By: Gillian Jones

July 31, 2006, Marketingweb (South Africa)

If you were appointed chief marketing officer in your organisation, who would you like to sit near? The CEO? Financial director? Technology (Research & Development)? The chief information officer who controls the customer database? Or the sales office?

This was the question posed by Dr Philip Kotler, marketing guru from the Kellogg’s School of Management, Northwestern University, Chicago. He was speaking at a conference in Johannesburg on Thursday.

The local audience were asked to vote, and around 20 voted for an office next to the technology head, while the same number wanted to sit close to the financial director or the CEO. Proximity to the information officer was more popular with 50 votes, while sales won with some 80 votes.

So who was right?

“You have got to sit next to all of them,” said Kotler, emphasising that marketing fulfils a crucial role across all an organisation’s activities.

He believes, however, that marketing is not fulfilling its potential. Part of the reason is that it suffers from a credibility problem, while it is also does not show Return on Investment (ROI) accountability. Thus marketing remains at the periphery of strategic decision-making.

To illustrate marketing’s lack of credibility, Kotler referred to a study which found that less than 57% of finance directors think investment in marketing is necessary for long-term corporate growth. Some 27% think marketing investment is only a short-term tactical measure; while 32% said marketing would be the first budget they would cut in hard times.*

Other obstacles facing marketing include the failure of new products – or what Kotler refers to as “our biggest embarrassment”, saying some 80% of new FMCG products fail.

He also believes marketing costs are high and rising, while marketing generally does not create major new ideas.

Marketing is also too involved in short-term thinking, says Kotler, although conceding this is not marketing’s fault but due to quarterly reporting. To counteract this, he suggests marketers engage in both downstream and upstream marketing.

In downstream marketing, marketers help the sales team push more product, while in upstream marketing, marketers visualise the best future opportunities and think ahead for the long term.

To become credible, marketers need to become financially competent. We have heard this before, but it’s a message worth repeating. And during his day-long presentation, Kotler kept drumming on the point that marketers need to understand finance.

“Marketing people are in marketing because they don’t like numbers… or they actually like people more than numbers. They like to make things happen,” he said. “But they need to understand finances.

“Someone in your department should be comfortable with stats, figures, and know the terms like shareholders’ value, ROI, etc.,” he said.

He also stressed the importance of being able to measure marketing’s outcomes. “You need to develop metrics for measuring different marketing expenditure categories.”

Some of the metrics marketers should consider include: