“The aim of marketing is to know and understand the customer so well that the product or service fits the need and sells itself.” – Peter Drucker, The Practice of Management, 1954.
Marketing is broken because business is broken, within the context of a customer-centric marketplace—still pushing in a pull economy. And marketing has become a function — rather than a driver — of business. This is basically a lapse in the market evolution as the two disciplines have become disconnected, one dragging the other down.
Marketing is trying hard to be customer-centric but is trapped in a business model that was built in a push economy, evolved from the Industrial Age, and driven by a purpose that is no longer aligned with a pull economy. In some cases it’s polar opposite.
Within the confines of the corporate enterprise, marketing has become functionalized, departmentalized, compartmentalized, regimented to a top-down management structure that drives organization focus and performance metrics based on self-serving financial objectives rather than customer serving value objectives.
It is the purpose of business that drives marketing, as a corporate function. If that purpose is profit and return on shareholder value, rather than return on customer value, then we have an interesting dichotomy at play that may be unprecedented, as business is now controlled by the customer in a pull economy. It is the customer that defines brand valuation and quarterly profits.
We need to stand back and take a broader perspective as this is not really a marketing problem; it’s a business problem. It’s a strategic disconnect between marketing and executive management, creating tension between short-term profit and long-term customer value. The CEO is measured on quarterly earnings.
So what does the management guru have to say about this?
That would be Peter Drucker, who proclaimed in The Practice of Management, first published in 1954, that “The purpose of a company is to create and keep a customer. Without the customer there is no company.”
He challenged companies to take a customer-centric point of view: “What is our business? Who is our customer? What does our customer consider valuable?”
His conclusion: “Marketing is the whole business seen from the customer’s point of view.”
And Drucker wasn’t even a marketing guy.
He did believe, however, that there are only two functions in the corporate enterprise that produce results: marketing and innovation. The rest, including management, are costs.
Theodore Levitt, who was a marketing guy, made the point even more succinctly in his book The Marketing Imagination back in 1982.
“Profit is a meaningless statement of the corporate purpose,” he wrote. “Without customers there is no business and no profit.”
“Saying profit is the purpose for business is like saying the purpose of life is to eat. Eating is a prerequisite, not a purpose for life. Profit is a prerequisite for business. To say that profit is the purpose of business is, simply, morally shallow.”
Though he was widely recognized as a marketing guru, business as an institution has not taken heed of his wisdom and foresight, as the purpose of business in most every corporate enterprise is profit—it is deeply embedded in corporate organizations, compensations, operations and cultures. And so we find another lapse, from academic theory to business practice.
In premise, marketing is about customers. In practice, marketing is a function of business, the purpose of which is to make a profit and return value to stockholders. Somewhere along the line marketing lost its way and became a cost. Yet going forward it is marketing that will drive business from the economic abyss into a new, customer-controlled marketplace.
That means marketing and management will have to come together.
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