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Each issue of CMO Close-up features an interview with a CMO, as well as other marketing executives answering that issue's "Big Question."
This week's feature:
Close-up with Keith Pigues, VP-CMO, Ply Gem Industries
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| Issue Alert - Top Stories |
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Tough economy forces marketers to reorganize
Some see opportunities for increasing efficiency, revamping sales approaches
Kate Maddox
Story posted: September 14, 2009 - 6:01 am EDT
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The past year has brought its share of hardship to marketers, as they have been forced to slash budgets and shelve projects. But many have also taken advantage of the challenging times to develop new sales processes and streamline their operations.
Across industries from building products to information technology, marketers are changing the way they sell their products to budget-constrained buyers, taking measures such as consolidating product teams, reorganizing sales around solutions and streamlining marketing communications programs.
USG Corp., a Chicago-based building materials company, serves one of the hardest-hit industries—residential and commercial construction.
“The housing market is in the tank, and we are seeing a decline in our commercial business as well,” said Linda McGovern, director of marketing at USG. “It is one of the worst cycles we have ever seen.”
As a result of the economy, USG had “significant cuts” in its marketing budget this year, McGovern said. “Instead of cutting across the board, we are focusing on our customers and are optimizing dollars toward what is most effective,” she said.
At the beginning of the year, McGovern's marketing team, which provides shared services across four USG divisions, took a hard look at its portfolio of products and the marketing programs it would create.
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FOCUS ON THE PRIORITIES
“We went through each division to focus on the priorities and programs,” McGovern said. “In the past, we would develop programs that were specific to individual products (such as USG Sheetrock). This year, we wanted to be as efficient as possible with our dollars and make our communications easy for the end-user to understand, so they're not being bombarded with different messages and services from different groups.”
The result was a solutions approach in which USG markets bundled solutions around a marketing message designed to meet a need, such as increased productivity.
“A contractor wants products that perform well and are quick to install, so they have more jobs in a day,” McGovern said. “We have a suite of different products and solutions. So, for example, we can talk about productivity in full-page print ads, then follow up with one-third-page ads that talk about specific products that play off a bigger brand message.”
USG is also increasing its marketing to verticals in which there is still a significant amount of building going on, such as health care and education.
Other marketers said the economy has given them an opportunity to make their marketing organizations ultimately be more efficient.
“The economy has helped us on an organizational front,” said Eduardo Conrado, senior VP-global business and technology marketing at Motorola Inc. “In the past, we were organized by business units. We had five different product marketing organizations, which are now consolidated under a single product marketing organization that reports to my group.”
This consolidated approach helps Motorola provide more of a solutions approach to its key verticals, such as government and commercial, Conrado said.
“In the government business, we have very specific solutions for public safety and, in the commercial business, we have solutions around transportation logistics,” he said. “In the middle, you have mobilized government enterprise. As the government is looking at automating its trucking fleets, for example, they can use some of our enterprise solutions.”
Conrado said the consolidated product marketing organization also helps Motorola develop new products that meet customer needs in a tight economy.
“Our customers are looking to leverage what they have in place and augment their technology investments, instead of doing a complete overlay,” he said. “You have to have someone looking at the complete portfolio.”
For example, within the retail industry, Motorola has products such as two-way radios for store employees, mobile computers for scanning and inventory, and VoIP phones for store managers. Under the old structure, “All of these products were siloed,” Conrado said.
Under a consolidated product marketing structure, Motorola realized a need to link all these products to better serve the retail industry, so it added software that allows the different devices to communicate.
Motorola has taken other measures to streamline its marketing this year, including an agency consolidation that reduced its roster of global agencies from several dozen to about a dozen. “Before, every segment went out and got an agency they liked, which was not good at presenting a cohesive Motorola message across the brand,” Conrado said.
Consolidating agencies and campaigns has proved successful for other marketers looking at being more efficient in the down economy.
Nigel Dessau, senior VP-CMO at chip maker AMD, said that when he joined the company in March 2008, AMD was using more than 1,000 global agencies, and the company was running about 900 different campaigns.
“That is a terrible way to use money,” said Dessau, who began implementing new procedures and processes to streamline the marketing organization. Now, there are about 300 agencies on AMD's approved supplier list, and four major campaigns around its core businesses. “It has really been about driving simplicity and focus,” Dessau said.
AMD also initiated a new process for product introductions. Previously, “everyone ran their own,” Dessau said; now, there is a single launch process to eliminate inefficiencies.
“We've established a series of systematic processes that allow people to work better,” Dessau said. “In the [time] that I've been here, this is a completely different company than when I joined.”
Dessau said a “classic error” for marketers is to make too many cuts in a down economy. “You need to actually place an investment in a down cycle,” he said. M
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