Designing a Winning Marketing Organization
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Prof. Sundar BharadwajCoca-Cola Company Chair Professor of MarketingTerry College of BusinessUniversity of Georgia
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Designing a Winning Marketing Organization
Uncovering the Anatomy of a WMO• The Structure of a WMO
• The Responsibilities of a WMO
• The Path to Become a WMO
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471 Responses (79 public firms)
Size (Employees)• 29% Less than 1000• 22% 1000-4999• 7% 5000-9999• 17% Greater than 10,000• 25% Unknown
Data Collected in Feb, June and December 2020
Data Description
Country of Origin• 70% for USA • 30% from outside
the US
Firm Age• 25% of the companies
were started post 2000• 75% Prior to 2000
Industry Sectors• 18% B2B• 26% B2C• 56% Both
Size (revenues)• 43% Less than $1B• 10% Between $1B-$10B• 6% Between $10B-$50B• 2% Greater than $50B• 39% Unreported
Sourced from the Marketing Capability Benchmark Study marcaps.com/research
Distinguishing Winning Marketing Organizations (WMO) From Lagging Marketing Organizations (LMO)
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Economic Growth• Achieve revenue and profit goals• Find new ways to achieving growth• Measure the return and optimize marketing investments
Customer Growth• Engage consumers/customers and build brand equity• Personalize offerings to customer preferences, needs and situations• Increase convenience and enjoyment across the customer journey
WMOScore in the Top 2 Box
6 or 7
LMOScore in the Bottom 3 Box
1, 2 or 3
Additional criteria in future (In Progress): Employee growth -engagement and satisfaction
Capability Fit Impacts Growth
1.86
5.31
1
2
3
4
5
6
7
Aver
age
Satis
fact
ion
w G
row
th
Low Fit High FitCapability Fit of Marketing Org. (0% – 100%)
Effect of MarCaps Fit on Growth*
*Growth is an aggregate of satisfaction (on a 1-7 scale) with company’s ability to 1) Achieve revenue and profit goals, 2) Find new ways to achieving growth and 3) To measure the returns and optimize marketing investments. The graph is based on the results of a model controlling for firm size, age, industry type.
Gro
wth
(1-7
sca
le)
Growth At Low vs High Fit
3xCompanies with high marketing capability fit reported 3x the level of growth than companies with low marketing capability fit – after controlling for other factors.
0% 100%
1
7
5
The Structure of WMOs•More customer centric
• Less centralized
•More externally connected
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WMOs Are Significantly More Customer Focused and Complex In Their Structure Design Choices
52%
42%
23%
11%
54%
46%
46%
38%
0% 10% 20% 30% 40% 50% 60%
Product/BrandStructure
Expertise Structure
Customer SegmentsStructure
Acquistion/RetentionStructure
Incidence of Organization Structure
23%
46%
0%
10%
20%
30%
40%
50%
Matrix Structure
Incidence of Matrix Structures
Lagging Marketing Organizations (LMOs)
Winning Marketing Organizations (WMOs)
