Marketers, be careful not to lose your strategic focus and grip
Like a shabby old songbird losing the odd feather, but with a steady assurance of doing this avian ritual many times before, last week I found myself warbling away like a good’n. Budget meetings are the only time in the year when business leaders in any organisation put their hubris and impressive-sounding job titles away, and with an air of trepidation, self-conscious in the spotlight, sing for their supper.
This year was no different in that respect, though this budget ensemble was strangely out of tune.
Like most organisations, we have business review meetings four times a year. The one at the end of September is when high-level budget plans and strategies for the following year are shared, discussed, and the direction of travel is agreed upon with the group CEO, CFO and a small coterie of disinterested peers from across the business.
Marketing can lower prices, it can raise income. It can remove barriers to entry, and stimulate innovation and job creation. It can reduce losses, it can increase awareness and sales volumes.
Four things have made this year particularly interesting. First, my function is the only one in the business to submit a budget that is in line with the five-year cost plan. Second, our brand plan for 2024 is transformational, in that we are proposing pivoting from a focus on raising awareness to generating action. Third, our biggest brand seems incapable of operating to budget. Fourth, at my instigation, this is the first time we have held a separate brand review meeting with this group, looking at all the marketing plans and budgets of the brands in the group together. Spicy.
Underpinning all of this is an inalienable truth. Often misunderstood, rarely articulated, and never celebrated. This one thing provides my North Star and is what gives me confidence when presenting plans and budgets. It is the purpose of marketing, and why good marketing is vital.
Why marketing works as an investment in most businesses
At its heart marketing is about creating a value exchange between producers and consumers. The more value we give consumers – meeting their needs, satisfying their wants and solving their problems, the more value they give us, paying us more, buying us more often, sticking with us through a value-based inertia.
Because of marketing, we as consumers have more choice: food is abundant, clothes are abundant, cars abundant, business services abundant, phones abundant. You name it, in today’s free market economy, you can pretty much find and buy anything (legal).
Marketing can lower prices, it can raise income. It can remove barriers to entry, and stimulate innovation and job creation. It can reduce losses, it can increase awareness and sales volumes. More pertinently today, it can reduce waste, and increase sustainable behaviour. Because of marketing, there is plenty to choose from to solve our problems and satisfy all of our needs.
So… and here it comes… marketing helps society. (Boom!)
That’s right, marketing creates value by improving people’s lives and wealth for society.
So, with this in mind, marketing as an activity needs to have a distinct role in the business strategy.
The discordant sounds in this year’s budget review meetings, a cacophony from the bevy of rather careworn, besuited executives, is due to poor strategy implementation and some wayward thinking from my marketing colleagues in the business units. This despite the direction they have been given, the budget envelopes in their own plans, and the process they were asked to follow… oh the joys of decentralisation and empowering leaders to lead.
As is so often the way in long-running transformation activities, we have lost our way. Or, at least we are fast losing our strategic focus and grip. The key indicators are the skyrocketing costs for proposition development and brand communications from certain teams, combined with rather wishful and unspecified commercial outcomes.
They haven’t realised that excess share of voice is relative to market share, not just competitor spend. Muppets.
Like many enterprises, our strategy relies on fostering points of leverage to deliver unique value to our customers. In implementing the strategy one team in particular, brand A, have glazed over these levers, and appear to be regressing to category norms and expectations.
The upshot is that while we may be better than our peers in some areas, we are having to compete hard for cut-through, with increasing pressure on sales conversion as we are becoming increasingly indistinguishable from our peers in this segment. At heart, this is because the value we’re creating isn’t unique. The result is that to win the predominant logic, from this team, has become to shout more loudly than everyone else through increased (unaffordable and deeply inefficient) communications investment. The pitch being that we need greater share of voice to win.
In an ironic twist, I find brand A quoting Binet and Field back at me, but to their eternal shame (having not actually read Advertising in the Age of Accountability) they haven’t realised that excess share of voice is relative to market share, not just competitor spend. Muppets.
Re-finding equilibrium with the strategy
So, with a deep, deep breath, I suggest the answer lies in going back to the basics of our group brand strategy and working out the best ways to bring our unique value for customers to life. And critically getting brand A, who are bidding for much more marketing spend, to really focus on the outcomes they need to deliver within the strategy: a) better propositions that deliver unique value, b) bottom-up marketing plans that leverage the lower cost customer acquisition channels, while implementing CRM to ensure we maximise the value acquired. They should do this before focusing on building the brand to access direct routes to market. If we succeed in the B2B2C markets, we may ultimately go direct in time, when we need to grow greater market share. But that is some time away.
So, to ensure budgets are given the rubber stamp, the task for the next month is clear. Get the brand teams to pivot from top-down benchmarking with vague macro outcomes, and go through the rigorous approach we have taken centrally to develop a bottom-up, audience-led, and outcome-focused plan, for their budget.
So, next time around, we will, yet again, get together to warble like a chorus of songbirds, but this time hopefully to sing the same tune.