Saturday, 29 August 2009

I wanna be a rock star - a new model for marketing

In his post ‘Will 10% unemployment be the new full employment?’, Charles Besondy predicts that permanent marketing employees will soon be a thing of the past.

He argues:

“There is too much uncertainty in the land to confidently invest in a strong and capable marketing department. There is too much volatility in the marketing programmes budget to justify a fully staffed marketing department. Better to keep fixed labour costs to a minimum and bring in the rock star interims for a few months as needed. No long-term commitments, no health insurance concerns, just the perfect skills and knowledge applied to the opportunity or problem for a season”.

Besondy is an interim manager and we shouldn’t be surprised, therefore, to hear him take this position.

Certainly, it is the case that economic conditions are imposing long term changes on business models. The move towards the outsourcing of non-core skills, be they marketing or otherwise, continues unabated: probably because it works, but does this mean the end of the in-house marketing team is inevitable?

Besondy stops short of looking at the pros and cons of a permanent marketing team or analysing which parts of the marketing discipline should be kept in-house. Having operated on both sides of the inustry, I feel qualified to have a try.

Pro’s of a permanent marketing team
  • Dedicated to the business
  • Deep understanding of day-to-day issues and developments
  • On-hand whenever it is needed
  • Potentially cheaper in the long run if fully employed

Con’s of a permanent marketing team

  • Risk of silo thinking and loss of perspective on what is going on outside of the business
  • Risk of temporary or permanent loss of drive and focus
  • Potential to be absorbed by the minutiae at the expense of ‘the big picture’
  • Potential to be under employed
  • The substantial and inflexible cost of full time salaries, holiday pay, sick leave etc.

The case for outsourcing is certainly a strong one, but is it an open and shut case?

I have posted regularly on the difference between the marketing discipline and the marketing department. The marketing discipline has to be owned by the board: the marketing department has to look after the elements of the marketing mix that are assigned to it – more often than not, this is brand and promotion.

Besondy has his focus on the traditional marketing department and I agree with his views in this area. I have never seen any benefit in an in-house creative team and believe too that many, if not all, forms of campaign development and delivery can be delivered more effectively by external resources.

The picture becomes more blurred in the areas of strategic marketing and marketing management. To think of strategic marketing as something that can be stopped and started according to the ebbs and flows of business fortunes is dangerous. Marketing, in its broadest definition, has to be constant and this means there needs to be somebody who is able to link the strategy of the board with tactical implementations in all areas of the 8P’s. Whether this should be resourced in-house or outsourced is a question of scale and affordability.

An outsourced marketing operation that can provide strategic consultancy as well as tactical implementation is the ideal solution for a small or medium sized business: not only is it more cost effective, but the client can access a level of experience that it would take several years to build in-house. With the right provider, there is no reason why this outsourced resource shouldn’t be fully focused on the business and available on demand.

The larger business is likely to have the scale to warrant permanent resource, but it too will benefit from blending internal structures with outsourced experience. I predict the corporate of the future will have a non-executive Director of Strategy & Marketing on the board and a permanent Head of Marketing in a senior management position. The non-exec will be somebody with deep marketing experience in a range of industries, who is able to guide and advise the board on its marketing strategy. The Head of Marketing will be responsible for the delivery of the plan and management of agency relationships. Naturally, for the model to be effective, the Head of Marketing will need to see the non-exec as an ally and mentor, not a threat.

In conclusion, therefore, even if the days of the permanent marketing employee aren’t completely numbered, the nature of the roles that many of them fulfil at the present time are. Jobs for life, if they ever existed in the first place, will go and short to medium-term performance related contracts will become the norm.

Marketers should embrace the opportunity the change presents. The chance to move from business to business makes for an interesting and varied career and, moreover, it allows greater value to be delivered to the client. Through this transition, marketing as a discipline might finally gain the respect and recognition it deserves.

Whether we should swagger in like rock stars is a different question!

Saturday, 15 August 2009

The future of print advertising

I have often complained about the dearth of business news in our area. Our local weekly paper, the Courier, can only manage a double page spread and the resources of one freelance journalist. The Argus, which is daily, has business news once a week and tends to be centred on Brighton. Across the border in Kent, The weekly Kent Messenger produces an 8-page supplement once a month.

In magazine form, we have South East Business, which is increasingly beholden to thinly disguised advertorials. Kent Director is run out of Cambridge, Sussex Business Times has disappeared and I haven’t seen a copy of Business First for several months either.

The issue, of course, is advertising, or rather, a lack of it. With advertising revenues having plummeted and so much content being available for free on-line, there is no money to pay the journalists. This is not a healthy situation for any of us. We need quality journalism in a democratic society, whether it is reporting on local news or international conflicts.

The dilemma for media owners is well documented, and, whatever the answer to their conundrum is, it is hard to see how it lies in advertising. A recent survey showed that most marketers now find print advertising the least effective form of promotion when measured in ROI terms.

This is hardly surprising. The Internet in general and Twitter in particular has allowed us all to become our own editors. We can pick out the content we want from a vast array of sources and easily filter out anything we don’t want – most commonly, the advertising. There is no shortage of readers; it is just that they have gone to other sources, such as blogs, e-newsletters and social media.

