October 2007

IN THIS ISSUE

A Letter from CEO Michael Dunn

As I go into the final stretch of writing my latest book revolving around the topic of marketing effectiveness, I find myself reflecting on the linkage between effective marketing and effective marketing organizations.

Not that many years ago, it would have been defined by how well vehicles of the day – traditional media, promotional offers, sponsorships, for example – captured new customers and market share, as measured by historical benchmarks. These days, though, with the explosion of channels and media alternatives, not to mention changing imperatives and marketing’s expanded role and influence, the concept of marketing effectiveness has vast and far-reaching implications throughout the enterprise.

Not surprisingly, our own work advising clients on using brand and marketing to drive business growth is continually expanding and evolving to reflect these new paradigms. This issue of our newsletter reflects our take on the widening scope of challenges facing marketing leadership and some of their solutions.

The ability to innovate, for example, is critical, and Kevin O’Donnell discusses ways to spur innovative thinking in Countering the Innovation Backlash. Our own David Aaker touches on the variety of success factors that will mark tomorrow’s marketing leaders in The Future of Marketing - Revisited, and Joseph Gelman discusses Rule-Breaking brands - those that are breaking through the clutter and achieving business growth. We also steer you to the Executive Summary of our 2006/2007 State of Marketing Study, and recent articles penned by Scott Davis for Ad Age and yours truly for the U.K.’s Brand Strategy magazine.

By the way, stay tuned for details on my book, tentatively titled Marketing Accountability Imperative: A Roadmap To More Effective Marketing Spending. It will be published by Jossey Bass in late March 2008.

Best regards,

[Signed, Michael Dunn]

Michael Dunn
CEO & Chairman
m_dunn@prophet.com

Countering the Innovation Backlash

By Kevin O’Donnell, Senior Partner

Senior executives are increasingly disenchanted with the successes they’re scoring on the innovation front, as evidenced by a recent Business Week survey where satisfaction with return on innovation percent sank to 46 (versus 52% last year).

Yet the role of innovation as a driver of organic growth and a differentiator that adds substantially to a brand’s value remains as critical as ever, says Senior Partner Kevin O’Donnell. In his inaugural column in the newly relaunched Marketing News, a publication of the American Marketing Association, O’Donnell spells out one solution: Create innovation “systems” that foster actionable creativity.

To learn more about O’Donnell’s perspective of the “must-haves” of a healthy innovation system, click here.

The Future of Marketing — Revisited

By David Aaker, Vice Chairman

Marketers have never before faced an environment where they have been as pummeled by change as they have in the last few years. Channel growth has exploded. Past “norms” of consumer behaviors are out the window, making customer control a moving target. Media is metamorphosing, posing struggles on what to use when and where – and most effectively. And through it all, the pressure remains to ensure marketing’s strategies and programs do the job of supporting business growth.

It spells a future where the marketing function will continue to be polarized. Firms and their marketing leaders that view the function as tactical against a short-term financial backdrop will struggle to have real impact. However, other chief marketing officers (I believe the majority) will elevate marketing to be a visible driver of success, having solved five key challenges.

First, they will find ways to generate home-run marketing programs that break free of the clutter. It will demand creative thinking, organizational tolerance for change, and talent in execution. It will also require them to hone their skills at leveraging today’s wealth of vehicles to connect to customers, including sponsorships, social programs, and new media venues from blogs to virtual worlds.

Second, they will succeed at meeting a critical senior management imperative: making marketing an instrumental driver of business growth. This, too, will require creativity and a willingness to suspend boundaries. Ideally, the chief executive will be able to look to marketing for the development of growth platforms, whether developing and leveraging brand assets, discovering unmet needs, or finding new markets.

Third, marketers will adapt to this new world of social media, where customers – and not them – are in control. This will entail devising creative and, more importantly, authentic ways to reinforce their brands’ value without the heavy-handed intrusiveness that can sometimes characterize more traditional messaging. Not only will they need to better anticipate how and when to reach out to customers in this changing environment, but also find effective means of encouraging positive incoming interactions.

And this dovetails with the fourth challenge CMOs will have addressed: Finding ways to truly connect to the customer by building relationship-based loyalty going beyond product-centered and product-driven approaches. A strong relationship can have a variety of sources, such as organizational associations (e.g., innovation, the environment, customer concern or high standards), the delivery of emotional benefits, or creation of active customer dialogues.

Finally, these CMOs will ensure relevance. When competing in dynamic markets, the most strategic challenge is to make sure the business produces offerings that customers want to buy. The need is to detect and evaluate trends and develop responsive offerings supported by brand assets.

