most profitable customers are those who trust your brand, not those looking for a killer discount. Sharp’s own work suggests 98% of advertising’s effects are long-term brand-building, not short-term price offers.

Here’s a worked example of promotion’s impact on profits. If a bar drops the price of its €5 drinks by 15%, profits actually nosedive by 50% … because of course profit is only a small part of the selling price, and the promotion eats straight into it. 

TAKEOUT: If your decisions are driven solely by unit sales data, look for more long-term data now. 

Myth #5: Advertising Should Focus on Unique Selling Propositions (USPs)

The USP and its cousin the VP (Value Proposition) seek to differentiate often-similar products and services with a vibe of narrow appeal. But here’s the Sharp problem: strong appeal to a small group means making a large one think you’re not for them. 

Advertising executives might say: that’s the point. But in a world of eight billion people, interacting on worldwide channels with a huge variety of buying drivers, a USP obsession may mean alienating millions of people that could grow your brand. 

What if narrow USPs aren’t as important as you think … and the only thing that really matters is a few easy-to-recall messages, widely distributed and recognized? 

 
TAKEOUT: Don’t over-do your USP activities; it can limit the size of your market.

Myth #7: Marketing Budgets Should Be Cut During Economic Downturns

Obviously no marketer agrees with this – but it is business reality for most C-Suites. When sales are down, the marketing budget needs to be slashed too, because investors are looking at your margins above all.

Sharp’s evidence for the opposite is profound – the Ehrenburg-Bass group shows sales declining 16% after one year and 25% after two if a brand cuts its adspend. Studies from Ogilvy, McKinsey, and others going back decades suggest holding ad spend firm (or even boosting it) in downturns leads to brand-positive outcomes, as these brave souls gain market share from competitors who did cut marketing budgets. 

If your perspective extends further than the next quarter – in other words, you use data with the knowledge that business cycles are predictable and recessions come to an end – you can aim to exit the bad times with your brand in a winning position. Warren Buffet said it best: “Be greedy when others are fearful.”

TAKEOUT: Hold your nerve when business takes a dip, because data suggests it’ll pay off big-time.

To explode old myths, enjoy the explosive growth of data

Let’s not forget: myths can be useful. When the world beyond is scary and the future uncertain, myths solidify our immediate situation and increase our understanding of it. Which can be great for smaller companies just starting out. 

But to summarize the theme above: the real situation is a lot bigger than your immediate one. And it contains amazing opportunities to grow your brand and your business, by taking advantage of complete and accurate data – datasets far larger than your inhouse list or CRM, and whose patterns of customer behavior can be made clear by intelligent use of AI.That’s what Billy Grace does. And it’s why we like research that challenges conventional beliefs, like Byron Sharp’s – especially when it’s all supported by data. If you’re looking to grow your brand with a data-driven approach, why not talk to us today? Book a talk with our professionals.