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Managing Marketing: Marketing strategy, planning and implementation from a CMO perspective

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Managing Marketing is a podcast hosted by TrinityP3 Founder and Global CEO, Darren Woolley. Each podcast is a conversation with a thought-leader, professional or practitioner of marketing and communications on the issues, insights and opportunities in the marketing management category. Ideal for marketers, advertisers, media and commercial communications professionals.

Julian Barrans is the Business Director for TrinityP3 in Asia, but has also had a long career as a global marketer at Mars. Here he shares with Darren the disciplined business approach to marketing and the role of strategy, planning and the all-important implementation to drive brand value and why marketing needs to sit at the table with their colleagues to drive and deliver business growth.

You can listen to the podcast here:

Follow Managing Marketing on Soundcloud or iTunes

Transcription:

Darren:

Welcome to Managing Marketing and from today we’re actually going to be coming to you every week. So, rather than fortnightly you’ll be able to listen to a new conversation around managing marketing on a weekly basis. So, make sure you check out our new weekly podcast.

But today, to celebrate the weekly podcast, I have the chance to sit down with Julian Barrans who is one of the TrinityP3 business managers; he’s in Sydney, down from Singapore. So let’s have a chat. Welcome, Julian.

Julian:

Nice to be here, Darren.

Darren:

It’s been three years since you joined TrinityP3?

Julian:

That’s right.

Darren:

But before that you had some phenomenal senior marketing roles all over the world didn’t you?

Julian:

Absolutely, I had a long client-side career with Mars; marketing director in Asia, Australia and New Zealand and then global innovation director based out of the U.S for Petcare.

Darren:

Mars is considered one of the top consumer packaged goods marketing companies isn’t it? It’s relatively unique as well because it’s still a private company rather than being publicly listed. That must have been a terrific experience?

Julian:

It was and because they very much believe in the brand; the old saying that factories come and go but brands live on forever was very much a belief of the Mars family. So, the metrics for success were very much around the tension between marketing and manufacturing; marketers want to do more things in the market, the consumer is king, the factory would be the common sense brake if you like: how much does it actually cost to make that kibble in that shape.

Darren:

So, what you want to do and what you can do and what makes sense to do are the three considerations.

Julian:

Yes, and that tension helped the common sense rule the day but it didn’t stop innovation. That’s why Mars has been very successful with these long-standing brands that exist around the world. They’ve got so many brands with way over a billion dollars in value not just when you consider their pet care portfolio but their snack food brands as well; the likes of M&M, Snickers and so on.

Darren:

It must also be fairly unique having such a big brand-driven business that is not having to every quarter go cap in hand to the shareholders to be answerable for short-term growth. I’m very aware that Mars as a business is very focused on performance but it’s not just short-term; they’re able to take a medium and long-term view of all their brands and I think they do don’t they?

Julian:

They do generally. I think it’s when there has been an acquisition and that’s a drain on cash. They don’t like borrowing much. They have AAA ratings with banks because they’re so liquid so part of the business is if you make profit you have freedom as a business to go and do things you’d like to try.

And also you’re rewarded financially based on rota return on assets. If you had a high rota it means you’re making good money, you have freedom and it also means that all of the associates in the business get paid more too. So, it’s a very instant reward system.

With that you get very thorough business processes put in place; sales are measured daily. When it comes to the yearly business plan that’s a rigorous process that starts around this time. It would only really be finalised around now and then waiting for the year-end to happen, which would set the true base for what the sales for the year were and then the kind of growth you’re looking for for next year.

Darren:

I was going to say it must have been a terrific place to learn the disciplines because some people think of marketing as a bit gut-instinct (not unaccountable) but certainly about the big ideas and going forward. But in actual fact, in a corporation like Mars, that discipline, the timing, the process would have been something that you had to learn intimately so that you could use that as a platform to leap from as a marketer.

Julian:

As a marketer and as marketing as part of the business overall. The very interesting aspect of the responsibility that the marketer at Mars had was that you were responsible for brand profitability. So, you were very much tied into the PNL.

