Ideas man

When I sat down for coffee with Danish marketing guru Christian Majgaard in Dublin's Burlington Hotel, he had just finished telling rapt delegates at The Marketing Institute's annual conference that customer insights and the customer relationship was going to be what shaped marketing over the next five to 10 years.
Majgaard is concerned that many marketers and their organisations are today working to communications parameters, and have somewhat lost sight of Philip Kotler's three strategic questions: Who is the customer? What does he or she want? How do we comply? He believes organisations have become too obsessed with themselves and their own image, rather than with the value they are offering their customers.
“What people buy is not a story but ultimately they buy a value — it can be a product, a service, or the feeling of being somebody. If people buy a luxury car they're not only buying the luxury of driving, they are also buying the luxury of being in the right community," says Majgaard. "There are many different customer needs, but there is always a need, and if you're not meeting that, then you can rabbit on with all your storytelling. It's not going to work."
He has little time for those who pat themselves on the back for a nominally successful advertising campaign. "You can do your research and find that 15pc of consumers remember your ad and that 7pc said it was excellent, but this is not the idea of business. You have merely turned into an entertainment company.
“The backbone of business is that the company creates a value that the customer wants. Once that is set correctly, then you brand it nicely, you tell the story, you have humorous or colourful ads and great taglines, but the surface on its own is not enough.
“This only works in those cases where substance is irrelevant and there are a few categories where that happens, like bottled water, for the simple reason that people can't taste the difference," he says, pointing also to the beer market, where there's not always a substantial taste difference between one beer and another. "However, there are still ways to innovate products. Take Guinness stout — customers taste the difference between it and, say, Carlsberg lager."
Majgaard concedes that this is fairly basic stuff, but he argues that it's what he sees is missing in many marketing roles today. "We see marketers jump straight into the storytelling and image side — not because they don't know the other phenomenon of substance exists, but because they are not brought into the role of determining it. They are not expected in their roles as marketing managers to think about that because of the way they're organised.
“Product development may be in another department, maybe the management believes the product shouldn't be changed or — and this is the most typical thing today — many marketing managers don't work in the headquarters where the product is being decided upon. They work in the branch office, in the national part of an international company whose headquarters is somewhere else. If you're the marketing manager for Coke in Denmark or Ireland, you're not supposed to have ideas about whether you change the taste. Someone else in Atlanta has decided on that."
Majgaard says this has transformed the role of the typical marketing manager into one of communications manager. "I just want to remind people that the original idea of marketing was not that."

Big opportunities for small business
While large global organisations may be difficult to transform, Majgaard believes that the opportunity remains for small to medium businesses to put customer value back at the centre of the business. "Don't start with the marketing, rather look at whether your idea is right," he advises those starting out with limited marketing budgets. "It again comes back to what customer would you like to focus on, what needs would your product or service cover and, of course, pick needs that you are good at covering. If you're not good at it, stay out of it. If you can get that balance right, then you're almost half-way there."
And what if you've done all that and your budget is still scarce? "Well then it's a matter of focus," says Majgaard. "Even if you have defined your customer segment to be this or that, it need not be all of them in every country, you can focus and dig a little bit deeper."
He points to the example of Enterprise Rent-A-Car. "This is a huge company that started out small. It looked at the market and said the businessperson at the airport is not the only customer for rental cars. There is another customer — the one whose car has broken down.
“These people also need a car, but it is a different business. The customer is not going to come along and pick it up, so you need to deliver the car to the home. How do you do this? By using students to do the drops and pick-ups. The company did this to great success."
He also points to a retail chain in the US that focuses on pets, as do many of its competitors who would say their customer is the family with pets. "This particular chain said 'That's true, our customer is the family with pets', but it went a step further and said 'Our customers are those pet owners who almost treat their pet as a human being'. That opens a whole new world. The core idea is the most powerful thing to get right."
Once that is set in place, the marketers can look to the communications like advertising, he says. "What creates market for a brand? It always comes back to the customer. Does advertising work? Yes, advertising works when it coincides with a great idea that brings the right kind of customer value. If not, it doesn't work, or works only in the short term. You can get your feedback, but that's not its role. The role of advertising is not just to entertain — it has to give you payback."

Getting back to the boardroom
An area that also animates Majgaard is that of marketing at board level in an organisation. "One good way to involve marketing at board level is to promote the marketing manager one day to managing director, but this is not common. I recently asked a headhunter colleague of mine how easy is it for marketing managers to become managing directors and his answer was 'basically impossible'.
“The problem is that marketing today is not viewed as serious business. If a marketing manager wants to develop a career where he or she one day has potential for the job as managing director, he or she has to go via sales, which is considered more line management, more serious, more directly attributable to the bottom line. The other obvious route is to run a daughter company, in order to prove you can line manage."
Majgaard says there's little point in criticising boards per se. "In order to renew a fresh meeting of minds between the board and the marketing manager, they will both have to move," he says. "The marketing manager has to speak to the board in the language it understands. A good CEO will be very interested in the three Kotler questions, and it's up to the marketing manager to prove that he or she is best placed to answer these questions."
The same thing goes for the finance director, says Majgaard. "What interests the finance manager is margin. Marketers should be asking 'Are you aware that the greatest way to generate margin is to invent customer value?' If you come to the table with something customers really like they're willing to pay for it. Price does not need to have anything to do with cost, not at all."
In typical fashion, he has an example to demonstrate this: "There's a perfume whose idea it is to be the most expensive perfume in the world. What need is it covering? The need that some men have to show their wives when they come home from a long trip that they love them. And what better way than coming home with the most expensive perfume in the world? What does such a company do when competitors increase their prices? It increases its prices too, because it must, to stay unique. This is a little bit exceptional, but there are always ways in which you can command high price."
Majgaard claims that the marketers have left the boardroom. "Maybe they went to the toilet," he jokes. "But while they were gone, the finance guys took over." He says it is in everybody's interest to bring their voice back in from the cold. "There's a real need for top management and marketing to be closer together, to embrace and manage the future challenges that lie ahead of us, and it is not enough to understand the customer. It is essential to have the breadth and space to make the right decisions."

By Ann O'Dea

This article first appeared in Marketing Age magazine.