Description
The nature of business-to-business (B2B) marketing is changing. What was once primarily a tactical function supporting the sales force is transforming into a strategic partner.
Perspective
Building Capabilities
for B2B Marketing
Leadership
Insights from Building
Product Manufacturers
Matthew Egol
Yogesh Pandit
David Perpich
Booz & Company
Contact Information
Amsterdam
Peter Mensing
Partner
+31-20-504-1900
[email protected]
Chicago
Matt Ericksen
Partner
+1-312-578-4610
[email protected]
Cleveland
Les Moeller
Partner
+1-216-696-1767
[email protected]
Steven Treppo
Partner
+1-216-696-1570
[email protected]
John Jullens
Principal
+1-216-696-1753
[email protected]
Dallas
Jose Gregorio Baquero
Partner
+1-214-746-6516
[email protected]
London
Richard Rawlinson
Partner
+44-20-7393-3415
[email protected]
Mumbai
Abhishek Malhotra
Partner
+91-22-2287-2001
[email protected]
Munich
Gregor Harter
Partner
+49-89-54525-554
[email protected]
New York
Matthew Egol
Partner
+1-212-551-6716
[email protected]
Yogesh Pandit
Principal
+1-212-551-6745
[email protected]
David Perpich
Senior Associate
+1-212-551-6058
[email protected]
San Francisco
Douglas Hardman
Partner
+1-415-281-4948
[email protected]
1 Booz & Company 1
EXECUTIVE
SUMMARY
The nature of business-to-business (B2B) marketing is
changing. What was once primarily a tactical function
supporting the sales force is transforming into a strategic
partner. Even as B2B marketers are under signifcant
pressure to do more with less, they must address a broad
set of requirements beyond brand advertising, trade shows,
and getting the company’s product catalog in front of target
customers. In addition to these core activities, leading B2B
marketers are now playing a more strategic role in building
customer insights, developing integrated campaigns across
traditional media and new digital platforms, and supporting
relationship-building programs with key purchasing decision
makers and those that infuence product specifcations.
The economic downturn has accel-
erated these shifts, as leading B2B
marketers seek to not only cut costs
but also grow stronger. Despite cost
pressures, an emerging set of B2B
marketing leaders are preserving
their focus on building new capa-
bilities to position themselves for
superior performance as the economy
bounces back.
To build insights into B2B marketing
leadership, Booz & Company recently
studied building product manufactur-
ers (BPMs) to better understand shifts
in their marketing objectives, spend-
ing priorities, and focus on capability-
building efforts. BPMs were chosen
for this initial wave of research
because the residential and commer-
cial construction sectors have been hit
particularly hard by the recession.
Booz & Company 2 Booz & Company 22
Effciently and effectively reaching
a fragmented set of customers has
historically been a challenge for B2B
marketers. For years, companies
relied on brand advertising, direct
mail of their product catalogs, and
a network of dealers and distribu-
tors to reach their diffuse customer
segments. While the emergence of
digital media platforms has opened
up new opportunities to interact
directly with end customers, many
B2B companies have been slow to
react, compared with business-to-
consumer (B2C) marketers.
When the economic downturn began
in the fall of 2008, B2B companies
came under intense pressure to cut
costs. After all, the recession hit the
B2B sector with full force; busi-
ness spending plunged 19 percent
between June 2008 and June 2009,
compared with a 1.9 percent drop in
consumer spending.
1
These cost pressures helped expose
the capability gaps between leading
and average B2B marketing orga-
nizations. C-suite directives to “do
more with less” forced marketers to
prioritize their investments, accel-
erating an ongoing shift to digital-
enabled marketing programs that
promise higher returns on invest-
ment by generating more effcient
and effective ways of distributing
product information to end custom-
ers and infuencers, while creating
higher-quality leads for dealers and
distributors.
The recession also brought a new
level of awareness inside B2B orga-
nizations that new capabilities are
needed to manage the integration
of traditional marketing platforms,
such as print trade journals, with
emerging digital channels. Today,
B2B frms are taking their cue from
leading marketers in developing
these capabilities:
• Cross-functional processes to
manage integrated marketing
programs
• Database marketing and other
technology skills to personalize
interactions with customers, dis-
tributors, and those who infuence
purchasing decisions
• Collaborative approaches with
agencies and media companies to
generate branded content
Booz & Company is working
with clients to develop a better
understanding of how leaders are
building these new capabilities and
what is required to successfully
navigate the transformation. In late
2008 and early 2009, we teamed
with the Association of National
Advertisers (ANA), with which
Booz & Company has enjoyed a
Key Findings
• Successful marketing investments
focus on building sustained
capabilities, as opposed to
executing a series of campaigns.
• Building product marketers with
more advanced capabilities have
graduated from playing a tactical
role to driving growth strategy for
their companies, but even leaders
recognize that there is much room
for improvement.
• Leaders are focusing more than
non-leaders on driving traffc to
their websites and building direct
relationships with customers to
drive leads for their dealers and
distributors.
• As companies increase their
spending on digital platforms,
they expect media companies to
become more important partners.
COST CONCERNS
HASTEN CHANGE
3 Booz & Company
multiyear relationship focused
on building successful marketing
models, to conduct a joint survey
of marketing effectiveness across
B2B sectors.
2
To extend this initial research, Booz
& Company recently partnered with
Hanley Wood, a leading B2B media
and information company serving
the construction market, to conduct
a marketing leadership study of 72
BPMs. BPMs were our frst choice
for an industry-specifc treatment
because they represent a large and
leading component of U.S. economic
activity. In addition, the sheer mag-
nitude of the downturn in construc-
tion markets has forced BPMs to
move rapidly in making budget and
marketing mix adjustments. This
being the case, BPMs provide poten-
tial ahead-of-the-curve insights for
other B2B sectors.
As part of our BPM research with
Hanley Wood, we developed the
Booz & Company Marketing
Leadership Index to help B2B
marketing executives identify the
capabilities that distinguish lead-
ers from non-leaders (see “Research
Methodology,” page 12). Given their
excellence in marketing, leaders
provide insights into marketing
best practices and establish forward-
looking trends in strategic priorities,
spending, and investments in
new capabilities.
For our marketing leadership study,
we defned BPM marketing lead-
ers as those who excel at both
“foundational” and “exceptional”
capabilities. We defned foundational
capabilities as those that represent
the “table stakes” attributes of tradi-
tional marketing programs: sales and
marketing collateral, dealer/distribu-
tor programs, customer training and
development, event marketing, and
customer insights (see Exhibit 1).
Note: n=72. Neutral responses are not included. Totals may vary because of rounding.
