2002

Marketing is the key driver of business success ... but marketers are not in the driving seat says PA Consulting Group - 30 October 2002

Marketing drives more shareholder value than anything else a business can do, according to new research by PA Consulting Group.

An analysis of 6,000 companies across 40 sectors indicates that on average marketing creates three times more value than other business activities. However, another PA study of senior marketers, finds that the majority are not focused on the drivers of this value, and as a result companies and their shareholders could be missing 25% of their potential value.

The study shows that profitability rather than growth is the route by which marketers can add most value, however 95% of marketing directors are targeted on the latter. Only 13% have economic profit targets¹ however these companies typically deliver 7.9% better long-term shareholder returns.

Peter Fisk who leads PA's marketing approach explains: "Marketers are most comfortable in their conventional areas - understanding customer needs, developing brands and communicating them creatively. They are less good at capturing the full value of these activities for the business and its shareholders".

• Marketers are not commercial: only 39% are responsible for pricing decisions, the key value driver
• Marketers need to focus their efforts: only 13% know their most valuable products and customers
• Marketers lack business discipline: only 24% want to be held more accountable for their performance
• Marketers don't drive the business: only 14% say they are shaping the business future, and even fewer want to be the CEO.
  

"This raises significant challenges and opportunities for both marketers and business leaders" argues Fisk when reflecting on the results, which are endorsed by the Chartered Institute of Marketing.

"High performance marketers have the opportunity to drive the business in response to fast-changing markets, and to maintain or increase budgets in difficult economic times. However they will achieve this only if they start talking the CEO's language and connecting their passion for customers with profits for shareholders".

"CEOs can unlock more shareholder value by focusing on strategic marketing, encouraging marketers to raise their game, and communicating their marketing advantage more clearly to investors. However they should also be concerned if their marketers are not interested in closing this potential gap in value creation".

¹ Economic profit is the profit after tax less a charge for equity capital tied up in the business. In other words, it incorporates the expected return to shareholders, and is therefore a better measure of the value created.

- Ends -

For more information, please contact:

Lavinia Pickles PA Consulting Group 123 Buckingham Palace Road London SW1W 9SR United Kingdom Tel: +44 20 7333 5392 Fax: +44 20 7333 5107 E-mail: lavinia.pickles@paconsulting.com

Notes to editors

PA Consulting Group is a leading management, systems and technology consulting firm, with a unique combination of these capabilities. Established almost 60 years ago, and operating world-wide from over 40 offices in more than 20 countries, PA draws on the knowledge and experience of around 4,000 people, whose skills span the initial generation of ideas and insights all the way through to detailed implementation.

PA builds strategies for the creation and capture of shareholder and customer value, and helps clients accelerate business growth through innovation and the application of technology. PA works with clients to improve performance, mobilize human resources and deliver change effectively, including managing major projects, and designing and implementing enterprise-wide systems and full e-business solutions.

PA focuses on creating benefits for clients rather than merely proposing them, and this focus is supported by an outstanding implementation track record in every major industry and for governments around the world. PA also develops leading-edge technology, both for its clients and within its own portfolio of venture companies, in areas ranging from software to wireless technology to life sciences.

PA distinguishes itself from its competitors through the range and quality of its people, the depth of its industry insight, its development and use of technology, and also its independence and culture of respect, collaboration and flexibility in working with clients.

We are proud that our clients say 'PA makes it happen'.

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