Download Marketing : Quo Vadis? A Discusion paper By

Marketing : Quo Vadis?
A Discusion paper
By
Malcolm Goodman, Lecturer
Durham University Business School,
Windmill Lane, Durham, DH1 3LB, UK
Email [email protected]
Keywords: Context; customer-perceived value; customer engagement; customer
offering; customer experience; customer satisfaction; marketing trends; marketing
tasks.
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Marketing : Quo Vadis?
A Discussion paper
Abstract
Keywords: Context; customer-perceived value; customer engagement; customer
offering; customer experience; customer satisfaction; marketing trends; marketing
tasks.
This paper seeks to encourage debate as to the true role of marketing in this decade.
Is it a function (a skill not always well defined); a philosophy (mantra or real-time
belief); or something else entirely? The paper explores these questions and discusses
six key trends:- relationship marketing, the use of new technology, the transformation
in the concept of customer value, measurement and accountability, innovation and
learning and globalisation - that are shaping the evolution of marketing.
The paradigm change from a global sellers’ to a global buyers’ market environment
presents severe challenges to those charged with the responsibility of managing
organisations. Broadly speaking organisations are confronted with two response
options. Leave things as they are (usually a least cost response) or face up to seriously
thinking about they way they operate. The first response, it is argued, is ill fitted for
the challenges presented by strong buyers’ markets. The second requires considerable
courage and determination. It involves a dedicated and determined initiative to do
something different by seeking to become really marketing oriented.
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The paper presents an example of what organisational troops can understand by
managing as well as presenting some thoughts as to the ‘doing’ skills involved in
professional marketing practice. Figure 3 presents a graphic diamond view of much
of the argument in the paper covering the need to generate customer engagement,
deliver customer experience and customer satisfaction and hence customer loyalty. A
marketing mix involving a collection of 6Cs has been found, in practice, to be more
effective than the traditional 4Ps or 7Ps
Four key tasks are identified for marketers: - developing
a detailed and deep
understanding of current and potential customers, developing a detailed and deep
understanding of current and potential competitors, developing a shared perspective
of of current and potential competitors, developing a shared perspective on how
markets are changing and developing a suitable strategic marketing approach.
Introduction and market place context
These are 'interesting' times’ for marketers - partly in the sense of the Chinese curse.
The challenges they now face include intense competition. Most markets in developed
economies have excess supply; blurring technology; new power relationships;
globalisation; increasingly sophisticated and demanding customers; and new
regulations. The need for marketing has never been greater.
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Yet, this has not led to larger, more powerful or prestigious marketing departments.
On the contrary, many firms have reduced their marketing departments. Management
consultants talk of 'marketing's mid-life crisis' and of marketing being at the 'crossroads'. This apparent paradox- marketing being more important than ever before but
the contribution of marketing departments being critically questioned - ironically
reflects the belated triumph of the original marketing concept. Over half a century
ago, Peter Drucker ( 2001 ) argued that since the role of business is to create
customers, its only two essential functions were marketing and innovation. He wrote,
'Marketing is not a function, it is the whole business seen from the customer's point of
view'. As markets have matured and become more competitive, especially during the
last two decades, this concept has largely become widely accepted in theory but yet
not so widely in terms of practice.
Paradigm shift (Sellers’ to buyers’ markets)
During the last two decades and at any ever increasing speed, many organisations
have experienced a paradigm change from a sellers’ to a buyers’ market environment
(Kotler, Keller, Brady, Goodman and Hansen 2009). A sellers’ market is broadly
characterised by demand being in excess of supply. Here basic business strategy is to
produce more and more and to reduce costs to achieve profitable results. The
paradigm response has been termed that of ‘least cost production’. Generally
speaking, the provider calls the tune. A buyers’ market environment is significantly
different. Here supply exceeds demand and providers are severely challenged to
provide customer offerings that customers (whether consumer or business-tobusiness) want to purchase.
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Some companies have benefited from strong sellers’ markets for several decades and
then found themselves fiercely challenged by the the consequences of the emergence
of strong buyers’ markets within a matter of months. The main challenges come from:

Competition that bites

Customers (both consumer and business-to-business) having more choice

Customers demanding more value as they perceive it for their money

The increasing importance of customer-perceived value (Kotler, Keller,
Brady, Goodman and Hansen 2009) which has led to the importance of
providers achieving the right blend of customer
tangible and intangible
attributes that deliver a positively differentiated customer offering and hence
buying experience. Therefore there is no real separation between ‘products’
and ‘services’ both are intrinsic attributes for a successful market package.

