The Incredible Unbundling of Marketing

October 13th, 2014

Having worked in marketing for almost a decade now, I have seen a lot of change. One of the most fascinating is the change of what people around me think marketing is and what it is not. To establish the baseline of how I think of it, and how marketers typically think of it, it helps to look at the official definition from the American Marketing Association:

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Source.

Since that’s a mouthful, marketers tend to shorthand with a series of P’s (four to seven depending on who you ask). For products, those are product (the creating part of the definition), price (the exchanging part of the definition) , promotion (the communicating part of the definition), place (the delivering part of the definition), positioning (the value part of the definition), people (the people who do the activity), and packaging (another part of the communicating piece of the definition). For services, those are product, price, promotion, place, people, process, and physical evidence. These are consistent with how I was taught in my marketing undergraduate classes as well as those in my MBA.

If you visit that link above, you’ll notice the AMA also goes through the trouble of defining marketing research on the same page:

Marketing research is the function that links the consumer, customer, and public to the marketer through information–information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications.

I’ll come back to research, but first, if schools are teaching what marketing is consistently, is this how marketing is being defined in the marketplace? At least in the tech industry where I’ve spent my entire career, increasingly no. Let’s break down some of these functions.

Product
This is the process of creating something of value for customers. This is almost always its own organization lately, and with varying degrees of interaction with marketing. In technology companies, product managers are more likely to have engineering backgrounds than marketing backgrounds. I myself am a part of the Product org at Pinterest (though I was in the marketing org at every other company).

Price
This is the process of determining the willingness to pay of different consumer segments, and setting a price that is attractive to the segments that are attractive to the company. Who owns this very much depends on the org. I have seen pricing owned by finance and sales more than marketing in my career.

Place
Place is where the product/service is sold. In technology, the internet is the prominent place, and determining whether an app strategy makes sense is the key question people need to answer regarding place. Sometimes a marketing decision, sometimes a separate product org’s decision. For sales-driven companies, this is frequently owned by the sales org.

Promotion
This is the act of making potential customers aware of and driving purchase of the product/service. Even in promotion, marketing functions are being splintered through multiple departments. PR is sometimes its own separate department. Many of the more direct marketing channels for technology companies (SEO, email, notifications, viral loops, conversion optimization) are unbundled into a separate product and engineering team typically called “growth”. Marketing still mostly has a stronghold on events, campaigns, and community management.

Positioning
Positioning is the strategy of how a product is presented to potential customers. Many people refer to this as brand, but positioning includes functions of determining a market segment and deciding on a value proposition for that segment. Much of that can and should occur before a product is built. Positioning is about why a company exists and what is stands for. Much of this is still owned by marketing, but I have seen many companies independently position their product and create core values that do not reflect the positioning. This makes it hard to align market expectations with internal processes, and brands suffer as a result.

Packaging
Packaging is the “coat of paint” that defines how a product is presented physically. It is every visual element of your product. This piece has mostly remained a marketing function, though I have seen separate design teams own this before.

People
This term has largely been replaced by the phrase “culture fit” in companies I have worked for, and is measured either by individual hiring managers or by HR or recruiting teams. As a result, this test has represented less about whether this person is a good reflection of our positioning to our customers and more about how well they will work with others internally, creating diversity problems.

Processes
These are the systems developed to deliver on positioning as someone experiences a service, like the line at a Chipotle or someone picking you up when you rent from Enterprise. These are increasingly managed by an Operations team.

Physical Evidence
With a service, there is a lack of tangibility to it, making it hard to value. Physical evidence re-inserts something physical into a less tangible experience to either create a memory or create an easier way for a customer to evaluate a service. This can be something out of the ordinary like a pink mustache with Lyft or a chocolate under your pillow at a hotel.

Now, let’s look at marketing research. In this case, I’ll discuss two newer disciplines encroaching on marketing’s stranglehold of these responsibilities.

User Experience
User experience teams frequently include their own research functions that do qualitative and quantitative analysis to identify problems and opportunities. Qualitatively, this occurs through one on one interviews or by monitoring individual product usage. Qualitatively, this occurs through surveys.

Marketing Performance Analysis
Data science or analytics teams have started to handle more of the monitoring of performance of product usage or marketing campaigns’ impact on growth. The rise of big data has made these processes require specialized statistical as well as technical skills.

Why is this unbundling happening?
I wish I had a stronger theory as to why this unbundling is occurring. Perhaps it is a reaction to years of abuse by advertising agencies and CPG companies trying to get us to buy cigarettes and saturated fats casting an evil stigma around the term marketing. Perhaps it is the technical founder re-imagining these skills with engineers at the core instead of MBA’s. Whatever the cause, marketing is being attacked on all sides, which has the result of redefining marketing with only the least impactful and measurable components, casting further doubt on the value of marketing.

What do we lose with unbundling?
I think the main thing one should worry about is whether an unbundled marketing structure or a bundled marketing structure is more effective, or at least knowing the trade-offs. The main issue that seems to occur with unbundling is that these separate functions lack a shared raison d’etre. Ways I have seen this manifest on the direct marketing side are growth experiments that violate brand guidelines, or a bias toward quantitative research when qualitative research may provide more insight. With operations, I have started to see as this moves further away from separate brand teams, efficiency trumps experience, and trade off discussions between those two things happen less often than they should.

The main issue with a bundled marketing organization is one of management. While the team is more likely to be aligned under one goal and set of rules, there are few if any people capable of managing a department with this large a scope that can have enough of an understanding of these functions to be valuable managers. This is both a failure of educational institutions to teach the “doing” element of marketing instead of just the strategy, a lack of on-the-job training to broaden employees’ view of the organization, and increasing complexity in performing all of the above actions. In this type of org, I foresee the strategy being great, but the execution being terrible because the strategy lacks an understanding of how execution really works.

Where do we go from here?
As I look through this analysis, I can’t help but feel conflicted. While I believe in the definition of marketing and experience some of the pains of these functions growing less and less aligned, I don’t see a rebundling fixing more problems than it creates in these organizations. So I can only hope that this post showcases the value of all of these elements working together, and that people working in these specialized roles start to take a broader view of what’s going on in the rest of the organization, start partnering more with these other teams, and create a better experience for the customer.

What do you think about the unbundling of marketing? How do you think we should react to it?

Thanks to Katie Garlinghouse for reading an early draft of this blog post.

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