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Study: CMOs Have No Impact on Sales

At his Law Marketing Blog, Larry Bodine reports on a study to be published in the Journal of Marketing that concludes that chief marketing officers at major corporations have no effect on their companies' financial performance. As reported in Advertising Age, the study looked at CMOs' impact on sales at 167 companies including Procter & Gamble, Microsoft and Apple over a five-year span. The Advertising Age piece says:

"The disheartening finding in 'Chief Marketing Officers: A Study of their Presence in Firms' Top Management Teams,' slated for the January 2008 issue, is sure to reignite the longstanding debate afflicting the suite: Should a CMO be judged on tangible or intangible metrics? On solid stats such as sales, or on more amorphous concepts such as brand equity or even awareness?

"The authors themselves -- Pravin Nath, a professor of marketing at the LeBow College of Business, and Vijay Mahajan, a professor in the department of marketing at the University of Texas at Austin -- admit the study is limited because it focuses on financial-performance metrics, such as sales growth and profitability, and not brand equity, and both were quick to offer caveats to the conclusion.

"The common financial metrics used to measure the performance of CFOs and CEOs don't apply as well to the CMO position, Mr. Mahajan argued. 'Those are very short-term,' he said. 'You cannot use short-term metrics to measure the performance of someone who is supposed to have a long-term impact.'"

Bodine does not address the study's implications for law firms, but it is sure to raise questions within firms' management ranks.

Posted by Robert J. Ambrogi on July 26, 2007 at 03:34 PM | Permalink | Comments (0)

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