Source: Booz & Company Marketing Leadership Study (2009)
Exhibit 1
Foundational Marketing Capabilities
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
44
40
43
43
38 55
62
70 26
7
17
54
50
11
15
13
15
18
16
4
8
1
19
15
26
19 Customer Training & Development
Event Marketing
Sales & Marketing Collateral
Dealer/Distributor Programs
Customer Insights
6
4
8
22
11
SATISFACTION WITH STRENGTH OF COMPANY'S FOUNDATIONAL MARKETING CAPABILITIES (% AGREE/DISAGREE)
Strongly Disagree
Disagree Somewhat
Agree Somewhat
Strongly Agree
Booz & Company 4
Exceptional capabilities are the
leading-edge skills required to take
advantage of the shift to digital—
multi-platform media campaigns,
data/lead management, search
engine optimization/search engine
marketing, and direct marketing
(see Exhibit 2).
The Booz & Company Marketing
Leadership Index scored BPM survey
respondents based on the sophis-
tication of their foundational and
exceptional capabilities. While
companies scored higher on average
for foundational capabilities, there
was still signifcant room improve-
ment among all BPMs. The range in
scores for exceptional capabilities
was even wider.
We defned leaders as those with
positive scores on both dimensions
of the Booz & Company Marketing
Leadership Index (i.e., for both foun-
dational and exceptional capabili-
ties). Based on this criterion, roughly
one-third of BPMs were classifed as
marketing leaders (see Exhibit 3).
With these fndings in hand,
we were able to distinguish how
leaders differed from the rest of
the pack when it came to setting
priorities for marketing innovation,
balancing marketing budgets, and
planning their spending levels for the
near term.
Source: Booz & Company Marketing Leadership Study (2009)
Exhibit 3
Booz & Company Marketing Leadership Index
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
INDEXED SUM OF INDIVIDUAL SCORES (STRONGLY AGREE = +2, AGREE +1, DISAGREE -1, STRONGLY DISAGREE -2)
Exceptional Score
Foundational Score
“Leaders”
-100
-80
-60
-40
-20
0
20
40
60
80
100
-100 -80 -60 -40 -20 0 20 40 60 80 100
Leaders
Non-Leaders
Note: n=72. Neutral responses are not included. Totals may vary because of rounding.
Source: Booz & Company Marketing Leadership Study (2009)
Exhibit 2
Exceptional Marketing Capabilities
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
SATISFACTION WITH STRENGTH OF COMPANY'S EXCEPTIONAL MARKETING CAPABILITIES (% AGREE/DISAGREE)
31
40
18
15
46
49
35
26
24
19
22
26 24
21
Direct Marketing
Multi-Platform Media Campaigns
Data/Lead Management
Search Engine Optimization/
Search Engine Marketing
10
14
50
43
33
34 18
6
20
8
Strongly Disagree
Disagree Somewhat
Agree Somewhat
Strongly Agree
5 Booz & Company 5
Although most B2B marketers
have historically struggled with
customer fragmentation, few have
been as challenged as those in the
building products industry. Potential
customers number in the hundreds
of thousands, and direct contact
with end buyers is often impeded by
multi-tier distribution networks of
distributors, dealers, and retailers.
In addition, BPMs also need to
market to infuencers—architects
and others who recommend specifc
products. BPM marketers currently
seek to reach these customers and
infuencers primarily by taking
out ads or by developing sales and
marketing collateral such as catalogs
to be handed out at trade shows or
distributed via direct mail.
But over time, BPMs have begun
to refne their focus for marketing
innovation. The emergence of the
Internet has allowed them to expand
the scope of their interactions with
end customers and infuencers
by building direct conversations
through e-mail and company-
owned websites, where they can
acquire information on customers
and publish virtual versions of their
catalogs and other targeted content.
Today, the vast majority of BPMs we
surveyed agree on the most critical
marketing objectives—driving
traffc to their website (85 percent),
increasing brand awareness through
advertising (83 percent), and
building direct relationships with
customers (83 percent).
To support these objectives, BPMs
are investing in a broad set of
marketing programs, including a
diverse mix of paid media adver-
tising and other “below-the-line”
marketing programs—the marketing
services industry’s term for anything
in the marketing budget that histori-
cally fell below the line item for
paid media. For BPMs, below-
the-line marketing accounts for
PRIORITIES FOR
MARKETING
INNOVATION
Booz & Company 6
three-quarters of spending, encom-
passing spending categories such
as direct marketing, events, trade
programs, sales and marketing col-
lateral, company websites, and the
purchase of keywords from Google
and other search platforms (see
Exhibit 4).
As marketers step up their efforts
to get closer to the customer, the
marketing mix is shifting in favor
of digital advertising, search, direct
marketing (including digital forms
such as e-mail), and company
websites. However, despite recent
pressures on traditional advertis-
ing, paid media’s share of the
budget is expected to remain stable,
underscoring the essential role that
advertising plays in promoting brand
awareness and driving audiences to
company websites.
In fact, parallel shifts in marketing
mix are occurring. First, paid media
is migrating to digital, but as part of
an integrated marketing campaign
that combines print, digital, and
events for maximum impact in build-
ing brands and driving sales. Second,
BPMs are simultaneously pursuing
other initiatives through their spend-
ing on below-the-line marketing
programs.
This shift is even more pronounced
for leading BPM marketers (see
Exhibit 5). For instance, leaders
place a much greater emphasis on
driving traffc to their own or dealer/
distributor websites. Similarly, build-
ing customer contacts and expand-
ing their customer database is a
much higher priority for leaders than
non-leaders. Given leaders’ strengths
in data management and direct mar-
keting, this is not surprising. Leaders
also focus more effort on digital
innovation, as they invest in new
capabilities to fully tap the potential
of online and mobile marketing to
forge deeper customer relationships
and better target the delivery of
information and promotional offers
to decision makers and infuencers.
In terms of overall investment,
the majority of leaders currently
spend the equivalent of more than
4 percent of sales on marketing. By
comparison, two-thirds of non-
leaders spend the equivalent of only
1 to 3 percent of sales on marketing,
a signifcant difference. Leaders are
sustaining higher levels of spend-
ing on marketing in the downturn,
recognizing that building winning
capabilities requires investment and
that they have an opportunity to
grow stronger even as they cut costs.
Moving forward, both groups
expect their marketing budgets to
increase as the economy rebounds
and the construction market recovers
(see Exhibit 6).
7 Booz & Company
Source: Booz & Company Marketing Leadership Study (2009)
Exhibit 4
Shift to More Direct Points of Contact
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
BPMS’ MARKETING BUDGETS—2010 VS. 2012 (ESTIMATED % ALLOCATION OF TOTAL MARKETING BUDGET)
18%
19%
14%
13%
9%
11%
8%
9%
4%
3%
20%
Trade Programs & Promotions
Company Websites
Direct Marketing
Paid Search
Digital Advertising
Traditional Advertising
Other
2012
100%
2%
17% Developing Sales & Marketing Collateral
Events
6%
5%
19%
2010
100%
3%
21%
Paid Media
Below the Line
(i.e., other than
paid media)
Note: BPM leaders n=33, BPM non-leaders n=39.
