March 19th, 2013
From reading the press, I think it’s fair to say that we look to members of the financial sector to tell us where the economy is going. These soothsayers read the tea leaves using metrics like interest rates, capital expenditures, unemployment and stock market reactions. This is all well and good, but it is incomplete. I think it is also wise to tap into the collective wisdom of marketing leaders who have their fingers on the pulse of the market’s biggest engine—customers.
In the February 2013 CMO Survey, 468 U.S. CMOs rated their optimism for the economy on a scale of 0 (lowest) to 100 (highest). The average score was 62.7, which is up from 58.4 in August 2012. This ~10% increase is important but a set of follow up questions tells us even more. Specifically, CMOs were asked to state whether they were “more optimistic,” “less optimistic,” or “no change” compared to the prior quarter. In August 2012, results indicated that uncertainty was rampant with about one third of the sample more optimistic, another third less optimistic, and the final third no change (see Figure 1). Results of the February survey indicate that CMOs who were more optimistic increased from 29 percent of the sample in August 2012 to a whopping 56 percent in the current survey! This 93 percent increase offers a very strong signal that economic uncertainty is fading. (more…)
August 30th, 2012
The August 2012 CMO Survey finds that company growth strategies will take on more risk in the coming year. Looking at Table 1, we can see that there two types of risk familiar to marketers—targeting new markets and offering new products or services. Combining these two, there are four general types of strategies that range from market penetration, which is the lowest risk because the company targets current markets with current offerings, to diversification, which is the highest risk because the company targets new markets with new offerings.
Table 1. Types of Growth Strategies
Similar to past CMO Surveys, growth spending over the past twelve months reflects a dominant focus on market penetration with an average of 51.7% of spending focused on this strategy. This is followed by product/service development (22.8%), market development (15.7%), and diversification (9.7%). However, as shown in Table 2, these figures are expected to shift significantly in the next twelve months. Growth spending on market penetration is expected to drop by 11.6% to 45.7% while all three of the other strategies are expected to increase by nearly 10% or more! These changes are consistent with a longer-term trend The CMO Survey has observed during this post-recessionary period.
August 22nd, 2012
New results from The CMO Survey are in and they ain’t pretty. Two key findings reflecting top marketers’ views about the economy stand out. First, Chief Marketing Officers (CMOs) expressed doubt about the outlook for the U.S. economy. On a 100-point scale where 0 is least optimistic and 100 is most optimistic, ratings dropped from a post-recession high of 63.4 in February 2012 to a score of 58.4 in August 2012. Figure 1 shows this trajectory over time. The greatest pessimism lies among business-to-business companies which dropped from an overall optimism score in February 2012 of 60.2 to a low of 53.6 in August. Business-to-consumer companies also decreased, but only from 63.8 to 61.5.
Figure 1. CMO Optimism for U.S. Economy (0-100 with 0 being the least optimistic)
March 20th, 2012
While going through my students’ resumes before class, I read one that listed “stair climbing” as a competitive sport. I had never heard of this, so I looked it up and found a well-established world-wide network of races. You can, for example, climb the Empire State Building and Gran Hotel Bali. Doing well requires strength, sprint, and endurance. If you are really good and perform well in the 100+ races around the world, you could win the Towerrunning World Cup.
All this talk of climbing made me think it would be interesting to plot the economic recovery using data from The CMO Survey. I plotted several key financial metrics as reported by The CMO Survey between August 2009 and February 2012 in Figure 1. What a beautiful sight! Steady and significant improvement over the course of 2.5 years to where we are today. These numbers are in response to the question, “Rate your firm’s performance during the last 12 months.”
February 28th, 2012
The results from The CMO Survey are in and one fact is very clear: Chief Marketing Officers are overwhelmingly optimistic about the U.S. economy’s outlook. When asked if they were more or less optimistic about the overall U.S. economy compared to last quarter, optimists outweighed pessimists 8 to 1. (more…)
February 7th, 2012
The CMO Survey reported that China will be the focus of the most dramatic increases in U.S. company sales revenues in international markets during the next 12 months. When asked to list the top three international markets for sales growth, approximately 20% named China. (more…)
December 20th, 2011
The CMO Survey asks top marketers to rank order the following factors in terms of their importance to customers: low price, superior product quality, superior innovation, trusting relationship, excellent service, and brand. The specific question is “For your largest market, rank your customers’ top three priorities over the next 12 months” where 1 is most important. I charted these responses over the last three years to get a sense of how priorities have shifted, especially during these tough economic times. (more…)
November 30th, 2011
I wrote a book last year entitled Strategy from the Outside In: Profiting from Customer Value. The central premise of the book is that companies are often managed with a focus on priorities other than customers. A range of reasons rooted in “insight-out thinking” include satisfying the stock market, lowering costs, or extracting all the value from existing capabilities. Companies that approach strategy from the outside in begin and end with the customer. In the words of Stephen Haeckel, these companies manage using “sense and respond,” not “make and sell.” (more…)