It puzzles me that some corporate executives still view business strategy as fundamentally different from, and somehow more crucial to organizational success than marketing strategy.
As a consultant I have had many conversations with senior and C-level executives. Our discussions often reveal these misconceptions:
- Corporations win when they focus on profits
- Business strategy defines the firm’s competitive strategy
- Marketing strategy’s scope is limited to marketing communications
This fuzzy thinking can be seriously damaging to the organizational focus and cohesion necessary for building strong brands and businesses.
Corporations win when they focus on customers
A business is successful when it profitably delivers a compelling value proposition to its customers. Profit is important. But, it is the by-product of successfully creating, delivering and communicating the compelling value that customers are seeking.
The value that is perceived by customers to be both relevant and unique is such a powerful source of competitive advantage. Profit is not, and cannot be, an end in itself. Without the compelling value proposition and the winning of the customer, profit becomes a moot point. Profits are the reward a business receives when it makes money winning customers.
As Henry Ford once famously stated,” Business must run at a profit…else it will die. But when anyone tries to run a business solely for profit…then also the business must die, for it no longer has a reason to exist.”
Marketing/business strategy define competitive strategy
Marketing strategy is synonymous with business strategy, not marketing communications. To limit marketing strategy to marketing communications is giving it short-shrift.
Marketing strategy goes beyond marketing communications. This proposition is compatible with an important tenet of management first advanced by Peter Drucker: “Concern and responsibility for marketing [customers], must…. permeate all areas of the enterprise.” Originally recognized as the central concept of marketing, “it has become increasingly important as a central concept of management.”[1]
It takes a well-conceived and executed marketing strategy to build a strong brand and business. Sometimes you’ll see it stated differently and business strategy will be substituted for marketing strategy. Marketers see these two terms synonymously and use them interchangeably. Either way, it’s about focusing corporations on creating, delivering and communicating a compelling value for its customers.
Every marketing strategy must answer two key questions: Where to play? and How to win? The answers to these two questions define competitive strategy.
Where to play? requires decisions about the product markets in which the business will compete and the level of investment that it must make to be successful.
How to win? requires decisions regarding the value proposition that a business seeks to deliver to the customers it chooses to serve, the assets and competencies required for this purpose, and the functional strategies to be employed in order to deliver on the chosen strategy.[2]
Every business strategy stems from answers to the same two questions.
Given the congruity between business strategy and marketing strategy, why do so many corporate executives continue to view business strategy as fundamentally different from marketing strategy and more crucial to organizational success?
It appears that three factors play important roles in shaping and fueling their views.
The role of higher education
Every major business school comprises numerous faculties (i.e., Strategy, Marketing, Organizational Studies, Accounting, etc.). Each of which makes a valuable contribution to research and teaching at these institutions. This traditional structure ensures a narrow focus within all faculty silos.
This focus has a downside that often manifests itself in the education received by business students. This traditional manner of instruction ensures that students gain a sound understanding of the body of knowledge in each faculty’s area of specialization. But, this silo approach to business education comes at a cost—students sometimes fail to understand the important similarities and linkages between the knowledge base of each faculty.
This problem tends to be magnified in the cases of Strategy and Marketing for two important reasons:
- Historically, the Strategy Faculty has been responsible for researching and teaching courses in business strategy. The Marketing Faculty has treaded very carefully in course description and construction, respecting the territorial integrity of each Faculty’s domain. That’s why Strategic Market Management and Brand Management are described as courses in marketing strategy rather than business strategy.
- The capstone course for many MBA programs is a Strategy Field Study and usually falls under the purview of Strategy faculty. So, even though this course is intended to be integrative in nature—students are expected to draw on their knowledge from all areas of study in completing it—students and prospective employers too often view this capstone course for MBA programs as a Business Strategy course rather than a Strategy course which integrates leading thinking in both marketing and business strategy.
The role of corporate leadership
It is not surprising that some corporate executives continue to argue that business strategy is more important to organizational success than marketing strategy. That is what they learned in their MBA program.
In these organizations, business strategists are frequently accorded more prominent roles within strategic planning functions than their counterparts in marketing. Marketing strategists usually find themselves relegated to developing marketing communications strategy.
This practice can be seriously damaging to the organizational focus and cohesion necessary for building strong brands and businesses that can win customers. Infighting typically occurs as marketing strategists attempt to increase their orbits of responsibility, often with a genuine desire to improve the customer-centricity of these organizations. Meanwhile the strategic planning team moves aggressively to protect its turf.
This is amplified even further in those organizations where corporate executives erroneously believe that the way to win in the marketplace is to focus on profits, not customers.
The role of the marketing community and industry observers
The marketing community is its own worst enemy in the diminution of the meaning and value of marketing inside many organizations. There is a commonly accepted practice for practitioners across every area of specialization within the field of marketing communications to refer to themselves generically as marketing practitioners, or worse, as marketing experts.
Pundits from the media who follow the industry exacerbate this problem by mimicking this practice.
Being a practitioner or expert in one’s own field (e.g., advertising, social media or public relations) doesn’t make you a marketing practitioner or marketing expert. It makes you an advertising, social media, or public relations practitioner or expert. Each field is only a subset of the total marketing picture.
Through this generic usage, marketing has taken on a meaning and a status that is far less than it is and needs to be. This has lead to the view that business strategy is fundamentally different from marketing strategy and more crucial to organizational success. This contradicts Drucker’s basic tenet about marketing.
So let me say it again here: marketing strategy is synonymous with business strategy not marketing communications.
What’s the way forward?
Dealing with the organizational dysfunction that frequently results from this friction requires change across all three of the factors I’ve discussed:
- Business schools should move more aggressively to break down traditional silos between departments and move towards more integrative practices in scholarship and instruction. This would be especially useful between Strategy and Marketing faculty as this would result in students—the business leaders of the future— understanding and valuing the congruity between business strategy and marketing strategy.
- Corporate executives should learn from, and mirror, this ethos, embedding customer-centricity within the fabric of their organizations. Marketing can, and should, play an important role in shaping business strategy for these corporations together with their traditional role of leading marketing communication activities. This will go a long way towards bolstering the organizational focus and cohesion necessary for building strong brands and businesses that can profitably win customers.
- The marketing community and industry observers should carefully consider how their generic use of marketing diminishes the perceived value of marketing as a strategic management discipline within corporations. Perhaps it’s time that high-profile marketing associations such as the AMA and CMA initiated a dialogue in this regard within the North American marketing community. This community must find a better way to profile its full range of expertise and capabilities if it is to play a more potent role in influencing and shaping competitive strategy within corporations in the future
[1] Carpenter, Gregory S., Chapter 1, “Creating Customers and Shaping The Competitive Game,” Kellogg On Marketing 2nd Edition. Hoboken, New Jersey: John Wiley & Sons, Inc., 2010. Print
[2] Aaker, David A., Chapter 1, “Business Strategy: The Concept and Trends in Its Management,” Strategic Market Management 6th Edition. Hoboken, New Jersey: John Wiley & Sons, Inc., 2001. Print
ashleykonson 
I think we should consider a third important question besides “Where to play?” and
“How to play?” This question is “Who to play with?”
I mean, culture matters a lot, and if your company’s culture doesn’t match your customer’s culture, this may result in misunderstanding and bad business, because the values, approaches, language, business behaviour, etc. are different.
For example, if a company usually deals with clients run by mature old school CEOs, should it take an e-commerce start-up as a client?
You may argue that nobody can afford such selectiveness, but it may cost you more in the end.
business plan is ultimate . the marketing plan is a part of it .
Hello Sarma, my thanks for taking the time to read and comment on my post. I understand your perspective. It is one shared by many. I think that these two are often the same thing.
often but not the same always !
Not the same – not even sometimes. Hopefully integral of course. Same with IT strategy, operating or performance chain strategy…this question in my experience is asked by someone who sees everything through a marketing lens. An important view but only one and as limiting as someone who only sees through a financial prism. Or shareholder over customer view. Great that you are passionate about you field, but think bigger.
I agree with your “companies win when they focus on the customer” philosophy but that is not singularly a marketing tenet…it applies to all aspects of the business. Insisting that companies view business and marketing strategy as the same weakens and limits your arguments.
Hello Chris, My thanks for taking the time to read and comment on my post. Perhaps I can offer you an alternative viewpoint to consider. Two way to frame the term “marketing” are: 1) As a function within a business 2) As the entire business viewed as a marketing entity , the function of which is creating, delivering and communicating compelling customer value and earning superior returns for doing so.
The way I see it businesses win when they win with customers. I would go even further and say that the real battlefield for businesses is in the minds of customers. So my views in my post stem from this way from framing “marketing.”
I’m a big Peter Drucker fan and he was not a marketer, but rather a management theorist. I would argue perhaps the leading theorist of a all time.
He put it this way: “There is only one valid definition of business purpose: to create a customer…The customer is the foundation of the business. “Marketing is so basic that it cannot be considered a separate function…It’s the whole business seen from its final result, that is from the customer’s point of view. Concern and responsibility for marketing must, therefore, permeate all areas of the enterprise.
I’m not suggesting the the marketing function should be in charge of all strategy activities. Only that when conceiving strategy at the organizational level, given the above explanation, that marketing strategy = business strategy.
I wrote a post this week on “How to talk about your brand in a way that everyone gets it?” My thesis here would be the same. When company’s view business strategy differently at a business unit level than they do marketing strategy, then they usually view building the brand as something the marketing function does versus every function in the organization,. Missing from that view is the comprehension that at the heart of every strong brand is a powerful business strategy=marketing strategy=business strategy…..etc.
In this viewpoint, where marketing strategy = business strategy or in one in which business strategy = marketing strategy, ALL functions will still need to create their own strategies in alignment with the central strategy of the organization. For the marketing function that would then be its integrated marketing communications strategy 🙂
Here’s the post if interested:
https://ashleykonson.com/2013/04/04/how-do-you-talk-about-your-brand-in-a-way-that-everyone-gets-it/
A very interesting discussion – absolutely agree – building on what’s been said, its about the ‘market orientation’ of the organisation — and when marketing is considered in that light it’s clear that business strategy and market/ing strategy are one and the same thing.
Hello Tina, my thanks for taking the time to read and comment on my post. Seems that we share similar viewpoints.
As I have guided my companies and business units through their marketing strategy development, they always come to find that the marketing strategy is the business strategy and vice versa. Because I come from B2B, they never go into the discussion thinking that, but the always emerge from the sesion feeling that way.
I have also noticed in recent years that many (inlcuding myself) are calling it a go-to-market startegy. That seems to shift the audience’s perspective away from marketing communications which is just one small piece of the puzzle.
I like the simplicity in your piece on “where to play” and “how to win”. I subdivide these into (1) Markets (~where to play), (2) customers (~where to play), (3) channels (~how to win), (4) product/value proposition (~how to win).
Great piece.
Hello Tom, my thanks for taking the time to read and comment on my post. I like the way you choose to express similar thinking. You may be interested in this post where I sing the praises of Roger Martin’s new book. It’s excellent and I highly recommend it to you: https://ashleykonson.com/2013/03/18/strategy-is-about-playing-to-win/
I totally agree with your article. As a marketing executive and now an academic in strategic marketing, it is mind boggling for me how senior management fails to see this. Throughout my career, the biggest and most time consuming thing for me was to try to prove over and over again why marketing is so crucial for a company’s future and how it is not just about marketing communications. Somehow in a company, regardless of their background, every manager seems to “know” what marketing is. What most fails to see is regardless of how good strategic financial plans are, regardless of how much resources a company has, regardless of how great the shareholders are, when there is no customer, when the customers can not be retained at a good margin, there is absolutely NOTHING! I always say to my students “No Customers, No Nothing”. And this is THE job for marketing! Strategic planning of retaining and growing customers at profit! So the whole company’s business need to be built around this activity. A strategic plan based on a strong and valid Vision ( not something just comes out of a creative agency or a CEO) can build wonders for the future of a business- sustainable and profitable for years to come!
Hello Gulderen, my thanks for taking the time to read and comment on my post. It seems like we are in agreement.
Ashley
Thanks for expressing these issues so succinctly and convincingly. Its always reassuring to know that someone else encounters and interprets things as you do yourself and I found myself saying “hear, hear!” out loud throughout your piece.
Of course marketers realise that business and marketing strategy are synonymous. Our perspective is one of recognition that marketing is the heart of any business today. It’s also a constant struggle to awaken primitive minds to the fact that marketing isn’t communications (although communications are the tools we use) and education is certainly at fault. Even today, I am frequently called to talk to students about marketing and then given a framework by the educational establishment, to work within that is based on fundamental misconceptions.