Q. Which of the following statements reflects the way marketing is structured in your organization?
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2.69
3.38
3.14
3.97
4.384.27
2
2.5
3
3.5
4
4.5
Decentralization_Marketing Budget Decisions Decentralization_Product/Service Decisions Decentralization_Marketing Program Decisions
Extent of Decentralization by Marketing Organization Type
Scale: 1 (Centralized) – 7 (Decentralized)
WMOs Manage Less Centralized Marketing Organizations
Lagging Marketing Organizations (LMOs)
Winning Marketing Organizations (WMOs)
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Q. Please use the slider below to indicate the extent to which marketing budget, product and program decisions in your company are centralized (i.e.: made by a corporate team for the entire organization) or decentralized (i.e.: made by local/ regional/ functional teams)
Mea
n D
ecen
traliz
atio
n Sc
ore
WMOs Are More Actively Engaged With The Outside Ecosystem
1.79
0.97 1.01
2.83 2.8
2.17
0
0.5
1
1.5
2
2.5
3
Outsource_Engagement Roles Outsource_Exchange Roles Outsource_Experience Roles
Insource/Outsource Of Marketing Tasksby Marketing Value Area
1.3
2.6
EMO WMO
Insource Vs. Outsource Of Marketing Tasks
Lagging Marketing Organizations (LMOs)
Winning Marketing Organizations (WMOs)Q. Please indicate if the activity listed below is OUTSOURCED (i.e.: 50% or more effort/spend is by outside agencies). 9
Mea
n N
umbe
r of T
asks
Out
sour
ced
Mea
n N
umbe
r of T
asks
Out
sour
ced
L M O
The Modern Marketing Framework
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Matching offerings to individual customer needs and context in ways that facilitate transactions
Increasing convenience and enjoyment across the customer journey
Deepening and expanding the meaning, community, and purpose around an offering
Discovery of new growth via branded platforms, revenue streaming, and marketing model innovation
Facilitate stronger and more flexible organizational links to nurture speed, synergies, and drive
Build and leverage information loops to increase causal understanding and expand resource optimization
Overall Levels of Outsourcing Are Low and Centered on Engagement Activities
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0%
10%
20%
30%
40%
50%
60%
70%
Journey m
anag
ement
: Gen
eratin
g a data
-based…
Digital S
ervices
and So
lutions :
Design
ing an
d…
Customer
Servic
e : Help
ing consumers
resolve
…
Product
Delivery
and Dist
ributi
on : Man
aging…
Channe
l Orch
estrat
ion : Man
aging t
he seam
less…
Experie
ntial m
arketin
g : Desi
gning c
onsum
er…
Customer
Involvem
ent : A
ctive
ly invol
v ing…
Media M
anag
ement
: Man
aging m
edia s
trategy,
…
Socia
l Med
ia : M
anagi
ng socia
l med
ia including…
Content &
Storyt
elling
: Desi
gning
, crea
ting, an
d…
Sponso
rship M
anage
ment :
Selecti
ng an
d…
Socia
l Purpo
se : M
anagin
g the s
ocial p
urpose fo
r…
Public/
Influence
r Rela
tions :
Managi
ng rela
tions…
Community M
anagem
ent :
Creating a
sense
of…
Marketin
g Perso
nalizat
ion : Desi
gning a
nd…
Marketin
g Autom
ation : M
anagi
ng the…
Perform
ance
Marketi
ng : M
anagin
g digit
al…
Product
Research
& Developmen
t : Ide
ntifying
…
Sales
Team M
anage
ment :
Managin
g sales
…
Shopp
er Marke
ting a
nd Sales
Promoti
ons :…
Pricing
Strat
egies a
nd Policies :
Defining a
nd…
Key Acco
unt Man
agem
ent : Gen
eratin
g con
sumer…
Product
Marketin
g : Man
aging p
roduct mess
ages…
CRM and Lo
yalty
Manag
ement
: Desi
gning
and…
Extent Of Outsourcing by Specific Marketing Activity EMO WMO
Experience Engagement Exchange
% O
utso
urci
ng
LMO
The Responsibilities of WMOs• It is not about digital, it what marketing
activities that they do that matters
• They are more involved in customer experience.
• They deliver greater personalization through exchange value
• Engagement value is their base camp.
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LMOs Tend To Focus Their Responsibilities On Engagement Activities. WMOs are More Involved On Experience and Exchange
56%
70%
47%
38%
57%
48%
56%
51%
63%
70%
64%
59%
20%
30%
40%
50%
60%
70%
80%
Digital Engagement Exchange Experience Front-End Back-End
Responsibility of Marketing by Type of Organization
Q. Below is a list of marketing activities. For each activity, please indicate if it REPORTS INTO MARKETING, i.e.: It is a marketing dept. responsibility. Select 'N/A or don't know' if the activity does not apply in your organization.
Lagging Marketing Organizations (LMOs)
Winning Marketing Organizations (WMOs)
Customer Facing
Non-Customer Facing
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% A
ctiv
ities
Rep
ortin
g to
Mar
ketin
g
WMOs Operate With a Broad Bandwidth Across Diverse Growth Drivers.
