CHICAGO -- The dividing line between sales and marketing will blur and eventually disappear, said a top executive with Kraft General Foods.
"Marketing has moved from mass to something more targeted. It has moved through local, regional, zip code and will move to one- on-one, largely with and through the supermarket," said Mark Harran, senior vice president of sales, customer development and marketing services. He spoke at a category management conference here hosted by International Business Communications, Southborough, Mass. The military structure of the sales and marketing staff that has existed in the past and is currently in place is moving toward a power-team structure, he said. The sales force used to be the execution arm, assigned to make quotas. It is now becoming a customer business, and team-driven with multiple functions, he said. Harran was asked by a member of the audience how Kraft General Foods' strategy of "one face per customer" might be affected by category management. "We are continuing [that strategy.] We are moving to multifunctional Kraft General Foods business teams in three areas on a need basis. We will have a person representing Kraft General Foods, managing interface with the customer. That is one face. It has worked, particularly in the logistical area," he said. "Category management for rice may be somewhat different than for coffee, but there is more in common than is different. We have also found that customers who are interested in doing category management with a supplier don't want 20 to 40 different approaches varying by supplier. Kraft General Foods can come with one approach. Customers like that," Harran said. The industry is moving away from the buyer and sales person being the sole or primary contact between trade partners. Instead there will be a matching up of multifunctional teams, which together can address the entire supply chain more effectively, he said. It has been said that in the future marketers must have a local focus in a global economy. It is not one or the other; it is both, Harran said. Instead of relying on demographics or psychographics, marketers of the future may turn to "buy-o-graphics" based on what people buy, he said. If the manufacturer knows what consumers are buying, he can try to intercept them based on their purchase cycles, he said. Manufacturers used to be able to reach consumers via "roadblocks" on network television. The roadblock was at 8 p.m. when 90% of households watched one of the three networks. Today with 90% of households visiting a supermarket five times a month, mass marketing needs to be done as people go through the checkouts, Harran said. In the future, more emphasis will be placed on marketing to current users because that is less expensive than trying to convert nonusers, he said. Pricing will have to be revised. Instead of focusing on margin maintenance and passing through costs on a penny-per-penny basis, manufacturers will have to look at "cost-to-serve," Harran said. The era of the big warehouse may end, as eventually one stop is taken out of the system, he said. "Right now there is the manufacturing plant, our warehouse, the customer's warehouse and the store. One of those warehouses will come out by stockkeeping unit. A particular SKU will miss one of those warehouses," he said. The concepts of category management and Efficient Consumer Response are virtually interchangeable, he said. "Category management is at the heart of ECR," he said. "Cooperation is the byword of ECR, but I dislike the word partnership as a way of implementing it. Trading partners should cooperate, but they should still realize their long-term viability is their own responsibility, not their trading partner's, in part or in whole," Harran said. "Don't weld two businesses together. You need a friction point to make the buyer-seller relationship productive," he said. Instead of using the word "partnership," Harran referred to trade "alliances." To be successful, he said, a trade alliance requires visibly active leadership by top management; an overall strategy in place; willingness to cooperate driven down from the top through the company; viewing technology as an enabler; multifunctional; training; new measurement systems; a positive state of mind, and resilience.
"The role of the supermarket is changing. The supermarket used to be viewed as a necessary consolidation point where consumers can buy products. In the future it will be viewed as a marketing medium," he said. The past practice of measuring success in terms of features, displays and ads won't be the case in the future. Programs will be tailored by store by category management, he said. Measurement changes will have to go deep, beyond sales or marketing, particularly in larger companies.
"A big re-education in the marketing function is necessary. To get re-education to happen, we need to change some of the measurements used for their success. For example, deductions. The sales department cannot cure that problem. It has to be cured by the person writing the deals and controlling the money. That is the product manager. Deductions are a deal design problem vs. a sales execution problem. That problem can be solved through cooperation," Harran said.