Deloitte Consulting LLP
Shake things up!
CMOs need to take bold, new steps
to improve marketing effectiveness.
These days, the door to the office of the Chief Marketing Officer
(CMO) is a revolving one. A recent article in Business Week (Decem-
ber 10, 2007) puts the average tenure for a CMO at 26 months,
much less than that for chief executive officers or chief financial of-
ficers (4 4 to 39 months, respectively). While the causes of this high
turnover vary, one thread is common: the typical CMO is under the
gun to improve marketing effectiveness.
(Note: The innovations discussed here fall into the high-impact,
immediate-horizon category. These tone-setting actions can yield
quick returns, while giving the CMO the time to put in play longer
term strategies for increasing revenue and margins. These innova-
tions also make sense when “big plans” aren’t delivering results
significant enough or fast enough.)
Easier said than done. This challenge requires more than a little
critical thinking and creativity. In fact, the desire for “effectiveness”
is often the reason the CMO position is created; yet, paradoxically,
the job is often structured in a way that makes it impossible to de-
liver results. In the worst cases, a CMO joins a highly decentralized
organization that has strong-minded brand marketers and unclear
decision rights. These organizations resist efforts to assert control,
rein in spending, and increase accountability — and that resistance
can accelerate the C MO’s trip through the revolving door.
and foremost, remember your charter: to deliver measurable re-
sults. At the same time, recognize that stakeholders judge effective-
ness over three horizons: immediate, intermediate, and long term.
So, you need to make different impacts at different intervals.
Early in their careers, marketers learn the “four Ps” — price, prod-
uct, place, and promotion — that make up the mix that guides their
decision-making ever after. For conventional CMOs, “marketing
effectiveness” means continually tweaking the mix. They diligently
apply statistical models to adjust spending levels and allocations, but
the benefits prove elusive or fleeting.
But the leading marketers have started doing things a little differ-
ently. Our research and experience suggest three ways the leading
marketers are shaking up the mix and, in doing so, realize greater
value and bigger yields from their marketing programs.
While reducing external expenditures might not be an optimal long-
term strategy, it can certainly have significant short-term impact.
Not least important in the decision to cut external expenditures
(advertising, media, research, and tactical marketing) is that such
cuts are usually the most readily acceptable to internal stakehold-
ers. If a consumer packaged goods (CPG) company wants to realize
profit gains quickly, this step can make a lot of sense.
To pull off a cut in external expenditures, the creative marketer bor-
rows from the playbook of the procurement professional who ap-
plies linear, structured thinking to reduce spending levels by either
managing demand or negotiating the price paid for the product/
service.
By way of illustration, you can curtail spending by raising approval
levels for any discretionary expenditure on research — a simple,
effective, and time-tested way to reduce demand for these types of
services. Or you might be careful to ensure than any research con-
ducted applies to several categories and/or brands, thereby cutting
out excess and redundancy.
In terms of price, you can competitively bid tactical marketing
materials, especially printed materials and in-store displays. Excess
capacity in the print industry and the emergence of intermediaries
have created a quick and effective basis for lowering costs without
closely scrutinizing the day-to-day, week-to-week marketing tactics
whose design and execution rests with brand marketers and sales
operations. In one recent case, a $9 billion CPG company reduced
spending by 11-16 percent — savings that accrued in the first year
of the program.
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