Download Building a Powerful Marketing Engine

www.execblueprints.com
ExecBlueprints
™
in partnership with Aspatore Books
Action Points
I. Goal-Oriented Marketing
Marketing should take a leadership
position in taking responsibility for the
profit and loss of the company.
II. The Bottom Line
Have both a short-term and a long-term
definition of profitability. Ensure that
everything pays back in acceptable
terms.
III. Must-Haves for Profitable
Marketing
Profitable marketing demands a compelling idea, customer connection,
and benchmarks.
IV. The Golden Rules for
Understanding the Market
Understand the entire product fit.
Listen to your customers. Make research
a priority.
V. Essential Take-Aways
A marketing executive should always
consider value not just in absolute terms
or relative terms, but also in terms of
how their strategies drove results or
not. Profitable marketing begins with
understanding the customer, the product, and the company.
Contents
About the Authors . . . . . . . . . . . . . . . . . . . . p.2
John Partilla . . . . . . . . . . . . . . . . . . . . . . . . . p.3
Mark Killen . . . . . . . . . . . . . . . . . . . . . . . . . . p.5
Holly Heckathorne . . . . . . . . . . . . . . . . . . . . p.8
Alan Kerzner. . . . . . . . . . . . . . . . . . . . . . . . p.10
Ideas to Build Upon & Action Points . . . p.14
The president of Time Warner Global Marketing and the
marketing leaders of American Century Investments,
Advanta Bank Corp., and Hartz Mountain on:
Building a Powerful
Marketing Engine
John Partilla
President, Time Warner Global Marketing
Mark Killen
Senior Vice President, Corporate and Product Marketing
American Century Investments Inc.
Holly Heckathorne
Vice President, Rewards Marketing, Advanta Bank Corp.
Alan Kerzner
Corporate Vice President, Marketing, Hartz Mountain
A
profitable marketing engine comes from integrating your marketing department with the other key competencies of the company. If marketing is respected as a key function of the
business, the business can then expect it to contribute to the bottom
line just as other departments do. The best way to spend marketing
dollars is the way that translates most effectively into generating revenues and market share gains, both in the short term and in the long
term. It is also important to give marketing specific goals, tied to
the business metrics of the company. If the department knows what
it is trying to accomplish, it will be more likely to achieve the financial metrics set for it. ■
Copyright 2005 Books24x7®. All rights reserved. Reproduction in whole or part is prohibited without the prior written permission of the publisher. This ExecBlueprints™ document was published as part of a subscription based service. ExecBlueprints,
a Referenceware® collection from Books24x7, provides concise, easy to absorb, practical information to help organizations address pressing strategic issues. For more information about ExecBlueprints please visit www.execblueprints.com.
About the Authors
John Partilla
President, Time Warner Global Marketing
J
ohn Partilla was named president of
Time Warner global marketing in
June of 2004. He holds the additional
title of senior vice president of Time
Warner. Reporting to Don Logan, chairman of Time Warner’s media and communications group, Mr. Partilla leads
global marketing in its mission to work
with major advertisers and help drive the
growth of advertising and marketing revenue across all of Time Warner’s businesses.
Prior to this, Mr. Partilla was founder
and chief executive officer of Brand Buzz,
a $100 million billing creative solutions
agency within Y&R Inc., launched in January of 2000. He carried the additional
title of executive vice president and
global client leader of the Sony Electronics
account.
Prior to leading Brand Buzz and Sony,
Mr. Partilla led and coordinated Y&R’s
business development efforts globally. In
2002, Mr. Partilla was elected to the nineperson Y&R NY executive board, as well
as the twenty-six-person Y&R Advertising global executive board. He was
among the youngest ever to receive such
distinctions. He also serves on the board
for School Chancellor Klein’s “Virtual
Enterprises,” an initiative to link the professional and academic world more
closely in New York City.
In 1997, Mr. Partilla was selected as
one of Crain’s “Top 40 Under 40,” for
helping Y&R lead the industry in new
business development.
☛ Read John’s insights on Page 3
Mark Killen
Senior Vice President, Corporate and Product Marketing, American Century Investments Inc.
M
ark Killen is senior vice president of corporate and product
marketing for American Century Investments, a premier investment
manager headquartered in Kansas City,
Missouri.
Mr. Killen, who joined the company in
1993, is responsible for corporate strategy
and the overall management and marketing of investment products. He previously
was senior vice president of direct marketing and services and vice president and
director for the broker/dealer division of
the indirect marketing channel.
Prior to joining American Century, Mr.
Killen held marketing positions with IBM
Corporation, specializing in the mutual
fund and financial services industries.
Mr. Killen holds a bachelor’s degree
in political science from the University of
Kansas.
☛ Read Mark’s insights on Page 5
Holly Heckathorne
Vice President, Rewards Marketing, Advanta Bank Corp.
H
olly Heckathorne is vice president of rewards marketing at
Advanta Bank Corp. In this
role, Ms. Heckathorne oversees the
development and marketing of the various card-related rewards programs,
including cash back, statement credits,
and point rewards.
Ms. Heckathorne started with
Advanta Bank Corp. in December of
2003. Prior to this time, Ms. Heckathorne
spent six years at Citigroup, marketing
the Diners Club Card. In her last three
years at Citigroup, Ms. Heckathorne was
the senior vice president in charge of new
product development. Under her oversight, Citigroup launched the first new
Diners Club Cards in over fifty years.
Prior to joining Citigroup, Ms.
Heckathorne was legal counsel at the
National Association of REALTORS.
Ms. Heckathorne has an M.B.A.
from DePaul University in Chicago,
Illinois, and a J.D. from the University of
Pittsburgh in Pittsburgh, Pennsylvania.
☛ Read Holly’s insights on Page 8
Alan Kerzner
Corporate Vice President, Marketing, Hartz Mountain
A
lan Kerzner is a seasoned marketing executive who provides
expertise in the areas of business
turnarounds, new business and brand
launches, and distribution channel strategy. His experience ranges from large,
traditional consumer package goods
firms (Richardson-Vicks, Procter &
Gamble, and Johnson & Johnson) to
holding leadership roles at three startups.
He served as senior vice president of
strategic initiatives for the Robbins
Company/Corporategifts.com, where he
supervised the efforts to leverage the
company’s technology and reengineer
critical processes. Mr. Kerzner also
© Books24x7, 2005
served as president and chief executive
officer of Home Shopping Showcase Inc.,
where he initiated and managed all facets
of store-within-store operations for the
company, which brought best-selling
direct television and collectable products
to grocery outlets.
Prior to Home Shopping Showcase,
Mr. Kerzner served as group product
director of Johnson & Johnson’s baby
products division, where he managed all
aspects of the leading baby toiletry line
including consumer, trade, and professional efforts for products totaling $175
million in sales. During his tenure,
Johnson’s Baby ended a four-year decline
and entered several new categories. He
was also instrumental in Johnson &
Johnson’s attempts to enter the young
woman’s skin care market, identifying
and leading the acquisition of the Clean
and Clear skincare business.
Mr. Kerzner began his career at
Richardson-Vicks, and then Proctor &
Gamble where he advanced to group
product director of Oil of Olay. The Oil
of Olay business ended a five-year decline
and grew double digits during Mr.
Kerzner’s stint with the business.
☛ Read Alan’s insights on Page 10
About the Authors
ExecBlueprints
2
John Partilla
President, Time Warner Global Marketing
The Importance
of Marketing
Marketing has to be a core competency in organizations and needs
to be elevated to the stature of the
other key functions. In my eyes,
marketing is creating real or perceived value in the eyes of the consumer. The goal of marketing is to
drive margin and profitability for
the company. Successful marketing
drives margin creation because,
ultimately, marketing should persuade the consumer that a certain
product or brand is worth a higher
In companies where marketing
delivers great value, there is an
appreciation for both short-term
and long-term return on marketing
efforts. Often, this process is termed
as the creation of brands or brand
building. You have to have the right
balanced vision.
Creating a Powerful
Marketing Engine
A lot of marketing is about the art
of the possible. It is about creating
solutions for your customer through
A marketing executive should always consider
this value not just in absolute terms or relative
terms, but also in terms of how these strategies
drove results or not.
John Partilla
President
Time Warner Global Marketing
price than the price they would pay
for a product they define as a commodity. The challenge lies in the
measurability and the impact of
that profit. A company can get
there by elevating the importance
in attempting to create this value
for the consumer.
Expert Advice
A company should then look for new
audiences or new ways to gain market share; it is necessary to be inventive and focused in that regard. A
marketing department needs to work
hard to understand the objectives of
its prospects, their business objectives, and their needs. To convert consumers into buyers, marketing
professionals need to link unique and
compelling value to them.
© Books24x7, 2005
John Partilla
President, Time Warner Global Marketing
developing value from what may
not be immediately apparent. There
is an art to marketing as well as a
science. When a company begins to
build a marketing department, it is
important to find people who are
knowledgeable about the consumer.
Marketing departments should be
staffed with consumer experts, with
data and research experts, and
with channel experts such as Web,
promotion, and public relations.
Look for people with experience
who understand the consumer and
the ways to reach the consumer and
the inventiveness of that department. They should value research
and data, but I think people should
also be applying more lateral thinking and subjective decision-making
based on instinct and more creatively driven applications.
“People who drive or champion marketing in a company also must have an
understanding that marketing needs to
drive near-term monetary value in the
marketplace.”
• Listed among Crain’s “Top 40
Under 40” in 1997
• Former founder and chief
executive officer of Brand Buzz, a
$100 million billing creative solutions
agency within Y&R Inc.
•Among the youngest ever elected
to the nine-person Y&R NY
executive board, as well as the
twenty-six person Y&R Advertising
global executive board
Marketing has to have a financial accountability and sensitivity to
other corporate priorities. It is
about bringing short-term as well as
long-term value, with a heightened
sensitivity to the immediate needs of
the marketplace. Studies can track
how consumers and the marketplace perceive the relative worth of
a brand vis-à-vis its competitors. A
brand also can be measured in the
margin that consumers are willing
to pay for the product. Products
tend to be commodities and brands
tend to command some sort of margin or premium.
