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January 26, 2013

A Director’s Guide to Marketing Directors

by Howard Fox Chartered Marketer

Given the progressively complex and rapidly changing business environment, few would argue the importance of the marketing role in commercial organisations. Companies’ market value and business flows (particularly given the apparently inextricable move towards digital business models) are firmly anchored to market decisions, degree of market orientation, and the strength of their brands and reputation. Even during these economically tough times, international brand values continue to climb to stratospheric heights. Coca Cola, affirmed by Interbrand (a respected branding agency), as the world’s most valuable brand, tops the list at over $77 Billion. “The company excels at keeping the brand fresh while maintaining a powerful sense of nostalgia that unites generations of Coke lovers and reinforces consumers’ deep connections to the brand.” Apple, rushing up the brand value charts to a close second (129% increase in brand value to $76 billion in 2012), has transformed how the world sees technology and its brand personality defines the very character of its consumers.

The explosion of social media has irrevocably changed company / consumer relationships, effectively reversing the balance of power. Take Dave Carroll, small time musician, peeved that United Airlines had damaged his guitar and refused to compensate him. Their parsimony no doubt saved their insurers a couple of thousand dollars. It also earned their reputation a YouTube video entitled “United breaks Guitars” which has amassed twelve and half million views to date. And a book (unsurprisingly named “United Breaks Guitars – the power of one voice in the age of social media”. Dave fills his days doing corporate talks on, well, how United breaks guitars. The Daily Mail quantified the resultant losses at $180 million. Contrast this with KING III requirements to carefully manage stakeholder relationships. Of course, Greg Smith’s New York Times op-ed piece on why he resigned from Goldman Sachs knocked $2.2 billion off their market capitalisation – certainly a material consideration for the board.

In spite of this context some companies remain without a marketer in the boardroom. While it is the norm to have board finance committees, remuneration committees, ethics committees and audit committees, it is very rare to have a customer, brand or reputation committee. However given the requirements of King III and the increasingly legislative environment in which South African business is required to operate, the marketing directors role is increasingly critical.

Howard Fox's article first appeared in Director Magazine.

This article was first published in Director Magazine, the Official Journal of the Institute of Diretcors

At a leadership level, the scope of the marketing role is dependent on the marketing-orientation Vs product / production orientation of the organisation as a whole. Organisations vary dramatically in their marketing orientation due to their market conditions, industry structure, strategic intent and maturity as an organisation. Brand driven organisations are inclined to place greater emphasis on marketing with greater scope under the direction of the marketing director. In sales led organisations a separate sales director may work in conjunction with, at the same level as the marketing director. In business-to-business roles or indeed those organisations that are price takers (such as miners of commodity products) may require only a very limited marketing role.

Job Role

Senior marketing professionals at board level must balance the analytical and creative. While it is true that the marketing discipline may perhaps require a greater creative component than say, financial management, it should not be confused with “Mad Men” the American TV show depicting an ad agency in the ‘60’s. While the creative output is perhaps the most physicall                                                y evident, and is a differentiating aspect of marketers role, it in not, a senior level, the exclusive defining aspect. Marketing remains after all a management science. The Marketing Director needs to be able to hold a long-term focus on developing the brand and business positioning into the future while simultaneously retaining a short-term action orientation.

The high level functions of a Marketing Director include:

  • Input into the organisations overall strategic direction.
  • Translating the strategic direction into a specific marketing strategy and campaign.
  • Create a corporate  / stakeholder communication strategy and plan
  • Developing and protect the organisations corporate and other brand/s
  • Developing and protecting the organisation’s reputation, including risk management and mitigation structures and procedures.
  • Overseeing new business development and sales strategies.
  • Ensuring appropriate pricing and distribution structures are in place.
  • Managing the organisation’s marketing resources. Budgeting for such.
  • Identifying, appointing and managing appropriate, cost effective marketing service providers
  • Development and maintenance of market and competitor intelligence, and the maintenance of the organisational customer records and CRM systems.
  • Develop a suitable structure for the marketing department and if appropriate a matrix structure for marketers embedded within functional business units.
  • Leading the marketing professionals across the organisation.
  • Ensure legal compliance of all marketing activities.

Appointments at this level would clearly hold significant experience, ideally in the type of marketing environment the organisation operates within. Recognising that marketing is very broad by definition, experience in the FMCG field may not easily, for instance, translate to business-to-business marketing. Likewise senior marketers from within a marketing specialisation such as advertising or research may be stretched to undertake a full spectrum marketing-generalist, leadership role. A senior marketer should additionally be reasonably knowledgeable in a wide variety of allied disciplines, such as production, information technology, legal and finance given that the marketing function is expected to interface across such disciplines.

