Marketing: CPG or Tech?
By Angus Maclaurin ‘07
Ask a number of MBAs what field they want to go into, and a large portion will respond marketing. Unfortunately, defining an area of focus is only half of the battle for most MBAs. The industry dramatically effects what marketing actually means for an internship or full-time job. Specifically, many students grapple with the difference between technology and consumer-packaged goods (CPG).
Many would argue that CPG or retail is the way to go. Even some of the technology companies like the background from more traditional industries. For example, Lloyd Braun, who runs Yahoo! Media, is a former TV executive, not a technology guru. It might cause one to wonder why people decide to begin their marketing careers in the technology industry. In the end, you cannot go wrong either way, but it helps to know what each sector teaches you.
As 25% of Haas graduates heads into technology, it is difficult to argue that it is not still a booming area with many opportunities for growth. The proximity to Silicon Valley makes it perfect for Haas grads to enter any one of hundreds of companies within a short-drive (depending on rush hour, of course).
The positives to joining a technology company focus on the following five points:
? Faster product development cycles
? Closer to innovative products
? Potentially more use of new media
? More companies in the Bay Area
? More entrepreneurial, less structure
Product Development Cycle
Technology typically will move much faster in terms of sales cycles and advertising campaigns. While a traditional CPG might launch a new product in 5 years, technology will evolve much more rapidly (than sometimes even you want!). For instance, the growth of Yahoo! or Google in the past 2 years and the new products they have launched have been pretty amazing.
Let’s face it, there are some really cool technologies out there. And many of these have the ability to change the way we live, do business, or interact with each other. Not all products are fascinating, but some would argue that technology still holds an edge over CPG on this front. Ask people whether they would prefer to work on the iPod Nano or Clorox bleach, and a larger portion would probably say the Nano. This is not to say that CPG/Retail don’t hold their fair
share of interesting and innovative products. In any of these industries, you can typically find an interesting product, although it is not going to be easy to work on the most innovative product in the company if you are just starting out.
Although CPG companies are starting to move into alternative media channels, technology is closer to the action. You probably will spend less time on TV and more time in the online space if you are working at a place like Yahoo! These are extremely useful areas to be aware of, since with the advent of TiVo and other recorders, TV advertising is becoming less effective.
Many of the technology companies, even larger, more established companies such as Yahoo! and Google, still lack the level of structure of a CPG company. This is both good and bad. If you are a self-starter, having less structure means that you can move up much faster. At the same time, do not expect a huge amount of training. This means that your group and your mentors become more important than ever.
Unfortunately, although technology may seem sexier from some perspectives, it is not without its drawbacks.
? Analytics and Marketing rigor
? Silos between Product Management and Marketing Communications
? Technical background sometimes required
? P&L responsibilities
Analysis and Marketing Rigor
Since products are rapidly changing and new campaigns are formulated each month, analytics play a smaller role. There is an immense amount of data available from any campaign, just take a look at web logs and the amount of data will make your head swim. However, the science behind analyzing this data has not yet been perfected.
CPG marketers understand their consumer to an extremely fine level, partially because they are looking for very small up-ticks in demand. This intense focus on data may cause some CPG marketers to view a technology background with less respect. Even Activision, the second
largest electronics game company, tends to hire brand managers with a CPG background. The training associated with CPG marketing is commonly believed to translate well into other areas of marketing.
Silos between Marketing Managers and Product Managers
In CPG, the brand managers generally run the show. Technology companies run slightly differently, with the product management teams and marketing departments sometimes separated. For example, at a company like Google, product managers run everything (and you have to have an engineering undergrad to be considered for one of these positions). Marketing plays a role in the company, but only as it is related to advertising and promotion and less to product development.
There is an advantage to the split between product managers and the marketing team in technology organizations. Marketers need less of the in-depth technical knowledge about the product. However, it can lead to some challenges in terms of communication between teams.
As a result of this split, marketing managers can be caught in the unfortunate position of marketing a product to consumers, instead of taking consumer insights into account before the product is developed. In other words, the product drives the market, instead of the market driving the product.
Amazon.com has a way of ensuring that there are no problems between marketing managers and product managers – there are only product managers. So you can find technology companies
with positions similar to Brand Management in CPG. You just need to know how the company is structured and how product decisions are made.
