Role of procurement in unlocking marketing value
Role of procurement in unlocking marketing value
While procurement is often associated with a process of cost reduction, in actual fact there is a huge opportunity for procurement to help marketing unlock the value of marketing and promote this value throughout the organisation. The first step is to define the value of marketing by developing a methodology for calculating ROMI (Return On Marketing Investment) In this presentation I highlight the fact that marketing, along with sales, is the one area that can grow the top line of any business. By working with the relevant senior marketing leads (those who are responsible for or who significantly influence the P&L) to define the value of marketing for the C-suite. The three areas where procurement should focus for marketing value are: 1. Cost cutting / benchmarking 2. Waste reduction / process optimisation 3. Performance improvement / effectiveness Cost cutting needs to be undertaken carefully to ensure you do not impact the top line performance of the marketing function. More importantly is the application of cost and resource benchmarking as a way of identifying inefficient areas of the marketing process, especially where marketing engages with external suppliers. Waste reduction is a combination of process improvement and optimisation to eliminate duplication within the agency roster, the marketing process and the cost of the outputs and outcomes. This includes improvements in costs and speed to market. Performance Improvement focuses on looking at implementing ways of improving performance from end to end. Budgeting right through to planning, execution and performance.
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Role of procurement in unlocking marketing value
- 1. marketing management consultants Procurement’s role in unlocking Marketing Value TrinityP3 June, 2014 © COPYRIGHT 2014
- 2. marketing management consultants Defining Marketing Value R.O.M.I. RETURN ON MARKETING INVE$TMENT
- 3. marketing management consultants Not All Marketing is Equal MANY MARKETING FUNCTIONS ARE SIMPLY SERVICE PROVIDERS TO THE PL OWNERS BusinessUnit BusinessUnit BusinessUnit BusinessUnit Marketing BusinessUnit BusinessUnit BusinessUnit BusinessUnit Marketing Marketing • BusinessUnit • BusinessUnit • BusinessUnit • BusinessUnit
- 4. marketing management consultants Procurement’s Role • COST CUTTING • WASTE REDUCTION • PERFORMANCE IMPROVEMENT
- 5. marketing management consultants Cost Cutting • Look for the largest, non-strategic spend • Before you cut, ensure you understand the value proposition • Cost cutting is not the same as waste reduction. Tier 1: Strategic Partners Tier 2: Specialist Service Providers Tier 3: General Service Providers
- 6. marketing management consultants Cost Benchmarking • Benchmark resource use, resource cost, media costs etc • Useful for identifying waste and inefficiency • Dangerous if used for simple cost cutting as can hide the causes
- 7. marketing management consultants Waste Reduction • Look for process duplication • Look for function redundancy • Look for non-performing outputs • Look for unaccountable complexity
- 8. marketing management consultants Creating Alignment and Compliance • Calculate the opportunity-cost lost through current practice • Engage the supply chain in the process to drive efficiencies • Use rewards and consequence to align both marketers and agencies to task
- 9. marketing management consultants Performance Improvement • Improvements in: • Goal setting • Targeting • Speed to market • Return
- 10. marketing management consultants Balance Efficiency with Effectiveness • Take an end-to-end view of marketing process • From budgeting to reconciliation • Implement regular reviews on cost, process, and results • Connect marketing, agency and finance ROMI Quality / Marketer Time / Procurement Cost / Finance
- 11. marketing management consultants Summary 1. Define marketing value 2. Work with the PL owners 3. Use cost benchmarking 4. Reduce waste in the process 5. Improve value performance $
- 12. marketing management consultants For more information contact: TrinityP3 Pty Ltd Sydney +612 9964 9900 Melbourne +613 9682 6800 Hong Kong +852 3478 3982 Singapore +65 6631 2861 Auckland +64 9 363 2891 people@trinityp3.com www.trinityp3.com Trinityp3.com/blog/ @TrinityP3 TrinityP3 TrinityP3.StrategicMarketingConsultants