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History then records the product era – until the 1960s, the sales era – in the 1970s, the marketing era – 1970s and beyond, the societal marketing era – 1980s to a value based marketing era in the 1990s. Although marketing has evolved to what it is today, it is evident that many organisations are still engrossed in an earlier orientation and often strategically drift away from business reality.
In the first edition of his textbook Kotler defined marketing as “analysing, organising, planning and control of the firm’s customer-impinging resources, policies, and activities with a view to satisfying the needs and wants of chosen customer groups at a profit” (Kotler 1967, p. 12).
However, in the 1972 edition, he distinguished marketing from marketing management. By 1972, he was defining marketing as the “set of human activities directed at facilitating and consummating exchanges” (p.12) and marketing management as “the analysis, planning, implementation, and control of programs designed to bring about desired exchanges with target audiences for the purpose of personal or mutual gain. It relies heavily on the adaptation and coordination of product, price, promotion, and place for achieving effective response” (p. 13).
At the same time, he introduced the societal marketing concept, which he defined as “customer orientation backed by integrated marketing aimed at generating customer satisfaction and long-run consumer welfare as the key to satisfying organisational goals” (p. 26).
Unilever Sri Lanka was one of the first companies to recognise the strategic role of marketing in the early 1950s, thus introducing the first marketing department and distinguishing between marketing and sales.
“Sales repping” or a sales representatives job in the company was tactical and was male centric. Sales was also a profession that one would consider a profession after exploring all other options and you would find it hard to convince your bride’s parents if you were a sales rep. We have come a long way since then to be one of the fastest growing professions in the world.
Marketing defined…
The American Marketing association (2007) explains marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
CIM UK (1992) approves marketing as the management process responsible for identifying, anticipating and satisfying customer requirements profitably.
Kotler (1972) defines Marketing is a science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services.
Ogilvy explains marketing is an intelligent and creative discipline, which involves delivering meaningful value for consumers and finding authentic ways to communicate with them on a personal level, which will help to educate, inspire and take action.
Levitt exclaims: “Selling concerns itself with the tricks and techniques of getting people to exchange their cash for your product. It is not concerned with the values that the exchange is all about. And it does not, as marketing invariably does, view the entire business process as consisting of a tightly integrated effort to discover, create, arouse, and satisfy customer needs.”
Hunt (1976) illustrates that the conceptual domain of marketing includes micro and macro marketing, positive and normative theories of marketing, and profit and not-for-profit marketing.
Grewal and Levy (2008) defines marketing as an organisational function and a set of processes for creating, capturing, communicating and delivering value to customers and for managing customer relationships in ways that benefit and the organisation and its stakeholders.
Lamb, Hair McDaniel (2004) explains marketing as the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational goals.
Marketing is a process by which companies create value for customers and build strong customer relationships, in order to capture value from customers in return. (www.wikipedia.com)
An aggregate of functions involved in moving goods from producer to consumer. (www.webster.com)
The difference of opinion amongst marketing scholars further reinforces the point that what begins as a simple response to the question of what marketing is can quickly unfold into a heated discussion about the complex nature, scope, and meaning of marketing. The widely used definition of Marketing (The CIM UK definition above borrowed form Kotler) has remained unchanged for the past 30 years and does not do justice to the important role of strategic marketing in modern business. The popular definition, which describes marketing as a management process responsible for identifying, anticipating and satisfying customer requirements at a profit and later added the phrase “in a socially responsible manner”.
Does the above definition encompass and reflect strategic marketing in the 21st century? Should it be an academic definition or a guide to practitioners?
Will satisfying a customer be sufficient today or should the post purchase experience “delight” the customer rather than the pre purchase expectation?
How can the marketer attempt to reduce the consumer’s cognitive dissonance by augmenting the products and services with tangible, explicit value that would delight rather than merely satisfy?
How has the world changed?
