Marketers Heading Back To The Boardroom

AUTHOR: Lachlan Colquhoun   DATE: 01.09.05   ISSUE 2, 2005
Marketing’s challenge to “regain its seat in the boardroom” through measuring and proving its effectiveness was one of the hot topics at a recent marketing conference in Singapore sponsored by AGSM, the Singapore Management University and the Marketing Science Institute.

Conference Co-Chair, AGSM Professor of Marketing John Roberts – who was also one of the conference presenters – says that “marketing metrics” was one of three main themes at the First Marketing Science Institute Asian Marketing Conference.

“We heard a presentation from Raj Srivastiva, from the Goizetta School, who is undoubtedly one of the world’s top metrics academics,” says Professor Roberts.

“There’s a strong feeling that marketing has lost its seat at the boardroom table and in the executive C suite, so there’s a perceived need to make marketing more accountable. We have to measure what we do.”

“In the past the CMO would just say ‘trust me’ but now there is an imperative of evidence-based justification you just can’t walk away from.”

ILLUSTRATION: Gregory Baldwin

Professor Roberts, who is also an academic trustee of the Marketing Science Institute, said the most interesting development in the metrics area was a new trend to describe marketing accountability “in the language of the Chief Financial Officer” rather than in traditional marketing terminologies.

“Marketing has historically tried to be accountable in terms of increasing market share, increasing sales and margins,” he says.

“The board and the CFO are looking at things in terms of return on equity and assets, and marketing has to embrace some of that language if it is going to prove its worth.

“So the issues Raj was addressing made me think about marketing metrics in a new way; much more about making marketing assets work for you, and understanding their contribution to the result. Ideas such as work rate (measured by asset turns) become important, rather than just net present value.”

In the past, says Professor Roberts, marketers were able to fend off the issue of measuring their performance through claiming that measurement would impair their creativity and effectiveness, but with the trend to measure all aspects of the enterprise, they are under pressure to quantify their contributions.

“At the moment the chief marketing officer goes to the CEO and says he or she needs another $15 million to support the growth strategy for brand X,” says Professor Roberts.

The trend to measure all aspects of the enterprise puts marketers under pressure to quantify their contributions.

“The CEO says ‘OK, what return am I going to get?’ and the CMO says ‘you’ll get back $30 million.’

“In the past the CMO would just say ‘trust me’ but now there is an imperative of evidence-based justification you just can’t walk away from.”

The Singapore conference was a unique gathering of top marketing academics from the US with marketing practitioners from Asia, who met to swap theories and experiences and find points of intersection.

“I think what the academics have to offer the practitioners are strong frameworks,” says Professor Roberts.

“The practitioners are there every day, they have their sleeves rolled up and they have a good feel for the market, so an academic can’t really teach them much about what the market is really like because their level of immersion is so much greater.

“But what an academic can do is to come in and look at all the phenomena bubbling away in a state of chaos and help make sense of the chaos, and that in itself can be helpful.

"The CEO says ‘OK, what return am I going to get?’ and the CMO says "you’ll get back $30 million."

“By having strong frameworks you are much less likely to be blindsided by the bits you are not working on, and you can be much more efficient on the bits you are working on.”

The other two “hot topics” at the conference were issues around branding and brand equity, and account management and the area of customer relationship management.

“We had a very interesting presentation from Erwin Elechicon, who is in charge of Procter & Gamble’s Fabric and Home Care business in the region, and he was talking about what they were doing to make their brands resonate in Asia,” says Professor Roberts.

“Some of their work was very cognisant of the fact that Buddhist Thailand, Catholic Philippines, Moslem Indonesia and Shinto Japan are very different countries in terms of what people believe, like and do.

"What the academics have to offer the practitioners are strong frameworks.”

“So he demonstrated some terrific ads for one of their products – Pantene – which showed beautiful hair but it was black hair in Korea, straight hair in India – and it illustrated the way that concept was translated to meet totally different market.”

"The board and CFO are looking at return on equity and assets; marketing has to embrace some of that language if it is going to prove its worth."
PHOTO: Greg Newington (Professor John Roberts)

In terms of branding, Professor Roberts says that the issue is particularly important in Asia, where the more “collectivist” nature of the societies means that brands are “much more powerful signals.”

“Brands are not just about me and the product, they are about me and the product and the way I fit in the society in Asia,’ he says.

“So it can be much more important in Asia, because identifying with a particular brand can tell much more about the person.”

In terms of Customer Relationship Management (CRM), Professor Roberts says the conference heard tales of success and frustration – but mainly stories of frustration.

“CRM is still a much more problematic area,” he says.

“To be honest, CRM practitioners are probably leading academia at the moment.

“The reality is that there’s a huge amount of work going on out there which is absolutely ghastly, but the top 20% is very exciting and does show us some way forward.”

“Brands are not just about me and the product, they are about me and the product and the way I fit in the society in Asia."

Some of the most promising advances in the area of practice are in the development of more “intelligent heuristics” which help in the exercise of customer segmentation, and understanding the most effective way to address different customers.

“The fact is that you can’t afford to address all of your customers individually, separately or differently because there are just too many of them,” says Professor Roberts.

“And you can’t afford to treat them as a mass, so you have to segment them. The real challenge is how to get to a level of granularity that is not so fine that it is unmanageable, but not so coarse that every grain within a segment is different.

“So some of the consulting companies, which provide tools for this sort of thing, are getting a lot cleverer in understanding their customers, and are getting to a usable level of granularity so that is very exciting.”

Improving the effectiveness of CRM, says Professor Roberts, remains an ongoing work in progress.

“With CRM, we are not trying to be perfect but we are trying to be better than we are today,” he says.

“There are a few organisations who are out there doing it well – I can name Coles Myer as one in the area of account management – so we are seeing that frontier of efficiency pushed out gradually.”

In the big picture, the Singapore conference provided reinforcement for one of Professor Roberts’ “favourite hobby horses” – that contrary to years of ingrained public perception, marketing is a socially useful discipline whose mission is to align consumer needs and corporate production in a way that promotes sustainability and efficiency.

“There are three ways of aligning the resources of the organisation and the needs of the community,” he says.

"Marketing is a socially useful discipline whose mission is to align consumer needs and corporate production in a way that promotes sustainability and efficiency."

“One is to manipulate people’s needs – and marketing does that. Another way is to lie, and pretend there is a match when there isn’t one. Some marketers also do that.

“But the third way is to understand the customers’ needs and adjust the offer to meet them.

“I would argue that the first two are not socially useful, but the third one is, and its also easier to understand what people want and give it to them than to manipulate them. Almost all marketing undertaken by large organisations (and most small ones) falls into this category.

“So I argue passionately that if marketing is conducted in this way then it is incredibly socially useful, and its about making sure that the productive resources of the company are focussed on what people are going to value.”