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SOME ASPECTS OF INTERCONNECTION OF MANAGEMENT AND MARKETING IN CONTEMPORARY ECONOMICS

 
17.04.2019 15:35
Автор: Heber Guy Tchicamboud, MBA Business/Management, Ukrainian American Concordia University
[Секція 2. Менеджмент. Маркетинг;]

Management. The idea of management comes from the military because that was the first time in human history a diverse group of people who did not know each other were organized to work together towards a common goal. From that structure comes the following principles:

• Hierarchy

• Command and control

• Incentives for achieving the goals

• Division of responsibility based on function

• Centralized decision making

Not much has changed over the last few thousand years. Today, the business world follows many of the same principles. At the highest level, business management is about capital allocation, mainly within an organization, to maximize shareholder returns. To do that, a manager must be good at understanding risk, making decisions, making trade-offs, communication, and putting the right people in the jobs. Middle management is more nuanced. Theoretically, management is an easy concept to grasp. However, the execution of the concept is complex. Having studied some organizations, I see that management today, can be categorized into four categories:

1. Domain Management (DM): This idea is very familiar in the business world. If you get an MBA (Master of Business Administration), this is what you study i.e. how to manage different business functions (domains) which might be marketing, finance, technology, strategy, etc. Your job description tells you what you are supposed to do. People can follow an exact set of principles and rules and become good at managing a function. For example, traditional marketing has four Ps (Product, Price, Place, Promotion) of marketing management. Over time, doing the same thing again and again, you become an expert in that function. However, with time the new things you are learning continues to decline and you get set in your methods because you have all this experience that tells you what works and what does not. Hence, you become less adapt to changes in culture, technology, and industry. Try hiring someone who has spent ten years doing direct marketing with a big budget for a CPG (Consumer Packaged Goods) company into a tech startup for growth marketing.

2. Organizational Management (OM): Hearing the term leadership in the business world, generally, Organizational Management is what people are referring to. After joining an organization in a managerial position (manager, director, vice president, president, etc.), having direct reports, to manage a function or to run a division i.e. Profit & Loss (P&L) responsibility for that division, one is expected to manage all the resources working in that function or division. Doing that requires:

Setting up a shared vision: Everybody in your organization and the other organizations you work with should understand what is to be achieved and why.

Incentives: Nothing changes human behavior like incentives. The shared vision one aligns one’s organization with has to reward people for continuously delivering on the shared vision. A common management error observed is that the new strategy or vision is declared by management and nobody tells the employees how they are supposed to do the job differently and if and how their incentives have changed.

Goals: The shared vision has to be converted to individual goals with incentives tied to them so that people understand what is expected of them in what time frame. So many times executive vision is never converted to concrete goals that the employees are supposed to achieve. This causes a lot of confusion within the organization.

3. Perception Management (PM): In a management role not only one has to do DM and OM, one has to manage the perception of self and one’s team in the organization. The time spent in PM is directly proportional to the size of the organization. In a small startup, there is less worry about PM because everyone sees your work. However, if you are the startup CEO, you might have to manage the perception of the investors and the board. On the other hand, as a mid-level manager (Director/VP) in a big company, you have to manage how your peers and your superiors perceive you. It is really important because decisions about you and your team are made in your absence and based on how the others perceive you. This means that as a manager you spend a lot of time aligning with various other managers so that you are perceived as a team player and nobody says anything negative about you to your superiors in your absence. You also spend more time on the PowerPoint to look polished than on the content in the presentation. In case you are wondering, why your boss is getting promoted when he is not good at his job, it is because, generally, the people who rise in big organizations spend most of their time in PM and not enough in OM and DM. If you are not doing PM, people are perceiving you anyways, it is a natural thing to do. So you might as well take charge and manage how others perceive you.

4. Feelings Management (FM): No matter how good one is at management, eventually she/he will end up hurting someone’s feelings in the organization. If one wants people’s commitment to the vision, they have to feel good about the shared vision and about working with you. If you are doing something bold, you want people to change their thinking, you have to critique someone’s work or reject someone’s idea, you have to do it very tactfully. All humans want to feel valued, liked, and respected. Relatively speaking it is common that engineers are better at taking direct feedback as long as you have a logical explanation. Other professionals, especially in the creative fields like design, may be more responsive to a different approach to receiving the same feedback. So, you have to recognize who you are speaking with and communicate accordingly. How you say things becomes more important than what you say. This skill is getting more and more important because culturally the younger generation is much more feelings conscious. The norm used to be that if your boss did not say anything about your completed project that means you did a good job. Slowly, the norm is moving towards positive reinforcement to your employees every day. So, if you want your younger employees to do their best work, start addressing their feelings. These days, it is not uncommon for management to use emojis to provide positive feedback on employee efforts.

You have to manage DM, OM, PM, and FM in parallel. However, the four management categories do not carry equal weight. A lot depends on your level in the hierarchy, the maturity of the organization, and your function. To become a better manager, understand where your skill level is in the four management categories and prioritize your development in these categories based on your role in the organization.

Marketing. Management guru Peter Drucker once said, “Because its purpose is to create a customer, the business enterprise has two -- and only these two - basic functions: marketing and innovation.” Clearly most business leaders embrace innovation as the lifeblood of their companies today, but lately marketing has been relegated to a staff-driven, cost center by many. And that has caused waste, missed opportunities, and failure for many businesses.