82%79%
84%
55%
72%
56%
31%26%
30%
19%
38%
46%
54%
31%
62%
85%
62% 62%
69%
62%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Social Media Content &Storytelling
MediaManagement
CommunityManagement
Public/InfluencerRelations
Digital Servicesand Solutions
Pricing Strategiesand Policies
Sales TeamManagement
Product Research& Development
Product Deliveryand Distribution
Top 5 Areas for LMOs Top 5 Areas for WMOs
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Lagging Marketing Organizations (LMOs)
Winning Marketing Organizations (WMOs)
% A
ctiv
ities
Rep
ortin
g to
Mar
ketin
g
8% 8% 15%
4% 1% 3%
Exchange
Experience
Engagement
Exchange
Experience
Engagement
Exchange
Experience
Engagement
Three-Stack ModelExchange + ExperienceExchange Focused
WMO
LMO
Exchange and Experience Value Seem The Most Distinguishing Basecamp Capability of WMOs
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Capability Diversity
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Level of Development by Capability/Organization Type
Lagging Marketing Organizations (LMOs)
Winning Marketing Organizations (WMOs)
Top 10 Capabilities With Greatest Difference Between EMOs and WMOs
WMOs Are Strong on Converting Data to Action
• Customer experience is #1.• Balance of foundational and new.• Talent is core.• Four areas of value.
• Issues of social purpose and sustainability.
• Engagement tactics.
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Capability Definition Capability Area Value Area
Importance for WMOs
Matter Most
WMO’S
Matter Least
What Matters to WMOs…
• Data as #1• Talent not present.• Exchange is missing.• Focus on tasks rather
than customer.
• Issues of social purpose and sustainability.
• External talent is not prioritized.
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Matter Most
EMO’S
Matter Least
…Is Different from What Matters to LMOs
The Path of a WMO• Find what matters to your organization
over the next three years (Importance)
• Find how well you do it today (Performance)
• Focus on strengthening Performance-Importance Fit
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Capability Performance
Impo
rtan
ce fo
r Gro
wth
Fit Score
72.5%
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The MarCaps Capability Fit Score
Capability Performance
Impo
rtan
ce fo
r Gro
wth
WMO Fit Score
86%
LMO Fit Score
53%21
Emerging Marketing Organizations (EMOs)
Winning Marketing Organizations (WMOs)
Note: Financial data from publicly traded firms available in Compustat.
2.5xA 1% increase in fit leads to 2.5% increase in Sales Growth after accounting for size, age, R&D investments, Advertising investments and intensity of competition.
2019
-202
0 %
Sal
es G
row
th R
ate
Effect of MarCaps Fit on Sales Growth
Capability Fit of Marketing Org. (0%-100%)
50 70 80 9060
Fit Drives Sales Revenue Growth in 2019 and 2020
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Average Market Value in $Billion
250
200
150
100
50
0
$213.6B
HighMarketing
CapabilitiesFit
$78.9B
LowMarketing Capabilities
Fit
Note: Financial data from publicly traded firms available in Compustat.
-1
-0.5
0
0.5
1
1.5
2
2.5
3
MarketingCapability Fit
AdvertisingIntensity
R&D Intensity Firm Size Sales Growth Business toConsumer Industry
Elasticity of MarCaps Fit
A 1% increase in Marketing Capability Fit is associated with a 2.35% increase in market value of firms.
Market Valuation by Level of MarCaps Fit
And Market Valuation
Anatomy of a Winning Marketing Organization
• Structured externally around customers and customer outcomes and more complex structures rather than around internal product or functional expertise.
• Decentralized decisions and greater tendency to draw on external expertise.
• Demonstrate a diverse set of marketing capabilities and create environments where people thrive.
• Develop a high degree fit by aligning performance to capabilities that matter to future performance.
• The marketing capability fit delivers growth, customer and financial market performance by leveraging the possibilities of today (e.g. Agility, technology, analytics, societal, etc…).
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Where Next?
…read our article in the Nov-Dec 2020 issue of HBRfor more details on the framework.
Visit
https://marcaps.com/research
for a free assessment.
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