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Alpha Notes

Marketing Hints for Clients of Alpha Associates

What's Wrong with Marketing?

80% of new packaged goods products fail... 50% of all acquisitions fail...
60% of business-to-business products fail... 99% of direct mail is discarded...

I was pleased to attend a presentation by Philip Kotler, Ph.D., in Boston. He is one of the true marketing "gurus" generally considered "the Father of Modern Marketing." He is a Professor of International Marketing at Northwestern University's Kellogg School of Management and has written 25 books on marketing, most of which we have in our Alpha Associates library. As I sat in the front row anticipating a provocative presentation on marketing, I was surprised that Dr. Kotler introduced the theme "What's Wrong with the Marketing Function at Most Companies?" and sited the statements noted above as evidence of this condition. According to Kotler, this is because the marketing function at most companies is not "centralized." I found this most interesting because many of our major engagements in recent years have involved integrating the marketing function throughout the enterprise.

Kotler is not alone in this belief. David Packard of Hewlett-Packard Company said it this way - "Marketing is much too important to leave to the Marketing Department …". Yet, at many companies the marketing function does belong only to the Marketing Department. Why should marketing be the "business" of all departments of the company? According to Kotler, it's a matter of priorities with the marketing function residing at the top of the priority list, because "marketing is about creating and delivering value to the customer." What could be more important than that? In many companies, the strategic marketing function is still confused with sales. However, there is no confusion on the part of some of today's leading marketing minds, such as Ted Leavitt who states, "Sales is about getting rid of what you have. Marketing is about having what people want to buy." Or as the great Peter F. Drucker phrased it, "The role of marketing is to make selling superfluous."

Let's take a moment and examine Kotler's insights that relate to this "value" proposition. He believes that a truly integrated marketing function adds value to a company as an off-balance sheet asset. He adds this to a list that includes branding, distribution partners, suppliers, and intellectual knowledge, including patents, trademarks and copyrights. A truly integrated marketing function contains core competencies and core processes that are an integral part of the marketing function or a by-product of marketing activities. Another of his value arguments is that Marketing drives the business strategy beyond the strict function of the Marketing Department. Components of the marketing mix, such as pricing, translate immediately to the Finance Department and the product function is also the responsibility of the engineering, manufacturing and service departments of most companies. Integrating a value system throughout these departments helps to reinforce the value proposition and add consistency to the company's sales and promotion programs.

Another of Kotler's arguments is that this function will create more consistent value for the company if it is supported with better access to needed information, better internal and external communications, and a more effective use of technology. According to Kotler, the more effective companies are today attempting to measure marketing effectiveness by relating it to ROI and stockholder value. He feels this is a trend that will continue to grow in the future.

A central theme of creating and delivering customer value requires a more complete understanding of the needs of the customer. Here he suggests using technology to build a better transaction history of the targeted customer. In addition, he recommends the typical demographic components used by database marketing firms and suggests adding psychograhic information to introduce patterns of behavior and tendencies of the targeted customers.

How does the marketing function "fit" in your company? Is it a stand-alone department, or is it creating value throughout the company and adding to your bottom line?