Marketing’s Fourth “P”: The Greatest Challenges for the CMO?

Every college student (or at least the ones paying attention in marketing 101) is familiar with marketing’s “four P’s”.   Promotion usually garners the most attention, because you usually get to do all the fun advertising folderol.   The more sophisticated CMO helps drive pricing strategy and product development.    In my experience, however, we’re usually less influential/successful in the “placement” or distribution. 

Yes, we design dealer programs, work with a direct sales force when they will allow us, cooperate with merchandising and store operations folks, and otherwise try to curry favor and influence over the direct/indirect modes of distribution.  To me, this is the biggest challenge in marketing:  getting other non-marketing people to cooperate in the path between brand and transaction. Here are some frustrations I’ve encountered:

·         Qualified prospects who never received a call from their local dealer during a promotion (discovered through a lead audit)

·         Store managers who “forgot” to post pricing and promotional material for a Memorial Day sale for a now-defunct big box home improvement chain.  We wound up hiring and outside company to make sure promotional materials were properly posted.

·         Professional services “professionals” who won’t/don’t follow up on responses from their own contact database after a marketing campaign  

Prophets of the dot.com era preached the notion of a perfect market, in which every brand was a click away, and distribution was unencumbered by poorly trained people at the retail point of sale.  Today, some successful companies employ the factory-direct model, which streamlines the distribution model, offers consumers presumably lower prices, and hoists the manufacturer’s margin.   CPG companies, offering the widest swath of brands vs. any other product category, are still beholden to brokers, grocery store buyers, and merchandising minions to make sure consumers have the chance to buy their product on the shelf of their local Safeway.

There’s a good (aren’t they all) Harvard Business Review study on how power tool company Stihl Incorporated withdrew its distribution from Lowe’s and Home Depot in favor of independent dealers:

http://hbr.org/product/stihl-incorporated-go-to-market-strategy-for-next-/an/KEL398-PDF-ENG

So after pulling out my hair (see photo above) over the years, I’ve come to these gems about managing the disaggregated distribution chains:

1.       Seek the “cooperation” leaders as much as the volume leaders.   In the first bullet point example above, rather than focusing primarily on the first volume quartile among our sixty dealers, we placed greater emphasis on the second and sometimes third quartiles—those who wanted to increase their volume of our product vs. other lines they carried.  Oftentimes there were mitigating circumstances that caused them to be second and third level dealers.  Many of them were treated as bastard step-children by the other brands, and appreciated the effort and attention that otherwise was not paid them.

2.       Publicize the hell out of successes, regardless of the magnitude.   Marketers are often viewed as eternal optimists and rare realists.   It is amazing what a few good case studies can do, especially if you can enlist the endorsement of those who benefited.  A few years ago we created a thought leadership program for one of our less….prominent practices which resulted in some mid-sized engagements that would not have otherwise come to be.   Some well-placed internal publicity and hall talk moved some complete non-believers into the fold.

3.       In the words of the famous marketing guy, Mies van der Rohe, God is in the details.   You can never assume that anything that’s supposed to be happening outside the four walls of your office is actually happening.  Maybe I’m now a product of my accounting environment, but a little bit of auditing goes a long way.  It is way too easy to move on to the next marketing fire rather than checking all the details of execution.  Don’t do it, otherwise all the hard work you’ve invested in a promotion, a dealer program, a marketing campaign, or whatever other major initiative that requires others in the distribution chain.    

Discussion Question:

What challenges in managing the “P” have you encountered, and how did you successfully manage through them?   Scroll down a bit to post your insighful comments.

P.S.  As I mentioned in an earlier posting, the average CMO lasts 24 months.  My two-year anniversary is on February 16^th, so wish me luck.

The Marketing Fish Rots from the Head Down

There’s an old Sicilian saying, “the fish rots from the head down”, and that’s nowhere more evident when it comes to proper marketing focus and discipline.  If your  CEO doesn’t get it, as a marketing professional, you’re screwed.   Maybe that’s why the average tenure of a CMO is 23 months (I’ll hit 24 in about two weeks, so stay tuned). 

A 2004 study by Stuart Spenser indicated most Fortune 500 CEOs rose in their ranks via finance, operations, and marketing, with finance being the most prevalent for the past 15 years.  Most CEO’s in the study earned engineering degrees.   And according to a study published by two professors at the McCombs School of Business at the University of Texas, companies with higher advertising budgets were more likely to have CEO’s with marketing backgrounds. 

Here’s a link to the study written by Raji Srinivasan and Robert Parrino:  http://www.mccombs.utexas.edu/faculty/robert.parrino/SP.pdf 

I’m a full supporter of the natural tension of divergent opinions.  I appreciate the debates among operations, marketing, sales, finance, IT, human resources, legal, dealers/distribution, et al that result in well-considered corporate decisions. Yet ultimately, the CEO is, in the words of a former US president, “the decider.”  And unless your CEO understands the end user, and the discipline/art/science of marketing, the company’s strategic and tactical marketing will be compromised.

In the past week, there have been stories in the WSJ of high-profile CEO’s behaving badly when it comes to understanding consumers or market conditions:

·         In a 2009 board meeting of a Big 4 auto maker in which an executive was presenting commercials promoting their fuel economy, the CEO was reported to have said, “nobody cares about fuel economy. When it’s empty, you fill it, period.  Why are we advertising something nobody cares about?”  Remember 2008, when gas hit $4 a gallon?

·         The now-former CEO of AMD (as of last Monday) “pooh-poohed the potential of mobile devices.”  The result is that other chip manufacturers have captured market share in this area, and AMD hasn’t.

I’m not writing this as an indictment of CEO’s, because many I’ve worked with listen, create consensus, and support product and service initiatives that result in better choices for consumers, new revenue streams, and margin dollars.  But to achieve these goals, it is incumbent on effective marketing professionals to present the facts—the realities of today’s market; the possibilities of tomorrow’s market; and the metrics that support the decisions in the middle.

If the fish rots from the head down, then at least marketing professionals can act as reality formaldehyde.

Consumers of the “Second Decade”: Have We Cycled Back?

As we plod into the first work day of the “second decade” (my placeholder moniker until I come up with something more clever), the 2010 data seems to indicate that everything old is new again, and the momentary return to consumer common sense may have passed:

·         In 2010, share of SUV sales to their highest level ever.  Sales of SUVs and trucks totaled 46.3% of all vehicle sales, the highest in the past eight years.   It remains to be seen if $3+ gas prices, along with the launch of the Volt and Leaf temper that trend.  Side note—the new Volt TV spot refers to it as “more than a leaf blower.”   Schwing!

·         The consumer savings trend may be at an end:  personal savings dropped from $622.8 billion in October to $614.8 in November.  This could be attributable to the increase in holiday spending, which was up 5.5% in 2010.  Or that we collectively decided it was just more fun to buy a new Kinect for the kids now rather than send them to college in a few years.

·         Dollar volume on cyber Monday was up a whopping 16% vs. YAG, fueled by a 6% increase in transactions and a 10% increase in average ticket.   Wonder what will happen if Amazon’s gift return shortcut takes hold (http://www.huffingtonpost.com/2010/12/29/amazon-patents-system-for_n_802402.html.  Could be ho-ho-horrible.

Despite a near 10% unemployment rate, the other 90% are voting with their wallets about their confidence in the economy.   Let’s hope this trend bodes well for us marketing folks who want to sell consumer things they don’t need, paid for with money they don’t have.