As Customers Change, Marketing Must Change, Too
Sunil Gupta, Edward W. Carter Professor of Business Administration, and Rajiv Lal, Stanley Roth, Sr. Professor of Retailing and co-head of the Marketing Unit, are faculty chairs for the HBS Executive Education program Marketing in the Digital Era. In this interview, they discuss the goals of the program, how marketing today differs from marketing in the past, and how executives can expand their ability to address new challenges.
Why did you create this program?
Sunil Gupta: We are constantly updating all of our programs with new cases and new insights from our research. But every so often, we take a big step back and think more critically about how we're structuring a topic. As we embarked on rethinking our approach to marketing, we talked with a lot of industry experts—CMOs and CEOs from major companies around the world—to find out how they think about marketing now and what has fundamentally changed.
Rajiv Lal: The resulting program, Marketing in the Digital Era, is organized around the big picture challenges organizations are facing. We start with an overview of how marketing has changed and is continuing to change as a result of the digital revolution. Then, we explore the marketing challenges companies face at different stages of the business: launch, growth, and maturity. Most of our cases we use in the program are brand new, and we have a diverse team of faculty who bring different perspectives to the marketing challenge.
What are some new challenges marketers are facing now?
Rajiv Lal: The core objective of marketing is to drive growth by understanding customers. That has not really changed. But digital technology has changed how customers search, buy, and interact with businesses. First, marketers need to understand how their target customer’s buying process has changed—and how it works today. Then they can figure out how to approach that customer.
One example of a significant change is the rise of direct-to-consumer (DTC) brands. These companies seemingly came out of nowhere in the last 10 years and have become huge billion-dollar brands, like Dollar Shave Club, Allbirds, Glossier, and Harry's. Their success was surprising because they were competing with major established brands. Dollar Shave Club came into a market dominated by Gillette, which had with 70 percent market share at its peak. In the program, we explore questions like: How did these DTC brands become so successful? What has changed? We go through the value chain to explain how these companies do things differently, such as how they collect customer insights differently, how they innovate differently, and how they engage in marketing and distribution differently.
Sunil Gupta: The flip side is the impact on established brands being hammered by these DTC brands. The program also includes cases on how companies have successfully fought back. Rajiv and I wrote a case with P&G about Olay, a long-established brand. From 2000-2010, this brand's global revenue increased from $.5B to $2B. Over the next seven years, sales dropped to $1B. P&G was considering what to do. The practice of marketing that had worked very well in the last 20 years was no longer working and needed to change. In the program, we examine situations like Olay’s as we discuss how established brands need to learn the tricks of the new brands.
What will participants learn in this program?
Sunil Gupta: Executives will learn marketing strategy fundamentals, and they will learn how to blend traditional marketing approaches with new ones. When we talk to young companies, we find that many of them focus only on social media. They think about how to bring the message to the market without a complete understanding of some of the other marketing components and decisions companies have to make to have a successful business.
Rajiv Lal: In fact, many of these young companies start with performance marketing—they put a dollar into Google ads and they see if they get more than a dollar out. They see the return on investment immediately, and that's where they focus their marketing. But down the road, they realize that performance marketing does not build brands. A more traditional company might build a brand first, and then put the product in big-box stores once there's a pull in the marketplace. The newer company leaders need to learn brand building, and the established companies need to learn how to do performance marketing. That's just one example.
Beyond performance marketing, what are some other ways marketing is changing?
Rajiv Lal: Today's customers are not individuals—they are connected with each other, so network effects become important. The value of WhatsApp, for example, is not much unless a lot of people adopt it. The power of the connections enhances the value of the product. In the program, we analyze the connections between customers, products, and the business.
Sunil Gupta: Another change is the increasing important connection between brands and social issues. The relationship between Colin Kaepernick and Nike is a great example. Marketing leaders and CEOs need to decide if a brand should take a stand on a particular issue, when, and how.
How do marketing challenges differ at different business stages?
Sunil Gupta: When you launch a new brand or business, you are assessing the fit between a product and the market. Does the product meet the needs of a large market? How can you generate demand in that market? How do you bring the product to market? What channels do you use, what price, and so on.
When you have established your product in the market and want to grow, you need to make some choices. Do you expand your customer base? Expand your product line? Expand the scope of the business? And how do you do those things? For example, if you want to introduce a lower-priced brand, how do you maintain brand equity?
In a mature market, competition intensifies and businesses face commoditization. Margins erode. The challenge is to capture value in this situation. Here is where companies often experience disruption—or can create it. When new players come in with different business models, established firms must figure out how to manage a completely different form of competition. For example, if you're a cable company and streaming services come out of nowhere, how do you respond? These are some of the questions we address in our program.
Who will benefit most from attending this program?
Rajiv Lal: This program is ideal for executives who are making decisions about marketing strategy and are focused on growing the business. That includes both marketers and general managers. Next are people in more tactical marketing roles who are hoping to build more strategic capabilities that will enable them to take on broader responsibilities over time. The program is also ideal for marketing leaders who simply want to bring their knowledge and skills up to date and learn about emerging best practices. That includes executives who have attended our earlier program, Strategic Marketing Management.
Sunil Gupta: CEOs, heads of business units, or other general managers will also benefit from the program. They'll gain a better understanding of the marketing function and where it fits in the overall business. As a result, they'll be better able to work effectively with their marketing team.
This program is appropriate for executives from companies of all sizes, from young, entrepreneurial businesses to long-established multinationals. Because we cover every stage, participants will develop knowledge and insights that can be adapted to any type of business.
Is the program appropriate for teams?
Sunil Gupta: Yes, absolutely. When more than one person from a company attends, they will acquire a shared vocabulary and will have a much easier time implementing program concepts. A marketing head might attend with one or more of their direct reports, or a CEO might attend with their CMO, for example.