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Tuesday, July 27, 2010

How Has Marketing Lost its Relevance?

In 2004, Nirmalya Kumar of the London Business School, published an incredibly insightful book called "Marketing as Strategy."  Professor Kumar argued that CEO's have lost faith in marketing -- that somewhere marketing became marginalized by tactical implementation of communications programs rather than owning a strategic "seat at the table."  Yet, as Kumar states, the importance of marketing as a two-way mirror between organizations and their customers has never been more important.

So we have this odd situation where the importance of the function is growing while the faith of management in those who lead the function is diminished. How did we get to this place where the marketing function is in crisis? How has marketing lost its relevance?

The answer lies, in part, with the subtitle of Professor Kumar's book: "understanding the CEO's agenda for driving growth and innovation." 

Over the years, many marketing organizations and the marketers who run them and serve them have become disconnected from the strategy of the company. My experience is that they often are communications experts not marketing experts.

Like any function under constant pressure, marketing developed its own measures to justify its existence.  Today, that takes place in the form of reliance on communications tactics and a train wreck of metrics, strewn like jackknifed cars along the track. 

We, as marketers get caught up in the latest pretty packaging whether it is social media, SEO or web traffic, and we look for metrics to justify how well they work.  (How many followers do you have?)

I find it interesting how many times I've read leading social media experts stress the importance of understanding the company's business objectives.  I want to stand up, shaking with incredulity, like the comedian Lewis Black.   "THAT IS THE PROBLEM!"  What are the business objectives?  Who in marketing helps set them?  Who in marketing understands them?  

Don't misunderstand me. Metrics are helpful. They are wonderful tools. But they are usually the cart before the proverbial horse. They often are not lead indicators of where the CEO is trying to move the company. CEOs are under increasing pressure to deliver profits. Board members worry about the complexities of financial reporting requirements. And, so, the C-suite agenda is less likely to focus on marketing issues. But marketing still has to find and deliver answers to questions that ultimately drive the growth of the company -- who are our customers?  what do they need from us?  how do we deliver what they need better than our competition delivers it? 

What has to change for marketing to become relevant to CEOs -- and for CMOs to keep their "seat in the suite"? 

Let's start by throwing stuff out. The 4Ps -- product, promotion, price and place?  In the dumpster!  Let's start to think and act like strategic business executives not kids playing with the latest toy and trying to show mom and dad how well it works.

Here's an easy place to start.  Answer the following three questions for your company or organization:

1. Where are we?  
2. Where have we agreed to go in five years?  
3. How do we get there profitably and increase shareholder value?

In one form or another that is what every CEO is trying to determine.  Twitter, Facebook, Digg, Reddit, Radian 6, only matter if they help answer the last bullet, and I believe they can -- when applied correctly to the right problem.

So if that is is the CEO's short list, what should marketing's be?  Let's go back to Professor Kumar.  Here is the set of questions he poses that every marketer needs to become relevant to the CEO and his or her agenda.  You need to answer these. If you don't know the answers, ask somebody. If nobody knows, figure out how to use the tools of marketing to get answers. That is how you become relevant. 

Seven Steps to Making Marketing Relevant Again
1. From Market Segments to Strategic Segments: 
  • Who are our valued customers?
  • Which customers are unhappy with current offerings in the industry?
  • Is the target large enough to meet our sales objectives?
  • What is our value proposition?
  • Does it fit the needs of customers we are trying to serve?
  • What benefits are we delivering?
  • Can we deliver and earn a profit?
2. From Selling Products to Providing Solutions: 
  • Do we guarantee customers outcomes and benefits instead of product performance?
  • Have our sales people developed consulting skills and deep industry knowledge?
  • Have we developed effective processes to allocate resources to solution projects?
3. From Declining to Growing Distribution Channels: 
  • What service outputs will the new channel provide?
  • How will the relative importance and power of existing channels change?
  • Which competitors will enter the new channel?
  • What changes in channel incentives to existing members will competitors try? 
  • What new competences do we need to enter the new channel?
4. From Branded Bulldozers to Global Distribution Partners: 
  • Have we identified our most valuable clients on a worldwide basis?
  • Are there single points of contact for global customers?
  • Have we optimized our supply chain for global efficiency
  • Have we harmonized pricing structures?
5. From Brand Acquisitions to Brand Rationalization: 
  • Which brands are contributing to our profits?
  • What needs-based segments exist in each category?
  • How much sales revenue would we risk by deleting non-core brands?
  • What is the role of the corporate brand?
  • How will we articulate our program to stakeholders?
6. From Market-Driven to Market-Driving: 
  • Are new ideas routinely imported from the outside?
  • Do we tolerate failures and have processes in place to learn from failures?
  • Do we ensure that radical ideas do not lose resources to incremental ideas?
7. From Strategic Business Unit Marketing to Corporate Marketing: 
  • How does the organization rate on customer focus in processes, including new product development, order fulfillment, customer relationship management?
  • Is the organization organized around customers?
  • Are metrics and rewards related to impact on customers?
  • Does the organization systematically learn about customers?
Clearly this is as much a shift in thinking as it is in the tools and programs marketing deploys. Social media and digital marketing tied to analytics can move the needle forward only a fraction if marketers don't understand the three most difficult questions any company faces. As marketers, isn't it time we stepped back and started thinking about the metrics we use as vehicles to identify the growth needs of the company rather than metrics that justify the existence of tactics that are often not well aligned with the strategic direction of the company?  Isn't it time we started to help set the strategic agenda of our companies and clients rather than serve as marginalized order takers worried about followers and colorful charts?


  1. Has marketing lost its relevance in what appears to be the golden age of marketing to come?


    Even though we are entering a new consumer era, one which will give rise to a new definition for social strategy (in which the consumer is an equal stakeholder in brand strategy formation), yet marketing today is still stuck between the many demands of the operational system, and the general belief that marketing is too important to be left to marketing, so this is absorbed by the CEO typically.

    Noting todays, climate, It may be more efficient for companies to out-source strategic and creative thinking whilst keeping decision-making in house, with a direct connect to consumers and what they think to try new things, explore ideas, deal with complaints, test market, etc.

    Just an idea.

  2. You make an excellent recommendation, Marco. Strategy and creativity often get beaten out of companies in the day-to-day grind of keeping up with the pressure of delivering profit. When those two areas are dead, my experience has been that innovation dies, too. The fact that Apple and Steve Jobs have made strategy and creativity central to the company is what makes them so innovative (and so well differentiated in the market). When companies who don't carry those attributes within their culture try to compete, they end up with me-too products such as Zune MP3 players and Kin smartphones. If strategic and creative thinking are not part of the culture, then companies need to acknowledge that and turn to outside resources for help or risk falling further behind.

  3. Bill -

    Very thought provoking, and in my estimation, you're absolutely right. I'm often surprised (dismayed?) at how many businesses are operating in a reactive way without lining up their decisions with this very important list of questions.

    I wonder if some of the trouble is that we don't recognize the value of investing the time in determining these answers, much less laying out the answers in a way that ensures that *everyone* in the busines is operating with them at the core. Strategy HAS to be an investment that companies need to make, and moreover, they have to revisit it on a regular enough basis - especially with the pace of business today - to ensure that the strategy is still in line with the market, with the customer base, and with the culture of the organization.

    Thanks for the discussion, and the brain food for the morning.

    Amber Naslund