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Pitch Brainstorm-Delhi: Eschew balance sheet approach and create value for customers

21-March-2005
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Pitch Brainstorm-Delhi: Eschew balance sheet approach and create value for customers

Companies are often confused on what to spend on and what not to spend on. While there is any number of information providers, what's lacking is knowledge providers. Should marketing expenditure be seen through an accountant's eyes or as a long-term investment in building a brand which is actually an asset? These dilemmas were addressed at the second session of the Delhi round of Pitch Brainstorm held on Friday.

The panelists included CVL Srinivas, MD, Maxus India; G Udyan Dravid, Marketing Consultant; Rajat Sethi, CEO, Wunderman, and Suresh Iyer, MD, Twinings India. Ramesh Jude Thomas, Principal Officer, Interbrand Equitor, moderated the discussion on "Turning marketing expenses into investments."

Marketing is not about building balance sheets but winning the trust of consumers, observed Dravid. He pointed out that most CEOs focussed more on securing investments and giving the best returns to shareholders, and that is why customers do not get due attention. "Anything that is not built on truth, transparency and trust leads to a flimsy brand," he said.

Sethi questioned the logic of brand building, saying that brand awareness without conversion into sales and preferences meant nothing. He said that there was "an obsessive focus on customer acquisition and a marked neglect of customer retention," which is the reason why most companies are actually not building brands or making long-term investments in their brands. "The role of marketing is essentially to pamper your customer and their retention is the best investment for a firm. Most marketers look at short-term, quick results which is when the equation fails," he argued.

Srinivas said, "What's really ironical is that many clients admit that they spreadsheets in their laptops but no knowledge givers who can optimise budgets at a macro-level." He observed that with "companies getting very compartmentalised, knowledge is splitting between the cracks."

Iyer also emphasised that true brand builders are those who focus on their customers. Unfortunately, he said, brand managers are increasingly becoming brand finance managers or brand account managers. The session ended with the panelists coming back to square one and trying to redefine how marketing expenses can turn to investments. While Srinivas said that one way of looking at it could be add two key words - 'objectives' and 'feedback' -- to the expenditure column and see how it evolves to investment, Sethi claimed that it's all about accountability.

Thomas had the last word, when he summed up the hotly-debated session saying, "You have to look at the value creation of the brand, then marketing expenses will automatically convert to investments."

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