By Tom Ryan
In a recent study, McKinsey & Co. found that companies whose brand portfolios perform strongly tend to place more responsibility for marketing strategy and execution in the hands of division-level marketers.
For these outperforming companies, corporate marketing serves primarily as "a center of excellence that disseminates information and best practices to line marketers," according to McKinsey.
At underperforming companies, corporate-marketing organizations spend more time providing marketing services (i.e., managing relationships with advertising agencies), as well as getting heavily involved with global brand and innovation management. McKinsey believes these tasks "can sometimes be profitably performed closer to the front line."
Nonetheless, the research group said divisional marketing teams do need some oversight to make sure their methods match corporate goals.
"Marketers in charge of categories, products, or brands need the freedom to take risks as they try to expand the boundaries of traditional approaches," McKinsey reports. "At the same time, however, it's vital for companies to make sure that marketers don't overspend - or cloud the meaning of core brands - while pursuing fragmented consumer segments, new-media opportunities, or evolving channel options."
The findings are part of a survey of chief marketing officers and their subordinates at 20 leading consumer goods makers exploring increasing complexities in the industry. McKinsey believes that many companies are struggling to keep up with "unprecedented levels of change - from an explosion of in the number of media choices to the growth in size and importance of major retailers such as Wal-Mart."
The study also looked into issues such as brand management, the changing media environment, innovation, consumer insights and retail relationships.
From an organizational perspective, the survey found that more than 80 percent of the consumer goods companies had corporate-marketing organizations in addition to marketing groups aligned with individual divisions. It noted that the right organizational model depends on factors varying by company - such as geographic scope and the number of categories in which a company competes - and a "one-size-fits-all" structure isn't feasible.
But the research group underscored the importance for all organizations of delineating roles and responsibilities between corporate and divisional marketing teams, especially in an environment where marketers are continually testing new techniques.
"In our experience, striking a healthy balance between corporate- and division-level marketers and clearly defining their respective responsibilities can contribute to strong performance within business units," McKinsey observed.
Discussion question: Why do you think companies placing more responsibility on divisional marketing teams saw their brand portfolios perform better? How do you think corporate and divisional marketing teams can achieve organizational balance?