(David Packard, the co-founder and former Chairman and CEO of Hewlett-Packard, once said, "Marketing is too important to be left to the marketing department." This post explains why Packard's view is accurate but why it's also not necessarily an indictment of the marketing function.)
A Perceived Loss of Influence
There is a widespread perception in the marketing community that the marketing function has been marginalized at many companies, that the influence of the marketing organization is not as broad or as strong as it once was.
Marketers frequently cite two circumstances as symptomatic of marketing's diminished stature and influence.
First, marketers often describe the lack of influence in terms of the 4Ps of the marketing mix. They note that in many companies, the marketing function is responsible for designing and executing promotional activities and programs, but has little influence over product, price, or place.
Marketers have also observed that senior marketing leaders often don't play a prominent role in the formulation of their company's business strategy.
Recent surveys by Marketing Week and McKinsey & Company have shown that one or both of these circumstances exist at many companies.
So, has the influence of the marketing function actually declined over the past several years, as many marketers believe? Or, is this perception the result of an inflated view of marketing's influence in the past?
To answer these questions, we need to take a brief tour of marketing history beginning about seven decades ago.
The Emergence of the Marketing Concept
In the 1950's, companies began to adopt a new guiding philosophy for achieving business success. This philosophy came to be called the marketing concept, and its core principle was what we might today call "customer centricity."
According to the marketing concept, business leaders should first develop an in-depth understanding of customer needs and wants, and then use that understanding to create products or services that will meet those needs and wants better than competitors. Furthermore, all organizational functions of the company should be aligned on the primary purpose of satisfying customer needs and wants.
Management icon Peter Drucker provided an early statement of the marketing concept as a management philosophy in his 1954 book, The Practice of Management, when he wrote:
"There is only one valid definition of business purpose: to create a satisfied customer. It is the customer who determines what the business is. Because it is its purpose to create a customer, any business enterprise has two - and only these two - basic functions: marketing and innovation."
By the 1960's, the philosophical principles of the marketing concept had become well established in business thinking, and many marketing scholars had embraced an expansive view of the role and authority of the marketing function.
In his 1960 marketing textbook, Basic Marketing: A Managerial Approach, E. Jerome McCarthy, the creator of the 4Ps model of the marketing mix, described the authority of the marketing function in exceptionally broad terms when he wrote:
". . . marketing should determine what products are to be produced (product development, design, and packaging) what prices to charge (credits and collections and pricing policy), and where they are to be available (warehousing and transportation) - as well as selling and advertising."
Other marketing textbooks soon began describing the role and authority of the marketing function in similar terms, and as a result, many marketers came to believe that a powerful marketing function was the norm in well-managed companies.
What Actually Happened
This belief, while widespread, was never completely accurate,* and it's clearly not accurate today. Recent research suggests that the marketing function in most companies does not have the broad authority and responsibilities the marketing scholars of the 1960's described.
A study published in the May 2023 issue of the Journal of the Academy of Marketing Science found that only 17% of the companies included in the study had marketing functions that controlled all marketing decisions and set their company's growth agenda.
The influence of the marketing function may have declined in some companies over the past several years, but in most companies, the marketing function never wielded the broad authority many marketing scholars had anticipated.
What actually happened in most companies is that strategy became the preferred way for senior company leaders to make major decisions about the future of their business. And because a sound strategy must address several important marketing issues, senior company leaders began making major marketing decisions as part of the strategy development process.
Therefore, in companies with a mature strategy development process, the marketing function doesn't fully control all marketing decisions. I frequently hear or see marketers complain about "non-marketers" making marketing decisions, and clearly the risk for mistakes increases when the people making marketing decisions don't understand basic marketing principles. However, when marketing is defined broadly, such decision making is probably inevitable and may, in fact, be necessary and beneficial.
Peter Drucker viewed marketing as a general management responsibility. In his 1973 classic, Management Tasks, Responsibilities, Practices, Drucker wrote:
"Marketing is so basic that it cannot be considered a separate function . . . it is, first, a central dimension of the entire business . . . Concern and responsibility for marketing must, therefore, permeate all areas of the enterprise."
To maximize the influence of the marketing functions in these circumstances, marketing leaders must develop capabilities and perform activities that are specifically designed to support their company's chosen business strategy and strategy-making process. I'll discuss the ascendancy of strategy in more detail and explain how marketing leaders can accomplish these tasks in my next two posts.
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*Marketing functions with broad responsibilities and decision-making authority did exist, primarily in large consumer package goods (CPG) companies that had adopted brand management structures and processes. Proctor & Gamble invented the brand management function in the 1930's, and by the late 1950's, it had been widely implemented by U.S. CPG companies. These companies may have inspired the view of the marketing function advanced by marketing scholars.
Image courtesy of Virtual EyeSee via Flickr (CC).
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