BrainTrust Query: Retail CMO Coming of Age or Fading Away?
Through a special arrangement, presented here for discussion is a summary of a current article from the newmarketbuilders blog. The article first appeared on the Licensing Industry Merchandisers’ Association (LIMA) blog.
Perhaps no other executive role within retailer and brand marketing organizations has seen more upheaval in recent years than that of the chief marketing officer. For the first time in its more than a century of history, Campbell hired a CMO, folding marketing services, global advertising, design, media, digital marketing, and consumer insights into a single position. Campbell’s approach is an example of how future CMOs will be required to wear many hats, not all of them creative.
On the other hand, retailers like Walgreens and J.C. Penney have eliminated the CMO role altogether, even as they embark on game-changing strategies. Walgreens CEO Greg Wasson and J.C. Penney CEO Ron Johnson are a new breed of controversial, hands-on retail chief executives who may be more invested in deploying and expanding the brand visions that they have established than employing head marketers to do it for them. Both have laid out new premises for their businesses, with Mr. Wasson deciding that Walgreens will operate not as a drug chain but as a "health and daily living" retailer and Mr. Johnson declaring that Penney’s will now become the "first specialty department store." Both have eliminated the CMO roles within their organizations after their high-profile chief marketers departed.
Mr. Wasson’s major initiatives have all been positioned to further his health and daily living mission, including Walgreens’ acceleration of the grocery category, its new store formats, and its purchase of a 45 percent share of European personal care mega-brand, Alliance Boots. With the exception of a bit of backtracking on his initial promise to curtail promotional activity, Mr. Johnson has stayed the course on converting Penney’s stores into brand-boutiques-in-a-box and on his radical remake of the company into a technology-centric enterprise despite tumbling numbers and plenty of tomato throwing on the part of pundits. Whether an active and opinionated CMO would have slowed the pace of change or tempered the strategy for either retailer will never been known. Clearly, the rise and fall of both organizations’ corporate brand strategies has top down accountability and every touch point and brand partnership will be scrutinized from loftier heights.
It doesn’t seem that long ago that CMOs and marketing teams were at the top of the retail food chain, creating a short-lived star culture. (Think John Fleming at Walmart and Michael Francis at Target.) As stories of marketing-led vetoes caused power struggles within retail organizations and sent shockwaves through supplier teams, the meteoric rise of the power marketer became a disruptive follow-up to the years-long reigns of merchant princes. During this period, suppliers that expanded their relationships with retailer marketing teams while maintaining touches with merchants were ahead of the curve. Going forward, customizing approaches based on company-specific dynamics will be critical as CMO strategies and marketing accountabilities become less straightforward.
Discussion Questions
How do you see the role of retail CMO and the overall marketing department changing? Are the CMO exits at Walgreens and Penney fairly isolated situations or a sign of things to come?
CEO or CMO? Who is going to drive the company’s vision? I think it is more a matter of personality and skill sets than of formal roles. In both Walgreens and JCP, the CEO felt the CMO was not meeting expectations and believed they could do a better job so they eliminated the position.
In other cases, the CEOs have found that CMOs handle their role well and they concentrate of the other aspects of running the business. In either scenario, the CEO believes they have provided the best approach for the company by being strong in an area where they saw weakness (rightly or wrongly) on their team.
The CEO should set the vision for the company and help encapsulate that vision in a core story. The job of the CMO is to take that core story and communicate it to employees, vendors and customers. The role of CMO is vital to an organization.
To borrow a phrase from Mark Twain, “The reports of my death are greatly exaggerated . . . .”
Marketing teams have a charge of connecting their goods and services to the most vital constituents of any retailer — customers — their own, and those of competitors, with whom they are battling for share of wallet.
The CMOs who have the committment to continuously help operations, finance, merchandising, distribution/allocation, and the executive team apprised of the complete consumer — behavior, attitude, future spending plans, how media influences purchase, lifestyle, etc., will always be in demand at the table.
Is that an easy task when a CEO might say for example, “No purple” in the store? No, it’s not. CMOs have to have the ability to speak their minds, and offer the intelligence that leads to insights that leads to impact through actionable solutions.
As all marketers know: “Everyone’s a marketer.” Everyone thinks they can market as well as the professional marketer. In some cases that is true — in some cases.
