Is Marketing demoralized by Top Management?

Marketing is fading away from firms’ top management eyes to an extent that worried some of the marketing academics (Anderson1982; … cited in Nath & Mahajan 2008), something that has been noticed by Nath and Mahajan during their research and encouraged them to investigate the Chief Marketing Officer phenomenon appointed at the top management level and responsible mainly for all marketing activities. The authors were concerned with the fact that the number of CFOs in the largest normalized 1000 firms in comparison to the CMOs is approximately 69% - 31% respectively (Booz Allen Hamilton and Zorn 2004 cited in Nath & Mahajan 2008). The merit of their qualitative research which was supported by quantitative analysis is to help firms make well defined decisions with regard to the choice of having CMO on board. They examined the Marketing strategic importance to the leadership table by introducing the factors related to the CMO presence/absence; to indicate the marketing influence at the level where corporate strategy is originated. That directly led them to raise the following questions:

“What are the factors associated with the likelihood of CMO presence in firms’ TMT? And what are the consequences of CMO presence for firm performance in the face of these factors?” (p.65)

CMO’s Presence/Absence

In theory, the authors based their initial qualitative stage on three core ones namely Contingency, theories of Power and homophily. Followed, they argued that marketing uncertainty are directly related to the strategic, structural and environmental factors that TMT faces. And accordingly, contingency theory claims there is no best way to organize a corporation (, forcing firms to adapt. Hypothetically, firms are more likely to have a CMO when they have reasonably high levels of innovation, differentiation and corporate branding strategy, when CEO is an outsider, and when TMT's marketing/experience is fairly high (p.68). We could argue here, although the CEO could be an outsider, he/she could still resist releasing the Marketing authority to the CMO following the theories of power and as FedEx Kinko’s CEO Gary Kusin said “If you’re a CEO brought in to turn around a troubled company, you can’t delegate marketing,” (cited by McGovern and Quelch p.37). In smaller firms, as diversification increases, CMO presence decreases, suggesting that executives seem to be unwilling to give up authority over marketing to a CMO. In support of homophily, CMO presence being more likely as TMT/CEO marketing/experience increases. While authors claimed that Market Concentration is negatively related to CMO presence, they failed to prove it and allow us to argue that it is slightly unrelated factor. Their argument was comparing Customer oriented industries to Competition oriented industries, ignoring that managing competition is one of the marketing activities that a CMO is supposed to do. (Vorhies and Morgan 2005 cited in Nath), for example, Oracle has CMO

although it has taken aggressive competition strategy by applying heavy acquisition (ZDNet. however. annual reports. In fact.479) and customer satisfaction are more suitable (Srinivasan. Kokinaki. and Standard and & Poor’s COMPUSTAT. we cannot ignore the importance of engaging the CMO strategically.9) Methodology and Analysis The authors observed CMO’s presence in the TMTs of a multi-industry sample of 167 with more than $250Million publicly listed U. 2 .p. Ambler’s team (p. Additionally. namely Tobin’q and Sales they found that CMO presence has no impact on firm performance. they assumed that firms tend to have a CMO over the entire period of the study represented by model 3 focusing on the logistic regression. They use various secondary sources of data. because the effect of marketing can be unpredictable and fluctuates on sales/purchase behavior. a more appropriate way to asses a CMO consequences on firm’s Performance.S. (CMO Council p. citing Lamey and colleagues (2007) buyers act differently depending on economic situation (Rao & Bharadwaj 2006 p18. supporting that CMO’s role improve performance in the stock world. firms for a five-year period (2000–2004). marketing literature suggests that a marketing initiative will increase sales. One can argue that financial performance cannot be used to measure long terms marketing objectives rather brand equity (Ambler. stock price and shareholders’ wealth. Finally. First Analysis: assuming that the CMO decision was visited every year. Conspicuously. cash flows. According to Rao & Bharadwaj. Puntoni p. Two types of analysis were conducted. comparing CMO’s presence to Firm’s financial performance could be slightly irrelevant. using financial performance measures. a study done by CMO Council shows that Strategically Involved CMOs Get High Marks for Performance. they measured the performance of the firm using two Models. CMO consequences on Firm’s Financial Performance! Surprisingly. represented by two models. Hanssens 2008 p. Oracle.485) has found a different approach by measuring Brand Equity against internal expectations (plan) and external (competitor) performance versus financial valuation. model 1 was done using Generalized Estimating Equations to avoid any errors. On a different argument.23 ). a market-based measure of performance. authors found CMO presence is positively connected with Tobin’s Q. In the second analysis. Model 2 was done similarly to model 1 except they have used a different control variable for the industry effects. Although they were concerned only by studying the CMO presence as a phenomenon.25). including firms’ 10-Ks or proxy reports.

(Nardone and See 2005. They have tried to guide the firms with the choice of having a CMO by introducing the structural and strategic factors related to that. To empower this relationship they must have studied the entire population or similar industrial environment then quantitatively research it (Bryman and Bell 2007). The market concentration was not supported and alternatively. Missing samples for small firms < $250Mil/sales or didn’t report any R&D in their financials. power and homophily theories. the authors tried to base that on finding of customer satisfaction’s weakness on shareholder value (p. similarly. the authors have emphasized on the complexity of building a corporate brand name suggesting a CMO to exist on the firm’s TMT to uncover this uncertainty.Limitations & Contribution The Research doesn’t allow firms to simulate the same environment to generalize the results on variables such as sales growth. Picking branding strategy as an example. there is an insignificant relationship between CMO presence and performance. performance and volatility. CMO experience and CMO tenure being 23 months.70). Basically. Authors claimed that no prior research has expanded the study to the branding strategy being critical to the TMT structural choices. the authors raised crucial research knowledge to the marketing domain and explained quantitatively and qualitatively the rationales based on the contingency. Greg 2004) Ultimately. missing factors such as Time Constraints. Marketing Accountability. 3 . relevant Marketing Metrics. make the research tough to match marketing reality domain.

Special Report strategy-business. Oxford: Oxford University Press. E. and Shareholders’Wealth Journal of Marketing January 2008 4 . (2007) Business Research Methods.S. A. Quelch. Marketing Management Analytics Ramesh K. Rao & Neeraj Bharadwaj Marketing John Nardone and Ed See. CMO Council (2007) Define & Align the CMO Gail McGovern and John A. and Bell.References Bryman. Expected Cash Flows. (2004) The Fall And Rise of the CMO . (2005) The path to marketing accountability: A foundational study. 2nd Edition. Welch. Vijay. “CMO Tenure: Slowing Down the Revolving http://en.22169919p. Shuba Srinivasan. 2005).com. 2004.wikipedia. Stefano Puntoni. Journal of Marketing Assessing Marketing Performance.htm 5 .2000065477. Vol. Hanssens (2008) Marketing and Firm Value: Metrics.” (accessed May 1. p65-81. (2008) Chief Marketing Officers: A Study of Their Presence in Firms' Top Management Teams. Jan2008. Forthcoming.475-498 Oracle Executives: Flora Kokinaki. Tim Ambler. spencerstuart. 20. Pravin.00.zdnet. [available at http://content.html Wekipedia. Journal of Marketing. Mahajan.Nath. Journal of Marketing Research. and Future Directions. Methods.pdf].oracle. ZDNet. Dominique M. 72 Issue 1. Greg (2004).

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