Monday, May 29, 2006

There is No Escape from Marketing!

I ran across Stan DeVaughn's blog entry from February 27, 2006 with the title "Marketing and Branding are high-tech wrecks" and can simply say that I couldn't have put it better myself. So many high-tech companies once founded upon their discovery of a "real" need over time seem to lose the ability to think outside in.

If you are a dyed in the wool marketeer working in a truly marketing driven organization you will have nothing to learn from this blog entry. If you are a marketing novice or a true marketeer working in a technology driven company you might want to keep reading.

Marketing has nothing to do with organization. Companies choose to organize the work of marketing in many different ways. Some companies gather all of Kotler's Ps (Product, Price, Place, Promotion) in the same organization while other companies have a marketing department managing advertising and the rest of the Ps are distributed throughout the organization. (Some companies don't even have a marketing department.)

Marketing describes how companies understand customer needs and satisfy them for a profit. To paraphrase Kotler marketing is all about what product to sell …to which customer…at what price….how will the customer find out about the product, buy it and get it delivered? (And what will the competitors do about it?) All companies do marketing. Whether it be done poorly or well, consciously or unconsciously marketing cannot be escaped. No matter how your particular organization organizes the work of marketing success depends on your ability to manage the balance and/or trade offs between the 4 Ps (the marketing mix).

Imagine a company where a market research department works with customer insight to identify customer needs, a product development department creates new products, a pricing manager sets the prices for the products, a market communications department does the advertising and the sales department defines a distribution strategy. So far so good?

Now imagine that none of these groups coordinate their activities with each other and in the event that they ever do meet it is not clear who really makes the decisions. These companies do exist and most often the people running the show in companies like this are the product development people. In the end they are making products with little or no input from the people with the customer insight and the rest of the organization has to do their best to try and sell them or the company will go bust. These types of companies are doing marketing (albeit poorly) whether they realize it or not. Because product development has created products that were not optimized to customer needs the company will compensate by increasing advertising expenditures and paying higher commissions to its dealers and/or with lower prices to the end users. This is managing the marketing mix.

Imagine, on the other hand, a company where the people with the customer insight (not the salespeople) are defining the requirements on new products including retail pricing, commisions and gross margin. Product development creates the defined product with the right performance and price. Promotion of this product will be very cost effective since the product so clearly meets the customers real needs at a reasonable price making the sales departments job much easier. Companies like this do exist and they are usually the leaders in their industries or they are hungry small companies de-throning the old industry leaders.

If you would like to read more of my thoughts on marketing have a look at the following:
The World's Shortest Marketing Plan

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