By Joanne Sammer
Few transit systems have enjoyed as large an infusion of dot-com marketing dollars in recent years as the three train lines that feed into New York City's Grand Central Terminal. Known collectively as Metro North, they adroitly shuttle thousands of suburban commuters into midtown Manhattan each day, offering their clientele few distractions other than the billboards that clutter its station platforms.
It was just this distraction that led Metro North's shuttled masses to become ticket holders in one of the most spirited but lesser known battles of last year's dot-com onslaught. Having resisted few advertising mediums in their quest to establish brand identity, an array of dot-com business-to-consumer (B2C) insurgents declared war against the likes of Jack Daniels, Johnny Walker, and Chivas, as they sought to take over their own coveted shares of Metro North ad space.
Johnny Walker won a decisive victory, as the insurgents all but surrendered the lion's share of ad space to the liquor peddlers just in time for the annual holiday season ad splash. For many Metro North riders, the battle seemed to deliver a sobering message about marketing executives and the excessive spending habits that are purported to advance their product branding.
"Marketing is a hot topic, but it should be hotter — it should be the first thing on every client's mind," says Michael Skoletsky, a client partner at Viant. Skoletsky is not alone in his view. "There's plenty of work for consultancies here — it's a hot area, and consultants can absolutely grow careers in marketing," comments Eric Almquist, a vice president at Mercer Management Consulting. At Boston Consulting Group (BCG), Michael Silverstone, senior vice president and leader of the consumer practice, proclaims, "We're oversold for the next three years. If I could hire another 100 consultants with the right skills in this area, I would."
Clearly, as companies seek to increase growth and profitability in the rapidly moving New Economy, consultancy firms — and their incumbent clients — are recognizing the need for marketing capabilities that support not only bricks-and-mortar operations, but also the opportunities presented by the e-world of the Internet and emerging channels such as mobile commerce and digital interactive television. However, while recognition is pretty universal, the consultancy approach to marketing and delivering client solutions is varied and, with no clear winners on the podium, there is much to play for.
A Surge in Demand
"This is an unusual time. Marketing in the digital arena is new to everyone, and technology is changing all the time," says Viant's Skoletsky. "I've been here two years, and it's the most exciting work I've ever been engaged in. There is a constant stream of people from traditional marketing and advertising backgrounds who would love to work here. We have more candidates than positions in this area."
If Viant is turning potential employees away, others are not so fortunate. CSC Consulting reports more client demand for marketing services than it can meet, but is intent on growing its skills. The marketing and sales strategy practice was created after the April 1 restructure that focused the consultancy side of CSC on e-business. It is now the task of Mike Matheis, leader of CSC Consulting's marketing and sales strategy practice in North America, to grow a core team of eight consultants into a full-fledged practice.
While a challenge, this is no new adventure for the man who previously built similar practices at Coopers & Lybrand and PricewaterhouseCoopers before joining CSC two years ago to do it all again. "We're very attractive to partners and principals because we have repositioned to focus on e-business. Others may be larger, but they're not entirely focused. I have significant resources to grow the practice, which is also attractive to individuals as there will be growth for them, too," he says. With 13 years in marketing at Procter & Gamble under his belt before joining a consulting firm, Matheis is looking for similar profiles as he hires partners and a decreasing level of experience as he recruits principals and consultants.
Where CSC's recruitment targets are relatively low, BCG's are more ambitious — but BCG is having problems finding the skills it needs. While it has almost 100 vice presidents in its consumer practice, BCG has only a small number of partners who are dedicated to specific domains such as branding, marketing, new product development, competitive analysis, and consumer understanding.
"It's hard to find the right people, because the skill set is complex," maintains Silverstone. "The necessary skills include intelligence, energy, creativity, and experience, plus lots of 'I can do it' attitude. We recruit from business schools and turn individuals into these people, as well as hire from industry."
Extending Brand Equity
When it comes to client projects, all are agreed that the customer must be the center of attention and every innovation, but working practices differ. "Beyond traditional marketing and branding, clients face the challenge of thinking through how to compete in the e-world. This is particularly true for bricks-and-mortar Fortune 1000 companies that want to extend their brand equity over the Web. We believe they should be concerned about new technologies when developing strategies, but should be using the sound marketing practices they've always used," says CSC's Matheis. "While disruptive technologies change the scope and market of a branding proposition, they don't change the reasons why customers respond to brands. People think everything has changed and throw everything out the window — we couldn't disagree with this more."
While the market has changed but customer expectations have not, Matheis's experience with clients is that they don't actually buy into this idea until the differences of the e-world are mapped onto the necessities of the traditional marketing model. To achieve this, CSC has a so-called "e-brandometer" that tracks the traditional steps of go-to-market — developing, planning, and executing a branding and marketing strategy — and then adds the "e" dimension.
"In the traditional world, for example, the first thing to do is identify the target audience. The difference in the Internet world is that the audience is smaller than in the real world — in the U.S., about 50 percent of the population has access to the Internet — but its profile is more highly educated, younger, and more affluent. So, in developing a strategy you must match that profile," Matheis explains.
He also cites the example within brand strategy of developing a value proposition. Where traditionally companies sought point solutions — perhaps a 30-second television advertisement that communicates one or two benefits of a product or service — today customers expect e-branding to deliver total solutions. "Consider a manufacturer of toothpaste," suggests Matheis. "A traditional ad is time-limited and might deliver the message that this toothpaste fights tooth decay. The e-user expects a total solution, a Web site on health care that offers a multitude of products. People are wrestling with this; bricks-and-mortar companies with big brands have a lot at risk and a lot to lose if they don't make the right alliances with partners that have similar brand equity and alignment."
