What is your Marketing IQ?
Want to test your marketing IQ? Take a marketing IQ test written by David Corkindale, Professor of Marketing Management, University of South Australia (my uni):
Take a Marketing IQ Test
How much do you really know about marketing – and is what you think you know right? Are you trying to make business decisions using some out of date beliefs about marketing? Do the people who advise you on marketing know what they are talking about – are they, possibly unwittingly, using false assumptions or guesses about how customers actually behave or how markets actually work? Can you tell?
Here is a small set of questions that will enable you to find out. Some questions, and answers, will be familiar but others will cause you to reassess some of your long-held beliefs; that is the Test’s greatest value.
Some of the answers will surprise you. However, if learning of the right answers to these questions causes you to re-assess some other things about marketing you thought true then this could enable you to spend your marketing money more wisely in future. Some of the answers can also give you a basis for comparing the results you get with your marketing activity with what you could expect. They give you a norm to compare your results against. For example, if you raise prices by 4 % and sales volume declines by 8% that is actually quite to be expected and you can re-assure your colleagues of that, as you’ll see below. Now you may try to compensate for your price increase in other ways. If you still lose 8% of volume you know that they were in vain. If you lose only 3% you know that your extra efforts saved you 5% of greater decline.
What is the basis for claiming that the answers to the Test questions are the ‘right’ ones? Many of the conventional wisdoms in marketing can be traced to one example, often quoted by a guru at a conference or in an article. For all we know, the example was a chance, one-off event or applied only to a special set of circumstances. Such is the case with “it costs five times as much to win a new client as to keep one.” One example in one set of circumstances does not make a universal, reliable, reproducible truth. The only principles worthy of setting down as a reliable guide – and, ideally, as answers to our Test questions – are those that have been found to apply in many examples across a range of circumstances. In academic language these are ‘empirical generalisations’. An example would be that it has been found in many circumstances that, on average, sales volume goes down by 2% for every 1% that you put up prices. It is different for known, particular circumstances; for example, if you were a small brand and your price increase took you past the price of the market leader then the price drop percentage would be double the 2% norm.
Some Marketing questions are given below. Answer all the questions first and then turn to page XX to find the answers, and the explanations for them. The questions have two possible answers both of which are plausible, and might have validity in certain circumstances, but you must choose which answer is most right, most of the time.
Q1. The best way to significantly grow sales volume is to:
a. increase the loyalty of existing customers
b. find new customers
Q2. Brands that decline in sales, compared to those that grow:
a. lose a greater proportion of their customer base in a period
b. lose much the same proportion of their customer base
Q3. Significant overall sales growth can be achieved if:
a. you cut the number of products you offer by as much as 50%
b. you increase the number
Q4. When selling to a potential customer it is better to:
a. use a soft, relationship-selling approach
b. be very direct and straightforward about your offer
Q5. Building credibility with customers is most effective if you offer:
a. a product or service demonstration
b. testimonials from satisfied customers
Q6. Forced to choose, buyers prefer sales people who are:
a. highly dependable
b. highly competent
Q7. Breakthrough, unique new products have a better chance of success if you use:
a. a new brand name for it
b. an established and trusted brand name
Q8. The best way to introduce a new version of your product or service is to;
a. introduce it at a discounted, lower price to encourage trial
b. keep you price at the intended, required list price from the start
Q9. In industrial marketing it is 9 times more important to focus upon:
a. performance and quality advantages
b. price advantages
Q10. With a breakthrough, innovative product or service you can usually tell:
a. you have a winner within 12 months
b. it usually takes as much as six years before you can tell you have a winner
The Answers to the Marketing I. Q. Test
The questions set are just a sample of the many that could be posed for this exercise. They relate to a range of marketing circumstances: consumer goods and services, industrial B2B marketing and the marketing of new products and innovations. Some of the questions and basis for the answers come from a recent book: Meaningful Marketing**. It reviews the findings of some 2000 marketing studies and articles as well as using data that was specially collected. Other questions and answers come from the extensive work of my colleagues in The Marketing Science Centre at the University of South Australia.