In a growing number of businesses, marketing will have more of a strategic role. That means the marketing group must have the skills and talent to think strategically and the credibility to influence the CEO to think in terms of building branded assets rather than immediate sales. It’s not an easy task, for sure.

Rule-Breaking Brands

By Joseph Gelman, Partner and Bernhard Schaar, Senior Associate

We live in a world of political correctness, in which we need to project a neutral image unlikely to cause any controversy. This situation has had a powerful impact on the major Spanish brands, which are genuinely careful in the messages they send out to make sure that they meet with approval and do not cause any offence to any segment of society (regardless of whether or not they are customers). The result is brands that talk of commitment, development, ecology, solidarity, and so on.

Although such corporate stances are necessary and, indeed, ideal for certain brands, their main drawback is that they curtail the creativity of the messages and attitudes that the brand can transmit to its customers, reducing its capacity to stand out and hindering the establishment of a close relationship with the consumers. In sum, they are watered-down, hackneyed brands, all fighting for a healthier, more inclusive, more responsible image, and the values associated with these aspects are repeated time after time.

But this does not have to be the trend moving forward. Some brands have explicitly broken away from this approach. Such brands usually try to “go back to basics”, to the most basic realities of the consumption of their products, to call a spade a spade, with a certain dose of aggressiveness and plenty of humor. Their messages are aimed at their highest value consumer segments, telling them things they know that they like to hear and paying little attention to other segments or interest groups. These are “rule-breaking brands”.

For years, Burger King was the also-ran of the burger business. Its positioning was entirely functional (based on the supposed higher quality of its product), which fell victim to the entente that McDonald’s was able to establish with its consumers. The company changed hands several times and results were usually disappointing. However, in recent years, Burger King has rapidly become a rule-breaking brand. It went back to the roots of consumers’ relationship with junk food, with messages which seemed to say “we like eating meat, we like eating a lot, we like this food even though it's not healthy, and we're going to keep on eating it”. The customers have identified with this brand attitude, feeling that to a certain extent they can challenge social conventions through hamburgers. The result of this was 13 quarters of record-breaking sales, and for the 2007 tax year Burger King is expecting to break new records, with a 9% increase in sales year-on-year.

Rule-breaking brands “return to basics” with clear and humorous messages. Axe, a brand of macho deodorants exemplifies this notion. Its message is incredibly clear, and anyone can understand it: “use Axe and girls will fall at your feet”. To emphasize the message, as well as use humor, the brand employs a certain sexual content to the message - women are powerless to resist “the Axe effect”, with explicit images depicting them fainting, throwing themselves on top of the boy and becoming objects at his mercy. The global “Bom Chicka Wah Wah” message was launched in 2006 as an international expression of pleasure and lust, a far cry from the “political correctness” of other brands. Thus, Axe created a controversial image, but one that set it apart from the rest. And it translated into results: six weeks after Axe was launched into the Japanese market at the start of this year, it had already achieved a market share of 12%.

Brands that break the rules do not necessarily have to be consumer products. In the automobile insurance business, traditionally dominated by large corporate brands, which transmit paternalistic values embodying size and responsibility, there is also a rule-breaking brand. Direct Line brings to the fore an unquestionable reality: for most people, car insurance is a burden, providing no added value, and absolutely all insurance policies are essentially the same, therefore the rational thing to do is to pay as little as possible for one. In fact, some of its messages seem to say to our faces “if you are paying more, then you must be stupid”.

Again, the results are unbeatable - this company has radically shaken up the entire Spanish insurance sector. Other examples of rule-breaking brands are cell phone operator Amena (recently acquired by Orange), Mediamarkt, and even Atlético de Madrid soccer team. They all share this return to basics, clear and direct messages with a large dose of humor, because it is not just what you say, but how you say it.

*This article has been translated to English, and originally ran in the September edition of the Spanish publication, El Economista.

Prophet Recommends...

Building a Successful Relationship with China

By Michael Dunn, CEO and Chairman

In this article from the May edition of Brand Strategy, Michael Dunn advises business-to-business brands to do their homework before entering the Chinese market. Are strategic partnerships the way to drive customer loyalty?

Embracing the Web Can Help You Harmonize Your Old- and New-Media Strategies

By Scott Davis, Senior Partner

In his August 3 column in Ad Age, Scott Davis uses our State of Marketing Study as a point of departure to encourage marketers to learn to use the best of new and traditional media in driving the business forward.

Think Big

By David Aaker, Vice Chairman

In this article, David Aaker examines how business can identify and drive innovation using brand and marketing strategies – without depending on technological breakthroughs – in this September 14 Sloan Management Review posting that also appeared in the September 15 Wall Street Journal.

