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Stanford Report, February 10, 1999

Marketing: Negotiating a corporate fault zone


During the last three decades, corporate marketing has evolved from a stand-alone department to a function that has a significant effect on almost every company pursuit from product prototyping to distribution. Successful marketing has morphed from a narrow set of tactics into a process that permeates the entire company.

Does this mean marketing specialists will be relegated to a corner in product engineering or sales? Of course not. But Business School marketing professor David Montgomery and his colleagues at the Marketing Science Institute (MSI) have developed some thought-provoking ideas about the effects this shift in marketing's role is having on business and academia. The challenge of the future will be the effective coordination of marketing and other areas of business. "Companies know a lot about finance, accounting, and marketing," says Montgomery, who served two years as director of MSI. "But they're not nearly so adept at managing the inter-functional experiences, which are effectively corporate fault zones."

Some of the most successful companies have emphasized cross-training to achieve marketing integration. Among Japanese multinationals, which exemplify some of the best practices in global marketing, a Sony engineer is likely to sell stereos on the pavement in an electronics bazaar for six months before ever sitting down to a product design board. "Those people never forget that experience," says Montgomery. By contrast, American management traditionally has been driven by the bottom line. To achieve profits, cost controls and the preservation of assets have been the corporate world's obsessions­ a focus that is internal, not external. As a result, marketing decisions have been cast into the same profit-seeking mold that deals narrowly with product development, marketing communications, price promotions and distribution.

But during the last ten years, a renewed interest in customer orientation combined with the Total Quality Management movement has triggered a change from cost control to customer value as the guiding principle of management. The result of this trend has been to blur the boundary between marketing and all aspects of operations management, says Montgomery, who is the Sebastian S. Kresge Professor of Marketing Strategy.

Since marketing influences nearly every function of a company today, the challenge is to get people from different orientations to work together effectively. Many questions remain unanswered. To what extent is inter-functional conflict a problem? Is there an optimal level and if so under what conditions? What reward structures and management mechanisms can reduce the negative consequences of conflict? Should corporations be organized around "functions," such as marketing or manufacturing, or around "processes," such as new product development or supply chain management?

In a paper co-authored with management professor Frederick Webster Jr. at Dartmouth's Amos Tuck School of Business Administration, Montgomery outlines three conceptual definitions of marketing that illustrate the different ways companies treat the area in their organizations:

In a global economy where products must be marketed and distributed in multiple environments, integration of marketing with other functions is essential. However, corporations must be vigilant about accountability at the same time. "The problem is: If it's everybody's job, it's nobody's responsibility," says Montgomery.

Another issue, cited in industry-academic workshops at MSI, is the academic treatment of the discipline. As the training ground for tomorrow's corps of business men and women, business schools need to place more emphasis on cross-disciplinary research and teaching. "We're organized to know more and more about less and less," says Montgomery, who notes that faculty from different disciplines burrow deeply into their own fields but aren't encouraged to work together enough. Academic journals, which are the linchpin of a successful academic career, have difficulty finding a place for research covering more than one area. More cross-disciplinary publishing sources are needed so that academics can research the issues that will be most relevant as corporations try to weave marketing throughout their organizations. SR