Marketing is cross functional and not a stand-alone function

Author: Krishnendu Dasgupta

Institute: S. P. Jain Institute of Management and Research
Area: Marketing
Marketing is cross functional and not a stand-alone function
Synopsis
Marketing has been seen as the function that drives an organization due to its sheer proximity with
the consumer. Like other functions, marketing works as a separate department with its own
objectives and goals, which are in line with those of the organization. This paper does treat
marketing as a department it views it as a philosophy.
The issue being explored here is that can the philosophy of marketing be made cross-functional?
The idea of marketing becoming inter-functional is related to the idea of customer orientation of an
organization. Peter Drucker in 1954 had suggested that to be truly customer-centric an
organization must adopt the marketing concept, which entails that the key to achieving its
organizational goals consists of the company being more effective than its competitors in creating,
delivering and communicating customer value to its chosen target markets. One of the steps that
help adopt the marketing concept is integration of functions.
If customer satisfaction is the goal of the organization then marketing alone cannot be expected to
meet it. Customer satisfaction is heavily dependant on the performance of other departments,
which necessitates the need for marketing to involve itself with other functions.
The marketing concept however is very difficult to implement however brilliant it may
conceptually. Very few companies have been successful in doing the same. This paper details the
case of Wolverine Controller Company, an Indianapolis based producer of flow controllers, which
is an excellent example of marketing becoming a cross functional organization. This should serve
as a model for organisation that intend to adopt the marketing concept and become cross functional
in its approach.
Marketing is cross functional and not a stand-alone function
1. Have marketing departments delivered?
Henri Fayol, who is regarded as one of the founding fathers of the management science,
had said that no management principle is absolute by itself and cannot be applied with the
same effect in a similar situation. Modifications to the approach must be made depending
on the problem at hand and the situational variables that affect it. This belief is based on a
simple premise that recognizes that each problem is unique and merits an unique solution.
However, modern practioneers merely acknowledge his contribution and but do not seemed
to heed his advice. They choose to apply solutions that have worked in the past.
The ever-mystifying phenomenon called the consumer, who continues to be under the
scrutiny of all organisations. They spend years understand how they behave in the hope that
the marketing efforts can be more focused and profitable. Traditionally, the understanding
of a consumer has been typically a function of the marketing department, which acts as the
contact point between the company and the consumer. How effective have marketing
departments been in this regard?
To be fair, marketing departments of companies across categories have displayed a sound
knowledge of the consumer using sources like studies commissioned to marketing research
firms, inputs from their sales forces, primary research etc. But at the same time marketing
professionals have realized that with consumer behaviour is becoming increasingly difficult
to ascertain and predict using conventional investigational tools. Sometimes such tools
have proved to be grossly inadequate in understanding consumer behaviour. For instance
conventional information gathering techniques used in market research like the five point
Likerts scale have proved to be unsuitable for rural research. So there is a silent agreement
that true knowledge of the consumer is not best obtained methods being practiced by
existing marketing departments of organisations.
But the more relevant issue here is have marketing departments been able to deliver on its
basic tasks the planning and executing the conception, pricing, promotion and
distribution of ideas, goods and services to create exchanges that satisfy individual and
organizational goals?
Companies in the past and today have recruited the brightest minds for the marketing
department. But the marketing department in the past lacked clarity in functioning, which is
also the case with many companies today. For all practical purposes the difference between
sales and marketing took the entire 90s decade to be established. The best perspective
about marketing efficacy came from the President of the one of the Big three automobile
companies who said in 1980 said .. the auto companies are in the Dark Ages. They
confuse sales and marketing. The sales and marketing guys are all sales guys. They dont
sell cars to the public, they sell them to the dealers.
Marketing professionals are also to blame equally. For most marketing is just the 4 Ps.