You add up all the brands; that’s the profit for the business overall. So, you could never forget that you were linked to margin. You really had to start thinking about the balance of sales that are brand-led versus the percentage of sales that are trade promotion-led. If you had a powerful brand, say 70+ % of your sales would be high-margin branded sales.

Darren:

Because retailers would be constantly putting pressure on the sales team to allow them to offer a discount or something that helps them differentiate their retail outlet but that could easily be at the expense of the brand if it’s over-leveraged.

Julian:

Absolutely. The only way you can protect against that is to have regular dialogue with the trade. As we had a new brand or brand initiative going on we’d have a road show with the trade and you’d probably do that if not every year then every two years. It’d be a good reason to pull the trade in and share stories and amuse them by having the brand team eating pet food; you’d always get a good laugh. I used to feel quite envious of the snack food division.

Darren:

Yes, much better eating chocolate bars than having to eat the dog or cat food.

Julian:

Absolutely. As the senior member I made sure that I had Sheeba.

Darren:

The high-end.

Julian:

Basically tinned tuna. I felt sorry for the person eating Chum or KittyKat.

Darren:

Very interesting. For me that raises some issues that you could clarify for me. We hear a lot today from marketers that go, ‘yeah, we’ve got a strategy but we just seem to be doing tactics all the time’. I can’t imagine that Mars was a company that didn’t have a strategy. But take us through that process as a marketer in charge of brands (with PNL responsibility/ brand profitability). What is the planning process? Where does it start for you as a marketer?

Julian:

We’d be tracking brand profitability every quarter so you can see what’s working well in terms of activities you’ve previously brought to the marketplace.

Darren:

So, sales daily but brand profitability quarterly.

Julian:

Yeah. You could analyse it more than that but you’d be causing too much distraction if you started looking at it every month.

Darren:

And also the danger is the natural ups and downs that you get on a daily basis doesn’t give you an overall trend either.

Julian:

No. It’s about being sensible with data and using data that is going to give you realistic trends that you can work with. You’ll certainly be able to see quarterly what happens around a new brand initiative or brand launch. You’d be able to track that to see how it went according to the initial sales plan that was developed.

Is distribution, sales growing as quickly as you thought? That was a good discipline but when it comes to how you set up the yearly plan (and the midterm plan)—just 5 years. So you would take a perspective and would be looking against your very established brand strategies that are often global, meeting with brands like Pedigree and Whiskas for example.

There is a global strategic committee that would be steering that brand, ensuring that the science around nutrition, the outcomes from that work would trickle down through the brands in an affordable way so you didn’t disrupt the cost structure of the brand too much.

But it gave you on strategy initiatives that you could add in at appropriate times so you’d have those longer term 5 year plans in place and then yearly you’d be getting down to the nitty-gritty. I mean nitty-gritty because it’s not just looking at a top-down shake.

We used to sit as a management team and we’d discuss what we thought was happening in the marketplace and what was going to be reasonable growth based on some of the big initiatives we had. You would have a shape and you’d be wanting to hold what your A&P percentage was versus the R&D percentage of revenue etc because you want to have an overall margin that meant you had a profitable business so that you could have freedom and pay the associates well.

So you had that shape but then you needed to build the activities from the ground up based on when they were going to the market, what kind of activities they were and you would have to build those and then see how that fitted with the overall yearly plan.

Darren:

And I imagine the consideration is not just building the brand value but also supporting the sales so you had to look at that medium to long as well as the short-term.

Julian:

Yeah, so with sales there’d be a trade expenditure budget, which would again be in line with the shape and then as you go through the year it would be managing that. You don’t want to end up in a situation where you’re late with your activities or the initiatives for the activities so everyone has to work together to make this all happen.

Because if you’re late with your activities you might be then relying on trade expenditure only. And with trade expenditure end of condoloa displays, price discounting you could fall into the trap of having lots of discounted sales whereas my guide was that if you’ve got a strong brand you want to be 70+% having branded sales not trade promotion driven sales.

