Who Let The Barbarians In?

1. Who Let The Barbarians In? Dr. Ajay K. Sirsi Schulich School of Business York University asirsi@schulich.yorku.ca

2. Ajay Bio • Schulich School of Business, Marketing professor • Research, writing, teaching (Exec, MBA, BBA) • Marketing Led - Sales Driven (Trafford) • Marketing: Real People, Real Decisions (Pearson) • Marketing: A Roadmap to Success (2009, Pearson) • Consulting • Royal Bank • Bayer • International Paper • Glaxo Smithkline • Imperial Oil • Manulife Financial • TELUS • Amgen • Schneider Electric

3. Today’s Discussion 1 2 3 Current State Of The Marketing Discipline The Silver Lining Implications For Teaching And Practice 4 Discussion

4. Today’s Discussion 1 2 3 Current State Of The Marketing Discipline The Silver Lining Implications For Teaching And Practice 4 Discussion

5. Barbarian • Foreign individual or tribe whose first language was not Greek • A Greek individual or tribe speaking Greek crudely • The Vikings • Label for the Goths during the Gothic revolt that put an end to the Roman Empire in 470 A.D. • Began the Dark Ages • Label for Normans during their invasion of England

6. Barbarian • Foreign individual or tribe whose first language was not Greek • A Greek individual or tribe speaking Greek crudely • The Vikings • Label for the Goths during the Gothic revolt that put an end to the Roman Empire in 470 A.D. • Began the Dark Ages • Label for Normans during their invasion of England

7. Recent Experiences • Four marketing consulting projects initiated by • CFOs • Sales • Operations • Frustration with • Lack of Marketing initiative • Marketing disconnect with customer needs

8. Recent Experiences • Member of interview panel to hire AVP of Sales • Candidate performed well in first interview • Client’s question: can she do Marketing as well? • Hire her for VP Marketing and Sales? • She has no formal Marketing experience • I developed a case study for second interview • She passed with flying colours

9. Recent Experiences • Marketing function is worried • Current CEO is retiring in the fall • New CEO does not “understand” marketing • Perused 3 years of Marketing monthly reports • To glean Marketing’s value to corporation • What I found • What new CEO did

10. Support in Literature • Anderson 1982, Day 1992, Varadarajan 1992 • Webster Jr. et al. (2005) • “Financial pressures, a shift in channel power, and Marketing’s inability to document its contribution to business results have combined to force reductions in Marketing spending and influence, and to accelerate a transfer of funds and responsibilities to the field Sales organization”

11. Support in Literature • Response: Formation of CMO Role • The problem? • Only 50% of Fortune 1000 firms have a CMO (Booz & Co 2004) • CMO makes no difference to firm performance (Nath and Majajan 2008) • Multi-industry sample of 167 firms over a 5-year period • Average CMO tenure is 23 months (Spencer Stuart statistic cited in 2004 Harvard study)

12. Why Has This Situation Occurred? • Failure to talk the same language amongst ourselves • Marketing used synonymously with Marketing Communications • Advertising • Marketing collateral material • Product used synonymously with Good • Marketing used to only denote activities that generate immediate sales • Failure to objectively demonstrate value created by Marketing

13. Why Has This Situation Occurred? • Failure to understand CEO’s agenda • Arrogance • “Why do you need to know what is in our Marketing Plan?” • Other functions have taken on traditional Marketing roles • CFO (Couto, Heinz, and Moran 2005) • Sales (Webster Jr., Malter, and Ganesan 2005)

14. Who Let The Barbarians In? We Did

15. Today’s Discussion 1 2 3 Current State Of The Marketing Discipline The Silver Lining Implications For Teaching And Practice 4 Discussion

16. Silver Lining • Research demonstrates that Marketing is critical for organizational success (Booz & Co survey of 9 industries 2004; Krasnikov and Jayachandran 2008; Nohria 2003) • Organizations want Marketing to take on non-traditional roles: driving innovation and cross-functional collaboration

17. Silver Lining • Late 2005 survey by Prophet and IDG • Broad, customer-focused issues are crucial drivers of business growth • Customer service and delivery • Customer experience • Advertising and promotion (1%)

18. Silver Lining • Current financial meltdown is making Marketing more attractive (WSJ) • Clients investing in marketing fundamentals to drive business growth

19. Silver Lining • CMO success is evident • IBM, Pepsi, UPS, P&G, Microsoft, GE • Key corporate decision makers • On par with other C-level executives • Shape company direction • Propel financial performance

20. Today’s Discussion 1 2 3 Current State Of The Marketing Discipline The Silver Lining Implications For Teaching And Practice 4 Discussion

21. What Can We Learn From Successful CMO’s? • Choose from 3 CMO models • Marketing Service Provider • Marketing Advisor • Driver of Growth • Understand the CEO’s agenda for driving growth and innovation (Kumar 2004) • Establish controls • “How to market Marketing” • Develop organizational linkages • What you own • What is matrixed • What you need to informally influence

22. What Can We Learn From Successful CMO’s? • Demonstrate organization dashboards • In conjunction with CEO • Combination of financial and brand equity metrics

23. Marketing communications awareness (%) • Brand awareness (%) • Brand associations (qualitative) • Brand equity (scale) • Purchase intent (scale) • Win rates (%) • Sales volume ($) • New net revenue ($) • Customer satisfaction (scale) • Customer retention (%) • Customer defection (%) • Profit as percentage of revenue (%) Problem Recognition Information Search Purchase Consideration Purchase Intent Purchase Decision Repeat Purchase Decision Source: Sirsi (2009, forthcoming) Marketing: A Roadmap to Success

24. What Can We Learn From Successful CMO’s? • Take risks • Come up with big ideas • “Marketing is about building new businesses, finding the white space, and leading the integration across the organization with sales and R&D” (Hyde, Landry, and Tipping 2004)

25. Marketing Plan Sales & Customer Plans Manufacturing Plan IT Plan HR Plan • Resource Allocation • Capital Allocation • Budgets • Strategic Plan • 3-5 Year Horizon • High-level strategy • Performance Measurement • KPM (key performance • measures) Source: Sirsi (2005) Marketing Led – Sales Driven

26. Implications For Students Are Profound Previous Now Move from project to project as part of cross-functional team Periods in non-marketing roles Understands market opportunities and value system management Strong knowledge of supply chains, audience engagement and contracting • Broad marketing experience • Understands the customer experience and translates into brand strategies

27. Implications For Students Are Profound Previous Now Creative, flexible, long-term goal orientation Motivated by unstructured environments and corporate social responsibility Right-brain and left-brain skills • Gregarious, outspoken • Works hard, plays hard • Numbers driven • Motivated by responsibility and fear of failure

28. Implications For Practice And Teaching • What we teach has to change • Less focus on terms and definitions • Broader focus on material, strategy • From NPD to innovation • From logistics to SCM • From microeconomics to pricing strategies • Customer satisfaction and brand strength relationship to firm performance • Cross-functional linkages • Marketing – Sales linkage • Marketing ROI

29. Today’s Discussion 1 2 3 Current State Of The Marketing Discipline The Silver Lining Implications For Teaching And Practice 4 Discussion

30. Ajay Contact Information • Email: asirsi@schulich.yorku.ca • Phone: (416) 486 – 8490 • Work: Schulich School of Business at York University, Toronto, Canada