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Today, chief executives at many leading companies are frustrated by marketing's inability to produce measurable results. Increasingly, they view the marketing department as an expense rather than an investment, and as a result, marketing is losing power in many corporations.

The majority of CMOs have lacked the organization, processes and tools to prove marketing's worth, and because of this, they have taken a backseat in the boardroom.

Meanwhile, CEOs and board members alike are demanding even greater accountability, performance analytics and tangible evidence of business value from their marketing organizations.

Does marketing matter? In "The Practice of Management" Peter Drucker wrote: "The business enterprise has two and only two basic functions-marketing and innovation. Marketing and innovations produce results. Everything else is cost."

Yet marketing departments are out of step by clinging to the Old Economy model of the 4Ps: Product, Price, Place and Promotion.

As the economy migrates from offline to online, the definition of value creation is changing. In the new digital world, value will be created by the business model itself. And at the center of that model is the consumer, now in full control of the marketing equation.

To survive and thrive in this environment, marketers will need to learn to adapt and reinvent their business models to reflect a critical trend: the emergence of the narrative of aesthetics and the arrival of the design economy.

Design is the only differential that matters when industries are competing at equal price and functionality (as they are now), because technology means no product can sustain an edge for long. This is a world of functional parity.

In the 1930s Raymond Loewy, the father of industrial design who gave America the Lucky Strike pack and sleek Greyhound buses, used to say that the most beautiful curve was a rising sales graph. That notion has driven design ever since. Good design married commerce during the Great Depression, and Loewy made products irresistible at a time when nobody really wanted to pay for anything.

Now, instead of one Raymond Loewy, the design world is humming with an eclectic mix of impresarios and entrepreneurs.

There are big corporate players, like Sony and Apple and Motorola and Mini.

There are architects and designers-iconoclasts like Philippe Starck and young upstarts like Jasper Morrison or Marc Newson.

There are entrepreneurs like David Neeleman, of JetBlue, and Ian Schrager, of the Royalton and Hudson Hotel. Cadillac was brought back from the abyss not with a clever marketing campaign but with great design. And of course there's Martha Stewart, who has parlayed her sense of style into a billion-dollar role as America's spokesperson for taste.

Ironically, the design revolution has been given a leg up by not-so-special (read: category-killing) stores like Pottery Barn and Ikea, which descended on Middle America in the mid-1990s. They're based on the premise that you don't need an interior designer to have a good-looking life.

When Target recognized that competing just on price with the likes of Wal-Mart was a losing proposition, the store reinvented itself with a simple formula: Get big-name designers to do $20 knock-offs of the same stuff they designed for the SoHo sophisticates. Thus Michael Graves, known for his work for upscale design firms like Italy's Alessi, started supplying Target with stainless-steel teakettles, blocky wood patio furniture and plump-handled spatulas.

Functionality has become multi-dimensional. Function now embraces psychology, and emotion and is expressed through the narrative of design. Technology simplifies our lives but it isolates us at the same time it connects us. To compensate, we will all become architects, designing the space around us to recover the joy of living. Design will define who we are and who we aspire to be.

To become relevant again in the age of the Design Economy, marketers will need to transcend functional marketing and focus on visual marketing. The narrative of design, not functionality or price alone, will become the battleground on which industries will compete for success.
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