Rules of Thumb

The paper describes a new approach to theory, based upon the use of rules of thumb. These offer practical help which is immediately of use in building upon managers' existing skills and knowledge, to develop specific solutions to unique problems whilst clearly highlighting the limitations of the 'theory' involved.

Marketing theories are supposed to underpin marketing practice. Recently, there have been a number of questions raised concerning the validity of some leading theories. Our research[1] (on 566 managers/professionals) investigated the differences - in terms of usefulness to practitioners - of seven of the leading marketing theories, split into two groups. The first comprised predictive models, which were the Product Lifecycle (PLC), Boston Matrix and Ansoff Matrix, and the second those that offered frameworks for analysis, which were the 4Ps, Segmentation, SWOT and Marketing Plans.

The group defined as frameworks were reported to be to be more useful - being actually used to provide frameworks for strategic decision-making - where the predictive theories forced reviews of existing strategy. The frameworks reportedly offered a clarity of focus in potentially complex processes; especially evident in the clear leadership (in terms of usefulness) held by SWOT. Our conclusions were that the results indicated that framework theories should in general be recommended as a starting point for the individual manager to develop his or her own solution to the specific issue to hand; and that predictive theories should be used more sparingly; in those areas where their predictions have demonstrable accuracy.

This paper is, therefore, part of a series which, addressing topics across the marketing disciple, propose new variants of ‘theory’ which we believe better meet these needs. In general, this new ‘theory’ is presented as rules’; since this format typically offers the most supportive framework. In particular, it introduces the idea that rules (of thumb) in general offer the most suitable frameworks for a number of important reasons. Thus, they offer practical help which is immediately of use in building upon managers' existing skills and knowledge, to develop specific solutions to unique problems whilst clearly highlighting the limitations of the 'theory' involved.

PRACTICAL HELP - 'rules of thumb' are derived directly from practical experience, and aim only to help the reader benefit from that experience. They also have a history of working in practice, which reduces the risk involved in implementing them.

IMMEDIATE (EASE OF) USE - 'rules of thumb' are, and need to be, inherently simple. In general they should be no more than one or two sentences long (or a single diagram) - so that the reader can immediately understand what they are saying; and can quickly put them into practice.

EXISTING SKILLS AND KNOWLEDGE - they build upon the practical skills and knowledge that the manager already possesses, rather than trying to override this, and typically develop a common-sense perspective - while still stimulating the development of real insight - which empowers the manager to deploy his or her own best judgment

SPECIFIC SOLUTION(S)- they directly relate to the unique situation facing the manager, which only he or she can solve and to which outsiders can only contribute general ideas, which is why they have to be empowered to confidently handle the related decision-making.

RECOGNIZED LIMITATIONS - even more important, users recognize that 'rules of thumb' are not perfect (as traditional marketing theories often claim to be). They are, justifiably, seen as approximations which will probably help in most (but not all) situations. A realistic awareness of the limitations on what you may do is as important in marketing as that of recognizing the potential awaiting development.

Such rules offer the most realistic approach to most marketing problems; but nobody should expect to apply each and every one of the rules to every situation facing them. They provide, in effect, an extended menu from which the user selects just THOSE FEW RULES WHICH APPLY TO A SPECIFIC SITUATION.

On the other hand, selection of the theory or technique to use - at any stage of the management process - is one of the most difficult tasks facing a manager. Accordingly, to help critically appraise the various 'theories' - the new Rules we are suggesting as much as the traditional approaches - the technique we now recommend is:

It should be obvious, from the list above, that the most important feature of the above approach is the rejection of anything and everything which does not directly help you solve your specific problem. This may sound trivial, for why should anyone think of offering solutions which are irrelevant or simply do not work? But, in their enthusiasm to help, many marketing experts will rush to do just that! The recognition of the individuality of each situation is normally a key requirement for sound marketing practice.

This process will inevitably discard most of the theories and techniques on. Even so, there is a reasonable chance that, from the wide variety on offer, there should be at least one idea which can offer some new insight into the problems at hand.

What use you then make of such theory depends entirely upon the specific needs of the moment. The most important advice, however, is given by the last recommendation from the Critics Charter. It is to use it as no more than a starting point. Indeed, its main value may be in terms of the new insights it stimulates, which may in turn suggest new solutions. More generally it should offer a productive framework within which answers may more easily be worked out.

However you use theory, though, you should only use it as an aid to your own judgment. In marketing you cannot delegate important decisions to outsiders. No matter how expert they are, they cannot have the amount of experience, of the matter in hand, as you do!

Where you are starting your deliberations, however, a more basic approach is needed. The next framework we offer, therefore, is the 'Analytical 4-Step' This simply outlines the stages which may help you to deploy your own judgment in any given marketing situation.

This process, which may be used in a variety of management situations but is especially suited to handling the complexities and uncertainties to be found in marketing, is deliberately kept as simple as possible. The hallmark of effective marketing practice is often simplicity. If you don't understand exactly what is happening you cannot hope to control it!

The most powerful starting point for analysis is, thus, the simplest. It is a blank sheet of paper! Without any preconceptions about what to expect, without any artificial frameworks to bias your views, without any tick-lists to limit your horizons, you simply write down the key factors about the situation which faces you. These factors should already have emerged from your previous desk research or more likely will already have been known to you as a result of previous experience.