John Partilla
ExecBlueprints
3
John Partilla
(continued)
President, Time Warner Global Marketing
As a result, a company should
establish relevance between a product or brand portfolio and the consumers’ needs. Forcing this
connection on consumers will not
help a company; instead, the company should also determine how,
where, and when it is best to communicate those relevant messages to
the consumer. The application of
creativity in marketing addresses not
just consumer concerns or needs as
they exist today, but strives to fill
gaps in future needs that they may
not be conscious of desiring. The
ultimate goal is to be invited by the
consumer to give these messages or
to engage them in the dialogue about
the brand or messaging.
Marketing and Profitability
The ability to drive margin makes
marketing profitable. Marketing
can drive short-term sales as well as
long-term brand building. A marketing executive has to measure the
short-term needs in terms of shared
market gain, sales gain, and margin
gain. Long-term measurements
involve keeping an eye on the vitality of the brand and the way the
brand is being made more robust
and enriched.
The profitability can be measured in lots of ways. A company can
measure it in shared gains, in margin gain, or in just pure volume. As
a result, it is important to be very
specific in the objectives for profitability. I also think one has to look
at the return on objective or return
on investment. There is always an
opportunity cost to any type of
effort to which the marketing
department ultimately commits.
There are other alternatives that
were forsaken. With any project, a
company should analyze if it was
© Books24x7, 2005
Key Components for Marketing Success
Understanding
How to Communicate
Understanding
the Customer
In the future,
understanding
exactly how to
communicate will
become a central
component of
marketing.
Understanding
the Customer
successful on its own terms, as well
as if it was successful relative to
other potential projects the company did not pursue.
Creating Value
for the Consumer
Our primary success strategy is to
emphasize the value, real or perceived, that we bring to a consumer.
My favorite way to spend marketing and advertising dollars is doing
more for our most loyal customers
in order to enrich their experience
or to create more value with their
interactions with a particular brand
or product. For Time Warner’s
more elite, higher-spending clients,
we try to provide customized, strategic, and creative thinking to help
them address their more complex
business challenges. On a more basic
level, we also try to provide these
clients with more central coordination and preferred access to some of
our core assets and some of our premier offerings and opportunities.
Creation
of Value
A marketing executive should
always consider this value not just
in absolute terms or relative terms,
but also in terms of how these
strategies drove results or not. It is
important to be crystal clear about
the objectives of the goals.
The Future of Marketing
Successful marketing in the future
will retain many of the same critical key planks as before: a deep
knowledge and understanding of the
consumer, the ability to communicate consumer-relevant and branddifferentiated information, and a
relentless focus on creating real or
perceived value in the consumers’
eyes. Additionally, though, marketing must have a greater understanding of the emerging tools,
technologies, and channels that are
becoming increasingly available.
Indeed, understanding how, when,
and where it’s best to communicate
to consumers is becoming as vital as
the message itself. ■
John Partilla
ExecBlueprints
4
Mark Killen
Senior Vice President, Corporate and Product Marketing, American Century Investments Inc.
Creating a
Compelling Brand
My personal vision around marketing is that you must start with a
very clear understanding of what is
different and special about the
company, and then use that to
develop a marketing or brand platform that will differentiate you from
your competition. This marketing
platform or compelling brand idea
should be an idea that will last at
compelling idea: the brand idea as
mentioned above. You must understand what your possibilities and
opportunities are for connecting
with clients. You should look at
those opportunities and evaluate
each one on the dimensions of
reach, frequency of contact, and
richness of the contact.
Each opportunity you have to
connect with clients is golden. First
learn their preferences, and then
The financial risk resulting from inaccurate
financial statements is, as always, exposure
to liability.
Mark Killen
Senior Vice President, Corporate and Product Marketing
American Century Investments Inc.
least a decade, as opposed to an idea
with a one-year shelf life. Armed
with the platform, your next step is
to plan how you will consistently
and very effectively communicate
that idea to your customers across
all possible customer touch points.
Explore ways you can clearly communicate the difference between
you and your competitors with all
of your customers, and don’t forget
to rally your “internal” customers.
Getting the employees of the company on board is often overlooked.
Don’t forget that your employees
are a very rich expression of your
brand. If your employees are not in
synch and supportive of your platform, you risk breaking the brand
promise with your customers.
Profitable Marketing
My own strategy for building a
profitable marketing engine starts
with the development of a very
© Books24x7, 2005
determine how you will deliver your
marketing message to those particular customer connection points.
Use a closed-loop measurement
process to measure the client’s
response to the marketing message
across each touch point.
When you first start out with this
approach, begin with the basic
budget for marketing and deploy
your marketing spending across
those different customer touch
points, focusing on where you
think the dollars will be most effective. Set up your leading and lagging
metrics to help you validate your
hypothesis, and then track the variance to those expectations. Don’t
change anything too quickly, as you
will need to gain experience and
measurement statistics across the
seasonal cycles of your business.
Remember that you are trying to
establish a baseline. Once you have
a baseline across a representative
market or buying cycle, only then
Mark Killen
Senior Vice President, Corporate and
Product Marketing
American Century Investments Inc.
“The best way to spend marketing dollars is the way that translates most
effectively into generating revenues
and market share gains.”
• Joined American Century Investments in 1993
• Responsible for corporate strategy
and the overall management and
marketing of investment products
• Company is a premier investment
manager
should you begin adjusting your
marketing mix. If you are not getting the response you expect, make
sure you can isolate whether it is the
message or the media. If your message is not compelling, then I advise
you to toss it aside and start over.
