Over the Christmas period, I have been reading Marketing Due Diligence by McDonald et al.  In the book Professor Malcolm Macdonald and his colleagues discuss how to link marketing activity to a firm’s share price and other financial measures.

The book is an attempt to explain the theories behind marketing strategy in a way understandable by senior managers and company directors.  Many of these individuals come from a financial background and look at marketing in terms of financial results only.  They ignore methods of measuring success, such as Kaplan and Norton’s Balanced Scorecard, which look at corporate success in terms of long-term growth, as opposed to short-term financial gain.

McDonald exposes the fallacy that marketing has failed.  That consumer power has exposed traditional marketing activities as irrelevant.  He argues that there is gross ignorance amongst many senior managers as to the power of marketing strategies and this means that this ignorance has led to mistaken definitions of marketing’s role in a business.

The truth is that marketing is a core business activity and traditional marketing activities have as much power today as they did fifty years ago.

McDonald argues that too many businesses give marketing professionals a subsidiary role in their business.  Often these companies concentrate on a product, technical, operations or financial focus.  Marketing’s secondary role in these firms means that it is never truly effective.

He also has concerns that some in the marketing industry are overly evangelical about their profession’s role in business and that marketing should be the core of the corporate universe.  Marketing is similar to finance and other business disciplines.  It is a functional profession with its own body of knowledge, processes, tools and techniques.  Marketing like these other professions has its own professional institute, the CIM, which prescribes, researches, examines and develops the marketing discipline in the same manner as other professions.

McDonald argues that marketing shouldn’t be given priority over other professional disciplines but that it should be given equal status to them.

However, it is clear that marketing is a pivotal strategic process and important to business leaders.  It should flourish at three different levels in a business:

1.  Senior managers and business proprietors need to understand and enthusiastically embrace the concept of customer service and the development of a customer-focused organisation.  the creation and maintenance of customer satisfaction should be the only route to long-term profitable success.   There should be an organisation-wide market-driven culture of superior customer service within a business as this route to success offers significant sustainability.
2.  Business strategies must start and be evaluated against the needs of the market.  Marketing activities must have a strategic focus and an organisation’s future must be planned from the market inwards.
3. Promotional and marketing tactics must be implemented within the context of an overall marketing strategy and be market-led.  Such tactics must meet the professional standards expected in such areas as market research, promotion and sales.

Customer satisfaction and customer focus are not simply the domain of the marketing department.  They should be the core concept throughout all of an organisations activities.

Marketing has a central role in the creation of sustainable competitive advantage.  As Kelly states in his paper Customer Intelligence; From Data to Dialogue (2005), ” the customer is the fulcrum of the business and everything from production ,to supply chain, to finance, risk management, personnel management and product development, all adapt and converge on the business value proposition that is projected to the consumer”.

This means that marketing activities need to be controlled at three levels:

1.  Marketing due diligence; whether marketing activities enhance or destroy shareholder value on the basis of an objective assessment and how strategy will be improved.
2. Marketing effectiveness; that tactics applied to each chosen market segment targeted by the marketing strategy create the expected competitive advantage
3. Promotional effectiveness: That marketing communications activity achieves the required objectives in terms of awareness, brand recognition, etc.

Measuring marketing effectiveness is not like factory output.  It is easy to measure what goes into a factory and what comes out, i.e. productivity.  It is not easy to measure the outcomes of marketing activity.  This fact is not grasped by many non-marketing professionals.  Productivity can be measured at the factory gate whereas the results of marketing activity may not be clear until many months after the strategy has been enacted.