What Makes Marketing Strategic?
Everyone in the corporate world today wants to be considered “strategic”—especially marketers. To that effect, some leading Fortune 500 companies have renamed their marketing functions “strategic marketing.” This is especially popular with the consumer product industry and the MBA-laden leading brands. The only problem is that it doesn’t make the marketing department truly strategic. It only makes the title so.
What is strategic marketing? How is it different than “regular” marketing? Is it like flavored coffee’s relation to regular coffee?
The most prevalent misconception is that the clearest differentiating line between “strategic” and “tactical” is time. Short-term moves and initiatives are called “tactical” and long-term moves are called “strategic.” It is unclear what is involved. Is it planning-related, so a long-term plan is long-run strategy and an annual plan is tactical? Or is it the development cycle that matters? A 10-year new engine development is strategic, but a three-year licensing deal is not?
No one actually knows where the demarcation line runs: Is it a year? One hundred years? Three days? Time actually has little to do with this distinction.
Nowhere is the fallacy of time as the dimension separating tactical from strategic more evident than in the pharmaceutical industry. Despite decades of improvements in the sophistication of their tools, pharma marketers today still are as tactical as they were 50 years ago—maybe more.
Is it “strategic” for a giant pharma company to develop a “me too” drug at huge cost and spend years in development and testing, and wrangling with competing regulatory authorities and large payers? The entire idea of “me too” is non-strategic. At best, it’s a desperate call for help. At worst, it’s a recipe for huge losses (covered by the few remaining blockbusters). Strategic marketing functions, or a strategic CMO, would have stopped that folly from happening at the early stage of drug development.
Instead, pharma marketing is responsible for executing a strategy on which it has little impact. For historical reasons having to do with the heavy hand of government regulations and the background of most pharma CEOs (hardly ever from marketing), pharma marketers all follow the same formula: They deploy KOL—key opinion leaders—to endorse their drugs, use an army of salespeople (“detailers”) to leave free samples, use so-called “medical science liaisons” to engage important physicians at conferences, and try to cozy up to patient associations and groups.
Strategy is not about the time horizon but about creating and sustaining distinction. There is nothing strategic about imitating each other to death. Most of the pharma marketing moves, therefore, are non-strategic. Succumbing to rampant competitive convergence and benchmarking as a way of life made marketing at the large pharmaceutical companies a stepchild to more “important” functions. My experience with pharma suggests that only private-label manufacturers have worse regard for marketing. Essentially, marketing at the world’s 12 leading pharma companies in the U.S. and Europe is more about formulaic distribution than marketing to create distinction.
If strategic distinction among pharma is moot, what’s left for pharma to try and differentiate? The marketing “leftovers” zoom on clinical claims of safety or efficacy wrapped into marketing communication. The space has become so full of noise that most physicians just don’t pay attention any longer. Anyone who watched the 2010 movie Love and Other Drugs got a glimpse of this “reality.” Direct-to-consumer advertising is a bust. Only a small percent of doctors say that they decide on a prescription based on patient pressure. Yet “phar-marketing” marches on using the same techniques over and again, hoping for a miracle.
If Not Time, Then What?
Short-term moves and small investments can be very strategic. Apple, for example, just announced the introduction of iPads with larger screens. At a time when tablets are declining and mobile phones’ smaller screens are all the rage, Apple is going the other way.
The rationale behind Apple’s move is a strategy of shifting use of iPads to the business community, where larger screens and enhanced work space can be useful. This is an exceedingly smart move. As consumers shift to smaller screens, businesses are the remaining lucrative segment not penetrated by Apple. Is this a long-term decision involving 15 years of R&D and the investment of billions (another misconception on what is “strategic”)? No. The iPad platform is already there. Technologically, it’s a blip for a company like Apple to do the tinkering.
Similarly, huge investments and long-term planning horizons can be tactical moves (at times, without any strategy behind them). The rush of all Western firms into China is a classic example of tactical moves without strategy. With little rhyme or reason, and with wide-eyed hope for large profits (or at least a billion customers), firms such as Tesco, the British grocery chain, Panasonic, the Japanese electronics manufacturer, Best Buy and Home Depot, two U.S. retailers—among many others—saw their easy profit dreams collapse and had to withdraw. My prediction is that the list will only get longer as China’s authoritative regime tilts the balance more and more against foreign firms.
Strategy is a set of activities, including marketing activities, which are aimed at creating unique value for customers. These activities have to be consistent with each other or there is no strategy. Some activities are central to the value created and some are secondary. Those that are crucial are strategic, regardless of their cost or time involved. Those that a company can do without, or will have little effect on the distinct value, are tactical. The a-priori judgment is naturally subjective. The final market judgment, alas, is not. That’s where marketers must fight tooth and nail to avoid blind spots in their own judgment.
Strategic Marketing and Strategic Intelligence
If you are a CMO, brand director or country manager and you like to be strategic, make sure that you are involved and can have an impact on the strategy that you’re asked to implement. You have to create access to strategic (i.e., competitive) intelligence, not tactical (i.e., marketing) information.
Does your work make an impact on your company’s strategy? Do you have strategic intelligence capability at your disposal? Or are you a strategic marketer by name only?
Benjamin Gilad is president and CEO of the Boston-based Fuld-Gilad-Herring Academy of Competitive Intelligence and author of Business War Games.