Mohanbir Sawhney

What ails the profession and how to fix it

To paraphrase Charles Dickens, these are the best of times for marketing, and these are the worst of times for marketing. On the one hand, marketing has never been more important for companies as they struggle to grow and differentiate themselves from competitors. On the other hand, the value of marketing is being called into question in the executive suite. Marketing needs to reinvent itself if chief marketing officers want to gain a seat at the executive table. If marketing does not reform itself, it will die a slow death from a thousand budget cuts.

What ails marketing?

Marketing faces two key crises - an identity crisis in defining its role in the organisation, and an accountability crisis in demonstrating the value of marketing to the organisation.

The Role of Marketing: Marketing often plays a highly circumscribed role of marketing communications in companies. Few marketing organisations are meaningfully involved in formulating corporate strategy, designing offerings and managing partnerships.

My colleague, Phil Kotler, recently told me about a conversation he had with a vice-president of marketing at a major airline. Phil asked the VP what he did in his job. Did he control pricing? "Not really," the marketing VP replied. "That's the yield management department." Did he control where and how often the airline flies or the classes of service it offers? "Not really - that's the flight scheduling department." Did he control the services that the airline provides its customers on the ground? "Not really, that's the operations department." So what exactly did he control? "Well," he told Phil. "I run advertising and the frequent-flyer programme."

I suspect that this is the case with most companies, with marketing becoming synonymous with marketing communications, and that, too, after the fact when products have already been developed. There are a few exceptions in the consumer packaged goods arena, but even there, the rising power of retailers and the shift in marketing dollars to promotions stands to make marketing the "discipline of cents-off coupons," in the words of my colleague, Don Lehmann from Columbia.

The Value of Marketing: Marketing faces a crisis of accountability as CEOs and CFOs legitimately question the return on investment (ROI) they get from their marketing investments. Not much has changed since John Wanamaker, founder of the first department store, made his famous statement: "One half of my advertising budget is wasted. The trouble is, I don't know which half."

According to David Pottruck, CEO of Charles Schwab and a former marketing head, CMOs need to speak the language of CEOs. "Almost all CEOs are focused on revenue growth," he says. "If you don't grow your revenues, you are sunk." According to Pottruck, while CEOs can clearly see the benefits of paying salesmen more for what they sell, the value of marketing is often not as clear." If CMOs are unable to quantify the value of marketing, marketing budgets will inevitably get cut, and marketing spending will gravitate toward short-term demand generation initiatives at the expense of brand and relationship-building initiatives.

(Mohanbir Sawhney is a faculty member at the Centre for Executive Education at the Indian School of Business, Hyderabad. He is the McCormick Tribune Professor of Technology, and the Director of the Centre for Research in Technology and Innovation at the Kellogg School of Management, Northwestern University. This article has been reprinted from ISBinsight, ISB's magazine, with its permission.)

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