The Decline and Dispersion of Marketing Competence
In many organizations, the corporate marketing function has lost budget, head count, influence and confidence, resulting in strategic consequences that run deeper than many senior managers may realize. The question is not how to rebuild the marketing center, but how to disperse marketing competenceacross the organization.
In many companies, the marketing function is in steep decline. Over the last decade in particular, there has been a marked fall-off in the influence, stature and significance of the corporate marketing department. The trend toward integrated marketing — much discussed in earlier decades — seems to have been overtaken by a counter trend towarddisintegration.
You do not have to go far to find tales of woe. For years now, conferences and workshops for the marketing profession have been awash in advice about how to determine and demonstrate a return on investment for the function. Marketing departments have been the scenes of pep rally-like meetings one moment and hand-wringing layoff announcements the next. Chief marketing officers — a title that cynics believe came into being as a cover for deep cuts in marketing headcount — have an average tenure of less than two years, according to surveys of 100 top-branded companies by executive recruiter Spencer Stuart.1 Every marketer, it seems, has a personal story to tell: the chairman who axes next year’s brand-development program without debate or discussion; the senior marketing vice president who hosts a “Marketing Day” for his global team and two weeks later is fired. What’s more, recent polls byChief Executive magazine indicate that 35% of CEOs claim their marketing organizations need improvement.2 A recent article inThe McKinsey Quarterly said that more than half of European CEOs interviewed were unimpressed by their marketers’ analytical skills and business acumen, saying in essence that marketing people “don’t think like businessmen.”3
Financial pressures, a shift in channel power and marketing’s inability to document its contribution to business results have combined to force reductions in marketing spending and influence and to accelerate a transfer of funds and responsibilities to the field sales organization. (See “Forces Shaping Marketing’s Role.”) In practice, many elements of the central marketing function have been “centrifuged” outward and embedded in functions as diverse as field sales and product engineering that are closer to customers. Today, marketing in many large companies is less of a department and more a diaspora of skills and capabilities spread across and even outside the organization.
1. “CMO Tenure: Slowing Down the Revolving Door,” blue paper, G. Welch, July 2004, www.spencerstuart.com/research/articles/744/.
2. “CEOs Are Not Happy With Their Marketing,” Chief Executive 201, August/September 2004, www.chiefexecutive.net/depts/ceowatch/201a.htm.
3. F. Cassidy, A. Freeling and D. Kiewell, “A Credibility Gap for Marketers,” research brief, McKinsey Quarterly no. 2 (2005).
4. G.S. Day, “Marketing’s Contribution to the Strategy Dialogue,” Journal of the Academy of Marketing Science 20, no. 4 (fall 1992): 323–329; and F.E. Webster Jr., “Market-Driven Management: How to Define, Develop, and Deliver Customer Value,” 2nd ed. (New York: John Wiley & Sons, 2002), ch. 2, 30–64.
5. F.E. Webster Jr., “Understanding the Relationships Among Brands, Consumers and Resellers,” Journal of the Academy of Marketing Science 28, no. 1 (winter 2000): 17–23.
6. C. Homburg, J.P. Workman Jr. and H. Krohmer, “Marketing’s Influence Within the Firm,” Journal of Marketing 63, no. 2 (April 1999): 1–17.
7. For examples of studies examining the financial implications of marketing strategy from a variety of perspectives, see: E.W. Anderson, C. Fornell and D.R. Lehmann, “Customer Satisfaction, Market Share, and Profitability,” Journal of Marketing 58, no. 3 (July 1999): 53–66; S. Gupta, D.R. Lehmann and J.A. Stuart, “Valuing Customers,” working paper 01–119, Marketing Science Institute, Cambridge, Massachusetts, 2001; N. Mizik and R. Jacobson, “Trading Off Value Creation and Appropriation: The Financial Implications of Shifts in Strategic Emphasis,” Journal of Marketing 67, no. 1 (January 2003): 63–76; J.C. Narver and S.F. Slater, “The Effect of Market Orientation on Profitability,” Journal of Marketing 54, no. 4 (October 1990): 20–35; R. Deshpandé, J.F. Farley and F.E. Webster Jr., “Factors Affecting Organizational Performance: A Five-Country Comparison,” working paper 97–108, Marketing Science Institute, Cambridge, Massachusetts, 1997; and K. Pauwels, J. Silva-Risso, S. Srinivasan and D.M. Hanssens, “New Products, Sales Promotions and Firm Value: The Case of the Automobile Industry,” Journal of Marketing 68 (October 2004): 142–156.
8. “Innovation Becoming Higher Priority in Global Companies,” press release, The Conference Board, June 30, 2004.
9. “Mastering Innovation: Exploiting Ideas for Profitable Growth,” Part 3 of the Global Benchmark Study, Deloitte Research, March 2004.
10. “The McKinsey Global Survey of Business Executives,” November 2004, www.mckinseyquarterly.com. (A McKinsey Quarterly survey of 16,476 global business executives.)
11. See K.L. Keller, “Strategic Brand Management: Building, Measuring, and Managing Brand Equity,” 2nd ed. (Upper Saddle River, New Jersey: Prentice Hall, 2003).