Talking markets not marketing: How Marketers can add value to their organisations and not end up like Blockbuster or Kodak

This outtake is from an hour of discussion recorded exclusively for our Pivotal Marketer Community on Facebook (where the full recording is available) sees Angela Hatton, marketing consultant, trainer and published author and MMC’s Rene Power discussing who is responsible for revenue in an organisation, why good brands go bust and the critical difference between marketing and market development.

It’s the second part in a series of serialisations on marketing management, be sure to check all new posts as they publish (or see the recommended reading below).

Angela Hatton:

I say that things have changed. When I started my career, which was four decades ago, companies looked very different than they do today. They were still very flabby in terms of the layers of management. I remember one of my first consultancy jobs, which was still probably one of the best ones I ever got to do was for a management centre that was quite local to me here, Sundridge Park Management Centre.

And they asked me to interview CEO’s from the top 100 companies, asking them what they thought the role of a manager would be in 10 years time, because they were trying to put management courses together.

And at the time the first company I went into, which was a utilities company, there were 32 levels of manager between the top, the CEO and the shop floor.

And of course, technology has then swept out all those middle managers who were really bean counters a lot of the time. And it’s made all of us have to take on a more strategic role and be much more multifunctional and much for capable.

Rene Power:

That is quite flabby.

Angela Hatton:

It is very flabby. And I don’t think it was particularly unusual.

Rene Power:

Watching us live on Facebook, do feel free to ask questions or pose current challenges that you’re facing in your organisation. You’re trying to kind of level up, position up, manage up as we call it.

What challenges are you facing? If you want to kind of drop a question or a comment and share that in the comments, so we can kind of pick that up and if it’s something we can advise on while we’re having a chat, we’re more than happy to do that.

Who is responsible for revenue in a business?

The point about revenue there, and when you first mentioned it about asking the question about, “Who’s responsible for revenue?” I thought we’re going to be going down a path here where again, marketers that are predominantly focused on promotional marketing, are probably going to be a bit scared to want to have conversations like that because the sort of stuff that they’re doing might not be bringing that kind of value.

Yes, it’s top of funnel stuff. It’s creating interest. It’s creating all of that sort of stuff but it’s not perhaps as tangible as other things but then when you qualified it by saying it’s about revenue in the long term, it’s not just about the orders now. It’s about customer lifetime value. It’s about opening up those customers and creating bigger segments.

Starting to look at this account based marketing phenomenon saying, “How can we go and manage, get more big contracts and accounts,” like we’ve got at the minute. So you’re right. That kind of relationship marketing, I suppose, it doesn’t always just sit with the sales guys that won the order, does it?

Angela Hatton:

No.

Rene Power:

It is a company wide thing that needs to be led from the marketing department.

Angela Hatton:

And it shocks me still, how many organisations, the big organisations in particular. In fairness, smaller organisations tend to be a lot leaner and meaner, and actually are much closer to their customer base anyway.

And anyway, there’s probably only team of 10 people or something. So the marketing person can talk to everybody else in the business without the kind of bureaucracy or hierarchy or what have you.

But it still shocks me how many organisations are organised around their products rather than around their customers.

Now, you understand historically why that’s happened and it’s because essentially planning was done around where the budgets were allocated. And budgets are allocated in order to make product.

Annual budgets and budgeting and why major organisations went bust

And they would be around a factory. Factory A over here is making product A and Factory B somewhere else is making Product B. And so the annual plans were really the annual budgets essentially. They were not strategic business plans. They were not business development plans in the way that strategic marketing should be thinking about it and looking at that top line revenue.

And I mean, I talk about the length of my career but in your lifetime as well, Rene, I’m sure you’ll have seen some very big companies go bust because fundamentally they’ve followed their product lifecycle in and out or their technology lifecycle in and out.

Rene Power:

And the big ones, you think about Kodak. You think about Blockbusters. Some of the retail one’s they’re the biggest and most well known aren’t they because they just took their eye off the ball.

Angela Hatton:

But it’s hard to believe, isn’t it? That somebody like Kodak never spotted the fact that the mobile phones were going to take pictures.

