Alternative marketing thinking

iCONTRACT

CMOs RIP

A study to be published in the Journal of Marketing that covered 167 companies including Procter & Gamble, Microsoft and Apple over a five-year period concludes that CMOs on top management teams don’t have any effect on a company’s financial performance. ‘Chief Marketing Officers: A Study of their Presence in Firms’ Top Management Teams,’ is sure to reignite the longstanding debate afflicting the C suite: Should a CMO be judged on tangible or intangible metrics? On solid stats such as sales, or on more amorphous concepts such as brand equity or even awareness? The authors themselves admit the study is limited because it focuses on financial-performance metrics, such as sales growth and profitability, and not brand equity, and both were quick to offer caveats to the conclusion. Providing a counter view to the study is a presentation by Raj Srivastava, executive director at the Zyman Institute of Brand Science. He points out that the market value of an average company is about four times its book value. A few companies, like Coca-Cola deviate from this rule. Coke has a market value seven times higher than what the accountants think the company is worth. So where does that intangible value come from? Brands, he believes add value well beyond the short-term growth in revenue. They help to reduce volatility for established goods and services by reducing churn, increasing a company’s leverage with retailers and resellers, and ensuring faster market penetration. Read more from the Millward Brown Blog.

Advertisements

Single Post Navigation

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: