Kanika Datta: The Real business of marketing

SWOT

Prevailing wisdom has it that business is marketing. In my humble opinion, marketing is one end-product of business; quality and customer focus count for just as much. Just as the legendary Harold Burson insists that good public relations cannot compensate for bad corporate strategy, savvy marketing can never be a proxy for a sub-standard product or bad customer service.

Enron is a great example of the first maxim. Ordinary consumers will instinctively understand the second when they experience the gap between the siren-like promises in advertisements and the actual performance of a product. As competition becomes increasingly global, I suspect quality and customer focus will play an ever-larger role in the corporate strategy mix. Indeed, the problems of focusing on marketing to the exclusion of other business basics was potently demonstrated in that most global of businesses, football, which was recently shaken with the resignation of Florentino Perez, president of Real Madrid football club.

What's a football club got to do with marketing? Well, almost everything, given that "the beautiful game" has become a high-stakes industry over the past decade. Real Madrid is the aristocrat among the European football clubs and the world's most successful club (nine times winner of the Champion's League and a stunning 29 Spanish league titles). It counts among its team players that fans around the world worship""Zinedine Zidane, Ronaldo, Roberto Carlos, David Beckham, Raul, and many more, collectively known as "The Galacticos". Real Madrid has overtaken the hugely successful Manchester United as the world's richest club.

But here's the thing. Since 2003, its "core product", the team, has suffered severe "quality" problems: it has won no silverware. It has gone through six coaches in three years""sacking its hugely successful head coach Del Bosque at the end of 2003.

Many commentators have highlighted Real's precipitous decline as a sign of the greed and venality to which global football has sunk. The players, conventional wisdom has it, are all overpaid prima donnas who have sacrificed their talent on the altar of lucre, and so on. This may well be true, but it is, at best, a partial explanation. The real reason lies in the marketing overkill to which the club has been subjected in recent years.

This was a situation of Perez's own making. Having spent a record ¤415.3 million ($492 million) on 17 new players, Perez set out to make Madrid a global brand. Most clubs traditionally do this by playing great football (like Chelsea and Barcelona), which has a multiplier effect in terms of TV rights, image rights, ticket sales, not to speak of (hugely overpriced) merchandise sales. Perez's solution was to turn the team into a marketing roadshow.

Among the casualties of Perez's marketing juggernaut has been pre-season practice. This is a vital element for any team""even one with the finest players in the world""ahead of the demanding football season. This is the time when teams hone their skills and teamwork. As Steve McManaman, the talented and under-rated midfielder who left the club with some bitterness at the end of 2003, wrote in his book El Macca, "Previously, we had been holed up in glorious isolation in Switzerland. You ran, you sweated, you got to know your new teammates, you had fun together, no one bothered you. You played strong teams to sharpen you. The coach experimented a bit if he had to..."

In 2003, all this changed with Perez's grand pre-season promotion tour of the Far East, packaged as "The Conquest of Asia". South-east Asia is one of the most rapidly growing markets for football, so in sheer marketing terms, this was probably a brilliant move. In footballing terms, it was a disaster. In business terms, it is the equivalent of skipping crucial steps in the production process in the interests of hard-sell.

McManaman recalls how, instead of building up a serious pre-season base, the team became "performing seals" training half-heartedly in front of paid audiences, playing third-rate teams in exhibition games. "We'd train in front of people to see us jog around the pitch. We'd have to attend functions, shake hands, smile into banks of flashbulbs." The big stars of the team had expensive image right deals that required attending endless functions till late at night. "It was terrible preparation for a new season."

The upshot of this was that the real business of football receded into the background. And it showed in Real's jaded performances, serious defensive lapses in the following season and weaknesses in the mid-field as hard-working non-stars were sacrificed for the dubious charms of tired celebrities. Perez has, in football parlance, ended scoring an own goal. His departure may just be the signal that for Real Madrid, it's time to get back to its core competence of playing sublime football.