sealPurdue News

December 13, 2002

Marketing isn't just advertising, it's a total business strategy

WEST LAFAYETTE, Ind. – Marketing should be much more than a department in a company, says a Purdue University marketing professor. In fact, marketing in the broadest sense pervades every operation and the awareness of all the employees in the most successful companies.

James Oakley

"Advertising is actually a very small part of marketing," says James Oakley, an assistant professor of marketing at the Krannert School of Management. "A firm's marketing strategy is its business strategy. Companies have shareholder value because everyone in the organization is focused on delivering the right product to the right customers.

"Marketing is not a computational function. I don't teach marketing. I teach business."

In Oakley's view, this customer-centric view of business is the guiding principle. But it has become even more relevant in a hypercompetitive world in which there is overcapacity of just about everything – cars, computer chips, air travel, food and information.

"The competition is greater, and the speed with which new products come out and the increased number of global players make it more complex now to predict who the winners will be," Oakley says. "In the past, companies could deliver part of what people wanted. That doesn't work anymore.

"Now it's all about delivering the exact product people want – even if they don't know they want it. Because if you don't, someone else will."

The increased availability of information today contributes to the competitive climate for companies. For example, Oakley points out that the Internet provides consumers with an abundance of information, right down to the exact invoice sheets on new cars. He does caution, however, that just because information is out there does not necessarily mean consumers are using it.

One way for a company not to be successful is to go by the numbers, Oakley says.

"A financial strategy is going to lose," he says. "If the CEO is looking at short-term goals, such as making Wall Street's quarterly profit forecasts, somebody is going to clobber the company a few quarters down the road."

Forward-looking companies are starting to come around to a longer term view, Oakley says. Coca Cola announced today (Friday, 12/13) that it won't offer quarterly or annual earnings guidance after this quarter, according to The Wall Street Journal.

"Coke is the first major company to make this announcement," Oakley says. "What it signals to the market is that this marketing leader is focusing on long-term strategy, which is where they should be looking. What was interesting about the Journal's report was that they quoted an analyst – whose bread and butter in the '90s were earnings reports – who looked on this shift favorably."

In Oakley's view, the shift from quarterly earnings announcements to the bigger picture represents the beginnings of what he and his marketing brethren call "market orientation" or "service-profit chain." Other terms could be "holistic marketing" or "total marketing."

"To conduct marketing correctly, a company has to understand what the consumer is looking for," Oakley says. "The very elite marketers, such as General Electric, Microsoft and Intel, know: A) What information to find; and B) What to do with the information."

Oakley says one of the characteristics of successful contemporary enterprises is speed – speed of introduction of new products and an organization in which everyone understands they are part of the marketing effort.

"Then it becomes a matter of communicating information throughout the organization," he says. "You can look at the effectiveness of organizations by evaluating them as you would a new computer. The better and faster an organization works as a collective unit in delivering the product the customer wants, the more shareholder value the company will create."

In this scenario, profits and shareholder value flow naturally to those companies that focus on delivering the right product to the customer at the greatest speed to market. Earnings per share reflect this success – after the fact.

The way the financial numbers game was played in the '90s was that the markets often rewarded companies for downsizing. When the announcement went out that people had been laid off, the stock price went up.

"The layoff-stock price rise was viewed then as creating efficiencies," Oakley says. "Now it tends to be viewed more as lack of control, and the market doesn't reward it anymore."

Layoffs lead to problems even in the best-case scenario when business gets better. If business picks up, then the company has no trained people, Oakley explains. This means the organization cannot respond with speed to the change in consumer demand, and the company's downward spiral continues.

"Where marketing as a field needs to go is to encourage a collaborative approach among organizational behavior, finance, accounting – even the fields of psychology and sociology – in understanding what consumers want."

Writer: Mike Lillich, (765) 494-2077,

Source: James Oakley, (765) 494-4445, (765) 497-1560 (home),

Purdue News Service: (765) 494-2096;

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