The Many P's of Marketing: Prediction

Marketing has gotten more and more nuanced, as new technologies and strategies have opened up many options for marketers.  It is my contention that today, the marketing mix contains much more than the traditional four or five P's that are taught in school.  In this series I am exploring the Many P's of Marketing.

Prediction:  Prediction is something we are supposed to do in marketing.  In some circles, they try to make it sound more scientific and business-like by calling it research, but when you boil it down, we are really talking about predicting.  Predicting which ad will be preferred by males aged 18-34.  Predicting at what price will people stop buying a specific service.  Predicting which new market will be most profitable.  Predicting which tag line will generate the most sales, or clicks, or votes.

Let's face it, research is the forgotten stepchild in many marketing plans.  Most of us got involved in marketing because of a love for writing or designing or photography or sales.  I haven't met too many people who got involved in marketing because of a love of research, or prediction.  I know that I would much rather play with words and pictures than with number and percentages (which I don't care what my math teachers told me, are not the same as numbers!)  While research is included in plans, I bet that it is often given scant attention.

Backing up your gut
But research, or prediction, or as one colleague calls it "educated guestimation", is important.  Nate Silver, possibly the most famous predictor around right now, in his book The Signal and the Noise says "[p]rediction is important because it connects subjective and objective reality."  In other words, prediction, or research, attempts to take some of the risk out of marketing decisions by making data-informed calculations about how people will act in a certain situation with a certain set of circumstances.  Prediction, especially as it is usually used in marketing, uses scientific methods to collect data to help marketers make what are essentially subjective decisions. Or as my Grandpa would say, prediction backs up your gut with numbers!

Research is important because marketers are usually spending large sums of someone's money on seemingly arbitrary decisions.  Most people who are paying for the marketing, usually known as clients or bosses, are more comfortable with some sort of external justification for how their money is being allocated.  Research is also important because no marketer can be an expert in every field or every target market.  Research can help to inform and educate us as to the realities of the marketplace.  Every time I feel that I know the market I am working in and how the customers think and act, quality market research helps to prove to me that I have more to learn.  In other words, market research can help keep our marketing egos in check.

Market research isn't always about predicting what WILL happen.  Sometimes it is about perceiving what IS happening.  A while back, I was managing the roll-out of a new name and identity for a healthcare system.  We had developed a marketing plan and our research showed that we were actually performing above expectations as far as market penetration on the new name and understanding of what healthcare entities were included in the newly formed and named health system.  It also showed that people had no idea how to pronounce the new name.  We had not even thought of this as an issue when we were developing our roll out campaign.  Armed with the perceptions that market research provided us, we were able to add radio to our promotional mix and soon had people pronouncing the health system's name correctly!

Making predictions is easy.  Making accurate predictions is hard!
We all make predictions all of the time.  Taking the highway will be faster.  I won't take an umbrella because its not going to rain until I get back.  The Cubs are going to win the World Series in 2013.  Making predictions is easy.  Making accurate predictions is hard.

The subtitle of Nate Silver's book is "Why so many predictions fail -- but some don't."  Human beings, Silver tells us, are hardwired to look for patterns in the world around us. While that would seem to be an advantage when it comes to evaluating data to support subjective decisions, sometimes it just makes it difficult to sort out the data that is important to pay attention to from that which is, well, just noise.

You see, the problem with research or prediction in the 21st century is not data but filtering.
We have plenty of data.  We have more data bombarding our synapses every day than we could possibly process in a week!  So the challenge then becomes learning to select only the data and information that is relevant and helpful in making accurate predictions.

Just as we make predictions all the time, we also filter all of the time.  One of the ways most people filter is by seeking out the familiar.  If you are politically conservative, you most likely watch Fox News more than someone who is liberal.  If you are from New York, you are much more likely to know last night's Knick's score than you are the score for the Suns.  This is one of the ways we manage the tidal wave of information we are exposed to each day.  As the amount of information we must deal with has increased, so has the size and the intensity of the filters we use.

The problem is good researchers need to learn how to remove the filters when they review research data.  While filters help us get a handle on raw information, they can also hide real research results.  An objective predictor is aware of her biases and prejudices and accounts for them when evaluating data.  A careless predictor looks at data through biased colored lenses and gets a distorted, and most likely inaccurate picture of the world.

Prediction, or research, may be the forgotten stepchild of your marketing plan, or the part of your marketing mix that never gets crossed off of your "to do" list.  If, however, you take the time and make the effort to do some carefully planned and executed research and analysis, it will be a great help to your marketing efforts.  It will provide you with greater insights to your market and a better understanding of how well you are communicating to that market.

At least that's my prediction.