A good CEO knows their limitations. In some cases, as Steve said, the CEO is also a marketer. Then it may be appropriate to combine the CMO role with the CEO role for that particular CEO. However, a truly great CEO surrounds themselves with professionals who are better and smarter than themselves in order to move their company to greatness. As Andrew Carnegie said, “No man will make a great leader who wants to do it all himself or get all the credit for doing it.”
The role of “marketing” has been controversial ever since it was expanded beyond “advertising.” As soon as you expand the marketing role, you necessarily diminish another role — in the case of CPG companies, it was sales. It took 50 years for that process to sort itself out through the brand management model pioneered by P&G.
The heart of the marketing (or CMO) role is to run the brand. In CPG companies this worked OK because multiple brands were owned by one company. So I got to be the “chief of Cheerios” at General Mills. But in truth, the bigger and more important the brand to the company, the more diminished that brand manager’s influence in running the brand becomes. No one makes a move on brand Coke without consulting the CEO.
The struggle for retail CMOs is thus even greater because most retailers only have one brand, those few seriously pursuing a proprietary brand strategy being the exception. So there is only one brand/business to run and the CEO is going to run it. It’s the same as if the only brand at General Mills was Cheerios. Not only would I have gotten even more “help” — I wouldn’t have been needed at all!
For retail CEOs who have an operations background only (and recognize it) they might put considerable power in the hands of a CMO. But most non-marketing executives think “marketing” is just advertising plus common sense anyway, so their attitude can be “hire an ad agency for the creative and be done with it.”
For the growing number of retail CEOs who have a marketing and strategy background, there probably is no compelling case for having a CMO. As my Scottish boss in one international assignment used to say, “You don’t buy a dog and then bark for yourself.”
You have to look at this separately for manufacturers and retailers. Manufacturers have had brand marketing for years. The concept of a CMO is just renaming the Group Product Manager or VP of Marketing. This job is to position the company and have the brand marketing program support the company.
Retail is different. One objective of ECR was to bring marketing to retail. This did not happen. Some chains supported the idea of marketing at the company or banner label. If the CEO and COO are not true retailers, they should have a CMO. If they spend their time in stores and talking with consumers, they may not need a CMO. At least a CMO will read the market research reports which few retailers ever do.
This is one of those articles that really is challenging to respond to in aggregate, but we will try. Ten years ago, a retailer CMO was a novelty. Over the last decade, they’ve gone from new news to rising stars to scapegoats. Now retailer CMOs are just regular members of the exec team — just as they are with manufacturers.
The reality, CMOs are rarely needed to run the business day to day. In fact, the whole point of a CMO is to have someone thinking longer term, shepherding the brand beyond the next quarter or year. By definition then, in tough times with short term focus, CMOs are less mission critical and can very easily be viewed as expendable. In the CPG world, CMOs joke that their average tenure is 30-36 months in a company with 12-24 months of transition between CMO gigs. The same now is true of retailers. This is the natural evolution of the position that all need to accept in staffing, career management and life plans.
The real issue is that CMOs are too likely to want to “bet the farm” on big bold marketing strategies. That works sometimes, but fails more often. When it fails, CMOs leave… thus the famous statistic Google touts about the average tenure of a CMO being 18 months.
A lower risk — and on average much higher return — strategy is to recognize that only a minority of marketing ideas don’t actually drive value. (This is actually true of all consumer facing ideas, not just marketing.) Therefore, organizations and especially CMOs need to have many more ideas in their pipeline.
That’s also why analytics are so critical to the CMO role, as analytics are the only way to sort out which marketing ideas in the portfolio actually drive real sales lift and which ones don’t.
I’ll echo the sentiment expressed here by many, that CEOs should stand back and let CMOs do their jobs. Even Steve Jobs (no pun intended) realized that he could not be CEO and CMO at the same time – so he went where the fun is, marketing. As I’ve written in these spaces before, when CMOs selling ideas to CEOs get the response, “I’m no expert, but I know what I like,” it’s time to move on. Marketing is a full time job, and any CEO who decides to take it on themselves will be giving short shrift to their executive responsibilities.
As a former retail CMO and veteran of four ad agencies, I understand that the job is first to sell the boss, and then the customer. Unfortunately, too often CEOs water down sound marketing plans with their fears, lack of expertise or experience, or focus on preserving their jobs. The necessary boldness is left behind, and marketing failure becomes a self-fulfilling prophesy. The answer is not a CEO who decides to do it all him/herself, but one who supports the marketing function and trusts their CMO.