Marketing as it was originally intended, in its fullest, truest, and greatest form, is more important today than ever before. The world is awash in innovative products, services, technologies, solutions, business models, etc. today.  These new offerings must be brought to market and commercialized in order to generate revenue and profit. Innovation alone cannot sustain a company; it must be paired with marketing.

The Decline of Marketing. Instead of being led and valued as a driver of business viability and growth, marketing has stagnated in recent years. Gartner’s CMO Spend Survey shows that marketing budgets have leveled off to an average of 11% of company revenue, packaged goods companies including Unilever and P&G have scaled back their marketing spending, and companies from media groups such as Warner Bros. to retailers like Walmart and Starbucks have been cutting marketing staff.

Pundits have been declaring, “marketing is dead” for nearly a decade now but predictions of marketing’s demise have increased with recent developments including the growth of artificial intelligence. AI assistants are expected to use algorithms and predictive analytics to offer up information, goods, and services to customers – which suggests that marketing will have increasingly less impact on their decisions. The growth in number and market share of Amazon’s private label brands is another development that also seems to challenge the effectiveness of other companies’ marketing. And those who worship at the temple of innovation believe that marketing is the cost you have to pay when your product is inferior.

If business leaders want to thrive in today’s cluttered, competitive, commoditizing marketplace, they need to unleash the powerful potential of marketing.

Innovation Needs Marketing. In a recent Harvard Business Review issue, two separate articles explained the importance of marketing in today’s innovation-fueled marketplace. Although the first article intended to promote a new sales approach, it ultimately made the case for marketing. Business school professors Thomas Steenburgh and Michael Ahearne observed, “Senior leaders have great confidence in their ability to develop innovations but not in their ability to commercialize them.”

The writers explained that breakthrough new products, unlike existing or incrementally better ones, require more intense and extensive engagement with customers. Whereas curiosity might fuel customers’ interest in a groundbreaking innovation early on, they are much more likely to be uncertain and raise doubts later in the sales cycle as they consider how their business and they themselves might need to change to adopt it.

As a result, the professors suggested sales teams develop a psychological profile of the ideal customer – those who are more adaptable, those whose organizational culture supports learning and change, etc.  And they said the training salespeople receive about a new offering should be less about its bells and whistles and more about the evaluation criteria that customers are likely to apply to it. The marketing function enables both of these.

Marketing is about connecting the right customers to the right product. Marketing helps sales teams, and people throughout the company, think from the outside-in about what is being offered, convey its value in customer-centric ways, and persist through barriers that can only be addressed through deep customer knowledge and insight. The article’s authors concluded that new-to-the-world products require transformation in the organization that offers the innovation as much as the one that buys it.  Unleashing the full power of marketing is critical to achieving that transformation.

They contrasted the failure of the Sony Reader to the “technically inferior but hugely successful” Amazon Kindle to explain the importance of go-to-market strategies to the success of new product launches. All the creativity that went into the development of the Reader “was undone by a lack of originality in execution,” they explained. The new product depended upon content but Sony did not enlist the book publishing industry as an ally. “Sony engineered an elegant device,” they authors concluded, “but Amazon designed an original solution.” And they went on to discuss how the way an idea is framed affects how people perceive its value. “Filmless photography” was a limiting way to introduce to customers Kodak’s first digital camera and a threatening way to describe it in the Kodak organization itself.

The marketing function can and should overcome such challenges. Marketing involves considering and addressing the entire customer experience, it provides the right context for people to understand the innovation, and it helps identify new partners and channels necessary to engage with customers at the right place, time, and manner.

Both articles make clear marketing’s essential role in the innovation process.

Marketing Is Misunderstood. If marketing is so critical to business today, why is it overlooked or undervalued by so many? The way marketing has come to be defined and executed is to blame. Marketing has been reduced to customer acquisition and retention. These days, what most people consider marketing is really simply advertising. Search, email, content, and other common forms of marketing today are primarily methods for generating or maintaining awareness or repeat purchase. They are the “announcements and persuasive messages” referred to in the American Marketing Association’s (AMA) definition of advertising, and their intent is to “inform and/or persuade” people.

But marketing is supposed to be so much more than this. It was born out of the Industrial Revolution, when manufacturers needed to develop products that would appeal to customers and to find ways to engage customers with them. The AMA’s definition of marketing reflects the function’s foundational role to business: Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

In conclusion we want to stress, that marketing, therefore, needs to be less about what happens after an innovation is ready to launch, and more about getting it to be ready in the first place - by creating a new market or expanding an existing one; developing or understanding how it will fit into customers’ needs, wants, values, and lives; and building a customer experience that turns the offering into a complete customer solution. And marketing needs to be less defined by a budget and managed by a department, and more embraced as a business discipline throughout the organization.

As business continues to be driven by innovation in 2019 and beyond, marketing must be embraced, developed and valued more than ever.

Literature

1. Seth Godin, “This is Marketing: You Can’t Be Seen Until You Learn to See”. Portfolio, November 13, 2018

2. David A. Robinson, “Faith-Based Human Resource Management” 2018 Edition


_____________________________


Supervisor: Liubov Zharova, Dr of Sci (Economics), Head of international economic relations, business and management department, Ukrainian-American Concordia University





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