Source: Booz & Company Marketing Leadership Study (2009)
Exhibit 5
BPM Leaders’ Marketing Priorities
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
KEY FOCUS OF FIRMS’ MARKETING OBJECTIVES—LEADERS VS. NON-LEADERS (% WHO REPLIED “AGREE” OR
“STRONGLY AGREE” TO EACH STATEMENT)
Driving website traffic through print/digital adv. 100% 69% +31%
Increasing brand awareness through advertising 91% 79% +12%
Building direct relationships with building pros 85% 82% +3%
Building customer contacts and growing our database 85% 62% +23%
Driving qualified leads for our sales force 85% 67% +18%
Training and professional education programs 85% 72% +13%
Developing custom content for branding 82% 74% +8%
Building deeper insights into our customer base 82% 69% +13%
Event and face-to-face marketing 79% 69% +10%
Building innovation around digital media 73% 62% +11%
Driving traffic to dealers/dist. through print/dig. adv. 70% 46% +24%
Building trial and repeat usage 61% 54% +7%
Difference between
Leaders and Non-Leaders Non-Leaders Leaders
Note: BPM leaders n=33, BPM non-leaders n=39.
Source: Booz & Company Marketing Leadership Study (2009)
Exhibit 6
Marketing Budgets as a Percentage of Sales: 2010 vs. 2012
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
30%
24%
46%
10%
21%
69%
39%
15%
46%
18%
31%
51%
2010 2012
Non-Leaders
Leaders
>6% 4%–6% 1%–3% >6% 4%–6% 1%–3%
Booz & Company 8
Leaders are defning themselves not
by the success of single campaigns,
but by the achievement of greater
sophistication in the development
of marketing capabilities. As a
result, they are beginning to play a
more strategic role that goes beyond
delivering on their historical focus
on brand building, events, and
traditional direct marketing.
Thanks to a study of B2B market-
ers across industries broader than
construction that we conducted
recently with ANA, we know that
investments in best-in-class market-
ing capabilities generate substantial
market share gains. Some 40 percent
of above-average B2B marketers
were found to have gained market
share, compared with 26 percent
of those with below-average capa-
bilities, representing a market
share gain premium of 54 percent.
Marketers in the top quartile
enjoyed an even more pronounced
advantage, as 56 percent of those
companies recorded gains over the
three-year period studied.
The Booz & Company–ANA study
revealed that B2B marketers that
build more advanced capabilities are
much more likely to play a strategic
business role within their compa-
nies. Most marketing organizations
are generally confned to perform-
ing tactical functions that support
strategic decisions that have already
been made. More tactically focused
marketing organizations exhibit
the characteristics of one of three
models:
• Service provider: Provides advertis-
ing, promotion, and public rela-
tions services at the request of the
brand and product/service teams
LEADERS STRESS
CAPABILITIES
OVER CAMPAIGNS
Some 40 percent of above-average
B2B marketers gained market share,
compared with 26 percent of those
with below-average capabilities.
9 Booz & Company 9 Booz & Company
• Best practice advisor: Works with
the individual businesses to maxi-
mize marketing effectiveness and
effciency by bringing best practices
to advertising, promotion, public
relations, and other activities
• Marketing master: Develops and
leads large company-wide mar-
keting efforts and helps set the
company’s priorities
For a marketing organization to be
classifed as strategic, the research
found that it must fall into one of the
following three models:
• Brand builder: Provides effcient
marketing services, from commu-
nications to creative output and
campaign execution, in support of
the company’s brands
• Senior counselor: Serves as a
primary advisor on marketing
strategy to the CEO and the indi-
vidual businesses, and leads major
advertising, promotions, and public
relations campaigns
• Growth champion: Drives the
company’s priorities, and leads the
development of its brands, prod-
ucts, and new businesses
Generally speaking, marketing
organizations that fulfll one of these
roles are highly infuential in affect-
ing the company’s strategic decision
making. In the marketing leadership
study focused on BPMs, conducted
with Hanley Wood, close to three-
quarters of marketing leaders were
identifed as playing a strategic busi-
ness role within their organizations.
This is substantially higher than for
non-leaders and for other B2B indus-
try marketers studied in the earlier
ANA study (see Exhibit 7).
As B2B marketers continue to
experiment with their marketing mix
and seek innovative approaches,
even leaders see room for improve-
ment in their development of
winning capabilities. Almost three-
quarters of the BPM leaders surveyed
in the Booz & Company marketing
leadership study said they were look-
ing to further scale up their market-
ing activities beyond traditional
focus areas such as advertising, trade
shows, and direct mail.
A number of obstacles potentially
stand in their way. The shift to
digital marketing requires
Note: BPM leaders n=33, BMP non-leaders n=39, ANA B2B average n=130.
Source: Booz & Company and ANA B2B Survey of B2B Marketers (2009); Booz & Company Marketing Leadership Study (2009)
Exhibit 7
Leaders Have a Seat at the Strategy Table
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
50%
44%
73%
50%
56%
27%
BPM Non-Leaders BPM Leaders ANA B2B Average
Tactical Functional Role Strategic Business Role
THE MARKETING ORGANIZATION'S ROLE IN THE COMPANY (RESPONDENTS COULD SELECT ONLY ONE OPTION)
Booz & Company 10
signifcant investments—for exam-
ple, in websites, in databases, and in
unique content. Moreover, organiza-
tional inertia that has set in around
traditional marketing methods can
often prove diffcult to change.
With the recession bringing a
renewed focus on operating eff-
ciency, many BPMs are embrac-
ing a “do it yourself” approach to
building new capabilities across
their organizations, and market-
ing departments are no exception.
Although this might seem to pose
fundamental challenges to media
companies’ relationships with their
advertising clients, the reverse is
proving true for media companies
that are taking a new approach to
partnering with marketers. Indeed,
many media companies are striv-
ing to reinvent themselves to help
advertising clients leverage their
digital assets and develop “private-
label media,” or their own branded
content and electronic media assets.
3
Collaborating with and outsourcing
capabilities to media companies and
agency partners—instead of hiring
the necessary talent and making the
required investments in new
technologies—is one way BPM
marketers can better stretch their
scarce resources.
The increasingly important role
that partnerships play in building
new capabilities was underscored
by a recent Booz & Company study
with the ANA, the Interactive
Advertising Bureau (IAB), and the
American Association of Advertising
Agencies (AAAA).
4
This research
program, called Marketing & Media
Ecosystem 2010, included input
from more than 250 marketing
executives at many B2B and B2C
marketers, as well as more than 100
media executives and 100 agency
executives. More than half of the
marketing executives surveyed said
they expected media companies to
become even more important direct
partners in the future (see Exhibit 8).
The Marketing & Media Ecosystem
2010 study also showed that 91
percent of media companies were
already engaging in integrated cam-
paign development, lead generation,
and other services that went beyond
selling traditional advertising.
Note: n=450 (250 marketers, 100 agencies, 100 media companies)
Source: Marketing & Media Ecosystem 2010 study, February 2008; Booz & Company analysis
Exhibit 8
Media Companies Perceived as Important Partners
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
WHICH DIRECT PARTNERSHIPS WILL BE MORE IMPORTANT IN THE FUTURE? (MARKETERS' RESPONSES)
EXAMPLES OF MARKETING SOLUTIONS
PROVIDED BY MEDIA PARTNERS
27%
52% 52% 52%
0%
10%
20%
30%
40%
50%
Agency
of Record
% of
Respondents
Communications
Planners
Media
Planners
Media
Companies
- Integrated campaign development
- Custom/exclusive content
- Consumer insights
- Behavioral targeting
- Database marketing
- Lead generation
- Word of mouth
- Event marketing
- Training and education programs
11 Booz & Company 11 Booz & Company
Although the preceding insights
highlight potential best practices and
trends in B2B marketing, company
priorities and strategic situations
can vary widely. Depending on their
current competitive positioning,
resources, and priorities for driving
growth, B2B marketers have to
identify the most effective marketing
solution to meet their needs.
To forge the best path forward, B2B
marketing leaders should engage in a
three-step process:
• The frst step is to identify the
specifc marketing priorities that
will be most valuable for driving
the company’s growth given
its unique positioning, and to
establish the best way to integrate
new approaches into marketing
campaigns.
• Next, marketing leaders should
devise plans for investing in the
key capabilities needed to address
these priorities. Leaders recognize
that a capability is a combination
of analytics, processes, technology,
and organization. Building winning
capabilities requires addressing
all four elements. This demands
not only better cross-functional
alignment internally but also new
ways of working with external
partners.
• The last step involves determining
which capabilities are best handled
in-house and which are best
managed through partnerships
with media companies, agencies,
and other specialized service
providers (e.g., database marketing,
marketing mix modeling).
Thought must be given to how the
company’s organization will adapt
to the complexity of managing
multiple agency and media
company relationships.
B2B marketing organizations
are now being held to a higher
standard with respect to establishing
connections with customers and
measuring the effectiveness of
campaigns in driving sales. Leaders
that take this opportunity to invest
in new, market-leading capabilities
won’t see the benefts only in terms
of increased short-term sales and
brand building. They will take
their position at the strategy table
in shaping their companies’ growth
agenda to achieve and sustain
superior performance.
IMPLICATIONS
FOR B2B
MARKETERS
Booz & Company 12
RESEARCH METHODOLOGY
As part of our research sponsored by Hanley Wood, we developed the
Booz & Company Marketing Leadership Index. The research included survey
input from 72 building product manufacturers in varied product categories
(e.g., roofng, lighting, electrical, windows), company sizes, residential and
commercial focus, and distribution channels. An online survey was used to
assess the BPMs’ sophistication in developing nine key marketing capabilities.
Five of these were defned as “foundational” capabilities: sales and marketing
collateral, dealer/distributor programs, customer training and development,
event marketing, and customer insights. Four others—multi-platform media
campaigns, data/lead management, search engine optimization/marketing,
and direct marketing—were considered “exceptional.”
We then developed a foundational and an exceptional score by adding up each
respondent’s scores in both groups of capabilities. Finally, we developed an
exceptional score and a foundational score by adding up each respondent’s
scores in both groups of capabilities. These scores were then indexed for a
maximum possible score on either dimension of 100 and a minimum score
of -100. In order for a company to be designated a marketing leader, it had to
register positive scores for both foundational and exceptional capabilities.
13 Booz & Company 13 Booz & Company 13 Booz & Company
About the Authors
Matthew Egol is a part-
ner in Booz & Company’s
consumer, media and digital
practice, and is based in
New York. He focuses on
growth strategy and sales
and marketing effectiveness
for clients across the market-
ing and media ecosystem.
Yogesh Pandit is a principal
in Booz & Company’s
consumer, media, and digital
practice and is based in New
York. He focuses on growth
strategy, capability building,
and sales and marketing
effectiveness for clients in
the media and consumer
industries.
David Perpich is a
senior associate with
Booz & Company in New
York. He specializes in
growth strategies and sales
and marketing capabilities
development for the con-
sumer, media, and digital
practice.
Endnotes
1
U.S. Department of Commerce, Bureau of Economic
Analysis, www.bea.gov/national/nipaweb/TableView.asp?Sel
ectedTable=5&FirstYear=2008&LastYear=2009&Freq=Qtr.
Accessed November 13, 2009
2
Matthew Ericksen, John Jullens, Gaurav Katarla, The New
B2B Marketing Imperative, http://www.booz.com/media/
uploads/New_B2B_Marketing_Imperative.pdf.
3
Matthew Egol, Leslie H. Moeller, and Christopher Vollmer,
“The Promise of Private-label Media,” s+b, Fall 2009,
http://www.strategy-business.com/article/09215?gko=1d7b
b&tid=27782251&pg=all.
4
Booz & Company, “Marketing & Media Ecosystem 2010:
ANA Annual Meeting CMO Roundtable,” October 2008,
www.booz.com/media/fle/Marketing_Media_Ecosystem.pdf.
Printed in USA
©2009 Booz & Company Inc.
Booz & Company is a leading global management
consulting frm, helping the world’s top businesses,
governments, and organizations.
Our founder, Edwin Booz, defned the profession
when he established the frst management consulting
frm in 1914.
Today, with more than 3,300 people in 59 offces
around the world, we bring foresight and knowledge,
deep functional expertise, and a practical approach
to building capabilities and delivering real impact.
We work closely with our clients to create and deliver
essential advantage.
For our management magazine strategy+business,
visit www.strategy-business.com.
Visit www.booz.com to learn more about
Booz & Company.
The most recent list of
our offce addresses and
telephone numbers can
be found on our website,
www.booz.com
Worldwide
Offces
Asia
Beijing
Delhi
Hong Kong
Mumbai
Seoul
Shanghai
Taipei
Tokyo
Australia,
New Zealand &
Southeast Asia
Adelaide
Auckland
Bangkok
Brisbane
Canberra
Jakarta
Kuala Lumpur
Melbourne
Sydney
Europe
Amsterdam
Berlin
Copenhagen
Dublin
Düsseldorf
Frankfurt
Helsinki
London
Madrid
Milan
Moscow
Munich
Oslo
Paris
Rome
Stockholm
Stuttgart
Vienna
Warsaw
Zurich
Middle East
Abu Dhabi
Beirut
Cairo
Dubai
Riyadh
North America
Atlanta
Chicago
Cleveland
Dallas
Detroit
Florham Park
Houston
Los Angeles
McLean
Mexico City
New York City
Parsippany
San Francisco
South America
Buenos Aires
Rio de Janeiro
Santiago
São Paulo
doc_991723029.pdf
The nature of business-to-business (B2B) marketing is changing. What was once primarily a tactical function supporting the sales force is transforming into a strategic partner.