Begin with a compelling message,
and then deploy the message.
As a marketing executive, you
need to appreciate that marketing
competes for dollars on the same
basis as other investments in you
company. Typically, all expenditures
have to pass a hurdle rate by which
we measure our return on investment. We run marketing expenditures through the same filters we
Mark Killen
ExecBlueprints
5
Mark Killen
(continued)
Senior Vice President, Corporate and Product Marketing, American Century Investments Inc.
would run, for example, technology
expenditures or a new product
offering. In other words, we evaluate marketing on the same basis as
any other opportunity to invest in
the business. Marketing must deliver
returns against that investment.
Measuring Profitability
In our industry, it’s challenging to
measure the success of every marketing strategy implemented, even
if benchmarks are set, because our
product is a considered purchase.
The typical entry point for our
products requires a $2,500 commitment from the client. Obviously,
this is very different from a packaged goods sale where the item
might cost $1. The high entry point
for our products, coupled with the
fact that prospects will research
their purchase, translates into a
“lag effect” between when our message is in market and when the customer actually makes the purchase.
With that said, my company
tries to calculate a return on investment for everything we do. We
measure cost per lead, cost per
acquisition, cost per click-through,
and other traditional measures. Our
best source of marketing measurement to date has been the Internet.
For instance, during an Internet
marketing campaign we can measure how many Internet “clicks” the
site receives. On the Internet, we can
follow the client’s actual progress
through the process of awareness of
the campaign, to interest in the product/service, to consideration, all the
way down to purchase. While very
traceable and measurable, Internet
marketing has its challenges. Many
times, clients will want to take a
break somewhere during the Web
process. They may re-engage on the
© Books24x7, 2005
Internet at some future time, or they
may call our 800 number and pick
up the process from there. Even
though they may have responded to
our marketing message via our
Web marketing, they may choose at
any point to exit that process and
purchase our products from other
intermediaries. The bottom line is
our potential customers have many
ways to purchase our products. Our
challenge is to run as tight a loop as
we can, tracking marketing campaigns to actual sales across all possible points of sale.
A Skilled
Marketing Department
If I were evaluating your marketing
department, I would begin by evaluating each marketing professional’s
competencies and strengths. I would
look at the department in terms of
the roles within the department, and
I would want to see a clear link to
their accountabilities. It is critical to
look at the measurement system to
determine if the metrics are aligned
with the goals. There is a common
denominator in every organization
— you get what you measure and
what you base pay on. Developmental metrics and goals are nice to
have, but don’t carry the same motivation as goals that determine pay.
A solid marketing department
will incorporate brand development, product line management,
strategic planning, research and
analysis, advertising and media, and
public relations. All of these functions are critical elements of the
marketing department of the future.
A research and analysis group is
able to conduct the environmental
surveys, the customer research, and
help analyze trends that will form
the basis for your corporate strategy.
Product management in our firm is
probably one of the most strategic
capabilities we have, because we
marry our understanding of what
customers want with our capability
to actually develop the products and
adapt them to the changing needs of
the client. Brand is very critical and
strategic, and ultimately is the leader
of the implementation of your marketing platform within the company.
Advertising, media, and sponsorships are important because they are
the avenues through which you
deploy your marketing message.
Public relations is probably the
most cost-effective and influential
marketing you can do, because it is
considered unbiased. If done well, it
adds to your brand’s value and perception in the market. If done
poorly, it can erode your brand’s
reputation in the market faster than
anything else.
Expert Advice
Marketing profitability can be adjusted by being smart about how much you are
spending versus the return. You should be able to draw an efficient frontier, or a
diminishing returns line, based on how much you spend versus how much you get
back. Given the challenges with marketing measurements, the amount of marketing spend tends to be based initially on an informed and educated guess or rule
of thumb based on the industry conventions. Once you establish the baseline measures, you have the inputs to help you adjust marketing spend and affect the resulting profitability. Ultimately, marketing will be more successful if you are truly able
to measure profitability and return on investment.
Mark Killen
ExecBlueprints
6
Mark Killen
(continued)
Senior Vice President, Corporate and Product Marketing, American Century Investments Inc.
Improving
Marketing Efforts
Never overlook the power of having a very strong internal communications campaign that is linked to
your marketing platform. In our
business, we operate a contact center that has direct interactions with
our clients. This interaction tends to
be one of the richest interactions the
customer has. Many companies
overlook the opportunity of having
internal people really excited about,
and aligned around, the brand and
marketing vision for the company.
Not only do internal employees talk
to customers, but they also talk to
their neighbors, their neighbors
talk to other neighbors, and so on.
Having your employees excited
and totally in synch with what you
are trying to do is the beginning of
an incredible opportunity in terms
of viral marketing. When we roll
out our marketing platform, our
objective is to have an internal campaign that is as spectacular as our
external campaign.
Technology and Marketing
The Internet is an incredibly important component in terms of
© Books24x7, 2005
deploying marketing messages. It is
an area that allows for effective
tracking, and there’s an ability to
personalize with customers in ways
other mediums cannot offer. Technology enables increases in marketing productivity, and I think
we’re on the front end of what the
Internet will be able to do. Technology advances are also impacting
digital cable. I know that in many
cable markets, technology enables
you to actually select the demographic you target and tailor the
message to that demographic in
much finer slices than before.
