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Brand Management

Marketing Excellence Formula

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Marketing Excellence Formula

Can you name the best marketing company in the world? It is a very difficult question. Too often we confuse big revenues, innovative products, famous brands or remarkable ad campaigns with marketing excellence. Don’t get me wrong: all of the above are wonderful corporate assets, but they do not necessarily denote marketing excellence.

A truly great marketing organization displays excellence in all fields of our discipline. And that is why I have no hesitation in telling you that Procter & Gamble is the single greatest marketing company in the world.

A short seven years ago P&G was the last company you would associate with marketing excellence. Half of its leading brands were losing market share, employee morale was at an all-time low, and a once powerful marketing function had been decimated by a disastrous restructuring.

But the recruitment of a new chief executive – AG Lafley, himself a talented marketer – and the promotion of James Stengel to the post of chief marketing officer a year later has transformed the once ailing CPG / FMCG giant and propelled it into the vanguard of marketing practice.

Take market research. P&G recognized that it was awash with too much quantitative analysis that only served to stifle consumer insight. In response it has radically revised its research architecture, first by installing observational methods such as ethnography at its core, and then using these insights to drive its quantitative analyses.

When Jim Stengel began the restructuring of P&G’s marketing function, his team shadowed marketing managers, studying how they used observational methods. The results were translated into a 300-item questionnaire that was distributed to more than 3000 staff. The data was analyzed using structural equation modelling. The very best of qual and quant, in synergy.

Take marketing communications. While TV advertising prices and expenditures have continued to rise, Stengel has been an out-spoken critic of the medium and agencies that extol it. A year ago he delivered a remarkable speech to US advertising executives in which he predicted the imminent demise of the 30-second TV spot, berated the industry for failing to evolve in any meaningful way, and announced that the mass-marketing approach P&G had helped to develop was effectively dead.

It wasn’t just talk. Stengel has overseen a dramatic 20% shift in P&G’s global marketing budgets away from TV advertising and has experimented with a series of alternative approaches. One such venture is the Tremor Marketing Unit, a network of 280,000 teenagers that P&G uses to virally promote brands to the vital youth market that is increasingly hard to reach by traditional methods. Stengel has also taken an avowedly integrated approach to communications. He recently announced that P&G did not have advertising agencies any more, just ‘communication agencies’. How’s that for media-neutral thinking?

Perhaps that most revolutionary element of the new P&G set-up is its approach to return on investment (ROI). Rather than seeing marketing accountability as the topic for a academic debate, Stengel and his team have made it a practical reality. All P&G’s communication agencies are now being paid on performance, not on retainer or commission. P&G has also committed itself to support the Apollo Project, the exciting new audience measurement system that could finally remove the embarrassing inexactitude of people meters once and for all.

The company that invented brand management and helped to write the book of marketing strategy in the 20th century is now busy on a new edition.

Anyone keen to learn about the future of marketing should watch what is going on at P&G now.

30 SECONDS ON … THE NEW P&G

– The rallying call of the revolution at Procter & Gamble has been simple. ‘The consumer is boss’ has been the mantra since AG Lafley took the helm.

– He supports ethnographic research, despite bridling at the name: ‘I call it the best way to create value. If you want to understand how a lion hunts don’t go to the zoo. Go to the jungle.’

– Jim Stengel has been critical of accountability in advertising. ‘This is a $450bn global industry and we are making decisions with less data and discipline than we apply to a $100,000 decisions in other aspects of our business.’

– The Apollo System, proposed in September 2004 by Arbitron and ACNielsen, would equip 70,000 people with a device to record their exposure to all marketing communications and link it to buyer behavior. The system is budgeted to cost $100m; as yet, only P&G has agreed to invest in it.

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4 Comments

Jim on September 30th, 2007 said

When do you think that the next big brand icon will truly deliver on renewable and sustainable green effort and hit the consumers on a much deeper level than the topical promotional levels…..and move ahead in a trajectory that is similar to a Microsoft or Google?

Craig on October 04th, 2007 said

I’ve been watching the green movement for some time and think that there needs to be a combination of two things. First, the benefits of being “green” have to be available in the short run. Green as a concept yields very little reward to people in the present. It’s inherently a trade of: “makes me feel good now to know that I’m doing something good for the planet later.” Behavior is tough to modify when there’s no current benefit – you’re to some degree relying on altruistic-like behavior. So there’s very little benefit in the brand promise related to things “green.”

Compare this with “Organic” for a moment where you do get a perceived current benefit – less chemicals ingested, children’s health etc. So in the first step, a belief needs to be fostered to reward being green now. Like, let’s get a certification system for things that are green and put together a state sales tax rebate program for buying “certified green” products. This could give current value of the green concept.

Second, marketers need to shift their attention from “It’s green! Buy it!” to “It’s a fantastic shirt and its green.” That statement could likely cause much debate, but here’s my take on it:

In my opinion, most people don’t perceive “being green” as a need, anymore than they perceive being charitable as a need. In some, its a want, and true, there will be a small subset of customers where it’s a need, but it will be a small population. So ultimately, the rest need to be influenced to buy. I think its rare that someone thinks “I need to go shopping, I don’t have enough green products in my house.” I believe they think “I need some new Tshirts or clothes or papertowels and need to go to the store.” Once there, a portion will buy green products, but unless the products work and function at the same level as non green products, they are in danger of not being repeat customers. So I think the products need to be comparable to non-green products, and marketers need to prove that they are comparable, but then as the final throw the customer over the edge, stroke – “and its green.” I draw a comparison here with “Fat Free” or “Healthy for you!” type food tags. The aisles are littered with those type of lines, but at the end of the day, mainstream consumers don’t want the food unless it tastes like the craving they have at the moment. There are a growing number of offerings that emphasize what they are first, and as a secondary characteristic denote the health benefits.

I look forward to feedback on this, which turned out a little longer than I had expected.

Jonathan Pietra on October 14th, 2007 said

I think The Coca-Cola Company is the best marketing company in the world. They managed to create the most popular brand in the world and they also have their own way of marketing

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  1. Anonymous - October 6, 2007

    Marketing Excellence Formula

    Can you name the best marketing company in the world? What makes them the leader revealed.

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