Chief Marketing Officers (CMO’s) and their impact on the firm’s performance

 

In the Journal of Marketing in 2008, Pravin Nath and Vijay Mahajan published their study of the impact of chief marketing officers on the business performance of a firm.

Here is the link to the Journal of Marketing website and the relevant journal article – you may be able to access this article via your university library. Alternatively, this website/blog has posted a full copy of the article.

To help with your academic research, here is the full citation:

Pravin Nath and Vijay Mahajan (2008) Chief Marketing Officers: A Study of Their Presence in Firms’ Top Management Teams. Journal of Marketing: January 2008, Vol. 72, No. 1, pp. 65-81.

Chief Marketing Officers (CMO’s) are under-represented in major firms

According to the Nath and Mahajan paper, where the authors reference a study by Booz Allen Hamilton, which indicated that only around 50% of Fortune 1000 companies had a chief marketing officer in their top management team. This is a disappointing result; particularly given the same study found that over 80% of firms had a chief financial officer.

As highlighted in the marketing career quiz and its outcomes, getting to the top management team (that is, the executive level of business) is a key stepping stone to becoming the chief executive officer (CEO). Unfortunately, that pathway is a little bit more challenging if you decide to pursue a marketing career.

Drivers for appointing a Chief Marketing Officer (CMO)

One of the goals of the journal article was to identify the underlying factors within the company that would make it more likely to have a chief marketing officer.
Nath and Mahajan found that the firm was more likely to have a chief marketing officer if:

  • innovation and differentiation was a key part of their overall corporate strategy
  • the organization considered it important to build a strong corporate brand
  • other executives in the top management team have had marketing experience or exposure – and possibly have a greater appreciation of the marketing function and its challenges
  • the Chief Executive Officer (CEO) has been appointed from outside the firm (that is, not promoted up through the ranks over time) – where they have less accumulated knowledge about the firm and its prior experiences and therefore need additional support
  • they are more concentrated or specialized firms that operating in one industry, rather than being a diversified conglomerate
  • they are relatively larger in size, but not a conglomerate.

Therefore, there are a range of strategic reasons – innovation, differentiation and branding – and a range of structural reasons – CEO and other senior management experience – that are the main drivers of whether or not a company will have a chief marketing officer (CMO).

Impact of a chief marketing officer on the overall performance of the firm

This Journal of Marketing article looked at the performance period of 2000 to 2004, across different industries. The second goal of the researchers was to identify whether having a chief marketing officer contributed to, or detracted from, the firm’s performance.

Perhaps surprisingly, they concluded that the presence of a chief marketing officer did not you have any significant impact – either positive or negative, on the overall firm’s performance (note: by performance, they looked at profitability and growth).