Comments on: Marketing Utopia: Wedding or a Marriage?

By: Peter

Peter — Sun, 26 Aug 2007 00:48:20 +0000

In small businesses, we like to think of marketing as strateic, and recognize its long-term contribution, but there is tremendous pressure to focus resources on generating sales leads and business this year, rather than corporate positioning. The latter is key for long-term success, but you have to suvive the short-term to get there!
On the other hand, we try to make marketing strategic by thinking of the product development and marketing budgets as two elements of a “new business development” budget. If you have the right products, and just need to put some muscle behind them, marketing gets the resources. If the product has lost its edge, or an opportunity or need exists to develop a winning successor to today’s product, the resources need to go into R&D. Marketing should have a central role in deciding this allocation. If marketing is just used to sell what exists, it will always be tactical, irrespective of budget horizons. If it shapes the new products and shares resources for business development, it will be strategic, irrespective of the budget horizons.

By: prasanta

prasanta — Wed, 22 Aug 2007 20:24:17 +0000

Thank U for ur valuable information to the marketing society……..which is indispensable for them.

By: Paul Barsch

Paul Barsch — Wed, 22 Aug 2007 18:57:40 +0000

Christina, this is a pretty niche area with few established players. There might not be any published analyst reports from Tier 1 firms about this market. I suggest setting up an inquiry call with any of the Forrester analysts who cover marketing practices, processes and marketing analytics. They may have some insight into players, market size etc.

By: Christina

Christina — Wed, 22 Aug 2007 17:41:30 +0000

I’m looking for data on the marketing mix modeling industry. Size of the market, major players, market share for players, etc. Any suggestions?

By: Paul Barsch

Paul Barsch — Mon, 20 Aug 2007 17:45:08 +0000

Roy, thank you for commenting regarding tying marketing investments to CF. I guess my main point is that most marketing organizations don’t have the infrastructure in place to measure ROMI effectively, much less marketing impact on FCF or ROA.
Direct marketing, email marketing is as you said, just one small part of the marketing mix. How about measuring the impact of tradeshows, advertising, industry associations etc. The marketing infrastructure (MRM, EMM, data warehousing etc..) and processes are critical to have in place to effectively measure our impact.

By: jennifer jones

jennifer jones — Mon, 20 Aug 2007 04:41:31 +0000

Great discussion! Weighing in on the points Paul and Steve make on company culture and whether or not companies who don’t take risks in marketing ever will, I have to agree with Paul, in that I have not worked with tactical companies who become strategic unless they get an overhaul. Having the wonderful opportunity to have worked with Steve Jobs back in 1985-6, it was obvious even then that he was the only one who truly got strategic marketing and without his thinking that way, that no one would have “been strategic”

By: Roy Young

Roy Young — Sat, 18 Aug 2007 01:31:17 +0000

I was actually thinking much more broadly than ROMI, Paul. ROMI is about short-term impact. Direct Marketers have been able to measure the precise ROMI of their campaigns for a long time. But how many direct marketers make it to “marriage” or the executive suite?
If what you are talking about, Paul, is marriage=a long-term commitment, than any marriage is going to require a common language. Marketers are going to have to speak the language of business that frames the value of what they do in terms of current and future cash flow using the financial language of business (e.g., return on assets, velocity, stockholder equity, etc.). Some of what marketers do directly impact these key performance indictors (KPIs) and some indirectly impact these KPIs, in either the short term or long term or both.

By: Paul Barsch

Paul Barsch — Thu, 16 Aug 2007 14:46:32 +0000

Roy, I’ll buy what you’re saying. Speaking the CFO’s language is necessary for marketing to have credibility and support from the executive suite. However I see very little marketing or customer database infrastructure in place ( at least in the companies I’ve worked in) to accurately manage and measure ROMI or any similar and credible financial metric.
If we truly could manage marketing as an investment, instead of expense, and had the proper marketing operations, processes and IT infrastructure to do so, perhaps that would give us some breathing room to at least start thinking strategically.

By: Roy Young

Roy Young — Thu, 16 Aug 2007 14:13:49 +0000

Great post and discussion.
From my perspective, more than a cultural issue, marketing’s role and focus may be a FINANCIAL issue. Marketing budgets are required by accounting standards to be reported on the annual P&L as expenses. Nothing marketing does is of any consequence on the balance sheet. If marketers manage customers as long-term investments, it is certainly of know measurable/reported consequence in financial terms. Similarly, if marketers manage the brand as a long term investment, this too is not measurable/reported on any financial statements.
Therefore, for the CEO and CFO to recognize marketing as a “marriage,” it’s going to take marketers to make their arguments in financial reports that are not currently part of the accounting requirements for public companies and often adopted by private companies.

By: Stephen Denny

Stephen Denny — Thu, 16 Aug 2007 02:25:23 +0000

Paul: I think you hit the nail with your last comment — this is a cultural question, first and foremost. Apple may (or may not, I don’t know) plan on a yearly basis and be very tactical in their marketing, but that is more likely to be the result of having a one man marketing team (named Steve), who comes up with all the ideas.
Other companies that view marketing as ‘growth drivers’ will take a longer term view (although probably still budget on a fiscal quarter/year).
When marketing is driven to “think” in terms of fiscal quarters, it breaks down to a tactical marcom role; when we can “think” in multi-year strategic moves (and still budget on a yearly basis), we’re doing our jobs and liking it.

By: Paul Barsch

Paul Barsch — Wed, 15 Aug 2007 19:18:28 +0000

Clare, I’m not sure if a company doesn’t already think strategically–that they ever will, short of a complete Board and CEO overhaul as in Apple.
A key factor is company/corporate culture. Does the company have a culture of risk taking? Do they have an appetite for placing the big bets, or do they like sure and steady? And just because they like sure and steady doesn’t mean they won’t take calculated risks (see Toyota and the pursuit of the Hybrid market)…

By: Claire Ratushny

Claire Ratushny — Wed, 15 Aug 2007 18:07:25 +0000

Paul,
Your two points are right on the money. By separating these two processes, each can be seen as distinct and important.
“What role should marketing play in discovering the next big idea?”
Marketers who spend time not only executing their own plans with specific tactics, but study marketplace trends, successes and failures, as well as their competitors, should be able to offer some pretty solid insights to the management team about how to advantageously capitalize on these things. I’ve always believed it’s just as important to have “a finger on the pulse” as it is to manage the minutiae of the day to day. . .
Notice that Richard Rumelt discussed the strength of bringing “the right knowledge and skill pools” together. These unique combinations, he feels, enable companies to exploit market trends in a very opportunistic way. He uses Apple’s iPod as one example of this. Dr. Rumelt points out that this is a far different scenario than the customary “static strategy concepts”. There’s a certain amount of risk here, isn’t there? Let’s face it: many companies are very risk averse these days, but Apple didn’t become Apple by being risk averse. The greater the risk, the greater the reward. Otherwise, companies can continue to content themselves with being “me-toos, me-threes. . .”
I like the way Rumelt thinks. . .but now, how to get large companies to think a bit more entrepreneurially, and get more in sync with this concept?

By: Lewis Green

Lewis Green — Wed, 15 Aug 2007 18:02:23 +0000

Paul,
I can only guess but I think two things prevent solid planning: 1) It takes lots of time and involves every functional area, and 2) it doesn’t produce short-term bottom line or top line results.

By: Paul Barsch

Paul Barsch — Wed, 15 Aug 2007 16:12:36 +0000

Claire, interesting article. From reading the article, I will assume that Dr. Rumelt is advocating the separation of budgeting and strategy in the “initial” phases of strategic planning. You can divorce the two for a time, but eventually they’ll have to come back together.
The value of Dr. Rumelt’s suggestion, I believe is two fold:
1) Separates “the next big idea” thinking from the budgeting process
2) Helps us get away from our natural tendencies to want to “do something” and get straight to the tactics
What role should marketing play in discovering the next big idea?
Btw, Thanks for the link!

By: Claire Ratushny

Claire Ratushny — Wed, 15 Aug 2007 15:19:48 +0000

Paul,
Excellent, timely post. I’m currently reading a McKinsey Quarterly report interview on this very topic. How’s that for timing?
The article: “Strategy’s Strategist: An interview with Richard Rumelt”, gives management and marketers a lot to think about. Mr. Rumelt is a professor of strategy at UCLA’s Anderson School of Management. His view: “Now, lots of people think the solution to the strategic-planning problem is to inject more strategy into the annual process. I disagree. I think the annual rolling resource budget should be separate from strategy work. So my basic recommendation is to do two things: avoid the label “strategic plan”–call those budgets “long-term resource plans”–and start a separate, nonannual, opportunity-driven process for strategy work.”
You and the Daily Fix readers might want to read this one (sign-up is easy and free).
http://www.mckinseyquarterly.com/article_abstract_visitor.aspx?ar=2039&l2=21&l3=37&srid=17

By: Paul Barsch

Paul Barsch — Wed, 15 Aug 2007 15:07:11 +0000

Lewis and John, thank you for commenting.
John, I got a good chuckle from your 2004 post. Thank you for sharing.
Lewis, obviously you’ve worked with many clients big and small. Why are most lacking a bigger picture and strategic plan lasting more than one calendar year?

By: Lewis Green

Lewis Green — Wed, 15 Aug 2007 14:42:26 +0000

Paul,
I have yet to run into a client or work for a business that plans out more than a year, either company-wide or at the department level. In fact, the best strategic thinking I’ve come across is the one you describe where the marketing plan’s goals must be tied to the one-year business goals.
Most of my clients have no strategic plans of any kind, nor do they create budgets at the department level. Most of the thinking and problem-solving is reactive.
It’s sad but true. I think most businesses, large and small, generally fly by the seat of their pants. They might argue that they have a business plan and a strategic plan, and most would be telling the truth. But, I suspect, most executives would be hard pressed to find those plans without the aid of their executive assistant.

By: johnmoore (from Brand Autopsy)

johnmoore (from Brand Autopsy) — Wed, 15 Aug 2007 14:30:36 +0000

Paul, a tangential riff is this idea of "Brand Loyalty Matrimony"... http://brandautopsy.typepad.com/brandautopsy/2004/06/brand_loyalty_m.html