Marketing’s Move from Monologue to Dialogue
26 March 2010 Courtney M. Barnes
The emergence of digital channels has altered the relationship between marketing and corporate communication teams. In an extract from their book Digital Strategies for Powerful Corporate Communications. Paul A. Argenti and Courtney M. Barnes discuss the problems Hewlett-Packard faced and overcame when it merged with Compaq, highlighting how the need for both a strong brand identity and corporate reputation has become paramount.
According to the American Marketing Association, "marketing is an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organisation and its stakeholders".
This definition suits an anachronistic vision of marketing in which messages are created, communicated, and delivered to customers via one-way channels -namely advertising. Speaking of outdated, in the early 1960s, Harvard Business School Professor Jerome McCarthy defined four elements that collectively comprised the "marketing mix": product, price, place and promotion. These 'four P's', as they are often called, shaped the process of developing marketing messages for customers:
1. Product. Select the tangible and intangible benefits of the product.
2. Price. Determine an appropriate product pricing structure.
3. Promotion. Create awareness of the product among the target audience.
4. Place. Make the product available to the customer.
The four P's approach worked well in an environment where executives had a tangible product to promote, had a well-defined audience to promote it to, and didn’t need to consider what that audience might say in response to the message. Plus, for marketers, 'that audience' usually referred only to customers; other stakeholders, including employees and investors, weren't direct recipients of marketing messages, so campaigns were crafted without specific attention to these groups.
Of course, this narrow approach could not remain effective forever. As digital channels emerged and broke down every proverbial wall that separated the company from its stakeholders and stakeholder groups from each other, protecting corporate reputation and building a strong brand identity became paramount. These two factors, now controlled more by stakeholders than by corporate executives, determine an organisation's ability to weather crises, manage change, remain competitive and reap financial rewards.
However, while this reality precipitates the altered relationship between marketing and corporate communication within organisations, it is important first to define brand and reputation against an increasingly digital business backdrop.
Brand aids: identity and image merge to create added value
Simply put, 'brand' is the product of a company's identity (the visual manifestation of the organisation as it is conveyed through its name, logo, motto, products, services etc.) and its image (the reflection of an organisation’s identity as it is seen from the viewpoint of its stakeholders).
Both a noun and a verb, 'brand' can describe the embodiment of corporate identity and image, as well as the process of defining (or redefining) this embodiment to stakeholders.
The latter process happens with greater regularity as the business environment shifts to meet changing stakeholder demands. Whether a company must brand itself to a new audience or rebrand itself in the face of a merger, acquisition, name change or other event, senior executives rely more and more on the communication function to shape messaging around target stakeholder groups and to disseminate them in the most efficient way possible.
According to 2008 research conducted by the Corporate Executive Board's Communications Executive Council (CEC), corporate brand strength is a significant predictor of company preference, as well as a stakeholder's willingness to recommend the company - another important behavior to achieve company objectives. The research also revealed that in addition to brand favorability among stakeholders, brand differentiation is a critical lever for corporate communicators seeking to improve levels of company preference: Differentiated brands have 61% more impact on company preference than do non-differentiated brands.
HP and Compaq
Hewlett-Packard (HP) executives learned the value of brand management and differentiation the hard way, albeit in a slightly different context. The company merged with Compaq in 2002, thus opening up a Pandora's box of challenges surrounding its culture, identity and employee communications. But the challenges didn't stop there. HP’s marketing - or lack thereof - presented a major problem when then-CEO Carly Fiorina and her board tried to rebrand the company and its new identity to a sceptical marketplace.
At the time, the corporate marketing function reported to HP's chief financial officer (CFO) and had become marginalised over the years. Business-unit marketing teams were organised as part of independent silos - whenever a new product was successful in the marketplace, HP would create a separate business around that product. When Fiorina attempted to nail down each of the product brands that HP promoted in the market, she came up with more than 150 of them, but she saw that each embodied very little of the broader HP brand. "It was reflective of the reality that the 'thousand tribes' has no collective identity," Fiorina would recall years later. "The company was 87 different profit and loss statements."
With that many brands scattered across multiple markets and no consistent messages to unite them, the company faced a situation that no management team would envy: it had one newly united company with two separate identities and, according to Fiorina's estimates, more than 150 unique brands. What's more, its stakeholders, from investors to consumers to employees, weren't sure how to interpret the changes, and profits suffered accordingly.
HP's branding struggle tied into what many would define as a reputation crisis for the company; however, many executives' tendency to think of brand and reputation synonymously could prove to be a fatal - though not uncommon - error. According to the CEC research, 65% of surveyed corporate communicators believe that reputation- and brand-building activities are the same, whereas in reality, they are means to very different ends. While the corporate brand signals the organisation's unique value proposition to stakeholders, corporate reputation signals the fulfillment of stakeholder expectations.
While also struggling with branding challenges, then, the blows to HP's reputation would keep coming three years after the HP-Compaq merger, when Fiorina was unceremoniously fired after HP missed quarterly profits in 2004, causing shares to plummet by 15%. But even prior to Fiorina's dismissal the company realised that a major strategic change would be required to weather this storm.
In late 2003, HP executives announced a shift in the company's advertising and marketing strategy: for the first time, it would focus on ensuring that HP's communications bore a consistent corporate message. Senior vice president for global brand and communications, Allison Johnson, told a Forbes reporter: "We are in a commoditising industry, in a marketplace where the brand is more important than speeds and feeds [the metrics of a machine's top performance].
"The message is now about the value of the relationship with the company."
That word 'relationship' is integral to the corporate communication function's success in gaining traction against marketing's dominance over messaging. Case in point: in 2007, Michael Mendenhall (who previously oversaw all marketing and communications for Walt Disney Parks and Resorts) joined HP as chief marketing officer (CMO) and senior vice president of corporate marketing.
Awareness and value
In contrast to the company's earlier organisational structure, in which corporate marketing reported to the CFO, Mendenhall became the direct report of HP's Office of Strategy and Technology. In a 'Productivity Network' interview with the Marketing Leadership Council, Mendenhall said: "My group's current charter is focussed around brand reputational management and driving higher brand awareness, brand equity and shareholder value for HP around the world. We are focussed on strengthening our customers' and employees' relationships to the HP brand worldwide and leveraging the entire portfolio to profitably grow the business."
Mendenhall went on to say: "There has been a fundamental paradigm shift in the overall media landscape, which has had profound implications on how companies manage relationships with their customers, their reputation and their overall brand. Brands are now being built in the digital net space as opposed to traditional channels. It's an evolution in all communication channels that's happening at a pace that we've never seen before in our lifetime.
"It's forcing marketers to not only repurpose campaigns and content, but to really look at the digital landscape and the specific channels that are emerging, and think, 'How best can we create the right message and the right level of engagement?'"
The paradigm shift illustrated by Mendenhall's comments has staggering effects on marketing functions within corporate entities, especially in the context of protecting vulnerable reputations and building strong brand identities - two things that stakeholders have more and more control over. This reality has sparked a newfound cooperation between marketing and corporate communications (forced or not); these executives may not agree on much, but the need to have a strong brand and reputation turned out to be enough to bring them together.
Reprinted with permission from McGraw-Hill Education. Excerpt from Digital Strategies for Powerful Corporate Communications. Copyright 2009 Paul A. Argenti; Courtney M. Barnes. All rights reserved