Perspective
Building Capabilities
for B2B Marketing
Leadership
Insights from Building
Product Manufacturers
Matthew Egol
Yogesh Pandit
David Perpich
Booz & Company
Contact Information
Amsterdam
Peter Mensing
Partner
+31-20-504-1900
[email protected]
Chicago
Matt Ericksen
Partner
+1-312-578-4610
[email protected]
Cleveland
Les Moeller
Partner
+1-216-696-1767
[email protected]
Steven Treppo
Partner
+1-216-696-1570
[email protected]
John Jullens
Principal
+1-216-696-1753
[email protected]
Dallas
Jose Gregorio Baquero
Partner
+1-214-746-6516
[email protected]
London
Richard Rawlinson
Partner
+44-20-7393-3415
[email protected]
Mumbai
Abhishek Malhotra
Partner
+91-22-2287-2001
[email protected]
Munich
Gregor Harter
Partner
+49-89-54525-554
[email protected]
New York
Matthew Egol
Partner
+1-212-551-6716
[email protected]
Yogesh Pandit
Principal
+1-212-551-6745
[email protected]
David Perpich
Senior Associate
+1-212-551-6058
[email protected]
San Francisco
Douglas Hardman
Partner
+1-415-281-4948
[email protected]
1 Booz & Company 1
EXECUTIVE
SUMMARY
The nature of business-to-business (B2B) marketing is
changing. What was once primarily a tactical function
supporting the sales force is transforming into a strategic
partner. Even as B2B marketers are under signifcant
pressure to do more with less, they must address a broad
set of requirements beyond brand advertising, trade shows,
and getting the company’s product catalog in front of target
customers. In addition to these core activities, leading B2B
marketers are now playing a more strategic role in building
customer insights, developing integrated campaigns across
traditional media and new digital platforms, and supporting
relationship-building programs with key purchasing decision
makers and those that infuence product specifcations.
The economic downturn has accel-
erated these shifts, as leading B2B
marketers seek to not only cut costs
but also grow stronger. Despite cost
pressures, an emerging set of B2B
marketing leaders are preserving
their focus on building new capa-
bilities to position themselves for
superior performance as the economy
bounces back.
To build insights into B2B marketing
leadership, Booz & Company recently
studied building product manufactur-
ers (BPMs) to better understand shifts
in their marketing objectives, spend-
ing priorities, and focus on capability-
building efforts. BPMs were chosen
for this initial wave of research
because the residential and commer-
cial construction sectors have been hit
particularly hard by the recession.
Booz & Company 2 Booz & Company 22
Effciently and effectively reaching
a fragmented set of customers has
historically been a challenge for B2B
marketers. For years, companies
relied on brand advertising, direct
mail of their product catalogs, and
a network of dealers and distribu-
tors to reach their diffuse customer
segments. While the emergence of
digital media platforms has opened
up new opportunities to interact
directly with end customers, many
B2B companies have been slow to
react, compared with business-to-
consumer (B2C) marketers.
When the economic downturn began
in the fall of 2008, B2B companies
came under intense pressure to cut
costs. After all, the recession hit the
B2B sector with full force; busi-
ness spending plunged 19 percent
between June 2008 and June 2009,
compared with a 1.9 percent drop in
consumer spending.
1
These cost pressures helped expose
the capability gaps between leading
and average B2B marketing orga-
nizations. C-suite directives to “do
more with less” forced marketers to
prioritize their investments, accel-
erating an ongoing shift to digital-
enabled marketing programs that
promise higher returns on invest-
ment by generating more effcient
and effective ways of distributing
product information to end custom-
ers and infuencers, while creating
higher-quality leads for dealers and
distributors.
The recession also brought a new
level of awareness inside B2B orga-
nizations that new capabilities are
needed to manage the integration
of traditional marketing platforms,
such as print trade journals, with
emerging digital channels. Today,
B2B frms are taking their cue from
leading marketers in developing
these capabilities:
• Cross-functional processes to
manage integrated marketing
programs
• Database marketing and other
technology skills to personalize
interactions with customers, dis-
tributors, and those who infuence
purchasing decisions
• Collaborative approaches with
agencies and media companies to
generate branded content
Booz & Company is working
with clients to develop a better
understanding of how leaders are
building these new capabilities and
what is required to successfully
navigate the transformation. In late
2008 and early 2009, we teamed
with the Association of National
Advertisers (ANA), with which
Booz & Company has enjoyed a
Key Findings
• Successful marketing investments
focus on building sustained
capabilities, as opposed to
executing a series of campaigns.
• Building product marketers with
more advanced capabilities have
graduated from playing a tactical
role to driving growth strategy for
their companies, but even leaders
recognize that there is much room
for improvement.
• Leaders are focusing more than
non-leaders on driving traffc to
their websites and building direct
relationships with customers to
drive leads for their dealers and
distributors.
• As companies increase their
spending on digital platforms,
they expect media companies to
become more important partners.
COST CONCERNS
HASTEN CHANGE
3 Booz & Company
multiyear relationship focused
on building successful marketing
models, to conduct a joint survey
of marketing effectiveness across
B2B sectors.
2
To extend this initial research, Booz
& Company recently partnered with
Hanley Wood, a leading B2B media
and information company serving
the construction market, to conduct
a marketing leadership study of 72
BPMs. BPMs were our frst choice
for an industry-specifc treatment
because they represent a large and
leading component of U.S. economic
activity. In addition, the sheer mag-
nitude of the downturn in construc-
tion markets has forced BPMs to
move rapidly in making budget and
marketing mix adjustments. This
being the case, BPMs provide poten-
tial ahead-of-the-curve insights for
other B2B sectors.
As part of our BPM research with
Hanley Wood, we developed the
Booz & Company Marketing
Leadership Index to help B2B
marketing executives identify the
capabilities that distinguish lead-
ers from non-leaders (see “Research
Methodology,” page 12). Given their
excellence in marketing, leaders
provide insights into marketing
best practices and establish forward-
looking trends in strategic priorities,
spending, and investments in
new capabilities.
For our marketing leadership study,
we defned BPM marketing lead-
ers as those who excel at both
“foundational” and “exceptional”
capabilities. We defned foundational
capabilities as those that represent
the “table stakes” attributes of tradi-
tional marketing programs: sales and
marketing collateral, dealer/distribu-
tor programs, customer training and
development, event marketing, and
customer insights (see Exhibit 1).
Note: n=72. Neutral responses are not included. Totals may vary because of rounding.
Source: Booz & Company Marketing Leadership Study (2009)
Exhibit 1
Foundational Marketing Capabilities
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
44
40
43
43
38 55
62
70 26
7
17
54
50
11
15
13
15
18
16
4
8
1
19
15
26
19 Customer Training & Development
Event Marketing
Sales & Marketing Collateral
Dealer/Distributor Programs
Customer Insights
6
4
8
22
11
SATISFACTION WITH STRENGTH OF COMPANY'S FOUNDATIONAL MARKETING CAPABILITIES (% AGREE/DISAGREE)
Strongly Disagree
Disagree Somewhat
Agree Somewhat
Strongly Agree
Booz & Company 4
Exceptional capabilities are the
leading-edge skills required to take
advantage of the shift to digital—
multi-platform media campaigns,
data/lead management, search
engine optimization/search engine
marketing, and direct marketing
(see Exhibit 2).
