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[Transformation 2010] Transforming the Marketing Enterprise, Larry Light 

Marketing Transformation

This is a milestone moment.

Marketing as we know it is at a crossroads.

Consumers are transforming how they deal with brands… and…

Marketing must transform how it deals with consumers.

Our new marketing world has changed…

  •  There is a more savvy… intuitive consumer… living in a world of immense choice and personalization… wanting the benefits of choice… without the complexity of choice.
  • Customers are more knowledgeable and smarter… They are more informed… more skeptical… more demanding… and more value conscious.
  • There is a wave of responsible individualism: people want to make a difference. Where it used to be you are what you own or you are what you drive… now we hear… you are if you care and… I care for brands that care.
  • And… of course… with the economic anxiety of our times … there is a growing generation of shoppers… where frugality is fashionable

These changes are tailor-made for the talents of marketers!

But… I am concerned. I am concerned about the degradation of marketing…

We must redefine marketing… REDEFINE … or be part of its deadly decline …
Instead of a profession… marketing is becoming a trade… the trade of managing and executing marketing communications.

This trend is demeaning… and devaluing the role of the CMO.

Here’s an example… I attended a client marketing meeting… where… in addition to the Chief Marketing Officer… there was a chief insights officer… a chief concept officer… a chief innovation officer… a chief pricing officer… a chief retail officer… and a chief merchandising officer.

Marketing has fallen in love with the increasing number of communication channel opportunities… social media, entertainment, events, online, , and so on.  But, communications channel management is not marketing management…

This fractionalization of functions is fracturing the role of marketing… and the CMO.
Marketing is sliced… diced… spliced… strangled… and mangled by specialists competing with each other for limited corporate resources. The CMO’s role is often reduced to managing this competition and attempting to force co-operation.

We are marginalizing marketing … and… trivializing the role of the CMO… turning this crucial position into coordinator and mediator and arbitrator.

Whether BTB or BTC … the CMO is now… the chief referee.

Marketing is about managing the business… and… managing the business is bigger… than managing messages and media…

Peter Drucker… the most respected management guru ever… once said, “The purpose of business is to create a customer.”

Effective marketing is not merely about message and media management; it is about business management. It is fundamentally about attracting and retaining customers.
The CMO must be the business leader responsible to generate … and support … and activate… a customer-driven focus within the organization…  BTB or BTC.

We can no longer distinguish between the business plan and the brand plan. There is only one plan… it is the brand-business plan.

The purpose of brand management is the enduring profitable growth of the business. The purpose of the business plan is the enduring profitable growth of the brand. The three functional responsibilities for building enduring profitable growth are Marketing, Operations, and Finance.

The authors of the brand-business plan are the CMO, the COO and the CFO. The owner of the plan is the CEO.

The CMO brings a distinctive perspective to the three-legged management stool… the CMO is responsible for

  • Helping define the growth strategy…
  • Achieving organizational alignment … behind a common brand- business purpose and direction…
  • Helping define the Brand-Business priorities…
  • Developing and implementing a Balanced Brand-Business Scorecard… and
  • Leading customer-driven innovation… through providing insights into customer needs… and problems … defining the focus for the development of…innovative insight-driven products and services.
  • Developing the price-value strategy…
  • As well as responsibility for brand communications… internal and external

Marketing is all about how we profitably manage customer-driven… top-line growth. This is the goal of the brand-business plan.

It is easy to be a marketing genius… when there is category growth.  Just show up for work… and sales go up.

In the wonderful world of category growth… the growth strategy was to increase distribution, and have regular price promotions.

For example… in the retail world, opening new stores was the key driver of sales success… resulting in an over-stored marketplace…

Remember those days when research showed that the key driver of share of market … was share of voice. I guess it didn’t matter what you said as long as you said it enough times. Top-of-mind brand awareness ruled.

Those were certainly the good old days. Well… those days are gone. In many categories, category growth has dwindled or declined. We are in a share war...

I know… we have always said that market share is a key measure of marketing success. But, did we really mean it?

Not when we give up so easily…

For category after category… people say, “This market is mature.”

We have insecurity about maturity…. We actually believe that we cannot profitably grow share. So… the marketing recommendation is often… “I give up. Let’s go to China. Let’s go to India.”

A share war is the real test of marketing skill. It is a test of conviction and competence. Do we believe that marketing has the organizing, strategic role of for the enduring profitable growth of market share? I do!

Here is the challenge. In a share war, not everybody can grow. Some will win. Some will lose. Let the superior marketer win. This is as it should be.

Believing that we cannot grow because the market is mature is an admission of a lack of effectiveness in our marketing abilities.

The future will belong to customer-focused businesses that are best at attracting and retaining customers resulting in sustainable, profitable share growth.

Robert Lentz, President of Toyota USA, in a Washington hearing said that Toyota had “lost sight of the customer.” This is even more basic than a product failure. It is a brand-business failure. It is at the core of brand credibility.

Losing customer-focus is a certain path to trouble.

Marketing is at the center of this fundamental core idea. That is why marketing is more than a marketing communications role; it is a business management role.

But somehow… this is not happening…

There seems to be a serious limitation of the effectiveness of marketing… relegating marketing to the managing the means of the communications.

Why is this?