Q1. The best way to significantly grow sales volume is to: b – find new customers.
This will surprise many as it is opposite to much conventional wisdom. However,
there is a huge amount of evidence from many countries including Australia that
backs this answer, particularly for repertoire markets. However, it is contrary to
what American consultants and academics believe – by armchair theorising – and so
does not appear in US marketing textbooks. The book cited above is rare in this and
quotes a study of 9800 brands where those that grew did so mostly by b.
Q2. . Brands that decline in sales, compared to those that grow: b – they lose much the
same proportion of their customer base, as do brands that grow. Those that grow
are much better at gaining new customers. This will surprise some marketing folk.
Q3. Significant overall sales growth can be achieved if: a -you cut the number of
products you offer by as much as 50%. Many studies quoted in the book show this.
In one example an Internet retailer cut out the bottom 54% of products across 42
categories. This resulted in an average 11% increase in sales. In general, it seems
that doing or offering one or a few things well rather many things poorly leads to
Q4. When selling to a potential customer it is better to: b – be very direct and
straightforward about your offer. This result comes from a major study of 901 new
products where success was assessed by whether a product survived more than five
years. It is also explained that for most customers the more difficult or obscure the
message is the more likely they are to fail to appreciate what is in it for them and
not purchase it.
Q5. Building credibility with customers is most effective if you offer: a – a product
demonstration. The basis for this answer comes from the study of the success of
new products. Using a testimonial was 29% more effective than just using the
company name alone but a demonstration was 47% more effective. Nothing is
more credible than seeing, touching, feeling and experiencing a product or service
yourself. A personal demonstration offers good evidence that you will deliver on
the benefit and your promise.
Q6. Forced to choose, buyers prefer sales people who are: a – highly dependable.
This comes from a study of 187 industrial buyers. Likeability was a desirable
characteristic of a salesperson and competency was 30% more important than it but
dependability was 320% more important. Buyers can manage their expectations if a
salesperson is incompetent and/or lacks knowledge but what they can’t manage is
non-dependability. What they can’t manage is a salesperson’s stability and
reliability. Also, dependability builds sound trust.
Q7. Breakthrough, unique new products have a better chance of success if you use: a –
a new brand name for it. One study examined 4000 new products. For a low level
of uniqueness, using an established, well-known brand name was more effective.
However, for those with a high level of uniqueness and innovation it was found
that a new-to-the-world brand name was more effective.
Q8. The best way to introduce a new version of your product or service is to; b – keep
your price at the intended, required list price from the start. We all know that the
price set communicates what value you think the product offers versus that of the
competition. Most customers do not want what is second-best.
Q9. In industrial marketing it is 9 times more important to focus upon: a – performance
and quality advantages. This based on a study of 1209 industrial manufacturers and
showed that in explaining differences in market share, quality was 9 times more
influential than price difference. Products and services that offer no meaningful
difference compared with competitors are a commodity and have to be sold usually
by lowering the price with, usually, consequent low profit.
Q10. With a breakthrough, innovative product or service you can usually tell: b – it
usually takes as much as six years before you can tell you have a winner. Studies
that have tracked the history of such major innovations over the last century as
TV, cars, VCRs and PCs show that on average it was six years before sales hit a
‘take-off’ point and started to climb significantly. At the six-year stage such
innovations had sales on only, on average, 1.7% of their eventual customer base
and a price that was 63% of the original, launch price. The more unique and
novel the offering, the more time it takes. You need to be patient. This is probably
what is the case with GM foods. Most people are happy with what they know and
trust; there is a natural inertia in the market. Your marketing plan had better build
What score did you get?
10 out of 10? You are well informed and probably a wise marketer. If you got 6 or more out of 10 you are better than the average. Less than 6? You had better read the book from which many of the questions came** and/or attend a marketing course to catch up on what’s actually known now about marketing.
* (Copyright) Dr. David Corkindale is Professor of Marketing Management at the University of South Australia.
** Meaningful Marketing. Doug Hall and Jeffrey Stamp, BrainBrewBooks, Cincinnati, 2003, available via MarketingSherpa.com.