Let us reflect for a moment on the numerous ways in which the world has changed in the past 30 years. If Facebook were a country, it would have been the third largest in the world with over a billion active users (which may lead to being the largest eventually), an era of space tourism; digital living and globalisation; cloning; to the shorter industry life cycles and faster adaptation and diffusion of technology.
The internet (e commerce, e mail), mobiles phones and PDAs (SMS, MMS) did not exist when most of these definitions were proposed whilst digital, satellite TV, video on demand was unheard of and we lived in a world without Starbucks, Google, Body shop, and Blackberry was just a fruit.
The consumer of the future will be dwelling in a “Converged digital home and workplace” savvy with astonishing technologies of the future such as Nano-technology, cloud computing, morphing, 3D printing, near field communication, holographic technologies and social media platforms that will change the nature of what it means to be human. By 2030, the world will be more complicated, divided between a broad American sphere of influence in Europe, the Middle East and South Asia; as well as a Chinese sphere in East Asia and Africa.
The current definition may also need to clearly classify customer requirements into customer needs, wants and demands. As articulated by Abraham Maslow, needs are a generic condition which pre exist and wants are what marketers create through brands, advertising messages, sales promotions and other forms of encoding. Demands are wants backed by the ability to purchase. You may want many brands but might only be able to demand (afford) a few.
How should marketing change?
What should be the role of marketing? Can marketing professionals unlearn, converge, challenge or reinvent what we have learnt thus far and craft a new definition, which is right for the times? Bibb and Simkin (2006) states that marketing is an evolving management discipline and the definition must evolve taking in to account the strategic role it needs to play in business in fuelling corporate strategy.
I recall, as the Vice President of the Sri Lanka Institute of Marketing, we approached the Organisation of Professional Associations (OPA) a few years ago and made a formal request to the esteemed association to include marketing as a profession. The immediate reaction amazed me and the formal response explained that marketing could not be recognised as a profession in Sri Lanka especially to be kept on par with other professions that had obtained membership already.
When we examined this further there were other professions such as engineers, lawyers, gemmologists, doctors, accountants, architects, secretaries, economists, quantity surveyors, bankers and nurses. If marketing needed to obtain greater recognition, the profession had to be highlighted as a core business function and should be relevant taking into account how marketing is expected to change in the next 10 years.
Marketers may need to re-evaluate themselves and look at the skill and competency gaps and learn the art of playing a strategic role to fuel corporate strategy rather than focus on marketing as a tactical function (marketing execution).
Marketing creativity vs. marketing accountability
A handful of marketers gauge the financial impact of their marketing strategies and are not familiar with analytics, predictive and measurement tools such as the balance scorecard, decision trees, predictive modelling (multiple regression analysis), time series analysis, cluster analysis, scenario planning, hypothesis testing and marketing ratios such as ROMI (the return on Marketing Investment).
They prefer to choose power point rather than excel to present a business case and fail to effectively project their creative ideas into commercial business opportunities. The CFO (Chief Financial officer) feels the pulse of the investor whilst CMO (Chief Marketing officer) dwells in the comfort of customer proximity. Marketers need to move out of this silo and unleash their creative instincts to learn investor lingo that fuel corporate strategy without floundering when questioned on the financial impact of their strategies.
Richard Slaughter a specialist in future studies argues that firms need to develop the capability of ‘Strategic Foresight’ to succeed. Slaughter views foresight not as a process of trying to predict the future, but of projecting what future marketers want, then shaping present concepts and actions to move towards it!
A value-based approach
Strategic marketers will need to align all organisational resources so that it ensures the creation of superior customer value, which will eventually result in the creation of sustainable shareholder value. The definition of marketing does not articulate this clearly and it has been the missing link in marketing for a long time.
Marketing has evolved from been a transactional to a relationship to a value based approach today where creating sustainable shareholder value is the aim of the marketing division through the creation of superior customer value. However, some of the widely-used marketing techniques are outdated and might send marketers in the wrong direction. Many of the marketing academics in the early 1960s were economists, where marketing was more of an art than a science.
