The role of marketing in business strategy

Marketing Is the Most Important Function

Assessing Marketing's Importance in an Organization

When marketing is considered the most important function in a company, the founders and senior management team believe that being centered on the customer is the most effective strategic direction to growth and profitability. Conversely, companies founded by engineers and technologists see research & development, innovation and engineering expertise as the most critical areas of importance. There are the financial experts who quickly create companies through mergers, acquisitions, divestures and joint ventures, and see financial management as the most important aspect of any organization (Matichich, 2009). The goal of this analysis is to evaluate why marketing is the most important function in an organization first, and second, evaluate the factors that illustrate why it may not. The conclusion brings together both perspectives.

Why Marketing Is the Most Critical Function

The marketing concept was originally defined by Dr. Phillip Kotler (1998) and states that all initiatives, strategies and programs within an organization need to be driven from the customer's standpoint. Dr. Kotler was quick to include the new product development and introduction process, and the fact that managing products to customer expectations over time led to greater levels of profits. The marketing concept also states that long-term viability and profitability of any firm is directly correlated to their ability to meet and exceed customer expectations over time (Kotler, 1998). The marketing concept has since become the basis of strategic market planning frameworks that seek to align every aspect of a company's core set of processes, from supply chain management and procurement through product planning to manufacturing and services (Cravens, Piercy, Baldauf, 2009). Strategic market frameworks are credited with creating a more focused series of strategies that seek to serve customers better than competitors while also continually focusing on meeting and exceeding their expectations (Troilo, G., De Luca, L., & Guenzi, 2009).

When a strategic market framework is in place and working, an organization is able to make every process, no matter how complex or simple, measurable from the customers' standpoint, making rapid progress towards earning customers' trust (Zahay, Griffin, 2010). Measuring how effective strategies are in meeting customer expectations while at the same time measuring their contributions to profits completely changes the structure and culture of an organization over time (Zahay, Griffin, 2010). The structure often becomes leaner, agile, and focused only on customer satisfaction. What gets measured gets done, and this is certainly the case with marketing initiatives that seek to maximize customer value.

The use of analytics and key performance indicators (KPIs) keep organizations focused on strategies that earn the greatest financial returns while also delivering the highest levels of customer satisfaction (Mitry, Smith, 2009). This connection of profits to customer satisfaction is predicated on the marketing concept and is further proof that being marketing-driven is the best strategy for attaining the highest levels of financial performance (Kotler, 1998). Being marketing driven also assures that each product generation and the options for specific model configuration will be consistent with customers' requirements and demands (Xia, Rajagopalan, 2009). Being customer-driven makes product roadmaps and product planning much more aligned to specific user needs as opposed to being driven purely by technology or cost. Marketing acts as the central coordination point to all of these factors taken together, from the framework used to gather customer feedback to the use of analytics to stay on track to fulfilling customer expectations. For all of these factors and the processes supporting them, marketing is considered the most important function in an organization.

Arguments against Marketing Being the Most Important Function

Over the last three years the turbulent economic environment has led company senior management teams to elevate finance to the most important function in a company (Matichich, 2009). Finance has in fact become so prevalent as the core focus of companies that the Chief Financial Officer (CFO) role now has greater responsibility than ever, from Information Systems (IS) to marketing budgets (Kierulff, Petersen, 2009). Finance has also emerged as the most important function in an organization because nearly every organization has had to deal with restructuring their financial plans and methods of financing (Matichich, 2009). Financial managers argue that without restricting of credit lines, leases and costs, there would be significantly less funds available to produce and sell goods and services. Marketing is seen as secondary to the need to gain more attractive financing and credit terms, which keep the company moving forward and solvent. Due to all of these factors, marketing is not considered strategic, while relationships with investors and lending institutions are. The primary customer becomes the shareholder and the lender, not the person purchasing the product. In many industries facing rapid rates of consolidation, this happens often, as is the case in enterprise software for example. The need for making finance the center of the company is predicated on having the best possible lines of credit and expansion through acquisition. Marketing becomes secondary and tactical when an organization chooses to expand through mergers and acquisitions. Manufacturing becomes more of a primary focus in organizations when finance is at the center of operations as well. The concentration on production efficiency, costs, and managing to variances in pricing all are critical for a company to be profitable. These metrics and their value to a company staying financially viable further support finance, not marketing, as being the most important function in an organization.