Monday, October 11, 2010

Marketing Hierarchy of Needs: Achieving Marketing Efficiency and Effectiveness

Every year, around Halloween, organizations meet to begin the battle for budget allocations for the New Year. For marketers, the news is good overall. According to research from IDC and Forrester, marketing spending is anticipated to increase between 3 to 5% for 2011.

This represents substantial growth when compared to 2009 cut-backs; however, even with the 2010/2011 snap-back in spending, most marketing budgets will remain below pre-recession levels. In the current environment, marketers are still being asked to do-more-with-less, driving a significant change in strategies, campaigns and go-to-market channels.

Marketing Spending lags Revenue Growth
Comparing marketing spending growth versus revenue growth reveals another important issue facing marketing budgets – the growth in marketing budgets lags revenue growth for the first time in eight years. For example, an IDC survey of technology marketers revealed that 2010 revenue grew at a healthy 5.8% world-wide, and that this greatly exceeded the 3.7% average market spending growth over the same period. Prior IDC surveys over the past 8 years indicate that as a key driver of revenue, growth in marketing spending normally precedes revenue growth. However, the opposite is strangely reflected in these latest results.

We have seen this same issue occur in IT spending over the past decade, where IT spending lagged significantly behind revenue growth following the bursting of the technology bubble in 2001, and are wondering if the same will now be true of marketing budgets going forward?

Most executives know that the playing field has changed, and two recessions in the past decade have resulted in Frugalnomics - changing the way that budget decisions are made by requiring quantifiable proof of bottom-line impact from each investment. Does the growth lag because marketing executives are not doing enough to tie spending to performance, justify marketing investments, and make the case for their fair share of the budget?

To fight Frugalnomics, most marketing leaders will need to do a better job convincing frugal executives to spend more on marketing by painting a better picture of why the investments are needed, and in particular, proving quantifiable ROI from each marketing investment.

Marketing service and technology providers also need to do their part to fight Frugalnomics, helping marketers quantify the value of proposals to prioritize projects and garner investment, and verify that post-project expected returns were delivered.

To help set budgets more effectively, and help marketers battle for their fair share, it is important to make sure that spending is balanced across all aspects of marketing, and that investments in one area do not cause neglect in another. Too often we see marketers invest in campaigns without having the right underlying foundational investments in operations, technology or content. For example, we see many firms that have neglected lead handling operations, launching marketing campaigns, but not having an adequate back end system to centrally capture and nurture the leads to close.

When examined from top to bottom, there is a clear hierarchical dependency between marketing technology and operations, content, campaigns and strategy, and by thinking about the investments and practices as a hierarchy, marketers assure proper foundational investments, while still delivering innovation. We find that thinking of this hierarchy as a Marketing Hierarchy of Needs, closely resembling Maslow’s well traveled theory, helps in making proper budgeting, spending justification, and driving better efficiency and effectiveness.

Driving the focus beyond the typical campaign thinking of traditional marketing, the hierarchy assures that foundational investments and best practices are in place before the team addresses higher-order investments, which rely on good technology, operations and content in order to deliver.

Maslow’s Hierarchy of Needs
In his hierarchy of needs, Abraham Maslow asserts that people are motivated by unsatisfied needs, and that certain lower needs are the initial focus and require satisfaction before higher needs can be addressed or achieved. Foundational needs include physiological requirements such as air, water, food, and sleep, and safety which includes security of home and family. Higher needs include, in order, Love, Self Esteem and Self Actualization. When each of these needs in turn is satisfied, from lower to higher, new (and still higher) needs emerge, and so on. As each need is met, personal achievement rises and purpose is fulfilled.


Maslow’s hierarchy of needs

The theory has been extended from human behavior to economics, whereby marketplaces need to have
foundational needs met before demand for higher needs can be pursued. For example, a third world economy focuses on the physiological and safety needs first – basic human survival. Until this can be resolved, whereby people have the water, food and shelter they need, higher level needs and the ability to have a consumer marketplace is not priority. For first world countries, the lower needs are viewed as commonplace commodities, while the focus moves towards meeting much higher end needs of careers, vacations, hobbies and spiritual fulfillment. As foundational needs are met and commoditized, the attention moves upwards towards higher order needs in order to achieve fulfillment.

Marketing Hierarchy of Needs
The Marketing Hierarchy of Needs™ represents a hierarchical view of marketing practices, services and investments. Each layer represents the next highest level of achievement, relying on a sound foundation in order to advance efficiently and effectively to the next level.


