Marketing structures evolve

04 February 2011

NEW YORK: Many major brand owners are attempting to modify their marketing structures and strategies, reflecting a shift in priorities after the downturn.

Celerant Consulting and research group The Economist Intelligence Unit surveyed 288 business leaders, and found a transition was seemingly underway.

"Apparently, executives are leaving the preoccupations of surviving the downturn behind," they argued.

Overall, 56% of respondents representing consumer goods specialists reported competitive and cost pressures were fuelling this process, measured against 51% hoping to boost market share.

Another 44% cited stimulating demand through creating new, better or different products, while reducing internal complexity logged 37%.

Participants from the energy and resources sector added regulation to this list, as did their peers in the pharmaceuticals industry.

Looking specifically at marketing and sales, 41% of contributors undertook modernisation efforts in 2010, making this the most commonly-effected division, with figures even hitting 60% among manufacturers.

Supply chains and procurement registered 26%, IT posted 24% and R&D delivered 22%, ahead of customer service's 14%, the same score as those pursuing company-wide transformation.

"The sales and marketing function is a higher-return place to implement real change than management on the cost side," said Dean Nelson, founder of private equity group KKR Capstone.

"The customer base has changed; the world has changed. People realise that they need to change their sales and marketing approach."

In keeping with such sentiments, the Celerant/EIU study suggested a recovery from the recessionary mindset may not yield bigger budgets, as emerging markets require unique tactics.

Rosabeth Kanter, a professor at Harvard Business School, warned support for R&D and communications must not be too constrained.

"Marketing always leads growth. You can't manufacture more if you are not attracting new customers. So, marketing expenditure goes up when aiming for topline growth," she said.

"In the long run you need to be investing in constantly renewing products and services. Innovation is the only way to have sustainable growth."

More broadly, new models of brand promotion appear to be taking shape, as advertising intersects with other fields, like corporate social responsibility and sustainability.

Shipping and logistics giant UPS has deployed this model, training its sales team to ensure they are knowledgeable about this aspect of its operations, and explicitly flagging up such activity to customers.

"We realised that we had an advantage and needed to sell it," said Scott Wicker, vp, sustainability, at UPS. "Sales and marketing is being affected the most."

Procter & Gamble, the parent of Tide and Pampers, has taken this further, aligning organisational goals behind the idea of "touching and improving" the lives of shoppers.

Its vision encompasses everything from developing inexpensive goods for poorer consumers to meeting a number of ambitious environmental targets.

"You need a clear line of sight for sustainability to the company's purpose," said Peter White, P&G's director, global sustainability.

While 47% of firms allocated more funds to change management in 2010, and 63% agreed senior executives dedicated greater time to this area, success is far from guaranteed.

Just 56% of the panel believed the programmes executed had proved effective, meaning a significant proportion were dissatisfied.

"I've yet to embark on a change initiative or project where one of the ultimate objectives is not the reduction of complexity," said Robert Tartaglia, chief operating officer of insurer Allianz Global Corporate & Specialty.

"There are a lot more experienced people out there and a better understanding of best practice, but I can't say I have seen any empirical evidence that companies are doing better."

Data sourced from Economist Intelligence Unit; additional content by Warc staff