A greater need to pay attention to market customisation

An increased stress on successful branding

The need to secure customer loyalty by a policy of engagement to deliver a
sound customer experience
Most people now regard it as self-evident that corporate survival and performance
depend on the firm's ability to offer superior customer-perceived value offerings than
the competition. In the UK, much of the success of astute businesses has been based
on the acceptance of this simple, powerful idea, and its influence on the day-to-day
behaviour of managers and other employees. In manufacturing, many firms became
aware of the importance of the marketing concept too casually and too late . Often, an
over-emphasis on cost-cutting (least cost production paradigm approach) may reduce
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the ability to create long-term customer-perceived value. Despite this the philosophy
of the marketing concept is emerging intact and, in some quarters, triumphant.
Practical expression of the marketing concept
In a sellers’ market environment it took some talent (of the wrong kind) to fail. A
buyers’ market, on the other hand, demands successful marketing practice. The
challenge is how to proceeed from a philosophic approach to an appropriate
functional marketing activity. Traditionally the answer to this question has been to
direct attention to the marketing mix. Many still advocate the application of the
traditional 4Ps (product, place, promotion and price described by McCarthy, 1960).
Others expand this to include three extra Ps (people, process and physical evidence) to
cater for service markets (Booms and Bitner, 1981).
However, just how relevant are these mix variants to the pressures facing providers in
buyers’ markets? Can they form the basis of a sound marketing plan when they do not
directly point to the importance of covering contextual factors (e.g. a sellers’ or a
buyers’ market) and fully account for the thrusts of the competition? In addition, are
providers really marketing oriented or still largely least cost production oriented? Or,
perhaps somewhere along this continuum?
In order to progress the search for an effective marketing mix it is useful to briefly
discuss some other approaches. A popular one amongst many academics is that of the
Service Dominant Logic ( Lusch and Vargo 2004 ). However, the S-D logic could be
seen as just another restatement of ideas from earlier phases in the development of
marketing thought, such as services marketing, relationship marketing, market
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orientation, network perspectives, integrated marketing communications (IMC) and
the resource based view of the firm. It does not place the same emphasis on the equal
importance of both tangible (‘product’) and intangible (‘service’) attributes that ‘mix’
to form a customer offering. From a practical point of view the approach needs to be
further refined to appeal broadly to practitioners. An interesting approach that
developed out of some work by Kashani and Turpin 1995 of the IMD in Switzerland
can be summarised as the 6C’s approach. This marketing mix model calls for
practitioners to pay close attention to context, customers, competition, cash, channels
and company style (least cost or market oriented). The 6Cs model performs well in
the field as it directly addresses key practical concerns of many providers (Kotler,
Keller, Brady, Goodman and Hansen).
View from the top
Figure 1
Businessmans’ compass
For an organisation to fully live out the holistic marketing approach to conducting
business it needs to be headed by a chief executive officer (CEO) who appreciates
the underying philosophy of marketing. This is to provide what customers value. It
usually requires a CEO to design, develop and spearhead the introduction of a new
corporate culture. It is about managing change. Figure 1 shows a simplified
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businessman’s compass that works in sellers’ markets (left hand side) and which
tends to encourage the development of strong finance/production fiefdoms. The right
hand side of Figure 1 presents a different picture. Here the functions at all points of
the businessman’s compass are of equal importance. The task of the CEO is to charge
the marketing function with the responsibility of discovering what customers value
and then co-ordinating all the firms functions to work as a team to deliver the right
customer offering.
This requires considerable skill and may take sometime to successfully achieve. This
paper outlines some ideas affecting, in theory and practice, the development of
functional marketing. However, progress will be checked if organisations are slow or
reluctant to seriously adopt the holistic marketing concept. This will involve a
determined intent to change organisational modus operandi and
requires a new
approach to management. Unlike marketing, which can be defined both as a
philosophy and as a functional activity, which can be communicated to everyone in an
organisation, few organisations can define management. So, if an organisation wants
to change its culture to a marketing one it will be severely handicapped if it cannot
define management in the same way that it can define marketing. In the author’s days
as a professional footballer players worked in a climate where teamwork was
encouraged throughout all clubs. This involved players, administrators, crowd
marshalls, pitch technicians, programme sellers etc. all working in unison. They all
knew what the club definition of management was and their part in club activities.
Similarly, military organisations have to adopt a common understanding of
management. All hands on a navy ship are open to the same danger and have to work
as a TEAM (together everyone achieves more).
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Figure 2
Defining Management as managing
Figure 2 presents a possible definition of management, or better still managing, in
which a CEO could work to transform the nature of an organisation’s culture to one
that is marketing oriented.
Table 1 presents a summary of key terms for the
marketing mix approach described in this paper.
Marketing as a process, not a function, that needs a market-oriented CEO
Inherent in the marketing concept is the idea that market orientation and the creation
of customer value are the concern of everyone in the firm, not just of those in the
marketing function. The dramatic improvements in productivity, 'total quality', and
customer service since the late 1990s, have cut across all business functions operations, logistics, R & D, sales, IT, and so on. Until recently, marketing people
have, if anything, been less involved in these developments than people in other
functions: the impetus has tended to come from the quality movement in operations
management.
Table 1
New Terminology
Term
CPV
Meaning
Customer perceived value
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Cash
Channels
Company
Context
Customer engagement
Customer experience
Customer loyalty
Customer offering
Managing
Marketing communications
TEAM
Revenue - Expenditure
Distribution logistics and marketing communications
Business orientation paradigm (cost reduction or
market orientation)
Buyers’ or sellers’ market environment
Seeking an interactive communication relationship
with customers
Providing a positively differentiated CPV customer
offering
Customer repeat buys branded customer offering
Defined as a CPV offering that is a mix of tangible and
intangible attributes
Better word than management as places the accent on
marketing action (concepy and function) rather than
control
Refers to all forms of marketing communication
Together everyone achieves more
A further factor has been the increasing pressure for accountability ( Farquhar2009 ).
Arguably, marketing people could and should have done more to demonstrate the
effectiveness of their decisions and expenditures, although it is the nature of
marketing that much of its value is inherently non-quantifiable - especially for those
activities aimed at building long-term value and market position. Either way,
marketing's failure to prove its value to the accountants has weakened its influence
and encouraged the shift of resources towards activities with demonstrable short-term
gains, such as price promotions. A similar worrying trend in many firms is the
continuing under-investment in R & D (Moncada-Paternò-Castello, Ciupagea, Smith,
Tübke and Tubbs 2010).
Organisations are now seeing the long-heralded arrival of marketing as a holistic
process, a way of running the whole business. Successful marketing today involves all
functions within the firm - especially the marketing function, which has a distinct
role in areas such as customer communications, market research and analysis, and a
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shared TEAM role in such areas as new product development, pricing, and
competitive strategy.
This paper discusses six major trends in marketing. All of these are having a major
impact on practioners but also affect other functions. Finally the specific question of
the future of marketing as a function is addressed.
The six key trends or issues are:
1. relationship marketing
2. the use of new technology
3. customer value and the morphing of ‘product’ and ‘service’attributes
4. measurement and accountability
5. innovation and learning
6. globalisation
1.
Relationship marketing
An important trend, especially in mature markets, is the growing emphasis on
customer retention and 'relationship marketing'. In many new markets, the increasing
cost and difficulty of attracting new customers means that it is more profitable to
concentrate on retaining a long-term relationship with existing ones. Increasingly,
firms are identifying customer relationships as among their most valuable assets. Of
course this depends on the level of customer loyalty, which varies greatly between
different industries. But, even in industries characterised by low brand loyalty, there is
now a recognition while customer offerings may come and go, successful brands can
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have a longer life and even a marginal increase in customer loyalty and a high longterm value.
The issue is complicated by two opposing trends:

Most markets are becoming more competitive with increasingly sophisticated
customers and many similar customer offerings ranging from generic drugs,
memory chips, and PC clones, to corporate banking, mortgages, premium private
label soft drinks, and home-delivered pizzas. Especially during recession, there is
a limit to the price premium that can be carried even by strong brands such as
BMW or Bosch. In this sense, customer-switching costs and brand loyalty have
never been lower. The result is that as customer offering differentiation becomes
harder, the focus tends to default to the least cost paradigm approach, rather than
a growing appreciation of the importance of practising
focused customer-
perceived value marketing.

