Marketing Must Take Its Share of Blame for the Economic Crisis

Management's Greatest Concern Should Be What a Company Stands for, Not Adding More Services to Sell to Consumers

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Why are so many of our major industries in trouble, beyond the current economic meltdown? Al Ries and I recently wondered why marketing wasn't being blamed for its share of the problem.

If you read the business press, you probably noticed the absence of any discussion of marketing and marketing strategy as it relates to the economic crisis.

BusinessWeek, Fortune, Forbes and the rest tend to get distracted by marketing's buzz-worthy short-term hits -- think Burger King's Subservient Chicken or the free breakfast at Denny's. Perhaps we are partly to blame, because Ad Age also writes about these campaigns, in addition to covering marketing's strategic mission of building brands in the long term.

Marketing is greatly misunderstood. It's the most important discipline in business today. It's the core essence of what a company is all about. The overriding concern of top management should be what a company stands for in the minds of customers and prospects.

But it's not. Top management is focused on products and services and especially on expanding the line to increase sales and profits.

What consumers care about is what a company or brand stands for. Perception is the key issue for consumers.

Yet to many management types, reality is the key issue. They think all you have to do is to change the reality and you change the perception. But to marketing types, changing perception is the most difficult issue in business.

The mantra "too big to fail" was used to justify bailing out financial firms. From a marketing perspective, it should have been presented as "too big to succeed." Take Citigroup, which received $45 billion in government money. What was its marketing strategy?

To turn Citibank into a financial supermarket. That's why it bought Travelers, an insurance company. Smith Barney, a stock brokerage firm. And Salomon Brothers, an investment bank.

Citigroup wanted consumers to buy as many of its financial services as possible. But from a marketing point of view, this was impossible. Consumers didn't associate any of those financial services with a "bank." The perception Citigroup tried to create in consumers' minds was at odds with what a consumer perceived a bank to be.

General Motors tried to create an auto supermarket in every Chevrolet dealership. Any kind of car or truck a consumer might want to buy, they could find in a Chevy showroom.

Even worse, every other GM brand tried the same strategy. Any kind of vehicle you might want, Pontiac had for sale. So did Olds. And Buick. And Cadillac.

Cadillac, for example, wanted to appeal to all market segments, so it introduced the low-priced Catera. The car was not only a miserable failure, but it also cheapened the brand in the eyes of consumers.

(A Cadillac brand manager once tried to convince me Catera was a big success in the "entry-luxe" category. In reality, Cadillac should not be in the entry-luxe category. All its cars should have sold at premium prices.)

If a customer wanted a cheaper car, he could have bought Chevy and over time, moved up as his financial status improved. Or, as Alfred Sloan stated, GM should have a car for every purse and purpose -- he didn't mean each of the brands should have a car for every purse and purpose.

It's our belief the economic crisis is due as much to marketing failures as financial ones. AIG, for example, is a marketing mess -- it's in so many different businesses that it can't create a powerful perception in prospects' minds.

Above all, the primary mission of top management is to build powerful brands, which is what marketing is all about. And to do that, a company should stick to its core mission. Expansion for expansion sake is the road to disaster.

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