John Little, Institute Professor of Management Science at MIT’s Sloan School of Management, is widely regarded as the founding father of marketing science. While he began his career in the field of operations research almost five decades ago, he eventually branched out into marketing and became known for his research on models of individual choice behavior, marketing mix models for consumer packaged goods, and adaptive control of promotional spending. In operations research he is best known for his proof of the queuing formula, commonly known as Little’s Law.
Little has been at the forefront of many areas-even before the internet became popular, he had already created and implemented the idea of online marketing models. He was one of the pioneers in the use of scanner data, and predicting future buying behavior. He started companies such as Management Decisions Systems and Kana Software. The annual John D.C. Little Award is awarded by INFORMS in his name.
Even at the age of 84, Little is sprightly as ever. He works just as hard, and still goes for a run each morning. He showed no signs of jet lag when he flew down from Boston to Beijing where he spoke about his pet subject-marketing science-at CKGSB’s Marketing Research Forum.
Zhang Kaifu, Assistant Professor of Marketing at CKGSB, sat down with Little for a conversation on the evolution of marketing science in the US, and what Chinese companies can learn from it. Excerpts from the interview:
Zhang Kaifu: When you started working on this subject, marketing was not considered a science.
John Little: No, but everything has fundamentals. And they remain to be discovered and utilized (in practice). In the 1960s, I worked on media models, for example, and there is certain kind of data that exists and you can build models which will use (that data), but there are also judgments (that) have to be made. And one of the things people have been reluctant to do was to call it a science when you are using judgments.
ZK: So they consider science to be a hard, precise and mathematical process where there is no human judgment involved.
JL: Well… that’s inappropriate in managerial conditions and in marketing conditions, usually. And therefore I wrote some papers which use judgments, and as time has gone by, we have understood processes better and better and require less (judgment) in some sense. I have a paper called “Managers and Models” (on how managers can use these models).
And for managers to be willing to use something, it has to be fairly simple, it has to include the important elements that he perceives as problems.
ZK: Not too complicated so they still can comprehend the essence…
JL:That’s right. So a lot of people like that idea. Prior to that, you couldn’t do any marketing science or management science without a very, very complete database, or they had a database so they analyzed it but they left out important things.
ZK: That is the beginning of marketing science. And as we know that after 40 years, many firms, in the US at least, have already adopted many tools from marketing science-conjoint analysis, optimization, etc.-and many of them have already proved to be quite successful. We want to get a little of that historical perspective from you. How did this adoption process first start?
JL: I founded a consulting company with some colleagues. The academics wanted to solve new problems and publish them, but they then hired MBAs (to put this research into practice).
We were willing to do the methodology and see that it worked. And one of the interesting things that I was involved in was building a marketing mix model at Nabisco which (was then known as National Biscuit Company and is now owned by Kraft) for Oreo cookies and another one for Coca Cola.
ZK: So it’s like a measurement/optimization tool?
JL: That’s right. And perhaps the most well-modeled stuff-which I’m not so much involved in-is new products, because so many products fail. My colleague Glen Urban (David Austin Professor in Management, Emeritus, at MIT) also worked out a measurement process that you can take into a mall, and get people to try the product, and also to view potential advertising for the product.
ZK: This can be done before the product launches and it can help make some improvements…
JL: That’s right. And it used to be. The product launch cost million dollars and this process cost maybe $60,000, so the payoff was huge. And if you are going to kill it, kill it early.
ZK: That’s all for the better. You mentioned that companies like Nabisco and Coca-Cola adopted some of the marketing science models early on. Did you see an impact after the companies made the adoption decision?
JL: Well, interestingly enough, we had a built-in process of adaptation. It is (to see if) advertising effectiveness decreased or increased. Then you can shift the marketing mix and that sort of thing is very helpful. In fact, you can do experimentation.
ZK: Counterfactual simulations before you actually carry it out in the real world…
JL: That’s correct. But you can also carry it out in the real world through a continuing re-measurement, because you introduce different advertising copy. The market changes, and you introduce different promotional techniques.
ZK: Did some of these insights translate into actual managerial actions? Did Coca-Cola, for instance, change its advertising strategy after that?
[This article has been reproduced with permission from CKGSB Knowledge, the online research journal of the Cheung Kong Graduate School of Business (CKGSB), China's leading independent business school. For more articles on China business strategy, please visit CKGSB Knowledge.]