The decline of marketing’s influence in the boardroom. The problems and the cure. Towards professionalism
Two of the main contributors to the somewhat confused state in which the marketing profession finds itself are:
- The widely-held belief that marketing is mainly a communications function
- The phenomenally -rapid acceleration of digital technology.
MARKETING IS PERCEIVED TO BE MAINLY A PROMOTIONAL FUNCTION
There has been a marked shift in the perceived role of marketing during the past thirty years as a result of the research of the Nordic School. Their work led to a shift from the economics-based “ product-dominant logic “ to the relationship-centered “ service-dominant logic “. This led to the widely-held view that as most customer-facing personnel do not belong to the marketing department, marketing is everyone’s responsibility. As a consequence marketing moved away from the board and came to be perceived as mainly a promotional function.
We are always alarmed when we see recruitment adverts for a “ Strategy Director “ and separately, a “ Marketing Director “, thus encouraging the belief that marketing has little to do with strategy. Also, Marketing's self-destructive focus on the measurement of tactical promotional expenditure in an attempt to prove that they are not wasteful, self-indulgent and innumerate has not helped our cause.
The advent of digital exacerbated this perception.
THE PHENOMENALLY- RAPID RISE OF DIGITAL TECHNOLOGY
A few months ago, the author heard from one of our leading marketing academics (whose confidence must be respected), who said that from recent interviews with senior directors across a range of businesses ( funded as part of an ESRC Digital Social Research grant ), marketing is becoming increasingly seen as purely digital in many businesses, with the consequence that marketers are less involved in strategic decisions. The evidence was suggesting that “ marketers are being excluded from the boardroom and becoming merely a service function “
Yet, as Nicola Kemp said in November 2013; " For many companies, the greatest threat is not being out of touch with digital developments, but losing sight of the fundamental needs of consumers and the underlying long-term drivers of their business "
Of course, digital is important, representing as it does a valuable addition to an already-impressive list of two-way communication channels, but it is not marketing. It should be obvious to anyone that without a robust strategy for what is sold and to whom, developing a digital strategy is impossible.
Given the maturity of most markets, the failure of hundreds of fads such as Marketing Excellence ( Pascale R , 1990 ) and of finance, with their ridiculous focus on short term rounds of exotic debt instruments, excessive leverage, cost-cutting and focus on cash, it is fair to conclude that future success will very much depend on a focus on markets and customers. How many pence are there in a pound and how many of these can be cut? Cost-cutting is finite, whereas creating value for customers is infinite and is limited only by our creativity and imagination—surely the role of marketing.
It is also worth noting that the UK has twelve times more accountants per capita than Germany (Pearson 2013). Even taking into consideration the fundamental differences in the role of accountants between the two nations, it is still tempting to ask which country has been more successful over the past sixty years
The most common objective of modern commercial organizations is the sustainable creation of shareholder value. This can be achieved only by providing shareholders with a total return from capital growth and dividend yield that exceeds their risk-adjusted required rate of return for this particular investment. In today's highly competitive environment, the major sources of shareholder value creation are the intangible marketing assets of the business, such as brands, customer relationships, and channels of distribution, the substantial majority of the company's value that does not appear on the traditional balance sheet. Consequently, the critical future strategies of a company, which indicate how these assets are to be developed, maintained, and exploited, are the role of properly-trained marketing specialists, not some geek playing around with technology.
So a changed approach is necessary, which entails getting back to basics and along with the growing realization that accountancy and cost-cutting is not a successful strategy, this represents a massive opportunity for our community.
A recent article on the future of marketing in HBR re-emphasized the need for marketers with traditional marketing expertise and claimed that these basic capabilities are missing from our community. Another, in Management Today in October, explained why product excellence is no longer enough. There are no bad products today. The consequence is that product excellence has to be augmented by differentiation in the market place.
In spite of the plethora of criticism of the state of marketing today, our research at Cranfield shows that successful marketers make a major contribution to corporate wealth by understanding markets, doing proper needs-based segmentation, developing quantified value propositions, competitive analysis, portfolio analysis and managing market place risk. This is supported by a flurry of recent articles by the likes of McKinsey, Accenture, IBM, and others too numerous to mention here giving evidence that organizations with CMOs doing these things are substantially more successful than those with CMOs who don’t drive strategy in these ways. The problem is that we are starting from a very low base, although the real situation is confused by changes in title from marketing to Chief Customer Officer, Chief Brand Officer, Chief Trust Officer, and the like.
So, the time has come to tell the world about the real contribution that world-class marketers make to the creation of shareholder value. This will not come from econometric models--- although these are important--- nor from simple measures of marketing effectiveness.
Top executives still don't know how to convert, for example, brand equity to " real " equity, whilst single numbers such as the net promoter score just do not convince anyone. Hence the "show-us-the-money" school at the top of most companies.
The forecasts are that marketing is beginning to morph into a technology-based discipline to cope with the new age of technology. Whilst this is almost certainly true, we must not forget to focus on the fundamentals of marketing and we must learn how to embrace technological developments as essential tools to help us in our quest to build real value for our target markets. Only this way will we let boards of directors see the major contribution we make to corporate strategy.
We also know that a significant proportion of the practitioner’s marketing community is not professionally qualified, in stark contrast to most other professions, where it is impossible to practice unless you are appropriately licensed. This is not to say that unqualified marketers can’t be successful, for this is obviously untrue. Nonetheless, it is no coincidence that with such a small proportion of professionally qualified practitioners, our reputation is at such an all-time low. Accordingly, the author will continue to support our professional body (The Chartered Institute of Marketing) and will always seek to encourage evidence-based best practices in all our communities, especially in the practitioner and educational domains.
From this and other papers on the state of marketing, it is difficult not to conclude that the discipline of marketing is destined to become increasingly less influential in the board room unless we continue to encourage and support a fundamental paradigm shift in our community towards professionalism. This way, the future can be bright for us all.