Wharton@Work

July 2011 | 

Competing in a Challenging Market? Find Allies Across Functions

allies-across-functions

In recent remarks at Wharton, Joseph Neubauer, chairman of ARAMARK, reflected, ‘‘My experience has been that you’ll develop the best solutions for any business problem only when you are able to integrate the perspectives of a broad range of disciplines…. Being focused is critical, but being functionally narrow is a mistake.’’ While Neubauer’s words weren’t directed specifically to marketing, it is this function that has been, out of necessity, one of the most collaborative. Marketing must work cross-functionally with sales, with innovation, with finance. In fact, marketing strategy without effective collaboration simply won’t work.

While the need for a strong connection between marketing and sales is well established, Wharton Vice Dean of Innovation Karl Ulrich, who teaches in Competitive Marketing Strategy, has recently explored the role of marketing in product design. He notes, “In terms of product development, decisions benefit from the perspectives of multiple functions of the firm.” Ulrich identifies 12 decisions in the development of a new product:

  1. How can the universe of potential users of a product be divided into segments?
  2. What channel will be used to deliver products to customers?
  3. What will be the name of the product and under which brand will it be sold?
  4. What products will be bundled together in a single offer to customers?
  5. What will be the price of the product?
  6. How can the benefits of the product be best communicated to customers?
  7. What warranty will be offered to customers? How will product service be provided?
  8. What will be the portfolio of products offered across all segments?
  9. How much will it cost to bring the product to market and what is the expected return for the associated investment?
  10. What will be the technology platforms on which future products are based?
  11. What intellectual property associated with the product is most important and how can it be safeguarded?
  12. How will individuals be organized and managed to develop the product?

He stresses that while these decisions benefit from a diversity of perspectives, leadership is provided for each by a specific function, and that leadership is not confined to product development. In fact, fully half of these decisions are made based on market research, and for these decisions the marketing function plays the leadership role.

As Ulrich recently told participants in Competitive Marketing Strategy, “If your goal is to stay ahead of your competition, the connection between marketing and product design and development is vital. Marketing plays a critical role in representing the customer perspective and in understanding how customers are likely to perceive a product in the context of competitive offerings."

But this cross-functional view of marketing isn’t a one-way process, with marketers reaching out to form alliances across the organization. Wharton marketing professor Jerry Wind notes that just as marketing must be effective at collaboration, the rest of the organization must adopt this integrated approach as well. As Ulrich described the need for marketing leadership in product development, Wind finds it across the organization.

He identifies a range of opportunities to use marketing insights, stressing that “Marketing should be an engine of business growth.” The opportunities he lists include creating a market-driven vision and value proposition, driving innovation, leveraging technology and marketing to create convergence, and rethinking the customer experience and relationships.

Wind notes that organizations that fail to adopt this more holistic approach are taking risks. “Marketing sometimes has been left out of important decisions where its perspectives are crucial. Many major decisions, such as mergers and acquisitions, have been financially driven with limited involvement by marketing, although their success is dependent upon marketing strategies. The AOL/Time Warner merger was driven by assumptions about advertising and marketing across different channels and its costly failure was, at least in part, due to weaknesses in these assumptions.

“Marketing should link the insights from the market with the strategies of the firm to drive the creation of value through developing relationships with customers. Marketing should lead the continued transformation of the company.”