Business Marketing
cout Culture W
by Glenn Granger
hat does Brad Pitt’s 2012 Oscar nomination for a film about baseball have to do with the challenges currently facing consumer marketing departments? A lot. Have patience, my fellow Europeans, I’ll explain.
I’m a Maths graduate. I like Maths, so let’s start with some statistics. In 2002 the Oakland Athletics – a team from the Pacific coast - spent $41 million on players’ salaries. In the same year their Atlantic coast cousins, The Boston Red Sox, spent $108 million. Yet, the A’s finished 1st in the American League West with 103 wins, setting a record by winning 20 consecutive games while The Red Sox finished second in the East Division, winning 93.
It was a feat nobody saw coming and it was entirely down to one thing: the Oakland A’s young general manager Billy Beane had started playing Moneyball.
Beane abandoned the scout-led approach based on opinions and collective knowledge that had ruled baseball drafting and adopted a quantitative approach known as “Sabermetrics,” applying statistical analysis to baseball records, to evaluate and compare the performance of individual players. In 2002, the A’s stopped looking for ‘star’ players and began looking for more effective ones. The subjective knowledge built up by scouts watching players took a backseat to methods such as value over replacement player (VORP), the measure of a player’s statistical contribution above the season average for measures, such as how often he reaches a base.
Ten years later in marketing, we’re having our Moneyball moment. It’s long been left to agencies and in-house marketers to decide their marketing mix based on their experiences and subjective views. For too long, marketers and their agencies have been their own scouts, making emotional decisions about the marketing mix that mirror the methods of twentieth century baseball that are just as ‘hit and miss’.
Yet for the foreseeable future, consumer marketing professionals will continue to be under pressure to demonstrate return on investment from their marketing decisions. And just like baseball, the stakes are high. A percentage point movement in market share can result in the gain or loss of hundreds of millions of pounds. This pressure will grow as economic uncertainty and the proliferation of online and offline channels combine with new business models to increase the challenge of managing an ever- more complex marketing mix, against tight budgets. This kind of pressure has to drive change. And it is.
Although marketing is ahead of baseball, gut feel and experience have been underpinned by various forms of statistical analyses since the 1960s to try and more accurately link spend and media choice to market share. The weakness that all such approaches share – apart from their huge cost – is the accuracy with which their models are able to predict consumer response to marketing decisions. This is because they use inflexible and laborious processes that inevitably result in a non-
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