Prophet’s 2011 State of Marketing Study

Brand-Building in the Complex New Ecosystem of Influence

Building a brand has never been more challenging. An entirely new and increasingly complex ecosystem has emerged, which impacts the way people connect, engage, influence, and are influenced.

Establishing a meaningful dialogue with customers in this environment has become a challenging proposition, given the pace of change and its variety of manifestations. From platforms and networks (Facebook, LinkedIn, and Twitter) and devices (smart phones and tablets), to communication modes (e-mail and text messaging) and practices and trends (crowd-sourcing and mass customization), exploding and fragmenting channels have made customer relationships a moving target.

Against this backdrop, Prophet’s 2011 State of Marketing Study found that senior executives in both marketing and general management are grappling with a variety of pressures as they seek to drive growth and build brand equity:

· The primary challenge is successfully driving growth through a brand positioning that is different from market alternatives and relevant to key customer needs.

· A majority of executives still believe, despite increasing evidence to the contrary, that the company (rather than the customer or other stakeholders) is the primary "owner" of the brand.

· Over the next three years, a quality offer (product/service) will continue to be the most important driver of brand equity, but word of mouth is expected to replace advertising in relative importance.

· Effectively targeting customers in this environment is problematic. Most tend to use similar positioning and messages for multiple customer segments - whether they are relevant or not.

· They believe their organizations are not well-equipped with the skills that are needed to build brands in the near future.

These were among the highlights of Prophet’s 2011 State of Marketing Study, which focused on a variety of brand strategy issues and concerns. The survey group encompassed more than 150 executives, half in marketing and the remainder either C-level executives or in nonmarketing and business unit management roles. They represented businesses with annual revenues ranging from under $25 million to over $40 billion, and in a variety of industries, from consumer products to financial services to technology and telecommunications.

Meeting the Growth Challenge

When it comes to the top strategic marketing challenges management faces, meeting the growth agenda by establishing a differentiated brand position is the primary concern—cited by 55 percent of all respondents, though weighted more heavily by non-marketers (67 percent) than marketers (53 percent).

But brand positioning is only part of the equation. Nonmarketers also put significant weight on activities like "identifying new paths to growth" (48 percent versus 39 percent for marketers) and "growing awareness with new customers" (43 percent versus 34 percent).

Marketers, however, were more focused on growth enablers, with a greater proportion (40 percent compared to 29 percent of non-marketers) ranking the alignment of brand and business strategies as important. They also put more emphasis on determining the most appropriate marketing investments and their levels (31 percent to 29 percent), and gaining better customer insights (39 percent versus 26 percent). See Figure 1.

Who Owns Your Brand?

Overall, 66 percent of respondents believe the company owns the brand. Non-marketers were overwhelmingly (71 percent) of the view that the company – not customers—is the primary "owner" of the brand. It was a view more prevalent in the business-to-consumer environment (65 percent) than in business-to–business (59 percent). Fifty-four percent of the marketers surveyed had that view. See Figure 2.

But all respondents also recognize that the dramatically changing dynamics between company and customers and the broader network of influencers are causing their control over their brands to slip away. Indeed, the golden era of advertising, marked by one-way communications directed at consumers, has long since given way to networked brand building, characterized by multiple channels and influencers (the brand “owner” not necessarily the primary one) over brand relationships.

Given this reality, over 40 percent of the business-toconsumer respondents said they believed they would have less control over their brands over the coming three years than today. (By contrast, only 28 percent of business-to-business participants were of that view.)

And while 36 percent of all the executives surveyed said product and service quality would remain the most critical driver of brand equity in the future, 20 percent said Word of Mouth will play a key role (versus 10 percent today). By contrast, only 6 percent of the respondents gave that kind of weight to advertising’s future role. See Figure 3.

Standing Out in the Crowd

In today's complex new ecosystem, how the brand is positioned with a variety of distinct audiences is a critical concern. Positioning has always been about differentiation. But in this unfolding environment, differentiation

is short-lived. Of greater impact over the long term is the issue of relevance to a vast number of stakeholder groups—from current and future target customers to channel partners to traditional and Web-based media. And what’s relevant to one won’t be relevant to all.

Against this backdrop, more than 75 percent of the study respondents do not believe they are executing their customer targeting strategy effectively—despite the fact that over 50 percent consider their strategies well-defined.

Over 90 percent of respondents are targeting more than one segment, and over half of these do so with multiple positionings of a single brand. Importantly, however, those multiple positionings are similar—what’s different among most in this group are the tactics used in bring them to life. See Figure 4.

Such practices may be effective when weighed against the effort of devising distinct positionings for various stakeholder groups, but just using different tactics will not build long-term differentiation and relevance into a brand. This requires thoughtfully-tailored "micro-positionings" built around specific benefits and messages that underlie the marketing tactics. See sidebar to right for more info.

Are Marketers Up to the Brand-Building Challenge?

Marketers who intend to prove their worth in driving the growth agenda must adopt new skills and mindsets. And while executives believe their organizations are wellequipped with traditional marketing communications capabilities, they also believe their teams are lacking in what’s needed for the path that’s emerging.

In evaluating their top three organizational capabilities when it comes to brand building, 46 percent cited skills at developing in-market advertising, messaging, and creative, followed by the ability to communicate customer insights internally, at 36 percent. And 34 percent identified their ability to identify new areas for the brand to drive growth.

However, in the next three years, more diverse skills and capabilities will need to be demonstrated. Chief among them, according to 84 percent of the survey group, will be more innovative approaches to targeting and marketing. Sixty-eight percent cited capabilities in digital media strategies. And 57 percent pointed to the need to approach marketing from a P&L mindset. See Figure 5.