Today’s marketing audit or marketing analysis is still a comprehensive review of marketing practice; but it looks quite a bit different than it did a decade ago for several reasons. The pace of change, especially in communications, makes promotional strategies obsolete very quickly. Additionally, the demand for transparency and responsiveness’ to stakeholders or other constituents means the process must look at more than just customers.

The modern marketing analysis should accomplish two core outcomes:

• Provide a simplifying and unifying focal point, and
• Identify ways to streamline and synergize current efforts.

The simplifying and unifying focal point gives the organization a guiding star by which to navigate in otherwise chaotic times. For many this is identifying the timeless customer need that is a through-line for all the organization’s products and services. It answers the question “What business are you in?” In other situations the focal point can be a specific strategy, brand initiative or the launch of a specific marketing program.

Identifying ways to streamline and integrate efforts is a particular challenge for companies that tend to create silos according to functional tasks like sales management, advertising, PR, Web and Search Engine Marketing, and Social Media.  Creating a unified strategy for promotion will help strengthen execution, create alignment and reinforce brand messages.

If you Google or Bing “marketing audit” you’ll likely find outlines and to-do lists for self-assessments. As of August 2010, most of what’s available is very similar to what you would have found at the library way back in 1990 when I first wrote about audits and starting doing them for clients.

In contrast to audit protocols of the past, today’s marketing analysis should cover:

• The core business that underlies your products and services. Is there ambiguity about this core or elements that distract?
• The regulatory or activist initiatives impacting manufacturing and distribution. Where do stakeholders’ environmental and social justice concerns intersect with marketing?
• Integration and alignment of sales strategies with traditional and new media promotion. Were your strategies for sales, advertising, pr, Web and social media designed to work together, or are one or more parts “bolted on”?
• The “Soft Stuff” – the human environment of marketing, including employee understanding of and/or commitment to current strategies and programs.

Beware the assessment that says you’ll get a comprehensive audit for $500 or even $1,500. Think about it. Most consultants charge $200 to $250 an hour. Do you think they can accurately assess your firm and its situation in 2-6 hours? More likely this is how long it takes them to plug your name and company details into a boilerplate report, that –surprise! – reveals you need to hire them for additional services.  Be willing to pay for a quality service that can stand on its own without obligation for further involvement by the consultant.

Be clear about your own objectives for the process.  How deep do you really want to go? Are you looking for a few new ideas? Or do you want a comprehensive management assessment that gives you high ROI recommendations?  I won’t even ask if you want a quick fix, because everyone does.  Are you willing to entertain a bigger fix if the audit suggests it? Are you pondering questions about your company’s strategy or direction, but don’t want to get bogged down in a long-term process? Consider your desired future end state and communicate that to the consultant as you engage in the audit process. Clear objectives at the start will help create a better end product.

Few companies argue that fostering trust with customers and other stakeholders is an important business task. Where there’s disagreement, however, is what specifically fosters trust, and the degree to which trust between customers and companies – particularly as it relates to green or sustainability claims – is suffering.

Our academic partner, Jenny Mish, PhD., assistant professor of marketing at Notre Dame, explored this and other questions in her doctoral research. Her study, which explored food standards and sustainability, resulted in insights about marketing behaviors that foster trust.

Mish interviewed a wide variety of individuals representing institutions engaged in developing or promoting the use of market-based product standards, such as Fair Trade or organic, that specify reductions in negative environmental or social impacts.  She spoke with people in large corporations like McDonald’s, in government such as the United States Department of Agriculture, and  smaller, grassroots organizations such as the Portland, OR-based Food Alliance.

The spectrum of types of trust she found span from the very impersonal and institutional, to the highly personal, local and dare we say “intimate.”  Large corporations tend to look primarily at repeat purchase behavior to evaluate the degree of trust they’ve engendered with customers. Some companies evaluate trust on the basis of their ability to fulfill key expectations of sustainability performance. Still others evaluate trust on the basis of direct, personal interactions with customers, and the degree to which they had actual contact with customers and other stakeholders.

Her findings suggest that marketers may be able to foster trust three different ways:

Preserving the Integrity of the Brand: The least personal form of trust is embodied in the brand attributes that create a predictable customer experience. This is true even when the context is not sustainability or green attributes.  This calls for organizational and channel alignment to fulfill brand promises consistently, which means full commitment to green or sustainability standards…not merely claims that show up in features and benefits.

Compliance with a Market-Based Standard: A company’s ability to merit certification such as the USDA’s organic standard or Fair Trade, creates a type of performance contract with customers that fosters trust. Marketers may encourage their organizations to qualify for certification, but ultimately this will require cross-functional collaboration to bring operations into compliance. Standards that inspire trust are those that are either objectively evaluated (by government or third-party) or that are developed and supported by a wide coalition of contributors/stakeholders.

Designing Highly Personal Forms of Contact with Customers: A company’s ability to deal directly and personally with its customers, such as “meet the farmer” programs, can foster the most personal type of trust.  These programs are common in “local” exchange relationships, such as those formed at farmer’s markets.

One implication of the study, as I see it, is that human interactions (personal) are where trust can be lost altogether, or maintained in either an impersonal or highly personal and reciprocal manner. Mish’s study was not designed to explore trust as engendered by the sales process, but we know from other experience that the quality of those interactions also impact on consumer perceptions. While they make good marketing sense, authentic interpersonal relationships are usually not driven by marketing goals. They usually reflect a sense of “this is the right thing to do regardless” in the company culture, as is the case with local relationships described above.  They manifest from the shared values of everyone in the company.

Ultimately fostering trust is not a matter of choosing between these forms. It’s bringing all types of trust-fostering practices to the marketing agenda. The assumption is that if the organization is large, then personal interaction is not possible.  If we believe, however, that it’s the right thing to do, then it becomes an opportunity for innovation. There’s the marketing challenge — creating trust-engendering relationships between human beings on both sides of the exchange process, regardless of company size.

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Jenny Mish’s dissertation is “Centralizing and Decentralizing Forces in the Development of Sustainable Markets: A study of Food Product Standards.” It was published in 2009, by the University of Utah.

Pointing to two examples – LEGO and Robobank – of companies among other examples, the authors comment on how brand building is slipping from arms of marketers into the hands of managers who are tending the total customer or stakeholder experience. “These organizations have understood that brand building (even if the terminology of branding is not used) is a participative process involving the whole organization and is the responsibility of all employees.”

Critical success factors for organizations creating brands in this environment, we predict, will include the abilities to align the organization on compelling strategies based on stakeholder dialogue, to foster and facilitate dialogue among multiple stakeholders, to channel greater flows of information into, within, and outside the organization, and to build authentic trust with stakeholder groups.

Strategy + Business Article: Brand Building Beyond Marketing

What’s the difference?

Effective strategy design calls on us to engage the artistic mind – capable of pattern recognition, synthesis, story, empathy, play and meaning-making – to create compelling futures that inspire adaptive change. In our Strategy Jazz workshop, we explore an archetypal pattern of human creativity through the eyes of jazz musicians to see ways we can get greater outcomes from strategy processes.

Strategy Jazz will be presented at the OSR (Organizational Systems Renewal) alumni conference at Seattle University, June 19, 2010, but can also be adapted for on-sites, retreats and other conferences.

Through this workshop, we invite participants to shift their mental model of strategy design from a linear “planning” model to an innovation-based approach that taps the artistic, intuitive mind.

Using conversations with jazz recording artists Greta Matassa and Jovino Santos Neto, we take participants on a guided tour of the elements of jazz improvisation, laying down an archetypal pattern that repeats itself in our approach to strategic innovation for businesses and other organizations.

The OSR Conference explores the emerging field of arts in the design and leadership of change. For more information about the OSR Conference or to register, please visit the event website. To find out about options for presenting this workshop for your own organization, please contact us. Additional information is also available here.

• Ethisphere Institute: In 2008, ethical leaders outperformed the growth of the S&P 500 by 40%. In 2009, again. In 2010, by 35%.
• CSR Magazine found a shareholder value performance gap of about 10% between, for example, the most and least transparent companies.
• SRI Research finds that the mean Market Value Added of the top 100 Corporate Citizens is $36 billion, more than four times the Mean Market Value Added of the remaining companies — which is less than $8 billion.
• Berkeley’s Haas School of Business: Study found that companies high in social responsibility had significantly higher profit margins, returns on equity, and returns on assets.

What type of behavior characterizes these types of companies? It’s important to note that these are self-regulated practices of companies that take responsibility for relationships with and impacts on a variety of stakeholders, and incorporate an active, conscious commitment to the public interest (versus self interest alone) in their decision-making.

For additional details see the entire blog article here.

The Journal of Public Policy and Marketing released a special issue devoted to stakeholder marketing this month, which among other things, features an article by our academic partner Jenny Mish, professor of marketing at Notre Dame, with her colleague Debra Scammon.

As the journal has limited visibility with people in business and non-profits who engage with stakeholders, I’m reporting here on some of the ideas that have the most applicability to day to day practice.

What is Stakeholder Marketing?

Stakeholder marketing is an approach to marketing that examines the impact of marketing on stakeholders other than the customer.  Our short-hand description is that it is about “marketing with rather than marketing at stakeholders.” It seeks to partner and collaborate with stakeholders in the creation of value for the company, its customers and other stakeholders. One article in the special edition, “Stakeholder Marketing and the Organizational Field,” says that research demonstrates a strong business case for responding to stakeholder issues efficiently. Among the benefits are improved financial performance, greater stakeholder identification with the firm, and stronger stakeholder support.

The ideas from this special edition, combined with my own research, leave me with two observations on the current state of stakeholder marketing:

Best Practices Not Yet Clear

First, the primary obstacle to the adoption of stakeholder marketing it that it does not lend itself to tactical considerations as easily as green marketing, social media marketing, relationship marketing or any other similar approaches. These other practices often comprise a set of tools and tactical strategies that can captured and shared. So far, stakeholder marketing has not been reduced to a checklist of best practices. These articles, rather, describe an intention. One essay suggests that stakeholder orientation is best represented in a definition of marketing management. As Jenny’s article indicates, stakeholder marketing begins with a set of principles rooted in values, which then inform the culture of the firm, which then informs marketing practice.

Jenny’s article actually goes farthest toward identifying practices that show up in a stakeholder oriented approach to marketing. Among them:

• Approaching promotion and sales from the perspective of educating consumers about their choices rather than persuading them or seeking to control their behavior in favor of the firm’s objectives.
• Engaging customers as partners in creating value for other stakeholders
• Giving away innovations and market intelligence in service of improving the overall well being of the industry or market.

Marketers alone are not organizationally empowered to implement these practices.  More so than other marketing approaches, stakeholder practices must be supported from the top and must be coordinated across functional boundaries throughout the company. This leads us back to the role of marketing management as key in implementing stakeholder marketing.

How is Stakeholder Marketing Different From Stakeholder Engagement?

The second takeaway is that this edition does not yet answer the question “How is stakeholder marketing different from stakeholder engagement?” To answer this will require comparing companies’ stakeholder engagement or Corporate Social Responsibility (CSR) programs with their marketing strategies, taking into account all aspects of the marketing mix: product/service, pricing, distribution/sales, and promotion. Where are the linkages, overlaps or gaps?

Over the last several months I have contacted a number of well-known companies that I perceive to be practicing aspects of stakeholder marketing. Unfortunately, they don’t recognize their actions as such. They are more inclined to say that their CSR programs have elements of customer engagement. Even Timberland, whose stakeholder initiatives have been integrated into aspects of marketing and promotion, declines to call what they do stakeholder marketing.

It may well be that in many companies a stakeholder orientation in marketing will come from gradual encroachment of CSR initiatives.  As long as companies reinforce short-term thinking among marketers through mandates on measurement and quarterly financial goals, marketers will understandably resist embracing stakeholder methods which are often long-term in nature and difficult to measure – even though enhanced financial performance may be the ultimate outcome.

In the following series of articles, I’ve taken some of the topics raised by the authors in this special edition and provided brief summaries of findings that I feel are the most practical for those who manage marketers or have strategic oversight on a firm’s marketing.

Evolution of the Marketing Orientation – Researchers propose that stakeholder orientation is the next evolution in what began as a product orientation and evolved next to a market orientation.

Stakeholder Practices of Triple Bottom Line Firms – What does stakeholder marketing look like? Exemplary Triple Bottom Line firms provide the most insight and examples.

Like it or Not: Dragging Companies into the Stakeholder Perspective — Market events often trigger stakeholder activism that forces companies to shift from stakeholder management to stakeholder engagement.

Social Networking Taps the Creative Potential of the Stakeholder System — Social media marketing technology gives companies ways to manage stakeholder ideas and input.

Copies of the Journal of Public Policy and Marketing are available from the American Marketing Association. Purchase requires a subscription, which for individuals costs $90. The Journal publishes twice a year. Digital versions are available, but only to subscribers. Additional Information is available here .

If you are interested in integrating stakeholder strategies into your own marketing programs or strengthening stakeholder relationships in other ways, please contact us.

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This series of articles is dedicated to my beloved friend Coffee, with whose help they were written.

By Kathleen Hosfeld

In an article called “The New Marketing Myopia,” authors N. Craig Smith, Minette E. Drumwright, and Mary C. Gentile suggest that a stakeholder perspective is the next step in a progression that began with “product orientation” and evolved to “market orientation.” Building on the insights of Theodore Levitt’s landmark essay “Marketing Myopia,” originally published in 1960 in Harvard Business Review, the authors say that a stakeholders orientation in marketing will help prevent companies from relying too heavily on products or services that may come under regulatory or other scrutiny, or fall out of step with mainstream values.  Another article in the Journal’s special edition, “From Market Orientation to Stakeholder Orientation,” by O.C. Ferrell, Tracy L Gonzalez-Padron, G. Tomas M. Hult, and Isabelle Maignan, further develops the this idea.

A product orientation is internally focused on selling what one can/wants to make. A market orientation shifts to an external assessment of what customers need/want, and what competitors provide. A stakeholder orientation would also be externally focused, including other voices beyond customers and competitors, those advocating for longer-term, ethical, social, environmental or cultural issues.

The New Marketing Myopia article provides examples of food manufacturers and retailers who trade on the short-term desires of children for junk and fast food, and US automakers catering to the desire for gas-guzzling SUVs while disregarding signs of increasing regulatory pressure for more fuel-efficient vehicles. Stakeholders have lobbied both industries for years.  Automakers in particular have paid a price for ignoring stakeholder concerns.

The authors make the point that a market orientation, because it looks outward, has the potential to more easily evolve into a stakeholder perspective. The chief difference is that market orientation tends to ultimately prioritize customers and competitors over other stakeholders, whereas stakeholder orientation seeks to manage to all stakeholder interests simultaneously.

The original “Marketing Myopia” offered inspirational examples of how a market orientation expanded possibilities for long-term organizational evolution – reframing the core business from specific products which may only have a market for a decade or two to a customer need that might be reinterpreted over many decades.  It expanded trains to transportation, or silent films to film and video entertainment.

The authors suggest that stakeholder orientation can help companies “develop foresight regarding the markets of the future.” However, they provide no examples of how companies have thrived by doing so. Rather the stakeholder orientation as described here serves as a constraint – what one should not or cannot do – rather than something that broadens strategic options.  This does an injustice, I believe, to the stakeholder concept, which by way of its expanded systems view and the latent creativity present in the stakeholder system itself should similarly explode strategic options.

I wanted the authors, particularly of the New Marketing Myopia article, to cite examples of the generativity fostered by the stakeholder perspective. In some situations the stakeholder perspective might offer an expanded view of customer needs—from junk food to youth nutrition, or from SUVs to transportation solutions.  In others, it might show how companies and customers can create new benefit for other stakeholders while enhancing value creation for themselves. Or, it may simply mean meeting the same customer need but from within a business model or operational system that has been redesigned to respond to issues of ethics and sustainability.

Significant change is motivated by a compelling future.  I believe there is a compelling business case for adopting a stakeholder orientation in marketing. The authors of both these articles have not made that case.

By Kathleen Hosfeld

While some companies step into a stakeholder orientation by choice, others find it forced upon them by stakeholder activists.  In “Stakeholder Marketing and the Organizational Field,” by Jay M. Handelman, Peggy H. Cunningham and Maureen A. Bourass, the authors begin with the story of Starbucks’ capitulation to human rights, environmental and nongovernmental organizations’ demands to carry fair trade coffee. Rather than settling the issue, this agreement unleashed further demands from the activist community. As stakeholder dynamics accelerated, Starbucks was forced to move from a position of trying to “manage” stakeholder issues and perceptions to a stance of collaboration.  By building partnerships with activists, the authors say the company achieved a degree of legitimacy that “mitigated” further attacks.

The complexity and rapid evolution of stakeholder demands, as demonstrated in the Starbucks example, can outstrip capacity to respond through what the authors call a “strategic” and what I would call an issues-management approach. As a result companies are forced to recognize their place in a field, which the authors describe as a community of organizations and stakeholders – marketers, consumer activists, government, professional and trade associations, and special interest groups.

In order to respond to stakeholder demands, Starbucks was forced to engage with members of the field, instead of managing them. They had to act as one of several constituents in network of embedded relationships.  The authors describe similar dynamics in the food retail business during a period of high inflation, when the industry fought stakeholder influence, and compared it with the same industry’s response to challenges between 1988 to 2005 (e. coli outbreak, 9/11 and childhood obesity) in which members engaged with stakeholders. As a result of engaging, food retailers profited, and found ways to leverage events or issues into marketing opportunities (such as appeals to patriotism during the aftermath of 9/11).

The authors make the point that as market and economic forces trigger stakeholder activism, conflicts between activists and the companies they target are based in ideology. Conflict occurs when companies stand solely for their own interests, while activists and other external stakeholders advocate for those they see as vulnerable – consumers, environment, social groups, etc.  Parties that begin to see how their own interests are aligned or compatible can bring resolution to issues more efficiently.

