Marketing – You can’t measure what you don’t define.

The recent survey, “Marketing Measurement and Accountability”, by Deloitte and the Chartered Institute of Marketing (CIM), makes for interesting reading. The initial results from this survey reveal that 56 per cent of the companies surveyed do not feel that they have more than a basic capability for measuring “marketing” effectiveness. Although the survey is still continuing, apparently less than 10 percent of organizations have set clear performance indicators, and 19 per cent of those companies surveyed stated that they never establish clear accountability for strategic “marketing” initiatives.

Should one be surprised at these results? Not really, because despite all that is talked about “marketing”, the results are remarkably similar to other surveys done in recent years. The CMO Council in America conducted a survey in the spring of 2004 of over 320 of America’s leading technology chief “marketing” officers, which revealed that less than 20% of the companies surveyed had developed meaningful measures for their “marketing” organizations. The survey showed that over 80% of the companies surveyed, expressed dissatisfaction with their ability to benchmark their “marketing” programs’ business impact and value. Yet those companies which had established a formal comprehensive measurement system achieved superior financial returns and had higher CEO confidence in their “marketing” function. In 2006 the CMO Council conducted a similar survey in Europe with similar results.

The Deloitte survey was based on about 40 questions, yet it seemed to have made one assumption that the term “marketing” was equally understood by both the finance and “marketing” leaders of the companies surveyed. Nowhere in the survey was a definition of “marketing” used to verify this assumption.

In 1976, the Chartered Institute of Marketing (CIM) defined “marketing” as “the management function of all those activities which anticipate and satisfy customer demand profitably.” However, since that time, understanding of the term “marketing” has become increasingly confused. Even the CIM frequently uses the term “marketing” in a casual way that undermines their own definition. It is therefore open to question, what the financial and “marketing” officers of those organizations which participated in the Deloitte survey, understood by the term “marketing”, and therefore how the answers and the survey should be interpreted. The questions in the survey are all very interesting but are they relevant? Do they apply to all businesses or only to large companies?

The purpose of every business is to make money. The purpose of a “marketing” organization is to produce profitable revenue by anticipating and satisfying customer demand. The objective of every manager of a “marketing” organization is to maximize sustainable profitable revenue while minimizing the use of “marketing” assets and resources. These are the principles on which “marketing”, as defined by the CIM, can and should be measured because they produce tangible and measurable outcomes.

In every business, whether or not they are called “marketing” managers, sales and “marketing” managers, commercial managers or sales managers, someone will be responsible for getting and retaining business to produce the necessary income for the organisation. For many the term “marketing” has become debased and meaningless, yet whatever it is called, the management of all those activities required to anticipate and satisfy customer demand profitably, is still fundamental to the long term future of every business large or small.

The understanding and profitable satisfaction of customer problems and requirements, both present and future, is fundamental to establishing a successful business. But contrary to what some may believe, customer satisfaction is not the objective of “marketing”. Customer satisfaction is important, but customers can be satisfied by the provision of free goods and services. However, unless effective management can ensure that customers can be satisfied profitably the business will ultimately fail.

Understanding the role and contribution of “marketing” for any commercial organisation, involves measuring how much profitable income is produced and how much it costs to get and retain business. There are no magic formulas in business or “marketing”, which if applied will guarantee required results. Every “marketing” action should be questioned on how it will help to produce income and how much it costs.

The Deloitte CIM survey illustrates the desire of companies to understand and quantify the contribution of “marketing” to the business, in order to justify their financial investment
However, without an agreed understanding of the definition of “marketing” as the CIM defined it, it is difficult to decide what “marketing” actions could and should be measured and to what effect. By not initially defining the term “marketing”, the survey leaves it to individual interpretation, making it difficult to draw any coherent conclusions from the answers given.

The definition of “marketing” produced by the CIM may be over 30 years old but it is not out of date, as it encompasses all the elements essential for a self supporting sustainable business, which is to make profitable revenue by anticipating and satisfying customer demand. What may be out of date is the term “marketing” itself. Perhaps trying to find a new definition of “marketing” on which all might agree is looking at the problem the wrong way round. Perhaps the real requirement is to find a new word or phrase for “the collective management of all those processes involved in producing sustainable profitable revenue by anticipating and satisfying customer demand,” then we can measure what we have defined.

© N.C.Watkis, Contract “marketing” Service 12 Apr 10
Contract “marketing” Service, (“marketing” Performance Consultants)

April 19, 2010   Posted in: marketing management

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