Disintermediation problem : The marketing department has traditionally served as the mediator between customers and the firm. But the Internet allows R&D, operations, sales, logistics, and support organizations to connect directly with customers, marginalizing the role of marketing in the process.
Measurement problem : The marketing function has traditionally been unable to measure the ROI of spending on marketing programs, so marketing budgets tend to be treated as avoidable expenses in difficult economic times.
Alignment problem : Marketing organizations are traditionally designed around marketing mix silos (product, price, promotion, place). These silos create disconnects between audience marketing, channel marketing, product marketing, and licensing/pricing activities.
Automation problem : Marketing has traditionally been a manual and intuitive process. But technologies like customer relationship management (CRM), partner relationship management (PRM), enterprise marketing automation (EMA), product lifecycle management (PLM) and marketing analytics are taking over the operational and analytical role of marketers.
Marketing needs to reinvent itself, with the changing times
Towards a new marketing metaphor: Marketing as gardening
Customer relationships as garden to be tended
Marketer as gardener
Partners as players in the ecosystem
Customer loyalty as roots
Lifetime profits as harvest
Marketing as seed, feed, yield, and weed
The evolving information power balance Customer information power Marketer information power High Low High Low 2 1 4 3 Information famine Personal marketing Information Democracy Relationship marketing Information Asymmetry Mass marketing Information Integration Collaborative marketing
The functional view of marketing Segmentation, Targeting, Positioning Product Strategy Pricing Strategy Promotion Strategy Place Strategy Opportunity assessment Implementation, Monitoring, and Control
Sustain value Augment value Communicate value Capture value Deliver value Realize value Define value Sense value Customer Relationship Repository Adapt
Traditional Marketing Transitional Marketing Collaborative Marketing Sense value Define value Realize value Deliver value Capture value Sustain Value Products Services Experiences Physical Hybrid Integrated Channels Channels Channels Persuasion, Permission, Contextual, Broadcast dialogue facilitation Vertical Horizontal Integrated Alliances Partnerships Value Network Communicate value Episodic Batch Active CRM CRM CRM Evolution of marketing activities Augment value Listen Observe Co-create Segmentation Customization Customerization Transactional Value-based Relationship Pricing Pricing Pricing
Towards the decoupled organization Human Resources Purchasing Marketing Finance & Administration Research & Development Product Manufacturing Information Technology Partner management Customer Customer Customer Customer organization (segment 2) Customer Customer Customer Customer organization (front-end) Product organization (back-end) Shared services (back-end) Product development Technical Sales Corporate Core
Citibank’s decoupled organization CEO Automotive Oil & Gas Retailing Cash Management Telecom Foreign Exchange Derivatives Mergers & Acquisitions Legal HR Controller Risk Mgmt. Operations IT Marketing Ford GM BMW Global Product Organization (Back-end) Global Customer Organization (Front-end) Local account managers Corporate Core Source: Designing the Global Corporation, Galbraith (2000)
The “P&L cube” – single target, multiple metrics for incentives N. America S . America EMEA APAC SBU 1 SBU 2 SBU 3
Integrators are the key to the front-end of the marketing organization. They are responsible for serving each distinct consumer, channel, or partner segment. They will have deep understanding of their segment, will be good at working across boundaries, and leading cross-functional teams.
Specialists are the key to the back-end of the marketing organization. They help the company to build and maintain world-class skills in functional areas of marketing like branding, marketing research, marketing decision support, business intelligence, and product design.
Linking through processes
Integrators and specialists will be linked through processes and teams.
Managing linkages at Kraft Foods Process teams (category-specific) Category teams (category-specific) Customer teams (key accounts) Source: Reinventing the Marketing Organization, McKinsey Quarterly Finance Operations Materials manager Plant manager Engineering Quality Process Team Leader Marketing information Finance Brand manager Consumer promotion Category Sales director R&D Category Business Director Category planners Retail Sales manager Sales information specialist Space management specialis Supply chain specialist Customer Category managers Customer Business Manager