Tuesday, August 25, 2009

Does David have to grow up?

My book, No Money Marketing, published by Tata McGraw-Hill will be in stores this month. It is mostly about upstart marketing techniques – how a David can leverage the flat world to beat the incumbent Goliaths. It is based largely on my own experience at two of India’s most successful brands – Infosys and Wipro. Both of these have experienced upwards of 30% growth every year to become $5bn IT firms competing with incumbents such as Accenture and IBM. Since we couldn’t have competed like-to-like on advertising, we used other means like analyst relations, PR, events etc to promote our brands.

People have asked me at what point a company stops being an upstart. It’s either when your growth rate slows (and you become a laggard or a niche player) or your now sizeable marketshare makes you a leader. But, and this is important, do you have to stop thinking like an upstart? Actually, yes. Because a company defending marketshare has to act differently from one that is busy grabbing growth. For example, a leader has to erect barriers to protect its turf. An upstart is usually good at tearing down barriers or finding a way around them. So I think that making the strategy transition from upstart to leader is a big inflexion point in the history of a firm, and can determine its future. How to stay hungry but play like the fat cat is an art.

And what about marketing? Does that need to change too? Can’t we just use those great frugal techniques that made us big? There’s this book by Marshall Goldsmith called “What got you here won’t get you there”. That’s about people, but it’s true for brands too. The frugal techniques are as valid as ever, but if you’re a big brand, you probably sell to more people, so you have to do more of whatever you did. And at a certain tipping point you may have to make the transition from one media to another because you need reach. For example, while PR may have been adequate from an awareness perspective on the way up, as a big brand you may have to invest in advertising to ensure adequate reach and frequency. Of course, if you can do it more frugally than your competition, that’s an entry barrier in itself.

I borrowed the cartoon from Tom Fishburne’s post on a similar topic, and thanks to @rahulnambiar for pointing me to this cool blog.

Wednesday, August 05, 2009

When does marketing get a seat on the Board?

I’ve often been asked this question. Mostly, of course, by Indian IT services marketers. We eye with envy the elevated status of our FMCG marketing brethren. Things are changing now, with most marketing heads directly reporting to the CEO (unlike the past where they reported to Sales or Finance).

Here are my views of when marketing becomes important enough to get a spot on the Board:

1. When supply outstrips demand.
When the stuff is selling itself, ie demand is greater than supply, marketing isn’t important. What is important is the supply chain and managing delivery in order to fulfill client demand. The role of sales and marketing is ensuring that clients know of your existence and collecting the orders.

2. When the original innovation that the company was founded on starts to age
Peter Drucker famously said that marketing and innovation are the only to functions of the company, with all else being costs. In this case marketing is defined as understanding what the customer wants, and innovation is fulfilling that need. Most companies are founded to fulfill a newly identified need. So for the first few years the CEO/Founder is effectively in charge of marketing (and there’s no space for any other marketer on the board!). Plus the original product/service idea is the key differentiator for the firm. It is only when the need is either outdated or satisfied to saturation that the company needs to identify fresh markets and marketing comes to the fore.

3. When there are at least 3 credible choices for customers.
As the market gets more crowded, marketing’s role shifts from just awareness and communication to differentiation and product management. That’s when it gets closer to the heart of the business.

If you look at the FMCG industry you will see that all of the above conditions hold true. What do you think of my hypothesis? More practioner views are welcome!