Friday, April 17, 2009

Why do companies need a Chief Marketing Officer?


As the business landscape evolves, marketing also evolves into an organization wide strategic discipline. Given marketer's knowledge of the customers, it is imperative that the CEO and the corporate board have a representative of the customer to continually educate them. Additionally, companies need a strategic CMO to benefit from:


• Aligning marketing with the corporate business strategy: Newer technology, powerful channel partners, and empowered customers have made the competition highly intense and marketing a very involved and strategic discipline. Marketing can no longer be confined to the 4P framework. Marketers, with their in-depth knowledge about markets and customers, should act as a major resource for strategy formulation. In all issues of corporate strategy—what markets to compete in, what segments to target, what entry mode and strategy to adopt, which partners to strategically ally with—marketing offers substantial information. In order to convey these holistic perspectives, it is imperative that in the corporate boardroom, marketing is represented by the CMO, who can speak to the directors and the CEO in their language. A classic example is of the iPhone from Apple. Given the tremendously successful iPod and iMac, Apple could have become complacent. But the marketing acumen of the executives recognized the need to constantly excite the customers. Further, they built their growth strategies on satisfying the unmet needs of the customers. Marketing played a crucial role in guiding Apple's corporate strategy.



• Connecting the corporate boardroom with the customer: As Peter Drucker said, the only two functions of any organization are innovation and marketing. Irrespective of how innovative a company is, how committed the employees are, and competent the top management is, unless the company connects with the customer, success will be elusive. The top management should constantly evaluate their strategic decisions in the context of customer feedback—what do the customers value and how can the customers help the company in co-creating value. CMO plays a crucial role in constantly updating the boardroom and the CEO about latest customer preference as well as how well the corporate resources are aligned to meet those evolving customer needs. Companies such as Levis Strauss, Sony, Toyota, Nike and Singapore Airlines are some of the pioneering companies that manage to constantly feel the pulse of their customers. As such, the marketing takes a central role in guiding the corporate strategy by having the top management team and the CEO regularly updated about customers and markets.



• Creating a customer-centric organization: Given the innumerable choices that customers have, ensuring long-term customer loyalty and sustainable competitive advantage becomes highly challenging. The difference between the successful companies that achieve those objectives and those who fail is the corporate orientation. Customer oriented companies design and operate every aspect of the company with the customer in mind. To build a customer-centric organization requires a highly concerted effort of all functions within a company along with every employee becoming a customer champion. These issues deal with organizational culture, organizational structure and corporate policies. The CMO can influence the boardroom and the CEO to implement measures that would facilitate building a customer- centric organization. Banyan Tree Hotels and Resorts is a classic example that showcases such a customer-centric philosophy. The founder has managed to instil a culture that allows constant interaction between marketing and other functions within the company. Such an emphasis has resulted in world-class resorts that always manage to delight the customers.From this discussion, it is evident that CMOs are strategic requirements of any corporate boardroom. But in spite of such a signifi cant role played by the CMO, companies have not completely embraced the concept of a CMO. The next section discusses some of the main challenges faced by CMOs, which make them vulnerable to boardroom dislike.

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