Blowing the marketing trumpet

Winston Fletcher believes that marketing is both misunderstood and undervalued. In this article, he spells out the benefits that marketing provides as the major player at the pivotal interface between supply and demand. Thus it is of critical importance to the efficient and cost-effective provision of goods and services, benefiting organisations, customers, the economy and society

TO THOSE who work in marketing, its benefits – both for customers and for businesses and other organisations – seem blindingly obvious. Yet those who work in marketing also know how few outsiders have any idea of what marketing truly does, how it functions, and what it achieves.

This is partly because marketing is a complex and diverse process, and is still developing. Its scope varies from company to company, from industry to industry. It tends to be far more advanced in product manufacturing organisations than in either service organisations or businessto- business organisations. As with many other complex processes, definitions vary and are notoriously imprecise.

In this article, I will focus on marketing as it is generally employed in large, advanced organisations.

People outside marketing almost always confuse marketing with marketing communications. This is as wrong as it is to confuse surgery with forceps. Like forceps, marketing communications are specialised tools. And, like surgery, marketing uses a variety of specialised tools to achieve its results. But as with surgery, no matter which tools are used, it is the results that matter. I believe the ultimate results of modern marketing to be both beneficial and ethical, and will aim to show they are of clear economic and social value. Not every marketing campaign will generate all these beneficial results – but many do, in many circumstances.

The essential benefits of marketing are well-known – even if they are constantly disputed by antagonists. Marketing helps organisations – not just businesses, but organisations of all kinds, from charities to campuses, from museums to medical centres – to grow: today, marketing is at the heart of organisational growth.

To achieve this growth, the marketing process is twofold. First, it helps organisations identify their customers and potential customers, and their requirements. Second, it attempts to persuade customers and potential customers that what the organisation offers will meet these requirements. To do these jobs, organisations use the relevant marketing tools. They use market research to try to ensure what they offer will be wanted and liked by customers; they use persuasive marketing communications to interest customers in what they are offering. Offering customers what they want and like, and informing them persuasively of its availability, generates demand, which in turn generates employment and economic wealth; all these are unequivocal benefits for economies and societies.

However, marketing also contributes further crucial, often unique, benefits in other social and economic areas, and these contributions are understood little, or not at all. Moreover, they are seldom seen as being directly related to marketing.

Three such areas are: first, sustainability; second, the pivotal interface between demand and supply; and third, managing customer segmentation. Like all the links in the marketing chain, these three benefits interlock. But as they are separate and distinct, we will consider them individually.

Naturally, marketing does none of this on its own. Marketing and marketers must constantly work alongside appropriate specialists, departments and consultants, both within the organisation and without. Marketing is, by its nature, part of a team effort. (To stretch the surgical analogy a mite further: marketing is at the heart of growth, but hearts need brains, lungs and all the other parts of the human organogram to work with them.) And naturally, in any organisation, marketing reflects the strategy and objectives of the organisation and is – in the last analysis – controlled by the organisation’s CEO and board (who may or may not be sympathetic to modern marketing).

Not all marketing is successful. Like every organisational activity, marketing involves risk. Marketing achieves its objectives frequently – but not always. Neither is all marketing morally defensible. Like every organisational activity, marketers must take account of the ethics of the society in which they operate. Sometimes they don’t. Nor, above all, do many of the organisations that claim they employ marketing truly employ marketing. They use the word marketing as a fig-leaf to cover up a lack of customer focus and a greedy rush for short-term profits.

But my point of departure is that, when properly employed, marketing is generally beneficial to society – except where there is irrefutable evidence that proves otherwise.

Nor, finally, is any of this intended to suggest that marketing and marketers do what they do because they are especially philanthropic, less still saintly. As implied in the previous paragraph, there are bad guys in marketing as there are everywhere. And the good guys simply do what they do to earn their living. But when it succeeds, the nature of the marketing process – akin to Adam Smith’s ‘invisible hand’ – intrinsically generates widespread benefits. It is as simple as that.

