Marketing is at a crossroads. For over 50 years, it was deemed a core business function, without contest. More recently, however, it has been losing that coveted position. To regain its influence on key business decisions, marketing needs to change ground up from its fundamentals.
It is no secret that marketing departments are under tremendous pressure to demonstrate their added value, their impact on business results, and even their efficiency, expressed by return on investment. Faced with constant pressure on quarterly earnings, chief executives and their chief financial officers are questioning the value of increasingly expensive advertising, which often dwells on irrelevant points of differentiation; of promotions that are often just a euphemism for price cutting; and of large marketing departments which, far from being an asset, are perceived to be millstones around the company's profitability. In many organisations, this has led to marketers losing their seats in the boardroom where big decisions are made.
The biggest shift in today's marketing world is not the declining effectiveness of television advertising. Rather, it is changes in how consumers choose products - increasingly ignoring push marketing and instead preferring to use the Internet, blogs and online communities to research products.
Trends reshaping markets and their dynamics
Five major trends are fundamentally changing the dynamics of the markets. If the marketing function is to remain relevant to business strategy, and be a significant contributor to results, it needs to find answers to address these tectonic shifts.
The changing consumer
Today's consumers are more difficult to decipher. Additionally, discovering unfulfilled needs - as an anchor for marketing's contribution to business growth - is more difficult than ever. There is evidence that points contrary to what marketers were traditionally taught - consumers are not always the best sources for new product or service ideas. Hence, traditional market-research methodologies, such as focus groups and consumer surveys, are not of much help in generating deep consumer insights.
The ready availability of information that has led to a new generation of discriminating and well-informed customers, along with the emergence of fast-moving and aggressive competition, have ensured that many once-premium products and services are no longer have enough differentiation to justify higher prices. This process of commoditisation has impacted a wide array of sectors - from consumer goods, industrial services, pharmaceuticals to engineered products.
Kamran Kashani is a professor of marketing at IMD.
This is the first in a series on the changing face of marketing. Watch this space for more insights on this trend.