At the same time in many markets - especially business-to-business markets –
there is a growth of closer, longer-term partnerships between firms within the
same value chain. This would apply both to companies such as DuPont or
Michelin and their major automotive customers, and also to consumer goods
manufacturers like Danone, Nestlé and Unilever. These partnerships involve close
collaboration on new customer offering development and also increase the
interdependence of information systems and other processes. A major trend in
supply chain management has been to reduce the number of suppliers and to build
a reliable value chain. All of this involves activity to increase customer-switching
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costs, justified by the increased competitiveness of the coalition. One effect of
these and other strategic alliances has been the increasing blurring of industry and
market boundaries (as in IT and financial services).
These two opposite trends have led to a shift backwards in emphasis from the
marketing function per se to a more sales-based transaction approach especially in
key account management. It is also common in tough market conditions for provider
organisations to panic and seek to buy business by discounting with the attendant
risks of damage to brand reputation, future strategy options
and bottom - line
earnings.
Meanwhile, within many marketing departments organisational changes have
occurred with brand or product (customer offering) managers tending to be replaced
by more market-oriented category or market managers. For instance, in consumer
packaged goods, today's category manager is part of a multifunctional team working
closely over time with the firm's main retail trade customers. In this sense, fast
moving consumer goods marketing has become more like business-to-business
marketing, especially in areas such as groceries with high retail concentration.
At the same time, many consumer marketing companies are also seeking to build
direct long-term relationships with individual consumers via database marketing, one
of the main uses of new technology. This too is reducing the gap between consumer
and business-to-business marketing.
2. The use of new technology
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Many of the trends, challenges, and opportunities in marketing relate to new
developments in information and communication technology (ICT). Some of the
organisational changes taking place in marketing - as in other functions - are closely
related to the use of ICT. The routine use of telephone, fax, voice mail, electronic
mail video conferencing and essentially the internet, are crucial for the success of
innovative organisations, especially those with global reach. In addition, marketing
has some unique new opportunities in the use of ICT. These can be grouped under
two headings: database marketing and new media opportunities.
Database marketing
Closely related to the trend toward relationship marketing is the increasing use of
long-term marketing programmes using large databases (Zahay,
Schibrowsky 2009).
Charlotte and
Database marketing has three key characteristics:
1. Increased targeting in terms of either market segments or individual customers
and prospects: the database enables the marketer to customise marketing
communications.
2. Increased emphasis on marketing as an interactive process through time: the
database records not only which communications have been directed at each
customer or segment, but also what the response was, which may in turn influence
the choice of subsequent communications.
3. Although traditionally associated with direct mail, database marketing today
involves a range of media combining direct personalised media - mail, telephone,
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personal selling - with direct-response advertising (e.g. with coupons or freephone numbers).
Marketing has in the past been comparatively slow in the adoption of ICT. However,
this is now changing with the growth of database marketing.
New media opportunities – from mass broadcasting to personal engagement
Marketing also has some emerging opportunities from new media, especially the
internet (Tăranu, Danciu, Traşă, Nicolae, and Lăzăroiu 2011). Today everyone can
be a marketer. Never before has it been possible for people to communicate their
judgements on provider’s offers on such a massive scale. The age of blogs, forum
postings, reviews and comments on social media platforms such as Facebook,
LinkedIn and Twitter, probably generate more marketing messages than are broadcast
by marketing departments. This is the essence of real marketing.
Providers have to progress from mass communication
to the new paradigm of
permitting existing and potential customers to have an active role in the
communication. This places the emphasis on direct customer engagement and
conversation. Attentive listening by organisations will provide the opportunity to
identify, produce and test key customer-perceived value attributes as they fashion
their customer offerings.
Progressive developments in the traditional media - print, direct mail, and notably (in
the UK) radio - all of which are able to deliver audiences which are far more
segmented than for television (Stephen and Galak 2009). Opportunities in new media
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include 'electronic brochures', home-shopping via interactive TV, video on demand,
and so on.
This will pose a threat to commercial TV channels and also to traditional advertising
agencies who are already having to adapt to a more fragmented media regime. It will
also impact on channel logistics and distribution, as items are increasingly mailed,
home-delivered, or collected by consumers from a convenient pick-up point. The
long-term effects of these changes will be substantial and marketers need to start
exploring them - as both threats and opportunities - now.
