Are 70 Year Old Marketing Ideas Back in Fashion?

Two months into my internship at The Croc, I’ve been asked to write an essay about the role of marketing within a business. To do so, I looked at some of the research published on this issue in the last 70 years - this is what I found. Peter Drucker, often hailed as the father of management theory, famously defined a business’ purpose as the creation of a customer. From this definition, Drucker derives that a business has two sole responsibilities: marketing and innovation. To gain a better understanding of marketing and its core responsibilities, it is important to first take a close look at the foundational theory for this subject.

Drucker’s Principal Beliefs

Marketing refers to customer orientation, meaning always putting the customer, and their needs, first. It also entails how the customer views the business, which is why marketing is central to a successful business. In his theory, Drucker explains this point by arguing that customers are not interested in the inner workings of an organisation. Instead, people buy and are loyal to brands, not companies. Additionally, marketing a business as a brand, rather than an organisation, gives a company the chance to easily reinvent and diversify itself. It is important to note here that Drucker does not view marketing as a separate business entity or department, but rather a value, or a competence that is inherent to the business through its function.

Innovation describes the response to the changing customer definition of value, and their expectations, which Drucker sees as a core feature of competitive markets. According to him, it is essential that the response does not avoid risk but is rather actively risk-taking to maximise customer orientation. Increased customer orientation results in profit maximisation, and thus the elongation and maximisation of a company’s value and survival. It is hard to forget Drucker’s rich expertise in management theory, which far encompasses his interest in marketing, as he sees both innovation and marketing as critical skills that management must possess to contribute to economic development. Through harnessing these abilities, potential demand, or what he calls latent demand, is transformed into effective demand.

Within his marketing concept, Drucker also emphasises the significance of a distinction between sales and marketing. Sales encompasses the process of converting a lead into a customer through direct interaction. Marketing, on the other hand, involves recognising and catering to customers’ needs and wishes. Whilst marketing serves to understand the customer, create strategies, and construct their messaging, sales is focused on delivering the product to the customer and enhancing revenue. Therefore, marketing should not be the task of a sales team, but a value at the core of a business. In fact, Drucker sees the aim of marketing as making selling superfluous. Through marketing, a business should know a customer so well that the product, or service they create appeals to the customer so much that it sells itself. This ties into his belief that the purpose of a business is to create a customer.

The Marketing Mix and Marketing Audiences

Less than a decade after Drucker presented his fundamental marketing concept in the 1950s, E. J. McCarthy introduced the so-called ‘marketing mix’. This theory refers to the four Ps of marketing – Product, Price, Place, and Promotion. McCarthy’s marketing mix is a tool used to effectively market and highlight the different roles marketing plays in a business. The product is meant to satisfy a customer’s need either by filling a void in the market or by offering a unique experience that drives demand. The price should not be too high for the customer, but simultaneously high enough for the business to profit. It should also reflect current market trends. Place refers to the right distribution channel, and promotion serves as a reminder to send the message at the right time. According to McCarthy, following this marketing mix maximises a business’ chances of selling a product whilst making customer-focused choices.

When examining the role of marketing it is also vital to include a distinction between business-to-business, or B2B, and business-to-customer, B2C, marketing. As the names indicate, B2B audiences are businesses whilst B2C targets individuals. Because of their audience, B2B purchases commonly take place over a longer period of time and involve more dedication to the relationship with the customer. This is because, in B2B transactions, every decision typically requires approval from multiple stakeholders before a purchase is made. As a result, the marketing efforts target not just one individual, but everyone involved in the decision-making process. Moreover, there is a greater emphasis on nurturing leads and focusing on user experience. Since purchasing decisions in B2B settings contribute to long-term company objectives, the evaluation process for products or services is considerably more intricate. Another key characteristic is that, because the purchases in B2B are often motivated by logical and financial ideas, such as ROI, their audiences look for expertise and efficiency, whereas B2C focuses more on entertainment and quick solutions, especially in the form of deals.

Contemporary Ideas

Although there is a consensus within the marketing industry that McCarthy’s, and especially Drucker’s teachings are fundamental to our understanding of marketing, many specialists believe that they are somewhat outdated. It has been observed that, in an effort to become a more scientific discipline, marketing has moved away from its focus on management theory. Instead, it gears towards creating new approaches through analytical techniques to create a revised general theory. For example, it is often argued that globalisation and advances in technology have changed media and the market so radically that these established concepts are holding us back and are preventing innovative thinking. A common suggestion to improve and reinvent the role of marketing is to concentrate on stakeholders, distributors, suppliers etc. rather than just customers to boost sales. Other ideas also show an emerging pattern – the view of marketing as a separate department of a business, not a core value. It seems that, over time, marketing and sales have become intertwined, or even almost merged in our modern-day comprehension of the role of marketing.

I believe that the role of marketing does not need to be redefined, but that our understanding of the matter should return to what Drucker so strongly stressed. Putting the customer first. This would make marketing an innate principle of a business that connects its various departments. Whilst societal circumstances and customer demands have undeniably changed since Drucker’s findings, the fundamental key to mastering these challenges stays the same. A business still needs to ask themselves how to create value for a customer and how to understand their needs, even if the ways in which it does so have transformed. If businesses centre their organisation and management around their customers, whether they come from a B2B or B2C audience, their product will sell itself. It then remains true, even 70 years later, that the purpose of a business is to create a customer. What has perhaps changed is the degree to which the customer has the power to define the business. This change is all the more reason to place the customer first.