Author: Aditi Anand
Marketing is the “money” function of the organization and often subjected to scrutiny, even when business is running as usual. A pandemic or not, as soon as the company falters on its financial objectives, the marketing budget is often the first to get rationalized.
There is much scepticism and ambiguity around the role of the function. Many sales first organizations believe that sales is the reason why marketing exists. Its purpose is to drive conversions.
Implicit in this thinking is the belief that enough demand for the product already exists. Marketing needs to find an efficient way to fulfil that demand with its brand. While sales is a critical KPI for the function, viewing marketing only as a sales enabler is taking a rather myopic and limiting view.
In my experience of about a decade and a half of marketing large consumer first brands, I have seen marketers play a far more strategic role than just closing the next sale.
Let me start with the most widely understood role and then go all the way up to the more strategic deliverables.
1. Driving short term sales:
The purpose of marketing here is demand generation for the business. Take the example of mobile phones. There are 1.1 BN active mobile connections in India today. The replacement market, and not first-time buyers, drive most sales for the category. The role of marketing is not to create a need for mobile phones in general. The marketer must create a want for their specific brand. The marketing material needs to establish the brand’s superiority over other alternatives. Further, it needs to win customers at the most efficient cost. If Marketing increases market share, revenue, or profit and delivers a positive ROI, it can be deemed successful.
2. Building a Brand for short to mid-term wins:
Consider a business that operates in a category where there is no product superiority between different alternatives. Or, imagine a scenario where differentiation is perceived and not real. The classic case study here, quoted many times over, is that of sweetened carbonated drinks.
Most consumers cannot differentiate between two similar-looking and tasting cola alternatives. In such categories, brand strength determines market share. Higher-order intangibles like purpose, culture, and emotion create strong brand identities. The marketing team might want to build brand imagery through associations with celebrities or dominant culture like music, art, comedy, or sports. It might want to support a cause or become the flagbearer of a popular movement.
If the brand evokes the right associations, it can differentiate itself from others. This differentiation will reflect in consumer choices and can be measured.
However, the causality between imagery and sales may not be possible to establish. It may also not reflect immediately in the next quarter or financial year’s earnings or revenue.
Capturing mind share that translates into market share is just one benefit of building a strong brand. Brand building is a long-term exercise, and the benefits of a strong brand manifest themselves in multiple other ways such as:
- Strong brands can command a price premium and, therefore, make more profit per sale (Think Apple vs. One Plus).
- They tend to attract higher paying customers and can upgrade them to more premium offerings. (Compare average revenue per user for Airtel vs. that for the erstwhile Idea).
- Strong brands have more loyal customers and lower churn. Since customer retention is generally less expensive than acquisition, the organization does benefit from cost saving.
- If the brand is strong, the future cost of marketing goes down. The marketer does not need to burn cash to build brand awareness and can focus more on conversion driving activities.
- Strong brands create powerful network effects. A large user base generally translates into positive momentum and higher advocacy for the brand, which further fuels growth.
- A strong brand can diversify into newer businesses or enter complementary categories with ease. At Airtel, we could successfully foray into the DTH business much later than competition leveraging the strength of the powerhouse brand.
- Lastly, when the existing category becomes a red ocean, strong brands can withstand the headwinds, without having to become a price warrior. Weaker brands that are built only on functional superiority either need to do deep discounting or crumble and fall.
3. Creating a new Category for sustained long-term success:
Consider a start-up that is bringing a disruptive new product or service into the market. The role of marketing in this context is far more strategic than explained above. It needs to provide a consumer lens to a manufacturer’s ambition. It must gather, understand, and translate the potential consumers’ pain points to make the new offering relevant to them. It also must create a desire for a product that hitherto does not exist.
As a strategy function in a futuristic organization, marketing must anticipate consumer needs before even consumers themselves can.
Marketing during the early years in many disruptive tech start-ups delivers to this task.
Consider the advertising done for printers, mobile phones, eCommerce, or digital payments during the early years of launch. Marketing teams in these sectors created the category by either evoking dissonance with the existing normal or by showing the consumers the possibilities of a fantastic future.
When Flipkart launched Ecommerce in India, marketing’s task was to educate and convince Indian consumers about an entirely new way to shop by dispelling the fears associated with online shopping.
Airtel launched mobile services by not selling a voice plan & its features but by evoking the basic human need of “self-expression” and, in that process, became the flagbearer of mobile penetration in India.
Today, marketing teams at consumer tech organizations like Alibaba, Amazon, and our homegrown Jio can use a wealth of consumer data to distil meaningful insights and launch relevant offerings in seemingly unrelated sectors.
The chart for Amazon below shows the various businesses it has and the fact that they do not have much in common except the consumer. And if there is one function that owns the relationship most strongly with the consumer, it is marketing.
To summarize, marketing must deliver on the sales KPI. But it can do much more. It is a strategic function that can fuel growth for the business, open up new revenue streams, and set the organization on the path for long term success.
