In Marketing 101, I recall the professor inculcating us with one marketing principal that we should never forget: STP (segmentation, targeting, positioning).

Vitamin Water, with its recent marketing, cleared the first step (as illustrated with the above ads). Here are three segments for the energy market: athletes, health-nuts, and, some form of self-expressive urban identity.

The next step is targeting. Instead of selling to everyone, the profs suggest that a company pick the most profitable, desirable segment.

Vitamin Water ignores this. I can imagine the marketing manager proclaiming, “Let’s sell to every type of consumer that will pay for $10/gallon for flavored water.”

The drink is three things at once. If I showed this to a marketing prof, they would scoff at such ineptitude, proclaiming that three distinct marketing messages leads to mass-confusion. As the great sage Seth Godin teaches us, “If you need to water down your story to appeal to everyone, it will appeal to no one.”

But I’m not so sure. Vitamin Water has hit $500M in sales, regardless of whether the marketing pitches the product three different ways. If it works, who cares?

What do you think, marketers of the world? Is Vitamin Water violating the sacred laws? Or are there new laws?

Business schools love frameworks: STP, SWOT, porter’s five forces, ideation, the 5ps, the 5Cs, etc. Those that have memorized such frameworks realize that they have no practical use in the real world.

I have a new framework for you: Design Thinking. Two weeks ago, Fast Company declared Design Thinking the “it” concept, soon to be the topic of countless books, blogs, and speeches.

What is Design Thinking? Consider the designer’s process, their scientific method–now mirror it onto any business problem fathomable.

Design thinking takes the sexiness of design and extends it beyond aesthetics to each step of the product development cycle. By disseminating the design process, everyone can be the clever, right-brain attuned designer, but without hipster glasses and all-black attire.

What’s the Design Thinking process? Evangelists organize the process into 4 steps. If I was to design a chair, for example, here are steps:

1. What kind of chair (scope)? Designers need constraints. How will I use the chair? Where will it go? These constraints set the scope of the problem and the designer can begin to get creative.
2. Look at more chairs (research). Designers look for inspiration. A team of designers will venture into the field, observing new chair designs, trends, and inspiration from industries far removed from the process. At this point, the design team has many ideas.
3. The drawing board (prototype). With several possible ideas for the chair, the designer will quickly sketch/model each idea. Prototyping the idea makes it tangible, facilitating new ideas, revisions, and progress.
4. The perfect chair (implement)! After several rounds of prototyping and revisions (and perhaps more research!), the designer will have a few solid creations from which to choose.

Contrast this with the processes in a typical corporation (I call it the Powerpoint Methodology). Decision-making involves a committee 2-levels removed from a project, who will decide among 4 fixed options described in Powerpoint. The project team chose 4 options because they filled the Powerpoint document and time allotted for their presentation. The company will spend more effort on deciding among the options than creating them.

The Powerpoint methodology is structured and linear (i.e, choose among these fixed options). The design process, however, has endless possibilities, where one can move forward and backward between prototyping and research, never bound by corporate bureaucracy.

Is Design Thinking legit? I’m willing to give it a shot. My reasons:

1. Pro: Just about the whole Internet (and every Fortune 500 CEO) is on-board the “design is important” bandwagon.
2. Pro: It’s painful if you’ve watched a traditional business team choose a logo. Slow-moving decisions are based on awkward consensus or brute force. Compare this to logo design in a creative firm, which relies on rapid prototyping and produces far more innovation.
3. Pro: Rather than a single vision, design thinkers work in teams using mass collaboration. 5 heads at business problem are better than one. Having finished Wikinomics, this is a philosphy I share.
4. Con: IDEO loves Design Thinking because they created it. Much of the online buzz sources from IDEO employees, which leads me to believe the whole concept is masturbatory.

Learn more about Design Thinking:

• Forthcoming book proselytizing Design Thinking.
• Design Thinking Blogs: Metacool, Design Thinking
• If there was a design thinking degree, here’s the curriculum
• What does design thinking feel like?
• Harvard Business Review article on design thinking by IDEO CEO Tim Brown.

The Netflix prize looks to be nearing completion since its 2006 announcement. Teams have competed to improve Netflix’s “suggested movies” algorithm by 10% (using your prior rentals, it predicts films that you might also like). The lack of success is from movies like Napoleon Dynamite. No matter how many regressions or models thrown at the algorithm, it’s impossible to predict whether someone would enjoy Napoleon Dynamite.

Two important points:

• Napoleon Dynamite is popular, but its popularity has no rhyme or reason (e.g., celebrity cast, genre, type of humor).
• No one (movie execs included) could have predicted Napoleon Dynamite’s popularity.

I’m reminded of a phenomenon called cumulative advantage, a theory that things are popular because they are popular (a feedback loop of sorts). Cumulative advantage has a big advocate: an academic, Duncan Watts. He argues that popularity is random and unpredictable–explaining Netflix’s inability to predict preference for Napoleon Dynamite. The idea is that popularity is not intrinsic (i.e., why Harry Potter was rejected by 8 publishers).

It’s black swan‘esque–consider music and movie execs scrambling to produce “hits.” Decades ago, broadcasting the latest singer on top 40 radio or casting Clark Gable in a film guaranteed popularity. But now, even an all-star headliner (i.e., Will Ferrell) means nothing.

Watts suggests that popularity has to do with our social nature–we desire to experience the best of everything by relying on others (i.e., Digg, most-viewed YouTube, most-reviewed Yelp), which compounds popularity and cumulative advantage. This interdependence makes predicting hits impossible, as individual taste have no impact.

So what’s this mean for marketers, as we are told that meeting individual customer needs are pivotal to success? Are customers irrationally relying on the influence of others?

My opinion: yes and no. If you’ve read Predictably Irrational by Dan Ariely, you’ll find many examples of consumer irrationality. Studies show that consumers will order different food and drinks based on whether they order first or last in a group. Another study shows a drop in cheating when people are forced to read the 10 commandments. No doubt, I can imagine social influence trumping personal preference in a variety of situations.

But I can’t imagine it affecting my decision for certain products, like toothpaste or detergent. In these situations, marketing frameworks are my friend.

If I was the marketing manager for Napoleon Dynamite, I would hope that I could influence popularity. But I’ve been drinking the marketing kool-aid for 6 years now. While I find it hard to believe that any marketing efforts would be inefficacous, the evidence is compelling: hundreds of statisticians, economists, and hobbyists competing for the $1M Netflix Prize could not predict consumers that would like Napoleon Dynamite. Who am I to think that my silly marketing research could do better?