Darren:

Of course, we’ve seen that in recent times where this constant on sale discounting price has set a new value for various brands, especially in the grocery area because consumers have become very savvy as to the price they’ll pay for something. And if it’s always on special then that becomes the new price.

It’s very hard, as a, marketer isn’t it, to get back to having a premium price or perception?

Julian:

And linked to that you can also train the trade to always wait for the discounted offer to come.

Darren:

Yes.

Julian:

And that is also a very dangerous situation to be in because they’ll quite happily sit on their stock for a bit longer and look to use the strength of the Mars brands as a foot traffic builder in store.

Darren:

Now, this is a consumer packaged good, sold through retail 3rd party; you and I have both been doing work in the last couple of years (not with consumer packaged goods) but with services companies; Telco’s, financial services. They don’t seem to have the same discipline from a marketing and business perspective that consumer packaged goods have. Why do you think that is?

Julian:

Yes, it’s interesting that the pressure is on their business from a daily perspective in terms of retention of customers and then the drive to acquire new customers has driven those types of businesses to one where they’ll get to customer at any price.

And they always seem to be discounting. So then you end up with a situation where the whole market is devalued. As far as the consumer is concerned they’ll see very little difference between a brand so you’re commoditising the market.

Darren:

Because there’s very little investment in the differentiation of the brand?

Julian:

Yes, because you’ve got a situation where in the old days, take Telco’s, it use to be coverage and call dropout was the big marker of the quality of the brand. Now, through new technology, it’s pretty much a level playing field so there’s little to differentiate them so they all start clamouring around discounts, offering extra data so it’s a discounting model.

It’s actually devalued. So now some brands are turning around; how do we get the consumer to be loyal to our brand. They’re now starting to look at things like service quality, which as we all know has been a bit of a problem with a lot of Telco’s for a long time.

They’re trying to dig themselves out of this hole they’ve created where they have devalued the brands and created a commodity market.

Darren:

But bringing the discipline that you learnt at Mars, how do you see that working if say tomorrow you became the CMO of a Telco or a financial services company? How can you bring that consumer packaged goods marketing business disciplined approach to a direct to consumer because there’s often no retailer; there maybe channels that they sell through but most of them are direct and where it’s all focused on acquisition rather than looking at quarterly brand value you are looking at daily sales, and daily acquisition and churn rates and things like that?

Julian:

I think the danger is if you let that dominate too much of your thinking. Yes, you need to have your finger on the pulse but the challenge is it can stop you doing the new things; what’s going to help differentiate you going forward.

If you think about digitisation of Telco’s versus the legacy aspect of the business, which is where the majority of the money, the profit comes from. So, yes you need to have a handle on what’s happening with prepaid, post-paid etc especially looking at Asian markets and emerging markets. But at the same time you’ve got to think about how the consumer is moving very quickly in terms of what they want.

The advent of technology around 3G, 4G, 5G is not far away then the service opportunity that you have with bundling different products and services as well that can allow you to build value in your brand again.

Now if you focus on the legacy side of the business, the daily acquisition rate and so on, then that’s going to stop you moving out in that direction. You’ve got to be strategic at some point. The only way I believe you can be strategic is by building that into a plan where you recognise, no, you’re not going to make money out of those digital services initially.

But what it’s going to do is add more salience to your brand and it’s worth its value in doing that while you’re building your capability and infrastructure. And you have to, therefore, take some of the profitability away from how you’re measuring the legacy part of the business. You have to invest in the future.

Darren:

I also think the other challenge for a CMO in those categories is the fact that brand isn’t just built through comms is it? It’s built through experience. It’s a service’s product (that’s almost an oxymoron)—but it is the fact that the brand is built through everything the customer experiences.

With packaged goods the retail experience is largely at the behest of the retailer and then the product experience comes down to the use of the product and that’s the reinforcing so there is a big opportunity for comms to set mindset about that brand and create preference.

