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Why Have a Marketing Function if Your Company is Market-Oriented?

As marketing gains increasing prominence as an orientation that everyone in the organization shares and as a process that all functions participate in deploying, a critical issue that arises is the role of the marketing function. Jerry Wind (1996) says it well when he notes, “Marketing, as a management function, appears to be in decline. Marketing as a management philosophy and orientation, espoused and practiced throughout the corporation, is however seen increasingly as critical to the success of any organization.”

What role should the marketing function play, if any, in an organization that has a strong market orientation? I answered this question in a paper published in the Journal of Marketing with Roland Rust. Here is a summary of what we found.

We took the view that though a firm’s market orientation is undeniably important, the marketing function should play a key role in managing several important connections between the customer and critical firm elements, including connecting the customer to (1) the product, (2) service delivery, and (3) financial accountability. I wrote about these roles in a recent blog.

To test our ideas about the importance of a marketing function, we collected data from managers across six business functions and two time periods with respect to the role of the marketing function, the firm’s market orientation, and firm performance. 330 managers across different functions responded to the questionnaire, including marketing (32.3%), human resources (27.7%), operations (31.1%), R&D (27.1%), accounting and tax services (34.2%), and finance (28.5%).

Our results show that the marketing function contributes to firm financial performance, customer relationship performance, and new product performance beyond that explained by a firm’s market orientation. Marketing’s value, in turn, is found to be a function of the degree to which it develops knowledge and skills in connecting the customer to the product and to financial accountability. For service firms, the value of the marketing function also is related positively to marketing’s ability to connect the customer to service delivery.

Figure 1 shows the role that the marketing function can play in companies. The five nodes are central firm elements: customers, product, service delivery, financial accountability, and top management. Customers refer to those intermediate and end consumers who purchase and/or use the firm’s goods or services. Product is used broadly in this model to refer to the goods or services offered by the firm. Service delivery refers to the ancillary actions involved in providing a firm’s goods and services to the customer. Therefore, even in a service business, product and service delivery are distinct; the product refers to the designed offering (e.g., an insurance policy), whereas service delivery refers to how well the customer is actually served before, during, and after the transaction (e.g., insurance sales, claim handling). Financial accountability refers to the links between firm actions and profitability. Top management refers to organization-wide leadership and decision making.

Figure 1 has nine connections between these nodes that reflect key firm knowledge and skills. We argued that firms historically have focused on developing node-specific knowledge and skills. For example, operations would become experts in product issues, marketing in customer issues, and accounting in financial accountability issues. The approach in Figure 1, in contrast, emphasizes developing knowledge and skills related to managing the connection between nodes. The marketing function should play a role in connecting the customer with (1) the product, (2) service delivery, and (3) financial accountability. Of these three connections, the traditional role of marketing has been to link the customer with the product. Identification of the other two connections with marketing is a fairly recent development made germane by trends in information technology, the growing dominance of the service economy, and importance of financial accountability to all areas of business.

Our approach does not suggest that the marketing function has complete purview over a certain customer connection, nor does it preclude other cross-functional activities. On the contrary, our view supports the role of both functional and cross-functional influences.

In sum, while a company’s market orientation is undeniably important, the marketing function continues to have an important role to play in connecting the customer to central strategic elements in the company. Marketing may be something that everyone needs to contribute to in order for the company to succeed. However, this does not replace the need for a function and leadership that are responsible for and accountable to the organization for creating value for customers and capturing value for the company.