Career path to nowhere: the changing world. (The Grayson Report).

PICTURE THIS career path. 1980: graduate college; 1980-1984: salesperson; 1985: back to school/MBA; 1985-1988: associate product manager; 1989-1991: product manager (small brand); 1991-1994: product manager (major brand); 1995-1997: sales development/trade relations; 1998-2000: group product manager; 2001-2002: vice president, marketing; 2003: job eliminated!

New Thinking, Marketing Needs!

What? No more VP marketing? What about all those functions for which the VP was responsible? You know the list (aka marketing mix): advertising, display, packaging, pricing, channels, PR, product, promotion and sometimes, sales. What will happen to all those functions? Who will be responsible? And most importantly, why will this happen?

The impetus for this evolving change in the organizational model is the fairly new concept of "branding," as opposed to "marketing." Branding, per se, should not be confused with "building-a-brand." This latter term, building-a-brand, has to do with the traditional marketing functions starting from ground zero. The pallet is clean--no name, no distribution, no customers.

Branding, on the other hand, is about building a relationship with the consumer. It has a lot to do with trust and loyalty, and an emotional bond. And this has to be reinforced with product benefits and advertising which promotes the whole gestalt.

The way things used to be, the product was king. Now it is the consumer. So, instead of doing business the same old way, we now will change the focus, the title and the job. The table of organization would show the three vice presidents [repositioning those "old" functions of marketing] with the new slant, described below, with one vice president of brand building reporting to the chief operating officer. The brand-building function would essentially be the new product development function and it would manage the brands until they are in the marketplace.

First a couple of definitions: a customer is one who buys from your factory; i.e., the trade. A consumer is the end purchaser of your product. Basically, a consumer buys from your customer.

Background: some years back there was a strong movement to add the "value" of a brand to the balance sheet of a company. While that no longer is the vogue, the basic concept remains: a brand has a value because it has engendered a relationship with the consumer that results in future sales. That is the essence of equity management.

This stems from the myriad of research findings that indicate that the value of an existing consumer is about five times greater than the value of a new one. That is, it is much easier to get a repeat purchase than to find a new user.

The failure of most of those shooting stars, the dot coms, was neither due to the concept nor even the lack of need--just the very high cost of customer acquisition versus the average purchase. Therefore, the focus has to be on retention.

VP: Equity Management

The first step, of course, is measuring the percentage of consumers who are, in fact, loyal users. Loyalty per se, is generally measured in terms of repeat purchases, say three out of the last four. Equity management's task is to find those consumers and discern the difference between these and the ones who switched after one purchase. The reasons could vary from price, product performance, promotion, advertising messages, et al. But this discovery is the first step in managing consumer loyalty and the brand equity.

Another piece of equity management is that once this vice president is in place, we can eliminate the customer service department. Customer service is the department that people call when they have a problem. Generally, it isn't even under the authority of marketing. And the very best a company can do, is undoing whatever damage has occurred with a product replacement or refund. What is needed is a consumer center so that while we still handle problems, our focus is staying ahead of the consumers' problems so that we are not always trying to catch up. Being consumer-centric avoids the problems from the beginning by focusing purely on him or her, their wants and needs, satisfactions or lack thereof, the solutions--and then eliminating the problem for all consumers.

A digression: a number of years ago we bought lipstick from 12 companies and then returned them to see how they would handle the complaint, "I just didn't like it." The responses varied from, "return it to the store, they'll refund your money," to, "enclosed please find a refund," to, "enclosed is a coupon good for ..." Only one company, Estee Lauder, called to find out exactly what it was that we didn't like about the product. Clearly Lauder was well ahead of its time.

VP: Customer Technology

As the name implies, this person is in charge of coordinating all of the technology relating to your customer. It is too simplistic to think in terms of merely customer relationship management (CRM, as it is popularly called), but rather the job entails coordination of all things that affect your customer: warehouse management, inventory control, shipping, production and all the data that flows from a sale. This includes inventory management of the customers' warehouses to anticipate potential out-of-stock conditions. In one sense, it is akin to Wal-Mart's vision of itself, "We are not in the retail business. We are in the distribution business--from Procter & Gamble's loading dock into the trunk of the customer's car in 72 hours."

In sum, customer technology includes all the steps from the factory to the retail store. Channel management (formerly, sales) also falls into this division.

VP: Consumer Management

This function is responsible for moving the product from the retailer's shelves to the final usage by the consumer. For example, customer technology has the responsibility of moving a can of soup from the factory, to the supermarket warehouse, to the store's storage, to the gondola, to the consumer's basket, to the kitchen shelf. But that is only part of the equation. Consumer management takes over from here. That sale isn't complete until the can is opened and consumed. So this consumer management vice president is responsible for most of the traditional marketing functions, as well as all of the components that ultimately add up to consumption; i.e., what's in the head of the consumer: the image, the product, the package, the advertising and the promotion. The advent of electronic marketing has added responsibilities to this position by increasing the types of available channels. For example, many cosmetic marketers were reluctant to develop their own websites for fear of alienating their retail accounts. They have subsequently gotten over this. Going directly to the consumer just skips over some customer management.

Having read this, we really don't expect many of you to eliminate the VP marketing position. As a matter of fact, the best that could happen is that you begin to think about the changing consumer, the changing channels, the changing environment and, in fact, the changing world. And all of that should be done in relationship to your own branding strategy. But remember branding doesn't work without a consumer-centric organization. It wouldn't surprise us if P&G was the first to reorganize the marketing function.

[smiley] Wish I Had Done That!

Revlon's ColorStay two-step nail enamel. Our panel loved it! It's not perfect for the 10 days as advertised, but with a little touch up now and then, it really works--better than anything out there. It is truly an advance. This is a remarkable formulation. In addition to superb wear, the application is like silk. It's much easier to apply--doesn't run all over the place, yet spreads across the nail easily. The gloss is terrific. And, it's one step less, doesn't need a base coat. Which makes us wonder why, in Vogue, Revlon included a $2 coupon. The coupon is for any Revlon product, which takes away from the rationale of "gaining trial" for the nail enamel. Somehow we always have a problem with coupons in Vogue; i.e., picturing the woman double parking her Rolls and running into the store to redeem the $2 coupon. Picky, picky. But it's a great product anyway! Good luck Revlon!

SUZANNE AND BOB GRAYSON ARE RESPECTED, PROFESSIONAL MARKETERS, HAVING SPENT THEIR CAREERS WITH THE LEADING COMPANOES IN THE BEAUTY INDUSTRY BEFORE STARING THEIR SUCCESSFUL CONSULTING BUSINESS IN THE EARLY 1970s.

THEIR CONSULTING CLIENTS HAVE INCLUDED AVON, BRISTOL-MYERS, ESTEE LAUDER, PROCTER & GAMBLE, REVLON AND COVER GIRL, AMONG OTHERS. THEY RESIDE IN SAN JUAN CAPISTRANO, CA AND MAINTAIN AN OFFICE IN NEW YORK CITY. FOR MORE INFORMATION, THEY CAN BE REACHED AT [e-mail] OR [e-mail].