Hugh Davidson - Seven ways marketers need to change
WHERE ARE WE NOW?
There were less than 1000 Marketers 50 years ago. Now there are over 500,000. There are more outstanding Marketers today than ever before. Marketing has been a success, and most industries now use the full range of techniques.
Unfortunately, Marketing has failed to spread its philosophy of "Customer First" beyond a few industries like FMCG, retailing, OTC medicines, drinks, delivery services, and computer search.
Many industries, of great importance to national economies, suffer from a marketing by-pass, eg. banking, insurance, telecom, and energy. They are not customer focused, but addicted to the bottom line, often ruthlessly exploiting the complexities of their products, and the cost of switching. They are value extractors rather than value adders.
It is a high priority for Marketers to spread the philosophy as well as the techniques of marketing more widely.
KEY CHANGES OVER THE NEXT 50 YEARS.
Marketers in the West will face lower growth and higher costs.
China and India will raise their share of world trade above 50% before 2060, gaining mainly from the West. Increased tax, funding ageing populations, and combating climate change will increase costs. Result will be more dissatisfied customers than ever before
The internet will empower these customers to push for greater transparency, better service, and superior value as never before. Marketers should support them in this quest.
WHAT IS MARKETING FOR?
The purpose of Marketing is to enhance profits, by making the world a fairer and better place for customers. Marketers achieve this through ruthless focus on delivering superior value, very efficiently.
Good Marketing flourishes through empowered customers, who stimulate improvement through fair competition. In this sense, Marketers and customers are partners in co-creating superior value for mutual benefit.
MARKETERS SHOULD ENGAGE MORE IN THE BIG QUESTIONS.
In the past, Marketers have been heavily involved in tactical day-to-day tasks, and given little priority to the big issues affecting their future environment.
They have ceded control of customer service to cost driven IT freaks; rarely been involved in mergers and acquisitions; passively accepted the damaging doctrine of shareholder value; and played only a limited role in making regulation more customer focused.
That’s why few Boards have marketers, and why, at the first whiff of economic problems, companies still cut investment in the drivers of future profitable growth. The Marketing Society and CIM are doing much to address these questions, but more needs to be done by individual practitioners.
SEVEN WAYS MARKETERS NEED TO CHANGE
1. Work with regulators, consumer groups, and government to empower consumers further
Lets increase transparency of products and pricing; eliminate time and cost of switching; ban hidden charges; introduce simple one page purchase agreements common to every industry. A determined effort is needed to make "value extraction" an unprofitable marketing strategy. Regulation should focus less on penalising offenders, more on empowering customers.
2. Spread the PHILOSOPHY of Marketing to "marketing by-pass" industries
Why should marketers in P & G, Apple, or Fedex care what happens in financial services or mobile telecom? Because some of their marketing practices are damaging the reputation of all Marketers, and reducing trust for all.
3. Simplify company structures
Structures of global companies in particular have become absurdly complex. Main functions of any organisation are creating demand, supplying it, raising and managing cash flow.
It’s time to return to a simple Board structure of 4 Executive Directors - CEO, and Directors of Demand, Supply, and Finance - supplemented by non execs, including one with a marketing background, and two Customer Directors 1
4. Re - focus on the "Forgotten Fundamental"
See page 26 in Quarter 2, Market Leader, "The Empty Marketing Sandwich". Marketing still consists of a three stage process - insight, product/service development, and communication. The weak link in is the middle step - the forgotten fundamental. That’s why so many new products fail, why most are weak "Me-Three's". Development needs to be given much more priority in future.
5. Press for change from shareholder value, to stakeholder value
The doctrine of shareholder value encourages short term financial manipulation, and is the enemy of good marketing. Stakeholder value, where profit is viewed as the result of satisfying customers, and motivating employees, has been successfully practiced for decades by many global companies and family businesses.
Marketers should press for the transition to stakeholder value, where the customer is seen as the most important constituent. Who else can deliver profitable long term growth?
6. Marketers should think "Markets" before "Brands"
As the name suggests, a prime task of Marketers is selecting and prioritising markets and segments to do business in. This requires leadership in future vision, corporate strategy and M & A, something few Marketers have succeeded in achieving.
Many Marketers accept their existing markets as a given, allowing CEOs, Finance Directors, and investment bankers to shape future market selection.
Perhaps this is because they start off by running brands, and keep on thinking "Brand" when they become CMO.
7. Change the profile of Marketers, and develop new skills
The left brain is analytical, the right intuitive and creative. Most Marketers seem to be stronger on the right, yet their key tasks are left brained. The recruitment profile of marketers needs redefining, including more with prior experience in other departments, or an engineering background. Business and financial analysis seem to be two of the weakest skill areas for Marketers.
The future of marketing is about building mutually beneficial partnerships between organisations and their empowered customers in the internet age. Let’s do it.
Hugh Davidson is speaking at The Annual Conference on 17 November.
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1. ‘Shareholder value: the enemy of good marketing’, Market Leader, September 2009.
2. Ibid.