Marketing as a science with Prof. Rachel Kennedy
As marketers, it's easy to rely on experience and accumulated wisdom as a default decision-making lens, especially when it comes to your bread and butter. But let’s shake it up.
On this episode of The CMO Show, we chat to Professor Rachel Kennedy, Associate Director, Product Development, at the Ehrenberg-Bass Institute for Marketing Science based in the University of South Australia.
When it comes to marketing evidence-based decisions to grow your brand, you might need a little more support.
According to Rachel, there are many good reasons for the default lean into intuition that marketers are often faced with.
‘By the time you reach the point of a CMO, typically you’ve gathered lots of really good experience that’s relevant. You are decisive and you have the ability to lead. It makes sense that people will default to what they know.”
“I know a lot of practitioners will talk about theories they learnt when they did their degree, but the theory does translate into mental pathways and the frameworks that are in people’s head, which becomes their intuition and the default decisions that they make.”
Working systematically and in conjunction with your data is a difficult rhythm to get into, but Rachel says the payoff is well worth it.
“It’s easy to ask questions. It’s getting robust answers that is hard work. We’ve had such breakthroughs in knowledge that change the thinking and the models around marketing and it’s all through applying scientific process.”
“There is so much data now. A shortage of data is not the problem, it’s learning to see that not all data is equal, and not all data is intuitive.”
Tune into this episode of The CMO Show for insights into how the science of marketing either dispels or supports intuition, assumption and common marketing ‘myths’.
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Credits
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The CMO Show Production Team
Producer - Pamela Obeid
Audio Engineers – Ed Cheng & Daniel Marr
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Transcript:
Mark Jones
There's an old phrase that I love and it's to assume is to make an ass out of you and me. And it's a fun idea because in marketing we make a lot of assumptions all the time. We rely on our experience to make really, really important decisions. But what if in thinking about our decision making, we need to maybe broaden the horizon beyond our experience and think about the data.
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Hello and thanks for joining us on the CMO Show. It's great to have you with us again. I'm so excited about our guest today, Professor Rachel Kennedy.
She's Associate Director of Product Development at The Ehrenberg Bass Institute for Marketing Science at the University of South Australia. Now, I met Rachel at the iMedia Future of Marketing Summit recently. And a few things really stood out and I was like, "I've got to have you on the show."
She's big on evidence-based marketing, but what we're going to talk about today is really challenging those assumptions that we make as marketers. How do we make decisions? Are we relying on expertise or are we looking at the evidence and looking at the data? It's a fascinating conversation. So maybe strap on your seats or do up that seatbelt if you're driving. Make sure you're ready for what will be a very big conversation. Let's hear from Rachel.
Rachel, so good to see you.
Rachel Kennedy
And likewise, Mark, an absolute pleasure to be here.
Mark Jones
Now, I want to jump straight into something. We met at the iMedia Future of Marketing Summit event recently, and you had this really great quote, "The core of marketing is markets." Do you remember saying that?
Rachel Kennedy
I do remember saying that because it is. We're about trade, buyers and sellers and trying to bring them together and make a profit.
Mark Jones
So unpack that a little bit for me, what does it mean to you? How do we think about the role of marketing in a way that's quite different to sales in that marketing or markets context?
Rachel Kennedy
Clearly marketing and sales are linked together, but marketing is about ensuring you've got a product that ... well, there are different ways you can be small and make some money, but the marketing we're interested in is how do you grow brands? How do you take a product or a service to the market efficiently at scale so that you can grow and be profitable?
Mark Jones
For those who don't know, the Ehrenberg-Bass Institute for Marketing Science, it's pretty interesting, it's the world's largest centre for research into marketing. Just give us a quick snapshot of what it's like to work there, 60 plus marketing scientists, I understand?
Rachel Kennedy
It's really fun, really love it, we’re lots of people who are very cohesive in trying to tackle big problems that keep lots of marketers awake. We work together really closely. We engage in the global world of marketing. We work across industries, across data sources, and we've been really successful in changing what people know about marketing, the language that they use, what people do and the results that they get.
So maybe just taking a step back for anyone who doesn't know about us, we're a not-for-profit research institute based in a university. We exist with the mission of discovering robust knowledge about anything to do with marketing. So how is it that people buy? What influences it? How do brands compete with each other? Strong focus on how do brands grow, but we're also interested in how do categories grow? What do different marketing levers do? When do they work? When are they less successful? So our focus is on robust knowledge that holds for most marketers most of the time.
