The Chief Marketing Officer, CMO, has become one of the more commonly talked about corporate designations in recent years. Given the tremendous marketing potential offered by the new media and proliferation of distribution channels, companies have begun to realise the huge potential of marketing in guiding corporate level strategies and substantially contributing to the financial bottom line.
In spite of such an understanding, it is startling to note that the average tenure of a CMO is merely 23 months compared to a Chief Financial Officer, CFO, that typically lasts four to five years on average. Further, not many companies have a senior marketing representative in their C-suite. This begs the question—do companies need a CMO or is the role of a CMO mere hype?
Why do Companies Need a Chief Marketing Officer?
As the business landscape evolves, marketing also evolves into an organisation wide strategic discipline. Given marketers’ knowledge of the customers, it is imperative that the CEO and the corporate board have a representative of the customer to continually educate them. Additionally, companies need a strategic CMO to benefit from the following areas:
- Align Marketing with the Corporate Business Strategy: Newer technology, powerful channel partners, and empowered customers have made the competition highly intense and marketing a very in- volved and strategic discipline. Marketing can no longer be confined to the 4P (Product, Price, Place, and Promotion) framework. Marketers, with their in-depth knowledge about markets and customers, should act as a major resource for strategy formulation.
- In all Issues of Corporate Strategy: What markets to compete in, what segments to target, what entry mode and strategy to adopt, which partners to strategically ally with—marketing offers substantial information. In order to convey these holistic perspectives, it is imperative that the marketing strategies are represented by the CMO in the corporate boardroom as he can speak to the directors and the CEO in their boardroom lingo.
A classic example is the iPhone from Apple. Given the tremendously successful iPod and iMac, Apple could have become complacent. But the marketing acumen of the executives recognised the need to constantly excite the customers. They built their growth strategies on satisfying the unmet needs of the customers. Marketing played a crucial role in guiding Apple’s corporate strategy.
The CMO's Position Aids with the Alignment of Marketing with Corporate Business Strategy.
- Connect the Corporate Boardroom with the Customer: As Peter Drucker said, the only two functions of any organisation are innovation and marketing. Irrespective of how innovative a company is, how committed the employees are, and how competent the top management is, un-less the company connects with the customer, success will be elusive. The top management should constantly evaluate their strategic decision in the context of customer feedback—what do the customers value and how can the customers help the company in co-creating value.
The CMO plays a crucial role in constantly updating the boardroom and the CEO about the latest customer preference, and how well the corporate resources are aligned to meet the evolving customer needs. Companies like L’Oreal, Nike, and Singapore Airlines are some of the pioneering companies that manage to constantly feel the pulse of their customers. As such, marketing takes a central role in guiding the corporate strategy by having the top management team and the CEO regularly updated about customers and markets.
- Create a Customer-Centric Organisation: Given the innumerable choices customers have, ensuring long term customer loyalty and sustainable competitive advantage becomes highly challenging. The difference between the successful companies that achieve those objectives and those who fail is the corporate orientation. Customer-oriented companies design and operate every aspect of the company with the customer in mind.
Building a customer-centric organisation requires a highly concerted effort of all functions within a company along with every employee becoming a customer champion. These issues deal with organ-isational culture, organisational structure, and corporate policies. The CMO can influence the boardroom and the CEO to implement measures that would allow a customer-centric organisation to be built. Banyan Tree Hotels and Resorts is a classic example that showcases such a customer-centric philosophy. The founder has managed to instill a culture that allows constant interaction between marketing and other functions with the company. Such an emphasis has resulted in world-class resorts that always delight the customers.
It is evident that CMOs are strategic requirements of any corporate boardroom. But in spite of such a significant role played by the CMO, companies have not completely embraced the concept of a CMO. Asia has an unprecedented opportunity to elevate marketing to the boardroom level, so that the CMO can take center-stage in shaping and executing the corporate strategy leading to better shareholder returns.
Challenges Faced by the CMO
The challenges faced by the CMO are the problems increasingly faced by marketing as a discipline of late. It has long been argued that one of the fundamental challenges of marketing which has undermined the credibility of marketing, threatened the standing of marketing within a company, and even threatened the existence of the very discipline as a distinct entity is marketing’s failure to quantify its outcomes and justify investments into marketing activities. Two such daunting challenges are:
- Measuring Marketing Outcomes: Marketing fundamentally differs from other functions within a company like finance or operations in a couple of aspects. As marketing deals with people, their attitudes and eventual behaviours, they are not as predictable as a mechanical process. As such, there can be considerable time lag between marketing actions and the intended outcomes. Further, measuring these outcomes will have to involve both financial and non-financial metrics. Given these underlying constraints, it is often challenging for the CMO to convince the top management of marketing’s ability to competently allocate resources and significantly contribute to the company’s growth.
- Explaining Marketing’s Centrality in a Company: Many companies continue to equate marketing with advertising and sales. But marketing has long evolved from being a tactical departmental function to an organisation wide strategic discipline. Given marketers’ knowledge about customers and other stakeholders, marketing plays a central role in leveraging the internal capabilities. To assert such a central role within any company, marketers should be able to understand the different aspects of the company, its strategies, its resources, and its limitations. Marketers usually are involved in their own jobs and fail to leverage their central-ity in a company. CMOs face immense up-hill task in educating and convincing the C-suite of their capabilities and their rightful status.
The role of marketing within a company is going to become even more central as managing customer interactions and co-creating value become the building blocks of any corporate strategy.
In the future, the CMO will emerge as the strategic connection between the corporate boardroom, the top management team, the CEO, and the customer. Companies should offer the CMO the requisite status and influence within the company. Furthermore, companies must create an organisational structure where CMOs can guide the company’s vision and mission by integrating the myriad functions within the company. The time is coming whereby the success of the company depends on the strength of its marketing and the CMO.
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