1.5: Characteristics of a marketing organization
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As noted earlier, the application of marketing in a particular organization varies tremendously, ranging from common-sense marketing to marketing departments with thousands of staff members and multimillion-dollar budgets. Yet both may have a great deal in common in respect to how they view the activity called marketing. We refer to these common characteristics as the Cs of Marketing. They are your clues that a business understands marketing.
Capsule 1: Review
1. The purpose of marketing is to help find and keep customers by creating a competitive advantage.
2. Marketing, one of several functions operating in an organization, is directed by the mission statement of the organization and provides certain tools to reach objectives.
3. The value of marketing must be kept in perspective: it must contribute to the growth of the firm.
4. The primary reasons for studying marketing are:
a. It is important to assess the role marketing should play in the firm.
b. Marketing offers growing career opportunities.
c. Marketing enhances our chances of becoming more effective consumers and citizens.
What makes the existence of any organization possible is that there are a significant number of people who need the product or service offered by that organization. As soon as that group becomes too small, or the need no longer exists, or some other organization can satisfy that need better, the organization will be eliminated. That is the way of a free economy. Thus, a politician does not get re-elected, an inner-city church closes its doors, the money needed to cure AIDS is not allocated, and the Colorado's Vail Ski Resort in the US files for bankruptcy.
In the case of business organizations, and marketing organizations in particular, the people with the needs are called consumers or customers. In marketing, the act of obtaining a desired object from someone by offering something of value in return is called the exchange process. Moreover, the exchange between the person with the need (who gives money or some other personal resource) and the organization selling this need-satisfying thing (a product, service, or idea) is inherently economic, and is called a transaction. There tends to be some negotiation between the parties. Individuals on both sides attempt to maximize rewards and minimize costs in their transactions so as to obtain the most profitable outcomes. Ideally, all parties achieve a satisfactory level of reward.
In each transaction, there is an underlying philosophy in respect to how the parties perceive the exchange. Sometimes deception and lying permeate the exchange. Other exchanges may be characterized as equitable, where each party receives about the same as the other—the customer's need is satisfied and the business makes a reasonable profit. With the emergence of the Internet and e-commerce during the 1990s, the nature of the exchange for many businesses and customers has changed dramatically. Today's consumers have access to far more and far better information. They also have many more choices. Businesses must provide a similar level of information and must deal with new competitors that are quicker, smarter, and open 24 hours a day.
An organization that employs marketing correctly knows that keeping customers informed is easier if they keep in constant contact with the customer. This does not necessarily mean that they write and call regularly, although it could. Rather, it more likely means that a marketing organization knows a great deal about the characteristics, values, interests, and behaviors of its customers, and monitors how these factors change over time. Although the process is not an exact science, there is sufficient evidence that marketers who do this well tend to succeed.
When this attempt to know as much about the consumer as possible is coupled with a decision to base all marketing on this information, it is said that the organization is consumer-oriented or has adopted the marketing concept. It means working back from the customers' needs, rather than forward from the factory's capabilities.
Both historically and currently, many businesses do not follow the marketing concept. Companies such as Texas Instruments and Otis Elevator followed what has been labeled a production orientation, where the focus is on technology, innovation, and low production costs. Such companies assume that a technically superior or less expensive product sells itself. There are also companies, such as Amway, where sales and marketing are essentially the same thing. This sales orientation assumes that a good salesperson has the capability to sell anything. Often, this focus on the selling process may ignore the consumer or view the consumer as someone to be manipulated. Insightful businesses acknowledge the importance of production and sales, but realize that a three-step process is most effective: (1) continuously collect information about customers' needs and competitors' capabilities; (2) share the information across departments; and (3) use the information to create a competitive advantage by increasing value for customers. This is true marketing.
All marketing organizations try to objectively compare their existing capabilities with their ability to meet the consumer's needs now and in the future. Moreover, when deficiencies are found, a good marketing organization must be willing to make changes as quickly as possible. When Toyota realized that their products were not connecting with consumers aged 35 and younger, it decided to take direct action. In 1999, it gathered eight people in their 20s and 30s from around the company into a new, ethnically diverse marketing group called "genesis". Their first assignment was to launch three cars meant to pull in younger buyers: the entry-level ECHO subcompact, a sporty new two-door Celica, and the MR2 Spyder, a racy convertible roadster.
