Although regarded as essential, marketing has long been seen by directors and shareholders as something of a lightweight discipline, not fit for a place on the board. Tesco has done much to change this perception, and now it seems other companies are catching on. By David Benady
Marketers have long felt powerless to influence the corporate strategies pursued by their employers. Their job has been to create the icing on the cake, to unleash the spin and the sparkle, and supervise communications for their organisation and its brands.
But rarely have they managed to sway big decisions about the direction a company should take. That has tended to be the domain of chief executives, finance directors and operational bosses, often under the influence of consultants of many descriptions.
Yet a number of events in recent months suggest that top bosses are rediscovering the potential of marketing to drive the progress or the revival of their businesses.
Last week, Marketing Week reported a speech chairman and managing director of brewer Scottish Courage, in which he commended the role of marketing in turning around the company’s fortunes. At the same time, he criticised the use of outside advisers such as management consultants, which he blamed for a serious glitch in the brewer’s supply chain three years ago.
Marketing gets an upgrade
The speech follows a key development at British Airways in the summer, when shareholders gave the thumbs-up to the promotion of the airline’s top marketer, Martin George, to the company’s main board as commercial director.
And then there is Tesco. Run by former marketing director Sir Terry Leahy, the company has this year unveiled profits topping &£2bn for the first time. Much of its success has been attributed to marketing techniques introduced by Leahy.
According to a source, one of Leahy’s first moves upon becoming chief executive in 1997 was to put marketing people in charge of the supermarket’s product groups. Initiatives such as the Clubcard loyalty scheme – which Leahy spearheaded – and the “Every Little Helps” ad campaign have contributed to a perception that Tesco starts with the needs of customers and works backwards to ascertain how the business should be organised.
Encouraging though these signs of a rise in marketing’s status may be, research carried out by the Marketing Society earlier this year suggested that there is still a mutual misunderstanding between marketers and top management.
One of those who helped carry out the research is Peter Fisk, former head of the Chartered Institute of Marketers and now a partner at consultancy The Foundation. He says: “Marketing folk in the past have struggled to influence major decisions or have the ear of the chief executive.
“Chief executives were frustrated that marketers weren’t coming forward to shape the strategy. So marketers were frustrated, but at the same time chief executives were looking for marketers to do more.”
This is just what marketers at Scottish Courage have done, according to Dunsmore. Marketing has ridden to the rescue of a business that made a disastrous attempt to implement cost- savings through an overhaul of its supply chain in 2002 and 2003.
At the Marketing Forum, Dunsmore blasted the use of outside advisers – remarks which were understood to be a swipe at PricewaterhouseCoopers (PwC), the management consultancy that advised the company on transforming its supply chain.
The problems related to a switch from the use of a large number of local depots to three giant regional distribution centres. Poor productivity at the new centres meant many of the old depots had to keep running at the same time, resulting in a “significant increase in double running costs”, according to the company, which was consequently forced to issue a profits warning in February 2003.
Pubs with no beer?
Service to pub chain customers such as Spirit and Enterprise Inns, and to supermarkets and off-licences, was damaged when deliveries were not made on time or in full. Profits at parent company Scottish & Newcastle (S&N) were hit to the tune of &£9m.
Dunsmore told delegates – in what an S&N spokesman later said were “tongue-in-cheek comments” – that if a chief executive told other senior staff to “spend &£9m on management consultants” looking at the supply chain, the staff should “take them out and shoot them”.
It appeared that the needs of customers – pub landlords and shop owners – were not central to the supply-chain reorganisation. Had PwC taken a marketing perspective, delivering to customers on time and in full would have been the primary aim, and the reorganisation would have flowed from this.
Dunsmore heaped praise on marketing for revitalising the company, talking of its “three dimensions” – customer insight, compelling brand propositions and tailoring the marketing agenda to meet the specific needs of the business. These dimensions, he said, were instrumental in increasing volume sales of Scottish Courage’s core brands, which include Foster’s, John Smith’s, Kronenbourg and Strongbow, by eight per cent between 2003 and August 2005.
But some are not convinced there are signs of a renaissance in the way the discipline is perceived by company bosses. “I don’t see any signs of marketing attaining a superior status to what it used to have,” says Mike Sommers, a former marketing director for a number of leading UK brands. But he does single out individual companies, such as Tesco under Leahy, PepsiCo UK under Martin Glenn – himself a former a management consultant at Coopers & Lybrand – and George at BA as businesses that are steeped in marketing.
The brand is the business
Despite marketing seemingly being marginalised in many companies, Jonathan Obermeister, a partner at Change Agency, points out that up to two-thirds of the brands in Interbrand’s valuation index are “corporate brands”, whose company identity is bound up with their customer-facing brand. He adds: “In the Fortune 500, there are more corporate brands than there are companies that own a portfolio of brands. It is hard to see how in these cases marketing can really be separated from the board’s company strategy. Marketing is a huge corporate concern.”
But as marketing has become more widely understood in the business world, company directors have begun to feel they can go it alone without the advice of professionals, says Emyr Williams, a consultant at Commercial Advantage. The problem with this approach is that marketing has become technically more complex, thanks to the explosion in media outlets and the rise of hyper-competitive markets.
“The marketing challenge is getting harder. So many more avenues have opened up from the days when you just pressed the buttons and let the television ratings roll. Most consumer companies would be better off with a strong and able marketer on the board,” says Williams.
While some companies are taking the opportunity offered by marketing and prospering, others sacrifice marketing to sales and are giving away their leading positions to retailers, allowing rivals to exploit channels such as the internet to eat into their businesses. If ever there were a need for an elevation in marketing’s corporate status, it has surely arrived.v
The following is an extract from Marketing Genius by Peter Fisk – a partner at business innovation firm The Foundation – due to be published in November by Wiley Capstone:
Marketers should be the most important, influential and inspiring professionals within the business community. Yet for too long, their talents have been restrained to functional delivery, a support function, and their contributions marginal to the core challenges of business. Businesses cannot survive in today’s markets like this.
Business needs marketers and marketing more than ever, to step up to the challenges of marketing complexity and intense competition, to be the creative and commercial driving force of business, and to embrace real customer orientation, innovation and profitable growth.
There is an open door for marketing to take ‘centre stage’, to strive strategic direction and aligned delivery, to be a stronger function and a holistic mindset for business. However, this requires marketers willing to change. While there are undoubtedly good examples of those who are already there, other must become more strategic, innovative and commercial. There has never been a more exciting time to be a marketer.