Release Date: March 4, 2013
BUFFALO, N.Y. -- A company’s chief marketing officer can be a critical component of a company’s top management team, according to a study by Inho Suk, assistant professor of accounting in the School of Management.
In an invited editorial for the Journal of Accounting and Marketing, Suk argues that a company’s chief marketing officer (CMO) should be part of the top management team, along with the chief executive officer (CEO) and chief financial officer (CFO), who determine the firm’s corporate strategy.
Because the CMO is responsible for many of the activities that drive a firm’s earnings, such as new product innovations, price promotions and advertising, Suk says the CMO would be a valuable asset in the C-suite. Most firms do not follow this practice, however.
“Although the CMO is the marketing executive responsible for various marketing activities, only 12 percent of Standard & Poor’s 1,500 U.S. firms choose to have the CMO on their top management team,” Suk says.
Furthermore, because the average tenure for a CMO at the top 100 U.S. branded companies is less than two years, it hinders him or her from implementing marketing policies that are consistent with accounting practices and financial policies, he adds.
Bringing the CMO on to the top management team and lengthening his or her tenure will allow the CMO to exert marketing policies that will provide long-term benefits to the company. In addition, the CMO is likely to gain a corporate-level perspective if on the team with the CEO and CFO.
“Under such circumstances, the quality of the information the CMO can provide about marketing and accounting will be higher and thus better reflect the firm’s value,” Suk says. This will lead to better long-term results.
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