Although assessing company capabilities often begins in the marketing area, all the business functions must be assessed. Do we have the technical know-how to produce a competitive product? Do we have the plant capacity? Do we have the necessary capital? Do we have good top management? A "no" to any of these questions may stymie the marketing effort. Conversely, a strong advantage in cost control or dynamic leadership may provide the company with a competitive marketing advantage that has little to do with marketing, but everything to do with the business succeeding.
Few doubt that the secret of success in any relationship is communication. This is especially true in a marketing relationship, where the attitude of both parties is frequently skeptical, the nature of the contact is hardly intimate, and the message delivery system tends to be impersonal and imprecise. It is because of these factors that communication plays such an important role in a marketing organization.
Marketers know that consumers are constantly picking up cues put out by the organization, or about the organization, that they use to form attitudes and beliefs about the organization. Many of these message-laden cues are controlled by the organization, including factors such as product design, product quality, price, packaging, outlet selection, advertising, and the availability of coupons. In this case, marketers follow basic communication principles that are discussed throughout this book. Most notably, there is a constant attempt to make sure that all of these elements deliver a consistent message, and that this message is understood and interpreted in the same way by the various consumers.
On the other hand, there are many message-laden cues that are not under the control of the marketer, yet may be more powerful in the minds of consumers, and that must be anticipated and dealt with by the marketers. A recent report that United Airlines had the worst customer satisfaction scores created a downturn in both United's stock and customer reservations. Although there are many sources delivering such information, the three most prominent are employees, competitors, and the media.
Employees, from the president on down, are all considered representatives of the organization for which they work. Consumers often assume that the behavior, language, or dress of an employee is an accurate reflection of the entire organization. Making employees—and possibly even former employees—positive ambassadors of the organization has become so important that a new term has emerged—internal marketing.
Competitors say a great deal about one another, some truths, some boldface lies. A marketing organization must be cognizant of this possibility and be prepared to respond. The automobile industry has used comparison messaging for over thirty years. Coke and Pepsi have been attacking and counter-attacking for about the same length of time. Negative political messages appear to be very effective, even though few politicians admit to the strategy.
Finally, the media (editors and reporters working for newspapers, TV and radio stations, and magazines) looms as one of the greatest communication hurdles faced by marketers. In a large marketing organization, the responsibility of communicating with the media is assigned to a public relations staff. Public relations people write press release stories about their organization that they hope the media will use. If the press releases are not used, the marketer attempts to ensure that whatever the media says about the organization is accurate and as complementary as possible. For smaller companies, dealing with the media becomes everyone's responsibility. Many businesses now face a new media, the Internet: chat rooms, websites, and propaganda campaigns intended to destroy a business have become commonplace. Companies that are willing to focus on communication as a means of doing business engage in relationship marketing—a type of marketing that builds long-standing positive relationships with customers and other important stakeholder groups. Relationship marketing identifies "high value" customers and prospects and bonds them to the brand through personal attention.
We have already mentioned the importance that competition plays in a marketing organization. At a minimum, marketing companies must thoroughly understand their competitors' strengths and weaknesses. This means more than making sweeping generalizations about the competitors. It means basing intelligent marketing decisions on facts about how competitors operate and determining how best to respond. Often the identification of competitors is fairly straightforward. It is the supermarket on the next block, or the three other companies that manufacture replacement windshields. There are instances, however, when the identification of a competitor is not clear. Marketing expert Theodore Levitt coined the term "marketing myopia" several years ago to describe companies that mis-identify their competition.3 Levitt argued, for example, that the mistake made by the passenger train industry was to restrict their competition to other railroads instead of all mass transit transportation alternatives, including automobiles, airlines, and buses. Today we see the same mistake being made by companies in the entertainment industry (movie theaters, restaurants, and resorts), who assume that their only competition is like-titled organizations.
Since practically no marketer operates as a monopoly, most of the strategy issues considered by a marketer relate to competition. Visualize a marketing strategy as a huge chess game where one player is constantly making his or her moves contingent on what the other player does. Some US partners, like Coke and Pepsi, McDonald's and Burger King, and Ford and General Motors, have been playing the game so long that a stalemate is often the result. In fact, the relative market share owned by Coke and Pepsi has not changed by more than a percentage or two despite the billions of dollars spent by each on marketing.
The desire of companies to accurately gauge competitors has led to the growing popularity of a separate discipline—competitive intelligence. This field involves gathering as much information about competitors through any means possible, usually short of breaking the law. More is said about this process in the integrated marketing box that follows.
