Now P&G Reorganizes … Back to the 1950s

Several years ago we noted that the 1950s definition of Marketing was mostly in alignment with how we see Marketing; and that what has happened over the intervening years has in fact diminished the role of Marketing to one of marketing communications … mostly.

Proctor and Gamble (P&G) announced a return to a 1950s Brand Management structure and the elimination of the “marketing” titles. They are not eliminating Marketing, just the marketing titles. If one looks carefully at the responsibilities of the “new” Brand Management function, one can easily see a direct parallel to how they were organized in the 1950s.

To us it is a good sign that major companies are moving back to a true Marketing function (no matter what they call it). Marketing is the source of competitive advantage today.

Mitch

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Disruptive Innovation From Microsoft

microsoftlogoMicrosoft recently announced the biggest restructuring in their history (the metric is number of people laid off in this case). 18,000 people are going to lose their jobs as part of the Nokia merger. However, to me that was not really the most shocking news, but then I don’t work there and no one I know is part of the 18,000 either.

Microsoft’s new CEO, Satya Nadella, made the statement that Microsoft was now going to focus on breakthrough innovations? Really? That would be a culture shift of major proportion from my vantage point.

Breakthrough innovations, by definition, reset the industry standard. When has Microsoft done that? One could argue that Windows did that, but a windows based operating system was not by any means a breakthrough when Microsoft introduced it, and given their dominate market share, they are the standard. So, for Mr. Nadella to state the Microsoft was going to focus on breakthrough innovation is a shock to me.

Maybe he can make that happen. Personally I doubt it. What do you think?

Mitch

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We Dropped You From The List

Anti_monopolyThat’s what they told my wife the other day after she waited all day long for AT&T to come out and fix a telephone problem we’re having. This despite having called them several times during the day to verify they were coming. Not only did they not tell her they had taken this action by calling to let her know, when she called to verify they were in fact still coming, they also advised that they were too busy to come back on her next scheduled day off.

Only a pseudo-monopoly can run this way and survive. In reality AT&T is not really a monopoly anymore given the various phone options that exist, but Comcast is really not much better, and the purpose of the phone line is simply to not be dependent totally on a cell phone or Internet in case of a disaster.

I’m unsure what it will take (maybe there’s nothing) to get AT&T’s attention. We recently dropped them completely at work even though their replacement has some technical problems, we just could not take their customer service anymore.

Fed Ex appears to be going the same way. We’ve noticed mediocre to bad customer service from them over the last two years, regularly. Something I would not have expected other than on rare occasion. Recently, after they failed to deliver a package within the timeframe expected I stopped at a Fed Ex Office to pick up the replacement handouts, whereupon the store manager told me she has the same problem with Fed Ex customer service and has gone off on them herself when trying to help a store customer.

Perhaps these “too big to fail” companies will.

Have you seen similar?

Mitch

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The CEO is the CMO

Back in January I posted briefly on the fact that the CEO is the defacto CMO in companies that do not have one. In truth, many CMOs are only responsible for the “communications” aspect of Marketing, and in those companies the CEO is still the true CMO, as the rest of Marketing’s responsibilities must be overseen at a high level.

Now, Ad Age is positing the notion that the CEO should also be involved directly with the “communications” responsibility given to the so-called CMO. Their argument is now that “marketing communications” is really a two-way street (it always was, just most of the traffic went in only one direction), the CEO needs to be on top of what is going on.

Given our position that Marketing (the alignment of the capabilities of your company with the current and future needs of your customers) is the source of competitive advantage, we describe the CMO in much broader terms than many. Whether that role is filled by the CEO or a true CMO depends, but somebody great better be in that role.

Mitch

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The Real Reason Sony Lost It’s Mojo

sonylogoA recent article in Business Week, “Sony Bets It Can Find The Next Big Thing,” discusses Sony’s poor results (six annual losses in seven years) and how they are still spending close to $5B in R&D to find the product(s) to improve their performance.

I commend them for their R&D efforts and it alone will not save them. The root cause problem is disclosed in the article. If you read Akio Morita’s autobiography, Made In Japan: Akio Morita and Sony, you will quickly discover that Mr. Morita believed that spending time with customers helped him uncover the “next big things.” As readers will recognize, this is in alignment with my beliefs about where CEOs should spend their time. (For more on this topic check the category link Spending Time with Customers).

Unfortunately, since Morita’s passing subsequent Sony CEOs have not understood the power of this approach. In fact the article notes: “CSL [their R&D center] has become an increasingly popular destination  for executives seeking ideas, including Sony Chief Executive Officer Kazuo Hirai…”

Spend less time at CSL and more time with customers if you want to turn Sony around. And if you want to keep your company on the forefront, spend more time with customers.

Do you see it differently?

Mitch

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Will This Reset Work Faster

jcpennylogo2014J.C. Penney has decided upon a new strategy … again. I commend them for at least realizing that returning to their failed strategy was not viable. And, they have survived long enough to try one more thing. That was not 100% clear to me as I noted previously.

What is their new strategy? Latina focus. This quote sums things up: “Our growth depends on catering to the Latina,” said Lyris Leos, director-multicultural marketing at J.C. Penney. Until now, “we have never overtly stated and assertively made the claim that the Latina is our brand muse.” (I’m also sure Ms. Leos has to be excited about this change in focus and what it may do for her career, assuming it is successful.)

The challenge is that Hispanics only account for about 9% of their customers, though a bit more than that in sales. Will a focus attracting Hispanics cause some portion of the other 81% of their customer-base to feel the store is no longer for them, which is what happened with Ron Johnson’s strategy? They lost existing customers at a faster rate than they attracted new ones, which is not an unexpected result. If it happens again, what will the Board do this time?

We’ll see.

Mitch

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The Product Return Guarantee

knob_creekBack in the early 1990s when I worked with Enzymatic Therapy, we hit on the idea of offering a money back guarantee if people weren’t happy with the results they got from Enzymatic’s products. The idea was to get people to use a full bottle to give it a fair trial and then, if they felt it didn’t work for them, they could return the empty bottle for a full refund, either from the store or from the company.

If they took it back to the store they got a full refund, and Enzymatic refunded full retail to the retailer so they did not lose the sale. Further, the customer was back in their store so they could look for other ways to help them. I believe the efficacy of Enzymatic’s products and this innovative guarantee helped propel them to a leadership position in the industry.

Today, many companies offer the so-called full-bottle guarantee. I continue to believe it’s an effective way to induce trial and make sure the customer gives the product a reasonable amount of time to produce results.

I recently ran across what I believe is a terrific and novel spin on this guarantee provided by Knob Creek. Watch this short commercial yourself and see if you don’t get a kick out of their spin.

Mitch

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