What Happens When There is a Disconnect Between Marketing and Business Strategy?

Earlier this year, I enrolled in an online class from IIM Bangalore. It featured Abhay Hanjura and Vivek Gupta, co-founders of Licious — the e-commerce brand specializing in ready-to-cook and ready-to-eat products.

During the session, they delved into their unique approach to the meat category, the challenges with traditional cold storage, and the journey of building the Licious brand.

My initial encounter with the brand was when it first launched. I had registered on the app but later opted out due to dissatisfaction with the product quality I received. While customer service did refund my payment, I chose not to return to the platform.

However, the SMS marketing from the platform was relentless. It only ceased when I raised the issue on X (now Twitter). Regardless of how they marketed their products, whatever they did seemed to work to some extent.

In fact, most people I've spoken to don't view Licious as just a butcher shop; they perceive it more as a convenience store.

Licious aggressive marketing hasn't helped them to grow their business. The company's operating income has remained flat this year, a mere 9.6% growth to Rs 747.7 crore during FY23 from Rs 682.5 crore in FY22. Meanwhile, the losses have jumped to Rs 500 crore in FY23 from Rs 485 crore in FY22.

In such scenarios, who shoulders the blame? Often, in many organizations, the sales or marketing team bears the brunt when business targets aren't met.

But the story here is different; as the article from The Ken points out, the business is realizing the market for premium meat is saturating. Their revenue targets were outrageously out of tune with market realities.

Furthermore, the average Indian consumer isn't inclined to consume meat daily. To address this, the brand introduced Uncrave, a plant-based meat alternative. However, it has yet to gain significant traction in India, given the presence of other plant-based protein sources.

But the larger story is the disconnect between marketing and business performance.

This disparity has become glaringly evident recently, as brands that excel in marketing often underperform in business. Examples include Dunzo, Licious, Meesho, Sharechat, and many others.

How do you bridge the gap between marketing and business strategy?

The disconnect between marketing and strategy is a recurring theme in startups.

As consumers, we have the choice to buy from our neighborhood stores or online, and an increasing number of customers are choosing the former.

Growth at all costs has only eroded startups' trust with consumers. You would assume that larger businesses are unaffected by the problem, but that is hardly the case.

Burger King's ex-CMO kept bragging about all the Cannes awards the brand has won over the years while it had the lowest sales per square foot in its category.

The disconnect between business strategy and marketing means that marketing executives often optimize for the lowest common denominator.

Walk into a boardroom discussion, and you might hear a senior executive talking about leads, MQLs, the share of voice, or the dramatic increase in followers on social media pages since they took over the department.

While all of these metrics matter, they don't move the needle as far as business is concerned. That's one of the reasons why you don't see CMOs turning into CROs.

Part of solving this problem involves ensuring that the founders are fully committed to marketing and recognizing the value it brings to the business.

The disconnect tends to be more pronounced when founders view marketing as merely a support function, likening the role of the marketing head to someone merely overseeing a paint job in a garage.

The next step is to define the role, and how the organization views it. The question is, do you want the CMO to have a say in strategy?

In many Indian organizations today, the CMO's role is predominantly centered on commercialization. It's primarily in fast-moving consumer goods companies and major e-commerce firms that CMOs assume a more strategic role with accountability for P&L.

When Forrester conducted its survey in 2016, only a third of the 275 CMOs surveyed had P&L responsibilities. However, there was a 13% increase year on year.

In India, we're still trying to ascertain this number. One would expect a general upward trend in the industry, especially with an increased emphasis on profitability.

However, the question remains: Are CMOs equipped to handle P&L responsibilities?

If they've spent years optimizing for the lowest common denominator, their ability to thrive in a role assessed quarter by quarter could be in doubt.

Being a successful CMO can often come down to a mix of skill and luck. A study by Korn Ferry in 2017 found that the CMO role was the riskiest position within the C-Suite.

While the average tenure has shown signs of improvement over time, there was a slight decline recently. In 2022, the average tenure for Fortune 500 CMOs was 51 months (4.3 years), down from 54 months (4.5 years) in 2021.

But if you feel like you are in the wrong profession after looking at those figures, you're not alone.

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