02. The importance of Marketing

 Marketing Professor, Philip Kotler and his research colleagues help us understand that Marketing is a significant dimension of any business in today’s highly competitive environment and financial success is often dependent on marketing ability. 

 

Finance, operations, accounting, administration and other business functions will not really matter if companies do not understand consumer needs and identify sufficient demand for their products and services for them to make a profit.

 

Companies of all kinds – from consumer product manufacturers (such as Nokia or Ericsson in Sweden), to health care insurers (e.g. Bupa in the United Kingdom), from car manufacturers (e.g. BMW or Porsche in Germany) to banks (such as Société Générale in France or RaboBank in Holland), from non profit organisations (Amnesty International, which was founded by a British lawyer) to industrial product manufacturers (e.g. Airbus – a French, German, English and Spanish conglomerate) – all have to use marketing to understand their core customers and grow their businesses. 

 

The 2007 survey of the ‘Top Ten CEO Challenges’ acknowledges the importance of marketing. The CEOs cited excellence of strategy execution as their top challenge. The report highlighted the fact that marketing challenges differ globally, with European CEOs focusing on getting new, more responsive ideas out sooner. 

 

Therefore execution in terms of speed, flexibility and adaptability to change is a more dominant theme in Europe (3rd place) than in Asia (8th place) and the United States (10th place). All CEOs recognized the importance of marketing to building brands and a loyal customer base, two core assets that make up a large percentage of the value of a company.
 

Marketing is a complex set of tasks as well as a philosophy of business and it has been the Achilles heel of many formerly prosperous companies. Some companies had to confront new competitors: the Spanish clothing company Zara entered Benetton’s target market, while H&M has been competing with Gap in many markets. There are also new consumer concerns. 

 

The Dutch company Philips, by being the first to focus on energy-efficient, environmentally friendly
consumer and business lighting, has overtaken many national light bulb brands in Europe. Consumers
also have more choice. 

 

The German discount supermarket Lidl has Euro 9 billion in non-domestic European sales, and now plans to target Hungary, Estonia, Lithuania, Croatia and Slovenia, where its main rival Aldi has no presence. Lidl has had a dramatic effect on established supermarkets such as Spar, Kaiser and Edeka in its domestic market. Its policies of ‘hard discounting’– offering goods at prices even lower than normal discount stores, and supplying only own brands characterise its marketing strategy.

 

 Lidl has more than 400 stores in Britain, and a nationwide survey by the consumer magazine Which? in 2007 reported that British consumers rated Lidl and Aldi higher than Tesco, Asda, Morrison’s and Sainsbury’s. Marketing managers have to rethink and reorient their marketing efforts to deliver customer satisfaction within competitive markets.
 

Even market leaders such as Nokia, BMW and Carrefour recognise that they cannot afford to relax their marketing effort as their leadership is challenged by fast and agile competitors and changing consumer tastes. Just ask Ford or Gap, both of whom lost 19 per cent and 15 per cent of their brand value respectively, according to Business Week/Interbrands annual ranking of the 100 Best Global Brands 2008.3 The big brand winners were Google, Zara and BMW, companies that really understand marketing and how to satisfy changing consumer needs.

 

As Rupert Murdoch, chief executive of the world’s largest media company – News Corp, the owner of The Times, ITV and BSkyB in the UK and a host of TV stations across Europe including bTV in Bulgaria, B1 TV in Romania, Fox Televizija in Serbia, Fox Turkey, TV Puls in Poland and LNT in Latvia, noted: ‘The world is changing very fast. Big will not beat small any more. It will be the fast beating the slow.’ 

 

Awareness of changing consumer and business trends and the use of marketing expertise to react to and change before, or with these trends, is a major marketing skill set for the future generation of marketers. BMW prides itself on being the world’s number one car manufacturer in the luxury niche market and also on its marketing ability to react to changing consumer lifestyle segments and match these segments with products.

 

 In 2000 BMW commissioned consumer research that identified four new market segments: Upper liberals; Postmoderns; Upper conservatives and Modern mainstreams, and then redesigned its product range to provide cars to match these predicted new segments. The strategy succeeded and in 2006 BMW had profits in excess of €4 billion. Changing a product range to match expected changes in future customer segments requires immense marketing skill. If BMW had got this wrong it could have been disastrous, but BMW was right and have the profits to reflect that.

Making the right decisions isn’t always easy. Marketing managers must make major strategic or long-term decisions along with tactical or short-term decisions. 

 

Strategically they must consider which features to design into new services or products, what kind of price to offer customers, what channels to use to distribute their services and products, how much to spend on communications including advertising, sales, or the Internet, and which other media is most appropriate. 

 

Tactically they must also decide on details as diverse as the exact wording or colour for new packaging, managing ongoing research, the colour of the wallpaper in reception and the format for answering the phone. For many companies the role of the marketing department has being confined to tactical issues, ignoring the strategic role of marketing in the overall success of the company. 

 

 The companies at greatest risk are those that fail to carefully monitor their customers and competitors and who fail to continuously match their value offerings to customer needs. They take a short-term, sales-driven view of their business and ultimately they fail to satisfy their stockholders, employees, suppliers and supply network members and – most importantly – their customers. Skillful marketing is a never-ending pursuit. 

 

As Jay Conrad Levinson author of Guerrilla Marketing noted: ‘Marketing is not an event, but a process . . . It has a beginning, a middle, but never an end, for it is a process. You improve it, perfect it, change it, even pause it. But you never stop it completely.