Categories: AlPositioning

Marketing is dead.

When I started to work at General Electric, marketing had the cachet of social media. It was new; it was different; it was going to revolutionize the world of business.

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For decades, Advertising Age called itself the “International newspaper of marketing,” a slogan it didn’t stop using until 2008.

What is marketing?

Back in those days, marketing was an omnibus concept that gathered all of a company’s exterior activities under one umbrella.

As spelled out in General Electric’s 1952 annual report, “The marketing department will establish for the engineer, the designer, and the manufacturing man what the consumer wants in a given product, what price he is willing to pay, and where and when it will be wanted. Marketing will have the authority in product planning, product scheduling, and inventory control, as well as sales, distribution and servicing the products.”
That was certainly the goal of the “marketing movement,” but at the time there was a lot of internal resistance. Very few companies actually put product planning, sales and distribution in the hands of the marketing department.

As a result, chief marketing officers today have extremely difficult jobs. While they might control massive marketing budgets, they lack the control of other corporate functions that deliver the financial results to justify their massive marketing budgets.

Every chief marketing officer is under pressure to deliver ROI. Return on investment. But if he or she only controls the “investment” and not functions that deliver the “return,” how can a company holds its CMO responsible?

I’m not advocating corporate reorganizations to put more functions under control of chief marketing officers. It’s too late for that. Furthermore, there is another development that undermines that possibility.

Attitudes toward marketing have changed.

There has been a huge change in top management’s attitude about the role and function of marketing.

Years ago, I can remember sitting in a dining room at General Electric when the head of the transformer department walked in. Seeing a group of advertising people, he pulled out a pencil and said, “I can get more business with this pencil than you guys can get with all of your advertising.”

Which might have been true then. But not now.

Today, marketing is the No.1 concern of most corporations. Unfortunately that doesn’t necessarily include marketing people. As Georges Clemenceau once said, “War is too important to be left to the generals.”

So top management has moved right in and taken over many of the strategic elements of the marketing function.

Among management types, the most admired chief executive today is not Bill Gates or Jack Welch, it’s Steve Jobs. As Ad Age reported, “Mr. Jobs was involved in every aspect of the marketing, down to the copy on TV ads.”

Apple co-founder Steve Wozniak told the BBC, “I would say marketing was his greatest strength.”

We have entered the golden era of marketing, but it might not be the golden age of marketing people. According to the editors of Advertising Age, “Today’s marketing shops want to be known as brand consultancies or idea companies.”

Why is that? Because “marketing” is too broad a concept for a service business. Marketing is the essence of what a company is all about, the essence of what a company is trying to do.

If you hire a marketing company to handle your marketing, then what is left for your company to do?

The better word.

Over the past few decades, it’s become apparent that there’s a better word to describe what today is called the “marketing” function.

And that word is “branding.” And I expect that sometime in the future a CMO will become a CBO, chief branding officer.

Why not? Branding is a subset of marketing and has become its most important component. In addition, there’s a new approach many companies are using that dramatizes the importance of the brand.

I call it, (1) Branding first. (2) Sales and profits second.

If you can build a brand, then you should be able to figure out a way to turn that brand into a profitable enterprise.

That ties in with one of the biggest problems in business today: Distribution. There are a lot of products that could be successful if they could get on the shelves of supermarkets, drugstores, convenience stores and other outlets. But how do you get on the shelf?

“Put my wonderful new product on your shelves,” says the entrepreneur, “and it will become famous.”

“Make your product famous,” says the distribution, “and we’ll put it on our shelves.”

Distribution has a valid point.

Amazon.com is a good example.

Today on the stock market, Amazon.com, Inc. is worth $103.6 billion. Sales last year were $34.2 billion and net profits were $1.2 billion.

But that’s not the way the company started. Founded in 1994, Amazon lost money for nine years in a row. On an overall basis, Amazon didn’t break even until the company was in its 15th year of operations.

Compare Barnes & Noble with Amazon. In the late 1990s, Barnes & Noble introduced an e-reader and in 2001, followed with an e-bookstore. But early sales were discouraging and the company discontinued its e-reader in 2003.

Big mistake. Branding first, sales and profits second.

It wasn’t until November 2007 that Amazon launched the Kindle which rapidly became the leading e-reader brand. So Barnes & Noble was forced to play catch up with the Nook, launched two years later in November 2009.

That’s not the way you build a brand. If there’s an iron-clad rule in marketing, it is this: Brands are built by being first in a new category.

Not just first in the marketplace, but first in the mind. And that’s why a new brand pioneering a new category has to stick around long enough to penetrate the minds of potential customers.

Groupon is another good example.

In its first three years, Groupon, Inc. had sales of $745 million and managed to lose $416 millon.

But the company built a brand and this year Groupon is planning an initial public offering valuing the company at something like $11 billion or so.

Imagine that. A money-losing company that’s less than four years old is going to be worth as much on the stock market as Omnicom ($11.1 billion) and a lot more than Pubicis ($6.1 billion) and Interpublic ($3.8 billion.)

That’s the value of building a brand.

(Just spending money in an effort to become well-known is not the same as building a brand. Witness Pets.com, Webvan and dozens of other money losers who never were able to establish strong positions like Groupon.)   

What’s next for marketing?

Maybe nothing.

Maybe it’s time for the powers-that-be in the marketing community to shift gears and focus on the essence of what the current marketing function is all about.

Not just an abstract name for a wide range of activities involving consumers in some fashion, but a simple, single concept that top management can instantly understand.

A simple, single concept that is certain to get more important as the years roll by.


Al Ries :