3. Customer value and the morphing of the terms ‘product’ and ‘service’ into the
term of ‘customer offering.’
Also linked to relationship marketing is the increasing focus on providing customerperceived value throughout the organisation. The clearest symbol of this trend has
been the high profile programmes of total quality such as Kaizen (or continuous
improvement), and business process re-engineering. Built into all these developments
is the belief that customer satisfaction is the key determinant of long-term market
success (Po-Tsang Chen and Hsin-Hui Hu 2010).
This includes the idea that the ultimate judges of quality are customers not company
designers. However, intangible service attributes of
tangible product attributes (Hueiju and
Wenchang
are equal importance with
2009). This reflects the
recognition that manufacturers also need to accept that their customers judge them
on delivery performance, responsiveness, friendliness, accurate invoicing, and so on.
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Internal marketing
Within firms, the idea has gained credence that all departments - even those which
have no direct contact with external customers - have their own internal customers
(Wieseke, Ahearne, Lam and Dick, 2009). Some firms have formalised this through
written service contracts between departments. As a result, the concept of customer
service is starting to run through entire businesses (Aburoub, Hersh and Kalil, 2011).
Innovations in customer service include the growing provision of unconditional
service guarantees and increasing focus on 'service recovery' - the handling of
complaints and service failures: the evidence is that customers whose complaints are
well handled can end up more loyal than before the service failure (Engelen and
Brettel, 2011).
4. Measurement and accountability
Another related trend is the increasing emphasis on measurement and financial
accountability in marketing
(Stewart 2009) with its emphasis on measuring the
response - or at least the measurable response - to each marketing activity and using
the acquired knowledge to adapt further communications to the same customer or
segment (Ganesh and Paswan 2010, McDonald, 2010). Measures of market response
and customer loyalty can also be used to allocate priorities between different types of
activity. For instance, the database can help marketers assess the long-term value of
different types of customer or even customers gained through different media and
marketing communications activities.
Another effect has been to encourage firms to allocate marketing resources towards
those activities with quantifiable results, such as short-term price promotions. It may
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also have become harder to justify investments in long-term brand building if provider
organisations allow the least cost paradigm to assume too heavier influence on their
functional marketing.
Brand equity
As a counter to these pressures for financial accountability, there has been much
interest in the idea of brand equity, i.e. that strong established brands are valuable
assets (Verbeeten snd Vijn 2010). Further, there have been numerous attempts to
place a financial value on these assets, especially in the UK where the accounting
rules allow such brand valuations to be included in the balance sheet. However,
progress has been slow for two reasons.
First, as with any asset that is not actively traded (e.g. shares in large public
companies) valuing a brand inherently involves having to make subjective judgements
about future cash flows or profits. The valuation also depends on its purpose, e.g.
acquisition, balance sheet, or internal management. Moreover, in the case of brands
arbitrary judgements have to be made about separating the value of the brand from the
rest of the business. This is especially problematic for corporate house brands
(Shamma and Hassan, 2011).
Second, it is difficult to standardise brand equity measurement or valuation. This
perhaps reflects marketers' traditional obsession with being different and original,
resulting in a proliferation of sometimes conflicting definitions, methods and labels.
The resulting confusion has, arguably, reduced the credibility and influence of the
marketing discipline; in contrast to the accountants - despite also facing conceptual
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problems, for instance over the use of language and methods. Marketing people could
learn a useful lesson from the accountants' ability to sing from the same song book.
While it may be a mistake to believe that we will ever devise a valid method for
estimating the value of brand equity, this does not justify today's total lack of
standardisation. Marketers should start by developing some standard measures and
definitions, as an aid to clear analysis and discussion. This especially applies to firms
managing the same brands across many countries.
Electronic data sources
There has been more progress in other areas of marketing measurement. In particular,
our ability to measure short-term market response has been greatly helped by the
increasing availability of electronic data sources, notably retail checkout scanned data
in packaged goods (Ketikidis, Kontogeorgis, Stalidis, and Kaggelides 2010). Another
interesting development is the use of 'single-source' data, consumer panels which
measure both purchases and media exposure for the same consumers. In many firms,
the marketers now have more data than they can assimilate and are looking towards
expert systems and other techniques to extract useful information.