But how many times have we seen, especially services companies with marketing teams that have gone off and done the big corporate branding communication piece but just never delivered at any point in the customer experience beyond a piece of comms.

Julian:

I agree totally. I’m a great believer in customer journey and understanding at what point your brand interacts with customers not just in how they discover your brand and how they might decide to purchase it but how they engage with your brand throughout their life.

That works whether you’re dealing with fast-moving packaged goods or a very occasional purchase like an automobile. So, you really need to understand the customer journey and how that is changing. With the advent of new technologies things are changing so fast in terms of how people consume media, information, and therefore also what they expect from a brand in terms of how the brand should communicate with them.

Going back to the old days, if you take packaged goods, something they’d seen on a shelf in a supermarket and maybe there was a website. Now you have KOLs, key opinion leaders, social media, communication through your smart phone, the likes of Trip Advisor, all these different platforms.

Darren:

And also audio search; the smart bots that you ask for things and they bring it to you or recommend it to you.

Julian:

Yeah. These things are changing the way consumers engage with brands a lot so you need to be on top of all that and predicting how that’s going to shift. If you looked at a customer journey today, say automobiles again, versus 10 years ago, the role of the distributor is quite different.

It used to be very much around selling. You’d go there, pick up a brochure, look at a car, go away with your brochure, think about which one you wanted and organise your test drives and so on. Now, through technology, you’ve done all sorts of research online, you’ve seen videos from the likes of Top Gear comparing this model with that model.

You’ve pulled models into your search that you’d never thought about before, thrown others out and you haven’t even gone to a distributor yet. You’ve not even sat in the car yet all these decisions have been taken. And unless you’re playing the game in the right way you miss out. Your brand might have been there.

Darren:

They say that more than 90% of automobile purchasers have done extensive online research and by the time they get to the distributor’s floor they already know exactly what they want, and what they’re looking for is how do they negotiate the best possible price. So the sales-ship now is how to maintain the margin and still get the sale.

Julian:

And the role of the salesperson is now to introduce the service manager who is the person who’s going to have the long-term relationship with the customer not the sales guy anymore.

Darren:

That’s true.

Julian:

Changes like that are happening that change the dynamics in the marketplace but it also makes it very exciting.

Darren:

But going back to your earlier point; it’s still important to have the overall strategy so that you can overlay a plan that understands that customer journey and influences the customer along the path.

Julian:

Exactly right. The strategy for the brand usually stays pretty much fixed and it’s the dynamics around it that you need to tweak and adjust so you can ensure you get the brand profitability target you want. So, it’s all about thoroughly planning what kind of strategic activities you’re going to put in place to support that strategy not a bunch of tactics.

The danger is you fall foul of doing lots of tactics because that’s what sales are asking for because they’re looking to leverage a retail experience or whatever. So, you need to have strategic activities in place that will take account of the customer journey, everything you know is happening in the relationship between your brand and the consumer, and keeping a crafty look over your shoulder to see what the competition are doing.

But don’t let the competition drive your activities. It should be your brand and the relationship with the consumer that drives your activities and how you see the market and the category developing, and to make sure that you retain your number 1 slot because you don’t want to be anywhere else in your category but number 1. Anywhere else and you start to get into trouble.

Darren:

Exactly. I want to give you 2 scenarios and get your advice on what you’d say to the marketers in each case. We’ve recently been working with a marketing team, a new marketer, and they’ve inherited a culture of research, strategy, research, strategy; like they’ve always been in strategy mode with very minimal actual marketing implementation.

So the new marketer’s come in, has looked at the strategy, it’s a perfectly fine strategy, it just needs implementation. How would you go from a culture of almost death by strategy into actually implementing a marketing plan?

Julian:

Well, if you have a team that are just spinning around strategy and trying to perfect something around the 95th percentile then you’ve got a problem. A strategy that just lives on paper; the consumer never gets to see it so it doesn’t exist at all. That’s not an outcome you want. You need to develop the strategic activities that enable the consumer to respond to the strategy you’ve developed. You have to have a balanced team where you’ve got people who are good at developing strategy but you can’t have people who are constipated for want of a better word.