Alinean Marketing Hierarchy of Needs™

The Marketing Hierarchy of Needs consists of the following tiers:
  • Tier 1: Marketing Operations and Technology – the foundational element of people, process and technology to support the development and delivery of marketing programs, including lead capture and scoring, analytics, user experience, content management, account management, campaign management, data management, sales and channel enablement.
  • Tier 2: Content Marketing – development, customization and delivery of content to support marketing campaigns including white papers, case studies, executive assessments, calculators, product demos / trials, video, events / seminars and user communities / portals;
  • Tier 3: In-bound and Out-bound Marketing – the execution of multi-channel inbound and outbound marketing campaigns including direct mail, newsletters, e-mail, teleprospecting, social media, advertising, search, content syndication and public relations / analyst relations;
  • Tier 4: Marketing Intelligence – using the information collected from foundational levels, intelligence is applied to identify target segments / groups, align sales and marketing, measure campaign ROI, optimize the marketing investment portfolio and drive marketing strategies to achieve growth.
Tier 1: Marketing Operations and Technology
Marketing Operations and Technology forms the foundation for all other marketing services. A lack of foundational investment and best practices can cause other higher order investments to be less efficient and effective.
Marketing Operations and Technology consists of the following services:

  • Lead capture and scoring
  • Collecting and analyzing on-site analytics data
  • Optimizing creative “look-and-feel” (e.g., navigation, placement of content, imagery, etc.)
  • Content management
  • Account management
  • Campaign management
  • Data management
  • Sales enablement (publication, awareness and training)
  • Channel sales enablement
Tier 2: Content Marketing
Campaigns rely on content to drive engagement with prospects. Without solid content as the foundation, in-bound and out-bound campaigns don’t have the tools to break through to overloaded, skeptical and frugal buyers.
According to Junta42, Content marketing is a marketing technique of creating and distributing relevant and valuable content to attract, acquire, and engage a clearly defined and understood target audience - with the objective of driving profitable customer action. Basically, content marketing is the art of communicating with your customers and prospects without selling. Instead of pitching your products or services, you are delivering information that makes your buyer more intelligent. The essence of this content strategy is the belief that if we, as businesses, deliver consistent, ongoing valuable information to buyers, they ultimately reward us with their business and loyalty.
Content Marketing consists of the following services, investments and assets:

  • Traditional white papers
  • Interactive white papers
  • Executive Assessment Tools
  • ROI Calculator
  • TCO Comparison Tool
  • Product Demos / Trials
  • Video
  • Podcasts
  • Case studies
  • Research / analyst reports
  • Live events / seminars
  • Online events / webinars
  • Communities / Portals
  • Interactive smart content - Delivery of content to match stage in buying lifecycle, and customization of content for industry, size, location, role
The following provides examples of typical content provided by marketing and used by prospective buyers throughout the buying lifecycle.


Tier 3: Out-Bound & In-Bound Marketing
Traditional marketing (outbound marketing) is a marketing strategy that focuses on finding customers by building brand awareness through advertising, promotion, public relations and sales.
Out-bound marketing consists of the following services, investments and assets:

  • Newsletters
  • E-mail
  • Deploying online external lead generation programs (e.g., co-registration, email list purchases, etc.)
  • Teleprospecting (Outbound Telesales)
  • Direct mail
Inbound marketing is a marketing strategy that focuses on getting found by customers. marketers "earn their way in" (via publishing helpful information on a blog etc.) in contrast to outbound marketing where they used to have to "buy, beg, or bug their way in" (via paid advertisements, issuing press releases in the hope they get picked up by the trade press, or paying commissioned sales people, respectively.

In-bound marketing consists of the following services, investments and assets:

  •  Social media
  • Display / banner advertisements
  • Optimizing website for organic / natural search
  • Paid search
  • Content Syndication
  • Directory Advertising
  • Tradeshows
  • Association Marketing
  • Public Relations / Analyst Relations
  • Inbound telesales
  • Television / radio advertisements
  • Print advertisements
  • Deploying offline “drive-to-web” programs
Tier 4: Marketing Intelligence
Marketing Intelligence is the process of acquiring and analyzing information in order to understand the market (both existing and potential customers); to determine the current and future needs and preferences, attitudes and behavior of the market; and to assess changes in the business environment that may affect the size and nature of the market in the future.

With this intelligence, the team can better develop a marketing strategy, focusing an organization's energies and resources on a course of action which can lead to increased sales and dominance of a targeted market niche. A marketing strategy combines product development, promotion, distribution, pricing, relationship management and other elements; identifies the firm's marketing goals, and explains how they will be achieved. Marketing strategy determines the choice of target market segments, positioning, marketing mix, and allocation of resources.

Marketing Intelligence consists of the following services, investments and assets:

  • Identifying target segment / differentiated target groups
  • Knowledge of target segments / groups
  • Intelligence based marketing strategies to achieve growth
  • Aligning sales and marketing towards common campaign goals
  • Measuring campaign ROI
  • Using campaign portfolio management to optimize campaign investments

The Bottom-Line
The Marketing Hierarchy of Needs can provide a framework for assessing current practices and investments, assuring a solid foundation for the next higher order projects and campaigns.
Marketing budgets, although growing, remain under pressure from current market conditions and Frugalnomics. Marketing executives can use the hierarchy of needs to communicate the reason for and value of marketing projects, improvements and investments in order to help marketing get it's fair share of the budget, and to help increase spending yield, driving better effeciency and effectiveness. Marketing service providers and technology vendors can use the Marketing Hierarchy of Needs to help support proposed projects, and assure that the proper foundation of practices is available to assure project / campaign success.

1 comment:

Louis said...

It's important to achieve marketing efficiency and effectiveness. Thanks a lot for the info.

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