We're also intimately excited about any exceptions and understanding them, but in terms of the dominant conversation we have with marketers, it's about what are the most important things they need to know in order to be successful at growing their brands profitably and not wasting resources on things that are just not going to matter or a distraction.
Mark Jones
Honestly, it sounds amazing, for anybody who's a bit marketing geeky, which I think more than one or two of our listeners are in that space.
Mark Jones
we talk a lot about marketing being art and science, but I think we tend to index more on the art component of it, particularly if you look more broadly across the marketing media landscape. It's always about campaigns and creativity and how brave we were and these fantastic ideas. And not to take anything away from any of that. It's just that the science component of the conversation and certainly the strategic work that goes on behind the scenes, just seems to be lagging either in visibility or understanding ... I don't know, what's your perception here? Is it just that we're hardwired to go for the shiny stuff? You tell me.
Rachel Kennedy
We are hardwired to go to the shiny stuff. In terms of the lagging, there's real variation. I mean, we work with biggest brands around the world and some of them live and breathe evidence based decision-making for growth. So you talked before about marketing, but this knowledge is actually relevant to anyone who's interested in profitable growth. So there are lots of GMs, CEOs who are equally engaged in trying to understand this knowledge and embed it into their businesses. So some people are running hard and doing it, but there's lots of variation. So I'd say there's been a real transformation in terms of how many people are aware of it. 10, 20 years ago
People would look blankly at you. Now, most marketers around the world have heard of us.
Mark Jones
Yes.
Rachel Kennedy
A lot of us use our language, but they don't necessarily know what it means, or we can see that they're using really poor measures to try and capture the things that we talk about. Creativity matters enormously. And we see that in the likes of advertising, which was my original area of research, but this pattern spotting and science gives really clear guardrails of where you can be creative and where you can't be. So there's a huge role in creativity, ensuring that people actually want to watch any video that you produce.
But you don't want creativity for the sake of creativity. Advertising that doesn't clearly look like the brand that it's for. For distracted viewers who don't know or care much about the brand is not going to sell anything. So if you want to win a creative award and have fun, that's completely fine and one route. If you actually want to be profitable and be doing good marketing, you need to understand the guardrails and where you can be creative and what are no-go zones.
Mark Jones
We should talk about some examples and one that I particularly like, Professor Andrew Ehrenberg. He's got this thing called the negative binomial distribution. Just to get a bit geeky for a second, which I think you described as the Law of Biofrequencies. Do you want to tell us about this and maybe that's a good way of understanding, practically speaking what we're talking about?
Rachel Kennedy
Absolutely. So that's one of the laws that we talk about, and it is a mathematical distribution, hence the NBD, but we're trying to refer to it as Ehrenberg's Law of Biofrequencies, because that's what it relates to.
So much marketing is focused on loyalty and heavy buyers, targeting towards the heavy buyers. ROI measures lead you to tend to do things towards heavy buyers, but this law or pattern shows us that, let's just take a single brand. If you look across the course of a year, likewise, it could be three months or five years, but just talk a year for now. What you see is the largest group of buyers by the brand once in a year. The next largest group by twice, then three times, four times. And depending on the category and size of the brand, you'll have a predictable number of buyers who buy 10, maybe even 50 times a year.
The maths holds across brands. The actual numbers is a function of the category that you play in because people buy bread a lot more than they buy cars. So you see differences in terms of the numbers, but the pattern is incredibly robust and it has critical implications in terms of what marketers need to do.
Mark Jones
So when we think about light versus heavy, the distinction here is frequency of purchase. Is that right?
Rachel Kennedy
Yes.
Mark Jones
So, is the assumption then that many marketers work to this idea that once they've started buying us, they'll keep buying our products. We assume people will instantly become heavy buyers, but in fact it's not the case. Is that the point?
Rachel Kennedy
There's lots of points around it. Brands have many more light buyers than they have heavy buyers. Buyers are predictable. We do have loyalties, we do have patterns, but we are not solely loyal to a single brand, and things are not so fixed. So predictably heavy buyers become lighter over time, lighter buyers become heavier. Some buyers go and do things like die, so lots-
Mark Jones
I think all buyers do that at some point.
