Weakness of the current marketing
Marketing has been arousing contradictory emotions for years – fascination and rejection, admiration and aversion, glorification and negation. One may assume that this may result, at least partially, from misunderstanding of the essence of marketing. This, in turn, naturally leads to various forms of distortion in the field of marketing use.
Allegations against contemporary marketing relate, among others, to:
- unclearly and imprecisely defined objectives, which marketing is to fulfil in a given organisation,
- lack of measurement and assessment of effectiveness of marketing activities,
- perceived low efficiency of marketing activities,
- financial illiteracy of marketers,
- perceiving marketing as a client manipulation method,
- a fact that marketers do not show how marketing contributes to creating the value for shareholders,
- marketers' reluctance to take risks (corporate inertia wins over the courage to create) and poor internal communication,
- internal conflicts between marketing and other aspects of an organisation (so-called silos or organizational bunkers)
A considerable part of these remarks pertains to the tasks of marketing in an organisation and evaluation of the obtained results, including the possibility to measure its effectiveness or efficiency. However, it also refers to the financial aspect and return on investment in marketing. If you assume that on average about 50% of the income of a company these are costs related to market activity – including sales and marketing – then it is difficult to expect that there will be no pressure associated with evaluation of the obtained results. And here the question about assets generated by marketing arises.
Assets generated by marketing
It is a well-known belief that in times of crisis, the first budget to be reduced is the one allocated to employees’ development, including training and marketing. At the same time the studies prove that companies that in difficult times maintain their marketing activity, not only lose less but also grow faster in post-crisis times. The problem is that it is not all about money. Millions can be spent ineffectively. The issue is, how to spend it in order to earn.
It is a common, often intuitive belief that investments in marketing activities bring benefits to a company. Often it is more difficult to answer the question “What are these benefits?”. It is even more apparent in the case of the scope of operation, which is easily reduced when the market becomes “more difficult”, and expenditures related to marketing are not treated as essential to survive.
The already deceased Prof. Peter Doyle indicated four main assets generated by marketing. The first of them is the brand and its capital. These assets are currently measurable best and their value – estimated relatively well. Based on various analyses (e.g. ,data of Brand Finance) it can be indicated that on average in 20% a brand value is determined by the market capitalisation (stock market value) of an organisation. Systematically published by Interbrand brand value pricing, indicate, for example, that the most valuable brand in the world today – Apple – is worth around $216 billion. This means that one brand is worth twice as much as the whole budget of our country, which amounts to PLN 435 billion. This shows, to a certain extent, what the actual role of marketing is and what the results in investments in this area are.
Of course one has to honestly point out that in a situation of crisis the drop in the pricing of stock exchange value of companies takes place to a large extent at the expense of the so-called intangible assets, including brands. This results from the fact that an economic crisis is always related to weakening of trust, including to companies. Nevertheless, strong brands (ones that are consistently built, also in difficult times) lose less and recover faster after the crisis.
The remaining assets created by investments in marketing, as Doyle has indicated, include client base and their loyalty, market knowledge and strategic partnership. As I have already mentioned, only the brand is measured widely, while the existing standards of assessment are accepted. This concerns client loyalty (e.g., CLV – customer lifetime value – i.e., the RMF measure) to a much lesser extent; and the other two (market knowledge, strategic partnership) – almost not at all.
Better marketing
The intuitive belief in the value of investment in marketing is justified. Nevertheless, the return on that investment requires rejection of the post-truth era marketing, in the case of which short-sightedness outweighs professionalism; and manipulation wins over evidence. Thinking in the categories of responsibility and professionalism is the key condition of the reduction of the current marketing weakness and increase in the return on the investment in marketing activities.
Marketing does not create needs. Just as it does not satisfy them. This is a lie, which when repeated in times of post-truth, becomes a false signpost. Needs are immanent elements of every human being. Everyone has them and everyone satisfies them themselves. At least that's what science says today. Marketing can discover them, make people aware of them, even prioritize them and help satisfy them by providing means - products.
There are many such half-truths, forgeries and understatements. They seem attractive but in reality they constitute a deceptive direction of thinking, which not only leads to deepening of the negative perception of marketing, but also limits benefits obtained from it. Today, in times of COVID-19 we can see this facade in a particularly clear way. Each of us lacks information on the essence of this pandemic, its results, the level of risk or prevention methods. The extent of gossip, unverified information and fake news makes us go through the education process quite quickly. We are beginning to be more and more aware. We think and we are looking for a verification of the data that we are exposed to at numerous channels.
The same process concerns market behaviours. An increase in awareness and development of critical thinking means that also marketing will have to become more responsible and more professional. The more that it will not have to be recreated. For example, the evidence-based marketing approach has been known for several decades. Now, however, favourable ground for its implementation has emerged. The way of thinking initiated in medicine and taken over by management will create marketing of the future. These are not hunches, beliefs or false intuition, but evidence, facts, and cause-and-effect relationships that will become the basis of the decisions of tomorrow's marketers. It will not happen immediately, but each revolution breaks out much earlier than announced.
The text was published in Marketer+ bimonthly (May-June 2020).
dr hab., prof. of UL Robert Kozielski (Department of Marketing, the Faculty of Management of the University of Lodz) – head of the Polish-American Management Center, Fulbright Foundation scholarship holder, member of the Committee on Organizational and Management Sciences of the Polish Academy of Sciences. Robert Kozielski specialises in market strategies of enterprises, strategic analyses and evaluation of the effectiveness of marketing activities of organisations.
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[1] P. Doyle: Valuing Marketing’s Contribution; European Management Journal, June 2000
[2] The Sejm of the Republic of Poland has adopted the budget for 2020: https://www.gov.pl/web/finanse/sejm-rp-przyjal-budzet-na-2020-r–pierwszy-od-30-lat-bez-deficytu – downloaded: May 10, 2020
[3] M. Broniatowski: Świat po koronawirusie według POLITICO: [The world after coronavirus according to POLITICO:] https://wiadomosci.onet.pl/politico/swiat-po-koronawirusie-wedlug-politico-biura-zakupy-zywnosc-euro-podroze-wszystko-to/pkwkm6z – downloaded: May 10, 2020
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Source: Faculty of Management, UL
Edit: Promotion Centre, UL