Measuring long-term advertising effects
One of the hardest activities to justify within a regime of quantitative measurement
and accountability is long-term media advertising. In the UK there has been extensive
work over the years trying to estimate advertising effectiveness, second only to the
United States in terms of sheer research volume. Since 1980, the Institute of
Practitioners in Advertising (IPA)
has run a competition giving awards to
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documented case histories. Since 1990, the IPA awards have included a category
called 'longer and broader advertising effects'. Despite such well-publicised
initiatives, it is inherently difficult in contemporary depressed global buyers’markets
to quantify the full long-term effects of marketing strategy and advertising (Ataman,
Van Heerde and Mela 2010; Pergelova, Prior and Rialp 2010). This will always
remain an area for informed business judgement rather than mere technical
optimisation.
5. Innovation and learning
Today's emphasis on innovation and learning has several implications for marketing.
In new product (customer offering) development, speed is now seen as crucial,
especially in technology-intensive industries. If anything, the importance of being
first to market may even have been overstated: the evidence is that the long-term
winners in emerging markets are not necessarily the pioneers, but rather the players
that develop and dominate the market during its crucial second phase of 'early
growth'. Innovative pioneer companies, such as Apple, (especially in the post Steve
Jobs era) need to avoid any temptation to become complacent. This again relates to
organisational learning. The pioneer has the opportunity to pre-empt all later entrants,
but is also more likely to make mistakes in the design or marketing of the new
customer offering. Later entrants have almost as much ability to learn from the
pioneer's mistakes as the pioneer itself, and at much lower cost.
The emphasis on speed to market will rightly continue but there may be a trend
towards more frequent, incremental attribute improvements (as in Japan) and in some
cases, a little more caution by thoroughly testing a customer offering
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marketing prior to full launch. However, once the new customer offering and its
marketing mix are ready for launch, the international roll-out is likely to be very fast
if not concurrent. In other words, the emphasis will be on speed as well as on 'getting
it right', but focusing as much on shortening the 'time to peak sales' (via fast market
penetration) as on further shortening the pre-launch 'time to market'.
Learning about market response
Innovation learning and speed are not just passing fads, they are likely to be a
dominant feature of management in most businesses for the foreseeable future
(O'Connor 2009). A continuing trend away from slow, large-scale, step-by-step
market research is likely towards a range of more responsive approaches. These will
still include techniques such as focus groups, conjoint analysis, market response
modelling, and the extensive analysis of consumer behaviour that is part of successful
database marketing. In addition, however, the approach today increasingly involves
working directly with customers, especially with those customers who tend to lead
their industries or - in the case of consumer markets - those who tend to be early
'adopters' or 'opinion formers'. Companies which work closely with such customers
may be in a stronger position to sense new trends, and to distinguish these from fads.
A related trend is the growing use of free-phone advice numbers, prize-draw
questionnaires, and the like, to encourage direct communication with consumers.
There is also increasing willingness to do experimental or even 'expeditionary'
marketing. The former refers to controlled incremental experiments in the real market,
with line extensions, trial price packages, and so on. Major retailers have greatly
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benefited from an ability to conduct low-cost marketing experiments giving detailed
confidential data on market response.
Expeditionary marketing refers to a willingness to try more radical customer offerings
and marketing mix activities (Hamel and Prahalad 1991, 1993)
Paradoxically
perhaps, this approach has been a feature of Japanese industries like consumer
electronics, mainly noted for their success at continuous incremental customer
offering innovation. In fact, this is less of a paradox than it might seem, for two
reasons. First, such incremental improvements in Japan are not random, but are
sequenced to take the firm along a planned trajectory of performance and cost. Each
project is judged as much by the learning and capabilities which allow the occasional
bolder step. Second, both approaches - incremental and expeditionary - are based on
the idea, that the way to learn about market response is to keep launching new
customer offerings in the real market.
A classic case of expeditionary marketing was the Sony Walkman, which was
developed in response to a bold hunch, not because of an perceived gap identifiable
from market research. This more entrepreneurial perspective reflects the view that,
while market research is good at describing what customers think, feel, and do today,
and is therefore essential for suggesting and testing possible fine-tuning
improvements, research cannot reliably predict how the market will respond to a
radical new customer offering such as a personal stereo. Even a new approach to a
service market, such as internet banking, uses technology with which consumers are
already very familiar. In this situation, crucial marketing skills still include the use of
diagnostic research, but also requires the communication of the customer-perceived
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value of conceptually new customer offerings in solving customer problems. This
necessitates learning from the market response more efficiently and faster than the
competition.
