32 | Professional Marketing April - June 2011

Terry McCrann

Terry McCrann

Adam Joseph talks marketing with Terry McCrann, fi nancial columnist and associate editor –

business at the Herald Sun.

PM.APRIL11.pg32.pdf Page 32 16/03/11, 1:09 PM

Professional Marketing | 33April - June 2011

Terry McCrann

AJ: What does “marketing” mean to you? TM: I don’t think about marketing as a separate component of a corporate dynamic. I see marketing in a ‘big picture’ sense as a key part of the whole corporate dynamic. I don’t think you can separate marketing from advertising. You can’t cleanly separate marketing from the relationships you have in the community because a key component of marketing is good community relationships. And it also makes your advertising more effective; it’s free advertising if you’ve got a good corporate profi le.

AJ: Do you see marketing as a department or as a philosophy of doing business?TM: You need to think of it holistically. To some extent it needs to have structure, it needs to be compartmentalised, because if it gets too ‘soft’ you lose touch with the ‘hard’ side of marketing and that’s a very important part of it. To be effective, marketing needs structure, it needs segmentation, but it needs to be holistic across the whole company.

AJ: What is the “harder” side of marketing?TM: If you take a retail brand, ‘hard’ marketing is your discount strategy, your relationships with your major customers and suppliers. Marketing mostly is about projecting out, not projecting backwards or inward. It’s all those sorts of things... where you spend dollars, where you’ve related it very specifi cally to product design.

AJ: Would the ‘softer’ aspects of marketing be about intangible things such as brand management?TM: Well, obviously brand management can be tangible, but it probably expands more into the ‘soft’ areas such as when your product suffers. For example, with Qantas, you could probably separate it into two categories; one is the brand management as in projecting all the things you need to project there – security, value for service, responsiveness to issues that arise from the consumer end. On the other hand, there is the defensive aspects of responding to a situation when it occurs, whether it’s a crash or it’s a series of late delays and so on. I don’t know how you separate that out, but it’s both projecting, it’s both offensive and defensive.

AJ: Who should be in charge of the brand?TM: The buck stops at the CEO’s desk. But within an organisation, functionally, who should be in charge? I don’t know. I’ve never thought of it in those terms. I think in the modern world ‘brand’ is probably the No.1 issue for a company. If your brand is damaged, your company is damaged in a way that overrides anything else. If your costs are getting out of line, you can attack that, but if you suffer signifi cant brand damage you have a serious, terminal problem on your hands. In that sense I don’t think the CEO on a day-to-day basis can manage the brand strategy, but the CEO has to have brand management as a key component of his working week. And he or she needs to set up the structures to ensure they’re getting all the information they need on a timely basis. Brand

management has got to be the No.1 ongoing week-to-week issue for a CEO.

AJ: As a CEO, how do you know when “brand damage” is happening? TM: Firstly, an indirect process, which is what sort of bad publicity you’re getting. Secondly, it’s just the tangible bottom-line results. I think we live in such a 24/7 world now that things will impact quickly in terms of the positive and the negative. It’s not like this will take a year or two years to happen.

AJ: What brands are being well-managed? TM: For brand development in the big picture sense, the big one in my mind would be Apple. They have created this whole image globally of a cutting-edge, funky, innovative product which they then expand in terms of actual devices. In my mind, unambiguously, Apple is the No.1 brand in the world today. And then there’s brand management on an ongoing basis. Coca Cola is probably the stand-out brand in terms of sustainability. And what happened with New Coke demonstrated how you can really stuff up your brand by doing some very stupid things. But then the ability to retrieve ground, to walk back from that and to basically emerge as strong as you were before - this demonstrates the undying strength of the brand and I guess after the stuff-up, it demonstrates a revival of brand management and marketing strategy.

AJ: Was “New Coke” was a genuine stuff-up or a clever PR stunt? TM: A genuine stuff-up. When Pepsi advanced its fl avour Coca Cola would have thought they had to respond by modifying their product. When the brand is under attack, when your product is under attack, how do you respond to that in terms of marketing? Brand rejuvenation or brand modifi cation or brand reinforcement? I mean all those things that, at the end of the day, if it worked they would say, “Well that was a brilliant strategy”, but if it doesn’t work “You’re an idiot”.

AJ: What about the marketing efforts of the big four banks? TM: They’ve done a bad job in managing consumer expectations about the changing environment in which banks operate in. What the consumer gets in 2010 is immeasurably better than in 2005 and in 2000 in terms of value, service and what you get for your money. Yet the customer thinks they are being screwed. And that tells you something is wrong. A specifi c example of bad branding is the ANZ campaign where they are telling you “Banks suck” but “Our bank doesn’t suck.” It reinforces consumer perceptions that all banks suck and that, at best, the ANZ might not be as bad as the others. But I don’t even think it works in that direction. I don’t know that customers value the brand and have confi dence in the brand and trust it in the same way that they would Coke. They use the banking product because they have to use a banking product, not because they choose to use a bank… they don’t drink ANZ because they don’t want to drink NAB.

AJ: Do any of the big four banks successfully differentiate themselves? TM: Not really. NAB has been trying to do this over the past 12 months with its low interest rate strategy, but I don’t think people see the NAB as a signifi cantly different bank to the others.

AJ: Do some people just like to have a whinge and banks are a good target?TM: That’s part of it. People expect a free lunch and the banks are not in a position to deliver one. There is a perception that my basic banking shouldn’t actually cost me anything. “I should be able to go to an ATM,” “I should be able to walk into a bank,” but there’s not a cost involved in that. And it intersects with the notion that “this is my money. Why should I have to pay to deal with my money?” It’s extraordinarily diffi cult for the banks to deal with those perceptions. And I think they’ve been arrogant too in the sense that you don’t have any choice, ultimately. If you walk out the ANZ door and go to the NAB, that’s okay because somebody’s going to walk out of NAB and into the ANZ. You get arrogant and you get lazy.

AJ: Is there complacency in other sectors? TM: If we go back to Apple, Google and those companies - Microsoft was able to create the brand because IBM was arrogant and lazy and dominant. And then Microsoft became arrogant, lazy and dominant and allowed other people to steal their lunch. Microsoft didn’t anticipate that it needed to broaden its brand and product range into the sort of things Google did when Yahoo fi rst appeared. For Microsoft, the warning bells should have been ringing. But they didn’t, because we’ve got this narrow focus on your product without thinking holistically. And it’s tough to do so. Google didn’t exist fi ve years ago. And, clearly, the company that was best able to grow that brand would have been Microsoft in my judgment. Similarly, Woolworths spent 10 years watching Wesfarmers develop Bunnings without going into that space.

AJ: If you had $5 million to reshape a business and be its CMO, who would you choose?TM: My fi rst thought is I don’t want to be fi ghting evolution. I’d look for the space where there is intrinsic organic growth because of the way consumer incomes are going, the way consumer spending patterns are going, the way technological development’s going. That leads me towards new technology-type focuses. I’d also be looking at a company which might be in the wholesale space, where there’s a huge retail opportunity not being captured. I’d go through that process of top-down, thinking, “what’s happening in the economy?”; “what’s happening in the global business environment?” and I’d arrive at a company in the entertainment/technological space. The next step might be to say, “Which is the Pepsi to the Coke in that space?” I’d be looking for a company that could be a challenger to Apple, where there’s a clearly defi ned market leader, but it’s in a growth market.

PM.APRIL11.pg33.pdf Page 33 16/03/11, 1:09 PM