Both the Internet and technology
are very important to building a
profitable engine. From my perspective, my company gets the best
statistics and metrics from Internetdeployed marketing in terms of
being able to measure customer reaction to the campaign and actually tie
those customer interactions to sales.
Technology in particular will
have a dramatic impact in terms of
how media is purchased, deployed,
and measured in the future. I
believe that in the future we will see
media buying strategies and product placement strategies affected by
advances in technology. As digital
technology becomes ubiquitous
and programming becomes more
regionalized, we will see new
opportunities for deploying marketing dollars.
Companies like Proctor & Gamble, the largest buyer of broadcast
television advertising, are beginning
to shift their spending more toward
product placement on television
versus traditional advertising buys.
The fact that companies with such
sophisticated marketing groups
have made these decisions points to
a shift toward product placement
and away from traditional thirtysecond spots. In my own industry,
we’re seeing shifts from broadcast
television to the Internet because
customers often go to sites that are
specialized in financial services and
financial analysis. This allows us to
be placed right there, when customers are in the frame of mind and
interested in evaluating products.
There’s no real equivalent to that in
print or in broadcast. Technology is
definitely changing the way we market, and while product placement is
the craze today, there will be something even more exciting in the
future — for a preview, just rent the
movie “Minority Report.” ■
Mark Killen
ExecBlueprints
7
Holly Heckathorne
Vice President, Rewards Marketing, Advanta Bank Corp.
Understanding the Market
Before a company can begin marketing a product or service, it first
has to understand the target market, the product that is being
marketed, how that product fits into
the needs of the target market, and
the best approach to getting the
product to the target. The best way
to build a profitable marketing
engine is to constantly listen to the
customer and modify the product or
service to fit the customers’ ongoing, ever-changing needs. Marketing
is profitable to a company when it
causes a continued, sustainable
positive customer reaction.
Retention and research have
often been secondary or tertiary
activities of many companies. In the
past, the main focus of companies
used to be acquiring new customers. There was such a strong
focus on acquisitions that once a
company actually acquired customers, it moved on to acquiring the
next customer and did not focus on
whether the customer stayed with
the company or not. Companies
have now realized that it can be
cheaper to keep existing customers
than to acquire new ones, and
Companies have now
realized that it can be
cheaper to keep
existing customers
than to acquire new
ones, and retaining
existing customers has
become an essential
part of marketing.
Holly Heckathorne
Vice President, Rewards Marketing
Advanta Bank Corp.
retaining existing customers has
become an essential part of
marketing.
Research is also incredibly
important in marketing. In a lot of
companies, research is set aside in
an effort to be the first to market
with a new idea or product. However, a company should always do
the necessary background research
of an opportunity to know whether
or not the potential opportunity will
be good for the customer and for
the company.
Holly Heckathorne
Vice President, Rewards Marketing
Advanta Bank Corp.
“There are many ways to measure
the profitability of a specific marketing
effort.”
• Joined Advanta Bank Corp. in 2003
• Oversees the development and marketing of the various card-related
rewards programs
• Launched the first new Diners Club
Cards in over fifty years
Determining Profits
The marketing team might measure
the success of the project based on
whether or not the marketing campaign broke even. That may be an
acceptable measure of success to a
business. Or, the department might
look at what percentage of profit
was achieved against what percentage was desired. The team
might measure profitable returns
over a five-year period or whether
the campaign elicited an immediate
return on investment. The form of
measurement should be determined
and agreed upon by the business
before the project is undertaken.
Preparing for a Product Launch
Understand
the target
market.
© Books24x7, 2005
Understand
the product
being
marketed.
Understand
how the
product fills a
market need.
Understand
the best
approach to
getting the
product to
market.
Listen to the
customer.
Holly Heckathorne
Modify the
product to
suit customer
needs.
ExecBlueprints
8
Holly Heckathorne
(continued)
Vice President, Rewards Marketing, Advanta Bank Corp.
Due Diligence
When performing due diligence on
the capabilities of a company’s
marketing department, there are a
number of questions to ask. First,
it is important to understand the
overall goals of the business at large
and to understand the various customer groups, the products that
serve these groups, and how the two
fit within the goals. Next, it is key
to lay out the responsibilities of the
marketing department and to learn
how integrated marketing is within
the company. If marketing is more
diverse and crosses several different
departments within an organization,
it is important to understand the
lines of communication between the
various groups. It is also imperative
to understand what activities fall
under the marketing department’s
purview, and to understand some
© Books24x7, 2005
Expert Advice
Technology is extremely important to a marketing department. Not only do existing
technologies, such as the Internet, make marketing professionals’ jobs easier, but
new technologies help to move a marketplace forward. For example, within the credit
card industry, innovative technologies such as contactless payments are helping
to create new opportunities for the industry. The ability to use the credit card quickly
for payments that normally would be made with cash is important to the growth of
the credit card industry. Another example is technologies relating to identity verification, such as biometric security measures. Using iris scans or fingerprints as card
verifications may help to lower the cost of fraud within the industry.
key fundamentals of the marketing
department, such as what the goals
are for the year, the expenditures of
the department, and how the return
on investment is measured. Besides
traditional marketing expenditures
on customer campaigns, it is important to understand how much of the
budget is allocated to research,
advertising, and public relations.
Lastly, but most importantly, the
human resource element must be
measured. A company must be willing to invest in strong professionals to run the marketing
department. Not only should a marketing professional be creative, but
the marketing team must also be
very analytical, have a strong grasp
of financial spreadsheets, and be
able to research and understand the
competitive marketplace. ■
Holly Heckathorne
ExecBlueprints
9
Alan Kerzner
Corporate Vice President, Marketing, Hartz Mountain
Successful
Marketing Strategies
My marketing vision is about being
responsible for the profit and loss
of the company. If you’re in consumer packaged goods, marketing
needs to be respected and accessible. They need to be able to prove
that they deserve to be one of the
top voices driving the company.
In a company like Hartz, where
marketing is new, the first step is to
make the benefits tangible. You can
talk about the power of being a
great brand and being more
marketing-oriented, but unless you
can provide case studies of how that
works and show how it can help
swing the balance of power away
from the super retailers, no one will
understand its value. You have to
position marketing to help a
company achieve its short- and
long-term objectives. You need to be
analytically oriented. You shouldn’t
be out there arguing for sacred
resource dollars to hold a feel-good
event in New York or the
Caribbean. You have to be focused
on the programs that could benefit
the business, and be ready to
explain how they can do so. You
have to demonstrate understanding
and expertise in non-marketing
areas. I’ve had the fortune to be
involved in other aspects of running
a business, as I’ve headed up some
startups. Showing that you
understand operations, financial
return, and cash flow helps you to
be seen as a leader within the organization. Finally, be passionate.
Enthusiasm creates enthusiasm.
Give the people in marketing
specific business responsibilities. If
they have to deliver a number,
they’ll think carefully about how
they spend their time and money.
You have to give people fairly
stretched goals up front. You also
need to make people accountable
for their responsibilities. A giant
part of the profit and loss in most
businesses is the cost of the product. As a marketing person, you
better be working closely with
operations to make sure they
understand that they’re accountable for certain costs or savings. As
you get into programs, you need to
test them and not roll them out
until you have evidence that they
will provide the appropriate financial return.
Profits and the Bottom Line
You should make marketing
consumer-based and trade- and
sales force-conscious. You have to
come up with something a consumer wants, but do it in such a
way that the trade and sales force
will get behind it. You need to create the vision and evaluate results.
Act as if it’s your own company.
Expert Advice
The percentage of a company’s sales that should be spent on marketing depends
on the industry. When I was in human beauty care, it was around 50 percent. In
the pet industry, 5 percent would be amazing. It depends, but the marketing investment question should be asked and viewed similarly to the capital expenditures
or research and development expenditure evaluations. The key is to position marketing as an investment for the future; every company needs to deal with it in
that context.
© Books24x7, 2005
Alan Kerzner
Corporate Vice President, Marketing
Hartz Mountain
“Marketing is very much about taking a
leadership role.”
• Expert in business turnarounds and
in new business and brand launches
• Experience at Richardson-Vicks,
Procter & Gamble, and Johnson &
Johnson
• Ended multi-year declines for Johnson’s Baby and Oil of Olay
You need to have both a shortterm and long-term definition of
profitability. You need to create the
vision and the long-term strategy;
that’s largely gut-based. I went to
two of the most quantitative schools
around, but in my mind, a lot of
marketing is still based on art, or
gut. You have to be sure that everything is strategically correct. If programs or activities don’t help
achieve your vision and strategy,
you shouldn’t be wasting time or
money on them. Finally, you need
to analyze and make sure something
pays back in acceptable terms.
“Acceptable profitability” depends
on the company, the strategic goal,
and so on. If I’m launching a new
product, I may not care if it’s profitable. I may consider success in
Alan Kerzner
ExecBlueprints
10
Alan Kerzner
(continued)
Corporate Vice President, Marketing, Hartz Mountain
terms of building awareness or distribution. In terms of an ongoing
product or program, profitability is
about what your company considers a decent rate of return. You can
build some basic models in terms of
whether it’s a coupon or sampling
program, the amount of business
you bring in, the percentage of new
versus current users, and the lifetime
value of those customers.
Benchmarking Success
and Calculating Return
on Investment
You can benchmark success in
terms of profit and loss, and
whether products and programs
achieve what they’re supposed to.
It’s about planning, testing, and
analyzing; if you are involved in
direct marketing, do a test grid of
different creative, different offers,
and different media. If you’re
looking at advertising, you could
do copy testing or tests of different media.
If I want to build trial for a
brand, then I go to my lifetime value
of a consumer model and play with
different assumptions about how
long they’ll purchase my product,
how much per year, and so forth.
However, I am not convinced that
you can evaluate everything on
return on investment. I changed the
packaging on 1,500 products when
I got to Hartz. It’s pretty easy to put
it in costs in terms of design,
switchovers with the trade, and so
on. I can’t tell you what the return
on investment is, though. I could
make assumptions, but there are too
many other changing variables to
understand the exact increase in
sales and profit the packaging
change resulted in. Similarly, in pet
supplies, I believe you need ongoing
© Books24x7, 2005
presence in pet enthusiasts’ books,
which is where the high spenders
look for news. I will never be able
to determine the return on investment on that effort — that is based
on gut. There are some things you
just have to do because you know
they’re right for what you want to
achieve.
Evaluating Marketing
Departments and an
Obstacle to Success
If I wanted to see how another company’s marketing department was
doing, I’d ask about what consumer
research they have and how they
make decisions. I’d want to know
how the marketing people themselves are evaluated. I would ask
about the innovations they’ve come
up with, and I’d also want to talk
to other areas like operations,
finance, and sales, in order to get a
view of who leads the organization.
Companies often overlook the
stress of the day-to-day work that
goes on in marketing, due to its
position at the hub of the wheel.
One can easily fill up the week
doing day-to-day work. Yet, the pet
supply industry, like many others,
has gone from doing new product
launches once a year to companies
having to regularly develop new
products for each of the top five
trade customers. For marketing to
Communicating Company Values
Be analytically oriented.
Focus on programs that will
benefit the business.
Explain how they can do so.
Demonstrate expertise in
non-marketing areas.
Make marketing’s benefits
tangible.
Alan Kerzner
ExecBlueprints
11
Alan Kerzner
(continued)
Corporate Vice President, Marketing, Hartz Mountain
be successful, other groups must
also be properly resourced and successful. If marketing is in charge of
getting out new products, but
research and development and operations are not doing their jobs, it
falls on marketing to be the project
managers. That leaves less time for
traditional marketing.
Staffing for Innovation
Effective staffing depends on the
company, the industry, and the
goals. There should be some senior
people who know how to run businesses and some out-of-the-box
thinkers, and you also need some
lower-level employees who can execute superbly and who will have the
opportunity to advance.
One essential investment is getting quality people. You get what
you pay for in terms of executives.
You need people who understand
marketing, who understand the
consumer, who are innovative, and
who are team builders. No company should simply take marketers
from their own industry; there are
benefits in taking them from outside
of the industry. Companies have to
realize that no one is an expert in
everything. They have to leverage
their internal strengths and take
good things from the outside. At
Hartz, we have a good brand
name, the highest brand awareness
in the industry, and excellent distribution and sales power. Given
that we manage over 1,500 products from day to day and are
involved in a ton of different areas,
we’re not necessarily the best innovators. I have not figured out how
to allow my people to spend enough
time on that. So, we’ve been actively
searching on the outside for innovation, for what people in their
© Books24x7, 2005
One essential investment is getting quality
people. You get what you pay for in terms of
executives.
Alan Kerzner
Corporate Vice President, Marketing, Hartz Mountain
garages are coming up with. When
we find a good idea, we take that
idea through licensing or acquisition
and then put the power of our
brand, distribution, and sales
behind it.
The Impact of Technology
The importance of the Internet and
technology depends on the business.
Where you tend to have a lot of personal consumer commitment and
involvement, it’s very important.
The Internet is a new channel of
communication that enables an
amazing grassroots impact, but
without the checks on accuracy. As
powerful and positive as the Internet is, it runs the risk of creating
negative results based on claims and
statements that have no credibility.
One exciting development for
marketers is that there is a new
methodology for behavior tracking
on the Web. If someone visits your
site or responds to something, you
can get a profile of where else they
go, what else they do, and how
much time they spend doing different things. This is going to provide additional knowledge and
targeting ability. Another somewhat
scary innovation is radio frequency
identification. A number of retailers want to track inventory location,
so they are asking manufacturers to
put radio frequency tags on/in
packages so they can be tracked
(sort of like a GPS system). However, many consumers, including
myself, don’t want other people
receiving signals of what I bring into
my house. Radio frequency identification technology can be utilized
to track when and where consumers
utilize certain goods. If this happens
on a widespread basis, a smart marketer is going to be all over it in
terms of how they can leverage this
knowledge.
Future Marketing
Opportunities
My favorite ways to spend marketing dollars are by sampling
good products to the consumer and
through direct response. Through
sampling, if you have a good product, you can generate quick repurchase and see the impact by looking
at store-by-store or regional sampling efforts pretty quickly. Direct
response television is an area where
I’ve had a lot of success, and it
allows you to buy media at cheap
rates and closely evaluate your
results by creative, offer, media program, and time of day. There are
always opportunities for marketing
bargains; companies need to have
the foresight to know them and the
organizational flexibility to jump on
them when they appear. Everyone
remembers that the E.T. filmmakers first went to M&M/Mars to
participate in the movie. Mars
didn’t want to, so they went to Hershey’s, who agreed to participate
with Reese’s Pieces. It was a huge
bargain for Reese’s Pieces to get that
Alan Kerzner
ExecBlueprints
12
Alan Kerzner
(continued)
Corporate Vice President, Marketing, Hartz Mountain
type of publicity. The same thing
happened to Hartz years ago when
we were offered Nylaboner, which
is now the leading edible bone and
is marketed by a competitor. That
was a big bargain, but we didn’t
realize it — now our competitor is
profiting from it.
The best marketing opportunities
over the next year will be in the area
of the micro-targeting of consumers. That’s been happening,
and it will continue to happen.
Additionally, hopefully, companies
© Books24x7, 2005
will realize that they cannot and
should not succeed by just pumping money to the trade. There will
probably be a trade realization that
they need what consumer brands
and marketing expertise brings.
