How Will Marketing Stay Relevant?

     It is the ultimate corporate paradox: the more important marketing becomes to the organization, the less important are those in marketing departments. Marketing's vital role is acknowledged. A survey of 370 marketing and non-marketing executives, conducted by the Association of National Advertisers (ANA) and the consultancy Booz Allen Hamilton, revealed that 75% believe that marketing has become more important to their firms over the past five years.

    Despite its importance, marketing is not getting the respect that all those in marketing think they deserve. Few marketing executives ever make CEO. Vice presidents of marketing have a notoriously short shelf life.  According to executive recruiting firm Spencer Stuart, the average CMO (Chief Marketing Officer) tenure lasts only 23 months. In the food industry, tenure is only 12 months, barely enough time for business cards to dry. Famed branding observer Don E. Schulz observes that "the marketing function is being pushed lower and lower in the corporate hierarchy."

     The reasons for marketing's exile to the corporate doghouse are familiar. Competition has increased, and only shareholder patience has shrunk more than product cycles. The mass economy, with its simple, predictable marketing tools, is dead. Consumers are more fickle than loyal.  
   
     So what is to be done in this environment? How can marketing recover the respect and status it once had, when CEOs sought lunch dates with Mary Wells and other famed Madison Avenue executives? The ANA study points out some common answers, some commonly ignored suggestions and, most interestingly, a potential new role for marketing. The typical answers revolve around marketing's insistence on marching to the beat of its own drummer, even though that makes it out of step with the rest of the organization. For example, the Conference Board found that the top four chief executive challenges for 2004 were top-line growth (52%), corporate agility (42%), customer loyalty and retention (41%), and innovation (31%).  By contrast, Booz Allen Hamilton found that marketing executives were focused on branding guidelines (83%), counseling divisions (52%), best-practice sharing (52%), and developing capabilities (47%). No wonder the ANA concluded: "Marketing is disconnected from the CEO agenda."

    Signs of the disconnect are everywhere. Marketing prattles on about "brand equity;" CEOs are focused on retention and customer equity.  AdWeek ranks agencies by how much they persuaded clients to spend with them; BusinessWeek ranks firms by profitability and shareholder value. To address this gap, marketing needs to talk the language of business. That means more than paying obligatory homage to ROI, then using surrogate metrics like "awareness," which has no quantifiable impact on the bottom line. It means using some of the advanced features of Excel. As the ANA study put it all too well: "Some marketing chiefs value unbridled creativity and innovation over multivariate regression models that isolate the incremental consumption delivered by a new ad execution." It also requires becoming much more knowledgeable about other organizational areas. If branding is defined in terms of being able to sense, deliver and capture customer value, then marketing executives must have working knowledge of supply chain, financial and product development management as well as ad and PR execution.

    Other common-sense suggestions are rarely implemented. For example, pricing is one of the legendary 4 Ps. Yet pricing is most frequently driven by either finance or sales, not marketing. Additionally, marketing needs to learn how to market itself. Ask someone in the warehouse, accounting or even human resources what marketing does. The answers will generally revolve around ignorance or cynicism. Those are not much of a base for a prominent organizational role.

    But what was most interesting about the study was its all-too-brief look at a potential new role for marketing. This new role has the potential to both raise marketing's stature in the organization and reduce the onus of being expected to measure the unmeasurable, such as the impact of community relations.  The new role revolves around new product development and innovation, primarily by facilitating interaction between customers and other organizational areas. The ANA study concludes that "a surprisingly high percentage of correspondents believe [marketing's] most important contributions lie in zones not typically associated with marketing, such as driving innovation and encouraging cross-functional collaboration." In the consumer goods industry, for example, 79% felt that marketing was "best positioned to orchestrate across functions" to develop and promote new offerings.

    In many ways, this role to corporate spur innovation takes marketing full circle. Marketing's original role, when it started being added to corporate organizational charts in the 1920s, was representing the customer. Marketing was supposed to be a stand-in for the customer, letting product development and other areas know exactly what customers wanted. It wasn't until the 1950s that the role changed to finding and selling the customer.

    Because they are the source of all profitability, nothing else is as important as customers to a company. If marketing wants to reverse its current dive into irrelevance, it needs to once again be seen as the "voice of the customer." Ultimately, that will require less advertising and PR, and more customer communication and collaboration. If you're in marketing, start changing your job description and responsibilities if you want to ever reach the top - or even keep your job longer than 23 months.

Comments

[Barry Welford]

It's a Permission Marketing world and the company beating the competition will be the one that is most 'to the right' on the product-driven / customer-centric scale. Marketing should not only 'represent the customer' as in the 1920 view but make sure that the whole company organization is listening to and reacting to what the customer really needs.

In Balanced Scorecard lingo, the four main assets of the company, financial, human capital, customers and business processes, need to be managed. The VP Marketing is responsible for managing the customers asset. In many companies, it's the make-or-break asset for survival and success. If a company doesn't think that asset is important, then they're leaving the market open to more clued-in competitors.