What Do CEOs Want From Marketing?

Transcription

1 Market Leader Issue 27, Winter What Do CEOs Want From Marketing? Anthony Freeling McKinsey Fiona Stewart Antennae Fran Cassidy The Cassidy Media Partnership Top of the CEO agenda is the need to deliver consistent top-line growth within an existing business portfolio, rather than from a continued reliance on acquisition. This objective was identified from our research into the opinions of CEOs and CMOs and highlights the importance of good marketing in running a successful company. We identified five consistent themes and these were: strong brands as a significant asset; more effective use of consumer data; the role of innovation, the need for better implementation and continued focus on business efficiency. Each area has significant implications for the role of the marketing function. Brands as a company asset In an increasingly clamorous society with a proliferation in the sheer volume of offerings, strong brands are significant assets in enabling companies to compete effectively. The challenges are building and maintaining brand equity by keeping brands refreshed and relevant and restoring trust in brands, particularly in sectors under attack from regulatory or consumer groups. Fmcg businesses typically have a strong brand focus across the organisation, but there is no room for complacency. Here, the main challenge is optimising resource allocation. As a result, a number of CEOs and CMOs talked about further rationalisation of the brand portfolio so that existing resources could be more effectively channeled to support stronger brands. In retail and service sector businesses there is a growing recognition among CEOs that the brand is absolutely crucial in an increasingly competitive marketplace. As one CEO put it, 'Lots of well resourced companies are fighting for the same share of mind so the brand is critical.' Overall, the management of brands as 'businesses' is thought to be critical. This has obvious implications for some of the current brand management functions as the need for broader commercial awareness within this role grows. Too much data, not enough understanding Not surprisingly, improvements in consumer and/or channel understanding continue to be key. Although companies seem to be awash with data that help them figure out tactics, many CEOs and CMOs are beginning to question the real strategic insights being generated. Some are quite outspoken about the need to get back to first principles. This means building models of purchase behaviour that enable the delivery of a strong proposition to consumers or customers. Being able to use customer data more effectively is seen as central, as this CMO puts it: 'I think one of our most significant challenges is really being able to extract more value from our customer data. For me this remains probably the most important issue'. The challenge is not just to obtain better quality insights, it is also to create a genuinely customer-focused organisation so the promise is delivered through the customer's experience. In addition, both CEOs and CMOs recognise there has to be a financial uplift at the end of the day. Innovation Both CEOs and the CMOs realise a profitable future depends on innovation in its widest sense. Most important is the drive for 'break through' innovations to address consumer and channel challenges rather than the incremental innovations believed to characterise much of the recent past. Over and above research and development for new products and services, many talk about an urgent need for procedures to challenge existing processes, data and methods in search of greater effectiveness. 'We need a fundamental reassessment of the value chain and how it is constructed, starting from better consumer and channel understanding.' Implementation The search for top-line growth also places a renewed focus on implementation. This is particularly marked in retail and service industries, but thought to be relevant in all businesses. In part this is about 'making sure we do the simple stuff very well indeed'. The drive for better implementation is not to underplay the importance of an appropriate strategy but there is a belief that it is easier to come up with 'world-class strategy than deliver world-class execution'. It is clear that marketers are expected to be capable of delivering both. As one CEO put it: 'They have to be able to decide what to do and

2 then do it!' Although some bemoan the lack of visionary leadership among those in the marketing function, others feel the real issue is delivering against the promises they make. Business efficiency Senior managers never stray too far from emphasising the importance of cost control but the current attitude to control seems to be focused on improving business efficiency and effecting operational transformation. This means 'having smarter processes' or 'finding ways of doing things better' rather than simply slashing budgets. Some CEOs mention specific programmes for continuous improvement, others talk about outsourcing, off-shoring, improving specifications to suppliers and better use of technology to create really efficient and effective systems. The need for agility within the organisation was included by many participants as a real business challenge. This is driven by the speed of change in many markets and the need for flexibility to adapt to changing market conditions. CEOs recognise that meeting these challenges requires them to leverage existing assets and capabilities more effectively: a combination of their employees, the effective execution of market strategies and the ability to use new technology to develop appropriate systems and processes. But what is the precise role that the marketing function plays in all of this? Is marketing coming of age? Given the current preoccupations of CEOs, particularly with top-line growth, it is not surprising that effective marketing is believed to be central to future strategy. A better overall marketing orientation is crucial to achieving greater customer focus. The aspiration is clearly articulated as shifting 'from having great marketers in defined places to having great marketing capabilities everywhere'. This focus on marketing orientation is not necessarily synonymous with the fortunes ofthe marketing function. In many companies, marketing is still viewed as the marcoms department and therefore plays a subsidiary role in strategic development. How has this seemingly paradoxical situation arisen? Consider impressions of the marketing function. The table below offers a range of perspectives: see Table 1. CMOs are often just as critical of the function in the industry in general. The marketing function is undoubtedly generating energy. The issue is that this energy needs to be channelled into creating more visible commercial value for the organisation. As one CEO summed it up, 'The marketing department is the heart of the business but not the head and it needs to be both.' What needs to change? The research identified three overall challenges for the marketing function. 1. What is marketing? One of the key issues is the wide variability in what people mean when they talk about marketing. This in turn is leading to confusion and dissatisfaction among both CEOs and CMOs. The research referred to 12 different activities that might be included in the function of the marketing department. These were: Market research Promotion strategy Pricing Customer communication Marketing fund allocation Key account management Distribution strategy CSR NPD Sales staff Corporate image and reputation Internal marketing and shareholder communication The responses to these definitions of marketing practices are telling. Some companies largely fmcg viewed nearly all of these areas as marketing tasks, with the exception of shareholder communication, internal marketing and key account management. Others expected only customer communications, market research, NPD and promotional strategy. In between these two extremes, some companies added in CSR, allocation of marketing funds and pricing. Where there is a central or group marketing director, an entirely different definition appears. Separate from the business unit and customers, they are often tasked with shareholder communication, CSR, internal marketing, corporate image and reputation. This mixture of roles leads to a lack of clarity in vocabulary. There appears to be no clear road map externally that defines what marketing does, while internally there appears to be confusion as to exactly what to expect from the function.

3 A number of CEOs admitted they had not made their expectations clear as to what marketing should deliver. This ambiguity is exacerbated by a lack of accountability from marketers themselves and a lack of proven models and processes consistently applied. 2. Balance between internal and external focus The role the CMO and his or her team plays within the organisation needs to change. Internally the marketing function needs to work more effectively with other departments to facilitate the consumer/customer centricity many organisations seek. A number of the CMOs feel one of their key roles is to provide the vision and business rationale for why the organisation needs to change the way its customer processes operate. This does not mean that marketing should be seen to 'own' the customer. Many within marketing counsel that if the customer is seen to be the sole preserve of the marketing function, others will too readily abdicate responsibility for delivery. But a strong internal focus reflects the importance of creating unity of purpose and internal alignment. Although the marketing function is believed to be full of highly intelligent and energetic people, both CEOs and CMOs talked about the way some marketers behave in the organisation 'more akin to a recalcitrant child than an adult' was one comment. This type of behaviour is not helpful for promoting the importance of marketing in the company. At the same time, there is call for marketing to become more externally focused of customers and end users. The operational demands within the marketing function are high and CMOs feel the role has become broader and more complex. As a result marketers have become more remote from their consumers/customers. Marketers are thought to rely too heavily on their service suppliers to bring those outside perspectives into the company. These two different demands need to be reconciled. 3. Skills and training Both the CEOs and the CMOs themselves are quite critical of the skills of many marketers, particularly the lack of overall commercial understanding and the need to argue their case using the language and frameworks of business (i.e. financial). Attitudes together with intrinsic skills and training are two areas in need of improvement. Intrinsic skills and attitudes The balance between creative and analytic abilities is widely questioned. Marketers place a premium on their ability to be creative, often being quite dismissive of the analytical and process skills of their colleagues in other departments. CEOs feel that marketers are quite reluctant to change the way they operate (and a number of marketers confess the same thing). Significantly, many of the marketers who have a broader role (incorporating strategy or sales for example) feel they have to be seen to have the most commercial understanding of all their peers to overcome stereotyped perceptions. Training There is concern among both CEOs and CMOs about the way marketers are being trained to cope with the demands being placed on them. Specifically: The kind of training required is unclear. The traditional marketing academies within the major fmcg companies are no longer producing the volume of alumni they once did, raising questions over the skills of more junior marketers. As one CEO commented, 'We have recruited from good companies but I am underwhelmed by their skills both technical and marketing.' Within companies, the size of the marketing function has generally diminished and fewer staff has meant that the apprenticeship model has broken down, so there is no longer the time to learn from the masters. The increased requirement for highly specialised skills may result in those rising up through the ranks missing the opportunity to develop the broader commercial skills necessary to assume more senior roles effectively. In addition high staff turnover results in a failure to develop an effective corporate memory. Thus best practices are not being embedded in everyday processes and actions. While some of these issues can be addressed within organisations themselves, others require more fundamental industry wide changes. Conclusions 1. The undoubted energy currently going into marketing tactics needs to be channelled into creating greater commercial value for the marketing function. Developing stronger methods of measurement and accepting greater accountability are necessary to make this happen. 2. If marketers are to take a major role in marketing strategy they will need to demonstrate a broader armoury of processes and models and a more commercially focused vocabulary. 3. Perhaps the greatest emphasis at the CEO level is on building marketing capabilities throughout the organisation to build much more effective customer focus. This presents marketers with a significant challenge: how to balance the need to work effectively internally with a renewed external focus on consumer and channel understanding. 4. Marketing can only take the lead in a company if it gains significantly higher status by delivery of results. 5. To ensure this, more needs to be done within the marketing community as a whole to build understanding about the meaning of marketing in today's organisations and to clarify the roles and responsibilities of those who inhabit it. Research methodology

4 A qualitative methodology was employed. A total of 30 CEOs (or equivalent) and CMOs were interviewed. Participants were drawn from a range of sectors. The interviews were conducted either face to face or over the phone and all fieldwork took place between July and October NOTES & EXHIBITS Anthony Freeling Anthony Freeling is a Senior Advisor to McKinsey and a freelance consultant focusing on helping organisations improve their marketing capabilities. Fiona Stewart Fiona Stewart is the founder of Antennae, a research-based consultancy. Fran Cassidy Fran Cassidy is Managing Partner of The Cassidy Media Partnership. TABLE 1

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