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Investing in Marketing Knowledge

The CMO Survey tracks investments companies make in different kinds of marketing knowledge. In the August 2011 survey, companies reported the following average investments: marketing training (+3.1%), marketing consulting (+3.5%), integrating what we know about marketing (+6.0%), market research and intelligence (+6.2%), and developing knowledge about how to do marketing (+6.4%). I found it both surprising and refreshing that companies appear to value two non-traditional types of marketing knowledge—integrating what we know about marketing and developing knowledge about how to do marketing. Both are very important but often underutilized by companies either because they are particularly hard to do (integrating what we know about marketing) or so implicit in what happens each day that they get overlooked (developing knowledge about how to do marketing).

One of the great things about modern day marketing in most companies is that many non-marketers are engaged in marketing tasks. Whether it is information systems, operations, manufacturing, or human resources, many different groups take actions that have a direct impact on customers. The challenge therefore is getting a singular view of the customer from all of these interactions. Compound this with multiple communication and purchase channels as well as strong divisions between marketing and sales and you have the classic case of fragmented marketing knowledge. Everybody knows a little, but the most profound insights that come from integrating knowledge across all of the company’s touch points with the customer are lost. This can become especially hazardous when brands or divisions “own” customers in companies because opportunities for extending the customer relationship are lost. This is one reason to advocate for an organizational structure based on customers, not brands. Another opportunity for integrating knowledge about marketing occurs within large multinational companies. There are many local success stories that could provide lessons for the broader organization but are never re-integrated. Why not? Most often it is because information processes have not encouraged that flow back into company headquarters. This happens because there is a belief that HQ knows best or because local managers are not encouraged to share the reasons for their success with other units.

When I say “developing knowledge about how to do marketing” I mean the active codification of effective marketing practice. This is important because the firm can benefit immensely by capturing and transferring marketing success. To make this work, it is essential that companies uncover what successful marketers are doing. This points to one of the reasons many companies don’t do this, which is that many marketers may not be aware of what they know or the process they use to engage in important marketing activities, such as setting price, positioning a new offering, or responding to a competitive threat. Steps become tacit and must be “externalized” (to use a Nonaka term) before they can be codified. This may be even more likely when the knowledge marketers have acquired is about marketing processes. Because marketing strategy processes such as market selection, entry, and positioning are intangible activities, marketers may be less aware of what they have learned when engaging with these processes. As a result, this knowledge is not documented or shared and it is often lost. Companies also may not store what has been learned because they do not think has immediate value. This may occur for many reasons, including a short-term focus that makes learning seem like a luxury. Company quarterly performance pressures make learning seem like a luxury resulting in tension between learning and performing.

Looking at these two types of marketing knowledge, Table 1 shows that B2C companies make, on average, the biggest investments. This contrasts with more traditional knowledge investments, for example marketing training, which is dominated by B2B-product companies and marketing consulting, which is dominated by B2B-services.

Table 1. Sector Differences in Marketing Knowledge Investments