What a cracking keynote speech! Emeritus Professor Malcolm McDonald, President of the CIM Thames Valley Branch, enthralled delegates at the Branch’s ‘Distinctly Different’ 2005 conference this week with his forthright comments on ‘Marketing Due Diligence’. If anyone thought that branding is the main purpose of marketing, then you would perhaps be either disappointed or amazed by his arguments. Marketing is not just about branding, insisted the eminent professor who until recently led Cranfield Business School, because there has to be more strategic substance behind it.
The marketing profession has a reputation for being “untouchable, unaccountable, expensive and slippery.” The term marketing itself has become to mean ‘promotion’ at best and at its worst, ‘t-shirts and price-off promotion’. As an example of the how impactful marketing can be he cited P&G’s recent acquisition of Gillette for £31 billion, of which only £4 billion was for tangible assets. This clearly demonstrates how crucial marketing should be to an organisation’s corporate future. Of the remaining £27 billion of intangible assets, only part of it was attributed to the strength of their brands. Much of it was for Gillette’s innovative capability and relationships with customers and consumers.”
He added: “Customers make profits for us, not factories, something that can easily be forgotten when companies are making short-term profits in growing markets. The trouble with this is that customers have long memories and when markets mature they vote with their feet, and in the scramble to recover, companies cut costs and implement other ‘Customer Touch’ measures such as CRM systems and the like.”
“The problem many short-termist companies have with this approach is that marketing investments cannot be measured like factory output, and benefits may not accrue for up to three years after the investment has been made. Consequently systems like outsourced call centres and CRM tend to be used as transactional, cost-reducing vehicles. Cost reduction is however finite, whereas value creation is infinite and is limited only by our creativity and vision. This is what world class companies do.”
Strategic marketing therefore comes before branding. This is, of course, is a direct result of getting your customer-centric marketing strategy right. Marketing should be, as the professor says, a vehicle for long-term value creation rather than short-term profit and cost rationalisation. It is primarily about differentiating yourself from your competitors, not copying what they do. So to create a strong brand you need to have the strategic elements of planning and creative thinking in place, and (with reference to Ansoff’s matrix) this includes looking at innovative ways for developing your products and services, in new and existing markets, by placing the customer at the forefront of your strategic thinking.
Andrew Dugdale, the CIM Thames Valley Branch Chairman, and Chairman of ICDL, a company focused on creating differentiated value, who presided over the day’s events, then posed the following question: “What is it that hold Marketers back from creating such Customer Centric strategies”? Maybe one answer was included in Matthew Leitch’s presentation where he talked about how the “uncertainty of risk” holds marketers back. “As a result” he continued, “we can be our own worst enemy by failing to be creative about potentially innovative and strategically profitable ideas”. Dugdale said “Could it be that it is as simple as our own psychology, tending towards risk aversion that holds us back”?
Leitch, a Chartered Accountant and author of Managed Luck with a degree in psychology from the University College London provided delegates with the following tips about how to use uncertainty to your advantage:
- Learn how to behave when things are uncertain;
- Keep an open mind – be honest even in the face of competition;
- Build advocacy and gain approval, but this must not go too far as this could raise expectations too high;
- Talk honestly about the potential pitfalls, risks and identify them clearly;
- Understand the consequences of what might happen if a project fails and how to find a solution;
- Establish the objective of the project;
- Create a list of things to do during a project;
- Don’t be reluctant to think about a variety of outcomes;
- Be objective, create a strong message and sound convincing;
- State the sources of evidence to back up your plan;
- Refer to your planned activities and their causal links;
- Beat uncertainty suppression for successful risk management;
- And evaluate a number of ideas.
The third speaker of the day, Michael Brewer, then countered some of Professor Malcolm McDonald’s argument about segmentation, in his speech – ‘Understanding and managing corporate segmentation.” He also argued that marketers should mirror customer strategy with their suppliers and asked: “What type of suppliers do we want to have a relationship with, and what are the dynamics of the relationship that we have with them” There is too little dialogue between suppliers and marketers, he said, and there should be much more.
Marketers should focus more on managing their limited resources to gain more ROI. He also recommended that marketers should create a psychometric profile of their organisations and more employee understanding.
The afternoon session featured case study-like presentations by Ted Moss of British Airways and Mike Skypala of Dunn-Humby. Moss looked at how you can develop loyalty, analysing the rational elements of loyalty-creation strategies versus its more emotional elements and impact. Skypala provided some examples of the work his company has been doing with FMCG manufacturers. He went on to explain how this links with Tesco Clubcard and the firm’s qualitative research with Tesco’s shoppers.
So, overall, it was a very thought-provoking conference with some very important, strong and clear messages for marketers. This is summed up by Dugdale’s poignant remarks, which he made after Michael Brewer’s presentation: “Getting to know you customers better is the critical element.”
To get to know your customers you need to personalise the way you develop a relationship with each individual customer, and let the customer manage that interaction. Not every customer within a segment needs, feels and wants the same things at the same time. It is important to see the development of a relationship with them as a long-term, evolutionary activity. Lastly, you need to: understand your market so that you can differentiate your offerings; create value and an emotional connection with it, manage risks in order to be innovative. By being different in ways that are important to your customer, you will create competitive advantage and opportunities for your company that your competitors may not have yet seen.
By Graham Jarvis
Editor and Media Services Consultant
E: editor@cimtech.org
Blog: http://www.media-insert.co.uk
Release date: 11th October 2005.
About CIM Thames Valley
CIM Thames Valley represents the interests of Marketing Professionals throughout one of the most active business regions in the UK. Drawing on support from business and academia it runs a series of focused, highly valuable programmes of events, conferences and learning for members throughout the year. To learn more about CIM Thames Valley, please contact the Branch Chairman, Andrew Dugdale at adugdale@thebusinessaccelerators.com or take a look at our website www.cimthamesvalley.co.uk/.
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