One of the most powerful marketing formulas I’ve been exposed to is T x M = E. Developed by GE Asia-Pacific, this formula aims to balance and improve the process of marketing decision making. It’s also designed to balance the allocation of resources between technical and motivational activity.
A few implications from the formula are as follows:
1. Technically perfect activity has a limited effect. Consider the perfect new product that fails to capture people’s imagination (10 x 0 = 0).
2. Human motivation has a multiplying effect. Consider the flawed product, that appeals to an underlying human need (2 x 8 = 16).
3. The best marketing effect is achieved by balancing technical expertise and motivational understanding (5 x 5 = 25).
To illustrate this formula, here's a small example from back home in Australia.
In the late nineties, there used to be a local candy company called Binka’s (manufacturers of jujubes and gummies). Competing against global players like Mars, Nestle and Cadbury, Binka’s were struggling to maintain sales and in real danger of folding.
With their back against the wall, what did they choose to do? They focused their energy on understanding customer motivations. This is what they found:
1. The candy category was primarily about losing control with fun and indulgence.
2. However parents were also attempting to gain control by eliminating bad indulgences.
3. In jujubes or gummies, this meant eliminating bad artificial colors and flavors.
Based on these findings Binka’s made a minor tweak in technical expertise (T) and a major shift in human motivation (M). Without changing their technical product, they used their brand to tap into a deeper motivation - shifting from Binka's to The Natural Confectionery Company:
- Year 1: Sales volume increased by 84%
- Year 2: Sales volume increased by 262%
- Year 3: Sales volume increased by 540%
- Year 4: Sales volume increased by 866%
- Year 5: Sales volume increased by 976%