The market share battlefield and its weaponry changed considerably as our economy transitioned from the Industrial Age to the Information Age. In particular, the growing sophistication of marketers (and IT needed to support them) has been nothing short of breathtaking.
The movement from the Industrial Age to the Information Age increased customer power, expanded offerings and growing competitive intensity. (See Sidebar.) As a result, both of marketing’s roles have become more important. Marketing’s tactical role is demand management, or deciding on the right channels and teeing up the awareness, considerations and positive attitudes that lead target customers to select their company’s offerings. The strategic role is to make sure the company has the right offering at the right price and margin.
In the information age, marketing is transitioning from an art to a data-based science highly reliant on the strength of the IT systems and the data it generates. Roles that used to be embraced by one person, serving as the mini-general manager of a product category, are increasingly divided into multiple marketing sub-specialties.
SIDEBAR: The context for marketing’s change
In the industrial age, industry boundaries were largely rigid, with each company fighting for a share of the industry’s profit pool through strong execution and superior resources. Suppliers had the power. They preferred and created mass markets with limited choice.
The widespread penetration of the Internet dramatically reduced the price of communications, allowing industries to nationalize, globalize and consolidate. At the same time, barriers to entry and industry boundaries eroded, creating more competitive intensity. New entrants gained market share by disrupting leaders. For instance, Walmart, Barnes & Noble and Borders replaced local independent books stores. Amazon then dealt all three (as well as the publishing industry) serious blows with a lower cost business model.
Information technology also caused value migration in most industries. For example, in the telecommunications industry, value used to be in hardware and now it rests in software and ecosystems evidenced by companies like Google and Apple displacing Nokia and Motorola in the phone market.
Finally, with the Internet, large, complex external supply chains replaced previous vertical integration. With more competitors and a strong supply chain offering a full array of services, existing competiors and new entrants increasingly competed for customers’ business by offering more choices. Finally, the Internet enabled social media and search functions, moving power from suppliers to customers.
The tactical side has transformed the most with marketing leaders expected to understand what levers will drive up demand in the most cost-effective manner, with return on marketing programs measured in the most sophisticated marketing departments and agencies. Interactive channels claim a growing share of marketing’s resources and marketing messages in these channels have transformed from one-way communications to a two-way dialogue. Customer experience is managed and measured across all channels.
One look at the new services supporting marketing departments shows the transformation of tactical marketing efforts from insightful work with creative talents to a data-based scientific effort to measure the components of demand, monitor their performance and influence their outcomes:
- Data cleansers
- Data segmentation vendors
- Data appenders
- List managers, compilers and brokers
- Lead management software vendors
- Search engine optimization/maximization vendors
- Marketing automation software vendors
- Content publishers
- E-mail vendors
- Analytics vendors
- Web analytics vendors
- Customer relationship management system vendors
This list of data-based experts sheds light on the considerable demands marketing now places on IT departments.
While digital data also becomes more important on the strategic side, methods have also expanded to include human observation of products in use and more open-ended questioning about jobs customers want others to do for them. Strategic marketing talent must today master the art of business model innovation and they have more relationships with customers, who are often initiators of innovation, not just focus group participants.
Large companies increasingly divide marketing’s demand management and product roles, placing tactical marketing under the commercial leader while embedding strategic marketing within business units. Chief Marketing Officers (CMO) of large companies increasingly realize they are managing resources across their organization – in fact any resource that touches customer experience is part of marketing’s scope. The CMO becomes akin to a magnet, attempting to align all resources to build a superior customer experience coupled with superior financial performance.
Smaller companies make the mistake of not paying attention to both marketing roles, usually choosing the tactical over the strategic. Smaller B2B companies make the mistake of thinking sales representatives can do marketing. Both large and small companies make the mistake in today’s competitive markets of not investing enough in the market-understanding process. Finally, too few IT departments understand how vital IT’s support of marketing is to their company’s success.
The best business models on paper fall apart in practice when marketing is weak. Is marketing a strength or weakness in your organization? Are IT and marketing collaborating? What’s your 2012 improvement plan?
For a great guide on marketing planning see the new edition of Scott Cooper et. al. The Successful Marketing Plan.