My seminars and presentations tackle definition early and the definition I am looking for is something like “Marketing is the process of identifying and leveraging business resources to deliver profit”. Therefore I would be guilty of perpetuating the “profit” myth were it not for the fact that I go on to explore the notion that sales and profit are the consequence of customer satisfaction, not the other way around. I can empathise with business owners who focus on profit. Without profit a modern commercial business wouldn’t exist (although this assumption its perhaps due for debate too). The question is more one of emphasis and priority.
Hello Phil, my thanks for taking the time to read my post and express your views on my blog. Keep the faith–there are a large number of us with similar views. 🙂
Ashley, a great article. I would like to make four points here.
1. Most senior executives, and especially SMB’s, distinguish marketing and business through the planning process, where a marketing plan is part of a business plan. And a business plan is usually done when a company is looking for financing. This gets back to your point that marketing is siloed into marketing communications.
2. I come from a B2B sales background, and I noticed that you didn’t mention the word “sales” in your article. However, after spending too much time cold calling as a sales guy, I decided there must be a better way to communicate a business message to a prospect. I too have read much of Peter Drucker, and realized that he is absolutely right, that “marketing” is the backbone of any company, because there isn’t a company unless that company has a customer/client. And every department within an organization needs to be customer focused. Over the past few years, in order to help companies get over this distinction between marketing and sales, I have been pushing them to have a Chief Revenue Officer (CRO) to incorporate three departments, marketing, sales and customer service. This isn’t perfect, but at least it has the three areas of a company that interface directly with its customers under one roof, and therefore hopefully sending the same message.
3. From working with all sized of companies over my 39 years in business, I find it shocking, and even appalling, that most businesses don’t even have a value proposition. All they have is an elevator pitch. They believe the value they bring is the latest feature of their product, or that companies will beat a path to their door because of this feature. Delivering value, and differentiation one’s business from their competitors. would help most CEO’s understand the value of marketing as the integral part of their business.
4. Because I have spent most of my business life talking to IT departments and working with technology companies, I understand their business mentality. Most IT departments now realize they must bring business value to their company in order to survive and thrive. But unfortunately, most B2B technology SMB’s either don’t realise that yet, or don’t understand the value of marketing.
Thanks for a very revealing article.
Hello Ian, my thanks for taking the time to read and comment on my post. I greatly appreciate the thoughtful nature of your comment and also your kind words.
Ashley,
Great article! I agree (but I also disagree).
The current model taught in most MBA schools is based on manufacturing where building something is more difficult than selling it. Therefore, market research and market strategy are components of a Business Strategy. Market research indicates what the market can use, how big the market is and what kind of profit is possible. The Business Strategy indicates how the organization can apply it resources to dominate that market. It considers whether to build a manufacturing plant in Iowa or Arkansas. Whether to invest in certain equipment or outsource to others. Whether to inventory products near the FedEx hub or ship directly from the factory. Whether to sell direct to consumers, sell through re-sellers or sell via telemarketing. And, especially, how to align sales and order volume with factory capacity.
Since our economy is now based more on services, information and software, selling is often more difficult than building a product. Thus, today’s MBA model is clunky and awkward. The Business Strategy for services and software companies are heavily weighted toward marketing strategy, just as you discuss above. The “manufacturing” location and “distribution” issues are pretty much gone. Selling direct to consumers is more the norm, with online advertising, websites, and social media impacting the top of the sales funnel.
It’s a great time to be in marketing, so enjoy it and have fun.
Paige Miller,
MultiPlanet Marketing
Contributing author to the textbook, The Social Media Industries, Taylor and Francis, March 2013
Hello Paige, my thanks for taking the time to read and comment on my post. It’s a pleasure to get to connect with so many great professionals through my blog.
Great Article! You are correct, here is the trouble we often see as an agency…CEO and COO, how are CMO’s not as common especially in SMB’s Unfortunately most owners and boards are just not familiar with the integration of marketing into their strategic plan/budget/operations and fail to have the proper people from marketing sitting at the table when important decisions are being made. It is just not in their culture to get away from the classic outdated models of the past. This lack of integration fractures planning and creates an oasis of lost opportunity.
Hello Wayne, My thanks for taking the time to read and comment on my post and I appreciate your kind words. Having worked for clients in the marketing communications industry I know what the world looks like through your eyes. It’s often not very pretty!
Ashley, it is not pretty at all, you are correct. It is often like moving mountains to get marketing integrated into a company’s processes. But as you know it can be rewarding when the few do see the light.