Rachel Kennedy
Exactly, but in terms of thinking that once you've converted someone, they're a buyer. There's just so much evidence that says, it's just not a useful way to think about it. So buyers have repertoires and they're not fixed that they just buy one brand and they're not fixed that they're just a heavy or a light buyer, which means rather than focusing on persuading people, there's a role for continually refreshing their memories, nudging, making it easy for them to notice us, easy for them to buy us. And so, that's partly why in terms of our broad framework of how brands grow and compete, we talk a lot about the importance of mental and physical availability because those things, there's so much evidence show, are absolutely important to brand health and growth.
Mark Jones
As marketers, we tend to lean into our experience of what we know works in our sector or perhaps a sector that we've previously worked in and we applied into our new role and we rely on those assumptions and that experience instead of continually reality checking our decisions with the datawhy is that? Is it just that the research is too hard to get or we don't know that it's there or what's going on?
Rachel Kennedy
We all default to our intuition, and there are very good reasons why. And by the time you get to a CMO, typically you've got lots of really good experience that's relevant. You are decisive and you have ability to lead. And so, it makes sense that people will default to what they know and there are good reasons why they might want to. So it's quick to default to intuition. And what we talk about is the mental models that are in people's heads.
And I know a lot of practitioners will go, yeah, I learnt the theory when I did my degree. I don't need theory, but the theory does translate into mental pathways and the frameworks that are in people's head, which becomes their intuition and the default decisions that they make. Trying to be generous, I would say the other good thing about those mental models in CMO's heads and things is they should deliver consistency across a team and across time.
But in terms of the mental models, in CMO's heads or any decision making heads for people who are making marketing decisions, because the way we've been taught to think about marketing is inconsistent with the evidence that has come to light in recent decades. There are a lot of decisions that are being made that are inconsistent with the evidence of what is actually going to work best. When you study the history of science and when science is poured into different disciplines and new knowledge advances, there’s this saying that you kind of need a generation of people to die out for the new knowledge to embed into industry.
Mark Jones
As someone who is skewing maybe towards the older years, it's a really challenging thought because we do get stuck in our ways. It does beg the next question though, if you are stuck in your ways, what do you do about it? Because you're going to be faced with different mindsets, and this is not a new idea of course, when we think about generations to come through, they do have different buying patterns. We think about the consumers a lot, but I'm interested in the marketers. Their assumptions will be a whole other set of assumptions, which will be, if you think about Millennials who are in management now, they've got millennial assumptions which may not be connected to the data either.
Rachel Kennedy
We actually run transformation projects with supporters and we go and measure what is the knowledge that is in people's heads and see how consistent teams are, but also how consistent the teams are with the evidence. And they're fascinating, because we see lots of inconsistency across teams, which means that people are not working together, so that's not good. But you also see a lot of inconsistency against the latest evidence, which means that people are likely to be doing things that are counter growth and wasting money.
Mark Jones
Yeah.
Rachel Kennedy
But in terms of what do you do, one thing I would love to see more of is evidence-based checklists. So they're used in things like medicine. So a doctor, highly trained, incredibly bright people to get through medicine. They use checklists. So when you go into surgery, you make sure the patient's anaesthetised. That you've got all of the equipment out of the body when you finished, and just the things that keep a patient alive, that they've all happened. And we work with forecasting researchers and they say that there are very solid, robust thing to lead to better outcomes.
That's one thing that I would love to see more of in marketing so that we get out of our heads, but just make sure that we drive evidence-based behaviours. And my role as a director is trying to help us translate the knowledge that we've got into tools that particularly our supporters, but that others can embed.
So you embed evidence-based practice into a business, rather than just relying on people to make the right decisions. So that is embedding the right knowledge into systems. So, templates for briefing for advertising or media, the metrics that you've got, ensuring that they're evidence based. And so many of the metrics in marketing are intermediate and rubbish metrics. So it's really hard to make the right decisions if you're looking at rubbish data. So there's a lot that you can do that can step you towards being evidence-based more often and more consistently across an organisation.
Mark Jones
Look, as a systems guy, I love systems thinking. What I've heard you say there is get that process right, the checklists and make sure that we stop to reality check our decisions against proven models, proven approach or what the research says-
Rachel Kennedy
And it's even broader than just the decisions.
Mark Jones
Right, so what, the whole process itself?
