In a new book on the subject of educating the CEO about marketing, Marketing as Strategy: Understanding the CEO's Agenda for Driving Growth and Innovation (Harvard Business School Press, 2004), Nirmalya Kumar, Professor of Marketing at the London Business School, challenges us to become customer-focused leaders of growth that is strategic, cross-functional and profitable.

In Part 3 of this series on educating our CEOs about marketing, I summarize some of the key points in Marketing as Strategy and conclude with an excerpt of my discussion with Professor Kumar. Regardless of your level, experience or organization, you can benefit from reading this book.

Summary of Insights

Here are the major points from Professor Kumar's recommendations for marketers:

Objective

Our challenge is articulated in this short statement: “The demand from CEOs is for foresight rather than hindsight, for innovators, not tacticians, and for market strategists, not marketing planners. Marketers must learn to lead with imagination driven by consumer insight and not rely on market research for predictions. As marketers, are we ready to face these challenges? We have nothing to lose except hierarchies, national and functional boundaries, and, most of all, the four Ps.”

Structure

To elevate marketing from the tactical responsibility to sell more of our products and services to a strategic influence in the future direction of the organization, Professor Kumar suggests we replace our traditional four Ps model of product, promotion, price and place (distribution) with the Three Vs of valued customer (whom to serve?), value proposition (what to offer?) and value network (how to deliver?).

Initiatives

Professor Kumar presents us with a menu of seven initiatives from which we must choose in order to move marketing into the role of driving growth and innovation in our organizations. The seven transformational initiatives, along with some questions from the checklists provided, are as follows:

1. From market segments to strategic segments: Who are our valued customers? Which customers are unhappy with current offerings in the industry? Is the target large enough to meet our sales objectives? What is our value proposition? Does it fit the needs of customers we are trying to serve? What benefits are we delivering? Can we deliver and earn a profit?
   
   
2. From selling products to providing solutions: Do we guarantee customers outcomes and benefits instead of product performance? Have our sales people developed consulting skills and deep industry knowledge? Have we developed effective processes to allocate resources to solution projects?
   
   
3. From declining to growing distribution channels: What service outputs will the new channel provide? How will the relative importance and power of existing channels change? Which competitors will enter the new channel? What changes in channel incentives to existing members will competitors try? What new competences do we need to enter the new channel?
   
   
4. From branded bulldozers to global distribution partners: Have we identified our most valuable clients on a worldwide basis? Are there single points of contact for global customers? Have we optimized our supply chain for global efficiency? Have we harmonized pricing structures?
   
   
5. From brand acquisitions to brand rationalization: Which brands are contributing to our profits? What needs-based segments exist in each category? How much sales revenue would we risk by deleting non-core brands? What is the role of the corporate brand? How will we articulate our program to stakeholders?
   
   
6. From market-driven to market-driving: Are new ideas routinely imported from the outside? Do we tolerate failures and have processes in place to learn from failures? Do we mix people on teams to generate new ideas? Do we ensure that radical ideas do not lose resources to incremental ideas?
   
   
7. From strategic business unit marketing to corporate marketing: How does the organization rate on customer focus in processes, including new product development, order fulfillment, customer relationship management? Is the organization organized around customers? Are metrics and rewards related to impact on customers? Does the organization systematically learn about customers?

Conclusion

Professor Kumar offers these words of advice for marketers: “Marketing must prove that it is willing and ready for its leadership role in transforming the company. It must convince others of its unique capabilities, resources and skills, and its mind-set to lead—and that it has matured as a discipline to become more strategic, cross-functional and bottom-line oriented.”

Interview With Professor Nirmalya Kumar

Young: “Strategy” is the most overused and inconsistently used word in business. How do you define “strategy”?

Kumar: Strategy is what will help us achieve our vision of what we want to be about three to five years from today and is generally an articulation of whom to serve (markets, customers), what to offer (products, services, value propositions) and how to deliver them (vehicles—alliances, acquisitions, etc.—and value chain) which I encapsulate with my 3Vs model of valued customer, value proposition, and value network.

Young: You write that CEOs actually want marketing to become a strategic partner. What's your evidence of this?

Kumar: Most CEOs are very aware that marketing is a critical function. But they are frustrated that marketing people are not living up to the pressing challenges of identifying new markets, keeping prices up, and retaining customers. They don't want marketers to tell them how to sell more by cutting prices and running more promotions, because that's not what they have in mind for their company.

Young: Let's suppose there's no chief marketing officer in my company and my CEO thinks marketing is really marketing communications, used only to sell products or services. What should I do to educate my CEO of marketing's broader value?

Kumar: Then you are in trouble. Marketing is really about a way of looking at your company. The best education for him or her would be to meet other CEOs of companies that see marketing as the driver. The only way you can educate a CEO generally I find is by having them talk to other CEOs.

Young: In your book you identify seven transformational issues where marketing has a vital role in determining strategy. Which of the seven is the best place to start?

Kumar: It depends on the kind of company you are.

For example, if you're having problems selling products because the products [in your industry] have commoditized, then clearly the transformation from selling products to providing solutions becomes the critical one. Then your success depends on how you can add bundles of services to your product so that you get the value added, especially if the product can be produced by anybody at a cheap price.

Now if you are a company that has a tremendous product portfolio because you have grown from a lot of acquisitions over the past, then brand rationalization becomes very critical for you because you can support only so many products, especially against strong distribution partners.