SUSTAINABILITY

The role of marketing is to help organisations grow by providing customers with what they want and like. But more importantly, marketing must ensure these benefits continue long-term. Longevity equals sustainability, and the top management of any socially responsible organisation will ensure its marketing strives for sustainability. Sustainability is not new. No organisation aiming to succeed long-term has ever invested in plant, and processes, and people, without intending to be around for quite a while. The leading Victorian entrepreneurs aimed for, and in many cases achieved, sustainability. However, the concept of sustainability has changed, as our knowledge of the consequences of how quickly we deplete resources has grown. Growing populations and growing affluence now burn up resources at an exponentially growing rate. Consequently, humanity is learning, albeit tardily, how swiftly resources can be exhausted, unless far greater emphasis is placed upon the vital importance of sustainability than has been the case in the past. Still, wise and responsible organisations have always looked to the future.

The role of marketing is to help organisations grow by providing customers with what they want and like. But more importantly, marketing must ensure these benefits continue long-term

For an organisation to achieve sustainability, it must provide what customers want and like, both now and in the decades to come; and its customers must pay a realistic price for what they get.

The realistic price must include a surplus over short-term costs – a profit margin – to fund future investment and growth. If this realistic price is unacceptable to customers, they will not buy: what is not bought generates no jobs and creates no wealth, making the organisation unsustainable. If, on the other hand, the price is uneconomically low, the organisation’s resources will be consumed to fund the deficit, again making the organisation unsustainable.

One of marketing’s foremost roles is to ensure prices are realistic for both customers and suppliers, in both the short and long term, thus giving the organisation a sustainable financial framework. This is another key economic and social benefit.

And one of the best ways of doing all this is to build successful brands. The main purpose of building brands is, almost by definition, sustainability.

THE PIVOT INTERFACE

Naturally, the interface between supply and demand does not solely relate to price. It relates to value: the interaction between the price and the specification of what is being offered. The specification will be both tangible and intangible – physical and perceived. Brands encompass physical and perceived specifications, as well as longevity. Thus they are ideal marketing tools with which to deliver sustainability.

Much marketing literature emphasises too heavily the role of customers in determining prices and specifications. In reality, the final specification of what is offered is a balance between what customers want and what the organisation can provide at prices that customers find acceptable. Customers may want a Rolls Royce for a couple of quid; unfortunately, a Rolls Royce cannot be made for a couple of quid. Managing the pivotal interface between demand and supply is now a basic marketing function.

To reconcile the needs and requirements of both sides, true marketers must face both ways. They must aim simultaneously to sustain both supply and demand. No other discipline in modern organisations specifically carries out this balancing role.

Once upon a time, evaluating the needs and requirements of customers, and the prices they were willing to pay, was done by inspired producers with a gut feel for their marketplace. Often this evaluation (to whit, ‘haggling’) occurred face-to-face, literally in a marketplace. Inspiration and gut feel continue to play crucial roles in the marketing process. But, as everyone knows, marketplaces have become infinitely more complex than they were.

Consequently, since the 1930s, almost all types of organisation have come to employ market research to explore customers’ requirements regarding specifications, prices, and much else. Such market research is intricate and subtle. Only those who know nothing about it believe any fool can do it. The disastrous mistakes made by amateur market researchers are legion (and contribute grievously to many people’s cynicism about market research).

Managing market research demands experience and expertise. And managing market research is a marketing function. Marketing is the discipline that is expected to know – must know – more than any other about the organisation’s customers.

The situation is less clear-cut on the other side of the pivotal interface: supply. This is partly for historical reasons – most long-established organisations were built by individuals with supply skills, and their successors often still hold the most senior positions – and partly because controlling all aspects of an organisation’s supply chain can nowadays entail expert, highly fragmented, scientific, engineering and legal knowledge. Marketers therefore tend to be less closely involved, personally, with the supply side of their organisations’ operations.

Far-sighted organisations are, however, seeking to integrate their marketing and supply-side managers into working units, to ensure the interface operates as seamlessly and effectively as possible.

The fact remains that marketing is now the major player at the pivotal interface between supply and demand – and is thus of critical importance to the efficient and cost-effective provision of goods and services, to the benefit of both organisations and customers, to the benefit of both economies and societies. Nowhere is this clearer than in the management of customer segmentation.

MANAGING CUSTOMER SEGMENTATION

The management of customer segmentation is a rapidly growing, valuable and underestimated part of modern marketing. The benefits of customer segmentation for both customers and organisations are seldom appreciated. Insofar as it is analysed at all, customer segmentation is widely and cynically thought by outsiders to be a manipulative way for organisations to boost sales, and to be of minimal value to customers. This could hardly be more wrong.

People’s detailed tastes, preferences and requirements differ. That is hardly contentious. Moreover, most people wish simultaneously to be the same as other people in certain ways and to differentiate themselves in many others. That, too, is hardly contentious – but it is a powerful and innate human characteristic (and can no doubt be explained by evolutionary forces). Removing individuals’ ways to express their individuality has long been either a punishment (prison) or a way to force them to conform (armies, religions, totalitarian autocracies). But most human individuals want to be individual, much of the time.

Unfortunately, the mechanisms of mass supply initially necessitated uniformity. Uniformity costs far less than diversity. Though Henry Ford did not say “You can have any colour you like as long as it’s black”, the phrase encapsulates a vital truth. Changes and modifications meant extra costs. Mass supply was inherently inimical to individuality – or at least, it was before computers.

Marketing has developed as a unique process, which carries out valuable functions of immense benefit to customers and organisations alike

Computerisation, more than anything else, has radically reduced the cost of modification in countless areas of mass supply, for both goods and services. Hence, we now live in an era of staggering variety in almost every sphere of human activity, but especially in food and clothing – two unarguably fundamental human needs.

Today, the relevant problem for organisations is: which modifications do customers want, in sufficient numbers to make them viable and profitable to provide? And how much are they willing to pay for them?

These questions can only be resolved by supply interfacing with marketing. Sometimes the proposed modifications will come from the marketers’ market research: “Our research shows a large number of people would want this modification if we can provide it.” Sometimes it will come from the expertise of R&D technologists – from the men in white coats: “We could modify the product in these ways, if that would interest customers.” Neither side can (or should) manage the process alone.

Naturally – as the cynics claim – organisations would not produce modifications unless they believed these would contribute to their growth and be profitable. But equally, such modifications would not contribute to growth and be profitable if customers did not want them. And sometimes customers do not want them, and they fail, hard as the organisation may try to promote them.

Customer segmentation can be thought of as a sub-sector of new product development, and in some ways it is. But it serves a different purpose, both for organisations and for customers. It is an exemplary demand/ supply pivotal interface.

SUMMARY

Over the past 100 years or so, marketing has emerged and developed as a unique process, which carries out valuable functions of immense benefit to customers and organisations alike. No other process fulfils these functions, though some large organisations still carry them out without employing professional marketers.

Marketing helps to inform organisations of what customers want and like, and helps to inform and persuade customers that what they want and like is available. These are major benefits in themselves, and they spawn further major benefits: employment and wealth.

Moreover, marketing is a continuing process, which must generate employment and wealth that are sustainable. This can only be achieved when organisations work within a sustainable financial framework, which, among other things, involves the generation of sufficient funds for future investment and growth.

To operate within a sustainable financial framework, there must be a balance between supply and demand, at the pivotal interface where price and specification are determined. Both must simultaneously benefit customers and organisations. Marketing is the only process which operates at this pivotal interface, facing both ways.

In today’s marketplaces, where the extensive demands of people’s motley tastes are increasingly fulfilled, marketing is the key player in evaluating precisely what different groups of customers require, and how large these groups are. Here, marketing works in close collaboration with the supply side to evaluate whether customers’ requirements can be met within a sustainable financial framework.

Today, then, marketing carries out a range of integrated functions, which together help people to realise their preferences and wants sustainably, and to engender employment, wealth and future investment. To me, those sound like valuable contributions to society – and well worth blowing our trumpet about. What do you think?

This article featured in Market Leader, July 2012.

Winston Fletcher writes extensively on advertising and marketing

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