Strategic models and theories such as the Ansoffs matrix, developed by Igor Ansoff, based on the business acquisition of companies in Chicago in the 1930’s are designed to go to infinity in both directions, and it has been vastly simplified into the 2 by 2 matrix we see today. AIDA was developed in 1924 in a book titled ‘The Psychology of Selling Insurance’ but is loosely used in marketing communications today without any evidence of it being tested. Consider the many flaws in concepts like the product life cycle and the Maslow’s hierarchy of needs.
The conventional marketing tutor might request you to listen to customers because they know what they want and tell you that you do not know what they want. We call this market research! However, Jobs (2010), who lead Apple into its peak performance, laments, “Apple does not listen to its customers and that’s the success of Apple”. He goes on to say, “Customers don’t know what they want, and it’s our endeavour at Apple to introduce a product and tell them they want it!” “Surprisingly they keep believing us!” (Bloomberg documentary on Steve Jobs).
Take for example the new “Mac Book wheel” that has been introduced by Apple, which replaces the conventional keyboard! Did we want our keyboard replaced? Or will Apple convince us. However, will the marketer attempt to satisfy the customer at the expense of profit? In the credit card business, high end customers that spend a lot of money and settle their bills at the end of the month in full without paying interest are the most demanding customers but at the same time the most unprofitable.
According to Doyle (2010) Strategic marketers will need to align all organisational resources so that it does create superior customer value, which will eventually result in the creation of sustainable shareholder value. The definition of marketing does not articulate this clearly and it has been the missing link in marketing for a long time.
Marketing, an art or science
Do marketers understand business? Marketers need to earn their respect in the boardroom and soul search to identify any gaps in boardroom skills and competencies.
According to Ward (2004), The modern marketer may need to master the skill of measuring marketing more effectively and be metric, dashboard or ratio oriented in an attempt to move away from being a mere creative geniuses and progress to being accountable and responsible marketers. “Marketing finance” is a new term coined to bridge this divide.
Importantly marketers are perceived by the finance department as unaccountable and irrational, claiming the focus is on expenditure instead of revenue and sustainable profitability. Some other departments claim that marketers promise too much and deliver too little internally and externally where as accountants are perceived to be less novel, routine and mundane with their ideas.
The 21st century marketer needs to be a lateral thinker as termed by Edward De bono. Be visionary and be unconventional in approach whilst being insight driven as opposed to mere information driven. What is an insight? It’s something that’s “in sight” and under your nose but you don’t see it.
McDonald and Mouncey (2009) states the successful marketer may need to be a “right brain” creative as well as a “left brain” scientist. Increasingly all creative, intuitive or qualitative concepts of marketing are metric driven. Take the example of services marketing, which has moved into customer life-cycle management from acquisition, engagement, and churn to customer lifetime value metrics.
Brand management, which is to manage the functional aspects of the product and the emotional perceptions of the user, is extended into the science of valuing brands through analytical projections or quantitative valuations rather than mere opinions and perceptions. Marketers are failing to engage both analytical and creative sides of their brains.
Take the age-old debate of creativity versus effectiveness between the advertising and marketing fraternity where practicing marketers today will question the advertising cost per inquiry (call, visit or web), advertising cost per sale and profit per ad to instil marketing accountability and a move towards a science with a clear rationale and justification than an art.
Drummond, Ensor & Ashford (2001) suggest that strategic marketing specialists must think beyond the sub functions of marketing execution and must be equipped with the right ammunition to deliver customer value, which will result in the creation of superior shareholder value. This then will move our profession from being perceived as a tactical function to a strategic function.
We will never be classified as a strategic function if we don’t link our efforts to balance sheet growth, dividends and the appreciation of the share price. One proposal is to sub divide marketing into specialisms like a scientist may draw a distinction between chemistry, biology and physics which are in turn sub divided in to hundreds of sub disciplines. Will this ensure marketers becoming experts in their field rather than expecting them to be a jack-of-all-trades and then criticised for not understanding operations and finance?
My initial exploratory research carried out on a cross section of a sample of marketers revealed some interesting insights. To my amazement many didn’t understand the question at first and to those who did, almost all of them responded in favour of marketing being more of an art or practice rather than a science. The sub functions within marketing which are functions requiring more of creativity such as branding, new product development, sales promotions, PR & advertising suggest marketing is more of an art and increasingly R&D, segmentation, marketing research, data analysis, marketing metric’s justify marketing to be more of a rational science.
Longman (1971, p.10) deplores “the rather remarkable lack of scientific methods employed by scientists of marketing.” However Hunt (2003) suggest that marketing researchers are at least as committed to the method of science as are researchers in other disciplines and concludes that the study of the positive dimensions of marketing can be appropriately referred to as a science on par with physics, chemistry and biology as opposed to a art or a practice which resembles engineering, medicine or architecture.
Sustainable competitive advantage
The current definition of marketing does not encourage us to think about outperforming competitors! This makes the widely used definition irrelevant because everything we do in business is about outperforming competitors and earning disproportionate profits.
A competitive advantage is the means by which a company can outperform its competitors and earn the share of hearts, minds, markets and higher than average profits. Every firm needs one! Should marketing take on the accountability to craft and deliver a competitive advantage that is sustainable or should it be left to another department within the company? Davidson argues that a competitive advantage can be derived from a superior product benefit, a perceived advantage, low cost operations through scale advantages, a unique product feature or benefit amongst many others.
Doyle & Stern (2006) explains that a competitive advantage needs to be meticulously crafted over a period of time by channelling the organisations resources and selecting carefully crafted marketing strategies as opposed to turbo marketing! The current definition of marketing does not encourage us to think about outperforming competitors! This in my opinion makes the widely used definition irrelevant because everything we do in business is about outperforming competitors and earning disproportionate profits.
We live in an era of macro uncertainty, which gives many CEOs and investors a deep sense of unease and fear on the return of their investments. How can the marketer understand and build on this vulnerability and use the principles of marketing to be an architect of competitive advantage, which will make the marketers function a strategic job.
A futuristic definition of strategic marketing
So what next? Predicting the future marketing concept. How insightful would marketing have to be? Throughout this book, an attempt is made to demonstrate the importance of the function of marketing towards organisational success. However, this importance has not always been understood. It is only over the past 40 years or so that significant proportions of producers, wholesalers, retailers and non-profit organisations adopted ‘Marketing Practices’. Instead of focusing only on production or selling activities, it is now a must for organisations to focus on customers and try to integrate organisation wide efforts to satisfy customer needs. Is strategic marketing considered the core strategy that everyone in the organisation must be engaged in, or merely the marketing department; or is it largely becoming a sales promotional and advertising discipline, with much of marketing’s territory stolen by finance, operations and HR?
Consider the organisational structure of the large modern trade retailing giants in Sri Lanka and you would see that the sales function or distribution is aligned to the operations department with marketing playing the branding and Marcom roles. However, the function on managing the promotional Mix is a dominant part of the marketing function and in most cases the only “P” managed and influenced out of the 7Ps.
Physical evidence is managed by the service, logistics or operations teams and all people related decisions are sphere headed by HR and processors are managed and re engineered by the operations team. The concept of market orientation is broader in scope than marketing orientation.
Wilson and Gilligan (2011) state that the strategic marketing mind-set is a business philosophy and must not be confined to a particular division within the company. Everyone’s job is to be a part-time marketer and full time marketers must play a strategic role and fuel corporate strategy. Narver and Slater (1990) in their paper ‘The effect of market orientation on business profitability’ defines market orientation as a culture where beating competition through the creation of superior customer value is the paramount objective throughout the business”. It goes on to add that a company must be customer oriented, competitor orientated, responsive to change, display cooperation amongst functions and have an emphasis on profit rather than turnover to be classified as a market led organisation.
Another behavioural definition is put forward by Kohil and Jaworski (1990), which explain market orientation as “an organisation wide generation of market intelligence, dissemination of its intelligence across departments, and organisation-wide responses to it.”
The proposed definition of market orientation is a combination of the above definitions and is less complex. An organisation is market led when “the philosophy of marketing is practiced throughout the organisation in all departments”. This is easier said than done! Marketing orientation is usually confined to a vertical pillar in the business and the challenge to a market-led CEO is to break this paradigm and encourage all functions in the organisation to be part-time marketers. Nigel Piercy argues that in a truly market led organisation the marketing department will disappear!
A student once wanted me to name the best book in marketing so that he may purchase it and I had no hesitation to say that it was the Oxford Dictionary instantly because some of the most complex words in management or marketing (including ‘marketing’) is simplified and crisply defined in the Oxford than in any other text book.
Consider words such as strategy, diversification, dissonance, stimuli, rejuvenation and globalisation to name a few examples. The Chartered Institute of Marketing introduced a new definition in 2007 and encouraged a debate, which defined Marketing as “a strategic business function that creates value by stimulating, facilitation and fulfilling customer demand. It does this by building brands, nurturing innovation, developing relationships, creating good customer service and communicating benefits. With a customer centric view, marketing brings positive return on investment, satisfies shareholders and stakeholders from business and the community, and contributes to positive behavioural change and a sustainable business future.”
The new definition proposed above captures some important changes. However, it may not be widely used because of its length and may also have a few overlaps. It takes courage to be different and marketers need to start by attempting to define marketing appropriately and may even have their own definition of marketing to unleash the professions true promise, marketers need accountability, creativity and courage; but the greatest of these is courage.
Here’s a bold step in that direction and I wish to propose the following as an alternative to what has been presented so far. I have kept it short, crisp and attempted to capture concepts that may guide us practicing marketers and students: “Strategic marketing is a process of creating superior customer value resulting in the creation of superior shareholder value and a sustainable competitive advantage,” Diasz (2012)
References
Kotler P, Management analysis planning and control, Prentice Hall, 1967
Kotler P, Marketing Management Analysis, Planning and Control by, Prentice Hall, 1972
Dibb S and Simkin L, marketing Concepts and strategies, 5th edition, Charles Hartford, 2006
Bloomberg Television, Game changes, 2010
Doyle P, Value based Marketing, John Wiley & Sons, Ltd, 2nd edition, 2010
Ward K, Marketing Finance, Turning marketing strategies into shareholder value, Elsevier Butterwoth-Heinemann, 2004
McDonald M and Mouncey P, Marketing Accountability, How to measure marketing effectiveness, Kogan Page Limited, 2009
Drummond G, Ensor J, Ashford R, Strategic Marketing, Planning and control, 3rd edition, Elsevier Butterwoth-Heinemann, 2001
Longman K A, Advertising, Prentice Hall, 1971
Hunt S D, Foundation of Marketing theory, Emerald Group Publishing Limited, 2003
Doyle P and Stern P, Marketing Management and strategy, 4th Edition, Pearson education limited, 2006
Narver and Slater, The effect of market orientation on business profitability, Journal of Marketing, 1990
Wilson R and Gilligan C, Strategic Marketing Management, 3rd edition, Elsevier Butterwoth-Heinemann, 2011
Kohil and Jaworski, Antecedents and consequences, Journal of Marketing, 1990
Piercy N and Harris C, Management behavior and barriers to market orientation in retailing companies, the journal of services marketing, 1999
(The writer, MBA UK, Fellow CIM UK, Chartered Marketer UK, is reading for a PhD at the University of Colombo.)
