Marketing Capabilities refers to the combination of decision processes, knowledge and skills of individuals, technology and data to transform assets like brands/intellectual property/market insights into sales, market share, return on assets etc. It is an organization level ability.
Marketing capabilities are thus derived from combinations of an organizations’ people, processes and technology and as such difficult to replicate. Recognizing and leveraging the non- imitability protects a competitive advantage, becoming a proverbial moat in the marketplace. Moreover, building capabilities demands resources and sustained effort, which further deepens and widens the moat.
Research published in 2009 shows that a 1% improvement in the marketing capabilities of the average Fortune 500 firm delivers a 3% improvement in Return on Assets.
Marketing Capability benchmarking data shows a similar relationship – a 1% improvement in an organization’s Marketing Capabilities Fit score drives a 2.5% improvement in Revenue Growth Rate.
The sustainable advantage due to marketing capabilities is not set in stone. Over time, competitors may indeed catch up, begin to build capabilities themselves, or even decide to compete with a new set of capabilities.
The marketing landscape has been shifting over the last several years with new technologies, new media, changing customer expectations and new competitors. The global pandemic of 2020 has only accelerated these shifts. As companies begin to rethink their business and marketing strategy post-COVID, they face a range of challenges as well as new opportunities. From a marketing-capability perspective, they must consider how well their current capabilities fit the requirements of the new world, which capabilities they require, which they’ve outgrown and how the resources underlying those capabilities can be repurposed, reallocated or recovered. To survive in the short term and thrive in the long term, marketers must do the work to define, measure and manage their marketing capabilities for new growth in this new world.
Marketing Capabilities are best measured using a survey of executives who are engaged in marketing activities, whether they are part of the marketing department or not. Members of marketing agencies should be included. Measurements should go beyond collecting opinions and should audit how well various marketing activities are conducted.