The leader article in September’s edition of “The Marketer”, titled “Who needs money?” suggested the idea of “marketing “without money. The article cited several companies which claim that they started or continue to have a marketing budget of zero, amongst them being the IT companies Google, Linux and Facebook. It also claimed that it was not only hi-tech businesses that were innovative and successful by doing “marketing” with a zero budget, but that some service companies such as McKinsey did not have a marketing organization, to which could be added Timpson’s, the high street heel bar retailer. But is it really true that successful “marketing” can be done without money? However attractive the idea may be, the idea that “marketing” may be done without a budget does not stand up to simple scrutiny, unless one has little or no real understanding of what is involved in “marketing.”
It is a truism, that you cannot get something for nothing. There is always a cost to someone, somewhere, and so it is with “marketing.” Surprisingly, for the magazine “The Marketer”, it seems that the Chartered Institute of Marketing (CIM)’s definition of marketing has been forgotten or not understood.
“Marketing,” as defined by the CIM, is the management process that anticipates and satisfies customer demand profitably, essentially being a process of managing resources and assets to produce profitable income. Thus the CIM’s definition involves a great deal more than simply promotional activities or even selling. But many people allegedly involved in “marketing” make this confusion. In “marketing” the importance is to anticipate and satisfy customer requirements to produce income, which requires a whole range of specialist disciplines including marketing research, product development, promotional communications, and especially selling.
The article in “The Marketer” suggests it is possible for even large companies to declare that they have zero or very low marketing budgets, but this is not actually the case. The truth is that many companies, perhaps a majority, have little idea what it actually costs them to get and retain business. There are many reasons for this, but a misunderstanding of the nature and purpose of marketing by both marketing staff and senior management is probably a primary cause.
In addition, the traditional departmental organization in companies means that the responsibilities of marketing organization are generally restricted to sales and sales support, rather than to the wider requirements involved with anticipating and satisfying customer demand. Investment in good marketing research is necessary to understand the market trends and anticipate customer demand. Satisfying customer demands includes other areas not thought of as part of the traditional “marketing” area of responsibility, such as product development, (guided by market research), production, and distribution. In addition, the area of credit control can have an important role to play in customer satisfaction. Thus “marketing” budgets are often at best incomplete in their scope, being derived from responsibilities of the marketing organization within the organizational structure, rather than from all those activities collectively involved in satisfying customers to produce income.
The purpose of “marketing” is to get and retain business to produce sustainable profitable income. “Marketing” is not another name for promotion or sales; there are many activities and disciplines involved. It is possible to have a minimal or zero promotional budget, as some successful IT companies do, but it is not possible to have a zero marketing budget if everything is properly accounted for. In its simplest form, the sole trader making his own goods and selling them on a free pitch on a street, may have spent nothing on promoting his business, but if “marketing” is about getting and retaining business, that trader has to make the goods and spend time selling them. He may not consider it, but there is a cost to him in getting and retaining business because of the cost involved in working time whether or not it is paid for.
Perhaps the reason for thinking that it is possible to have a zero promotional budget stems from the desire, from some marketers, to avoid having to measure the return on their investments, so there is an attraction in the idea of a zero investment. But the purpose of marketing is to generate money. Marketers will be measured on how much income they generate and how much it cost to produce it. Marketers must therefore be fully aware of what is involved in all the activities required to anticipate and satisfy customer demand profitably, and not delude themselves into thinking that they can get and retain business without cost.
Agreed, Nicholas.
While the hard costs of several recent successful marketing campaigns are stated to have been low or zero, the companies failed to tally the soft costs of their campaigns.
Let’s get real about how much we’re spending on marketing regardless of whether you call it promoting, branding, positioning or pimping a service or product.
These firms like Facebook and Google do not need to use marketing heavily because of their reputation, their unique product and their massive user following. Few other firms in the world could even attempt to market without costs.
Ryan, I agree – marketing is such a broad term, they are excluding areas of it when they say they spend nothing.
Nicholas, your conclusion is brilliant. Great article!