I had these thoughts in mind when The Courier came to see me this week to talk about its new approach to business news. The paper, like the Kent Messenger before it, has decided to consolidate the business news into a monthly 8-page supplement. I like the idea. In fact, I’d like to see it go further and set up an on-line forum to allow two-way dialogue with the business community on business news.

Naturally, the representative didn’t come to see me for my insight: it was to sell advertising and what struck me this time was, rather than give me the usual spiel about stellar circulations and perfectly aligned audience demographics, the approach was to say “if local businesses want a business paper, they will have to support it with advertising”.

I don’t know if I find this resigned or refreshingly honest. Either way, it does raise the question about how media owners will be selling their advertising in future: as a means of raising awareness of products and services, or as a form of corporate social responsibility?

But isn’t this the way that newspapers started in the first place – as a way for business people to promote their political persuasion and points of view? Perhaps it’s true. Everything does come full circle in the end.

What do you think? Do businesses have a responsibility to support their local media with advertising?

Sunday, 2 August 2009

Putting the star and bucks back in Starbucks - Starbucks trial brand strategy

Coffee is a regular topic of conversation in The Marketing Eye office. Normally it’s an argument about whose turn it is to make the next one, but now, for a short time at least, we can claim a professional interest.

Recent reports have revealed that Starbucks is planning to open 3 unbranded coffee shops in its home town of Seattle. We are told that each of the new shops will be unique and tailored to the community in which it is situated. One of the test outlets will feature poetry readings and live music and there will be alcohol on offer and free Wi-Fi. The address of the cafe will be used in the branding, for example one is to be called 15th Avenue Coffee and Tea. Most importantly, there will be no Starbucks branding.

Lambasted by the conspiracy theorists as stealth marketing, the Starbucks experiment is a fascinating case-study in brand life-cycles and brand strategy.

Globally ubiquitous, the Starbucks brand is a phenomenon. Since expanding out of Seattle in the 1990’s, it has re-defined the coffee market and become synonymous with the boom years and globalisation. The signs are, however, that Starbucks might now have reached its peak. Last year’s results showed a heavy decline on previous years and in April, Starbucks reported a further 77% fall in quarterly profits.

The reverse can’t be blamed entirely on the recession as the evidence is that, even with less money in our pockets, there is still plenty of coffee being drunk. The Starbucks star has definitely lost its sparkle. We shouldn’t be surprised, therefore, that returning CEO Howard Schultz is looking for new ways to invigorate Starbucks' performance and return it to growth. The brand has got too big too quickly and is in need of re-invention.

Tailoring a product to the needs and wants of the market goes back to the basic principles of good marketing. The ‘one-size-fits-all’ Starbucks’ model needs modifying and evolving. People have grown tired of the homogeneous outlet and its mass produced product. As consumers, we know that a far more satisfying experience is found in the local coffee shop where a bespoke and lovingly produced beverage is mixed with a genuine appreciation of our custom. Schultz recognizes that Starbucks must present itself as a neighbourhood coffee shop instead of the corporate conglomerate that it has become.

Management Today said: “The move is interesting because it’s essentially a reaction against the kind of bland, ubiquitous corporatism with which Starbucks has become synonymous to many people. It’s basically admitting that some customers are now put off by well-known popular brands and are more inclined to favour smaller local ones instead”.

Opinion on Twitter is divided:
@karentoms said: “How cruel, I'd be gutted to find I'd been inadvertently lulled into Starbucks”, whereas, @
bellakatz posted:” Interesting idea. I kinda like it”. @danielmarino summed up most people’s views with his simple: “questionable, but very interesting” comment.

The chief concern seems to be about honesty. @jeremyrandall said: “Unbranded shops feel like subterfuge. How about unique cafes/names, but keep a small Starbucks logo, so it doesn't seem like trickery?”

Starbucks will do well to heed this tweet of wisdom. Adopting and implementing a local marketing strategy under the umbrella brand would be seen as a much more open approach.

As we have said in previous posts, there is no reason why a business shouldn’t operate two or more brands and even allow the brands to compete against each other.

A different brand for a different market is not a new concept: Toyota does it with Lexus: Donna Karen does it with DKNY and there are many more examples. The important point is that there is something different in the customer experience and the customer promise. The early evidence is that this is the intention with the new Starbucks brand, but the strategy will unfurl if it can’t be maintained. The organisation will undoubtedly want to leverage the efficiencies of its larger operation, for example in purchasing. If that also extends to recruitment and training, one wonders how different the customer experience can really be. Same coffee, same staff, same processes - will we essentially be left with only a change in decor?

To work, the change must go deep into the core values. As The Community Room posted on its blog: “Starbucks needs to whole heartedly handover its stores to the community.... How many people would love to host something in these pieces of real estate? Let customers run everything and change the emphasis, so it’s honestly about the local community”.

Starbucks will be faced with some fascinating dilemmas if the new stores out-perform the branded ones: What is the future of the corporate brand? How does it achieve economies of scale in a brand with unlimited physical iterations? How does it become welcomed and not isolated by the communities it wants to be part of?

The authors of brand and marketing text books around the world wait with bated breath.