One of the first mistakes an organization might make is to allow the various functional areas to become proprietary. Whenever a marketing department considers itself most important to the success of the organization and self-sufficient without need for accounting, manufacturing, or human resources, it ceases to be a reliable marketing group. True marketers know that they cannot be any better than their weakest link. Lack of understanding and trust between marketing and manufacturing, for instance, could mean that a product sold by marketing is not delivered when promised or with the right features. Marketers should consider their peers in engineering, who might not be able to produce an ambitious product requested by marketing at the cost desired. Likewise, human resources might not be able to locate the individual "with ten years of experience in package goods marketing" requested by the marketing manager.
The point is that marketing is far more likely to be successful if its staff relate intelligently and honestly with members of the other functional areas. In some organizations, the walls of parochialism have been standing so long that tearing them down is almost impossible. Nevertheless, creating inter-departmental connections is critical.
With downsizing and other cost-cutting activities prevalent during the 1990s, the need for inter-related and harmonious business functions has become even more important. In the field of marketing, the term integrated marketing has been coined, suggesting that individuals working in traditional marketing departments are no longer specialists, but must become knowledgeable about all the elements of the business that currently or potentially have an impact on the success of marketing. At the corporate level, all managers should share a corporate vision, and there should be an organizational structure that makes it possible for departments or divisions to share information and participate in joint planning.
This approach represents the direction in which many companies are moving, including US giants like Kraft and Disney. To be truly integrated, though, every decision at each level of the business should support decisions made at all the other levels. To illustrate, let us say that the corporate goal is to maximize profit. A marketing plan objective to increase sales by marketing new products matches the goal.
Spying to stay competitive
Most corporate detectives avoid terms like spying and espionage, preferring the more dignified label "competitive intelligence", but whatever they call it, snooping on business rivals has become an entrenched sub-industry.
Nearly every large US company has an intelligence office of some kind. Some, like Motorola, Inc., have units sprinkled in almost all of their outposts around the world. Their assignment is to monitor rivals, sniff out mergers or new technologies that might affect the bottom line, even to keep tabs on morale at client companies. A veteran of the Central Intelligence Agency formed Motorola's intelligence unit, viewed as a model in the business, in 1982.
Corporate intelligence relies on a slew of tools—some sophisticated, many quite basic. On the simpler end of the spectrum, business sleuths do everything from prowling trade show floors to combing through rivals' web sites and patent office filings. They keep their ears open in airports and aboard flights. Sometimes they go further. They take photographs of competitive factories, and, increasingly, they rely on new data-mining software that permits them to scan the Internet at high speeds for snippets about their rivals. 
Most marketers are curious; they enjoy observing and noting what's happening in their community. Although the word "community" usually denotes a city, town, or neighborhood, we use the word here in a much broader sense. "Community" refers to the environment in which the marketer operates. For Esther and Jim Williams, who operate an A&W drive-in in Mattoon, Illinois in the US, community is quite small. For Verizon Communication, community encompasses practically the entire world, extending even to outer space.
Regardless of the scope of the marketer's community, maintaining contact with it is essential. Contact could mean reading the local newspaper and listening to the local gossip. Or it could mean subscribing to information releases of several marketing research firms that monitor world events 24 hours a day, every day. Either might do the job, although the differences in financial costs would be great. In the chapter “Marketing research: an aid to decision making” we discuss some of the more important trends in the world community. Esther and Jim would find this discussion interesting, but not very useful.
Ultimately, to be considered a responsible citizen in the environments in which a company operates, marketers have the ongoing task of engaging in only pro-societal activities and conducting business in an ethical manner. There are many marketing companies that donate millions of dollars or land to communities, clean lakes and rivers, revamp deteriorating neighborhoods, give free products to the needy, manage recycling activities, and so forth. There is no doubt that the need for marketing to continue such activities will increase.
1. Sources: Neil King, Jr. and Jess Bravin, "Call It Mission Impossible Inc.—Corporate Spying Firms Thrive," The Wall Street Journal, Monday, July 3, 2000, pp. B1, B4; Norm Brodsky, "The First Step," Inc., August, 2000, pp. 37—38; "Spy Practice," Sunday Times (London), July 23, 2000, p. 89; "Competitive Intelligence is Not Corporate Espionage,” Financial News, June 30, 2000, p. A6.