The Booz & Company Marketing
Leadership Index scored BPM survey
respondents based on the sophis-
tication of their foundational and
exceptional capabilities. While
companies scored higher on average
for foundational capabilities, there
was still signifcant room improve-
ment among all BPMs. The range in
scores for exceptional capabilities
was even wider.
We defned leaders as those with
positive scores on both dimensions
of the Booz & Company Marketing
Leadership Index (i.e., for both foun-
dational and exceptional capabili-
ties). Based on this criterion, roughly
one-third of BPMs were classifed as
marketing leaders (see Exhibit 3).
With these fndings in hand,
we were able to distinguish how
leaders differed from the rest of
the pack when it came to setting
priorities for marketing innovation,
balancing marketing budgets, and
planning their spending levels for the
near term.
Source: Booz & Company Marketing Leadership Study (2009)
Exhibit 3
Booz & Company Marketing Leadership Index
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
INDEXED SUM OF INDIVIDUAL SCORES (STRONGLY AGREE = +2, AGREE +1, DISAGREE -1, STRONGLY DISAGREE -2)
Exceptional Score
Foundational Score
“Leaders”
-100
-80
-60
-40
-20
0
20
40
60
80
100
-100 -80 -60 -40 -20 0 20 40 60 80 100
Leaders
Non-Leaders
Note: n=72. Neutral responses are not included. Totals may vary because of rounding.
Source: Booz & Company Marketing Leadership Study (2009)
Exhibit 2
Exceptional Marketing Capabilities
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
SATISFACTION WITH STRENGTH OF COMPANY'S EXCEPTIONAL MARKETING CAPABILITIES (% AGREE/DISAGREE)
31
40
18
15
46
49
35
26
24
19
22
26 24
21
Direct Marketing
Multi-Platform Media Campaigns
Data/Lead Management
Search Engine Optimization/
Search Engine Marketing
10
14
50
43
33
34 18
6
20
8
Strongly Disagree
Disagree Somewhat
Agree Somewhat
Strongly Agree
5 Booz & Company 5
Although most B2B marketers
have historically struggled with
customer fragmentation, few have
been as challenged as those in the
building products industry. Potential
customers number in the hundreds
of thousands, and direct contact
with end buyers is often impeded by
multi-tier distribution networks of
distributors, dealers, and retailers.
In addition, BPMs also need to
market to infuencers—architects
and others who recommend specifc
products. BPM marketers currently
seek to reach these customers and
infuencers primarily by taking
out ads or by developing sales and
marketing collateral such as catalogs
to be handed out at trade shows or
distributed via direct mail.
But over time, BPMs have begun
to refne their focus for marketing
innovation. The emergence of the
Internet has allowed them to expand
the scope of their interactions with
end customers and infuencers
by building direct conversations
through e-mail and company-
owned websites, where they can
acquire information on customers
and publish virtual versions of their
catalogs and other targeted content.
Today, the vast majority of BPMs we
surveyed agree on the most critical
marketing objectives—driving
traffc to their website (85 percent),
increasing brand awareness through
advertising (83 percent), and
building direct relationships with
customers (83 percent).
To support these objectives, BPMs
are investing in a broad set of
marketing programs, including a
diverse mix of paid media adver-
tising and other “below-the-line”
marketing programs—the marketing
services industry’s term for anything
in the marketing budget that histori-
cally fell below the line item for
paid media. For BPMs, below-
the-line marketing accounts for
PRIORITIES FOR
MARKETING
INNOVATION
Booz & Company 6
three-quarters of spending, encom-
passing spending categories such
as direct marketing, events, trade
programs, sales and marketing col-
lateral, company websites, and the
purchase of keywords from Google
and other search platforms (see
Exhibit 4).
As marketers step up their efforts
to get closer to the customer, the
marketing mix is shifting in favor
of digital advertising, search, direct
marketing (including digital forms
such as e-mail), and company
websites. However, despite recent
pressures on traditional advertis-
ing, paid media’s share of the
budget is expected to remain stable,
underscoring the essential role that
advertising plays in promoting brand
awareness and driving audiences to
company websites.
In fact, parallel shifts in marketing
mix are occurring. First, paid media
is migrating to digital, but as part of
an integrated marketing campaign
that combines print, digital, and
events for maximum impact in build-
ing brands and driving sales. Second,
BPMs are simultaneously pursuing
other initiatives through their spend-
ing on below-the-line marketing
programs.
This shift is even more pronounced
for leading BPM marketers (see
Exhibit 5). For instance, leaders
place a much greater emphasis on
driving traffc to their own or dealer/
distributor websites. Similarly, build-
ing customer contacts and expand-
ing their customer database is a
much higher priority for leaders than
non-leaders. Given leaders’ strengths
in data management and direct mar-
keting, this is not surprising. Leaders
also focus more effort on digital
innovation, as they invest in new
capabilities to fully tap the potential
of online and mobile marketing to
forge deeper customer relationships
and better target the delivery of
information and promotional offers
to decision makers and infuencers.
In terms of overall investment,
the majority of leaders currently
spend the equivalent of more than
4 percent of sales on marketing. By
comparison, two-thirds of non-
leaders spend the equivalent of only
1 to 3 percent of sales on marketing,
a signifcant difference. Leaders are
sustaining higher levels of spend-
ing on marketing in the downturn,
recognizing that building winning
capabilities requires investment and
that they have an opportunity to
grow stronger even as they cut costs.
Moving forward, both groups
expect their marketing budgets to
increase as the economy rebounds
and the construction market recovers
(see Exhibit 6).
7 Booz & Company
Source: Booz & Company Marketing Leadership Study (2009)
Exhibit 4
Shift to More Direct Points of Contact
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
BPMS’ MARKETING BUDGETS—2010 VS. 2012 (ESTIMATED % ALLOCATION OF TOTAL MARKETING BUDGET)
18%
19%
14%
13%
9%
11%
8%
9%
4%
3%
20%
Trade Programs & Promotions
Company Websites
Direct Marketing
Paid Search
Digital Advertising
Traditional Advertising
Other
2012
100%
2%
17% Developing Sales & Marketing Collateral
Events
6%
5%
19%
2010
100%
3%
21%
Paid Media
Below the Line
(i.e., other than
paid media)
Note: BPM leaders n=33, BPM non-leaders n=39.
