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Does Starbucks Need a Chief Marketing Officer?
Starbucks promoted its current global chief marketing officer (CMO), Brady Brewer, to the role of CEO of Starbucks’ international business, consequently becoming the latest in a number of companies to eliminate the CMO role.
Instead of replacing the top marketing job, Starbucks is appointing regional CEOs backed by “regional marketing support” to tailor marketing and messages at local levels. Starbucks is also creating two new marketing roles:
- An EVP, chief merchant and product officer “focused on global product strategy, developing new products and growth platforms.”
- A global brand creative leader expected to guide the chain’s global brand identity, overseeing collaborations within arts, design, architecture, fashion, publishing, and music.
The organizational realignment comes after the chain last November introduced a “Triple Shot Reinvention” growth plan that includes expanding its store footprint to 55,000 by 2030, up from 38,000 currently, driven largely by expansion in China and other underserved overseas markets. It also calls for doubling its 75 million global Starbucks Rewards members within five years.
Laxman Narasimhan, Starbucks’ CEO, said, “Consistent with our ambitions, we are realigning the organization to balance clear geographical focus with investing in functional capabilities to scale around the world, generating productivity and reinvigorating our partner culture.”
Starbucks is not the only company to make organizational changes recently. UPS, Etsy, and Walgreens have decided to eliminate the CMO role over the last few months, building on moves in recent years by Lowe’s, Hyatt Hotels, McDonald’s, Johnson & Johnson, Uber, and Lyft to ditch the role.
According to Adweek, “Starbucks’ move to ditch the CMO position comes as many brands are rethinking where the now nebulous role sits within their business, changing the title to reflect a broader range of responsibilities, hiring ‘fractional’ CMOs in consulting-style positions and, in some cases, cutting it entirely.”
Recent analysis from Spencer Stuart found that 27% of Fortune 500 companies don’t have a CMO role.
Jimmy Yar, chief detective at The Talent Detective, believes Starbucks’ realignment of its marketing structure reflects an increased emphasis on the “think global, act local” mantra. He told Marketing-Interactive, “With high growth regions such as APAC where countries are far less homogenous than North America and Europe, the decentralization to regional marketing to help drive growth becomes the order of the day.”
An Ad Age article noted that marketing-adjacent roles, such as chief customer officer, are replacing CMOs, particularly for retailers, “as the companies look to put customers at the forefront of all of their marketing decisions, including loyalty programming.”
A Fortune article from January on the trend of the CMO role being forsaken explained that the rise of “martech” (or marketing technology), which supports data-driven digital marketing, has made the role “more algorithmically driven, full of customer insights, and so mission critical that it also falls under other C-suite executives’ remit.”
Discussion Questions
Does it make sense for Starbucks to eliminate the global chief marketing officer role as it shifts toward more of a regional focus?
Has the global CMO role become less relevant, or is the marketing function too broad in scope for one individual to oversee?
Poll
Loading …BrainTrust
Lisa Goller
B2B Content Strategist
Shep Hyken
Chief Amazement Officer, Shepard Presentations, LLC
The truth here is that Starbucks will still do marketing, it’s just that this will be executed through different roles. That makes sense since marketing is a very diffuse and extensive area that is cross-functional. Of course, ensuring marketing is localized and regionalized – which Starbucks is doing – makes good sense. And from my understanding, some regions like the Americas will still have a local CMO position.
Global companies like Starbucks, McDonalds, and J&J do understand that one message and one strategy does not work effectively in every market – so regional CMOs make sense in that context. For a US regional or metro-sized retailer or grocer with a fairly homogenous market, keep it simple and have one person be accountable.
CMO, EVP, Brand Creative Leader, a rose by any other name is still a rose.
“Think Global, Act Local” is often quoted without thought. In this case, it is extraordinarily important. Like McDonald’s, every market is different. The differences result from culture and ingrained tastes.
And, the competition is differnet. In China, Luckin Coffee is a fast-growing powerhouse. While China’s Luckin was a roaring success, it was a massive failure in Thailand. Starbucks’ initial entry into Australia was a disaster. After regrouping, they are now up to only 69 stores. Target’s cut-and-paste strategy in Canada is a case study of how not to market in another country.
The closer the product is to the consumer, the less value a global Marketing office offers to an organization.
In my corporate days I never worked for a company that had a CMO and they were able to handle their marketing just fine. I like a regional approach to marketing because it makes more sense. Marketers in positions other than C level can do a better job; the C Suite has too many distractions.
EXACTLY!!!!!
I agree. Marketing is very cross-functional. Sometimes it’s nice to have someone to pull all the strands together, but often it can be handled by other divisions or people.
What a funny cycle this has been. Retailers never had CMO’s per se. Ever. Then the CMO rose to prominence, even having their own IT departments, which created a lot of corporate friction. A lot of money was made by consultants trying to “put Humpty back together again” and eliminate that friction.
It reached the height of silliness (IMO, of course) when Kohl’s did a re-org and had merchandising report to the CMO.
I am actually glad to see retailers trying to return to some kind of holistic way of looking at their business.
I had to laugh at that from Kohl’s. It’s an absurd reporting line!
Eliminating the CMO role doesn’t eliminate marketing. It means it falls under a different title and executive responsibility. New titles, such as CXO, may include marketing. I do think it’s important for a consistent identity throughout the brand (globally) – even if there are nuances in different regions, countries, etc. Whether that falls under the title of a CMO, COO, CEO, CXO, or some other title doesn’t matter. It has to be done.
