The Case for Marketing's Reform

Tomorrow, in Boston, I add my two cents to the contributions of a number of marketing luminaries convened to examine the question, “Does marketing need reform?

Marketing is in big-time trouble, starting with their standing among consumers. In a recent survey, consumers ranked marketers just above used car salespeople in trust.

Disappointing marketing results have so strained relationships between marketing agencies and their clients that long-running relationships are becoming a rarity. The number of years that clients retain the same agency has declined from 11 years to only two-and-a-half, according to an October 2001 survey by Pile & Co.

Agencies may blame conditions from media clutter to new wrinkles in customer behavior for falling productivity, but clients rightfully expect their agencies to know what to do when conditions change requirements for marketing success.

Other areas of marketing are doing no better. Recent research shows 90% or more of sales promotions for packaged goods result in lowered profits.

A 1995 study by Information Resources, Inc. found that 70-80% of new product introductions fail. Some observers now put the failure rate at over 90%.

Despite delivering less than ever, marketing’s portion of corporate budgets has never been greater. In an analysis of 20 industries, half had selling, general, and administrative costs (SG&A) of more than 40% of every sales dollar, and all had SG&A costs of more than 30%.

Just between 1978 and 1996, SG&A expenses for the S&P500 increased 25% from 19% of sales to 24% of sales. During the same period, spending on advertising increased from around 3% of revenues to the mid-4% – a 50 increase.

Thus, in an age when every other business function has to “do more with less,” marketing has managed to achieve an unenviable record of “doing less with more.”

Yes, marketing needs reform.

Comments

[Yvonne DiVita]

Can we really ever expect consumers to give marketing high marks? The vast majority of consumers are hooked on TV, and believe most of what gets written in their daily newspaper. Consumers fail to be informed, then blame marketing for their ignorance. On the flip side, marketers continue to think they 'know it all' despite the numbers you cite in your post, because they're relying on 20th century thinking. Their consumers, however, are eagerly embracing the 21st century. While marketing is not rocket surgery, it doesn't dissect the product or service, it is rocket science because it involves serious study: of both the product or service, and how that product or service speaks to the consumer. On-line shopping and the emergence of women as business leaders, will change marketing dramatically in the next 10 years. For those who understand this, marketing will become a successful tool to promote and support their businesses, for those who insist on ignoring women's roles and the dynamics of the on-line shopping model, business will continue to be a muddy landscape dotted with lost shoes...

[Michele]

I wish I could be there, David - it sounds like an intriguing and thought-provoking conference. It's funny how, being in the marketing and advertising business, I have a "love/hate" relationship with the industry.

[David Wolfe]

Thanks, Yvonne. I introduced the audience at the symposium to the reality that beginning in the mid 40s, women begin progressively outnumbering men, so marekters better get used to the idea than not only are most adults now 45 or older, most of those are women.

Michele -- About your love/hate relationship with your profession, someone at the symposium said the same thing about consumers -- that they have a love/hate relationship with marketers. See Tom Asacker's 8/9 post about the conference.