Source: Booz & Company Marketing Leadership Study (2009)
Exhibit 5
BPM Leaders’ Marketing Priorities
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
KEY FOCUS OF FIRMS’ MARKETING OBJECTIVES—LEADERS VS. NON-LEADERS (% WHO REPLIED “AGREE” OR
“STRONGLY AGREE” TO EACH STATEMENT)
Driving website traffic through print/digital adv. 100% 69% +31%
Increasing brand awareness through advertising 91% 79% +12%
Building direct relationships with building pros 85% 82% +3%
Building customer contacts and growing our database 85% 62% +23%
Driving qualified leads for our sales force 85% 67% +18%
Training and professional education programs 85% 72% +13%
Developing custom content for branding 82% 74% +8%
Building deeper insights into our customer base 82% 69% +13%
Event and face-to-face marketing 79% 69% +10%
Building innovation around digital media 73% 62% +11%
Driving traffic to dealers/dist. through print/dig. adv. 70% 46% +24%
Building trial and repeat usage 61% 54% +7%
Difference between
Leaders and Non-Leaders Non-Leaders Leaders
Note: BPM leaders n=33, BPM non-leaders n=39.
Source: Booz & Company Marketing Leadership Study (2009)
Exhibit 6
Marketing Budgets as a Percentage of Sales: 2010 vs. 2012
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
30%
24%
46%
10%
21%
69%
39%
15%
46%
18%
31%
51%
2010 2012
Non-Leaders
Leaders
>6% 4%–6% 1%–3% >6% 4%–6% 1%–3%
Booz & Company 8
Leaders are defning themselves not
by the success of single campaigns,
but by the achievement of greater
sophistication in the development
of marketing capabilities. As a
result, they are beginning to play a
more strategic role that goes beyond
delivering on their historical focus
on brand building, events, and
traditional direct marketing.
Thanks to a study of B2B market-
ers across industries broader than
construction that we conducted
recently with ANA, we know that
investments in best-in-class market-
ing capabilities generate substantial
market share gains. Some 40 percent
of above-average B2B marketers
were found to have gained market
share, compared with 26 percent
of those with below-average capa-
bilities, representing a market
share gain premium of 54 percent.
Marketers in the top quartile
enjoyed an even more pronounced
advantage, as 56 percent of those
companies recorded gains over the
three-year period studied.
The Booz & Company–ANA study
revealed that B2B marketers that
build more advanced capabilities are
much more likely to play a strategic
business role within their compa-
nies. Most marketing organizations
are generally confned to perform-
ing tactical functions that support
strategic decisions that have already
been made. More tactically focused
marketing organizations exhibit
the characteristics of one of three
models:
• Service provider: Provides advertis-
ing, promotion, and public rela-
tions services at the request of the
brand and product/service teams
LEADERS STRESS
CAPABILITIES
OVER CAMPAIGNS
Some 40 percent of above-average
B2B marketers gained market share,
compared with 26 percent of those
with below-average capabilities.
9 Booz & Company 9 Booz & Company
• Best practice advisor: Works with
the individual businesses to maxi-
mize marketing effectiveness and
effciency by bringing best practices
to advertising, promotion, public
relations, and other activities
• Marketing master: Develops and
leads large company-wide mar-
keting efforts and helps set the
company’s priorities
For a marketing organization to be
classifed as strategic, the research
found that it must fall into one of the
following three models:
• Brand builder: Provides effcient
marketing services, from commu-
nications to creative output and
campaign execution, in support of
the company’s brands
• Senior counselor: Serves as a
primary advisor on marketing
strategy to the CEO and the indi-
vidual businesses, and leads major
advertising, promotions, and public
relations campaigns
• Growth champion: Drives the
company’s priorities, and leads the
development of its brands, prod-
ucts, and new businesses
Generally speaking, marketing
organizations that fulfll one of these
roles are highly infuential in affect-
ing the company’s strategic decision
making. In the marketing leadership
study focused on BPMs, conducted
with Hanley Wood, close to three-
quarters of marketing leaders were
identifed as playing a strategic busi-
ness role within their organizations.
This is substantially higher than for
non-leaders and for other B2B indus-
try marketers studied in the earlier
ANA study (see Exhibit 7).
As B2B marketers continue to
experiment with their marketing mix
and seek innovative approaches,
even leaders see room for improve-
ment in their development of
winning capabilities. Almost three-
quarters of the BPM leaders surveyed
in the Booz & Company marketing
leadership study said they were look-
ing to further scale up their market-
ing activities beyond traditional
focus areas such as advertising, trade
shows, and direct mail.
A number of obstacles potentially
stand in their way. The shift to
digital marketing requires
Note: BPM leaders n=33, BMP non-leaders n=39, ANA B2B average n=130.
Source: Booz & Company and ANA B2B Survey of B2B Marketers (2009); Booz & Company Marketing Leadership Study (2009)
Exhibit 7
Leaders Have a Seat at the Strategy Table
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
50%
44%
73%
50%
56%
27%
BPM Non-Leaders BPM Leaders ANA B2B Average
Tactical Functional Role Strategic Business Role
THE MARKETING ORGANIZATION'S ROLE IN THE COMPANY (RESPONDENTS COULD SELECT ONLY ONE OPTION)
Booz & Company 10
signifcant investments—for exam-
ple, in websites, in databases, and in
unique content. Moreover, organiza-
tional inertia that has set in around
traditional marketing methods can
often prove diffcult to change.
With the recession bringing a
renewed focus on operating eff-
ciency, many BPMs are embrac-
ing a “do it yourself” approach to
building new capabilities across
their organizations, and market-
ing departments are no exception.
Although this might seem to pose
fundamental challenges to media
companies’ relationships with their
advertising clients, the reverse is
proving true for media companies
that are taking a new approach to
partnering with marketers. Indeed,
many media companies are striv-
ing to reinvent themselves to help
advertising clients leverage their
digital assets and develop “private-
label media,” or their own branded
content and electronic media assets.
3
Collaborating with and outsourcing
capabilities to media companies and
agency partners—instead of hiring
the necessary talent and making the
required investments in new
technologies—is one way BPM
marketers can better stretch their
scarce resources.
The increasingly important role
that partnerships play in building
new capabilities was underscored
by a recent Booz & Company study
with the ANA, the Interactive
Advertising Bureau (IAB), and the
American Association of Advertising
Agencies (AAAA).
4
This research
program, called Marketing & Media
Ecosystem 2010, included input
from more than 250 marketing
executives at many B2B and B2C
marketers, as well as more than 100
media executives and 100 agency
executives. More than half of the
marketing executives surveyed said
they expected media companies to
become even more important direct
partners in the future (see Exhibit 8).
The Marketing & Media Ecosystem
2010 study also showed that 91
percent of media companies were
already engaging in integrated cam-
paign development, lead generation,
and other services that went beyond
selling traditional advertising.