Darren:

You’d also want to make sure that as you move from this long period of strategy into implementation you’ve got all the right metrics in place to be able to see how that strategy is performing as you implement it wouldn’t you?

Julian:

Yeah. In the example you gave it sounds like they researched strategy to death and sometimes 90% is good enough. It’s only real once you get the activities in place, you see how well it resonates with the consumer and how well it drives the brands in the marketplace.

If you’re forever researching you’re just dancing on a pinhead in an unreal situation because research is not necessarily a real world.

Darren:

It’s always going to be an approximation of the real world. It’s almost like to move into the real world and implement is to actually carry out the experiment, moving from the hypothesis to the actual experiment in the laboratory.

Julian:

You have to have marketers who have enough courage of their convictions to move forward; that’s pretty critical. You need to have the right type of marketer.

Darren:

Now, the other one is almost the polar opposite and it’s exasperated by the fact that the marketing budget actually resides with the business and not the marketers. In some ways they’re being decapitated. They have a strategy but the business is constantly wanting short-term results so they feel like they’re constantly doing tactics.

Is it possible to build your brand through tactics?

Julian:

No. You need to have a clear brand strategy, strategic activities and use the strategic activities to drive what would be seen as tactics. If you do it from a strategic perspective you can still have tactics in the market but they’re not ad-hoc; they have to be strategic tactics.

Darren:

So, you could use your strategy to critique the tactics that you’re being asked to do. Does it fit with this strategy? Yes, then we’ll execute it. No, it doesn’t; how can we change the tactic that you’ve asked for to actually fit and build our longer term brand strategy?

Julian:

Exactly. If you’ve got a situation where a lot of trade expenditure is looking to drive tactics; take a step back and say, ‘o.k. we understand that we need to drive sales’ but you would turn it into a strategic sales promotion and not just have it as a price discount in the market. That’s something that’s quite different. And you can use that quite powerfully.

I’ve seen situations where from a packaged goods perspective the brand may be changing the colour of its packaging. If you don’t do something positive around that there may be no consumer benefit. A change of colour rarely is a consumer or brand benefit but you can make it fun and make it a reward for your loyal customers by doing something promotionally around that.

Darren:

Something novel.

Julian:

Novel, it’s fun and the consumer gets some reward for buying more, product for example. That way you can fulfil the requirements of the tactic but you’ve done something that smooths the potential negative impact of the brand change and you can be successful and actually drive sales.

Darren:

Sometimes you see one person with both sales and marketing responsibility but if you have a separate sales head and marketing head and them working together is actually an incredibly positive thing isn’t it?

Julian:

Yes. It’s important to have a good relationship between sales and marketing. You don’t want to have two people who are at loggerheads because if they’re not communicating that level of disjointed activity in the marketplace is not going to be good for the brand or the business.

Darren:

I remember talking to a head of marketing who had previously had both sales and marketing; went into a new job where they were only a marketer and sales was managed separately. When he walked in he asked where’s the head of sales and they pointed across almost to the other side of the room. He said, ‘I want my office right next to his’.

The head of sales was a bit worried; he’d never had a marketer so aggressively wanting to work together who then sat down and said, ‘who are our 20 biggest retailers’ accounts and when can you set up a meeting so that we can sit down together and talk about how we can align our marketing and business objectives to theirs and amplify the effectiveness of our budget?’

That’s quite an enlightened approach isn’t it?

Julian:

It is. And one of the great things about the way Mars management works is that usually they sit in a circle. So, on my left side was the sales director, on my right was the R&D director and the conversations we’d have–everyone was very attuned to what we were trying to do in the business and with the brands and so there was mutual respect for the roles each one played in delivering the business plan.

Darren:

You all have a lever and if one person pulls too hard then the others are going to be offside.

