Diageo CMO Cristina Diezhandino On What CEOs Need To Know To Meet And Lead Marketplace Evolutions

Key Concepts

• Brand Building as Business Driver: The fundamental role of brand management is to drive business performance.
• Commercial Leadership: CMOs should be viewed as business leaders first, marketers second.
• Big Idea: An enduring concept rooted in human truth, capable of evolution.
• Authenticity and Truth: Key criteria for judging good creative work.
• Emotional Connection: Essential for resonance and enduring impact.
• Visual Expression: Increasingly critical in a visually saturated world.
• Portfolio Management: Balancing global priorities with local market realities and consumer needs.
• Consumer Choice Framework: A methodology for evaluating consumer occasions and motivations to optimize brand portfolio presence.
• Premiumization: The trend of consumers opting for higher-quality, more expensive products.
• Occasion-Based Marketing: Understanding and adapting brands to different consumption occasions.
• Conscious Create Teams: Centralized teams responsible for defining and developing core brand assets to reduce fragmentation and maximize synergies.
• Virtual Content Studios: Leveraging AI for content adaptation and local market execution.
• Craft and Care: Inspiration drawn from luxury categories, emphasizing product quality and customer consideration.
• Origin Story: The importance of provenance and craft, but with a strategic approach to its communication.
• Short-Term Pressures vs. Foresight: The challenge of balancing immediate demands with long-term strategic vision.

Marketing Evolution and Core Principles

The discussion highlights a significant evolution in marketing approaches, primarily driven by the speed of change and the enormous advancements in technology. While the fundamental goal of brands to conquer hearts and minds remains constant, the "how" has transformed dramatically.

Evolution of Marketing Approach

• Speed of Change: The pace at which marketing environments and technologies evolve is accelerating, demanding constant adaptation.
• Fundamentals Endure: The core objective of brands to be chosen by consumers has not changed.
• Technological Advancements: The tools and platforms available for marketing have expanded significantly, impacting content creation and distribution.

Early Career Learnings and Business Acumen

The speaker's early career at Unilever instilled a crucial mindset: brand marketing and brand building are drivers of business performance. This perspective, where the brand manager acts as the "general manager of the brand," has been invaluable throughout their career, particularly in engaging with boards and stakeholders.

• Business-Centric Communication: The ability to communicate marketing's value in business-centric terms is critical, especially when interacting with decision-makers less familiar with marketing specifics.
• CMOs as Commercial Leaders: A key argument is that too few CMOs fully embrace their role as commercial leaders and business leaders first, marketers second, emphasizing the need to move the business forward.
• Specialization vs. Business Acumen: While the increasing complexity of marketing necessitates specialization (e.g., in creative and communication), translating this specialized expertise into business impact can be challenging. Companies like Diageo offer programs to bridge this gap.
• Diversity of Capabilities: Valuing a diversity of skills within marketing teams, including those with a strong business angle and those with specialized expertise, is crucial for holistic success.

The "Big Idea" and Judging Creative Work

The conversation delves into the concept of a "big idea" and the criteria for judging creative output.

• Definition of a "Big Idea": A "big idea" is defined as something that touches a form of human truth, making it enduring.
  • Example: Johnnie Walker's concept of progress, present from its inception, exemplifies an enduring idea.
• Endurance and Evolution: For ideas to endure, they must also evolve.
• Criteria for Judging Good Work:
  • Authenticity and Truth: The core of the concept or proposition.
  • Powerful Expression: How the idea is communicated, making it bigger than its original conception.
  • Emotionality and Connection: The ability to create an emotional resonance with the audience.
  • Connection to Brand Truth: The emotional connection should be rooted in the brand's internal proposition, not external.
  • Visual Expression: The capacity to be visualized rapidly and effectively, especially in environments with limited language or no voice. This is increasingly important in today's visually driven media landscape (e.g., Instagram, TikTok).

Managing a Large Brand Portfolio

Managing an extensive portfolio of over 150 brands presents a dual challenge of science and art, with a significant emphasis on scientific methodologies.

Portfolio Management Strategy

• Consumer Choice Framework: A proprietary methodology used to evaluate the size of occasions and motivations of consumers globally. This framework helps bucket consumers into segments to optimize brand portfolio presence in each market.
• Global Brand Priorities: Identifying and investing in global brands (e.g., Johnnie Walker, Guinness, Smirnoff, Don Julio) that operate in categories with projected future growth or where active growth strategies are in place.
• Category Expansion: Proactively investing in brands in underdeveloped but growing categories, such as tequila, based on an understanding of underlying trends.
• Brand Lifecycle Management: Acknowledging the need to manage brands that are growing fast, growing less fast, and those that require stabilization.
• The "Tail" of the Portfolio: Continuous consideration for managing the long tail of smaller brands.

Brand Adaptation and Innovation

• Consumer Behavior Trends: Adapting to evolving consumer behaviors, such as the "drinking less but better" or "more mindfully" trend, leading to premiumization.
• Occasion Expansion: Recognizing shifts in consumption occasions, like spirits being consumed earlier in the day or with food.
  • Example: The potential for an Espresso Martini with Ketel One at a Sunday brunch, or Tanqueray with a gin and tonic alongside tapas.
• Innovation Programs: Actively developing new products and formats, such as lower-alcohol options for brands like Gordon's gin, to cater to different occasions.

