Growth tonic: how marketers can deliver growth in the current conditions
At our most recent pharma seminar, Dr Don O’Sullivan, Associate Professor of Marketing at Melbourne Business School, discussed the ways in which firms can achieve growth. So what were the key lessons for marketers?
1. Growth is still the end – but the means need to change
Growth in value is the primary responsibility of senior management. According to the 2013 PwC Annual Global CEO Survey, it is also the number 1 concern for CEOs – more pressing, even, than governmental responses to the GFC. But growth in most firms is now largely driven by assets that do not appear on the balance sheet, the corollary of which is that traditional management practices, including marketing practices, lead to interventions that are counterproductive. In the pursuit of short-term financial indicators and to meet earnings targets, firms inevitably reduce sources of discretionary spending – with marketing one of the first to go.
The upshot: what gets measured gets managed, so the first step to growth is understanding how your activities are measured.
2. There is hope for marketers – if you look beyond the balance sheet
Based on advertising as a percentage of sales, the marketing function of firms has become progressively less effective over the past couple of decades. But marketers can take heart from the way that brand-led firms measure performance. Typically, they measure the firm’s competency within the current served market (retention, share of customer and market share), along with referral, margin, organic growth, and competency in extending the addressable market. This can lead to a major shift in organisational focus, with IBM an example of a firm that has successfully extended its addressable market through its ‘Smarter Planet’ initiative.
The upshot: shift the measures of your marketing activities towards those of a brand-led firm.
3. Your brilliant campaign won’t win over the CEO
Marketing departments have traditionally been responsible for one of the four Ps in the marketing mix (promotion) above all else. Accordingly, marketers have tended to concern themselves with marketing communications. Unfortunately, CEOs are largely disinterested in the details of campaigns. They want marketers to do more than just roll out promotions; rather, they seek leaders who can drive business value. Therefore, marketers need to shift from delivering campaign success to delivering business success.
The upshot: don’t let yourself become the firm’s ‘colouring-in department’; understand your role in driving marketing assets (not just marketing communications).
4. Act before your fate is sealed
As business drivers have moved from hard assets to intangible assets residing within the market, the risks inherent in firm management have changed. The problem this represents for marketers is that the implementation phase for which they are traditionally responsible (agency management, campaign integration, etc.) only happens once most of the risks have already been ‘baked in’ by earlier decisions. To overcome this, brand-led firms engage with risk as a function of market engagement rather than simply a function of marketing execution.
The upshot: seek to influence the upstream process – ideally beginning with decisions made at board level, through to those regarding control over market data, objective-setting, budgeting and campaign planning.
Dr. Don O’Sullivan is Associate Professor of Marketing at Melbourne Business School. Don’s primary research focus is on how marketing affects company performance. He is an active member of the Chief Marketing Officers (CMO) Council and his research has been published in leading international marketing journals. As a corporate educator and consultant, he has worked with a wide range of blue-chip organisations.
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