The purpose of any commercial business is to make profits for the benefit of its shareholders and employees, by satisfying customers. The contribution of Marketing to any business, is in the generation of profitable revenue. Without that profitable revenue there can be no sustainable business. Thus marketing must ultimately be measured by the amount of profitable revenue generated. That is not to say that brand awareness, market penetration, customer retention and many other aspects of marketing are not important, but ultimately, the purpose of all marketing related activities, is to generate a continuous profitable revenue stream for the business. Thus the amount of profitable revenue generated together with the efficiency of the use of assets and investment, must be the primary measures of marketing performance.
The Chartered Institute of Marketing (CIM) defines Marketing as “the management process that identifies anticipates and satisfies customer requirements profitably”. Anticipating and satisfying customer demands requires many customer related activities including, advertising and promotion, marketing research, product development, brand management, and distribution but also includes making the sale, which is the executive function that ultimately brings in the money. While the CIM’s definition is logical and complete, current marketing articles tend to focus on the specialist disciplines of brand management, customer relationship management (CRM), advertising and research. The term “marketing” has now become debased, so that its meaning is imprecise and has become just another name for advertising or selling. This tends to perpetuate similar attitudes amongst marketers, limiting objectives and encouraging short term and silo thinking. The fact that the CIM defines marketing as a “management process” tends to be forgotten.
Businesses are organized in many ways, but frequently they are organized as a collection of functional departments based on what they are, rather than what they do or achieve. Hence organizations have departments of accounts, sales, production, marketing, transport, personnel and many others, which are separately managed, creating a silo mentality. While it is reasonable to consider these various specialist areas separately, they are all customer related disciplines which contribute to marketing, and collectively working to “satisfy” customer demand, and thus ought to be collectively managed. However, many marketing managers see their role in a much narrower area of specializations, but the manager with the responsibility of producing the business income, must have ultimate responsibility for all business operations which contribute in the satisfactory delivery of customer demand. The manager of all customer related activities should perhaps be referred to as a commercial manager or head of business operations, rather than the marketing manager. In this manner, the term “Business operations” would be more accurately reflecting the definition of marketing as set out by the CIM. Business organization could then be structured more simply into two main areas, Business Operations and Business Support.
It is the job of the commercial manager or head of business operations, to generate profitable revenue for the immediate and long term future of the business, with the objective of maximizing profitable revenue while minimizing costs and the use of assets. Managers therefore need to understand all the activities involved in getting and maintaining business, through customer satisfaction, by;
- asking questions,
- avoiding assumptions,
- using performance measurement to quantify achievement.
The purpose of measurement in Marketing, as in any other facet of business, is to establish the level of results derived from marketing plans and execution. Choosing the right things to measure, dependent on what one needs to know in order to make informed decision, is essential. Collecting volumes of marketing measurements achieves nothing if the information does not directly assist in informed decision making.
Brand awareness, market share and other measures all have a certain importance, but all the separate elements of the marketing function are interdependent, collectively contributing to the overall contribution of marketing, so that marketing performance must be measured as a whole.
Converting marketing plans into actions to achieve results requires the effective use and management of marketing assets and resources. The continuous monitoring of indicators of marketing performance, highlighting success, failure, and problems, is an essential management tool for the commercial manager, who must also inspire, motivate and direct staff to achieve the desired result. Successful marketing requires efficient and effective management, in order to produce the required profit on which the business relies.
© N.C.Watkis, Contract Marketing Service 30 Aug 24
