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‘Everyone’s trying to drive spend up for their functional activity’

‘Everyone’s trying to drive spend up for their functional activity’
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First Published: Wed, Oct 31 2007. 01 16 AM IST

Don Schultz:Professor  and author
Don Schultz:Professor and author
Updated: Wed, Oct 31 2007. 01 16 AM IST
Mumbai: K nown as the father of integrated marketing communications, Don Schultz is world renowned for his work and research on IMC. He is professor emeritus in service at Northwestern University’s Medill School. He is also president of Agora Inc., a global marketing communication consulting firm, and executive director, Brand Finance Inc., a leading global brand valuation consultancy.
Schultz is author and co-author of many books on marketing including Brand Babble: Sense and Nonsense About Brands and Branding (2004). In 1998, Sales and Marketing Management magazine named him one of the 80 most influential people in sales and marketing. Before his academic career, he worked in advertising for about 15 years. He speaks to Mint about issues before IMC today. Edited excerpts:
Has the definition of integrated marketing communications (IMC) been changing through the years?
Yes. To understand the changes, however, you have to go back to where IMC started in the late 1980s and early 1990s. That was before the commercial applications of the Internet and World Wide Web became available. At that time, there were only four major marketing and media forms: advertising, PR, direct marketing and sales promotion. As a result, it was fairly easy to manage those four marketing tools. The primary task of the marketing and communication people was to align those four activities and to try to get those four functional groups to talk to each other internally.
Don Schultz:Professor and author
The introduction of all the digital communication systems through the Internet in the early 1990s, raised all kinds of new choices and alternatives for both the marketer and the consumer. The addition to all these new communication systems, i.e., social networks, mobile, websites, etc., have created major organizational challenges. Today, organizations are even more challenged as they try to get all their marketing and communications activities aligned against increasingly factionalized and splintering groups customers.
Today, I focus much more on internal and external alignment and not as much on integration. The reason is that most organizations are based on functional organizational structures, all of which are silo’ed or separated from each other. Hence, you have a marketing group, an HR group, a finance group, etc., none of whom work together very well nor are they encouraged to cooperate by senior management. Each is given specific activities and responsibilities, so they don’t worry about others in the organization and since they are internally focused, they don’t concern themselves with customers either.
In the past three to four years, I’ve focused on developing horizontal systems inside organizations that marketing people can use to bring the organization together—that’s what I mean by alignment.
We first started doing this with IBM in the mid-1990s, getting their managers to focus on customers, rather than products. Today, Tesco Plc. (largest British retailer), FedEx Corp., United Parcel Service Inc., all base their organizational structures on customers. That enables them to get their functional silos aligned to serve customers, an external view, rather than simply managing the things they make and want to see, an internal view.
Clearly, the centre of the entire system is the customer. Therefore, the entire focus of the firm is on how the organization thinks about what they do in marketing, not just what the marketing department does. The goal is to get everyone in the organization thinking about how the company goes to market, not just what a small group of people with a marketing title do. So, our focus is how do we align the organization, and then internally align these independent groups which, if not properly directed, end up doing their own thing to the detriment of the company as a whole.
Cemex SAB de CV, the third largest cement company in the world, is headquartered in Monterrey, Mexico. They are the absolute masters of internal operations integration. They know how to bring all the operational activities together, align them and generate huge value from those integration processes. They are still, however, trying to integrate their marketing and sales operations. We worked with them on how they might do that. We told them, first, identify who their audiences and customer groups are. They found eight basic customer groups that influence their business. We’ve set up audience leaders who are responsible for activities focused on a customer group. That KAL (key audience leader) is responsible for directing the entire firm on focusing on that customer group.
For example, in the financial communications space, investor relations people are primarily responsible for leading the communication. Operations people are responsible for regulators, environmental activities and the like. Corporate social responsibility and employees generally fall under HR, etc. Audience leaders bring all the internal functions together to focus on each specific group.
What are the challenges before practitioners of IMC?
Internally, organizations have created these functional silos I talked about before. Unfortunately, externally, the same thing has happened. For example, in the broad area of marketing and marketing communication, we have groups representing advertising, digital, direct marketing and PR. They all bring a specialized and functional view.
