future of marketing and agencies

T

A Perspective from the Marketing Department Clelie Bolore | | Jolie Gorlitz | Vanessa Levrat | Stephanie L. Webb | Amelie-‐Pauline Vignalou

Greenzo Corporation

L e c t u r e r : J a n e t H u l l 0 2 . 0 4 . 2 0 1 0

A PERSPECTIVE FROM THE MARKETING DEPARTMENT | PAGE 1 OF 14

TABLE OF CONTENTS

CURRENT SITUATION: WHERE ARE WE NOW? 2

OUR VISION: WHERE DO WE WANT TO BE? 5

AGENCIES: WHAT IS OUR DEGREE OF INTERACTION? 8

REFERENCES 10

APPENDIX A – INTERVIEW GUIDELINE 11

APPENDIX B – SCORING MATRIX 12

APPENDIX C – EXPECTATIONS FROM BOTH SIDES 13

APPENDIX D – MAIN ISSUES AND PROPOSED SOLUTIONS 14


CURRENT SITUATION: WHERE ARE WE NOW? For the purpose of this report, the group has decided to base the context of the case on a real, functioning company; however, due to confidentiality agreements, the name has been changed to Greenzo Corporation, a car retail and manufacturing business. For additional and insider details were found through an interview with one of the communication experts (Appendix A).

INDUSTRY STRUCTURE The structure of the automotive industry has changed a lot over the past 20 years. Manufacturers have focused on the profitable elements of the value chain and externalized most of the upstream activities. This sector is highly competitive on both national and international levels. To face the international competitors, French constructors have to better the competitiveness-price. (Industrie Automobile Française, 2009-10) CONSUMERS EXPECTATIONS AND STATE OF MIND:

• There is more concern about environmental issues. • People are looking for eco-friendly cars, more sustainable and responsible.

Sustainable transportation is merely in the concept stage; however, it is a growing trend that manufactures are taking into consideration when designing their latest models (ex: Toyota’s Prius early mover into market). A challenging external factor that has recently hit the automotive market is the recent (2008-Present) global financial downtown. This downtown has caused the following current and projected situations (Industrie Automobile Française, 2009-10):

• Production activities decreased by 20% (due to relocation) o Slight increase in production activities from 2009 to 2010.

• Sales of new cars increased by 10% (due to a government incentive program for recycling your ‘clunker’ for a more environmentally friendly vehicle)

o New car sales will steadily decrease due to an increase in unemployment and suppression of the government-sponsored incentive program.

WHAT IS GREENZO’S BRAND POSITION? Greenzo is currently one of the largest and leading automotive companies in Europe, but it has not escaped from low sales volume in the recent years. They are in a highly

Price Competition

Cheaper Foreign

Production France = 2009 Financial Crisis


competitive industry, which is constantly changing and presents a need for innovation. It is necessary for Greenzo to remain strong in their research and development (R&D) efforts to maintain their competitive advantage. Their current R&D core strategy is centralized around renewable resources and alternative energies. Customers are unwilling to pay high premiums for ‘green’ products, so the following challenge then becomes an issue for the marketing department:

• How do you market a vehicle to customers that is based on their ‘green’ desires when an ‘green’ vehicle is not a major factor in their purchasing decision?

WHAT IS THE TRADITIONAL MARKETING DEPARTMENT STRUCTURE? The marketing department is product oriented and is in charge of one entity per type of car model. There is a separation between the marketing and communication departments, as they function as two separate entities.

• Marketing: In charge of defining the marketing mix around one car model (car dealership strategies, pricing strategies, defining the car features according to customers needs, and a small role in the communication/promotion aspect).

• Communication: In charge of ‘below the line’ media activities (printed brochures aimed at dealerships, etc) and ‘above the line’ media activities (media advertising, print advertising, radio, etc).

This report will focus primarily on the marketing department, as it boasts an impressive 160 employees, where as the communication department hold only 42. HOW HAVE YOU BEEN USED TO WORKING WITH YOUR AGENCY?

• Remuneration Scheme: The contract is an exclusive contract for the advertising projects and on a volumes basis (+/- 20%) for the print production projects.

• Long-term Relationship: The agency successfully took control of the Greenzo account several years ago and has been working together for six years.

• Devoted Team Members: Artistic directors, copywriters, creative teams, and project managers who regularly follow-up on the different communication projects.

• Working conditions: The department is in contact on a daily basis via e-mail and phone. Face-to-face meetings are organized only at specific periods (during the presentation of the creative idea by the agency and then throughout several milestones) to make sure projects are on the track.