Note: n=450 (250 marketers, 100 agencies, 100 media companies)
Source: Marketing & Media Ecosystem 2010 study, February 2008; Booz & Company analysis
Exhibit 8
Media Companies Perceived as Important Partners
50%
50%
50%
. 3 values
100%
100%
75%
75%
25%
lines
lines
. 5 values
25% 100%
100%
75%
75%
50%
50%
. 4 values
100%
100%
25%
25%
75%
75%
. 7 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 8 values
100% 25% lin
100% 25%
75%
75% lin
50%
50%
. 6 values
lin
100% 25% 75% lin 50%
100%
. 2 values
50%
100% 50%
50% 100%
75% 50% 100%
. 1 value
100%
100%
100%
100%
100%
WHICH DIRECT PARTNERSHIPS WILL BE MORE IMPORTANT IN THE FUTURE? (MARKETERS' RESPONSES)
EXAMPLES OF MARKETING SOLUTIONS
PROVIDED BY MEDIA PARTNERS
27%
52% 52% 52%
0%
10%
20%
30%
40%
50%
Agency
of Record
% of
Respondents
Communications
Planners
Media
Planners
Media
Companies
- Integrated campaign development
- Custom/exclusive content
- Consumer insights
- Behavioral targeting
- Database marketing
- Lead generation
- Word of mouth
- Event marketing
- Training and education programs
11 Booz & Company 11 Booz & Company
Although the preceding insights
highlight potential best practices and
trends in B2B marketing, company
priorities and strategic situations
can vary widely. Depending on their
current competitive positioning,
resources, and priorities for driving
growth, B2B marketers have to
identify the most effective marketing
solution to meet their needs.
To forge the best path forward, B2B
marketing leaders should engage in a
three-step process:
• The frst step is to identify the
specifc marketing priorities that
will be most valuable for driving
the company’s growth given
its unique positioning, and to
establish the best way to integrate
new approaches into marketing
campaigns.
• Next, marketing leaders should
devise plans for investing in the
key capabilities needed to address
these priorities. Leaders recognize
that a capability is a combination
of analytics, processes, technology,
and organization. Building winning
capabilities requires addressing
all four elements. This demands
not only better cross-functional
alignment internally but also new
ways of working with external
partners.
• The last step involves determining
which capabilities are best handled
in-house and which are best
managed through partnerships
with media companies, agencies,
and other specialized service
providers (e.g., database marketing,
marketing mix modeling).
Thought must be given to how the
company’s organization will adapt
to the complexity of managing
multiple agency and media
company relationships.
B2B marketing organizations
are now being held to a higher
standard with respect to establishing
connections with customers and
measuring the effectiveness of
campaigns in driving sales. Leaders
that take this opportunity to invest
in new, market-leading capabilities
won’t see the benefts only in terms
of increased short-term sales and
brand building. They will take
their position at the strategy table
in shaping their companies’ growth
agenda to achieve and sustain
superior performance.
IMPLICATIONS
FOR B2B
MARKETERS
Booz & Company 12
RESEARCH METHODOLOGY
As part of our research sponsored by Hanley Wood, we developed the
Booz & Company Marketing Leadership Index. The research included survey
input from 72 building product manufacturers in varied product categories
(e.g., roofng, lighting, electrical, windows), company sizes, residential and
commercial focus, and distribution channels. An online survey was used to
assess the BPMs’ sophistication in developing nine key marketing capabilities.
Five of these were defned as “foundational” capabilities: sales and marketing
collateral, dealer/distributor programs, customer training and development,
event marketing, and customer insights. Four others—multi-platform media
campaigns, data/lead management, search engine optimization/marketing,
and direct marketing—were considered “exceptional.”
We then developed a foundational and an exceptional score by adding up each
respondent’s scores in both groups of capabilities. Finally, we developed an
exceptional score and a foundational score by adding up each respondent’s
scores in both groups of capabilities. These scores were then indexed for a
maximum possible score on either dimension of 100 and a minimum score
of -100. In order for a company to be designated a marketing leader, it had to
register positive scores for both foundational and exceptional capabilities.
13 Booz & Company 13 Booz & Company 13 Booz & Company
About the Authors
Matthew Egol is a part-
ner in Booz & Company’s
consumer, media and digital
practice, and is based in
New York. He focuses on
growth strategy and sales
and marketing effectiveness
for clients across the market-
ing and media ecosystem.
Yogesh Pandit is a principal
in Booz & Company’s
consumer, media, and digital
practice and is based in New
York. He focuses on growth
strategy, capability building,
and sales and marketing
effectiveness for clients in
the media and consumer
industries.
David Perpich is a
senior associate with
Booz & Company in New
York. He specializes in
growth strategies and sales
and marketing capabilities
development for the con-
sumer, media, and digital
practice.
Endnotes
1
U.S. Department of Commerce, Bureau of Economic
Analysis, www.bea.gov/national/nipaweb/TableView.asp?Sel
ectedTable=5&FirstYear=2008&LastYear=2009&Freq=Qtr.
Accessed November 13, 2009
2
Matthew Ericksen, John Jullens, Gaurav Katarla, The New
B2B Marketing Imperative, http://www.booz.com/media/
uploads/New_B2B_Marketing_Imperative.pdf.
3
Matthew Egol, Leslie H. Moeller, and Christopher Vollmer,
“The Promise of Private-label Media,” s+b, Fall 2009,
http://www.strategy-business.com/article/09215?gko=1d7b
b&tid=27782251&pg=all.
4
Booz & Company, “Marketing & Media Ecosystem 2010:
ANA Annual Meeting CMO Roundtable,” October 2008,
www.booz.com/media/fle/Marketing_Media_Ecosystem.pdf.
Printed in USA
©2009 Booz & Company Inc.
Booz & Company is a leading global management
consulting frm, helping the world’s top businesses,
governments, and organizations.
Our founder, Edwin Booz, defned the profession
when he established the frst management consulting
frm in 1914.
Today, with more than 3,300 people in 59 offces
around the world, we bring foresight and knowledge,
deep functional expertise, and a practical approach
to building capabilities and delivering real impact.
We work closely with our clients to create and deliver
essential advantage.
For our management magazine strategy+business,
visit www.strategy-business.com.
Visit www.booz.com to learn more about
Booz & Company.
The most recent list of
our offce addresses and
telephone numbers can
be found on our website,
www.booz.com
Worldwide
Offces
Asia
Beijing
Delhi
Hong Kong
Mumbai
Seoul
Shanghai
Taipei
Tokyo
Australia,
New Zealand &
Southeast Asia
Adelaide
Auckland
Bangkok
Brisbane
Canberra
Jakarta
Kuala Lumpur
Melbourne
Sydney
Europe
Amsterdam
Berlin
Copenhagen
Dublin
Düsseldorf
Frankfurt
Helsinki
London
Madrid
Milan
Moscow
Munich
Oslo
Paris
Rome
Stockholm
Stuttgart
Vienna
Warsaw
Zurich
Middle East
Abu Dhabi
Beirut
Cairo
Dubai
Riyadh
North America
Atlanta
Chicago
Cleveland
Dallas
Detroit
Florham Park
Houston
Los Angeles
McLean
Mexico City
New York City
Parsippany
San Francisco
South America
Buenos Aires
Rio de Janeiro
Santiago
São Paulo
doc_991723029.pdf