And I’ve always said when I’ve been teaching students particularly, when you looking at competitor analysis, don’t worry about the people you know that’s number one in the market, number two in the market. You can see them. You know what they’re doing. We can mystery shop them. We can do whatever.

Ask yourself, who’s about to come into this market? Who’s got a different solution? Because they’ll come in with new rules. And that’s exactly what we’ve seen happening.

For me the impact of technology has been much more important in terms of changing sectors than it has been in terms of changes in how you can communicate with people.

Rene Power:

It’s really interesting. You think about the mobile phones and think about the impact that they’ve had on sales of calculators and alarm clocks and all sorts of things.

Angela Hatton:

I know, it’s incredible. The fact that companies are still organised around product rather than around their markets and their customers means that the management information in a lot of those companies is also very lacking because they can tell you everything you would want to know about the number of products we’ve sold and the resell rate and all the rest of it.

What they can’t tell you is what share of that customer’s wallet do we have across our portfolio? What they can’t tell us is whether or not we are actually growing our market share with those particular customers. And there is only one measure that will tell you whether your go-to market plan’s working, and that’s your share of served market.

And if the share of served market’s going up, your go-to market planning is working, it’s good.

I’m not saying it couldn’t get better because you could obviously grow that share even more. If it’s stable or declining, therefore using percentages because we can play around with market share. The reason that metric is so valid is it stops you thinking you’re doing well if you look at total sales, when a market’s in growth.

So again, throughout the ’80s and ’90s when markets were growing, those companies, like the Kodak’s, the world that we’re talking about, took their eye off the ball because actually they were growing sales year on year. And if they weren’t growing them in the UK, they were picking them up in an export market or an international market.

What they failed to measure is that their share of the market was falling. And that’s the thing that’s important, taking account of those two metrics.

Market development is grander than marketing

And those are the things that I think marketers should be kind of bringing to the boardroom and talking about the return on investment that we get. I bet everyone who works in a company with products, the company would be able to tell you about the return on investment for their product development. But what they can’t tell you is what’s the return on the investment in market development.

Rene Power:

It’s a good point. You used the phrase market development there. I think that’s a really important way to look at this as well because you’re looking at, it’s not just… like we keep coming back to this communications cascade. This promotional splurge of information that we want to put out there and we just want somebody to kind of take it and act on it.

But in reality when you’re doing proper, deep market development work, you are looking at trends in the sites, how it’s moving, how things are shaping, what new entrants are, what things could come along and kind of disrupt, what are people not currently getting that they could be getting, they don’t even know they’re not getting.

That’s where companies like Apple seem to do very well in giving us things that we didn’t even realise we needed and then all of a sudden can’t live without. And they’re sometimes the best examples of innovation, aren’t they?
So I think you’re right.

Angela Hatton:

But always, they’re solving a problem.

It may not be a problem that people are talking about specifically but the hassle of not being able to pick up a phone call if you weren’t at home because it was tied to the wall, was a limitation and a problem of people’s personal communication.

And having a single number that you could take around with you, that understanding how people are using the product or wanting to use the device in some shape or form.

And I think one of the most useful things marketers could do to change the perception of marketing in the organisation, assuming they need to, is to stop talking about marketing and to talk markets, yeah?

Because they ask for a marketing budget, but it’s not a budget for marketing. It’s a budget for the market. It’s not marketing research. It’s research into the market. It isn’t a marketing plan. It’s a go-to market plan that is owned by the company.

And the experts in the how-to-do-that-effectively, to establish a strong value proposition should lie in the marketing team. But some of the people listening to your call will probably have already found that their product colleagues are the one’s that are taking some of that space.

Now interestingly where I’ve worked British Council, Tetra Pak, big companies, global companies like that where the product people are kind of stealing marketing’s clothes, if you like.

They still have a limitation in that they are still focused on their product portfolio. And if the company sells to the same customer across portfolios there is still a huge opportunity for the marketers to step in there and go, “Hang on guys. You’re all trying to research the same segment of the market. You’re still trying to do value proposition. You’re missing the added value that comes from someone buying across our portfolio,” whatever that might be.

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