Rachel Kennedy
it's broader. So people's job titles are things like loyalty manager, that's counter growth, and yet that's what the person's title is and the job description. So that's not about a decision, but it's ensuring that the business is evidence-based in the language it uses and the systems everything that it does. So I was just saying this scope to broaden it, if you want to be evidence-based.
Mark Jones
It's a real problem, if you're a loyalty manager at an airline for example, isn't it? Anyway.
Rachel Kennedy
It's not that loyalty doesn't matter, but if the airline wants to win, they have to be putting emphasis on acquisition.
Mark Jones
Got it. So where I was going with that was thinking about how we make it more systematised over time so that we get that constant reality check because it's just hard in simple terms to get out of the routine of what you're doing and switch mental approaches to say, you know what does the data say? Because we've been relying on our internal data sources for a long period of time. I have a suspicion that with martech and the development of these technologies that we've been using, they keep feeding us the same answers, because it's the same pool of data, as opposed to thinking more broadly. Is that where we're headed here?
Rachel Kennedy
It's easy to ask questions. It's getting robust answers that is hard work and there is so much data now, a shortage of data is not the problem and you can almost see anything that you want to see in data, and not all data is equal. So where we're different to others and how it is that we've had these breakthroughs in knowledge that change the thinking and the models around marketing is through applying scientific process. Our focus is what is robust, what is constant, and the same across categories, across markets, across different data sorts.
Mark Jones
That's great. Let's think about the future of marketing. I know that you've got a few ideas here around brand consistency, around experience, and personalization. There's a whole bunch of things we need to be thinking about.
Rachel Kennedy
This question came out of the recent keynote that I did on the future of marketing and I made those predictions for 2050, which is an incredibly long way off as far as predictions go, but I made them thinking of myself at 80, in my nursing home, with my robot carer going, "What is likely to remain the same?" And none of us can predict the future with great certainty, but as a scientist who has looked at data that goes back hundreds of years and evidence that goes back thousands. There were some ... I came up with predictions, so core of marketing is markets. We are going to have trade and markets continue, because there'll be an equity of where there are resources and skills and people will continue to swap and trade.
Mark Jones
Well, that's a relief.
Rachel Kennedy
Yep, exactly, but the default in predictions is we're all going to lose our jobs and there's disaster coming, but for marketers, trade is going to continue.
Mark Jones
Good.
Rachel Kennedy
Human behaviour will remain habitual. We have brains that have evolved slowly over time, but that evolution is really, really slow and we are cognitive misers. So that's pretty much going to continue. Even though we'll add tools that will help us, our brains won't evolve quickly. And because of that, brands which are mental shortcuts that make it easy for people to buy and make choices are going to continue to matter and without marketing will continue to matter. But there is going to be change. Categories and brands will evolve. So some are going to die and we'll be buying more drone parts and things that we haven't bought in the past. So certain brands will become more valuable.
How we buy in terms of robot or drone delivery will continue to evolve. Maybe more predictive subscription boxes. There will be change, particularly ad and media formats. They'll take forms that we haven't seen before, but advertising on papyrus or on rock that we've seen thousands of years ago gets the same message across. And so, there will still be a need to communicate with buyers, however that happens.
Mark Jones
Okay, so billboards will still exist in some form.
Rachel Kennedy
Exactly. And they've changed a lot and they will probably get even more 3D and Wild to grab our attention.
Mark Jones
Of course.
Rachel Kennedy
But brands will continue to want to communicate. What will win in terms of what are going to be the big brands of the future are those brands who are successful at delivering scale. So they appeal and are easy to be bought by lots of buyers. Loyalty will matter, but far, far less. It's just going to be predictable and a function of the category that the brand plays in.
I predict that some brands are going to be dead and have destroyed an awful lot of value because they're trying to optimise the wrong things. They're using pointless personalization, too much targeting, focused on the likes of engagement to the detriment of being easy to notice, easy to buy and that scale. So yeah, my last prediction was the brands that will win, will have good mental and physical availability, be clear on their distinctive assets and be evidence-based.
Mark Jones
And the comment there about Personalization is it's great to personalise if you know your customers and you're delivering value, but if that's all you're doing, you're not thinking about scale, maybe you're missing the point.
Rachel Kennedy
personalization is not a bad thing, but to win scale and consistency matter enormously. When you really understand that negative binomial distribution, you realise that most buyers are light of the brand and category, and with that their memory structures are less well-developed. So they're not necessarily looking for personalised, you still need relevant communications, but the importance of things like looking like you and using your distinctive assets very clearly, so people don't have to process too much, but they know straight away who you are and what you do. That matters far, far more.