MESSAGE FLOWCHART: MARKETING AND COMMUNICATION DEPARTMENTS WORKING WITH THE AGENCY

The marketing department gives the messages to be broadcasted and the marketing objectives to the communication department. From there, the communication department translates these objectives into communication objectives and writes the brief for the agency. The agency works on the brief and then provides the communication department a creative idea who then must receive the approval from the marketing department. With this process, the communication department functions as the intermediary, where as the marketing department functions are the decision maker. THE MAIN CONFLICTS ENCOUNTERED In order for the working relationship between the marketing department and agency to improve and establish a common ground, it is useful to construct a scoring matrix (Appendix B). This matrix will help each side to understand the business issues and the market-place knowledge. For additional information on what both sides (marketing departments and agencies expect from each other, please see Appendix C. Additionally, for information on the main issues and their proposed solutions, please see Appendix D.

MARKETING DEPARTMENT COMMUNICATION DEPARTMENT AGENCY


OUR VISION: WHERE DO WE WANT TO BE? According to a study commissioned by Deloitte, 70% of respondents do not believe that the role of the marketing department and their purpose is clearly defined. (Marketing in 3D, 2007) This vision for Greenzo’s marketing department then must become the following:

Clearly articulate and define the functions, purpose, attributes, and contributions made by the Greenzo marketing department with particular focus on demonstrating value and justification for existence to the board of directions.

One way to tackle this ambitious vision is to realign and restructure the marketing and the communication departments into one, like-minded and focused department – Marketing Communications (MarCom) Department. Additionally, job titles and position descriptions would be slightly altered as to adhere to the new standards of one department.

POTENTIAL SOLUTION FOR CONFLICTS The position for each team member must be clearly defined and their responsibilities outlined in order to minimize and provide foresight against potential conflicts. Within this context, the following bullets are just a few suggested job titles and functions: • Title: Strategist

Function/Responsibility: To investigate consumer touch points to find out potential points of failure within the interaction between the company and the consumer. (Ex: Conduct surveys on fears, hopes, etc.)

• Title: Creative Team Member Function/Responsibility: To associate consumer aspirations with relevant marketing campaigns.

• Title: Communication Executive Function/Responsibility: To bridge the gap between the media and the marketing processes, as well as to inform other departments of the internal communication process so as to mention and educate about the current campaign.

• Title: Accountant Function/Responsibility: Playing a vital role in the department, they would be responsible for providing figures and values for justification of ‘why’ the department exists and their long-term returns on investment (ROI).


• Title: Customer Relationship Executive Function/Responsibility: Primary role is to ensure that there is a two-way communication flow between the MarCom and the Sales departments. This will alleviate conflict between campaign development and the misunderstanding / misinterpretation of the message by the sales associates.

Cross-training: Employees from other departments should be encouraged to spend a few hours a month in the MarCom department to gain an understanding of its function and how it relates to their own job. HOW WILL YOU INTERFACE WITH FINANCE AND THE BOARD OF DIRECTORS? It is highly recommended that the CEO (Chief Executive Officer) and CFO (Chief Financial Officer) attend the initial marketing briefs of the MarCom department. This effort would provide both executives the opportunity to be ‘silent listeners’ and an allowance for questions and feedback for the CMO (Chief Marketing Officer). Likewise, it is suggested that the CMO maintain contact with the CFO as to create a better working relationship and an understanding for each other’s positions and job functions for the overall goal of the company. With the merge and formation of the MarCom department, the CMO may also be referred to as, or share in partnership the tasks with, the CCO (Chief Communications Officer).

HOW WILL BRAND PERFORMANCE BE MONITORED AND MEASURED? Before using the measurement tools, it is instrumental to compile all featured reports and have them presented in the weekly (or bi-monthly) meeting between the CEO, CFO, and CMO. This procedure will ensure to demonstrate the effectiveness and impact marketing has on business performance. (Deloitte, 2008) To avoid a false representation, the following tools should be utilized for the measure of the MarCom department: 1. Key Performance Indicators (KPI): According to the Deloitte study, these KPIs

are most effective when they are • internally consistent and externally verifiable; • comparable over time (showing business trends); • comparative over time (showing market performance); and • material to business performance (driver of value).

2. Top of Mind Awareness (TOMA): Telephone survey investigating campaign

awareness (Pelsmacker et al., 2007: 77).

3. Net Promoter Scores (NPS): Customer satisfaction survey of a brand. (http://www.netpromoter.com)


Each of these tools should be regulated on a quarterly basis as to provide strong and relative arguments backing the position of the MarCom department.