Portfolio Approach to Brand Building (Cannibalization)

• Consumer Choice Framework: This segmentation tool helps identify distinct consumer needs that different brands can address.
• Brand Positioning: Differentiating brands within a category based on price points, specific product lines (e.g., Tanqueray No. 10 for martinis vs. Gordon's for ready-to-drinks), or origin.
• Creating Clear Distinctions: Marketers' job is to create clear distinctions between portfolio brands to serve different consumer needs and purposes.
• Maximizing Trademark Potential: Encouraging innovation to tap into different aspects of brands and widen the "fan of possibilities."
• Strategic Cannibalization (PNG Model): The philosophy that if a company doesn't cannibalize its own brands, a competitor will. This approach is valid when brands serve different moments or flavor profiles within a category, allowing the company to gain share of occasions.
  • Example: Offering a diverse portfolio of whiskey brands with different flavor profiles to cater to various consumer preferences and occasions.

Investment Metrics and Performance Evaluation

Determining where to invest requires a robust approach to metrics and ROI.

• ROI Methodology: A proprietary methodology focusing on both short-term and long-term ROI, using attribution to analyze investment allocation.
• Data Ingestion and Future Growth: The system ingests historical data and considers expected future growth.
• Short-Term Metrics: While long-term outcomes are paramount, short-term metrics are also monitored.
  • Short-term market share.
  • Talkability: Used as an indicator of current sentiment and consumer engagement.
• Talkability vs. Commercial Result: Talkability is seen as an informative "beat" or indicator of the moment, but not a sole determinant of commercial success. It serves to confirm positive choices and provide reassurance.
• Long-Term Expectations: Metrics are in place to ensure long-term expectations are met, especially for cultural platforms.
  • Example: A partnership with the English Premier League and Guinness involves monitoring talkability alongside on-trade and off-trade sales, and the long-term association of the brand with sports-watching occasions.

Occasions and Brand Perception

The discussion explores the role of occasions in brand perception and the challenges of shifting established associations.

• Occasion Focus: Brands like Coca-Cola and high-end champagne brands have historically focused on specific occasions.
• Occasions as Limitations: Occasions can be limiting if brands become too narrowly associated with them.
• Shifting Perceptions: Shifting established perceptions is difficult.
  • Example: Guinness, initially strongly associated with Ireland and St. Patrick's Day, and later with winter months, has worked to broaden its occasion suitability for summer and sports watching.
• Approach to Shifting Perception:
  • Overcoming Internal Barriers: The primary barrier is often internal resistance to change within an organization.
  • Opening Possibility: Marketing's role is to open the possibility of a different future, rather than solely relying on past "reasons to believe."
  • Cross-Fertilization: Leveraging lessons learned from other brands and categories within a portfolio can inspire new approaches.
  • Challenging Norms: Brands can break norms, as exemplified by Johnnie Walker Blue, which challenged the notion that only single malts could command a high price point in Scotch whiskey.

Reorganizing Marketing for Pace of Change

Adapting marketing organizations to meet and lead market changes is a significant focus.

Conscious Create Teams

• Purpose: To reduce fragmentation in creative asset development and adaptation, leading to greater effectiveness and efficiency.
• Structure: Comprised of global teams and representatives from lead markets.
• Function:
  • Defines the asset matrix – a small number of core assets to be developed.
  • Gathers a significant portion of investment for developing these assets.
  • These assets are then utilized broadly across the brand's community.
• Ownership: These teams are also owners of KPIs, ensuring performance delivery.
• Talent Development: Provides opportunities for people to learn and participate.
• AI Integration: Leverages AI through Virtual Content Studios for content adaptation and local market execution. Brand managers in local markets own the execution and feedback loop.
• Insight for Creation: The insight behind this shift was the need to reduce the cost and maximize synergies of adapting central content across multiple geographies.

Inspiration from Other Categories and Craftsmanship

• Luxury Category Inspiration: The luxury category offers inspiration through its emphasis on:
  • Love for Craft: Dedication to the quality of the product and its marketing.
  • Care for Customers: A deep consideration for the customer experience.
• Product Phase is Essential: The product phase is inextricably linked to the marketing phase.
• Experiencing Origin: Visiting the place where a product is made and meeting the people who create it (e.g., Scotland for Scotch, Mexico for Don Julio) is highly inspirational and is a practice taken with creative teams.
• Origin Story Communication: While origin is crucial in many categories, its communication needs to be strategic. Understanding deeply and valuing provenance and craft is key, but the amount of space it takes in communication should be tailored to the audience (e.g., more detailed discussions with bartenders vs. broader communication for consumers).
• Brand as Everyone's Responsibility: Reinforcing the idea that brand care and attention to executional detail are vital across the organization, not just within marketing.

Watchouts for Marketing Success

• Short-Term Pressures: The tendency to get trapped in short-term demands, which can hinder long-term vision. Marketers must deliver on immediate needs while maintaining a long-term perspective.
• Lack of Foresight: This can stem from a lack of preparedness or being solely focused on the immediate.
• Forgetting Unique Contribution: Marketers must constantly identify and deliver on what is uniquely their contribution to the business, focusing on consumer needs.