These just provide an operational framework but most companies rarely look beyond them
for marketing mix variables Companies like Harley-Davidson and Virgin have steered
cleared of the trodden path and set new standards in marketing. They have used a mixture
of techniques like buyer clubs, unconventional advertising and public relations to create
customer-focused solutions. Like traditional marketing companies like Procter and Gamble
they too have been successful companies. So is there some aspect that traditional firms
have not looked at?
To some extent yes. Marketing has been accorded the exalted status of reaching out a
companys produce to a suitable customer. To succeed in its task it has looked at well
established functions like sales, advertising, market research and external resources like
distribution. However, it has rarely looked beyond the marketing department and
marketing-related functions to accomplish its mission. Unfortunately marketing
departments themselves became an organization entity within companies, which spent
more time reconciling the disparate views of sales and marketing rather concentrating on
their assigned functions. Marketing departments are not known to consider other
departments as their partners in the task of reaching out to consumers, which may not be
the correct assumption to make. They choose to direct the functions of departments like
R&D and manufacturing to suit consumer needs and yet do not involve them in the process
of delivering customer value. Hence it would be fair to conclude that the manner in which
marketing has been practiced has not integrated the other functions of an organisation. This
is a sheer waste of available resources. But then the question is should marketing strive to
become cross-functional?
2. The failure of the marketing concept
The prominence given to the marketing function stemmed from the adoption of customer
orientation as an approach in the early 1950s. This was primarily due to the writings of
Peter Drucker who propounded the concept of customer orientation in his book The
Practice of Management where he addressed a fundamental question what is a business?
In his view the objective of a business was not to make to profits, its purpose was to create
customers and profits were a result of gaining customers.
He stressed on the importance of marketing and not sales was the key to growing
business along with innovation. He cited the example of Cyrus McCormick, the inventor
of the mechanical harvester, who also invented market research and analysis, the concept of
market share or standing, modern pricing policies, sales/service specialists, after sales
service and customer credit way back before the middle of the 19
th
century. He stated that
the European businesses were sales oriented and had hence stagnated.
Drucker went on say, Marketing is not only much broader than selling, it is not a
specialized activity at all. It encompasses the entire business. It is the whole business seen
from the point of view of the final view of its final result, that is the customers point of
view.
This signaled the shift from what is today known as the selling concept to the marketing
concept
1
. Druckers views were based on GEs development of a new marketing approach,
which integrated all marketing functions and an analytical perspective based on market
research that had been adopted in 1950. In fact in their annual report of 1952 they
proclaimed the customer had been put first in the process of production planning,
attempting to build consumer appeal into the product design stage. The report stated the
marketing man would be introduced at the beginning of the production cycle instead of the
end and would integrate marketing into each phase of the business. GE became the
vanguard in implementing the marketing concept by understanding the customers drive
markets and not products. In addition companies like IBM, Procter & Gamble, General
Foods, Xerox and HP have championed the marketing concept.
A pertinent question at this point would be how does the marketing concept ensure cross-
functionality in marketing? After all, it is a philosophy is easier understood than
implemented. As Fredrick Webster noted in his book Market-Driven Management that
by 1970s most companies did not readily or easily accept the rather simple strictures of the
market concept. The focus shifted from long-term profitability through customer
satisfaction to short-term term manufacturing and selling orientations. The original concept
of putting the customer at the center of all operational and strategic decision making so as
to blur the boundaries between traditional management functions did not take place. The
boundaries actually grew taller with the marketing function in some companies and became
the dominant function providing a large portion of the top management in companies. In
other places there was still engineering dominance and a sales orientation. As a result
marketing did not live up to its promise of revolutionizing American businesses. Non-
American firms were gaining into the market share in most industries.
3. Where did market concept fail a starting point for the future?
Phillip Kotler states that for the marketing concept to be implemented in organisations,
some key steps need to be followed:
Target a market
Identify customer needs
Evolve an integrated marketing approach
Generate profits through customer satisfaction
While companies have successfully followed the first two steps, the last two have not been
implemented partially. An integrated marketing approach involves the working together of
all the departments of a company to serve the interests of a consumer. This involves two
steps coordinated functioning between all marketing functions (sales, product
management, market research, advertising etc) and the adoption of the customer
orientation concept by all other departments.
*1. Marketing concept holds that the key to achieving its organizational goals consists of the company being more effective than its competitors in creating,
delivering and communicating customer value to its chosen target markets.
Again, in several organizations the marketing department is quite well organized but other
departments do not embrace this concept. There is usually a conflict between marketing
and other functions because the constituencies that other departments serve are different.
For the marketing department, the constituency is the customer but for the finance
department they are the firms shareholders and investors and for the purchase department
suppliers form the key constituency. They find it difficult to put customer interests before
others because they feel their internal customers would be affected.
The other issue is generation of profits. The marketing concept stresses on the fact that
profits will come if customers are satisfied but it become difficult to account to accept such
a long term perspective when share holder and investor pressures exist.
Also one must keep in mind that what Drucker propounded was a philosophy a way of
thinking. It was not a tool kit and a typical Seven steps to corporate success approach.
The drawback to this was that in the absence of an implementation framework, Druckers
philosophy could be put to practice in many organisations.
But the failure in implementation does not undermine the utility of this philosophy. In fact
most organizations practice customer orientation in some way or the other. Every one today
recognizes the need to serve a customer well from large government departments to
family run businesses and they have been taking steps to become more customer focuses.
This is an opportunity for the marketing function to reinvent itself by aligning with
other departments in the organizations . The failure of marketing should be the path to
realizing any process that takes one close to a consumer couldnt be conducted in isolation.
Marketing needs to be a part of a larger process involving the entire organisation.
It must be understood that the survival of an organization depends on the consumer and
every employee has a stake in each sales that is made. A well-designed product will not sell
unless the consumer wants it. Profits are not generated only through cost reduction
measures a loyal and satisfied customer will ensure a lifetime of profits for the
organization. An organization also exists for its customer because they have invested both
their wealth and trust in purchasing a product manufactured by it. Consequently the
investors and shareholders are not only stakeholders important for a finance manager.
The key is to realise that customer orientation is not just the prerogative of the
marketing department all departments have to work together towards become more
customer focused. It would be incorrect to say that the marketing concept was flawed or
did not develop pointers that would have helped operationalise the philosophy of Drucker.
Drucker just showed the way. In fact had Drucker or any other management guru
developed a model way of making a customer-oriented organization it may not have
worked for everyone. Some organizations were able to understand the concept and become
powerful customer focused organizations while others failed. The idea is not reject the
concept but to develop in a more relevant frame.
4. Aligining marketing with other functions
The question now is can a framework be thought of which is able to integrate marketing
with other functions so that they do not work at cross-purposes. Benson Shapiro has done
some extraordinary work in this field. This paper would focus on two of his famous articles
published in Harvard Business Review and understand how marketing can become
cross-functional.
The first article Can marketing and manufacturing coexist? looked at how to decrease
conflict and increase cooperation between marketing and manufacturing. Eight factors were
identified which led to conflict between the two functions capacity planning and long
range sales forecasting, production scheduling and short-range sales forecasting, quality
assurance, delivery and physical distribution, breadth of product line, cost control, new
product introduction and adjunct services. The primary reasons why conflicts arise in these
areas were:
Differing reward systems: Manufacturing people are evaluated on running a smooth
operation on a minimal cost while marketing people are judged on the basis of
profitable growth of the company. Their tasks often are at cross-purposes, which
lead to increase in conflicts.
Orientation and work experience: A marketing and sales person has spent his life
interacting with customers while a manufacturing person has worked his way from
the shop floor. The difference in experiences builds in perspectives that are hard to
change over the years.
Cultural differences: Traditionally marketing people are known to be flashy,
outgoing, flamboyant with large egos while manufacturing people are more sedate
and sober. Hence it is easy to understand why they dont see eye-to-eye.
