Monday, September 17, 2007

Maximize Marketing Investment By Understanding Tool Interactions

[Click the Image above for a Larger View.]

I’ve previously discussed the importance of aligning CMO goals with CEO objectives to maximizing return on marketing investment for the organization. Now, assuming the CMO has ensured alignment, the challenge remains to maximize the marketing mix to deliver on those goals. Maximizing marketing return on investment requires a deep understanding of the often elusive interplay between marketing variables. Whether you define you marketing toolkit as the traditional 4 P’s or as a more comprehensive kit of tools, do you understand how they work together? Understanding the interaction between variables can allow the marketer to enhance the overall return of the marketing investment spend by combining efficiencies with effectiveness. The less the guesswork about the interactions, the lower the inherent risk of any selected set of tactics.

A simple interaction grid shows that the 4 Ps impact one another. Not very helpful, though.

A deeper analytical staircase grid structure provides deeper insight and challenges the marketer to ask the questions appropriate for each cell of the grid. For example, in the grid above (click the image above for a larger view), let P1= Product. Column 1, Row1 is the intersection between Product/Product. Evaluate this cell by asking all of the traditional Product marketing questions to determine if the product is optimized to meet customer needs and profitability requirements. Let P2=Price. The cell below, Column1, Row2, reflects the interaction between Price and Product. Here, the marketer asks questions about the tradeoffs between product features and price points. Are there high end product opportunities? Are there opportunities to introduce lower priced products with a different set of features or services? Let P3=Place. Column1, Row 3 addresses the interaction between Place and Product. Are all products in the portfolio sold in the same channels? Do product features differ by channel?

Note that the questions in each cell can be modified to address situations and challenges specific to any business. By completing the grid with the questions relevant to your business you have a dynamic set of marketing questions to be addressed. Then, assess your ability to answer the questions in each cell. You will quickly determine the degree of knowledge that you have about the performance of the key elements of your marketing mix. Where the data is insufficient and a gap exists, further research may be warranted. Your ultimate goal is to understand the mix tradeoffs to maximize ROI against the marketing goals which are aligned with the business objectives of the CEO.

Note that while this example used the “4 Ps”, the same interaction analysis can be conducted against a deeper list of marketing tools, and it is a simple steps (but a lot of effort) to evaluate interactions at a deeper level with any given element. For example, you might construct a similar interaction analysis against each major element of the Promotion mix, evaluating the impact of print media and sponsorships or between coupon discounts and trade marketing.

Saturday, September 01, 2007

Outlive the 23-Month CMO Hurdle.

In an earlier post MarketingWitz notes a report that CMOs are short-lived, lasting 23 months on average. Marketing Witz: Marketing Executives are Short-term. How can Markerting survive? Are CMOs performing that poorly across the board or are they just performing the wrong role? Return on the marketing investment is as much a function of defining the return as measuring the investment. If the CMO is measuring return on the role differently than the CEO then the inevitable turnover will continue.

As CMO, do you view your role to be the prinicpal driver of profitable new growth via new customers and increased sales among current customers? Do you define your role as steward of the brand, enforcing brand positioning and brand communication consistency? Do you view your role as advisor to various constituencies across the organization? Are you the face of the company with the media? If you answered "yes" to most or all of the these questions you are in good company with other CMO's. But CEOs are likely to view the first question as the only truly meaningful measure of marketing return. The other functions are simply marketing approaches to help deliver on the objective of increasing sales and profits. Measuring marketing results based on increased brand awareness or level of internal brand consulting activity is merely an internal marketing process metric while delivering increased sales and profits is the focus of the CEO. Be sure your CMO objectives are clearly defined and in line with the goals of the CEO, and outlive the 23 month hurdle.