Then start the selection process; following much the same process as in the 'Critic's Charter', delete all those which will not be absolutely crucial to the marketing strategy or tactics you are planning. It is likely that, even so, few will disappear at this stage - since most will seem essential - so be more ruthless and progressively discard the least essential until you have no more than six factors left (though these may be modified to encompass some aspects of those deleted - as long as this does not dilute their impact).

Then prioritize these six factors (from one to six, in descending order of importance) and note why you have chosen these priorities (since, at a later stage and as conditions change, you may want to change the order of these items).

Finally, try and identify what relationships exist between these factors. Some may be trade-offs (price against quality, say), some may be complementary (support levels and image, say). Whatever aids you use, simply try to see what patterns emerge. At one extreme, this is a process of synthesis - trying to combine the components to produce something bigger, and better, than the individual parts. Ideally, you should reduce the six factors to no more than two 'prime directives' (the concepts or philosophies on which managers are able to focus, but which still encapsulate the key elements). At the other, it revolves around 'dilemmas', where there are several options which are apparently in conflict with each other. The management of the dilemma, so that apparently conflicting options may need to be simultaneously applied - with synergy rather than friction, is the route to success in these cases. The classic example is that of the Japanese who simply did not accept that raising quality standards would cost more; and who went on to show that in practice it actually reduced overall costs.

Depending upon the outcome of this final stage it may then be necessary to return to the first step - to add in the extra factors which this has suggested might be relevant. The whole process is then repeated. In many marketing planning activities iteration is the key to progressively optimizing the final output.

This, then, is the 'Analytical 4-Step' approach to analysis; though to make it a bit more memorable, there are actually five steps - where Step Zero is perhaps the most important of all! In the present context this is referred to as 'Zero Level Marketing'. It is a commitment to approach each new activity afresh - a blank sheet of paper -without the prejudices derived from previous exposure to theories.

The factors which you write on that blank sheet of paper, therefore, should only be the key factors which are directly relevant to the individual situation in hand. The essence of this process, of Zero Level Marketing, is the distillation of exactly what is important to the current situation - unencumbered by any academic gimmickry (no matter how elegantly it may be packaged!). On the other hand, I will repeat the point that this may be very powerful in its simplicity, but is also quite sophisticated in use.

I will emphasize, however, that this approach, this particular form of analysis, is just one of those which are available. It is, as always, up to you to select (with the aid of the Critic's Charter, say) which one of these is best suited to your specific requirements at the time; enlightened pragmatism is a virtue and a diversity of approaches a near necessity!

The one great virtue of the 'Analytical 4-Step', though, is that it is totally under your control - you know exactly where you are.

The basic assumptions behind these new rule-based approaches derive from what we call the philosophy of 'Realistic Marketing'.

Rule T8 - THE BASIC PHILOSOPHIES OF REALISTIC MARKETING -

a) PRAGMATISM - ABOVE ALL, ANY THEORY CLAIMING ADHERENCE TO THESE PHILOSOPHIES MUST OFFER VALUABLE, PRACTICAL SUPPORT FOR THE MARKETING PRACTITIONER

b) SUBSERVIENCE - but it must clearly limit itself to being just an AID to the manager's own marketing (decision-making), never as a replacement for it

c) COMMON-SENSE - and it must explained in terms which mean that it can be FULLY understood by, and supported by, all those implementing it

d) INDIVIDUALITY - it should normally be seen only as providing support for the specific elements of marketing currently under consideration, and should not be derived from irrelevant generalizations

e) OPTIONALITY - and it ideally should signal that it is only one of a number of options, one of the alternative approaches to the specific topic

f) INCREMENTALISM - an especially important point is that its action should usually be capable of (and usually be seen to be) operating incrementally upon the factors involved

g) ITERATION - and this action should generally be repeatable until an optimal outcome is reached

h) RESOURCEABILITY - but it must take account the reality of the resources - human and technical as well as financial - available to the organization

i) INTEGRABILITY - indeed it should, as far as possible, make clear what role it also plays, if any, in co-ordinating the operational resources across the organization as a whole

j) INVESTMENT - the time dimension, which means that marketing decisions must be viewed as investment decisions affecting the long-term as well as the short-term, must be allowed for

k) ZERO-LEVEL - FINALLY, IN SUMMARY OF A NUMBER OF THE ABOVE FACTORS, ANY THEORY, SUCH AS IT IS, SHOULD BE DIRECTLY RELEVANT TO THE SITUATION IN HAND - in line with the discussions earlier in this chapter

From this very long list, the first factor is normally the most important - since it encapsulates the 'realism' which is the definitive feature of this form of marketing. It also leads naturally to most of the other factors listed, including multiple, alternative approaches to marketing topics (best handled by the Zero Level approach) - as well as the very real constraints imposed by limited resources, and previous history - and it highlights (at least in this version) marketing's central role in co-ordinating the organization’s resources overall.

'Realistic Marketing' should be nothing if not pragmatic, and should judge itself by the practical outcomes of its advice to the managers it claims to support.

The new rules, covering the range of marketing practice, are explained in more detail in the paper-back ‘New Marketing Practice’[2] recently published by Penguin.

The secret of using them effectively is to remember that they offer practical help which is immediately of use in building upon managers' existing skills and knowledge, to develop specific solutions to unique problems whilst clearly highlighting the limitations of the 'theory' involved

[1] Mercer, D, (1996), Management’s Commitment to Marketing Theory Compared with Actual Practice, MEG (Marketing Education Group)

[2] Mercer, D, (1997), New Marketing Practice, Penguin