In the old days, marketers were people in smart suits who were reputed to be able to sell refrigerators to the Inuit. But marketers have moved on; they no longer want to be thought of as selling products to consumers who do not really want to buy. Marketing, they claim, has entered a more sophisticated era of customer focus and brand management, driven by data procurement and technology.
This formalisation has spawned impressive terms such as ECR (efficient consumer responsibility); category management; CRM (customer relationship management or, to some, cause-related marketing); media neutrality; integrated marketing; value-based marketing; and economic profit. Although these phrases are bandied about freely, a closer look reveals that marketers often interpret them differently. This lack of consistency leads to confusion, and over time an unnecessary mystique has developed around the various theories.
British Gas head of marketing Andrew Mann says: “Jargon can sometimes be a barrier: marketers tend to be guilty of using it in different ways.”
Management consultants have capitalised on this confusion, developing a whole industry around telling brand owners and their marketers how to run their businesses in line with the latest disciplines.
One such function that has come in for recent criticism is category management. According to Axis Management managing director Jonathan Smith, category management has become “an overly complex, jargon-laden, number-crunching exercise”. He adds that category management and CRM (in its “customer relationship management” sense) badly need simplifying (MW last week).
Too much talk
Although CRM and category management are but two of the many mantras that marketers have relied on in recent years to manage their brands, customers, technology and growth, there is a general concern among senior marketers that such jargon can distract marketers from getting on with the job. While these terms may describe some of the complexities of marketing, marketers can spend too much time trying to untangle the theories in order to put them into practice.
BBC director of marketing and communications Andy Duncan says that marketers can easily fall into the trap of making things over-complicated, while former BBC marketer Jane Frost is scathing about jargon: “It is a desperate attempt to apply quasi-scientific names to something which is actually plain common sense,” she says.
A don’t-need-to-know basis
Not all marketers feel the need to concern themselves with the details of every marketing theory, however. For instance, Gillette business unit director for grooming and personal care Jackie Jordan says that media neutrality is “a specialist area” – the concern of media and advertising agencies. In her opinion, they are the ones who should advise on and deliver campaigns that make the most cost-effective use of different media.
Cussons marketing director Dominic Box demurs. He believes that, although the upsurge in the use of jargon is partly a result of the marketing services industry’s self-promotion, marketers do need to learn more about marketing theories such as CRM: “As competition levels have increased and consumers have become much more demanding, the role of the marketer has changed dramatically. It is more complex and tougher than ever before. We need tools such as media neutrality and CRM.”
The Chartered Institute of Marketing’s new chief executive, Peter Fisk, who is a former consultant at PA Consulting, maintains that management consultants or academics should not be blamed for the rise in the use of marketing jargon. He says: “In most cases, new terms emerge because they define something that is different and useful. Examples include brand communities, economic profit, or permission marketing. Marketers sometimes react negatively to new phrases because they are not willing to face the challenge of complexity. If they did, they might find something valuable that will enhance their skills, and improve results.”
According to Ruth McNeil, managing partner of Response Consulting and a spokeswoman for the Market Research Society, marketing jargon has evolved as marketing has become more established as a profession. She says: “Marketing needs a certain type of jargon, just as medicine and law do. The problem does not lie in the words, but in the way they get tossed around. I don’t believe that it is the fault of consultants: a lot of jargon is driven by fashion.”
McNeil is not the only one who believes that marketers are forever jumping on bandwagons. Industry expert and Marketing Week columnist Alan Mitchell says that most marketing jargon is picked up on “conference circuits that often act as a substitute for thought”. He believes that, as technologies and industries evolve, the quest for improvements will increase the need for complex marketing tools.
Shops call the shots
Pressure to introduce new systems and standards has also come from retailers. Many brand owners have been forced to introduce category management systems and to change the structure of their companies to meet retailers’ needs.
Britvic Soft Drinks category director Andrew Marsden has been building category management systems within the company since 2000. He says: “The basic principles of marketing will never change: it is about making money and getting a competitive advantage. But the levels of sophistication required by the trade are greater than ever before. It is easy to be disparaging about some of the fancy-sounding marketing tools, but marketing is a commercial discipline and we have to be commercially literate to stay in the game.”
Although Marsden says marketers must be commercially literate, research from PA Consulting shows that not all marketers have a say in the bigger commercial picture. More than 61 per cent of marketers do not manage price and 82 per cent do not influence decisions in sales channels. Despite the impression given by the research, however, marketers claim that they pay heed to the “four Ps” – price, product, promotion and place – in devising marketing strategies.
Beyond the four Ps, the degree and speed of adoption of new learning and theories by a company tends to depend on its size, especially when it comes to systems such as category management. Smith says that marketers in smaller companies tend to focus on selling the brand through advertising and promotions, while larger players give marketing a much broader role to play in the business.
One marketer from a medium-sized packaged goods company says that the “sheer might” of bigger players, combined with the power of retailers, has prompted smaller companies to install complex structures such as category management.
He says: “Retailers have high expectations of manufacturers and how those manufacturers develop their businesses. Blue-chip companies have the resources to put the required processes and structures in place, and smaller companies are then forced to follow.”
McNeil disagrees, however. She says that it is unusual for small businesses to have to restructure to mirror larger rivals and please retailers: “A company with 15 brands will always operate differently to a company with only one or two brands.”
British Gas head of marketing Andrew Mann believes that, whatever systems are in place, marketing has the same role to play. He says: “Marketing is about listening to customers and driving out costs, irrespective of the systems in place within the organisation. In my view, marketers today are more skilled than ever in listening not only to what their consumers want but also in driving value for the shareholders.”
A century is a long time in marketing
As a discipline, marketing’s origins can be traced to the emergence of “free enterprise” thinking, the ideas of Adam Smith and the “social science” of economics. Only relatively recently have the finer points of buying and selling behaviours come to be understood. The past 100 years or so have seen huge changes in commerce. The speed and scope of production have increased hugely, as has the spending power of individuals, spurring consumption to previously unimaginable heights.
But, despite the formulation of ever more complex and sophisticated marketing tools and systems, marketing as a discipline appears to have become more inefficient. Mitchell says that, over the past century, the ratio of marketing costs to manufacturing costs has fundamentally changed. Marketing now accounts for 50 per cent of the cost of getting a product to consumers, compared to 25 per cent 100 years ago. Relative manufacturing productivity has improved commensurately: in the past it accounted for 75 per cent of the cost of a product, now it is 50 per cent.
Perhaps there is a warning for marketers in this. As manufacturing costs are squeezed to the limits, brand owners may increasingly look to marketing costs as a major overhead, ripe for rationalisation. Marketers’ towers of terminology are unlikely to protect them from the one word that really matters to a company: efficiency.