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Corporate Mktg Initiatives ROI 5


									Corporate Marketing Initiatives & ROI
Making a Case for Substantive Consumer Research.

By Ted Mininni.

Trends in Corporate Marketing Circles.
Corporate directives, and trends, come and go. A notable corporate trend of late has centered on
the need for accountability in corporate marketing departments, and that trend is expected to
intensify. Not long ago, many business sectors were booming and stock prices climbing, but the
bullish 90’s are a long-faded memory. All the same, today’s restless shareholders are still intent
on capturing profits, putting considerable pressure on corporations to deliver. In response,
companies are scrambling to bring new products to market, hoping for growth in top-line sales,
and additional profits. They are also trying to better assess the value of that one last corporate
department and initiative that defies easy quantification and ROI performance assessment:
marketing. After all, this might be persuade them to make a case for trimming marketing budgets.

The fact of the matter: the traditional marketing metrics that have long been measured—tracking
sales leads, market share and CPM (impressions per thousand)—are no longer sufficient for the
CEOs and CFOs of the corporate world. The challenge posed by trying to nail down the actual
ROI (Return on Investment) of marketing, has long been an issue of contention. Measuring the
effectiveness of marketing initiatives is no easier now than it has ever been, and many executives
can’t even agree on what ROI really means in relation to marketing, or settle on the right mix of
tools to best measure marketing performance.

Corporations do not have an “industry-wide standard” to refer to in their respective sectors.
Companies measure marketing ROI in diverse ways; some of them strikingly similar. It is equally
obvious that many corporations are grappling with different criteria to measure their marketing
ROI depending on their strategic goals. Due to increased competition and other market factors,
many companies are currently assessing where they are in the marketplace, and implementing a
strategic marketing plan to bring them where they want to be. Once they decide on the specific
resources and strategies that will help them reach their objectives, they try to decide on the
proper mix of metrics to measure their progress. Smart companies aren’t waiting for fiscal year-
end or quarterly analysis of their efforts; they monitor their marketing activities as they go along,
so they can make necessary adjustments.

Besides looking at incremental sales revenues that may have been generated by their marketing
functions, and changes in market share, smart corporate marketers are tracking more subtle
markers. For example, gauging consumer changes in brand awareness, and their attitudes
toward corporate brands, can yield significant indicators as to corporate success in the marketing
of those brands. Consumer changes in purchasing patterns are also strong indicators.

In other words, there are a host of intangibles and harder to track fluctuations in the marketplace
that clearly impact the overall valuation of a company’s brand(s), as well as marketing ROI, and
these are much harder to quantify. Yet, these factors that include brand perception, have a very
direct bearing on the overall value of the company, and its marketing efforts. While harder to
gauge, it must be argued that companies need to put the research mechanism in place to assess
customer awareness, perceptions and attitudes toward their brands, as well as their relationship
(loyalty) levels to those brands. Surprisingly, many companies do not engage in this meaningful
research on an ongoing basis, and wonder why they are witnessing steady brand erosion. Even
their brand extensions spell trouble. Without a sufficient grounding in the brand’s attributes, as
per the customer’s perception, extensions become a hit-or-miss proposition. There have been too
many brand extension failures, from dismal to disastrous, that bear this out. Worse than the
failure of new products, is the negative backlash this can have on the brand by diminishing its
value in the consumer’s eyes.
The Role of Innovative New Products.
CMOs will have to come to terms with the fact that CEOs are focused revenue growth. One
critical area that factors into revenue growth is the launch of innovative new products. Top-line
sales growth is as much a focus as bottom-line profits; in fact the pressure is only intensifying for
companies to deliver better results in both areas. Thus, there is urgency for CEOs and their
corporate marketing organizations to take a critical look at the issue of new product R&D,
marketing department accountability, and ROI. Closer collaboration between CMOs and CEOs on
marketing strategies and initiatives increase the likelihood of top management’s identifying true
value creation in the branding and marketing initiatives of their marketing departments. Especially
when there is cohesiveness in the overall corporate branding and marketing strategies among all
of the executives in the upper echelon of the company.