The problem is the way they are compensated on billings, on how much of their clients’ budget they can get. As a result, everyone’s trying to drive overall spend up for their functional activity. Hence, they can’t work together. This is the problem with agencies. Managers are still not addressing these issues. Compensation remains a major problem.
For example, assume I am a marketing organization with a communication problem. I want to reach a certain audience. So, I walk into an ad agency. Suddenly, the problem becomes an ad problem. I walk down the street with the same problem and go into a PR agency. Suddenly, my problem becomes a PR problem, not an advertising problem. The same is true with a direct marketing agency. Thus, the problem is seen through the eyes of what the agency does, not what is important or relevant to the customer. The seeming focus of any functional group is how to use the tools we have, not to solve the customer’s problem.
Egos are an issue in IMC (everyone would like to say that the idea started with them and then evolved into a 360 degree solution). In many meetings, egos in the room can be cut with a knife, it’s that pervasive. Everyone believes that their particular capability is pivotal for any solution since that’s what they know how to do.
What is the role of media specialists?
This is what puts pressure back on the marketing and communication. You get into the argument: which is more important, media form or creative? Historically, in communication planning, we have always started with the creative message, since we’ve always assumed the media organization would aggregate an audience and make it available to us. Then, as a marketer or advertiser or media agency, all I have to do is select the right audience the medium has aggregated and place my commercial in that media form.
Now the problem is, when the marketplace becomes really fractionalized with mobile, digital, social networks, the Web, Internet and so on, there’s no one who is really aggregating audiences, or the audiences I want to reach. And the system has changed as well. In some cases, I’m trying to get people to access the information they need from resources I provide rather than me sending them information.
That creates all kinds of internal problems—how do you get the team to think about that and how does the media planning agency go about that. My basic premise in the last several years is that the delivery system or the media is more important than the message. If I can’t reach the people I want to reach, then it makes no difference what I have to say. The problem with most organizations is that they always start with the content, the message, value proposition...
You’ve said that media planning should switch to a consumer-media consumption model and not a marketer distribution model.
The important thing about media and media distribution is: it doesn’t make any difference how many messages you send out, but how many customers you receive. So, the key ingredient is consumption, not distribution. Right now, we’re charging for message distribution because we don’t really know how many of our messages have been or are being consumed or by whom. I can buy thousands of ads, but if no one’s watching them it is a waste of my resources.
Which advertisers have built brands successfully using IMC?
The best job on IMC comes from people such as Starbucks. They’ve not spent much on media advertising but focused on providing a very good experience for the customer in a Starbucks store. Customers are surrounded by positive experiences in a Starbucks location.
Richard Branson has created this aura of the Virgin brand. He has been able to put Virgin on almost everything—record stores, airlines, trains, and the consumers seems to accept this. In India, I saw this with Kingfisher; in the West if I said I was going to put the name of a beer on an airline, people would laugh at me. But, in India, the Kingfisher brand has an aura of success and innovation. I suspect Kingfisher could take that name and put it on any number of other products.
In my view, Tesco is the best marketing organization in the world. They know everything they need to know about their customers; they have a dialogue going with customers, customers share information since they know they will get something in return. Everything they do is driven by customer data, from where they put stores to what products they put in stores.
What’s the big theme in IMC?
Over the past years, we’ve ignored our employees and support systems. We’ve ignored things such as customer service and the employees’ role in supporting and building a brand. People have much more impact from the experiences they have (with a brand) than from its marketing communications. As a bank, I can spend as much money as I want on ad messages about fast, friendly service, but if I find the service slow and surly it is all wasted. So, focusing on internal or employee branding is critical for the future.
IMC is a much broader concept now. It’s about how do we bring these internal and external systems together and how all can support the promises that an organization makes.
Shape of IMC in India and China?
What’s dramatically different about India is the whole idea of a family-owned business which can take the long-term view versus the short-term view that publicly held or SOEs must take. Family orientation in family-owned companies permits them to invest in things without having to reassure investors every 30 minutes and to see if things are working well.
The real interesting innovative approach will come from India and such companies as Tata, Mahindra and Mahindra, etc. I think that will be true, even if it takes longer to do.
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First Published: Wed, Oct 31 2007. 01 16 AM IST