The New World of Reaction-Based Marketing

Those of us who have spent some time in research departments tend to think in linear terms. By that I mean that there is a “classic” sequence to follow to understand customer needs, new product opportunities, line extensions, new advertising, etc. For example, we might start with a strategic study to understand buyer needs and behavior, identify segments or personas, follow that with benefit screening or concept testing to assess interest, then move into advertising concepts, and then marry that with the product development track with R&D, address any deficiencies, move into a test market, and then a national introduction.

Not. Those days are long gone. There is no appetite for “research” or “insights” in the classic flow referred to above.

This is most obvious when you look at the revenue of major research firms, which have grown anemically the last five years. While it is important to understand customer/buyer needs, research can’t add nearly as much value until it understands the digital landscape. Joel Rubinson and Bill Harvey have written about this eloquently. Those of us who consider ourselves insights experts or researchers must come to grips with the fact that most companies have no interest in spending much time conversing with customers, even when it has strategic value.

Most companies feel the need to respond or react to what is happening right now, in real time. In fact, for many companies, response time is the only thing that matters. We are in an age of data lakes, auctions, programmatic and ROI – a world of reaction-based marketing. In this world, a brand demands that for every nickel it spends, a nickel in sales should be generated. Companies are not interested in convincing you that their product is superior, or meets your needs, or fits your lifestyle unless they get paid back. Nor are they interested in the protective benefits of long-term brand building. This is a finance-centric rather than marketing-centric philosophy.

Reaction-based marketing has four primary characteristics which distinguish it from traditional marketing and brand building

• ROI is the primary KPI used to measure marketing success.
• Decisions are engineering-driven, not consumer needs-driven.
• Decisions are event-based, not strategically- or equity-driven.
• The cost of failure is less than the cost of testing.

A great example is Amazon, which alone has created these exact marketing conditions. It is a complete ecosystem for testing all elements of the marketing mix (excluding distribution, which it owns). Yet has Amazon not created the perfect ecosystem for driving brands into commodity status? A great example is alkaline batteries: Duracell currently cells 24 AAA batteries for $16. Amazon sells 48 AAA batteries for $15. I wonder who wins that battle?

As researchers and insights experts, where we add value is the missing link between all of the automated ecosystems that are competing for the consumer’s attention, and how the consumer thinks and feels. That market is wide open.