Corporations are faced with new realities in the marketplace: the emergence of more market
fragmentation has created new demands and new challenges for corporate marketing
departments and the creative firms with whom they consult. Many of today’s new market
segments have limited the overall success of mass marketing initiatives, and eroded brand
loyalty. Added to this picture is the fact that there are a plethora of private label offerings at retail,
which have started to affect the “premium value” image of branded products, and slow the sales
of “national brands”. Now, throw in the complexities of global competitors flooding the
marketplace with more products and services in every category, and marketers have plenty of
challenges. All of this behooves today’s CMOs and their marketing departments to really focus on
thoroughly understanding their customers more than ever before.

As Procter & Gamble’s CEO, G. Alan Lafley has pointed out in recent interviews, it is of vital
importance to identify your customers and to find out what they want and expect from your
company and your products. And that takes knowing how they actually live and use products.
This concept sounds logical and simple, but it isn’t being done in many cases. Many companies’
R&D and marketing departments originate new products and services they think the customer
wants. Many times, they seek to fill a real need in the marketplace, but this does not necessarily
ensure success. Only n-going customer research will yield this crucial information: the customer’s
needs and expectations from a specific company’s products and services they purchase, as well
as their perceptions of that company’s brands. These factors should play the decisive role in the
development and positioning of new products, as well as the revitalization of existing products.

This approach would also streamline wasteful time and monies expended on new product
development and advertising for products that cannot possibly make it in the marketplace. A more
scientific, analytical approach must be taken now, rather than continuing to rely on those age-old
creative, and “gut” instincts of marketing management, with a dash of quantification, or year-to-
year gauging the overall effectiveness of the marketing mix thrown in. Marketing and marketing
quantification have to become more science than art as competitive pressures grow and
demographics change at an increasingly frenetic pace.

Customer expectations have risen and continue to rise. Today’s global consumer is more
educated than ever before. Tomes of information about products and services are available on
the Internet. Comparison shopping on product or service features and prices is easy. So what is
that USP—unique selling proposition of that “doggy in the window”? Never has sound brand
management been a more crucial factor in guiding companies through these murky waters. Never
has targeting the right customer at the right time and with the right mix of products and marketing
initiatives, had more impetus. Never has corporate alignment been more critical in that process.

Corporate Alignment.
One thing is clearly evident: there has to be an alignment between corporate goals and marketing
goals; alignment between the marketing department and the rest of corporate management, and
alignment between all personnel in the marketing department. And: branding begins internally.
It is obvious that the corporate trend toward CMO interface with the CEO, CFO and R&D
management will continue to grow. In fact, it can be argued that all CMOs will have to learn to
speak the language of their other management counterparts. Overall business strategy must be
set and implemented by all of these corporate players if marketing efforts are to be successful.
Autonomy is not an option here, and the idea of each department staking out its own turf must
give way (easier said than done) to cooperation to ensure the overall success and well-being of
the entire company. Sales, marketing, finance and operations departments must become more
integrated than ever before.

At some point, entire corporate management teams must converge in thought and practice on the
subject of measuring marketing ROI. Otherwise, corporate marketing departments will face
ongoing budget cuts, which may help short-term corporate initiatives, at the expense of long-term
branding and customer relationship building initiatives. Perhaps a new dedication to assessing
the effectiveness of various marketing initiatives is needed. Is the advertising, promotional and
sponsorship mix working? Does the budget need reallocation to support the initiatives that reach
the target market, and downplay—or even eliminate--the ones that don’t? Should there be an
ongoing process of assessment in place, rather than a yearly review or a quarterly review?