Julian:

Yes, they are. You have to be careful in situations where someone is trying to drive too much profit then that can have a negative impact on the brand through R&D where there is pressure on recipes for example. That can be death by 1,000 cuts. You can actually impact the palatability.

Darren:

Just purely by putting the stress on the production line to be able to deliver to the same quality. It must have been an amazing environment because clearly everyone was aligned to an objective. The fact that you sat in a circle for those meetings; it’s no wonder it’s a continually successful brand or business.

Julian:

Yes, absolutely. It’s still privately owned. It was a great training ground for things that worked well. And the biggest learning is communication and having processes in place that allow you to set up the essential conversations.

Darren:

We hear a lot about learning marketing in Mars, Unilever, Proctor and Gamble; these are all great training grounds for marketers. But then I also hear from marketers that work in Telco or financial services and they go, ‘but none of that actually works in this particular category’. What do you say to that?

Julian:

I think they’re making a difference out of their business that doesn’t necessarily need to exist in that way. The principles of marketing are quite straightforward. How you execute because of different channels, technology base, that will adjust things but the principles of having a strong brand, making sure you meet the needs and wants of your consumer target base—that’s what marketing is really about.

Darren:

It’s very easy to say that’s not relevant to us but the fundamental principles are the same.

Julian:

They are the same. Working around the differences that different industries require from marketing input. When I’m doing interviews and talks one of the sad conversations I often have is where a marketer will ask ‘how do I get the CEO to listen to what I’m doing in marketing?’

You realise that one of the big problems is that they’re so focused on the comms side of marketing and the language they use is more closely linked to the advertising industry that they’re not using business language in the C-suites. Therefore, they’re not actually joining in the conversation that the rest of the C-suite are having around the business, profitability, EBIT etc.

Darren:

I did notice when you were talking about your role as a marketer at Mars your language was sprinkled with business terms rather than marketing terms. I don’t think you once mentioned brand health; it was brand profitability. The tracking studies that a lot of people obsess about are not as important as ultimately the value that’s delivered from that in a business sense.

Julian:

You’re absolutely right. Things like brand health and saliency are essential parts of making sure you’re doing the right things in terms of listening to consumers and aligning your brand to be able to deliver against those.

Yes, you have all the measures like saliency but those aren’t metrics that are necessarily driving the business. We talked about businesses that are listed on markets and having that constant pressure of shareholders.

Darren:

Short-term reporting to shareholders.

Julian:

Yeah. Mars would have its own pressures because it’s running a business. And if you want to survive for decades and decades and keep growing then you also need to have your eye on those things too. It’s about responsible business management.

So within that you have to have responsible brand management too. One of the projects I was asked to look at was one of the factories had various challenges (bottlenecks) within it. I was asked to look at how we could improve the profitability of that factory to align with another factory.

What was going on and causing the challenges? Although I was a marketer I had to go in with a business hat on and have a cross-functional team that would look at what we needed to do to improve profitability because overall that’s going to benefit the brand in the long-term. So what changes can we make that are not brand-critical or consumer-critical?

One of the things you find is that the brands had carried out lots of activities, some of them a bit petty (changing colours and shapes of this and that) and it had reduced the efficiency of the plant—so a rationalisation of production. What’s critical to the consumer and what’s not and what’s peripheral?

By going through that we were able to increase the throughput, profitability of the plants and turned it around in 6 months. That’s about common sense, about what’s important for the brand and what is just a bit of a gimmick.

Darren:

I think it’s smart business, which is smart marketing, which is smart brand management.

Julian:

Yes. It meant that we were able to offer better value to the consumer because with the new-found profitability we were able to reduce prices so the consumer became very happy with this outcome. So more profitable, better deal for the consumer, brand grows.

Darren:

Julian, I’ve just noticed the time. Thanks for sitting down and having a chat.

Julian:

Thanks very much, Darren. I enjoyed it.

Darren:

One last question; what is the brand that you would most want to work on if you could choose any brand in the world?

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Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 - Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com

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