Here are a few reasons …

First… the lack of organizational alignment… commonly known as the Silo Mentality.
Silos spawn storage… not sharing. Silos reinforce lack of accountability for business results… it is always the other function’s fault.

We talk a lot about Integrated Marketing. But, integrated marketing cannot happen when we build our organization on segregation… it is organizational sectarianism.
Do not accept this marketing segregation!

Marketing is in a unique position to break down these isolated, towers of segregated responsibilities. But… we will never achieve this… if we continue to accept the fractionalization of functions.

The CMO is in the unique position of being responsible for the common thread that crosses all functions, all geographies, all organizational levels… The CMO is the keeper of the customer wants and needs… In a customer-focused business, the CMO is the voice of the customer.

Second, processes… templates …and tools are king.
Process dominates over passion. If the indicated actions fail, we can say, “It is not my fault. I followed the process.” “The process made me do it.” Over-emphasis on process… is marketing poison.

Processes do not think … people think…

Processes make risk-averse decisions…

In a world that is drowning in data… knowing what to ignore… is as important as knowing what to consider.

Marketers must return to using their expertise and their judgment and their creativity make reasoned…informed… insightful decisions.

Third – Insight has become the marketing cliché… yet, it is mis-understood… misused… mistaken….

We made it a meaningless, useless term.

  • Is it insight to discover that people’s incomes are under strain and stress?
  • Is it insight to learn that… people want an easy-to-use clothes washing- machine?
  • Is it insight to learn that people like food that tastes good?
  • Is it insight to learn that people prefer a dog food the dog will eat?
  • Is it insight to learn that a BTB customer wants a computer system that won’t go down?

These are not insights. These are observations of the obvious. Yet, in each case… these were reported as insights based on extensive research.

Meaningful insights are more than mere information… need to meet two criteria:

Surprise at what you learned…
And… as a result … a change in behavior based on this learning.
Real… actionable insight will not come from superior data analysis.

Business schools are turning out MBAs who are analyzers…rather than synthesizers.
MBA has come to mean, “manage by analytics.” I fear it will come to mean “murderer of brand assets.”

Superior analysis provides understanding of where we are and how we got to where we are. It does not provide insight into what kind of future we can create.

Several years ago… an article in Harvard Business Review observed that “true innovation and strategic value are going to be found more and more in the “synthesizers – the people who draw together stuff from multiple fields and use that to create an understanding of what the company should do.”

Fourth… Measurement mindset
As business has become more challenging… business has become more cautious.
The over-reliance on metrics… is stifling marketing…

Of course… the CMO must be focused on producing business results.
But, justifying marketing’s value only through metrics… results in an over-emphasis on metrics… the numbing by numbers…

Do not use metrics to justify… use metrics to guide continuous improvement. If marketing needs to be justified in the organization, then marketing has a bigger problem than can be solved through measurement.

Measurement should be a learning tool, not a justification tool. Measurement of past experiences… cannot tell us what will or might work in the future.

When I was at McDonald’s… I was asked whether I was certain that the new approach to building the brand will work. My answer was “NO!” I was not certain that it will work. But, I was certain of one thing, “The path we are currently on will not work.”

There is a big difference between confidence and certainty. Confidence comes from a combination of research information, experience and judgment.

Fifth… Build Trust
There is a “trust deficit” … it needs to be replenished.

People don’t trust the institutions in which they once placed their confidence … people no longer trust the government they elect… the banks they select… the food they eat… the marketing communications they receive.

The first priority table-stakes are about reliability, dependability, confidence, assurance, credibility…

It all comes down to trust.

In September 2009… Business Week featured its annual report on the 100 Best Global Brands … The importance of trust was the cover story.

They wrote: “In the world of branding, trust is the most perishable of assets”
Without brand trust… any brand will be tossed into the dustbin of banished brands. In this less trusting world… the role of marketing is even more crucial …

Creating, building and strengthening brand trust must be a major responsibility for the CMO... including the increasingly important role of internal and external PR.

Building and maintaining trust is at the core of effective marketing… without trust nothing else matters.

[PAUSE]

The theme of this 4As conference is transforming the marketing enterprise… Marketing as we know it will continue to decline unless we move to re-form… transform marketing… and transform the CMO… from a marketing communications role… to a brand-business leadership role.

Shame on us when often the first question for a new CMO is, “What will the new advertising be? Will there be a new slogan? Will there be a new advertising agency?”

  •  The CMO is responsible for building and managing the Brand-Business plan…
  • The CMO is the voice of the customer… whether a BTB customer or a consumer…the CMO should know more about the customer than anyone else in the organization… the CMO is the customer advocate.
  • The CMO must lead the effort to drive true customer-insight focused innovation
  • The CMO should lead the effort to break down organizational silos…

There is a wonderful book called 1959: the year everything changed. 1959 saw … the birth of the microchip, the birth-control pill, the space race, and the computer revolution…

The rise of Pop art, and indie films… as well as the emergence of Castro, Malcolm X, Motown, the Generation Gap…

2010 is marketing’s own 1959… let’s make it the year that everything changed.

Let’s harness the energy and innovativeness of marketing… and make it the central force of brand-business management.

Here is the good news. The customer is on our side. And, the CMO is the ultimate management voice of the customer.

 

 

Larry Light
President and CEO
Arcature LLC

Transformation 2010

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