‘It's time to rethink what marketing does'

So what is the new marketing paradigm today? There's always been a debate as to whether marketing belongs to the boardroom. What are you seeing today? Is marketing securing its rightful place at the high table?

I think it's a good question because I often joke that the CMOs in most companies are really MCOs, that they are not Chief Marketing Officers but are Marketing Communications Officers. The role of marketing has gotten circumscribed. Marketing is limited in many companies to managing short-term promotional activities and advertising. Peter Drucker, the pre-eminent management guru, put marketing on a very high pedestal by saying that only two things add value - marketing and innovation. The rest is all cost.

Somehow, along the road from Peter Drucker and Ted Levitt, marketing has lost its way. Drucker had a very strategic view of marketing. Based on this, I see marketing's role as bringing customer and market insight into the company, orchestrating the creation of value propositions and offerings that are compelling, and managing marketing communications and the customer experience to drive satisfaction and loyalty.

But marketing today is far removed from this lofty view for two reasons. One reason is that it has been limited to the outbound role of marketing communications. Rarely is marketing involved at the outset in product definition and product development, with the possible exception of consumer packaged goods companies. The involvement of marketing starts once the product is ready to be taken to the market, by which time it is too late to change much about the product. The second reason is that, even within the realm of marketing communications, marketing has become quite tactical due to an excessive focus on short-term promotional activities instead of building longer-term brand value and customer loyalty. I sometimes joke that marketing solves problems that don't matter for people who don't matter!

So what's the next paradigm? How does marketing get its seat back at the strategy table?

Actually never has the need been greater for marketing to have a seat at the strategic table because as markets mature and competition intensifies, the differentiation between competing firms shrinks. In this environment, marketing becomes vital in finding market opportunities, in articulating your value proposition and in positioning yourself in the market place in a differentiated way.

Can you give me an example?

A few years ago, Steve Ballmer, the CEO of Microsoft, explained why marketing is more important to Microsoft today. He said: “When we launched Windows, our value proposition was very obvious - ‘It's graphical'! It does not take a rocket scientist to explain what the value proposition of Windows was relative to MS-DOS. Then when we launched Microsoft Office, we said it “works as one”. We integrated separate applications and consumers benefited from this in a very compelling manner. But what is the value proposition of Office 2007? What about Windows Vista? It is becoming less obvious why customers need new versions of these products.” The point is that the differential functionality between successive versions is shrinking and the marketplace is becoming more crowded.

In a crowded marketplace, it is far more important to have a crisp and clear understanding of what scenario your product is optimised for and what target customer you are focusing on. You need to be very clear about where you are going to win, as this helps you to craft compelling value propositions and differentiated positioning and messaging. So I believe that marketing has an extremely important role to play in today's competitive environment. But marketers need to think more strategically and raise their game.

I am currently helping Cisco Systems with this process of re-imagining marketing. I was approached by Bill Brownell, the Senior Vice-President for Enterprise & Mid-Market Marketing at Cisco. Bill raised a very interesting question, so simple yet so profound. He said: Sales manages sales, development manages products, finance manages money, and HR manages people. What does marketing manage? When he asked his team this question, they responded by saying that they manage events, manage brands, manage promotions, and so on. But there was no clear answer to the big picture of what marketing should manage.

The answer, according to Bill, was that marketing should manage markets. But the question is - what exactly is market management? In response to this question, I built a framework for market management that I have been working with Cisco to implement. Market management is the development of customer insight and market foresight, orchestrating the development of offers and solutions for customers and then managing the outbound communication in a way that builds market leadership in current markets and shapes the transitions to the markets of the future.

Within this overall market management framework I have identified five pillars – excellence in customer insight and market foresight, excellence in value proposition definition, excellence in value whole offer creation, excellence in marketing communication, and excellence in measurement and optimisation. I am currently conceptualising this next generation architecture of marketing in collaboration with a number of companies.

So, this would call for quite an overhaul of marketing's definition, won't it?

Indeed, it would. I have also been discussing this with Phil (Philip Kotler) closely. Phil and I agree that it's time to rethink the whole architecture of what marketing does and how it operates and its benefits to the organisation. Sometimes, these activities don't have to be performed by the marketing department. Someone in the organisation has to do it, whether or not it is labelled as “marketing” does not matter in the end. There is nothing to say that customer insight work can't be done out of engineering, for instance. All in all, I think marketing has a bright future because it is much needed. But I don't like the trajectory of where things are going today in the marketing discipline.

Next week: Better growth from fewer brands

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