This decision makes sense. Marketing is now too complex for only one person to oversee, particularly given Starbucks’ plan to scale globally on a tight timeline.
Marketing is now infused with tech for agility and entwined with service for localized resonance. No wonder Starbucks’ CMO role is fading while the chain restructures around customer-centric innovation and belonging.
Chief Marketing Officer, Chief Customer Officer- Chief Brand Officer….take your pick. As long as a talented leadership team, working well together understands the Customer and infuses the rest of the organization with that understanding, does it really matter? I’ve always been more in favor of building a well-functioning, well led team, than filling up standard boxes on an org. chart.
I would like to remind us that when economies decline, control of companies usually shifts from marketing to accounting. In most cases, that doesn’t work, especially for consumer brands. CPG for example, is a marketing driven industry..
The white ivory tower accountants are more concerned with saving money than building business. My educated guess is that cost savings were the driving force behind the examples of companies mentioned who no longer have CMOs.
I worked for a company where we, the marketing department, controlled the brand and grew profitably in double digits each of six straight years. However, as soon as “accounting” took control, and laid off most of the marketing department, including the CMO, the brand started to decline.
Initially, the new accounting regime cut all advertising and marketing expenses, and that mentality ignores the importance of keeping your brand message front and center to build and retain your customer base.
Meanwhile, that brand’s chief competitor took advantage by accelerating their marketing energy, and became a dominant force in the same category. Their share of voice became a defining factor.
The usual leadership functions of a Chief Marketing Officer (CMO) are to head up brand management, marketing communications, market research, product marketing, distribution channel management, pricing and customer service. Management of the brand image and brand message are the most important of all.
Whether or not a person has the title of CMO is less important than how the above responsibilities are handled, and by whom? There is also a fine line sometimes between marketing and advertising, but my experience has always been that the CMO oversees ad agencies or ad personnel.
To suggest that regional marketing somehow replaces composite brand marketing is foolish. Regional marketing directors are better suited or overseeing customer service, especially for Starbucks, however a national brand, let alone a global brand, needs one voice to protect the brand, it’s message, research, and distribution channels, which are all but impossible to manage regionally because channels tend to overlap and crossover.
In the case of Starbucks, since the CMO is now CEO, it might be that Laxman Narasimhan will oversee and perform the national level marketing activities on his own. But with regards to shifting to global thinking, I agree that each part of the world needs its own decision makers, at least to a degree, however, there still needs to be one czar at corporate headquarters to control the image and message of the brand. Db
Spot on, David. I’ve lived exactly what you are describing and have seen a few others up close. Sometimes a new CEO wants to put a new spin on their leadership, break up legacy teams. At the end of the day, the brand, voice, customer experience, and strategic marketing still have to be led by someone at the top. The alternative of letting regions do what they want may yield a blip in sales performance, but can often damage a brand if not coordinated with a protector.
If you are improving the functional execution it doesn’t matter what the title is. So, as long as marketing is getting done – and getting done most effectively – what difference does it make what the box on the org chart says?
It appears that many companies have moved on from CMOs for a number of reasons – some good, some not good. AI is the newest siren call of marketers.
However, it doesn’t matter whether you have or what you call this position as long as the organization in its target markets are customer facing.
How about saying re-evaluate, or evolve, or reposition, or regionalize, or replace, or integrate, or……instead of eliminate? Eliminate sounds like a staff reduction. It may in fact be a staff addition. One box on the org chart is being split and the new boxes are being moved around on the org chart in an effort to be closer to individual market needs. What What Starbucks is doing makes abundant sense, but the story is more accurately told with words other than eliminate.
The important question becomes: Who is doing the marketing in the company? It will always be done — because the full 4Ps (place—channel, price, product, promotion) of marketing are always critical to the bottom line. Moves like this outsource the Ps elsewhere in the company — usually putting it the hands of people inexperienced with the human realities of those issues operate.
These companies have lost any muscular vision for marketing’s true value — partly through CMOs hires lacking that same muscular sense with them. As a result, we find pricing shuffled off to finance — so margin focus replaces focus on the value delivered. Product is shuffled off to product development and the focus becomes what can be made rather than what should be made. Channel is put in the hands of micro-management by metric busy-bodies – at least in Starbucks’ case that seems to have clearly happened. All that leaves communication for the marketing department.
Fortunately, the “no CMO” movement is just another fad like how often companies decide they can just do their advertising work in-house. They make the change, do it for a few years, then go back out to agencies. So CMOs will be back. But these companies will have to feel the pain of their errors before that will happen.
I believe this is about strategic adaptation to market forces by a new CEO and board seeking the right formula. Corporate often decentralizes for growth upside, then several years later swings back to centralize functions like Marketing to better align direction, improve cost efficiencies, and if brand becomes a marketing mess.
The key question is who ultimately owns the Starbucks brand and customer experience? Do they have a seat at the table? Will it be given the weight it deserves to differentiate, make an impact? This proud brand was built by Howard Shultz, former CMO Aimee Johnson, Brady Brewer, and others, who also created the digital experience we now enjoy.
So it sounds like they are “decentralizing”. Back and forth we go on the corporate strategy possibilities. In one camp “we need one team”! In another “we need marketing aligned to the region we are operating in”!
In the end, there is no one correct answer. The pendulum swings back and forth, and so it will be interesting to see how this move goes.