A New Definition of Marketing

October 22nd, 2015
Steven Howard

The role of marketing is to create and keep good customers

It was with shock and horror that I read a few years ago an Australian Marketing Institute white paper titled What Value Marketing? describes “the ultimate role of marketing as delivering increased shareholder value.”

When and how did our profession get so far off the mark?

Contrast this with the new definition of marketing from the American Marketing Association, unveiled at about the same time:

“Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”

It’s rather sad that even the American Marketing Association (AMA) definition talks about managing customer relationships only in terms of benefits to the organization and its stakeholders. After all, if the customer doesn’t benefit from the relationship, I can guarantee you the relationship will not last very long.

Using the new American Marketing Association version as a base, my preferred definition of marketing has become:

“The ultimate role of marketing is to create and keep good customers, to the benefit of customers, the organization, and stakeholders.”

As I have written before, business is not just about sales, contracts, cash flow, internal rates of return, and profitability. Even Henry Ford recognized this when he said, “A business that makes nothing but money is a poor kind of business.”

Marketing — as an ethos and a philosophy for doing business — is central for the survival and prosperity of any organization. This is why it is far too important to be left to only a handful of marketing specialists.

Marketing must permeate the entire organization and is not something that should be seen as either a “top-down” or a “bottom-up” approach. Rather it must become an approach that infuses and ignites the whole organization.

This inculcation and indoctrination of marketing as a philosophy for doing business, combined with the emphasis on understanding customer needs and creating value for customers, must be led by the top of the organization.

Too many CEOs and other senior executives these days see their primary roles as cutter of costs and manipulators of financial figures. Those duties are best carried out by the Chief Operating Officer.

A CEO can better serve his or her customers, employees, communities, shareholders, and board (please note the sequential order of these constituents) by being the guardian of the corporate brand, the motivator of marketing excellence, and the champion of understanding customer needs.

Likewise, marketing also needs to become a central concern of Boards of Directors. Here’s what William Parrett, Chief Executive at Deloitte Touche Tohmatsu, wrote in the December 11, 2004 issue of The Economist:

“A recent survey by Deloitte and the Economist Intelligence Unit found that management and boards of directors focus far too much on financial results that represent lagging indicators of past performance. We believe they should pay far more attention to non-financial factors such as customer satisfaction, product and service quality, operational performance, and employee commitment — leading indicators of future performance that firms can use to navigate confidently toward a sustainable future. We also encourage corporate management to communicate with stakeholders about these indicators in quarterly and annual reports.”

The winners in this next segment of the economic cycle are not going to be the cost cutters and the retrenchers. The winners are going to be the marketing innovators and the ones who create, protect, and enhance the values customers receive and perceive from transacting business with them and from being associated with them.

It is not only your sales force that must create value for your customers. It is your entire organization. Our personal marketing philosophy is if it touches the customer, it’s a marketing issue.

Everything your organization does touches your customers and your prospects. Hence, everything you do not only is marketing related, but also impacts the results of your marketing efforts.

In short, everything you do should be done to create value for customers.

This is how you create and keep good customers. Creating and keeping good customers will enable your organization to achieve its bottom-line financial goals, and to increase shareholder value.

But you have to take care of your customers first. As Lee Iacocca, former Chairman and CEO of Chrysler, is quoted as saying, “If you take care of your customers, everything else will fall into place.”

And that is why my definition of marketing is focused on customers first, the organization second, and shareholders third.

 

Key Point: the ultimate role of marketing is to create and keep good customers, to the benefit of customers, the organization, and stakeholders.

Taking Action: review your mission statement. Is the emphasis on your customers, the organization, employees, or shareholders? If the answer is anything other than customers, now would be a good time to create a new mission statement.

How involved is your Board in your marketing activities? What steps can be taken to get the Board more interested in marketing and other leading-edge factors such as customer satisfaction, product and service quality, operational performance, and employee commitment?

What role does marketing play in your organization? Is it confined to a solitary functional department? What would it take to create a marketing ethos that permeates throughout your entire organization?

This article is partially excerpted from my book Powerful Marketing Memos, available in Kindle and paperback formats at Amazon.

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