Deathwish Marketing in Action

They coin the phrase death wish marketing, and define it to be those efforts that managers, unconsciously or unknowingly, undertake to kill a product, brand, or occasionally, an entire company.

We have been able to observe a form of death wish marketing being practiced by manufacturers in the consumer packaged goods business for the past decade or so. During that time, marketing managers have unknowingly undertaken marketing programs that converted brand equity into short term retail volume.

These managers were provided with a Marketing Management Information System (MMIS) and taught how to use it to extract scanner data and to use the system's facilities for converting those data into information. That is, the underlying data in the MMIS was data about retail sales in different markets, along with the associated prices and promotion activity levels. Managers interact with the MMIS to produce "reports" that consist of rows and columns of numbers and/or graph that display the data. We use the term information to distinguish these reports and graphs from the underlying data elements.

Once the managers got the information onto their screens, they would then use their knowledge of marketing and merchandising to generate insights and perhaps competitive marketing programs. The question arise, though, about what will these managers see? What will they elect to do with their information systems?

A decade has passed and the evidence is in ... we know what they tended to do with their systems. They tended to do what was easy to do ... to see what was easy to see in the data. They would get a few columns of numbers from their database, and graph these numbers so that they could see what was happening over time.

A typical graph would display weeks along the horizontal axis and both retail sales volume and retail price cut along the vertical axis. Given this display of information, it was easy for them to see that when they got a deep price cut from the retailers, they tended to get a big jump in volume. Although this jump was only temporary (it went away when the price returned to its normal level), the volume spike was significant enough to provide them with a significant amount of revenue. It was not uncommon for a price promotion to generate 4-6 weeks of normal volume in only one promotion week.

Who could argue with the numbers ... retail promotions created a lot of volume. When it was time to prepare a new annual brand plan, the brand manager found that it was easy to argue for an increase in promotion expenditures so that even more volume could be generated by retail promotions. Senior management was always giving the brand manager new volume targets, ones that were higher than last year's target. Unfortunately for most of these managers, their brands were in product categories that were not growing, or were growing at a rate that was significantly less than the growth rate that was desired for almost all the brands that comprised the category.

Since the brand managers could not meet their growth goals through product category growth, they had to take the volume from some other brand. How to do that was staring them in the face ... they could see it in their graphs. Just do more promotions, or get the retailer to give them a deeper price cut on the same number of promotions, and everything would work out.

But, alas, things did not go as expected, particularly in the long run. Again, time has passed and we can see what happened because the "long run" has come about. When firms 1) gave all these managers access to information via powerful personal computers connected to huge databases, and 2) empowered them to act upon what they find in those data, they created a situation in which death wish marketing could prosper.

By doing what was easy to do, the managers did not do what was hard to do, which is to ascertain how all the elements of the marketing mix affect volume and profitability, in both the short and long term. They learned how temporary price cuts, retail displays, and retailer advertising features were impacting short term volume. But they did not see how these promotional activities were impacting the very essence of their businesses: their brand equity.

It has become painfully clear to senior managers in most of these firms that, by chasing promotional volume, they were destroying their brand equity. But how could this be? How is it that a retail sale can destroy brand equity? As consumers, we should all know the answer to that question. If were are able to buy an item on sale, then we begin to wonder why we ever paid full price for the item. Pretty soon, we stop buying it unless it is on sale. Manufacturers made this easy for us by having a number of retail promotions each year, and by scheduling them in ways that make it easy for the observant consumer to pick up the patterns. The consumer then simply buys "from deal to deal" without buying any of the brand when it is not on deal.

Such deal buying and stockpiling is only one way that brand equity was impacted. We now understand that brand equity can also be eroded when most of the brands in a category increase their level of dealing. A consumer will spot a good price on a brand that is different from her regular brand and give it a trial. She finds that it is ok and thus adds it to her consideration set ... the set of brands that she will buy to meet her product needs. In this instance the consumer may have been totally loyal to another brand, but is now willing to buy either one ... whichever one is on sale. Thus the first brand has lost its brand equity, and although the second brand has gained retail volume, it has not increased its brand equity. When you multiply this scenario throughout the year and the millions of consumers, you find that the increase in deals throughout the years served to teach consumers that they are fools to pay full price in a lot of the product categories.

This awareness by managers of this problem has caused them to sponsor a new study of the brand equity situation. Researchers have completed some early work in their study, and have documented the situation discussed above. They have concluded that it is, indeed, possible to increase market share at the expense of brand equity.

For instance, one food brand studied showed a 12% increase in market share in 1991, driven by a 78% increase in coupon distribution. At the same time, their models indicated that the brand's equity dropped 22%, and that this drop was the cause of a share drop in market share in 1992.

Yes, it does seem that death wish marketing is alive and well.