"Marketing" or "Commercial Management"?
A recent article in the Chartered Institute of Marketing’s house magazine Catalyst is titled “Stand up for Marketing”. It is an interesting article, and one wonders why it has taken the CIM so long to write it?
In December 2011 the year of its centenary, the CIM seemed to be on the point of abandoning marketing as a lost cause, when it put the cat amongst the pigeons of the marketing press when it published a discussion document “Marketing and Sales Fusion”.
The document proposed that the function of marketing should be merged into the sales function if it was to have a future. Unfortunately, the document ignored the CIM’s own definition of marketing, which it defines as “the management process that anticipates and satisfies customer requirements profitably”, and which therefore includes the process of selling. Did this proposal matter? In reality, no, because this has become an academic argument which has little purpose and achieves no practical result. However, the importance of , “the management process that anticipates and satisfies customer requirements profitably”, whatever it is called by academics, is fundamental to the existence of any business no matter how large or small.
Marketing is the name of the commercial management process that produces profitable income, which is the sole purpose of any business. Unfortunately, the frequent and general misuse of the word “marketing” as another word for selling, advertising, or other communication, has led to the subsequent erosion of its meaning and to difficulties in quantifying its contribution to a business as a whole. You cannot measure what you cannot define., and as the late Peter Drucker said “if you can’t measure it, you can’t manage it”.
Whatever the size of any business enterprise, someone will be responsible for producing its sustainable profitable, regardless of whether or not they are called commercial, marketing or sales managers. About 80% of all businesses are considered to be small. In small businesses, all the activities of market research, development, advertising, promotion and selling tend to be closely integrated, simply because they have fewer personnel available. It is generally in larger companies that the various disciplines that comprise the “marketing” process become separated into differently managed activity areas.
Whatever job title they have, the executives responsible for producing profitable income, must show themselves to be efficient and effective in producing sustainable profitable income for the long term future of the business. Ultimately, their contribution to their business will be measured on the amount of profitable income produced, and how much cost and investment was used to produce it.
Inspire, motivate and direct
The purpose of any and every business is to make money; businesses exist for no other reason. Understanding the problems and demands of customers, both present and future is the first requirement of every business. Using that understanding to supply answers that meet customer’s needs and to do it profitably is essential for the existence and future of every business. Contrary to what some may believe, customer satisfaction is not the main objective of business. Customer satisfaction is important, but customers can be satisfied by the provision of free goods and services. However, unless customers can be satisfied profitably the business will fail.
The most important question which should be asked of every activity in the marketing process is “how will it add to profit?” in other words, how will this activity or investment, impact on the production of sustainable profitable income for the long-term? Many activities will have a direct impact on income, such as the management and direction of sales. But other important activities may contribute collectively, but not directly to the production of income.
Advertising, other than direct response advertising, makes the market aware of the product, but does not directly induce the customer to buy. Similarly, product and market research help to identify customer requirements, and is therefore an important investment. However, it is the ability to provide a product or service solution to the identified requirement and to the customer’s satisfaction in a profitable manner, that will decide the level of future income.
Managers have to understand how to manage the various activities that collectively produce the income of the business. They must learn to manage their resources so as to maximise the volume of profitable income, while minimising costs and the use of assets and investment.
Effective management is necessary to convert business development plans into actions and to achieve results. To achieve this, the commercial manager needs to inspire, motivate and direct those staff responsible for carrying out the separate tasks in order to reach their initial objectives and encourage further achievement. It is only the effective leadership and management of all those activities that collectively satisfy customer requirements profitably that will determine the level of overall commercial success.