What is Marketing?
Having spent my entire career either directly involved in marketing, teaching it or consulting on it, I have a point of view on the answer to this question.?
What is it?? - The academic definitions are usually quite long but I offer this short-hand version which reveals very little about methodology but says much about the focus and the desired outcome: “delighting customers profitably”.? For non-profits, substitute, “while meeting the goals of the organization”.? Everything else is tactics.? “Delighting” suggests going beyond merely satisfying.? I love the phrase, “promise less than you can deliver; deliver more than you promised”.? Amazon does this incredibly well with its delivery promises.? It almost always does better than the original delivery date when you order. ?Delighting profitably is not easy, especially in highly competitive or commodity-type categories.? Often the delight factors are not the core product or service but ancillary factors like warranties, after-sales service, customer relationships, etc.? “Customers” establishes who is most important. ?If the Sales department in typical organizations ‘owns’ the customer relationship, then Marketing should be the strongest advocate and most knowledgeable force internally of the entire customer universe: past, present and potential.? Customers can be users, purchasers or influencers and in B2B situations, this can get quite complicated.? Many a marketer and their Sales organization have rued the day they misjudged who actually was the key influencer and/or decision-maker.? “Profitability”, is ultimately the goal but others would argue it’s too narrow and we should add, ethically, sustainably, gender-affirming, etc.? At the end of the day, however, if there is no profit, there is no business.?
Philip Kotler of Northwestern University and the ‘dean’ of marketing academia offered this more fulsome description of marketing: ”CC-DV-TP:? Create, Communicate and Deliver Value to a Target Market at a Profit.”1? Value is at the heart of this definition.? More on this in a moment.?? Creating value is the domain of product management which is all about defining and delivering the core product or service.? Communicating is the domain of brand management and the art of branding or establishing a desired perception in the mind of the target customer.?
“Delivering value” Kotler defines as customer management.? “Value” itself depends entirely on customer needs and expectations and, as suggested earlier, we aim to exceed these expectations.? As an aside, Steven Jobs famously said, “A lot of times, people don't know what they want until you show it to them”2, so asking potential customers what they want and need is fraught with risk, too.? No one ‘asked’ for a better Blackberry? before the iPhone? revolutionized the smart phone market.? Kotler makes the point that successful companies like Procter & Gamble have moved beyond relying on internal R&D capabilities to license-in or acquire new technology and, in the process, co-create innovation directly with its customers.? My own background in pharma amply illustrates this as the ROI of internal R&D has fallen, companies are continuously acquiring biotechs and even their marketing partners.? One example is Pfizer’s acquisition of Warner- Lambert to gain full commercial control of Lipitor?.?
“Target market” is an incredibly important part of Kotler’s definition.? One of my business “heroes” is Vilfredo Pareto who famously observed in the early 20th century that about 80% of Italy’s property wealth was controlled by only 20% of the population, the so-called 80:20 observation.3?? If marketing is to be efficient and effective, we need to seek out the Pareto effect whenever possible.? I find that clients are often reluctant to ignore any potential customers and, therefore, spread their activities too thin. Decide whom are you going to “love” and who will “love” you back – profitably.? ?This, of course, can change quickly as restaurants learned during the COVID pandemic.? Profit in marketing terms is often defined as “Marketing Margin” or Revenue minus Cost of Goods Sold minus direct marketing expenses.?? I worked with a medium-sized client recently who refused to divulge any profitability measures to its Marketing department, essentially turning them into expense managers rather than business managers.?? This is a recipe for attracting mediocre talent and concentrating important decisions with senior management who should be focused on more important decisions.
Strategy vs. Tactics vs. Execution – Roger Martin, former Dean of the Rotman Business School at the University of Toronto,? would probably argue that there usually is an artificial distinction made between strategy and execution.4? If strategy is a statement that summarizes the overall direction of a major marketing activity and tactics is how it’s supposed to be implemented, then strategy without executable/executed tactics is meaningless.? Of course, the opposite often occurs with dire consequences: activity with no thoughtful, predetermined purpose or direction.? I see this quite often in start-ups.? Solo entrepreneurs are often quite eager to “get started” which means picking a name, printing business cards, setting up a website, etc.? Later, they discover after a more careful market analysis (or poor results) that many of these early decisions were flawed.? That doesn’t mean that mistakes won’t be made (they will be) but at least our key assumptions should be clear and pretested/risk-assessed wherever possible.? A teaching colleague of mine in England, Brian Smith, who has written extensively on healthcare marketing shared the thought that we should “follow the money” to see what an organization’s real strategies are.5 ?Companies can be accused of paying lip service to platitudes like the Dove? brand’s ‘real beauty’ campaign yet the same parent company (Unilever) has been criticized for perpetuating machismo stereotypes with its Axe? brand.6
So, are there any common approaches that would underpin long-term, successful marketing activity?? Yes, welcome to the world of Core Marketing Strategy (CMS).? A CMS defines the target market, the customer within that market, key existing competitors or brand-switching opportunities, and the basis for our differentiation or why the customer would prefer us to competition.? Three key skills are required. ?I have written separately on this but they can be short-handed as S-T-P.? “S” is for segmentation as in identifying a cluster of potential customers that share common characteristics that we can most effectively and profitably “delight”.? If Ford’s Bronco? range tried to appeal to families as well as self-imagined, rugged individuals, it would probably end up turning off both groups. ?Look for Pareto!? ?“T” is for targeting as in, doing a ‘deep dive’ on the target customer in terms of understanding their attitudes, behaviours and other characteristics and how best to reach them. “P” is for positioning.? This is sometimes referred to as USP or brand promise and is a concise statement of why target customers will prefer our brand to competition. ?Michael Porter of Harvard has written extensively on competitive differentiation.7? Positioning is not a catchy slogan but is the result of comprehensive and ongoing analysis, written in plain language with the effect that it should not change (like the entire CMS) unless there is a major disruptive influence (like COVID) or is proven to be unsuccessful.? ???
