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IN THIS ISSUE

MARCH 2006

A Letter from CEO Michael Dunn
Build Internal Bridges to Strengthen Customer Ties
Creating the Optimal Marketing Structure
Connecting Corporate and BU Marketers
The Inside Track
Recommended Reading
Upcoming Events

A Letter from CEO Michael Dunn

The ability to get more out of marketing is a key challenge being grappled with by many businesses these days. And it's not just an issue of marketing investments that generate clear returns (even though that's always a very high priority).

The goal is to create world-class marketing organizations that have the insights, capabilities, and, ultimately, the relationships throughout the enterprise to help foster a thoroughly customer-centric environment. It's that type of leadership that is critical to driving the top- and bottom-line business growth that CEOs and shareholders demand.

It's an area we're increasingly asked by clients to help them explore and address, and the focus of this quarter's newsletter. In our first article, Build Internal Bridges to Strengthen Customer Ties, we share how leading marketing organizations build bonds between Corporate and the BU marketers, IT, and Human Resources. In Creating the Optimal Marketing Structure, we look at how to better leverage the distinct capabilities of corporate and business unit marketers. And in Connecting Corporate and BU Marketers, we delve into why the "us versus them" mentality needs to be remedied — and how one corporation approached it.

We also offer up David Aaker's reflections on how he developed his interest and leadership in branding. Dave also shares his thoughts on consumer trends and marketing best practices in an article featured in our Recommended Reading section.

Thanks for your continued interest in Prophet and our thinking. As always, we welcome your feedback.

Warmest Regards,

Michael Dunn
President & CEO
m_dunn@prophet.com

Building Great Brands and Businesses

Build Internal Bridges to Strengthen Customer Ties

Today's mandate to marketers: help the business get closer to the customer. But meeting that mandate is often easier said than done. Senior marketers must realize the path to better customer relationships starts in their own backyard, starting with their compatriots in the business units and their peers in information technology and human resources.

Turf Wars

The relationship between corporate and business unit marketers is often dysfunctional. The routine is well rehearsed: corporate marketers decry the BUs' resistance to organization-wide initiatives, and the BUs grouse at the impracticality of it all. Subsequently, agendas are sub-optimized. But common ground is shared: grow the business by forging customer relationships.

Here's how General Electric's corporate marketers handled the disconnect, realizing reciprocity was needed with the BUs if its corporate re-branding initiative was going to be successful. Rather than force-feed the strategy to the BUs, the corporate marketing team test-drove the strategy through two business units. Together, they worked out kinks, built effective working and communications bridges, and guided the strategy's broader implementation. This approach was critical to the success of GE's re-positioning around "Imagination at Work."

Connecting with IT

Technology can serve as a strategic weapon for Marketing to deploy, given IT's ability to generate considerable information that must be leveraged to better segment customers; design loyalty, ROI and share-of-wallet metrics; and improve pricing models.

IT's vision can also devise leading-edge ways to reach the customer. 7-Eleven's IT allows individual stores to adjust inventory to customer tastes. BMW offers users an online feature to "mass customize" its Mini Cooper. Moving beyond executional to strategic levels of partnership adds tremendous value to the organization.

Fire in the Hire

Marketing and HR professionals increasingly realize the need for corporate symbiosis. HR's reach is cross-functional and company-wide. By becoming philosophically aligned, HR and Marketing share an objective: to attract and retain employees who fully understand the brand and its promise.

At one company, the new-employee orientation also fosters brand consciousness. The day-long program includes basic information and key objectives, but branches into meeting client wants through external communications. This collaboration creates a new breed of brand ambassadors from day one.

Every discipline and function in an organization drives and supports business growth. The need to put the customer front and center is implicit. By realizing this cross-departmental common ground, a company ultimately reaches its higher ground.

Adapted from Internal Alliances Yield Outside Wins, Brandweek, August 2005.

Creating the Optimal Marketing Structure

As early as 2000, an overwhelming 95% of respondents to a Marketing Leadership Council survey said they anticipated centralizing aspects of their marketing functions.

The appeal of centralized marketing stems from two critical needs: greater consistency across an organization, and more brand power.

Yet in the rush to centralize, many businesses took big leaps without the tiniest of looks. These firms forgot to evaluate and then integrate a strong centralized marketing group with a strong business unit. Creating the optimal marketing structure requires at least three initial steps:

Start at the Top. With clear articulation from senior management, a centralized marketing team identifies which strategies are best implemented across brands or markets and how to get there.

BU's Critical Role. Simultaneously, the business units must assess the organization's overall strategy in terms of the individual business or brand. They must identify unit- or brand-specific growth drivers, what's required in terms of results for the unit to succeed, and the best marketing tactics to achieve that.

The Consultant Swing. In this parceling and integration of roles and responsibilities, it falls on corporate marketing to move beyond the tactical and take on a more consultative role. This shift keeps corporate above the fray, which supports objectivity and idea generation.

Businesses are increasingly realizing the power of brand to transform an organization. At the same time, they're also realizing that tapping into that power requires that the right structure, supported by the right people with the right capabilities is in place to see it through. Increasingly, that takes a collaborative effort that transcends business silos and is undertaken over the long term.

Adapted from The Best of Both Worlds, CMO Magazine, November 2005.

Connecting Corporate and BU Marketers

Recently, a senior corporate marketer with a Fortune 500 firm expressed some concern about brand strategy. "We've created a great rallying point for employees and a compelling positioning for customers, but some of our core business units are resistant. If we don't demonstrate clear implications for putting more product into customer's hands sooner, they don't see any near-term ROI benefits."

She underscored a growing challenge impeding the success of many corporate marketing departments: a frequent disconnect between corporate and business unit (BU) marketers' goals and objectives. If left unaddressed, everyone loses.

Some organizations have found win-win solutions. Financial services giant UBS gained tremendous success and internal buy-in to its initiative by explaining its new corporate brand strategy in a thorough, methodological manner that included the concerns of each business unit. UBS was named to Business Week's list of most valuable global brands for the first time in 2004, and again in 2005.

In the process, UBS found that corporate and BU marketers actually have very complementary roles. Corporate is traditionally responsible for building brand and reputation, guiding the overall brand portfolio, and ensuring effectiveness. BU marketers are all about building and supporting sales initiatives. But each function ultimately leads to a primary goal: building better customer relationships that drive business performance.

Rather than working on the initiative du jour, corporate needs to adopt a more real-world approach, recognizing the realities of its BU counterparts. Corporate should also consistently seek BU synergies that result in cost saving and efficiency. BUs should consider how an individual brand and message fit within the overall corporate portfolio.

As that Fortune 500 marketer experienced first-hand, an "us versus them" approach serves neither customers nor the business.

Adapted from Corporate and BU Marketers: End Division and Learn to Conquer, Point, May 2005.

The Inside Track

As a leading thinker on modern brand strategy, David Aaker's theories and reputation have been cemented through his books, including Managing Brand Equity, Building Strong Brands, Brand Leadership, and Brand Portfolio Strategy. Aaker admits, "I have been frankly stunned by the impact that the books have had on perspectives and practices. Executives read books and implement those ideas that catch their eye. The influence of books, in Japan and Europe in addition to the U.S., made me realize how invisible my prior work had been with respect to the 'real world.'"

What initially led Aaker to the uncharted territory of branding? What was the impetus behind the trailblazer? Based on material from his book, From Fargo to the World of Brands, Aaker shares what stirred his interest in an article entitled "My Brand Books: Why?"

Upcoming Events

In an American Marketing Association workshop on March 15 at the Hyatt Regency Austin, Austin, TX, Prophet's Marisa Mulvihill presents on Strategic New Product Development, and Mitch Duckler, on Building and Managing Your Brand as a Strategic Asset. For additional information, click here.

Partner Tim Munoz discusses Marketing Effectiveness at the ANA Regional Meeting in Boston, MA on May 17. For details, click here.

Senior Partner Andy Pierce teams with General Motors' Tim Bennett for a presentation on Creating Differentiation in Your Brand Portfolio at the ASMI conference on Branding Excellence. The event will be held May 17-19 in Chicago. For details, click here.

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