Challenges to Brand Management.
Corporate marketing has to continue to focus on solid brand management. It is too easy for
corporate marketing departments to let outside pressures force shifts in the way they build and
manage their brands. In the way they develop and bring new products to market. That can spell
disaster. Marketing guru Martin Brandt said: “Companies make products but customers buy
brands.” The most successful brands are carefully managed and consistent. Savvy marketers
know that retaining customers while acquiring new ones is the best way to maximize ROI and
beat the competition. Delivering on the brand message with sound marketing initiatives;
extending the brand values into the company’s products and services, and making certain they
are relevant, drives positive customer experiences and builds brand loyalty.

Corporate business has been increasingly spurred on to bring new products into the marketplace.
Underlying financial pressure from Wall Street and shareholders force companies to continue to
flood the marketplace with new products in an effort to achieve year-to-year or top line sales
growth. Tens of thousands of new products debut every year. Yet, the reality is that over 90% of
all new products that are launched this year, will not be in the marketplace in two years’ time.
According to industry estimates, roughly 80% of new products launched are categorized as “me
too”. Many of them are not a “fit” with the corporate brands that launch them. Brand equities are
often stretched too far. Thus, they are doomed to failure.

New products can and should be the “life blood” of any corporation. New products that are well
researched, that represent real innovation, genuine value and consistency with the
corporate brand in the customer’s view, are the keys to success in an over-stored, over-
catalogued, over-advertised marketplace. Again: especially if these innovations are valued and
recognized as genuinely important by the consumer and relevant under the corporate brand
banner. Only in-depth customer research should verify or disqualify new product concepts before
they ever become reality. Not only are ill-advised new product and service offerings detrimental to
the company; they can also be detrimental to the brand. This is where the most significant
damage can be done: the overall perception of the brand.

All of these issues must be factored in by corporations as they take a longer, more critical look at
their R&D, consumer research and marketing departments. Even as they assess what their
customer deems to be valid new product launches, companies must strive to keep their existing
product lines fresh, vital and relevant. They must try to offer the consumer true innovations in the
new products that they bring to market. But: these have to be innovations that the customer truly
wants. And truly wants from that specific company.
Brand values must then be properly and effectively communicated at every customer touch point
in this increasingly competitive marketplace. All of these issues should be jointly understood and
agreed upon by corporate marketing departments, design departments and/or the creative
consultancies with whom they collaborate, before any and all brand strategies and marketing
initiatives can be fulfilled. Challenging? Yes. However, all great innovations are the direct result of
problems and challenges that demand new solutions. Every executive who is involved in the
marketing of products and services, corporations and consultancies alike, have a unique and rare
opportunity at this point in history to engage in the most meaningful customer research. This in
turn, will yield the most meaningful and satisfying customer relationships. Ultimately, isn’t that
what building brand value and a return on marketing investment are all about?

Corporate business and creative consultancies can rise to meet the challenges of marketing
products and services in a more fragmented global business environment. They can focus on true
brand management and the alignment between corporate goals and marketing goals. They can
position and differentiate products and services in a meaningful way to the customer. They can
create quality brand experiences for the customer. Michael Dell, founder and president of Dell
Computer has stated that: “We believe that the quality and nature of the customer relationship
and experience is going to be the next competitive battleground.” If corporations strive to
implement sound marketing initiatives, then ROI will fall into place. Corporate marketing
departments need to be open-minded and create a culture in which measuring marketing metrics
becomes a way of life. Better still, research that scientifically measures customer attitudes, needs
and desires of the brand on an on-going basis, has to become the embraced corporate way of
life. Dare we say that then the ROI will take care of itself?

Ted Mininni is President of Design Force Inc., a metro New York area consultancy that
specializes in brand identity, package design and consumer promotional campaign strategy and
execution for the food & beverage and toy & entertainment industries. He has been quoted in
publications such as Brandweek, Brand Packaging, POP Times and Playthings Magazine. His
articles have appeared in Brandweek Magazine, Emerald Publishing’s Young Consumers in the
U.K., Promo Magazine, License Magazine, Brand Packaging, Package Design Magazine, Quirk’s
Marketing Research Review, The CEO Refresher, and among others.

To contact Design Force, Inc., call 856-810-2277, or go online at

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