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Monday
Sep172012

FINANCE MARKETING AND OPERATIONS: WHO WORKS FOR WHOM?

Published April 1997 but still true. 

 

One of today’s most visible and successful CEO’s is Lee Iacocca.  His dramatic turn-around of the Chrysler Corporation surprised many financial and operations heads of industry.  Iacocca was a marketer.  The finance and operations heads of Chrysler and Ford (where he learned the auto business) worked for him. 

 

Chrysler was losing its traditional customer base as a result of not listening to them.  The American auto industry was notorious for this common problem;  it took  a marketer to slap it into shape.

 

I have never forgotten the introduction to one of my college marketing text books that compared the success rate of Fortune 500 executives with backgrounds in the areas of finance, accounting, operations, and human relations, to those with marketing backgrounds.  The author claimed that professionals with marketing backgrounds were gradually winning the “fight to the top” in Corporate America.  This was an unusual observation because this had not previously been the case.  I don’t know how true this was for the time it was written.  Twenty years later, it is interesting to watch as the recent fervor in industry reverts back to the trend of  “listening to the customer.”

 

Today, “marketing driven” companies are succeeding over “product- driven” companies by responding faster to customer needs and wants.  A “product driven” company focuses on a product manufactured or the service provided, then attempts to sell to prospects.  These companies offer products in need of a market.  As a result, they must look for a market or “sell” to customers who aren’t necessarily ready to buy.  Many companies in this product model have “marketing departments.”  These departments actually spend their time selling -- not marketing.

 

By contrast, a “marketing driven” company focuses on building products and providing services that its customers want or need.  By utilizing the company’s core competencies, for the good of solving customer problems, they use existing customer relationships to gain more “customer share” (more dollars from existing relationships), rather than looking to “market share” (a higher percentage of the total market).

 

Progressive companies are looking to marketing executives to find ways to survive in a global economy where standard products become commodities, selling for the lowest price.  Ross Controls is a company that has managed to turn around a commodity pricing cross-fire in the pneumatic valve business.  As outlined in March’s “Business Marketing Magazine,”  published by Advertising Age,  Ross was in trouble a few years ago.  Using a marketing approach called mass customization, Ross is now growing in a flat industry and has turned a life-threatening problem into a plus.

 

Combining computer aided manufacturing and design tools with one-to-one marketing, Ross’s engineers were trained to customize their products directly with their customers. The concept was so radical that new graduates right out of school were trained in the process instead of using existing engineering staff.  The concept itself is impressive, but the thrust of the reasoning is supported by the organizational structure as well.  The engineers, called integrators, report to the marketing department, not the manufacturing or design units. 

 

Marketing is a “system of interacting business activities designed to plan, price, promote, and distribute” products and services to present and future customers.  It is the big picture, not a salesman with a catalog.  The process of competitive marketing today is not a department.  Marketing is a management process and philosophy that supports the marketing driven concept.  Anyone in a company who understands and embraces this concept is a marketer.

 

That’s why the finance and accounting people worked for Lee Iacocca.  Iacocca knew that to succeed, he had to change  the entire focus of management.  To turn around the automobile industry, workers needed to build new kinds of cars: ones that their customers wanted to buy.  Iacocca knew that the industry  had to become marketing driven; no longer could they just hawk cars.

 

As simple as it sounds, I believe that most companies are still selling products in search of markets.  The holistic shift of management into an integrated marketing machine requires time and care;  it cannot be  accomplished by policy or edict.  A complete process requires the careful blending of planning, technology, philosophy, and human interaction.  As Ross Controls is aware, the shift is more than a rewarding one; the results can be life-saving!

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