Prophet's 2006/2007 State of Marketing Study: The Effectiveness Imperative

How important is marketing effectiveness to today’s senior marketing executives? Exceedingly, according to findings of Prophet’s 2006-2007 State of Marketing Study. It’s getting there that’s problematic.

The Study was conducted among 100 plus senior-level marketers to better understand how they allocate and measure their marketing investments. It uncovered, as in our 2005 Study, that they continue to look beyond marketing to achieve business growth -- and business strategy, new products, and the customer experience are among the most critical drivers. It all requires executional excellence and a focus on innovation, they agreed.

 

Most frequently downloaded from www.prophet.com

At Kohl’s, Very Vera Should be Very Wary  [PDF]
By Steve Chang

In this article, Steve Chang discusses the potential impact on Vera Wang's brand by launching a new line of clothing for Kohl's. (BrandWeek.com, October 16, 2006)

 

Other articles of interest

The Watercooler Is Now On The Web
BusinessWeek, October 1, 2007
Like many twentysomethings, the workers at Starcom MediaVest Group spend a portion of their workday on a social network. So in April, executives of the ad-buying firm figured, why fight it? They launched a network of their own, for employees only, called SMG Connected. Today, a little more than a third of the company's workers, or 2,060 people, have signed up for their own pages where they can create profiles that outline their jobs, list the brands they admire and describe their values by choosing from words such as "creativity" and "humor."

Managing Innovation
Wall Street Journal, September 24, 2007

Managing innovation is one of the biggest challenges that companies face. They not only need to come up with new ideas, but they also need to foster a culture that encourages and rewards innovation. Otherwise, they risk being overtaken by their competitors.

At a recent panel discussion at the Tech Museum in San Jose, Scott Thurm, management-news editor for The Wall Street Journal, talked about managing innovation with four experienced managers at Silicon Valley technology companies: Marthin De Beer, senior vice president of the emerging-markets technology group at Cisco Systems Inc.; Judith L. Estrin, chief executive of Packet Design Inc., a network-technology company; Douglas Merrill, vice president of engineering and chief information officer of Google...

Beyond the 4Ps: The 5Ts of Marketing Operations
Marketing Profs, September 25, 2007

CMOs of global companies are now confronted with unparalleled challenges—and opportunities

News and Events

Our ranks continue to grow

We continue to attract professionals with impressive credentials to expand the range of capabilities we offer clients.

In London, we’ve welcomed Sarah Essex as a senior partner, charged with increasing our presence throughout Europe and supporting the further development of strategic platform accounts. Essex, a long-time consultant who also has held client-side strategy positions with Diageo, joins us from Monitor’s Market2Customer strategic marketing consultancy. Her experience covers a range of strategic marketing and business growth issues, from marketing and corporate strategy and planning to customer segmentation to brand positioning.

We’re also expanding our presence in New York with the addition of three new partners, Russell Brackett, Chris Lederer, and Phyllis Rothschild.

Brackett is a corporate strategist who most recently was a vice president and client partner with Boston’s Gen3 Partners. He brings 20 years experience working with Fortune 500 clients on issues ranging from product development to innovation processes to growth strategies.

Lederer is a recognized marketing and brand strategist with two decades of experience working for and consulting to the most senior management within a number of marketing intensive industries. He joins us from from Helios Consulting where he was President and Owner for 10 years.

Rothschild joins Prophet from Mercer Management Consulting in Boston, where she most recently has been a director in the strategy practice, counseling large multi-national clients in a range of industries. Her areas of focus have included market assessments and new market entry strategy, customer facing strategy, competitive diagnostics, and strategic planning redesign.

On firing customers and making Ucare

Members of Prophet’s team add their 2-cents to news and issues of the day in the “Sounds Off” section of our blog, BackPocket. Check it out to learn our take on the brand implications of Sprint’s decision to fire “bad” customers and Johnson & Johnson’s bid to give back while building more brand cachet. Be sure to add your own comments while you’re there!

Re-launching a best-selling soft drink

Roland Bernhard discusses the recent re-launch of the best-selling Swiss soft drink brand, Rivella, in Berner Zeitung. *Please note this article is in German. read ›

Spotlight on Speaking…

ANA Annual Conference - Masters of Marketing
October 11–14 — Phoenix, AZ
Kevin O'Donnell, Senior Partner, is co-presenting with Kris Hart, VP Marketing at Harrah's. They will discuss aspects of the work we have done to help grow the Harrah's brand and optimize its brand portfolio. 

Haas Inside Innovation 2007 Conference
November 17 - Berkeley, CA
Vice Chairman David Aaker will be speaking on the topic of "Discovering and Launching New Product Blockbusters".

Marketing Society Annual Dinner
November 20 — London, UK
Prophet is partnering with the Marketing Society to present this year's annual dinner themed "New rules for a new world."


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