Technological changes: Changes in technology put too burden on both functions.
Products become obsolete faster than expected increasing pressure to find new
products and mistakes become less tolerable.
Consumer unpredictability: A product, which looks perfect at development and
testing stage, flounders at the selling stage. Manufacturing people blame marketing
people for not being able to sell.
Shapiro suggests the following to overcome conflicts:
Explicit management policies: The top management should lay down clear-cut
policies that take in account the constraints faced by both sides. This will ensure
that when problems arise the organization and not an individual provide a solution.
Unless necessary compromises and mediations must be avoided, as they are short-
term policies, which do more harm than good.
A common evaluation system: The performance of people should be evaluated in
such a manner that inter-functionality is stressed. There should be common
variables of evaluation between both functions
People orientation: An organization must provide platforms for informal interaction
between departments. This would help increase knowledge about the other
functions. Also career paths that encourage cross-functional experience should be
considered.
Shapiros other work What the Hell is Market Oriented?, (Harvard Business
Review, November, 1988) talks about Wolverine Controller Company, an Indianapolis
based producer of flow controllers for process industries like chemicals, paper and food
which was facing a problem of declining profitability. The CEO called a meeting of the
VPs of all functions marketing, manufacturing, sales, finance and research &
development. At the conclave they came to the conclusion that the problem they were
facing was due to lack of knowledge of the consumer and competitors. They decided to go
for a complete revamp of their strategy with responsibility for getting know consumers
being shared across departments and not being restricted to the marketing team. For
instance they listed down their 20 major customers and decided that pairs of two would
visit them. These pairs would be formed out of the CEO, six functional heads and three
divisional general managers and the sales force would coordinate it. Also all 10 heads
would visit the next trade show together and also visit 10 prospective consumers. Finally a
group of 7 was drawn for whom the marketing VP gathered market information, finance
VP analysed their financial performance and the R&D VP made technical reviews. The rest
analysed the strengths and weaknesses of one competitor each.
To tackle the problem of inter functional coordination the HR VP scrutinized cross
functional communication and identified ways to improve it. The MIS was identified a key
tool to leverage inter-departmental communication. Also the existing bonus plan based on
divisional goals was done away with and instead corporate goals were introduced in the
revised plan that was devised by the VP of HR.
Responsibilities were changed. Each team now had members from other divisions.
Informal socialization was encouraged. An idea to improve customer responsiveness was
developed by the technical field service and customer-service manager during a bowling
league party.
Changes began to show with sales and profits increasing. Internally decisions became more
integrative. The organisation became truly marketing-oriented. The key reason for this was
that it stressed on inter-functional coordination as means of achieving a common goal. It
had vision and commitment from the top level, which is a necessity from any company to
marketing oriented.
Thus these two cases have ably demonstrated that marketing, as a philosophy, is truly
cross-functional. The issue here is that one should not look at marketing as function, rather
it should look at it as a philosophy. As a concept, for marketing to exist, it has to be cross-
functional.
5. The road ahead
Implementing marketing as a cross-functional discipline is easier said than done. A key
concept that needs to be understood is that employees of an organization must be
convinced of the goals of customer orientation. In other words the organization must be
sold to the employees. Unless that take place an organization cannot be truly customer
focused.
A step that can aid this process of internal customer orientation is the idea of internal
marketing. As Berry and Parsuraman define it, internal marketing is the philosophy of
treating employees as customers.wooing themand it is the strategy of shaping job
products to fit human needs. It is very different from managing human resources and
should not be viewed as an HR function. For any external marketing function to be
successful, internal marketing is a must. Unless employees are motivated enough the very
idea of a cross functional marketing system cannot exist
Hence for marketing to succeed it must understand a fundamental premise customer
satisfaction is affected by the performance of other divisions. In the interest of sustaining
the concept of marketing, it must influence and involve itself with other departments. That
is the path of the future and possibly that of success.