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The Best and the Rest
For high-performance businesses, creating a marketing capability that drives real business performance requires an effort that is complex, pervasive and sustained. An excerpt from Outlook, an Accenture publication.
Posted Jan 18, 2005
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Great marketing is no accident. For high-performance businesses, creating a marketing capability that drives real business performance requires an effort that is complex, pervasive and sustained.

Marketing is one of the business functions that have been the focus of Accenture's research to date on the link between capabilities mastery and high performance. This research has shown a huge and growing gap between companies in their approaches to marketing. And this gap increasingly corresponds to similar variations in their financial performance. We call those on the leading edge--the top performers with their dramatically different perspectives and capabilities--capital-M marketers.

Take Best Buy Co., the electronics retailer. It shifted its strategic focus from product category dominance to target customer segment dominance. To execute the new strategy, it acquired a number of new capabilities. The result? A significant margin jump and market-share increase.

Best Buy can achieve such changes in part because it has worked for years to apply a fact-based discipline to all aspects of its business and marketing. The company does extensive market research to understand customer motivations, behaviors, and drivers of customer satisfaction. The company also uses marketing science to determine the marketing mix, offerings and optimal inventory levels, ensuring a low cost structure while maintaining high availability and high levels of customer satisfaction.

Hard to Replicate
Marketing success like that enjoyed by Best Buy requires a meticulous process, with clear intentions and a long, concerted effort, resulting in an advantage that is not easily replicated. While many factors cause companies to lag, two of the most pervasive have been systematic underinvestment in building a marketing capability and 20 years of reducing headcount in marketing departments.

More than a century ago, American retailing pioneer John Wanamaker famously observed that half of his advertising dollars were wasted--but he just didn't know which half. Today, little-m marketers regard his comment as incontrovertible. Capital-M competitors do not. They track global advertising spending then measure its return and reallocate their dollars frequently for much greater marketing productivity. Little-m marketers tend not to know how far behind they are and scoff that such techniques are not even possible.

Marketers at Risk
A number of current trends are putting little-m marketers at even greater risk. For example, rapidly improving marketing processes, techniques and technologies are giving the businesses that embrace them significant advantages in marketing productivity. Likewise, major shifts in market demographics and needs are also providing advantages to companies with the advanced capabilities needed to understand and respond to these changes.

Our research shows that capital-M marketers recognize these trends and are beginning to tackle them. While these companies have begun to respond aggressively, many others are just awakening to the trends' existence.

Marketing Mastery
To achieve marketing mastery, companies must develop capabilities that address these trends and simultaneously drive real business performance. Early results of Accenture's research indicate that the following three capabilities have direct impact on value creation and so define capital-M marketing processes.

Develop and deliver the branded experience: This means delivering proactive management of each customer interaction to produce a consistently satisfying, consistently profitable set of rewarding experiences.

Create and shape demand: The best marketers not only serve the demand that comes to them but actively craft that demand, growing it in the process.

Translate foresight and insight into marketing productivity: High-performance businesses find many ways to make themselves more productive through customer research and optimization techniques. By using a continuous cycle of research, insight and learning, companies can increase their cross-sell ratios and customer value.

There seems to be no shortage of companies with average marketing capabilities, but few of them are high performers in their industries. Companies that have used marketing for significant impact on their business performance have done so with capabilities so pioneering, and so broadly applied, that competitors frequently cannot even believe those capabilities exist. Joining the ranks of capital-M marketers requires expertise, world-class technology and excellent execution. But most of all, it requires seeing the yawning gap between the best and the rest, and moving quickly to secure a spot among the enlightened.

 


John G. Freeland is the managing partner of the Accenture Customer Relationship Management service line, responsible for the company's CRM business worldwide. In his 25 years of experience at Accenture,  Freeland has advised clients in many industries, particularly in financial services, on how to create more profitable customer relationships and superior brand value. Freeland also serves on the Accenture Executive Committee. He is based in New York.

Paul F. Nunes is an executive research fellow at the Accenture Institute for High Performance Business in Wellesley, Massachusetts, where he directs and conducts studies of business and marketing strategy. In addition to his frequent contributions to Outlook, his work has appeared regularly in Harvard Business Review as well as in numerous other publications and newspapers. His most recent book is Mass Affluence: Seven New Rules of Marketing to Today's Consumers (Harvard Business School Press, 2004).


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