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Recently, the president of the Advertising Research Foundation (ARF), Bob Barocci, reached out to the ARF LinkedIn Group and asked this question: “If research could answer one unanswered question that would significantly improve marketing today, what would that question be?” First off, that’s a great question. Secondly, I wrote an answer that, seemed a little beyond the scope of a LinkedIn discussion. So I put the full answer here. Enjoy!
How do you consistently and repeatedly achieve breakthrough innovation performance? Great breakthrough products that deliver relevant, compelling, meaningful, differentiated benefits pave the way to success across the marketing mix. Mediocre "me too" products make marketing all that much harder. Unfortunately, that's the state we're in: "me too" mediocrity and commoditization of choice.
The growth engines of the future come through bold innovation -- not product enhancements, renovations and line extensions. Yet marketing consistently fails to account for the upside of bold innovation; they're content using tools that focus only on the downside - the risks. This risk-averse (and, worse, reward-averse) mind-set drives products to the rut of the center. Within categories, products converge upon themselves -- blending into bland, undifferentiated feature soup. Yummy!
For too long, marketing has failed to address this challenge, content to play the game of incremental(ism). As a result, supermarkets grew from 10,000 SKUs in the 1970s to about 50,000 today. Tools marketers employ across the innovation system shepherd safe, incremental initiatives while discarding potential market superstars -- what is the opportunity lost, measured in billions? Here's but one example (in billions): in 2007, Coca-Cola bought Vitamin Water for roughly $4 billion (a company with some $350 million in revenue), because Coca-Cola couldn't drive bold innovation in non-carbonated beverages.
Despite all this, we expect consumers to continue paying more for brand loyalty? Of course we don't, so we play couponing games and battle for position on store shelves, and look to “holy grail” shiny new approaches like digital media or neuro-marketing. That’s all really cool stuff and is, in fact, very shiny. Lipstick is shiny on a pig, too.
(To be clear, I’m not trying to demean shiny lipstick. It has its place. But shine, regardless of format, doesn’t change the underlying piggy-ness of pigs or innovation.)
Albert Einstein famously stated the definition of insanity, “doing the same thing, over and over again, but expecting different results.” Another definition is equally valid: doing the wrong thing, over and over again, and expecting success. When it comes to innovation, either definition is applicable. Yet, this is exactly what firms continue to do. There's an 80% product failure rate. Okay, let’s repeat that. Hope it goes better next time. Talk about insane!
Marketing needs to stop this insanity and address the fatal flaws systemic to innovation. Cobbling together piecemeal best practices to bandage individual flaws may solve microcosmic issues but, macrocosmically (quoting Steve Jobs), it equates to a solution that is less than the sum of its parts. Innovation needs a comprehensive solution that addresses flaws at a systemic level.
Such a solution lies in the hands of marketing. As Peter Drucker said, “because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions: marketing and innovation.” When marketing fails to understand the customer, innovation fails to deliver successful products.
For too long, marketing has taken its eyes off the prize. And that’s where the real shine comes from: gold resulting from delivery of compelling, relevant, meaningful, differentiated new products -- the gold mined from bold innovation.
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Stan Sthanunathan - VP of Knowledge and Insights, The Coca-Cola Company