Board Representation for Marketing requires evidence of performance

A survey in late 2005 by the Chartered Institute of Marketing revealed that just 11 of the UK’s FTSE 100 companies have a marketer on the main board. If marketing encompasses all the “business getting” activities of a company, it seems strange that as the main revenue getting activity it has no Board representation alongside that of finance and operations in the majority of companies. Perhaps the problem lies with marketers themselves. Many still see marketing as more of an art than a science, and are more interested in the creative side, such as advertising and promotion, and to a lesser extent customer relationship.

In fast moving consumer goods businesses, the marketing function (including sales organizations) tend to be large. However, in industrial and business to business organizations, while the sales organization may be large, that of marketing is often small by comparison and frequently a separate department. However, the division of sales and marketing, tends to fragment what should be collective endeavour, into competitive animosity. Marketing is frequently perceived too narrowly, in terms of advertising and sales, and lacking the quantifiable accountability of Finance and Production, fails to prove and justify its contribution.

The question that arises is, “Do marketers only understand the individual elements of marketing activity, rather than understanding the management of all the “business getting” activities of marketing as a whole? If marketers are not able to quantify the contribution of marketing to a business, then their credibility as managers will be insufficient to merit membership of a Board of Directors.

In many companies, the sales function is treated separately from marketing or may be at best combined into a sales and marketing department. But if marketing encompasses all those activities which anticipate and satisfy customer demand profitably, then the scattering of those various activities around the company organization makes no sense, and prevents good management.

“Sales” is the executive arm of marketing. We do not “Market” products and services. We advertise, promote, and sell products. To be effective, sales requires the direction provided by marketing research and planning, together with the support of advertising. If all the separate Business Getting activities which anticipate and satisfy customer demand profitably are to be effectively managed then they must be managed as a “whole” and that “whole” is “Marketing.”

As the business getting function of an organization, marketing is of major importance, but its ability to satisfy customer demand is not entirely in its own control, as Production or service provision have a major contribution. For this reason, marketers must not only be able to measure marketing performance, to ensure that resources are being used effectively, but also be aware of the performance of production and service provision in the generation of overall profit.

In most businesses, the various departments generally see their own performances in isolation. The challenge for the Chief Executive Officer is to encourage separate departments to become more integrated to the common goal of making long term profits. To that end all business departments have a responsibility to provide measurements of their own performance, but should also have an interest in the performance other departments which have effect or are effected by their own activities. This is particularly important with marketing, whose success or otherwise will have effect on such areas as finance, production, and personnel. To be more effectively managed, marketing may need to be organized differently.

Generally, businesses are organized around the main constituent parts, namely: finance, production and sales (marketing), with other areas tacked on such as personnel, buying, transport etc. An alternative model for business organization is to divide it simply into two parts, Operations and Support.

The “Operations” side would be concerned with all those activities which are collectively and directly engaged in generating revenue. This would include marketing and production or service provision. The “Support” side would encompass all those functions which provide the resources for operations, including finance, personnel, supply (purchasing) etc. Every company department or function would therefore be ascribed to operations or support.

Under the “umbrella” of Operations, both the Marketing and the Production functions would remain as separate management activities, but would become more integrated. Marketers would therefore, have to take more account of the performance of the Support side which provides marketing’s resources. Regardless of how a business is organized, marketers must understand that they do not work in isolation. While their objective is to develop and maintain a continuous revenue stream, they require the resources of other business functions. Marketers need not only to monitor the performance of their own responsibilities, but to take an interest in the performance of those other business activities which support their own.

Implementing marketing plans and achieving their objectives cannot be done effectively without a full understanding of the measurements of marketing performance. But neither can implementation be achieved without awareness of marketing’s effect on those other business activities which support it. Performance measurement is the key to understanding the effectiveness of any business organization. Marketing performance measurement should not therefore be considered in isolation from the performance of other business functions or the business as a whole. If marketers want to qualify successfully for Board of Director status, they must prove that not only can they manage their budget and resources effectively, providing quantitative evidence of their profit contribution, but can also fully appreciate the performance of all the other supporting functions that are integral with the business.

© N.C.Watkis, Contract Marketing Service 19 Feb 07
Contract Marketing Service, (Specialists in Measuring Marketing Performance and Return on Marketing Investment.) CMC- InsightExec 19 February 07

February 19, 2007   Posted in: marketing management

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