The article concludes with recommendations to carefully monitor trigger events that lead to stakeholder activism, to monitor the firm’s own institutional (social, economic and financial) capital relative to stakeholders, and to be conscious of the ideological assumptions that inform the response to stakeholders.

By Kathleen Hosfeld

Bhaskar Chakravorti, a senior lecturer at Harvard University and a partner of McKinsey & Co. writes in his article “Stakeholder Marketing 2.0” about one contribution that social media marketing can make to stakeholder commitments in marketing.  Marketing with customers rather than at them is one of the paradigm shifts that occur in the movement to a stakeholder perspective.

In a traditional setting, he writes that “the intended targets (customers) did not have the opportunity to interact with decision makers; provide feedback; and influence the product, the experience or the brand in an ongoing manner ….Consumers were downstream participants and suppliers, partners or employees played their respective roles upstream.”

What social media marketing tools allow companies to do is to create manageable forums for interaction – what Chakravorti calls “harnessing distributed intelligence.”  Specific examples of “crowd sourcing” that he cites are Dell’s Idea Storm for external stakeholders and EmployeeStorm for internal stakeholders, Starbucks’ MyStarbucksIdea.com, Mujii Awards and Staples Invention Quest.

Chakravorti describes five characteristics of desirable social network solutions for stakeholders – by which he means primarily customer and employee stakeholders. Chief among them is an emphasis on encouraging diversity of participation, making the decision-making model for the company clear in the design of the system, and preventing the potential for manipulation such as minority coalitions campaigning to create greater weight for their ideas in the system.

Chakravorti notes that research has not yet proven that utilization of these ideas results in better financial performance or enhanced stakeholder marketing outcomes. Given the overwhelming curiosity that business has in social media networking, I doubt that this caveat will deter any company of a size from investing – and perhaps considerably — in designing social media programs like Starbucks’, Dells’ and Staples’.

By Kathleen Hosfeld

An executive I’ll call Adam (not his real name) was frustrated with the company’s inability to get traction on its marketing strategy. A thoughtful leader who’d spent part of his career in a consulting firm, Adam didn’t understand why his direct reports weren’t making more progress.  As we interviewed him and his executives, we discovered that their archetypal understanding of the company’s strategy was completely different.  The difference had profound implications for almost every aspect of the company’s operations – from planning to marketing to organizational structure and hiring.

Thinking about strategic archetypes was developed into a useful framework by professors Jeffrey Conant, Michael Mokwa, Rajan Varadarjan and Daryl O McKee (Texas A&M, Louisiana and Arizona State Universities). We used their research  with permission in the development of our online strategic assessment instrument, which allows us to type companies and their executives using these four archetypes:

• Prospector – The consummate innovator, able to anticipate and capitalize on trends, design breakthrough new products and services, highly agile and market oriented. Product and service innovators.
• Analyzer – Capable of innovation, but more likely to focus on market penetration for products or services with proven potential.  Strategic market developers.
• Defender – A niche or focused company that is highly selective about the products and services it offers.  Their strategic advantage in a reputation for quality and effective cost management.
• Reactor – Responds to the competitive movements of other companies. Opportunistic rather than strategic.

Each of these archetypes has its own approach to planning, research, products and service selection or innovation, promotion, pricing and organizational structure.

Archetypal language helps simplify otherwise complex constellations of factors in organizational life. Many consultants have been inspired by the work of Carol Pearson, author of The Hero and the Outlaw: Building Extraordinary Brands Through the Power of Archetypes (McGraw-Hill, 2001) to use archetypal language in building brand identities.

Like an organizational Meyers-Briggs, an archetype assessment gives executives an accessible vocabulary to identify strategic disconnects between the C Suite and the rest of the organization, and even within the executive team. Our client Adam consistently scored as an Analyzer and all of his direct reports as either Defenders or Reactors.  This helped Adam understand why he felt misunderstood, and sometimes lonely. It also gave him a means by which to articulate the specific areas where he needed to bring the organization into alignment around his vision.

The most important learning for Adam’s organization was that the Reactor type isn’t really a strategic alternative at all. It’s the archetype of no clear strategy. When too many people score in this category, it’s a sign that either there is no clear alignment around a strategy or that no one as yet understands the strategy. It’s a wake-up call for making conscious choices about which archetype best suits the assets and resources of the organization.

For many, a strategy is a series of financial goals the company must achieve. Archetypal language gives companies a more streamlined way to talk about how to start rowing together in the same direction towards those goals.