While there are a number of notable senior marketers with no formal qualification in the subject, it would be the norm to expect a Marketing Director to have a minimum of a degree specifically in marketing, communication, or an associated specialisation. As with other board level appointments a general management qualification such as an MBA adds stature, improves linkages into the business and ensures an organisation-wide outlook. A professional designation Chartered Marketer conferred by the Marketing Association and ratified by the Directorate Registration and Recognition (DRR) of the South African Qualification Authority is available to senior marketers.

Reputation Management

It takes 20 years to build a reputation, and 5 minutes to ruin it. If you think about that, you will do things differently.

Warren Buffet.

The Marketing Director is the primary custodian of an organisation’s brand and reputation. While most of his efforts are focused on building a positive reputation, the marketing director needs to ensure reputation monitoring and risk mitigation strategies and structures are in place in anticipation of future crisis.

King III points out that the economic value of a company can no longer be based solely on the balance sheet:

Principle 8.1: The board should appreciate that stakeholders’ perceptions affect a company’s reputation.

Principle 8.2: The board should delegate to management to proactively deal with stakeholders relationships.

Principle 8.5: Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence.

Principle 8.6: The brand should ensure disputes are resolved as effectively, efficiently and expeditiously as possible.

Large listed companies may retain the services of a specialist stakeholder relations firm to maintain communication with shareholders, although responsibility for such may be devolved to the Company Secretarial or Corporate Affairs teams.

Some larger brands have their brands explicitly valued by external brand agencies to ensure long-term protection and growth of this asset. While the marketing profession can’t claim unanimity with regards to brand value methodology there are recognised methods, such as ISO 10668 Monetary Brand Valuation.

Creativity and the role of ad agencies.

Creativity is used as a lever to multiply the impact of a well thought through communication campaign. You will recognise from your own experience that highly creative adverts break-through the clutter more effective than bland ones do. However, clearly a more risqué advert or communication is more likely to offend at least a portion of the target market. Thus while a creative campaign can offer significant strategic advantage, it may come with an increased risk to the organisation’s reputation. The degree of market tolerance for such communication depends on the history of the organisation with regard to past advertising (i.e. has it always tweaked the nose of convention) and the category of product and service. A fast service chicken restaurant with a long history of satirical and irreverent advertising is more likely to be forgiven than a funeral home or multinational pharmaceutical company. Critically brands should remain consistent to reduce market push back.

Marketers outsource the creative component of advertising to external agencies because it is difficult to justify the cost of retaining ‘creatives’ in house, especially given the ad hoc nature of their output; creatives prefer and work best in the fertile environment agencies offer; and because the sort of creative staff who work at ad agencies generally don’t want to work in client-type organisations.

A primer on media

Media has proliferated, fragmented, and faces significant change as consumers move from traditional media such as newspapers and magazines to more contemporary channels such social media. Some form of media is a requirement to communicate to an organsation’s target market, and is likely to be their single largest marketing expenditure. The broad categories of media are: those channels the company owns: web sites, brochures, in house publications and the like; media it buys such as advertising and sponsorships and that media exposure it “earns” – traditionally thought of as “public relations” but increasingly “content marketing” and most social media. It is the marketing directors responsibility to arbitrage between the costs and advantages of the media types available. This is done with the assistance of a media house, which offers both media strategy, as well as media buying on behalf of a large number of organisations. Earned media is likely to be facilitated through a media relations or reputation management service provider (previously known as the “PR agency”).

Staying legal

The South African business environment and in particular the marketing environment has become and continues to become increasingly legislated. The days of simple self, or industry regulation are largely coming to a close. With sanction of fines up to R10 million or jail terms up to 10 years, the risk of legal non compliance are material at board level. Clearly the prospective reputational damage of a legal case via the Consumer Commissioner, the Competition Tribunal or other bodies are also significant. While the Marketing Director may not be in a position to determine the specific legal risks of a particular market structure, marketing strategy or tactical undertaking he should certainly have sufficient knowledge and experience to know when to confer with legal council.

Relevant legislation specific to marketing issues includes:

  • Competition Act no 89 of 1998 as amended
  • Consumer Protection Act no.68 of 2008
  • Electronic Communications and Transactions Act, 2002
  • Protection of Personal Information Bill soon to be promulgated
  • Sector specific legislation such as FIAS Act no. 37 of 2002

Self-regulation clings on in the form of the Advertising Standards Authority (ASA), an independent body funded through industry contributions based on advertising spend. All members are required to abide by the rulings of the ASA. Additionally, in terms of the Electronics and Communications Act (Act No 36 OF 2005) all electronic broadcasters must adhere to the code administered by the ASA. This offers a low cost alternative to legal action to settle complaints regarding advertising in South Africa. Unfortunately for marketers it also means that advertisers are required to respond to complaints even if such a complaint is from a single individual. The ASA can sanction advertisers by prohibiting further dissemination of the communication.

This article was first published in Directorship the official journal of the Institute of Directors South Africa.

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