Marketers Take The Baton

mttbAs the era of cost-cutting to raise profits draws to an inevitable end, companies are starting to cast about for new ways to boost the bottom line.

The result: A renewed focus on marketing-driven top-line revenue growth, say executives at E.I. du Pont de Nemours, United Parcel Service and others, both through traditional marketing methods as well as emerging, non-traditional means.

“From 2000 to 2005, Du Pont was mainly driven by cost metrics; now we’re driven by growth metrics,” says George Cattermole, director-corporate marketing for the Wilmington, Del.-based conglomerate, which had $43.8 billion in sales in 1996.

“We want to increase the value of our stock 15% per year and we don’t think you can get that through cost-cutting,” Mr. Cattermole adds. “You have to start to grow your revenue. As markers continue to expand, if you don’t grow you lose market share.”

The profit growth of recent years has often come from major cutting and massive layoffs that, while painful at times, left corporate America stronger and more productive. However, these companies have now reached the end of this profit-building strategy, since more trimming would remove the muscle they need for long-term growth.

“Business marketing is alive, well and growing like mad,” says Ralph Oliva, executive director of the Institute for the Study of Business. Markets at Pennsylvania State University, University Park, Pa. “Once cost-cutting is over, there’s a need to understand where growth comes from, where profits come from and how to develop additional finesse to get ahead of that curve.”

Joe Pyne, senior VP-marketing for Atlanta-based UPS, agrees that companies such as his are starting to look once again to their marketing strategies as they move toward the next growth phase.

“We’re no different from any other company. There’s a seesaw of cost reductions, customer demands, increasing revenues and introducing new products,” says Mr. Pyne. “We’re looking to be more efficient with [budgets] we have and are placing an emphasis on business-to-business marketing.”

In line with that, traditional outlets remain an important part of the marketing mix even as electronic resources gain firm footholds.

Ad growth in trade pubs

For example, Brian Kardon, senior VP-marketing for Cahners Publishing Co., Newton, Mass., says his company continues to see strong ad growth in its trade publications.

Readership of trade magazines, Cahners research shows, has remained strong and largely unchanged during the last decade, despite an explosion of information resources at readers’ disposal.

Direct marketing also is benefiting from this new corporate direction. An updated Direct Marketing Association study projects that business-to-business direct marketing sales will grow more than 10% annually until 2001, outpacing consumer direct marketing sales and total business-to-business sales in the economy overall.

The exhibition industry, as well, is expected to grow at an average of 6% per year until 2001, says the Center for Exhibition Industry Research, Bethesda, Md.

Trackability critical

Part of the reason these tried-and-true venues remain popular is they are easily trackable. That, marketers say, is important as accountability grows as an issue.

For the past five years, Milwaukee-based Rockwell Automation has staged its annual Automation Fair, where Rockwell and its partners meet with customers.

Although the fair is one of his biggest expenditures, it is also “one of the easiest to measure for real, live results,” says Randall Freeman, Rockwell Automation’s VP-global marketing. “We’ve gone from about 3,000 customers the first year to topping 10,000 last year when people from 45 countries attended.

“The real value is the leads we generate – they’re the highest quality we get from any show or any business-to-business event we do all year. And our partners agree.”

As new media develops as a trackable marketing tool, its importance will also climb.

At Du Pont, increasing emphasis is put “on revisiting the marketing process to understand how we can make money with information technology,” says Mr. Cattermole. Information technology “allows for an entirely new basis of conversations with the marketplace,” he says.

Du Pont’s IT efforts include bolstering its database marketing capabilities and tapping the Internet, including intranets and extranets.

Those actions are common to many companies. “The real action on the Web right now is from business-to-business marketers,” says Penn State’s Mr. Oliva.

“We do a tremendous amount of research every year on exactly what customers want and where business is going, and electronic commerce keeps popping up,” says UPS’s Mr. Pyne. “We’re putting a lot of emphasis on providing information that enables transactions to take place and on positioning ourselves on the Net to enable business to take place.”

Spreading marketing around

As business-to-business marketing becomes more targeted and more important, its concepts are being infused throughout companies.

Du Pont’s Mr. Cattermole sees “multi functional teams doing marketing activities” and cites the difficulty of defining a marketing budget when myriad departments are involved. “Research, distribution, manufacturing and sales people are all working on solutions for customers – so how do you put a budget on it?”

 

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