Technical background sometimes required
For some tech marketing positions (often called product marketing engineers), you are working closely with either engineers (internal) or the sales force and customers (external), which will require you to converse on product specifications, applications and new product direction. In order to be effective in these interactions, technical knowledge can be critical and it may be difficult to get positions of this nature without the technical background.
Profit & Loss Responsibilities
Some technology companies tend to break P&L responsibilities away from marketing. Whereas the marketing team is responsible for sales in CPG, technology does not always follow this path. Some groups are only responsible for producing communications (marcomm), and others for the product only. In certain cases, when the revenue is indirect, the marketing department is not held to the revenue goals in comparison to CPG or retail.
Consumer Packaged Goods (CPG)
CPG companies have been around for ages, and will continue to be as long as we still need to eat. This has long been recognized as the training ground for general management, with Procter and Gamble arguably being the king of them all. As a result, CPG can be a logical place for many MBAs to look.
? Extremely strong training ground
? General Management
? Career opportunities and future transitions
It is hard to dispute the training provided by CPG companies, especially given their in-depth knowledge of consumers, packaging, distribution, and advertising effectiveness. A small uplift in consumption (1% increase is huge win) can separate a successful product from an unsuccessful product. As a result, CPG companies do a lot of testing, ensuring that they understand what factors will effect sales down to the smallest change in color on the package. Marketing drives sales since products are not very differentiated.
CPG tends to lie at the center of a company, and is akin to general management. Many top-level managers and CEOs in these companies tend to come from the marketing department. Marketing combines management of people and in-depth understanding of the product. A brand manager, or assistant brand manager, works on everything from packaging and P&L to marketing plans. In effect, you would function as a small business owner in one of these larger companies. Few other departments offer that same skill-set so relevant for running a company.
It is often said that it is much easier to transition from a large company to a small company than the other way around. The same holds true for CPG versus Technology. It is a lot easier to move from CPG to Technology than the other way around. Typically, the only way to move into a CPG company from the Tech sector is when a CPG company is looking for out-of-the-box thinking. Unfortunately, you may be recognized as the tech guy rather than a general marketer.
The Downsides to CPG Marketing:
? Long product and campaign development time
? Fewer companies in the bay area
Campaign and Product Development time
During one particular Careers in Marketing class, students learned about Dreyers Dibs, a new form of snacks combining easy bites with ice cream. This was a dramatic success for Dreyers and a fascinating product to work on. Unfortunately, it also took 5 years to develop (and this was a fast turnaround time!) This endeavor created a new product category, which can have tremendous impact, given the size of the CPG market. On the whole, CPG can move more slowly, which means you can plan months, or even years in advance. A few companies, especially in the retail space, such as Taco Bell or Gap will introduce products on a seasonal level and the speed is much closer to the technology companies.
One of the reasons why CPG moves at a more defined pace than technology involves market share. Market share does not change quickly for CPG companies, and a few percentage points increase in market share is a HUGE win for a CPG company. Don’t expect to see a dramatic
change in consumer behavior overnight, the role of most brand managers is to improve all of the little details that add up to small wins over each year.
Since CPG marketing focuses on making small changes to gradually improve market share, do not expect to see many of these positions venturing into risky markets or untested media. The companies are smart and won’t ignore new media, but they also will not be the guinea pigs.
Limited CPG in the Bay Area
Finally, the last downside to CPG (at least for Haas students) involves the small number of CPG companies in the Bay Area and the limited opportunities for internships; each company tends to hire at most 1-2 interns per summer. The sheer number of Tech companies is overwhelming with the Silicon Valley continuing to be the spawning ground for new and successful enterprises. In the Bay Area. the well-known CPG brands include Clorox or Del Monte and the well-known retail brands include the Gap. The number of major CPG companies can be counted on two hands, which makes finding a good job even more challenging. And if you want to work for the most recognized CPG company of them all, P&G, you have to head to Cincinnati. There are a number of great CPG companies in the Midwest, but after spending 2 years enjoying the Bay Area weather, moving may be a tall order.
At the end of the day, you need to focus on your passions. If you like using the product, or really admire the company, it will show up during the interview (and it is much more common to learn this the hard way!). The more you learn about each company the better, even though it takes a lot of time. Especially since interviewing season comes up so quickly, you need to be more prepared than you think. And if you are not sure which path to take, utilize your resources (classmates, career services staff, alumni, etc.) to help you hone in on your career direction. And who knows, over the course of your career, you might end up working for both technology and CPG companies, which can be an ideal background.