BONUS STRUCTURE / INCENTIVES SYSTEM As there currently appears to be lacking a bonus structure and incentives system, one should be implemented with the merging of the two departments. This system should be on a quarterly scheme based on performance objectives that are clearly linked to time-constrained tasks and assignments. One example of a bonus period could be the direct correlation to the performance of the NPS scores. If the scores were above the 75% margin, each MarCom employee would receive a stipend bonus amount. If they were above the 80% margin, then the employees would receive a slightly higher stipend and so forth. In addition to this example, there could be another NPS incentive that if the margin were at 100%, there would be an annual flat sum pay out. Within this context, the higher-level positions would, obviously, receive a larger stipend than their subordinate colleagues.


AGENCIES: WHAT IS OUR DEGREE OF INTERACTION? When working with agencies, it is necessary for companies to develop standard protocols and procedures in dealing with the various issues that may arise throughout the working relationship, such as payment schemes and the ownership of materials produced.

PAYMENT SCHEME The key to a long and successful partnership between an agency and its client lies in the finances. It is however difficult to calculate and quantify ideas and concepts. The following points are four main remuneration structures for agencies (Sims, 2005):

• Commission: The agency receives a percentage of the profit resulting from a campaign. It is a simple method but it does not reflect the amount of work and the time involved in the project.

• Phased Fee: It is calculated according to the time the agency is going to spend to accomplish the project. With that structure, fees are calculated easily and it enables companies to compare agencies’ efficiency.

• Project Fee: The company is only charged when the project is completed. The fees can be agreed on or estimated beforehand. This method is generally chosen when projects are not done on a regular basis.

• Payment by Results: This remuneration method is predominantly used as a complement of another. The reference points can follow from the project’s efficiency or the agency service. The only difficulty is to measure the results to give the appropriate incentives.

With the new MarCom department in charge of working with the agencies, the chosen methods for best practice include the ‘phased fee’ structure associated with a ‘payment by results’ plan. This will ensure that the agency will be paid according to the time spent on each campaign, as well as remuneration for the creative team depending on the effectiveness of each project. This will also help to establish a more consistent budget structure providing clearly defined agreements and security to the agency. Equally, by using the ‘payment by results’ method, Greenzo is guaranteed quality service. As many contracts are never signed between companies and agencies, this method will also help to avoid future problems, especially as the relationship will ideally be long-term (Sims, 2005). Unfortunately, due to the word constraint, there will not be a mention of additional external suppliers. It was decided as a group that the main focus would relay within the issues of the marketing and communication departments and working with agencies.


WHO OWNS THE RIGHTS? It is easy for there to be a misunderstanding between marketing departments of a business and their contracted agencies over who owns the final rights for the production of materials. A company, specifically the marketing department, may hire an agency to create or produce various marketing elements throughout an advertising campaign from print designs to a ‘catchy’ slogan to multimedia development. The company may have a preconceived notion of the ideas they would like to implement for the campaign or they may hire the agency to do everything. In either case, unless agreements are pre-arranged, there is a potential issue over who owns the rights of the final ‘product’. (Thomas, 2008) For the purpose of this report, a simplified visual structure will be set into practice. Terms and agreements must be contracted between Greenzo and the chosen advertising agency. It will be the right of the agency to receive credit for all materials produced for the Greenzo campaigns; however, it will be under the ownership of the Greenzo Corporation. All credits to the agency will be promoted on web materials and press packages. Restrictions on material usage will be within the rights of Greenzo. By having Greenzo maintain full control on the material usage, there will be a reassurance of maintaining company standards. For example, the specifications of where a logo can be placed, the proximity limitations of layout design for print advertisements, locations on where campaign messages may be spread throughout a city and by which means of communication. (Verbauwhede, 2005)


REFERENCES Deloitte (2008) Marketing in 3D. Highlighting perspectives on marketing effectiveness [available on http://www.deloitte.com] Industrie Automobile Française (2009-10), XERFI 700 KPI’s for Marketing reporting- a framework for effective Marketing disclosure, IPA 2008 Net Promoter (2010) http://www.netpromoter.com [accessed March 2010] Pelsmacker, P., Geuens, M., van den Bergh, J. Mare (2007) Marketing communications: a European perspective, 3rd ed, Harlow: Prentice Hall/Financial Times Sims, M. (2005) Working with agencies: an insider's guide, Wiley, 1st edition Thomas, Liisa (2008) When Are Slogans Trademarks, and Who Owns Them-the Agency That Developed the Slogan, or the Company That Uses It?, INTA Bulletin, Vol. 63, No. 14 [August] Verbauwhede, Lien (2005) Intellectual Property Issues in Advertising, SMEs Division, WIPO1


APPENDIX A – INTERVIEW GUIDELINE Date: 31. 03 2010 Interviewee: Nicolas S (Communication manager in charge of the Below The Line activities of Greenzo company). Headquarter: Paris, Boulogne Good morning, We need to describe and examine the relationship among your communication/marketing department and your main agency. We would like to understand the current situation in to propose recommendations to improve it, and understand what would be the future issues concerning this relationship.

1. How many people work for the marketing department? About 160 employees

2. How many people work for the communication department?

About 42 persons

3. What is the nature/type of your contract with your main Agency? Are you paying them by projects? Per year? … It is an exclusive contract as regard the advertising projects (TV adds, printed add on billboards...), but it is very different for the printed production (brochures..) where our agency is paid per volumes (+/- 20%)

4. How do you measure your agency efficiency?

We have a satisfaction survey, which is fulfil by the purchasing department. We are only measuring if the communication projects respect the annual company budget.

5. Can we have a company flowchart so we can see the link between the

finance department and the Marketing Communications department? Well, from what I know, there is no link...

6. How do you see your relations with your communication agency? Do you

have some idea to improve the situation? Well, we will reduce the communication budget because of the economic French crisis…obviously it will certainly affect both sides…


APPENDIX B – SCORING MATRIX This matrix evaluates the ability of a company and its client to reach a mutually beneficial relationship. It is a sample evaluation criteria. Company’s criteria Your level of

importance Agency score

Examples of comments

Understanding of business issues

4 5 Good understanding of business goals, company operations, politics, personalities, etc...

Marketplace knowledge 3 3 Knows trends at local level but does not have strong sector knowledge. Ok for us to provide this

Strategic thinking 4 5 Good implementing. Could be better strategically

Creative expression/implementation

.. .. Concepts can be very samey

Cultural fit/chemistry .. .. Very good day-to-day team

Marketing vision .. .. Agency management does not provide this

World-class people .. .. Days to day contacts excellent on implementation side but lacking vision

Integration with other agencies

.. .. We determine this

Results .. ..

Scoring 1-5; 1=very low, 5=very high) Agency’s criteria Your level of

importance Agency score

Examples of comments

Spirit of partnership and involvement

4 5 This could be better

Understanding of agency 3 3 We need to get closer to them

Emphasis on creativity 4 2 ...

Inspiring marketing vision

... ... ...

Client profitability and growth

... ... ...

Brand enhancement ... ... ...

Ease of working ... ... ...

Scoring 1-5; 1=very low, 5=very high)


APPENDIX C – EXPECTATIONS FROM BOTH SIDES Reference: The Future of Agencies, Sims M., Chapter 1 What we want from an agency:

• Understanding our complex business issues • Marketplace knowledge (they should provide benchmark about competitors campaigns) • Strict budgeting • Strategic thinking / consultancy/ solutions that integrate with our others activities • Creative expression and implementation • Cultural/chemistry fit • Marketing vision • Geographic coverage • Work professionally like-minded business partners

What agencies want from a client?

• They want him to take risks and produce award-winning work • Understanding of their business • A client who know what is wanted but willing to be surprised • A client who enhances our reputation and inspires us to do great work (issues of an

agency just doing production studio… What Greenzo’s agency is expecting from its client?

• Mainly to answer their questions on the ongoing projects • To have company’s feedbacks and validation on the choice of graphic codes, car

pictures, text about the car’s features, tagline, slogan, layouts... • That Greenzo let them some freedom of creation and that they follow their advices

The main issues faced by both parts:

• Lack of access to senior people • Poor communication brief • Feeling of being undervalued, under-rewarded • Agencies should work more professionally and not be creative maverick partners


APPENDIX D – MAIN ISSUES AND PROPOSED SOLUTIONS This table details some of the major issues the marketing department faces when relating to the hired agency as well as provides potential solutions to resolve conflict.

Main Issues Proposed Solutions • Greenzo underestimates the role

and function of the consulting agency through strict regulations, which reduces the agency's scope of creativity and becoming a “managed suppliers.” (Sims, 2005)

- Quarterly corporate events to build relationship and trust.

- When introducing a new product, fully engage the agency in understanding ‘why’.

- Invite the agency to an R&D center to see how the features and USP (unique selling points) are developed.

- Share some confidential information, business results, and future targets to relate the campaign to sales results. (Sims, 2005)

• Lack of consideration for the agency’s staff members.

- Invitation to internal, corporate events. - Introduce agency team to other

company departments, such as the finance department. (Sims, 2005)

- Ask for participation in presenting concepts and campaigns to other company departments to understand their issues and areas of interest. (Sims, 2005)

• Budget and deadline divergence: - Poor pricing justifications

- Create and develop a benchmarking system. - Suggestion: CEO and directory of

the agency create the template chart in tandem as to provide a sense of transparency of information and negotiations can be made at the beginning of a campaign.

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