6. Globalisation
Finally, all these trends are occurring in an increasingly global context. There has
been genuine progress at reducing trade barriers between countries, especially within
Europe. Many of the issues were controversially discussed in Levitt's classic Harvard
Business review article 'the Globalization of Markets' in 1983 ( Hollis, 2011).
In high-technology industries, the main drivers behind globalisation are cost
efficiency and knowledge sharing. The economics favour players with high
expenditure on R&D and customer offering innovation, and with production
economies of scale, so that fixed costs are spread over a global market including
North America, Europe and Asia. To achieve this combination, firms need to invest
heavily in global customer-perceived value oriented marketing sub functions such as
distribution, sales, and service provision. Industries showing this pattern include
consumer electronics, cars, pharmaceuticals, IT, aerospace, defence, and engineering.
Much of the mighty German and Japanese manufacturing sectors has been based on
the combination of high domestic R&D together with global distribution logistics and
the use of locally adapted functional marketing activities.
For somewhat different reasons, many luxury brands and an increasing number of
service based customer offering businesses are also becoming global and this trend
seems likely to continue. The reasons vary, typically including some cost efficiency
and shared learning (as in high-technology industries), e.g. the development of a new
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perfume, a new quick-service restaurant format, or an airline reservation system. In
addition, there may be some direct benefit from the use of a global brand, because of
its luxury connotations (Chanel, Rolls-Royce), associations with international youth
(Levis, Pepsi, Swatch, Benetton) or just because of familiarity and reliability (Holiday
Inn).
Managing marketing across borders
There is no clear separation between international marketing (as opposed to a few
export sales) and the rest of international management. Among the multinationals, the
trend is towards organisations structured into businesses aimed at global or especially for packaged goods - regional markets (e.g. the European businesses of
Heineken’s beer and Mars' pet food business) rather than the traditional collection of
national businesses reporting to national general managers. Nevertheless, organising
for transnational operations remains problematic and most chief executives see it as
an area for further improvement.
Within marketing, a particular issue is the balance between global or regional and
local branding and marketing. Another less widely discussed issue is pricing: as
national barriers and shipping costs decrease, we are likely to see a reduction in price
differences. This is a thorny problem in international marketing and a source of some
conflict and tension within transnational businesses.
The future of marketing as a function
Six current trends or issues in marketing have been highlighted: relationship
marketing; the use of the new technology; customer value and the blurring of product
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and service; measurement and accountability; innovation and learning; and
globalisation. These are all impacting upon both the marketing function and other
functions. In addition , the broader issue that - partly because the marketing concept is
now so widely accepted and is increasingly being implemented across all the
functions within the firm - the specific role of marketing as a separate function has
come under question.
What does all this mean for marketing, and for the future of marketing as a function?
Perhaps the main implication is that there is likely to be a continuing increase in the
importance of marketing as a philosophy and a way of running the business, hopefully
combined with a decrease in its importance as a separate function. The competitive
pressure for firms to be market-oriented and responsive will, if anything, escalate
even further. This will mean that organisational changes that increase the amount of
direct customer contact within all functions and at the top of the organisation will
become essential. A notable feature of Germany's extremely successful mid-sized
engineering companies is that they are run by people with a solid knowledge of
technology who also spend a high proportion of their time working directly with
customers. Another aspect of market orientation will be the increasing dissemination
of headline information about customer satisfaction and market performance
throughout the organisation.
The need for marketing as a function will continue. However, it is unlikely that there
will be a return to large corporate marketing departments and even within individual
businesses and business units, the number of career marketing people on the payroll
may be small. The trend seems to be towards sub-contracting much of the detailed
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research, analysis, and in some cases even the execution of marketing to specialist
agencies, perhaps including ex-employees working from home. Firms will from time
to time use such agencies on a one-off basis for ad hoc projects, but the trend will be
towards longer-term relationships. This set up will provide a good blend of mutual
understanding, specialist expertise, knowledge of the particular market context, and
low fixed costs for the firm.