Target, within the pet area, has
moved to a total reinvention,
lifestyle-based strategy. They may
have gone a bit too extreme, but
retailers like Target are clearly
showing an awareness of and willingness to innovate, and to think
like consumer marketers. ■
Alan Kerzner
ExecBlueprints
13
Ideas to Build Upon & Action Points
I. Goal-Oriented Marketing
Marketing should take a leadership
position in taking responsibility for the
profit and loss of the company. Give the
people in marketing specific business
responsibilities. If they have to deliver
a number, they’ll think carefully about
how they spend their time and money.
Make people accountable for their
responsibilities. The marketing leaders
should position marketing to help a
company achieve its short- and longterm objectives.
Marketing must be analytically
oriented.
• Be focused on the programs that
could benefit the business, and
be ready to explain how they can
do so.
• Demonstrate understanding and
expertise in non-marketing areas.
II. The Bottom Line
Have both a short- and long-term definition of profitability.
• Create the vision and the longterm strategy, which is largely gutbased. Long-term goal-setting is
based on art, not science.
• Be sure everything is strategically
correct. If programs or activities
don’t help achieve your vision and
strategy, you shouldn’t waste time
or money on them.
Ensure that everything pays back in
acceptable terms.
• The definition of “acceptable
profitability” depends on the company, the strategic goal, and the
project itself.
III. Must-Haves for
Profitable Marketing
Compelling idea
• Building a profitable marketing
engine starts with the development of a very compelling idea:
the brand idea.
Listen to your customers
• The best way to build a profitable
marketing engine is to constantly
listen to the customer and modify
the product or service to fit the
customers’ ongoing, ever-changing
needs.
• Understand your possibilities and
opportunities for connecting with
clients.
• Marketing is profitable to a
company when it causes a continued, sustainable positive customer
reaction.
• You should look at those opportunities and evaluate each one on
the dimensions of reach, frequency of contact, and richness of
the contact.
Make research a priority
• Research is incredibly important
in marketing.
Customer connection
• Each opportunity you have to
connect with clients is golden.
• Learn their preferences, and
determine how you will deliver
your marketing message to those
particular customer connection
points.
Benchmarks
• Marketing profitability can be
adjusted by being smart about
how much you are spending versus the return.
• Once you establish the baseline
measures, you have the inputs
to help you adjust marketing
spend and affect the resulting
profitability.
• Ultimately, marketing will be
more successful if you are truly
able to measure profitability and
return on investment.
• In a lot of companies, research is
set aside in an effort to be the first
to market with a new idea or
product. However, a company
should always do the necessary
background research of an opportunity to know whether or not
the potential opportunity will be
good for the customer and for
the company.
V. Essential Take-Aways
A marketing executive should always
consider value not just in absolute
terms or relative terms, but also in
terms of how their strategies drove
results or not. Marketing goals and
thinking should be tied to and aligned
with corporate objectives, both longand short-term.
Powerful marketing begins with
understanding the customer, the product, and the company.
• Understand what customers
want and how you can deliver
value to them.
• There are many ways to measure
the profitability of a specific marketing effort.
IV. The Golden Rules for
Understanding the Market
• Understand how the product
fits into the needs of the target
market.
• The form of measurement should
be determined and agreed upon by
the business before the project is
undertaken.
Understand the entire product fit
Before a company can begin marketing a product or service, it first has
to understand the target market, the
product that is being marketed, and
how that product fits into the needs
of the target market, and the best
approach to getting the product to
the target.
• Understand how your marketing
strategies support the goals of
your company and its bottom
line. ■
© Books24x7, 2005
Ideas to Build Upon & Action Points
ExecBlueprints
14
Ideas to Build Upon & Action Points
(continued)
?
10 KEY QUESTIONS AND D ISCUSSION POINTS
1
What is your strategy for building a profitable marketing engine? How would you
articulate your vision for this? Where should a company who is not yet sophisticated
about their marketing start to build?
2
What makes marketing “profitable”? How can marketing directly contribute to the
bottom line of the company?
3
What specific strategies can be put in place to help a company make marketing
more profitable? How can you benchmark the success of each of these strategies?
What precisely should be measured?
4
How do you calculate ROI with respect to marketing plans for your company? How can
you measure ROI for efforts in branding, which may not be as financially measurable?
5
If you were doing due diligence on the marketing department of another company,
what questions would you ask to see what shape their marketing department was in?
6
What areas are most often overlooked by companies when trying to make their
marketing efforts more successful?
7
How should a marketing department be staffed? What are the essential positions?
Which positions are less essential?
8
What are your favorite ways to spend your marketing/advertising dollars? What have
you found has returned the best ROI for your company? Are there any opportunities in
the next 6-12 months for bargains in marketing?
9
How important is the Internet and technology to building a profitable marketing engine?
How has technology impacted how a successful marketing group works? What new
technologies, pending in the next year or so, will further help your group?
10
What do you feel are the essential investments companies MUST make to ensure their
marketing department runs smoothly and can measure results (for example, CRM, using
outside agencies for specific functions, etc.)?
ExecBlueprints is a subscription-based offering from Books24x7, a SkillSoft Company, for more information on subscribing
see: www.books24x7.com.
© Books24x7, 2005
Ideas to Build Upon & Action Points
ExecBlueprints
15