Net Promoter and revenue growth: an examination across three industries
This study examines the claim that the Net Promoter Score (NPS) is an indicator of future revenue growth. It presents evidence from firms in three US industries: airlines, supermarkets and insurance companies. The analysis uses longitudinal data for NPS and revenue for periods between 5 and 11 years for airlines and supermarkets. This contrasts to the predominant approach in past work, which has been to analyze cross-sectional data. In addition to that longitudinal analysis, the cross-sectional association between NPS and revenue growth is examined for a sample of ten large insurance firms for an aggregated period 2017-2020. The overall conclusion from the analysis is that Net Promoter is not an indicator of future revenue growth.
CitationDawes, J. (2022)"Net Promoter and revenue growth: an examination across three industries". Forthcoming in the Australasian Marketing Journal.
Some Practical and Theoretical Difficulties of Target Marketing
Most major marketing textbooks, including Kotler’s, have long argued for target marketing as the superior strategy, encouraging marketers to find and pursue exclusive segments within their competitive category. We argue for more critical questioning of this theory and the development of a more thorough epistemological basis to the theory. We highlight empirical evidence that competing brands seldom sell to different sorts of customers, even when the brands’ marketing strategy is obviously predicated on the belief that the brand appeals to a distinct segment. We show that it is difficult, or at least wasteful, to use media that targets a specific segment. We encourage marketing theorists to develop a more realistic, empirically grounded, theory of target marketing.
CitationDanenberg, Nick, Byron Sharp, and Rachel Kennedy (2006), “Some Practical & Theoretical Difficulties of Target Marketing,” in 35th European Marketing Academy Conference. Athens.
The Logical Limitations of Target Marketing
Smith's idea of segmentation has been steadily refined into Kotler's target marketing, and widely adopted by academics and practitioners. However, this approach has not been empirically justified, and is logically invalid in its simple forms. In this paper, a logically valid approach to target marketing is developed, and the conditions required for such an approach established. These conditions are found to be true far less often than suggested by proponents of target marketing. An alternative approach is then offered to guide marketing decisions when the requirements for target marketing cannot be met.
CitationWright, Malcolm and Don Esslemont (1994), “The Logical Limitations of Target Marketing,” Marketing Bulletin, 5 (5), 13-20.
Net Promoter Score Fails the Test
“Managers have adopted the Net Promoter Score on the basis that solid science underpins the technique and that it is superior to other metrics.
We find no support that for the claim that Net Promoter is the “single most reliable indicator of a company’s ability to grow.”
CitationSharp, Byron (2008), “Net Promoter Score Fails the Test: Market Research Buyers Beware,” Marketing Research, Winter, 28-30.
Questioning the value of the ‘true brand loyalty’ distinction
Many authors regard attitudinal loyalty to be ‘true’ brand loyalty, or at very least that
composite measures of attitudinal and behavioural loyalty are required to gain insight into
loyal behaviour. However, this position is at odds with basic epistemological principles,
empirical evidence regarding attitudinal stability, and the scope of existing causal explanations
in a variety of fields, including marketing. We demonstrate these points with reference to the
existing literature, and call for a greater focus on behavioural approaches to brand loyalty.
CitationSHARP, B, SHARP A, & WRIGHT, M. 1999 Questioning the Value of the True Brand Loyalty Distinction. In: Conference. J. Cadeaux, Dr., ed. Australian & New Zealand Marketing Academy 1999, 29 November – 1 December, School of Marketing, University of New South Wales.
Consideration sets for Banking and Insurance purchases
This study examines the extent of consumer information search and consideration of financial services brands. It uses data from two surveys of purchasing behavior. This study finds a surprisingly low level of consumer consideration, either by personal enquiry or via the internet. The most common consideration set comprised only one brand, and this was the case for both high-value and low-value services. The managerial implication is that services marketers should make brand salience a top priority, with the competitiveness of their offer not being the primary driver of sales. If a financial services brand is salient to a consumer, there is a very high chance they will purchase that brand, without extensive comparison of the merits of alternatives.
CitationDawes J., Mundt, K. & Sharp, Byron. 2009. Considerations sets for financial services brands. Journal of Financial Services Marketing, vol. 14, pp. 190-202.
CFO: “But what if we invest in training these sales and marketing people and then they leave?”
CMO: “What if we don’t invest in them and they stay?”
CitationSharp, Byron (2014), “The CMO's Legacy,” in Admap. online: Warc.
A Differentiated Brand Should Appeal to a Special Segment of the Market…But it Doesn’t !
Recent research has shown that competitive brands are bought by very similar client bases, that is, brand level segmentation is slight or non- existent. In this research, we examined a case where rather extreme attempts had been made to differentiate the brand and appeal to a distinct demographic group. Our purpose was to see how far the 'no brand level segmentation' finding generalises by pitching it against an extreme test. We found little in the way of brand level segmentation, certainly nothing that would make a difference to the marketing management of the brand.
CitationSharp, B., Tolo, M. & Giannopoulos, A. 2001. 'A differentiated brand should appeal to a special segment of the market...but it doesn't!' Paper presented at Aust & NZ Marketing Academy Confernce. 3-5 December.
Questioning The Value of the “True” Brand Loyalty Distinction
Many authors regard attitudinal loyalty to be ‘true’ brand loyalty, or at very least that composite measures of attitudinal and behavioural loyalty are required to gain insight into loyal behaviour. However, this position is at odds with basic epistemological principles, empirical evidence regarding attitudinal stability, and the scope of existing causal explanations in a variety of fields, including marketing. We demonstrate these points with reference to the existing literature, and call for a greater focus on behavioural approaches to brand loyalty.
CitationANZMAC
Independent Empirical Support for Porter’s Generic Marketing Strategies ? A Re-analysis using correspondence analysis.
Many published studies have sought to identify distinct strategy approaches with the objective of assessing whether certain strategies yield superior performance. Empirically derived strategy clusters are sometimes contrasted to theoretically derived strategy schemas or typologies as a point of reference, for comparison and contrast, or to explain associations with dependent variables such as performance. In some cases this theory dependence of observation can be misguided if the typology used lacks validity or incorporates flawed assumptions.
This paper re-analyses a published work where empirically derived strategy clusters were identified using the multivariate mapping technique of correspondence analysis. The analysis provides further insights into the relationships between the variables under study by allowing the distance between variables to be seen (visually). In this case, the technique shows how close or distant various business strategies are to one another. This is of interest because if quite similar strategies yield dissimilar performance levels, the implications are that either minor differences in strategy are extremely important; or unobserved factors are influencing the results. Conversely, if superior performance is associated with markedly different strategy, an implication for managers is to take very different approaches to strategy.
The paper concludes that the use of a well known generic strategy typology (Porter’s (1980) generic competitive strategies) was of little use in interpretation of the clusters that were identified. Further, it suggests that Porter’s (1980) generic competitive strategy schema does not describe/fit empirical reality, and provides no support for the notion that these generic strategies are routes to superior profit.
CitationJournal of Empirical Generalisations in Marketing Science, Volume One, 1996.
