Rethink Marketing

Interview
Marketing Evolution: A Conversation with Dr. Steven Perkins

 

Over the past decade, many aspects of marketing have evolved – the research expectations of corporations have shifted, research and segmentation methodologies have changed, and there is an increasing focus on measuring marketing ROI. Additionally, technology has enabled greater data access and analysis capabilities than ever before.

But is the data collected any more relevant? Is customer and market understanding genuinely increased? And are better decisions really being made?

Join us as we talk with Dr. Steven Perkins, Associate Dean for Graduate Programs at the
UT Dallas School of Management about these questions as well as the academic and practical trends he sees in marketing.


Dr. Perkins, as a marketing academician and practitioner for two decades, what is your perspective on the ways marketing has evolved both in theory and practice?

The first marketing research project I worked on 25 years ago used punch cards to enter the data and to write statistical computer programs. If nothing else, changes in technology – particularly information systems and statistical software – have had a tremendous impact. We can do more now with Excel than we could with those earlier programs.

In addition to greater ease in accessing and analyzing data, there has been an enormous increase in the volume of information available. Still, it’s not always easy to obtain the best data or to understand the results of analysis. And it’s still difficult to determine whether we are making better decisions.

What do you mean?

Generally, I think the kind of data we get is more varied and complete – and certainly there is more of it. But is it better data? Is it more relevant?

Sometimes we gather data just to have it and we don’t know why we’re trying to gather it or what we’re going to do with it once we get. Companies are losing sight of the forest for all the trees – it’s very hard to pull excessive amounts data together and fit it into the big picture. This is where outside consultants can help by providing the framework or model through which companies can understand what the data means and how it can be used to impact business decisions.

Data hasn’t been the only thing to expand and change – customer segmentation has shifted from demographic- and psychographic-based approaches to behavior- and benefit-based approaches. Why has this happened and what are the implications?

The first segmentation study I worked on twenty years ago for a salty snack company was based completely on attitudinal data. It provided very valuable insights into different customer segments. But about ten years ago, I started to see a shift to more behavioral data input in segmentation studies, as many companies now want that kind of understanding to drive immediate action.

For example, we recently completed a new research project for the same salty snack company that included more behavioral data as well as attitudinal data in creating the segments. And in another project, a fast food company wanted more behavioral data included in creating segments to understand the situations that influenced restaurant and food choices. From those results, they could tailor their menus and consider other types of restaurants for acquisition to fill gaps in their line. This research is being used to drive short-term actions.

Some research firms have adopted a “lifestage” segmentation approach that combines demographics, behaviors, and attitudes. The segments tend to be more differentiated and distinct. It is easier to explain the results and then move ahead with marketing plans for those targeted segments. In general, I find that an attitudinal focus in segmentation is applicable to advertising and promotional strategies, while behavioral variables find greater use in design of channel programs and competitor responses.

Ultimately, the holy grail is finding ways to connect more objective variables such as demographics and behaviors with more subjective variables such as attitudes and psychographics. In this regard, database marketing has become very important to companies. Objective data from sources like Equifax is seen as a way to make marketing research results more actionable. For instance, by gathering the number of times a person shops a particular retailer in a month or the amount a shopper spent on electronics, companies try to tie concrete behavioral statistics to attitudinal data.

It sounds like research objectives have really changed for many corporations.

Yes, there is a huge push towards results in research that can help a company right away. This means that research has become more tactically focused and action oriented. Companies are looking for information that can help them with immediate issues such as product sales. But sometimes the focus on short-term research is done at the expense of long-term strategic input. The hope of getting some bigger strategic understanding is often secondary.

What are some of new methodologies used to measure brand strength and equity?

I’m a big believer in the “means-end” theory of consumer behavior. Much of that perspective has been developed by Tom Reynolds, a Professor Emeritus from UT Dallas. In a nutshell, the theory says that products are simply bundles of attributes, and what we really need to understand are the consequences or benefits the consumer derives from using the product – in particular the personal values that are important to the consumer as they select and use the product. The thought is that this answers the question “What products will serve as means to help me fulfill the ends that are important to me?”

In layman terms, it means we should conceptualize brand equity as the strength of the linkage between product and person. This approach as been applied to products as diverse as snack chips and political candidates. Often it is measured statistically as the strength between preference or choice for a product and the consumer’s values. Admittedly, measuring the relationship between brand and consumer is harder to do and not as easy to communicate.

So what are the challenges to identifying and measuring marketing ROI?

There are many challenges to measuring marketing ROI in the real world. The connections between marketing expenditures, purchases and profit can be messy, and there are no set standards across companies or industries for measuring ROI. Often we’re focused on what can be measured quickly and cheaply rather than those things that link us more closely to the consumer. For example, we can measure how many cases of soft drinks were sold last week, but again, it’s harder to measure the customer relationship to and connection with a brand. This is strategically important.

It’s possible also that we are trying to quantify something that shouldn’t even be quantified. There are so many linkages that make it difficult to quantify marketing ROI. But CEOs will continue to push for ROI measurements – it’s a way for them to understand and control marketing.

Some marketers may worry that the focus on ROI will put practitioners in an even more difficult situation. Will they get all the blame and none of the credit? But it is an area that I expect we should tackle. Again it is related to the need for greater accountability.

Are you saying that this is a way for Marketing to increase its strategic value?

It’s one way. Overall, it’s fair to say that many CEOs don’t think of marketers as strategic leaders. Whatever challenges individual companies face, marketing may be able to help by focusing more on meaningful metrics that show how well their brands are performing. These can be standard awareness and recall metrics, customer satisfaction results, or more complex financial brand value approaches. That may not sound very “out of the box,” but it supports the strategic needs of the company, and it’s information the CEO can understand.

What transformations do you predict for Marketing in the next few years and how will they add value to the consumer?

As I said earlier, the improvements in technology and the drive for accountability seem to be among the largest changes I have seen. What I would like to see happen over the next few years is more practitioner use of a model of consumer behavior.

Many times our understanding of consumers is very piecemeal and ad hoc. I believe companies would benefit from developing their own model of consumer behavior for their markets. In my own consulting, I have seen the value of a good conceptual model identifying what impacts consumers and influences their purchase behavior.

So I’m expecting the next transformation may be different. More of a philosophical shift toward deeper understanding of consumers.
 

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Dr. Steven Perkins is the Associate Dean for Graduate Programs in the School of Management at
The University of Texas at Dallas, where he focuses on increasing interactions between the university and businesses in the DFW area.

Prior to joining UT Dallas, Dr. Perkins was vice president for Marketing Science at the M/A/R/C Group, managing twenty quantitative consultants who conducted the analysis on $30 million of research annually. Previously, he directed advanced analytics for Opinion Research Corporation in Princeton, NJ.

Dr. Perkins also served as an Assistant Professor of Marketing at Penn State, teaching graduate and undergraduate marketing research courses. He started his career as a consultant with Arthur Andersen & Co. developing client information systems.

Dr. Perkins received a PhD in marketing from UT Dallas and his MBA from The University of Texas where he also completed his undergraduate studies. He has published a variety of articles on marketing research methodologies, interpretive analysis, and the use of marketing information in managerial decision making. Dr. Perkins is a member of the American Marketing Association and INFORMS/College of Marketing Science.

July 2005