For those marketing people who continue operating within the firm's marketing
department, the challenge now is to become more efficient and accountable, to spend
more time in direct contact with customers - both direct trade or industrial purchasing
customers and also final consumers or end-users - and to work more closely with their
colleagues from other functions (especially finance, production/supply and HRM) and
increasingly from other countries as well. There is also a challenging and crucial task
for marketing people to become fully involved in managing the customer database by
working closely with the various specialists involved in extracting usable information
from database market research, modelling, and with the development of integrated
marketing communications mixes. To succeed, they will need a blend of human,
analytical and time management skills.
Thinking strategically
The need for time management skills relates to the single biggest challenge - and
opportunity - for the marketing function: to rise above the day-to-day and start
thinking more strategically.
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This is much harder to achieve today than even only five or ten years ago. The trends
described mean that the marketing task has become more complex. The rate of change
in customer demands, markets, and technology has increased. Additionally
relationships with customers, outside agencies, other functions and colleagues from
other countries are time-consuming. So too are some of the planning and control
systems resulting from the emphasis on measurement and accountability. At the same
time, the number of people in marketing departments has decreased as part of the
general downsizing of many firms.
The net effect - a more complex task done by fewer people, but it is believed that in
their case it raises a particular threat to the long-term success of the firm because of
marketing's role as the main interface with the contextual factors affecting the market
environment. Sound marketing managers have a close and detailed knowledge of the
market; a holistic understanding of he firm's competitive strengths and weaknesses; a
thought- through view of the external threats and especially opportunities it faces; and
a well considered perspective on an appropriate longer-term marketing strategy. If the
day-to-day pressures prevent the development of this knowledge and vision, the
whole organisation can become purely tactical, reactive and regress to a purely cost
driven transactional approach to business.
One effect of time and performance pressures is that, although the need to be
outward-looking is universally recognised, it is hard to find the time to put this into
practice. This includes time with today's customers and time analysing today's
competitors - their structures, strategies, capabilities, priorities, and internal financial
performance. But, perhaps even more important is the need to spend time developing
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a better shared understanding of the way the firm's markets may develop in the future,
and who its competitors will be tomorrow. What almost destroyed IBM was not
Honeywell and Univac but DEC, Apple and Microsoft. What is threatening CocaCola is not only Pepsi-Cola but now also Cott, which makes the concentrate for
premium private label colas such as Sainsbury's Classic Cola in the UK.
Four Key Tasks For Marketing People
Todays marketing practitioners must find a way to rise above the day-to-day pressures
and grasp the importance of four key tasks:
1. Develop a detailed and deep understanding of their current customers and
prospects. Much of this should also come from direct contact, especially with
leading-edge customers. Some should also come from ad hoc background
research on new issues, values, and trends. (Such research may take courage to
justify in today's environment as it neither exploits the main data sources nor is it
immediately actionable).
2. Similarly, develop a deep and shared understanding of today's competitors. A
good mechanism for achieving such understanding shared within the management
team, is to conduct a structured role-plays of key
competitors. Another,
especially in consumer markets, is to 'reverse-engineer' the competitors’
marketing communications mix material.
3. Third, and more difficult: develop a similarly deep and shared perspective on how
the market may change and develop in the future. What are likely to be the new
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threats and opportunities? What new issues are just over the horizon? Who will be
tomorrow's customers, competitors, and channels? What will be the new
applications, the new product/customer offering technologies?
4. Finally, develop a strategic marketing perspective on what the firm should do to
achieve its objectives, based on an understanding of its current and future markets
and capabilities. The issue here is to become more proactive and seek to do some
'market driving' as opposed to being 'market driven'.
Summary and Conclusion
This paper has sought to encourage debate as to the true role of marketing in this
decade. Is it merely a function (a skill not always well defined)? Or a philosophy
(mantra or real-time belief)? Or something else entirely? The paper explored these
themes and discussed six key trends (relationship marketing, the use of new
technology, the transformation in the concept of customer value, measurement and
accountability, innovation and learning, globalisation) that are shaping the evolution
of marketing. The paper concluded by presenting four key tasks (developing a
detailed and deep understanding of current and potential customers, developing a
detailed and deep understanding of current and potential competitors, developing a
shared perspective on how markets are changing, developing a suitable strategic
marketing approach in the light of this) that all marketing practitioners should pursue.
Figure 3
Diamond Marketing Mode – It’s all about customers.....
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Given the unprecedented time and performance pressures, none of this will be easy,
but it is very important and should be pretty interesting too - and not just in the sense
of the Chinese curse.
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