By Christopher Kenton
Take a moment to answer a deceivingly simple question: what is the fundamental purpose of marketing? What is it, when all is said and done, that marketing should accomplish for your business?
Whatever you’ve come to believe about the fundamental purpose of marketing, it’s almost certainly wrong. In fact, I don’t even have to know what you believe marketing’s true purpose is, although I do know that no more than 15% of you will agree on any one of the five or six usual answers. All of those answers are wrong. Even the definition provided by the most influential marketing textbook on the planet, a book that in 11 printings has reached millions of readers, is flat out wrong.
The purpose of marketing is not to generate leads, even though winning new customers is important. The purpose is not to build brands, even though brands are valuable. The purpose is not to support sales, or build distribution channels, but those are good things, too. And no, even though well-respected academics will tell you this, the fundamental purpose of marketing is not about filling a need with the right product at the right price. That is a good definition of the practical application of marketing, but it sheds no light on the purpose of marketing. What does marketing contribute to the success of the corporation?
Is marketing about filling a need with the right product at the right price in order to generate a profit? Closer. But cutting straight to the bottom line doesn’t clarify marketing’s purpose—everything in business is ultimately about generating a profit. To truly understand the fundamental purpose of marketing, you have to throw existing definitions out the window altogether and start fresh.
In fact, let’s start really fresh.
Imagine standing on a beach with a hundred other people. Off in the distance you can see an island where there is a large source of gold. All you have to do is reach the island and the gold is yours. To aid in your efforts, there’s a long line of boats waiting on the shore. What do you do?
Most people would hop in a boat and push off—and that’s what most businesses do. If you can see the goal, get moving. But the moment you set out you’re at the mercy of whatever the world can throw at you. The current drags in one direction while the wind blows in another, and before you make any headway there’s a sea full of flailing boats.
Some people who were standing on the beach anticipated that it wouldn’t be so easy. They watched the first group set out in a rush only to be scattered by the wind and waves, and they’re determined to take a smarter approach. So they look carefully at the selection of boats, put a finger to the wind to get a sense of conditions, and set out more prepared to reach the goal. At this point, two typical approaches emerge. Sales-driven organizations get in the boat and row. They row hard and strong with their eye on the prize and a drummer demanding a measured stroke. Marketing-driven organizations get in the boat and raise the sails to catch the prevailing wind. They tack to the left, tack to the right, trying to find a course in the wind that will ultimately take them in the right direction.
So who makes it to the island? Well, one lucky soul that jumped in the first group of boats just happened to catch a current that dropped him on the island without effort. There’s no accounting for luck. A few of the rowboats managed to power through the surf and make it to the island on shear force of will. A few more of the sailors tacked skillfully through the shifting winds to discover not a straight course, but an effective course nonetheless. Behind the few victors a tangle of struggling boats remain, some rowing hard without making headway, some sailing beautifully in the wrong direction, and some just hopelessly adrift. Every time you look at your balance sheet, you should ask yourself why you should invest another dollar in your own company rather than the stock market.
Did I forget to mention the engineering-driven organization? They’re still back on the beach building a sub.
Now, let’s imagine you’re still on the beach, with the advantage of having watched a few waves of successes and failures. With a nice selection of boats still waiting on the shore for you to make a move, what approach will you take? How will you choose the right boat? How can you build and direct the most effective team? Where and when will you push off to gain just the right advantage with the winds and tides? What’s your best strategy to get out ahead of the competition?
These are the kinds of questions you ask before you get in the boat, and they’re good questions for marketing, if not exclusive to marketing. But far too many businesses have a marketing mentality that focuses only on the tactical application of marketing—how to trim the sails most efficiently and effectively after you’ve already set your course. In fact, many business school academics maintain that marketing has no role in developing corporate strategy at all, that marketing is just about managing acquisition and retention programs. If you accept the notion that the purpose of marketing is to fill a need with the right product at the right price, it’s easy to write marketing out of the equation that determines what actually should be filled with which product, and indeed many marketing executives are simply carrying water for the corporate strategists, reporting on the success of the last campaign or plans for the next.
But marketers have specific skills that are fundamental to the success of corporate strategy, beyond their ability to effectively design and manage campaigns. Marketers contribute an understanding of market development, customer intimacy, channel strategy, communications and brand strategy. These critical areas of knowledge are not only central to an effective competitive strategy, they are the underpinnings of marketing’s ultimate purpose, which in today’s increasingly complex environment means a lot more than tactical efficiency and effectiveness.
While the application of marketing is to fill a need with the right product at the right price to produce a profit, the guiding purpose of marketing in the business organization should be understood more strategically. That purpose can be seen in two expressions.
1. The purpose of marketing is to reduce shareholder risk.
2. The purpose of marketing is to maximize customer lifetime value.
Like two sides of a coin, each expression is different but the value and the purpose of the coin is the same. An easy way to think about this definition is to think of your marketing team like your stockbroker. It’s easy enough to pick your own stocks, but a good stockbroker should know a whole lot more about the market and current conditions in order to help you reduce risk and maximize the value of your portfolio. Every time you look at your balance sheet, you should ask yourself why you should invest another dollar in your own company rather than the stock market. If your marketing team can’t help you answer that fundamental question, as well as execute objectives, you don’t have a team that is fulfilling its optimal purpose.
Christopher Kenton is senior vice president of the CMO Council (www.cmocouncil.org), and its corporate parent, GlobalFluency.