Marketing Theory and Business Reality

As many experienced managers of marketing and marketing practitioners will know, marketing theory and marketing practice are in reality, often not the same thing. While classical marketing theory might define the ideal marketing organization, the fact is that most marketers usually find themselves in an organizational structure that is already existent. As the marketing organization is part of a larger business structure, marketers are not usually in a position to change or develop it in any major way. Thus in practice, the role of the marketing function may not directly relate to the text book theory. In reality, marketers have to deal with things as they are and not as they might prefer them to be.

The Chartered Institute of Marketing defines marketing as being: “the management function that anticipates and satisfies customer demand profitably.” Thus in satisfying customer demand, the definition includes sales and other activities as part of the marketing function. While some may question this definition, it is still the definition which is more widely quoted in text books and academia internationally than probably any other. That said, while the definition of marketing is inclusive of many specialist activities, those specialist activities are often separately organized within the corporate environment, rather than collectively under a unified marketing management. In practice, the way that marketing activities are organized is often dependant on the size of the business organization.

In the smaller business, all the activities involved in the marketing function are done by only a few people, of whom the largest proportion may well be from the sales force. Quite often the person in charge of this organization will be known as the “sales and marketing director or manager”, emphasising that frequently marketing and sales are still seen as separate organizations and activities.
In companies that have a “Sales and Marketing manager,” these activities are at least united under one decision maker, thus providing unified management. In smaller business organizations, the relatively small number of staff employed requires a greater integration of marketing related activities that generally reflects the classical definition of marketing. This enforced integration of activities requires marketers to develop their skills across all the elements of marketing to generate and maximize profitable revenue. However for marketer involved in larger organizations this is frequently not the case.

In many large companies the various activities of marketing are often separated within the corporate organization. Sales may be separated from marketing, as may be research and advertising, with each area having separate structure but without necessarily a collective management. With large established businesses, such situations tend to have arisen out of a hierarchical structure of the organization, rather than an organization that reflected the business operational requirements. One only has to look at the organizational tree of many large companies to see the scope for “empire building” and the development of a “Silo” mentality, where individuals concentrate solely on their own responsibilities and results, without concern or interest for other areas of the business.

The performance of a marketing organization should be measured in sustainable profitable revenue. However, the sustainability of future revenue is dependent on continuing customer satisfaction with the price, product and service combination. Customer satisfaction can only be judged from surveys to ascertain the level of satisfaction and the customer’s perception of the product, company and service. Such surveys may indicate problems which, although they are not the responsibility of the established marketing organization, may have adverse effects on the overall marketing performance. Such perceptions might result from customer service support, deliveries, credit control and other areas. For the marketer and especially the Chief Marketing Officer (CMO), this means that while they have defined areas of responsibilities, they need to be aware of the performance of many other business areas whose performance will directly and indirectly effect the maintenance of customer satisfaction and sustainable profitable revenue.

According to the Deloitte report, “Marketing in 3D”,(Jan 2008), professional marketers rarely reach the boardroom to provide their professional influence. In fact, the report showed that of those that reach CMO status, few remain in post longer than 22 months. The report also showed that many marketers appeared confused about their role and contribution to their business, and this feeling was compounded when activities which should normally be part of the marketing function, such as customer service, telesales, distribution and product development were controlled by other departments.

Ideally the CMO should be responsible for all activities that are directly and indirectly involved with “anticipating and satisfying customers”, but the reality is that this is frequently not the case. What should the CMO and professional marketer do under such circumstances? Although the CMO or professional marketer may not have executive authority over all the business activities that comprise classical marketing, they should think and act as if they did, within the limits of their corporate authority. To do this they can:

* Identify all those business areas which maybe outside the existing marketing organization that impinge on customer satisfaction. E.g. distribution, production, product development, customer service etc.

* Obtain all the statistical performance reporting data provided by each relevant business area. If suitable data should not be available, define which performance measures are desirable and relevant and request them from the relevant business areas.

* Relate all the relevant performance data to the marketing organization’s performance data in order to obtain a full picture of the overall ability to anticipate and satisfy customer demand.

* Undertake regular customer satisfaction surveys to indicate how and where performance needs to be improved.

Although a CMO may not have executive responsibility for all the business operations involved in anticipating and satisfying customer demand, he or she should cultivate an executive interest in them. By so doing they will be able advise and report to the board on all marketing related activities, demonstrating the importance of the integrated management approach to all those activities involved in generating sustainable profitable revenue.

© N.C. Watkis, Contract Marketing Service 12 Aug. 08
Contract Marketing Service, (Marketing Performance Measurement Consultants)

August 12, 2008   Posted in: marketing management

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