Developing Marketing Capability - Essay Example

? Developing Marketing Capability Developing Marketing Capability Introduction Marketing has become a very essential element of any business as it acts as the path between the company and its customers. With the change in corporate trends and environment, the need for reaching the customers and presenting company’s product has grown substantially. In this way, the need is of having an effective marketing function. This requires a strategic approach from organizations to devise a strong and sustaining marketing function. This study is going to evaluate of how organizations work on structuring marketing function. What are their approaches, challenges, needs and ambitions to structure a marketing function The aim is to identify the relationship between marketing and organization performance, which is to assert marketing as a significant business function. Objectives Challenges faced by organizing in measuring marketing performance. To organize a marketing function in order to bring competitive advantage and true organizational success. To align marketing function with organizational goals, structure, capabilities and resources. This is to bring competitive advantage and success for the organization. Organizational Challenges in measuring Marketing Performance In an objective to improve marketing performance, organizations first have to measure marketing performance (Richardson, 2012). Without assessing or measuring performance organizations cannot get on with the improvement of capability, skill or performance. There are certain major challenges which organizations face in measuring marketing performance (Shaw & Pont, 2003). Likewise there are challenges to measure intangible customer value, loyalty or marketing outcome which inevitably leads organizations to incomplete assessment. Similarly, by setting numerical data as performance measures bring incomplete information on assessment (Gronholdt & Martensen, 2006). Relatively big financial data feeds like return on investment, balance sheet, or profit or loss statements do not provide the real sketch of marketing, which eventually give distractive information. Moreover more operational activity of marketing does not mean it is performing well as if the marketers are found busy does not mean that there work is productive or based on outcomes (profits or revenues). Intensive marketing does not allocate productive marketing, and hence cannot be taken as a performance measure (Shaw & Pont, 2003). To access marketing performance organizations have to find a purposive method, in which first thing is to set a right performance metrics. For measuring marketing performance there are different metrics which can reflect the operational and functional performance of marketing (Gronholdt & Martensen, 2006). In the most adaptive metrics used in critical evaluation of marketing performance are activity based metrics. This may include metrics of numerical counting and control and in-depth reporting to scan the intrinsic performance of the function (Raab, 2009). The most adaptive metrics include rate of customer acquisition, customer engagement, events successes, popularity of labels, and competitive brand reception respectively. There are certain limitations behind such metrics as they all are intangible but to a great extend provide the explicit information of how the marketing functioning is performing (Gronholdt & Martensen, 2006). Similarly, a well reported system is itself a performance scanner for marketing. When organizations demand performance assessment, it means they have well organized and well established reporting systems (DCI, 2004). Such systems are obligatory, obligatory in terms of intensive reporting, periodic reporting and reporting with respect to each marketing activity. With time to time reporting, the whole picture comes out on front giving a projection of marketing delays, inefficiencies or unproductiveness (DCI, 2004). Organizations which imply MPM (marketing performance management) attain marketing as a business function. Hence, such organizations involve finance within marketing system. The hierarchies in the marketing function are based on financial principles just like program to people ratios, awareness to demand ratios or conversation rates which also come out as performance metrics in the marketing function. Similarly, giving a resource based approach to the marketing heads also channelize marketing performance (Kotler, 2009). Likewise, when marketing managers are aware that they have to achieve certain targets based on the resources provided, they themselves prepared to measure and report marketing performance. By applying all such marketing implications, the organizations can work out in measuring marketing performance (Kotler, 2009). After performance gets measured the next stage is to design a well organized marketing function. This starts with the grouping of organization resources, capabilities and skills, and next to the structuring of marketing principles (Neely, 2007, pp. 36). How Marketing Function should be structured to bring Competitive Advantage? When organizations exist in highly competitive environments, they require some fundamental operational and functional competencies (Coates, 2008). According to modern literature, the operational competencies include advancement of mission, strong interpersonal relationships, strategic thinking, deliberate communication and quality service approach (Coates, 2008). Similarly in modern business perspective, functional competencies include information, culture, performance and skill respectively (Edgar & Lockwood, 2008). Both operational and functional competencies are important for organizations. Likewise functional competencies which fall in departments (production, R&D or marketing) include operational competencies to develop competitive advantage, which later on builds the ground of organizational success and performance (Bersin, 2013). Marketing competencies include channel management, product enhancement, communication, positioning or strategic differentiation which if achieved provide the gateway of competitive advantage (Duff, 2013). Marketing competencies which are part of functional competencies have a central part in gaining competitive advantage. Being a major functioning department, marketing itself evolves the cycle of competitive advantage. This is done by establishing all marketing competencies and goals which are to be reflections of organizational aims and perspectives (Shaughnessy, 1995, pp. 45-47). Marketing function should be structured on the basis of all the above mentioned marketing competencies (Drummond et al., 2007). These are according to the organizational goals, as competencies are always reflection of organization objectives. Meanwhile, by adopting such marketing principles a long term marketing structure can be formed, which is effective, competitive and integrated (Drummond et al., 2007). Once the competencies are set as fundamentals of marketing, the marketing infrastructure can be started to get formed. According to the modern literature, the next level in forming a marketing structure is to group organization resources. This is to check that how much organization can afford a new marketing function (Coates, 2008). Organizational goals have to be assessed in order to see that how such goals can be aligned with the new marketing functioning. Just like if organizational goals are irrespective of the new marketing functioning, the function will definitely not perform or grow (Shaughnessy, 1995). Moreover, organizational skills and capabilities are next to be analyzed. There are many organizations which try to impose their skills and capabilities (potencies) in the new marketing function; this disintegrates the function and the overall performance of organization. Hence, capabilities are must to be analyzed before forming a new structure, as these are intangible assets which have a direct association with any of the organization function “marketing function” (Edgar & Lockwood, 2008). The third stage after self-organizational assessment and establishment of the competencies is recruitment and selection. Hiring the best people in marketing is the basic thing required in structuring. It should be the core objective of recruiters that they hire the best people- a team which is diversified in all respects (promotion, distribution, tendering and differentiation). According to Philip Kotler, specialization comes through skilled people (Chung, 2008). No matter it is marketing, HR or Finance, specialized people have a vital skill, command and authority to bring performance and growth (Chung, 2008). Hence, hiring specialized staff in marketing is part of structuring. This is an essential activity which assures chances of progress, performance and receiving competitive advantage (Chung, 2008). The last but not the least is selecting a significant marketing structure. There are two types of marketing structures, centralized and decentralized which can fit in the organization setup. Selecting an adequate marketing structure depends upon the suitability of the organization (Foong, 2013). In an organization where there is a gap between marketing actions and organizational goals, such organization suite centralized marketing (Woodcock, 2008). In this way the decisions are transferred through centralized authorities (headquarters) and marketers are proactive to response on such decisions. Similarly, organizations which want to divide risk and planning operation are well suited to decentralized marketing system. This helps them in restraining uncertainties as they are managed by specialized people (marketing specialist) and in a distinctive manner (Woodcock, 2008). The recommended marketing structure is decentralized marketing structure, which allows the marketers to perform in their own natural style. When there is interference from outside (leadership, business owners), which is in the centralized marketing system, then specialists are more stubborn and less creative (Foong, 2013). They do not touch their unique marketing styles, strategies and tactics which they use in effective decentralized marketing system. Hence, decentralized system is highly recommended as It is applicable in all organizations and requires less time to get adjusted and established. Decentralized marketers being more authorized are respectively more responsible to counter back uncertainties. They are risk managers and challenge pickers which organizations cannot find in any centralized marketing system (Foong, 2013). When all above procedures are met, well engaged, and established they result in an effective and result giving marketing structure. To achieve the primary goals (competitive advantage-organizational success), it is necessary that all the discussed procedures are met at the time of structuring marketing function (Kotler, 2009). These are basics which implies to the formation of marketing function, which later results in competitive advantage and organizational success (Kotler, 2009). Organizational needs and capabilities in meeting sole objectives (Competitive advantage-Success) There are three levels of organizational capabilities including assurance of internal competencies (operational and functional), employee skill development, and understanding of customer needs and wants. To have all such capabilities organizations have to keep a Resource based approach, which means that resources such as finance, assets or labor are well integrated with the capabilities (Daft et al., 