The Evolution of Marketing Systems

The discussions on brand and sales management describe how marketing and sales have changed in consumer goods firms, partly as a result of the changing nature of consumer goods marketing. Such marketing has evolved over time from almost total reliance on mass marketing to a more local focus approach, one that recognizes the differences among the regions of the country. However, the local focus approach appears to be giving way to target marketing, an even finer-grained approach to marketing. One vice president of sales at a large consumer packaged goods firm describes this trend:

Manufacturers will empower people in the field, pushing down more accountability to those closest to the customer. Thus, regional and local marketing will diminish as account marketing grows. Consumer marketing will interface with the sales departments, and marketing dollars will be integrated down to the store level.

Account focus may only be a way-station on the road to a store focus. A recent speech by the Chairman and Chief Executive Officer of Vons Companies, a leading California retailer, supports this point. He stated that the firm should:

look beyond the computer rooms for applications of technologies. Take it where it's needed, such as the stores, distribution centers and offices. Much of the exciting technology that we see coming down the pike is at the store level. Vons has 325 stores. Any efficiency and cost savings that are developed at store level can be multiplied times 325.

This trend is associated with a related development by retail firms: an increased emphasis on category management in which traditional retail buyers are becoming category managers. This has led manufacturers to broaden their historical focus from a brand to the category. For instance, Procter & Gamble has created a new management position titled "category manager" and put in place account teams to serve the retail accounts that have gone to this broader approach to merchandising.

The focus of these activities is clearly on the category, which appears to be a more natural emphasis for the retailer and the manufacturer. In fact, the category management problem is a recurring theme in discussions of the future relationship between manufacturers and retailers. One problem is that the two parties to this partnership tend to take different views. While manufacturers emphasize brands, retailers emphasize categories.

A manufacturer defines a category by to whom it appeals, while a retailer's view is more standardized. Retailers want category status reports; the manufacturer is more interested in showing the brand's contribution to the category. The retailer wants a store traffic/promotion evaluation; the manufacturer wants more promotional support at point-of-sale. The retailer wants a competitive review of his performance compared with the market; the manufacturer wants to highlight successes. The challenge in category management is to reach a common language, which should be done in the business review.

It is clear that manufacturers must learn how to analyze the brand and category from the retailers' perspective. Walter Salmon makes a strong statement about the retailers' moves towards category management: The title "category manager" will replace that of "buyer" in most chains.

Manufacturers have become so concerned about this retailer-manufacturer gap that they have formed a new trade association: The National Association of Promotional & Advertising Allowances. This association's goal is to improve the partnership between manufacturers and retailers.

Further discussion: