The long-misunderstood function of Marketing, and the resultant need for CMOs in Japanese companies

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So Ikeda, Project Manager, Hakuhodo Consulting Inc.

In 2006, “CMO, the Chief Marketing Officer – The Role of a Strategic Leader to Take on the Challenges of the Global Market”[1] was published. It was a seminal work by Professor Taro Kamioka of Hitotsubashi University, who has advocated the need to introduce the position of CMO into Japanese corporate culture. A common appointment in America, it remains an urgent necessity for Japanese companies. Professor Philip Kotler of Northwestern University, a world-renowned authority on marketing, also advocates the establishment of the position of CMO in Japanese corporations every time he visits Japan.

Despite repeated calls for change, very few Japanese companies have a system where marketing professionals such as a CMO have joined the ranks alongside the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) in the management-level decision-making process. Small start-ups are actively using the title of CMO, unlike publicly listed companies. They hence acknowledge the importance of marketing. The question remains – what is hindering the adoption of the position of CMO in major Japanese corporations, despite the recent trend to the contrary?

Many Japanese are of the understanding that marketing operates as a single function. However, it comprises multiple, separate functions that require the expertise of a CMO.

Various departments exist within a corporation and are expected to work in tandem with each other. These departments comprise production/manufacturing, logistics, sales, and so on. In a small company, the top-level management may be able to combine different functions based on their business vision, which is the criterion for judgment. However, as companies grow, the inevitable malady of a silo organization sets in – the pursuit of optimisation within each individual department results in inefficiency and inconsequence.

As a matter of course, it becomes necessary to create a coordinating function to integrate separate functions. That function is usually fulfilled by the corporate planning division in Japanese corporations. However, corporate planning tends to operate on an inward-looking logic (corporate perspective), bringing on board numbers-oriented resources that are mostly from a financial background.

As a consequence, companies often lose sight of the perspective of customers. Essentially, “customers’ perspective” ought to be the guiding principle behind the integration of several functions within a corporation, and for this purpose, it is critical to have a CMO who is well-versed in such insight. Sadly, it seems that most Japanese companies do not acknowledge this.

With the exception of a handful of forward-looking fast-moving consumer goods (FMCG) companies, marketing departments are usually given the single role of sales support, advertising, or research. In other words, the marketing department, like corporate planning, should naturally be endowed with cross-functional capability as well as accompanying responsibilities. However, in reality, this has not materialized in many companies and could be one of the reasons for dismal profit growth.

The Expanding Role of Marketing

The speed at which marketing itself is evolving and expanding could be one of the main reasons why the role of CMO has not gained prominence. Generally, marketing knowledge remains obscure and marketing is most often defined merely as a single function. This is evident in the famous framework presented by Professor Michael Porter, “Value Chain.” However, it has been over 30 years since Professor Porter first presented this model, and marketing has since evolved dramatically.

fig 1 - Japan CMO

Figure 1. Expanding role of marketing in corporate management (Adjusted by the author based on a chart from Porter, M.E. (1985) Competitive Advantage)

Marketing today, as shown in this chart, needs to be understood as a position that integrates the main business activities of a company. At one of the world’s leading marketing companies, Procter & Gamble, a brand manager within the marketing division takes charge of the entire process from upstream to downstream. This includes facets such as the designing of current marketing strategies, product concept development, market needs forecast, judgment on whether to increase or decrease production and package design. The brand manager may also be in charge of other areas such as the inventory forecast of wholesalers and retailers, consumer research, advertising, budget control, sales talk direction, sales material production, promotion of discounts and the measurement of effectiveness. Moreover, there are many who get promoted as brand managers in their 20s and obtain hands-on experience as marketing professionals early on in their respective careers.

The capabilities guided by adopting the “customers’ perspective” for the formulation of strategies, decision-making, and execution are fostered through this process. In fact, the “function to bind together separate functions” is absent in the corporate planning division that is guided by corporate perspective. However, the acknowledgement that marketing has such an extensive role is far from commonly shared. I believe that is the reason behind the lack of CMOs in Japanese organisations.

Professor Naoto Onzo of Waseda University, a leading academic in marketing in Japan, has recently expounded on the remarkable progress that marketing has made the recent years, as follows:

“There is a huge difference between the marketing that I learned as a student, and what marketing today has become in reality, despite being under the same name as an academic discipline. If you compared it to an airplane, the marketing I learned was a propeller plane, while marketing today is a state-of-the-art jet plane.” (Onzo, 2017) [2]

The words of a prominent scholar who has been at the forefront of marketing inquiry carry weight and are truly convincing. It may take more time for the importance and significance of marketing and the CMO’s role to be widely acknowledged among the general business community, including the management. Yet I, as a consultant, would like to be actively involved in a continuous endeavour to raise such awareness.

References

[1] Kamioka, T. (2006). CMO Markering-saikosekininsha: Global Shijo ni Idomu Senryaku Leader no Yakuwari (CMO, the Chief Marketing Officer – The Role of a Strategic Leader to Take on the Challenges of the Global Market). Tokyo: DIAMOND

[2] Onzo, N. (2017). Marketing ni Tsuyokunaru (To Become Good at Marketing). Tokyo: Chikumashobo

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Author: So Ikeda
Date: 8 February 2018

About the Author

So “Sonny” Ikeda is a Project Manager of Hakuhodo Consulting. He worked on many consultancy projects for clients including automobile manufacturers, pharmaceutical companies, service companies and other B-to-B businesses, on brand management and market strategy. He joined Hakuhodo in 2005 and started his career as an account executive. He became a professional brand and marketing consultant in 2011 when he transferred to Hakuhodo Consulting Inc. (HCI), a brand consulting firm within Hakuhodo group.

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