2010). Meanwhile, without knowing of how many resources an organization has it cannot judge that how much capable it is in the market. This requires a resource based view from which organizations understand the gap between resources and capabilities (Smart & Conant, 2013). When organizations align resources, capabilities and skills and transfer them to any function “marketing”, there are certain chances of growth and performance. Organizations which work in globalization and competitive market environments always follow the rule of integration (Daft et al., 2010). They apply integration by aligning resources (finance, capital, labor, machines, and equipment), skills (competencies) and capabilities (potencies) and which is to rule out the competitive market situation (Daft et al., 2010). Competitive advantage is an outcome of integration. It is an outcome that comes through organizational incorporation. When organizations are integrated which means their departments are linked and sub-merged, they have a clear vision, path and direction to move forward (Daft et al., 2010). Moving forward means moving towards growth and progress, which eventually is a way to true organizational success. The fact is that when organizations align skills, capabilities and resources and transfer them to all functions, then they have a better path to generate competitive advantage (EMM, 2013). With collaboration each department is competitive, which further assures organizational success for the large aspect of time (Drummond et al., 2007). Understanding Marketing Capability as a key for Organizational Performance For organizations that exist in competitive markets, all functions are relatively important within their system. Whether it is Human Resource, Production, R&D or Marketing all have distinctive importance and are partially significant for organization performance (EMM, 2013). Developing employee skill and capability in the marketing section do have a direct or indirect impact on organization performance. When employees are well trained or highly professional they know the tactics to bring growth and prospect. Meanwhile, employee skill itself is a major competitive advantage as when it is there it becomes the direct threat for competitors prevailing within the market (Drummond et al., 2007). According to Alexander Krasnikov, marketing capabilities such as customer relationship management have a significant relationship with organizational performance. He described that marketing capabilities create superior performance outcomes for firms. Just like firms which belong to different industrial sectors uses CRM (customer relationship management) to catch customer related performance (Krasnikov, 2007). In contemporary researches, it has been noted that marketing functions such as pricing, distribution and advertisement which are drivers of competitive advantage are evolved through marketing capabilities (EMM, 2013). Capabilities such as comparative information collection, deliberate customer understanding, and brand based marketing are what that give life to marketing functions. In this way, marketing functions are directed through marketing capabilities. The more strong and unified the capabilities are the more systemized and effective marketing functions are within the organization system. All of this leads to organizational performance and competitive advantage which are segments of true organizational success (Drummond et al., 2007). Understanding the importance of marketing capabilities, organizations should work on developing capabilities (Coates, 2008). In this the very first thing to consider is employee skill which is a direct source of marketing capabilities. To develop employee skill, organizations use various methods of skill development. The methods include organizing workshops, training programs, or skill development programs to enhance the individual level skill. Similarly, some organizations encourage coordination and communication to improve employee interpersonal skills. These are to improve team leadership qualities, motivation and self-determination of employees to incarnate capability as a whole (Coates, 2008). Apart from all, marketing culture is precisely important in developing capabilities especially individual level capabilities (Daft et al., 2010). A culture which accepts marketing as a business function is significant in establishing marketing capabilities. Motivation in employees comes through the culture, and also the importance of the business function which is derived through culture (Daft et al., 2010). Conclusion Organizations face different challenges in measuring marketing performance. Challenges of having a right performance measure or performance metrics are there for organizations. Measuring performance is important because it gives a way to devise an effective marketing function. In view of the study, it can be said that organizations have to align themselves with marketing function. This is to generate performance in the marketing system which directly or indirectly impacts the overall organization performance. This requires an integrated organizational approach which aligns organization resources, skills and capabilities with marketing skills and capabilities. When integration is there, competitive advantage and organizational success are inevitably there. Hence, all of this concludes that marketing as a business unit is precisely important for organization performance. No organizations can sustain or improve unless they have an effective marketing function, effective in terms of performance, growth and sustainability. Reference List Bersin, 2013. Functional Competencies. [Online] Deloitte Development LLC Viewed at: [Accessed 21 February 2013]. Chung, H., 2008. 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