Regional Marketing:
An Investment in Business Growth

Hamilton Consultants White Paper

Anthony Nygren, Will Rodgers, Bill Smits

What should the role of marketing be in an organization: identifying market opportunities? Segmenting the market? Developing competitive positioning? In fact, marketing should be doing all of these things, but when push comes to shove, marketing's primary role should be to generate sales opportunities. Often, however, a centralized marketing organization struggles to develop these opportunities-not from a lack of effort, but from a lack of sufficient contact with the field. We have found that a regional marketing presence can prove extremely effective in bridging the gap between marketing and sales, and between headquarters and the field.

Many organizations that might benefit from regional marketing, however, do not even consider it because they view it simply as an additional expense that does not directly generate revenue. While there are certainly resources associated with a regional marketing effort, these resources need to be seen as an investment rather than as an expense. The cost of a regional marketing presence today will produce future profit by increasing customer loyalty, identifying and targeting new potential customers, and maximizing the efficiency and effectiveness of the sales force.

Is Regional Marketing Right for You?

Obviously, a regional marketing organization would not fit all situations. The structure of any marketing organization should be driven by the market Key Success Factors (the internal and external activities and strategies that drive success in a given market). These KSFs are likely to be very different from one industry to another; therefore, an organization that works well for one industry may be totally inefficient in another.

While each business should consider itself unique, there are some fairly universal characteristics of businesses that could benefit from a regional marketing presence. Specifically, such businesses would:

• Have a regionally deployed sales force and
• See significant regional variation in customer needs.

Additionally, the business would likely:

• Experience notable regional variation in:
  • Customer satisfaction
  • Competitive intensity and competitive landscape
  • Distribution networks
  • Buying processes
  • Market share
  • Regulatory conditions
• Operate in an industry in which sales are relationship-driven, not transactional.
• Be experiencing growth rates below those of competitors.

Often, the sales force provides a clear "early warning sign" that a regional marketing presence may be needed. Complaints from sales that "the marketing program out here isn't working," or "marketing isn't doing anything to help me sell," must be taken with a large grain of salt-but they should be taken seriously. These gripes may simply be excuses for sales force underperformance, but they may be a symptom of the problem described in the first paragraph above. They may indicate that whatever the centralized marketing organization is doing, the effort is either getting lost in translation to the field, or it simply does not have enough relevance to the realities of specific sales territories.

Regional Marketing Success Stories

A division of a company in the home and building environmental systems business felt that it was under-performing in terms of annual revenue, but had been unable to identify the reason why. Interviews with centralized marketing personnel and field sales people led to a single conclusion: there was a breakdown in the process of turning the marketing strategies developed at headquarters into sales opportunities and revenue in the sales territories.

The company had a competitive advantage in that it offered a broader range of products and services than any of its competitors. However, a lack of a regional marketing presence meant that there was no ongoing effort to assess and probe individual accounts for opportunities to up-sell and cross-sell. In fact, the sales force of this division, which sold high margin services (fire, security, environmental), had no information about the local customers that had already bought and installed environmental products from another division of the company.

The one sales territory that was delivering results was the one region that had set about establishing its own regional marketing presence by turning one of its sales managers into a regional business development manager. Division management realized that if new business development leaders were installed in all the other regions, there was an opportunity to raise the performance of all the regions to 20% above established quota levels (the level achieved by the region with the regional marketing presence).

As a result of regional marketing, therefore, the organization's $2 billion in annual revenue could increase by over $350 million. Moreover, by focusing on bringing the organizational marketing strategies down to the business development realities of the region, this regional marketing resource would also make the sales force more efficient: the additional $350 million in revenue would come without any increase in the size of the sales force.

In another example, a manufacturer of construction drainage pipe faced a market with significant regional variability. The needs for drainage pipe in Iowa (farm country) are entirely different from the needs for drainage pipe in Arizona (irrigation, and sudden rain run-off). Achieving success in all markets therefore means creating offerings (comprising product, pricing, and distribution) that meet these very different needs. Only a regional approach to marketing can have enough contact with local customers to understand their needs and respond effectively.

How to Determine If and When to Deploy Regional Marketing

The case of the home and building environmental systems company illustrates the potential value that can be captured through a regional marketing presence. Pursuing that potential, however, should not be a hit-or-miss process. For the division described in the case example, the identification of the need for regional business development resulted from a marketing audit that revealed the organization's strengths and weaknesses relative to the market Key Success Factors.

In general, any investment in regional marketing should flow from an analysis of the market and the marketing organization that identifies a legitimate, well-defined need for a regional marketing presence. By conducting customer research, and by analyzing competitors' strategies and tactics, a company can begin to develop a picture of the Key Success Factors for the market. In some cases, the "customers" to be researched should include both end-customers and the sales force, which is effectively the internal customer of the marketing organization. Additionally, the centralized marketing organization should turn the analytical mirror on itself to evaluate its alignment with KSFs-its ability to meet customer needs and compete effectively in all markets.

Based on this analysis, a marketing organization should be able to identify the need for a regional marketing presence. The organization should also be able to define the role that regional marketing resource should play, and to quantify the potential value that could be captured by adding this resource. Quantifying the "stakes" attached to regional marketing makes clear that this is an investment-not just an expense. Moreover, these "stakes" make a strong case to senior management and finance that it is an investment worth making-it is an investment that offers a defined and defensible return.

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