Of late, marketing has been over-identified with marketing communications, to its detriment. Great marketing operations find opportunities and develop and launch successful solutions, and if properly used, are the company's growth engine.
I recently interviewed Philip Kotler, the well-known marketing guru at the Kellogg School of Management, Northwestern University, about the value of marketing in today's turbulent environment. Who better to give us his insight on the subject than Philip, who has just recently published (with co-author John Caslione) a book called Chaotics: The Business of Managing and Marketing in the Age of Turbulence. Following are excerpts from our conversation.
Philip, in these troubled times, companies are cutting their marketing budgets—in fact, marketing is one of the first departments to be cut. Do you think it is a wise move to cut the marketing budget?
Yes, if the marketers cannot provide performance metrics for their expenditures. Marketers have had it easy in the past, getting lots of money for 30-second commercials without having to produce any evidence of their sales or profit impact. Advertising was a matter of faith, not reason. The plot was to get a large share of voice so that the brand was locked in the customers' memories. Hopefully the message promised something distinctive and the customer who wanted that point of difference would automatically choose that brand.
My guess is that only 1 out of 10, maybe only 1 out 20, advertising campaigns really makes a financial contribution. That means that the average company has only 1 chance in 10 or 20 that its ad campaign will create a memorable and motivating message. I don't like those odds.
Years ago, Will Rogers quipped, "If advertisers spent the same amount of money on improving their products as they do on advertising, they wouldn't have to advertise them." This theme was recently elaborated by Jean Claude Larreche in his new book Momentum. He claimed that heavy advertising spending is often on products that have little distinction. The company would be smarter to save that money and use it to build a better product.
Is cutting out the less-defensible parts of the marketing budget enough to do in difficult times?
No. I can even imagine where the proper step is to increase the overall marketing budget and spend more. A down period introduces as much opportunity as it does chaos. For example, customers are ready to switch to lower-price store brands and away from the more expensive national and international brands. Retailers such as Kroger (KR), Tesco (TESO), and others are strengthening their private brands and offering two or three private brands on the model of "good, better, and best." Today, more people are fishing to solve the problem of having a good dinner with little cost. This is good news for companies that make fishing rods, nets, and bait. Some companies see cracks of sunshine in this otherwise gloomy picture.
Are there any marketing maxims that must be preserved even in bad times?
Yes. I would mention three:
1. Understand your target customers and solve their problems in a better way than your competitors.
2. Build your brand promise that is delivered by everyone in your business network (employees, distributors, suppliers).
3. Innovate continuously in your products, services, and supply chain.
What changes should marketing departments make in these times?
Most marketing departments are tactical, not strategic. They can do marketing research and marketing communications (ads, brochures), and have other skills for developing and launching a product. But they don't really drive the company's growth strategy. I know of a pharmaceutical company that only calls in a marketer when it wants to decide on the color for a new pill. Where was the thinking done about what diseases the company should pursue, how big the opportunity is, should the solution be in the form of a pill, liquid, or patch, and so on?
I am not arguing that the marketing department should call the shots on growth strategy. I am asking for marketing to be a proactive collaborator in developing the firm's growth strategy. Yet marketing for the most part remains busy with details.
The recent appointment of Chief Marketing Officers (CMOs) is a good sign. A CMO presumably joins the senior management group to help plan the company's future. He or she brings in the voice of the customer into the company's thinking and tries to get management to move from marketing to "consumering." develops better ways to get customer insight; develops better metrics for measuring the impact of different marketing efforts; protects and enhances the company's brands; and brings in new marketing technologies and skills to the marketing department.
What is preventing the marketing department from taking on a stronger leadership role?
Most marketers have been hired into a marketing department because they are right-brain trained—that is, creative. They are less well-trained in their left brain, the part that thinks about numbers, finance, and evidence. But they have to deal with managers who by and large are left-brain trained. (Anyone interested in this subject should read the recently published book War in the Boardroom: Why Left-Brain Management and Right-Brain Marketing Don't See Eye-to-Eye—and What to Do About It by Al and Laura Ries). The key need then is to put into the marketing department some sharp left-brain people or two-brain people who can work with the other managers. Once department managers begin to deal with some two-brain strategic marketing managers, marketing will play a stronger leadership role.
What else are you busy thinking about?
In our newly released book, Chaotics: The Business of Managing and Marketing in The Age of Turbulence, John Caslione and I have built a Chaotics Management System for dealing with the increasing level of turbulence and disruption in the modern world. We talk about early warning systems, scenario planning, risk and uncertainty, new opportunities, and robust and resilient company departments. We offer a comprehensive way for managers to monitor the new economy and make better and quicker decisions.
Thank you for your time, Philip.
Readers, you can find out more about Philip Kotler's new projects at www.chaoticsstrategies.com and www.upandoutofpoverty.com. I would love to hear from you. Please send your comments about marketing in the Age of Turbulence.
Marshall Goldsmith is the author of the Wall Street Journal bestseller Succession: Are You Ready? as well as the New York Times and Wall Street Journal bestseller What Got You Here Won't Get You There, a Harold Longman Award winner for Business Book of the Year. He can be reached at Marshall@MarshallGoldsmith.com, and he provides his articles and videos online at MarshallGoldsmithLibrary.com.