An Interesting Problem
Recently, we met with a client to discuss marketing strategy. This client has a long history of doing business in Utah and is one of the largest private companies in the state. However, when we met with them we met with a marketing committee composed of a public information director, graphic designer, corporate strategist, and the corporate pilot. No marketing director and no CMO.
Needless to say, this company has not devoted a lot of resources to strategic marketing. Just in case you missed it before- the corporate pilot is on the marketing committee. In the pilot’s defense, he is a perfectly intelligent person—he was just being allocated in an odd way.
After the meeting it became clear that this committee wanted to have a seat in the board room with the rest of the senior management team. Functions represented on this team were finance, operations, safety, and HR. All of these functions provide inputs that help the executive team make profitable decisions for the entire organization. Marketing was occasionally called upon to talk about the company website or the design of a tradeshow booth, but had no say in the strategic direction of the company’s marketing efforts. Why? It is because no one on the committee knew how to give the senior management team useful information or input.
Marketing’s input belongs in the C-suite along with all the other pertinent business functions. In fact, the input that marketing can provide can be ubiquitously applied to the planning of all other functions.
Functional Input and Influence
Each business function does stuff and the stuff they do produces data. Operations produce production, logistical, inventory, and quality data. HR produces compliance, benefit, hiring, and turnover data. Finance produces investment portfolio, income statement, cash flow, and balance sheet data. But the one bit of data that precludes all of these other data is demand. Demand- the downward sloping line from Econ 101 textbooks- is perhaps, when it is accurate, the most important data an organization can have.
Determining demand is a marketing input. Without knowing demand operations cannot plan how much to make, HR does not know how many people to hire (or fire), and finance cannot make decisions regarding inventory management, cash reserves, and investment risk. In addition to helping with these decisions marketing can also help several of these functions operate smoothly by controlling demand by turning up or turning down marketing efforts.
If marketing provides input that affects all of these functions, why is marketing not represented in every c-suite across the country? It is because many marketing professionals do not know how to determine market demand.
The Solution
Marketers need to understand demand before they can gain audience and influence with the highest powers in their respective organizations. Many marketers, including the marketing committee described at the start of this article, try to gain influence through creativity and innovative ad campaigns. These tactics, while colorful, cool, and well thought out, do not speak the language of business that senior executives want to hear.
Some key concepts that any marketer seeking influence in the c-suite should familiarize him/herself with include:
Demand: specifically how it is related to price and quantity
Elasticity: not how to determine the half-life of your underwear- how does price change affect demand for your product
Supply: how much of a good will your market produce? How does this affect your pricing?
Competition: what is the competitive model of your industry: Perfect, monopolistic competition, oligopoly, or monopoly – a combination of 2 or more of these?
Aggregate Planning: used in operational planning, but a key input is demand – an input that marketing needs to own
ROI: marketing budgets should be used as an investment that yields revenue
We will do our best to elucidate each of these concepts in future blog articles. It is our goal to educate the lay and professional marketer alike. More sophisticated marketing means more efficient markets, which benefit society as a whole.
Will knowing these things make a marketer more successful professionally or in the c-suite? All things held constant, probably not. Many other things contribute to professional success and influence than knowing things – but having a foundational knowledge of these things couldn’t hurt.