Mark Jones
As I listened to you go through that list, one of the things that came to mind was this concept of friction that we talk a lot about, which is in the transaction process, how well can you remove friction? Obviously, Apple Pay, and that's something that I use every day, almost frictionless. And it gets better and better over time, right? That sort of thing. Using that as an example seems to be something to pay a lot of attention to. Is that right?
Rachel Kennedy
Yeah. In our language we talk about removing barriers.
Mark Jones
Right.
Rachel Kennedy
Any barrier that's going to stop some buyers buying you some of the time. So yet the Apple Pay is a perfect example. Not having a right pack size, so you become harder for some buyers that your cap is too hard to take off. Whatever it might be. The more barriers you remove that stop people, the more likely you are to be bought by those light buyers or any buyer really, because buyers have repertoires, they're happy buying you, but they're also happy buying competitors. So the brands that make it easy to buy from them, easy to notice, easy to think of, they're the ones that win.
Mark Jones
Just briefly, you also said a comment that I wanted to pick you up on was that it's going to be increasingly easy to make a brand inconsistent, which suggests to me that as marketers, we ourselves continue to be wildly inconsistent. Maybe we are not holding to our traditional ideas around brand guidelines, policing the brand, being very clear. Being very consistent. Why do you say that?
Rachel Kennedy
On many fronts, we see it all of the time, but also in terms of AI and the technologies, the ability to target and tailor at scale mean that it's becoming easier and easier to change pack, to change copy, to tweak things so that different people see you in different ways and you lose that consistency, you lose the scale.
Mark Jones
Right, so in other words, lots of different messages for different people. You've now undermined the distinctiveness that holds your whole brand together. Is that the idea?
Rachel Kennedy
Yeah, and marketers know their brands really intimately. Marketers have very well-established memory structures for their category. So much so that they can't see the world through the lens of the millions of people who might buy them, who on average, know an awful lot less and care a lot less. It makes sense that you can just change a colour or you can just change something. And it still looks like the brand to the marketer, but to the light buyers who don't care much, it might be just that colour, which was the cue that they look for as they're running through the supermarket.
Running late with a screaming baby on their hand, half on the phone. So the more you change, the harder you make it for many people to buy you. And I was giving packaged goods example there, but the same holds in terms of services and other things.
Mark Jones
Fascinating. My head is already full. I'm sure the listener has had more than one tiny brain explosion from some of the things that we've spoken about. And I certainly hope that's the case because such a great reminder to think about the role of evidence-based marketing, getting away from those default ideas that we hold on to. Obviously going for the data and maybe get in touch with you guys.
Rachel Kennedy
Even the science.
Mark Jones
Right, and the science, right? So thank you so much for all that you've brought to this conversation. I really appreciate it. Any quick closing thoughts and advice for CMOs as they embrace this crazy world that we're in around AI in particular changing the world?
Rachel Kennedy
It's a really, really exciting time and I've seen many CMOs just do amazing things in their career because they're willing to lead on the journey to being evidence-based. So I think it can be scary to people who don't know something, but encourage you to read and to take the first steps and to reach out if we can be of help.
Mark Jones
Fantastic. Thank you very much again for being my guest. It's great to see you and all the best.
Rachel Kennedy
Thank you very much, Mark. Really enjoyed it.
Mark Jones:
So that was my chat with Rachel Kennedy. How are you doing? My brain was really working hard then so many big ideas. I just wanted to land on one idea, which was this concept of consistency. And it's interesting to think about the shadow side of the world that we live in, which is so much distraction. We see that in our everyday lives, but it actually influences, I think, to a degree, the work that we do as marketers because it's so tempting to get pulled away from our core mission, to get distracted from the core messages.
This whole idea of presenting a consistent voice and a consistent brand to market. And it's a really great reminder that we've got to stay focused on that core mission, that core brand, that core idea, maybe how you sound and the way that you look and really holding onto that.
So I wonder what you took out of it. I'd really love to hear it. And of course, we love all of your feedback here at the CMO Show. Thank you so much for joining us. The CMO Show is a podcast produced by Impact Institute in partnership with Adobe. We are a show that's produced for marketers by marketers.
All the best until next time.