Are Marketers Chasing Rainbows?
by Michael L. Perla
November 25, 2003

In a recent article, Andrew Ehrenberg writes that "many goals in marketing are unrealistic" and "doomed to failure from the start." His comments appeared in a piece titled "Marketing: Are You Really a Realist?" in Strategy+Business, the newsletter from Booz Allen Hamilton, the global management and technology firm.

Ehrenberg, a professor of marketing at London South Bank University, writes that marketers are "chasing rainbows" in setting impossible objectives around sustained growth, brand differentiation, persuasive advertising, profit maximization and knowledge management.

As implied by Ehrenberg's commentary, the first objective is hyperbolic, the second is futile, the third is temporary, the fourth is unrealistic and the fifth is often unusable and ungeneralizable.

In a nutshell, Ehrenberg states that marketers need to set achievable goals that fit within the marketing purview. This objective seems reasonable. But it belies the fact that marketing's outputs should be an integral part of a company's corporate and business unit strategies, which often include profit hunts, growth initiatives, and brand extensions.

In many ways, marketing's decisions are a company's strategy, along with some sort of feasibility analysis and a potential ROI check. Four key areas are pertinent to any business/growth strategy, which marketing should be prime on: which offerings, which segments, what value proposition and which channels.
Which Offerings?

A fundamental business decision is which products and/or services a company will offer. In general, the main objective is to fill a need in a profitable manner. The first question is, What need are you trying to fill? The second is, Can you fill it in a profitable manner?

If you don't know the answer to the first question, then it's hard to understand the customer benefits and your value proposition to the market. If you don't know the answer to the second question, you could become another Pets.com or Webvan in losing hundreds of millions of dollars (over a billion in the latter case) of other people's capital.

Accordingly, the question around which offerings a company chooses to develop and market is the essence of one's corporate strategy, and it is directly related to marketing's circle of competence. The product marketing or brand manager role typically aligns with this strategic area, and is analogous to a general manager or president of a single line of business, with one product/brand.

A couple of questions to flesh out this area:
1. What is the 80/20 (e.g., which 20% of offerings contribute to 80% of your sales) with regard to your offerings in terms of revenue, profits and growth?
2. How can you augment/extend your offerings to add more value to your customers?

Which Segments?
There are hundreds of books on the art and science of segmenting customers via demographics, psychographics, needs, etc. The subject could never be exhausted in a couple of paragraphs.

Nevertheless, it's important to understand what companies are tying to accomplish. The essence of segmentation is to find relatively homogeneous clusters that are profitable enough to penetrate and in which to execute targeted marketing campaigns. There is also one-to-one marketing, which is more personalized and customized for each customer, but is still more similar than different since many of us have related desires, goals, and needs.

Identifying a substantial segment allows a company to leverage some marketing economies in utilizing its marketing resources. If there's a reasonable probability that all the customers in segment A think, feel, and/or buy in a similar manner, then I can execute campaign B, which is targeted for segment A, as a way to capture the awareness and interest of a large group in an economical and efficient manner.

It's sort of like the franchise model in that certain areas (locations, demographics, segments) respond to a particular concept, no matter what state or country or province.

A couple of questions to flesh out this area:
1. What are the best segmentation bases to use in identifying substantial, actionable and reachable segments?
2. Which customers are most satisfied with your offerings, and what other businesses have similar needs and/or characteristics?

What Value Proposition?
Once you understand what needs that your offerings are satisfying, you have the potential to craft a unique value proposition to your customers. As I've written elsewhere, value (like beauty) is often in the eye of the beholder.

However, companies typically use a number of big buckets in defining value, which may be different for any one buyer (see personal versus business agendas/pain). As stated, value is often defined in a set number of ways: financially (e.g., above the hurdle rate), strategically (e.g., the capture of a new market), and operationally (e.g., more efficient processes).

Marketing is the area that should define the corporate value proposition, which is shared with analysts and Wall Street; the unit value propositions, which are aligned to the corporate version; and the offering value propositions, which are unique to the customer needs that the offerings are attempting to satisfy. The value proposition components should be built by marketing, with marketing educating the sales force on how to assemble, configure and adapt the components to each specific selling situation.

A couple of questions to flesh out this area:
1. What are the key value proposition components that should be a part of each value proposition, from corporate to unit to offering?
2. What will drive value for each of your customers in the future, and how can you link to those expectations?

Which Channels?
In terms of channels (aka "place"), you're typically looking at five: Web, call center or tele-, field sales, partners (often called "the channel"), and retail.

Depending on your business and your offerings, each channel has a certain sweet spot. You're probably not going to sell low-priced books via a high-cost field sales channel, just as you're unlikely to sell multimillion-dollar enterprise solutions via a call center. In a nutshell, marketing should analyze each offering, which channel it is best suited for, and how customers want to buy.

A company's merger and acquisition strategy and its go-to-market model are dependent on marketing's due diligence around its channels. Marketers need to be involved in build or buy decisions and how they impact their company's channel, offering and segmentation strategies.

A couple of questions to flesh out this area:
1. How do customers "touch" your company in evaluating options, buying products/services and getting post-sale service and support?
2. What is your company's channel strategy in terms of your offerings, your segments and your value propositions?

Summary
The net-net of this article is that marketing's broad purview, as discussed by Ehrenberg, should be aligned with a company's corporate and business unit strategies in terms of their foci on growth, profits and brand equity. As widely discussed today, the strategy-to-revenue gap is around the "operationalization" of strategy into something that people can execute day to day while still keeping their eyes on the larger goal.

Marketers should set broad, encompassing goals, but they need to make sure that they operationalize and execute on their game plan and not leave it to others to define for them. Setting success and process metrics (see "Do Your Metrics Measure Up?") up front is a powerful way to deliver the message that marketing is all about accountability and getting tangible results.

In some companies, the Chief Marketing Officer has a seat at the table in setting strategy and direction. But in many other firms, marketing is left outside the strategy room.

Although big goals can be somewhat nebulous, as Ehrenberg notes in his commentary, it's marketing's responsibility to provide the content and strategy to hit the stretch targets, which it needs to help set, define and communicate.

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