One Channel Among Many
BCG toes the "customer is king" line, offering clients the ability to understand what the customer hopes for, wishes for, and dreams of, but can't articulate. "You need to understand customers and how to generate company migration strategies for growth. Multichannel marketing is the way to go, so we explore these avenues with clients. Typically, we get called in at three stages: ground-floor e-triage, where clients want help in identifying primary opportunities; late-stage idea development, where we help the client execute strategy and make the idea commercial; and where clients want support across every area of marketing," explains Silverstone. "Everyone wants to grow and be more advantaged, but there is a great deal of uncertainty at the moment, and huge pressure about how best to use capital to generate the fastest growth."
Rather than create specialized project teams, BCG works with the client in multifunctional groups according to the module of activity at hand. It recognizes the weaknesses of the "dot-bombs" and the dangers of losing sight of the business by becoming overwhelmed by technologies such as Customer Relationship Management (CRM) systems, often preferring to work with existing customers who, it claims, are more sophisticated in their thinking. "With these clients we can develop a one-page objectives plan and then scope the opportunity together," claims Silverstone.
Like BCG, Bain & Co. does not have a marketing practice and sticks to broadbase strategy when consulting with its clients. Its consultants also work in integrated teams, pulling in the required skills as projects progress.
"Work at the strategic level is not changing. If you have the strategy right, the ability to improve marketing is about tactics. If the tools are there, such as CRM and database management, then it's about getting to customers in an individual way," says Vijay Vishwanath, director with responsibility for the consumer products practice at Bain.
While Bain is committed to e-business, it believes that companies must move from pure "e" strategies to an integrated view of the business, incorporating new channels seamlessly in the whole. "Every time a new channel emerges, the world says it will destroy everything. But those who apply traditional marketing methods to e-business and integrate across channels will do better than the pure plays so hyped a year ago," adds Vishwanath.
When approached by a client wanting to use a new marketing channel, Bain points out that the Internet, by way of example, is just one channel among many, and that usual rules apply. "Companies think about a portfolio of products, not often about a portfolio of channels, and what they are trying to accomplish. A very important question is the role of each channel. For example, should an e-tailer put all its products or just some of them on the Internet?" asks Vishwanath. Customers are then considered in terms of segmentation and which segments have an inclination to which channel.
Know Your Customer
So, too, are brands scrutinized and developed to differentiate them from competitors, a line of work for which Bain notes significant demand as many products have become commodities over the past few years. "Companies often jump to the issue of the brand — logo, identity, and so on — before asking the essential question about why the value proposition of their product is different," says Vishwanath. "Marketing executives are all looking to differentiate products in the customers' eyes — it all goes back to consumers, segmentation, and understanding customers."
If this is the strategy consultancy approach, Mercer Management Consulting takes, perhaps, an even more cerebral tack, attempting to get into the minds of consumers to find out where its clients will make profits in future. "This is increasingly difficult in an environment where there is no sustainable advantage anymore, but we have a strong customer science capability and focus on customer behavior. We look at what customers are choosing and how we can help clients make them choose their brands," says Almquist, who heads Mercer's customer value growth practice worldwide. "The winners will be those that really understand profitability and how they can affect it. For example, how to maintain profitable customers and improve the profitability of nonprofitable customers to yield value."
Building on its analytical view of customer behavior and choice, Mercer has developed what it calls discrete choice models that encapsulate its knowledge and deliver information on how customers behave in different situations. Almquist cites the example of a project with French railway operator SNCF that was looking to improve revenues from its Eurostar Paris-to-London service. Using a choice model, the project reconfigured the business, adding a new class of service and additional transportation packages beyond the Paris-to-London run. "As a result of using the model, revenue went up 20 percent over 18 months," claims Almquist.
Having carefully studied the telecoms market to find out what customers do and don't value, Mercer has also developed pricing models that help to identify customer priorities.
The firm reports an increasing importance of brand strategy in its work and works with clients to achieve strategic control in their markets. Almquist describes Coca-Cola's control of distribution channels as a winning method of not giving consumers choice in their purchases. "We do a lot of brand strategy work, not so much advertising, but 'customer moments of truth' that work over time. Increasingly, it's customer experience that creates strong brands, so we help clients align their organizations so that every employee at every touchpoint becomes a brand ambassador."
A Multitude of Products
A typical marketing and branding project takes between four and six months and involves a team of five to 10 consultants, although with only 30 consultants worldwide in his practice, Almquist acknowledges the need to call on other practices to work on the broader aspects of client projects. That said, he claims that 50% to 60% of Mercer's revenue has a significant marketing or customer-focused element and that he is constantly on the lookout for new recruits. "People are very hard to find, and our core customer science team is in big demand. We tend to recruit out of schools with empirically focused programs, such as Cornell, and also in India and China, where people are very good at statistical and quantitative methods. In this area, the U.S. has fallen behind," he says.
As the number of products and services in the market grows exponentially — Almquist notes 350,000 products competing for shelf space in a typical store that can handle 50,000 products — client demand for consultancy help to get products on the shelves and through the tills is bound to grow, creating plenty of work for customer-conscious consultants.
Almquist sees another rich seam in the aftermath of CRM implementation. "There is growing dissatisfaction about the value companies are getting from huge investments in CRM. CRM has been very lucrative for the systems integrators, but clients are wondering what they are getting. This all comes back to analytical marketing to create value from the investment," he says.
Marketing a multitude of products through multiple channels to an increasingly fickle audience may not be easy, but it is certainly an interesting challenge and one that is not about to disappear. As Almquist concludes, "The customer topic has become very important for consulting firms, as stock markets are so punishing to companies when the top line doesn't grow."
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