Application – It is impossible to generalize a ‘model’ marketing plan when it comes to strategy and tactic selection.? The origin of the so-called 4 P’s (Price-Promotion-Product-Place) traces back to the 1940s.8? Then we added a few more Ps for service industries, hospitals, military contractors, etc.? This gives rise to the idea of a ‘mix’ of activities that may be required.? For some start-ups, marketing activities could include simply encouraging word of mouth referrals among a few, early customers.? For larger organizations, integrated multi/omni-channel activities can be incredibly complex.? So, what are the common characteristics?? This so-called mix should have clearly-stated with measurable objectives and link to over-arching organizational goals and the Core Marketing Strategy described above. ?This ‘thread’ is often broken in many marketing plans I’ve reviewed.? ?In terms of measurement, the concept of Kaplan and Norton’s ‘Balanced Scorecard’ published in the 1990s can be helpful in identifying goals and metrics beyond profitability or purely financial outcomes.9 ?Leading and Lagging Indicators can be quite useful as well. ?“Leading” indicators are outcomes which happen early in the execution.? For example, most website performance measures such as page views, average time spent, bounce rate, etc. would be considered as early indicators (but not definitive measures) of marketing success.? My daughter, who has pursued a career in qualitative research, would argue that not all so-called metrics are reliable.? For example, “intent-to-purchase” is a notoriously difficult behaviour to predict, let alone measure. “Lagging” indicators take longer to materialize and would include the classic metrics of sales, market share, repeat purchases, etc. ??
Organization Issues – The ‘place’ of marketing in an organization is always a fascinating issue to me.? Most organizations still structure themselves along functional silos such as Marketing, Sales, Operations, etc.? ?Marketing occasionally considers itself to be the centre of the universe which, of course, endears them to the rest of the organization.? At some level, everyone in the organization is ‘marketing’.? When employees go home at night and talk to partners, friends or share employment information on social media (favourable and unfavourable), they are ‘marketing’.? In my experience, the best marketing arises out of truly collaborative approaches both internally and externally.? This requires marketers to have a ‘step-down’ attitude – perhaps a dose of humility even as they amass a comprehensive understanding of the market and customer.? For inspiration, I often play a short video on leadership during my marketing workshops which emphasizes that marketers have the responsibility with limited ability to direct others, so collaboration is the only viable approach.? I think the toughest job I ever had was that of regional marketing manager where I had both the challenge of a normal marketing role, coupled with the fact I did not control the marketing budgets of my constituent markets.? The career rewards for marketers can be significant, since a good marketer quickly gains a 360 degree view of the entire business.?
In summary, marketing, in my opinion, comes down to delighting the customer.? How organizations get there is as varied as the industries and organizations involved but there are discreet skills and principles which help ensure (but not guarantee) success.?? ???
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Gary Lyon is Principal Consultant at Portage Solutions and ‘graduate’ of the FMCG and consumer healthcare industries.? Portage offers marketing-oriented strategy support as well as training and organization development programs through its affiliation with Innovara Inc. Contacts: [email protected] or www.innovara.com.
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References
1? https://www.youtube.com/watch?v=bilOOPuAvTY&t=54s? (Philip Kotler; accessed 2/26/24)
2? https://www.helpscout.com/blog/why-steve-jobs-never-listened-to-his-customers/ (accessed 2/26/24)
3? https://en.wikipedia.org/wiki/Pareto_principle (accessed 2/26/24)
4? https://hbr.org/2010/07/the-execution-trap (Roger Martin; accessed 2/26/24)
5 ?Smith, B.D.? Making Marketing Happen. London: Routledge, 2005. ISBN-10 : ?0750662484
7? https://www.isc.hbs.edu/? (Michael Porter’s work and other Harvard strategy experts are highlighted? here; accessed 2/26/24)
8? https://en.wikipedia.org/wiki/Marketing_mix (accessed 2/26/24)
9? https://hbr.org/1992/01/the-balanced-scorecard-measures-that-drive-performance-2 (accessed 2/26/24)