Marketing has never been more complex. Advances in technology have revolutionized the discipline, while issues such as the COVID-19 pandemic, the Black Lives Matter movement and the climate crisis have raised expectations for marketers’ social performance.
It’s no wonder that leaders are uncertain about marketing’s role and performance. Our survey of marketing managers found that just 20% of those in traditional corporations are satisfied with the effectiveness of their departments; the percentage is only marginally higher among those in digital-native companies.
We spent two years studying the change in marketing organizations and conducting interviews with senior marketing leaders to understand the problem and create a practical framework that companies could use to compete in this new environment. We have identified six broad areas of value that a marketing function can contribute to and 72 marketing capabilities that are needed to create that value. This work has resulted in the analytic process presented here.
1. DEFINING MARKETING’S VALUE PROPOSITION
Without a value-based goal for marketing and a strategy for determining the capabilities needed to achieve it, new technologies and processes are unlikely to deliver improvements in performance. Our framework provides both a goal and a strategy. It divides the six kinds of value created into two categories: value for customers and value for the company. Understanding this taxonomy is the first step in articulating your marketing value proposition.
Creating Customer Value In the effort to attract and retain customers, a marketing team can create value in three areas: exchange, experience and engagement.
— EXCHANGE VALUE: Marketers create this kind of value when they match their offerings to customer needs. That requires recognizing when customers are looking for a particular product, understanding what problem they are trying to solve and figuring out the offerings that suit them best. It calls for sharp conversion, personalization and prediction capabilities.
— EXPERIENCE VALUE: Marketers focused on creating this kind of value work to eliminate hassles and enhance satisfaction across the customer journey. That requires a focus on improving journey orchestration, value augmentation and offering design through constant innovation.
Read also: How to conduct a growth-focused marketing impact audit
— ENGAGEMENT VALUE: This type of value enhances the “meaning” of a company’s offering — how customers perceive the brand and their relationship with it. Companies nurture a sense of community among users and go beyond a product’s traditional functional benefits to offer societal benefits. Creating engagement value requires marketers to build purpose and communities, optimize connections and design stories to strengthen customer relationships.
Creating Company Value The marketing function can also contribute to growth by generating internal value for a company in three areas: strategic, operational and knowledge.
— STRATEGIC VALUE: Marketing teams often spot ways to expand current offerings and guide the development of new business models. To do this they need the ability to discover growth, build platforms and leverage assets. Traditionally teams focused to a large extent on identifying opportunities for line extensions within a given product category. Today technology allows marketers to help companies enter new categories and even industries. Marketing teams can also help companies capture new revenue streams from existing assets or practices — for example, by monetizing marketing data and activities.
— OPERATIONAL VALUE: Many marketing leaders struggle with the proliferation of independent and specialized teams engaged in an expanding array of activities across the organization. Their work can be hard to integrate. Marketing organizations can create operational value for a company by aligning disparate teams around a shared growth agenda and marketing approach and increasing their speed, agility and collaboration. The key here is the ability to improve talent management, enhance organizational links, and strengthen execution methods and technology.
— KNOWLEDGE VALUE: In its role representing the “voice of the customer,” the marketing function can create knowledge value, principally through the astute use of new technologies. For example, artificial intelligence-powered data analytics systems can increasingly tease out the causal relationship between marketing investments and business outcomes, improving marketing efficiency. The success of such initiatives depends on enhancing data creation and management, leveraging market and customer intelligence, and advancing marketing analytics.
2. DETERMINE YOUR MARKETING VALUE PROPOSITION
With a clear understanding of these six broad types of value and the capabilities needed to deliver them, leaders can gauge the importance of each to future growth. That analysis will yield the function’s value proposition — its statement of purpose.
Using our framework, you can rate the importance to growth of each of the capabilities underpinning the six value areas. You can ask, Within exchange value, how important to growth on a 1-to-10 scale will trend forecasting be over the next couple of years? Product personalization? Marketing automation?
During this exercise it is important to be clear about what’s feasible. Organizations should make careful choices about what they will focus on given their growth goals, industry conditions and other external factors.
3. CREATE YOUR CHANGE STRATEGY
Once marketing’s areas of strength and weakness have been identified, it will be clearer which capabilities to develop, which to sustain at their current level and which to scale down.
Consider how the chief marketing officer of a transportation technology firm we worked with applied the framework. She formed a marketing transformation team that, in a series of work sessions, rated the importance to company growth of capabilities and aligned around a value proposition that focused on increasing exchange, engagement, operational and knowledge value.
We then worked with the team to evaluate the current level of each capability and the level needed to help deliver on the new value proposition. Then the leaders made specific choices about their organizational priorities for the following year, including prediction and conversion management, storytelling and content personalization, market and customer intelligence, data science and analytics, and marketing technology.
This new focus led to the formation of the company’s first marketing operations and capability functions, the formalization of a branding team, and the integration of its product and performance marketing activities into the team focused on demand generation.
Just as important, the work created a clarity of purpose. As the CMO put it, “It helped us get aligned within our team and with the executive team on what we needed to be best in the world at, what we needed to be good at, and what we could assign to others.”
Marketing leaders often struggle to carry out changes in ways that advance marketing’s operating effectiveness. The framework presented here brings clarity to the process and guides the design of a marketing organization for our time — one built as a coalition to create value and drive company growth.
Omar Rodríguez-vilá is an associate professor in the practice of marketing at Emory University’s Goizueta Business School. Sundar Bharadwaj is the Coca-cola Company chair of marketing at the University of Georgia’s Terry College of Business. Neil A. Morgan is the Petsmart distinguished professor of marketing chair at Indiana University’s Kelley School of Business. Shubu Mitra is the chief operating officer of MarCaps, a marketing capability solutions provider. All four are founders of Marcaps.
