All in the same boat

Updated: Jul 27 2006, 05:30am hrs
The marketing function is in serious danger of becoming a dinosaur because it has not kept pace with the changing times. A 2004 study of 100 companies by consulting firm Booz Allen Hamilton reports, Corporate marketing function is not aligned with CEOs agenda. Companies expect marketing to deliver measurable ROI rather than focus on tactical issues. Kellogg School of Management Prof Mohanbir Sawhney puts it more bluntly when he says: If marketing does not reform itself, it will die a slow death by a thousand budget cuts.

A key reason why marketing sometimes fail to deliver ROI is its inability to leverage modern technologies to make operations more effective. Huge marketing monies are spent each year, and this is done in pretty much the same man ner as, say, five, 10 or 20 years ago.

Some areas of marketing that were traditionally quantitativefor example market research, media planninghave been the exceptions, and managers constantly assess the range of technology options available. The bulk of marketing operations, however, remain primitive in terms of their approach to technology, and there is often a fear of treading into unknown territories.

Pots of money are spent on consumer activation through vehicles like promotions, direct marketing, and retail POP; but there is very little tracking and accountability of these spends simply because, in the good old days, these spends were largely based on faith and semi-intuitive budget allocation.

Similarly, trade activationthe all-embracing term that includes trade rebates and incentives, promotions, contests etcis yet another sacred cow that has traditionally been managed in a loose, unstructured manner with plenty of inefficiencies.

There are several reasons why this has happened. One reason is the way the use of IT and other technologies has evolved in organisations. Initially, organisations focused on automating areas related to finance and accounting . Then they focused on early wins in manufacturing and logistics.

Simultaneously, they look-ed at improving employee productivity. The need to see technology impacting marketing operations has not been felt. It is likely that the current demand for ROI, in marketing, will fuel change.

The other reason, and possibly the more important one, is that marketing has been practised more as an art than a science. Those in marketing were expected to develop insights into consumer behaviour, and then craft marketing strategies accordingly. Today the one-size-fits-all approach wont deliver. There is greater emphasis on scientifically allocating marketing resources to multiple vehicles.

While the bad news is marketing has generally failed to leverage modern technologies and deliver ROI, the good news is that we are all in the same boat. Even in developed economies of the West, not too many companies have been able to transform their marketing by getting technology to work for them. In other words, the gap between the West and India is, at best, a few years, not decades.

While financial pressures will force companies to re-orient their marke- ting priorities, and make it ROI-focused, their managers can take a few simple steps:

Examine key areas where sales and marketing spends are being incurred;

Identify areas with a significant degree of manual intervention and unstructured execution. These will be the areas where technology can yield immediate results;

Seek advice from tech-savvy people (staff plus external invitees) on how technology can make these spend areas more efficient. This group can also throw light on other marketing initiatives that may be possible using modern technologies.

The author is managing director, Solutions Integrated