Prioritisation of Marketing Investments in Different Types of Marketing Functions

To elucidate how the marketing function’s efforts influence the company’s results, marketing functions are classified according to their role mix. The impact of the types is studied on the basis of an empirical study among 395 marketing managers. The study identifies four types of marketing functions based on the efforts they dedicate to seven generic marketing roles. The four types of marketing functions are denoted as follows: (1) the broadly-based; (2) the hesitant; (3) the traditional and (4) the market-creating marketing function. All four types of marketing functions directly influence the company’s results, but there is considerable variation in the composition of the roles within each type of marketing function, their use and impact on the company’s results. The findings of this study indicate that marketing functions are heterogeneous, and the effect achieved from investing in any given role therefore varies. The primary managerial implication is a need for prioritisation of the marketing roles with a view to maximise the marginal impact on the company’s results, but also to decide if the marketing function would benefit from shifting between different types of marketing functions by prioritising some roles differently. Introduction Companies no not necessarily need strong marketing functions. This was the conclusion drawn by Verhoef and Leeflang (2009, p. 28, 29) as they were unable to provide empirical evidence to support a correlation between the marketing function’s influence in the organisation and the company’s results. Despite this, Verhoef and Leeflang (2009) recommend the establishment of strong marketing functions as they found that marketing activities have a direct effect on the company’s market orientation, which – in turn – affects the company’s results. Verhoef and Leeflang (2009, p. 29) provide a general recommendation for all marketing functions stating that they should reclaim influence by investing in the same two roles – »accountability« and »innovativeDanish Journal of Management & Business nr. 1 | 2015 46 ness« – regardless of their individual starting point. Verhoef and Leeflang (2009) thus assume that there is no variation as to what should be or can be prioritised by marketing functions. If this assumption on marginalisation of the marketing function is correct, the question is not if all companies should have a marketing function or if the marketing function is losing influence (cf. Verhoef and Leeflang, 2009). Rather, the question is if marketing deserves any influence and how marketing functions become influential. We assume that the prerequisite to any influence is that the marketing function adds value. In line herewith, our study explores how different marketing functions add value to their companies through different marketing roles. Three circumstances put this issue in perspective and challenge the marketing function. Firstly, marketing functions may be comprised by many roles and they are different from others in the way they employ and prioritise these roles to achieve results. This means that the individual marketing function has a specific platform as a basis for every new move it needs to make. Nevertheless, it seems possible to identify types of marketing functions that act similarly; types which may be useful in building a better understanding of the relation between the behaviour of the marketing function and the company’s results. It can be demonstrated that marketing is a profitable activity (Day 1994; Verhoef and Leeflang 2009). Thus, the challenge here is to single out those marketing roles that maximise the profitability of marketing. Secondly, several studies have explored the influence of marketing functions within organisations. Influence is typically perceived as: (1) importance, (2) decision-making impact and (3) the senior management’s respect (see e.g. Verhoef and Leeflang 2009; Moorman and Rust 1999). How the marketing function’s influence within the organisation affects the company’s market orientation and business results is interesting and helpful in building an understanding of how to strengthen the marketing function’s internal position in the company. But it does not improve our understanding of how the marketing function’s roles directly affect the company’s business results, or how the roles may be prioritised to maximise their impact on the company’s results. Verhoef and Leeflang (2009) studied the political discussion of the influence of marketing and noted that it is the organisation that delegates responsibility to marketing, and that some competencies and authority are delegated mechanically. We study strategic influence and wish to shift the focus to determine if the marketing function adds value rather than if it has influence. Thirdly, marketing research shows that there is generally a positive correlation between the senior management’s respect for the marketing function and the influence of this function on the company’s business results (Verhoef and Leeflang 2009). Prioritisation of marketing investments in different types of marketing functions 47 Specifically, more respect for the marketing function among senior management correlates with the marketing function’s influence on company results. In Verhoef and Leeflang’s (2009) perspective, the marketing function’s influence is a management issue; the management delegates decision-making competence and decides if the marketing function has more or less influence. But decreasing influence on the part of the marketing function within the company may indicate decreasing respect with the senior management. Therefore, the question is not simply if the senior management supports the marketing function and acknowledges its strategic relevance, but also how senior management’s respect may be re-established. A proactive marketing function that through its work is capable of demonstrating that it has a direct impact on the company’s results may be the factor needed to re-establish the senior management’s respect and to increase the marketing function’s influence in the organisation. But different types of marketing functions produce results in different ways, and the way in which various types of marketing functions re-establish the respect of senior management therefore also varies. These issues challenge the marketing function and raise the following research questions: (1) How do marketing functions put together their particular mix of roles? (2) How do the company’s results vary with different types of marketing function? (3) How does the senior management’s respect vary with type of marketing function? (4) How is investment in marketing roles related to type of marketing function? To answer these questions, this study explores the roles of the marketing function and studies how the roles may be used to divide marketing functions into types depending on how they work. Next, the study explores how the company’s results and the senior management’s respect vary with the type of marketing function; and, finally, we study how marketing roles may be prioritised according to type of marketing function. This study is interesting because it documents that the impact of investing in marketing depends on the starting point of each individual marketing function. Those in charge of marketing efforts may employ this knowledge to develop their marketing function and to improve the strategic influence of the marketing function within the company by prioritising the marketing roles that increase the marginal impact on the senior management’s respect and the company’s results as much as possible. Furthermore, this knowledge can be used to demonstrate accountability and support decisions concerning budget allocations. Theoretical foundations The marketing function’s activities have been a central topic in marketing research, and previous research has focused on three issues: Firstly, the activities typically performed by the marketing function that can be grouped into generic roles, reflecting relatively general ways of doing things. Secondly, how the roles can be strucDanish Journal of Management & Business nr. 1 | 2015 48 tured so that they may serve to develop the influence of the marketing function and, thirdly, what this influence concerns (see e.g. Day 1994; Lehman 1997; Moorman and Rust 1999; Ramaswami et al. 2004; Srivastava et al. 1999; Verhoef and Leeflang 2009; O’Sullivan and Abdela 2007; Vorhies and Morgan 2005). The roles and their structure Several studies have focused on selected roles and activities, e.g. Day (1994); Han, Kim, and Srivastava (1998); Lawson and Samson (2001); Lehman (1997); Moorman and Rust (1999); Ramaswami, Bhargava, and Srivastava (2004); Srivastava, Fahey, and Christensen (2001); Srivastava, Shervani, and Fahey (1999) and Verhoef and Leeflang (2009). These studies are characterised by a number of essential limitations. Firstly, the extant literature discusses all roles as if they were equally important; no differentiation is made according to the importance of the roles for the marketing function. Secondly, it is assumed that all roles are equally important in all marketing functions. Such an approach to the study of roles is problematic as marketing functions may develop their profiles over time. Extant studies may not be capable of sufficiently reflecting the variation in the roles and activities that marketing functions perform, and therefore they may only to a limited degree be capable of taking into account the real world variation in the manner in which marketing functions create results. Thirdly, the structure of the roles has not been subjected to thorough scrutiny (Day 1994). This is an issue because roles do not work independently in a vacuum, but always interact with other roles. It is the composition of the role, their complementarity and inter-relation that give the marketing function its unique identity and ability to produce results (Moorman and Slotegr