Thursday, 30 August 2007

Marketing in the Context of Business

Rather than looking at what the boundaries of marketing are, the focus of this particular post will be on what do you leverage marketing for. Marketing folks have done enough self-promotion for business to believe that marketing is crucial to business (I agree, in principle), but some are not quite sure what to do with it- where do you use it, when do you need more of it, when can you make do with less?

Marketing is a force multiplier to business- having a great product (service) which can be sold at a reasonable price and still make reasonable margins is probably the most crucial thing for business, and nothing can substitute that, but what is also important is to be able to quickly spread the word to enable the business to capture all that revenue left untapped, and be able to create a "respect" that allows you to command premiums over competition (differentiation)- with the first, you accelerate revenues, and with the second, you improve profits.

Who owns marketing? That is an easy one to answer, and it is not the marketing department. I would argue, depending on which business you are in and what the specific leverage points are, that it is clearly a direct business leadership responsibility. Think of marketing as a way of thinking, and be cognisant of marketing's role in every single business transaction (many of which tend to be outside of the scope of the traditional marketing department)- every sales call, every hr presentation, every results presentation, every governmental interface- so please do not lock responsibility for marketing into a black box left to marketing people.

When do you need marketing? Why don't I focus on the easier question to answer? When don't you need it? A few circumstances, but the following would probably be important:

  • When you cannot scale up to meet current demand- now what's the point in creating further revenue demand if you cannot fulfil existing demand? But even in this, there are mitigating circumstances- eg in a services business, the crimp on demand is sometimes due to a non availability of employees, and hence the marketing emphasis is on building the employee brand.
  • When you have an absolute monopoly and are in no particular hurry to rival a certain William H Gates. The monopoly need not only be about governmental regulation (where you have been clever enough to get the government to shut every one else out of the market), it could also be because you have been frightfully clever and have created intellectual property ( patent/ copyright/ r&d led monopoly)
  • When you are a large business that has been consistently investing in your brand and have created a sufficient base of goodwill, so you can weather a couple of seasons of base-level investment, because you need to cut costs to weather the coming squalls. But don't make a habit of it…

But, please note, the key point is that marketing is a force multiplier- it cannot, make up for weak business fundamentals.

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