Executive Summary
Because many strategically important aspects of marketing are addressed by other functions in the organization, the decreased influence of the marketing department is a topic of growing debate. This study investigates this diminished influence and assesses its determinants and consequences. The authors use a large-scale Internet-based survey of several hundred marketing, finance, and general managers of Dutch firms. Descriptive results tend to support the growing concerns about a decreased influence of marketing. The marketing department is considered moderately influential. The department is mainly responsible for segmentation and positioning, customer satisfaction measurement and improvement, advertising, and relationship and loyalty programs. Decisions about pricing and distribution are not the primary responsibility of the marketing department, and its influence on nonmarketing decisions, such as investments in information technology, is limited.
The results indicate that accountability and innovativeness of the marketing department are the key drivers of its influence. A firms’ short-term orientation is negatively related to the influence of the marketing department. Marketing influence is subsequently positively related to market orientation, which is positively related to firm performance. The results do not support prior findings of a direct positive link between marketing departments’ influence and firm performance. Thus, the influence of the marketing department does not explain incremental value of firm performance beyond the effect of market orientation. An additional analysis suggests that when firms are market oriented, a less influential marketing department does not lower firm performance. Thus, it appears that these firms can choose to have an influential or noninfluential marketing department without any repercussions for their performance. Marketing activities can then possibly move to other functions. Only when firms are not market oriented is an influential marketing department preferred.
The study also discusses the potential dual relationship between marketing departments’ influence and market orientation. The executed analysis provides initial evidence for such a dual relationship. Marketing departments’ influence is positively related to market orientation, while market orientation is also related to influence of the marketing department. This implies that building up a strong marketing department goes hand-in-hand with developing a strong market orientation. On the basis of these findings and insights from the literature, the authors suggest that the marketing department should aim to retain its influence. Dispersed marketing decision making among many functions can possibly cause a lack of coordination, and customers may lose their advocate within the firm. There are two general solutions for regaining this influence. First, marketing departments should become more innovative by increasing their share in new product and service concepts. Second, marketing departments should become more accountable by linking marketing actions and policies with financial results.
Biography
Peter C. Verhoef is Professor of Marketing in the Department of Marketing, Faculty of Economics and Business, at University of Groningen, the Netherlands. His publications have appeared in journals such as Journal of Marketing, Journal of Marketing Research, Marketing Science, International Journal of Research in Marketing, Journal of Consumer Psychology, Journal of the Academy of Marketing Science, Journal of Retailing, and Marketing Management. His work has been awarded the Donald R. Lehmann Award for the best dissertation based article in Journal of Marketing and Journal of Marketing Research in 2003. He is currently an editorial board member of the Journal of Marketing, Marketing Science, Journal of Retailing, Journal of Service Research, Journal of Interactive Marketing, and International Commerce Review. He functions as an area editor for International Journal of Research in Marketing. He is the director and founder of the Customer Insights Center at the University of Groningen.
Peter S.H. Leeflang holds the Frank M. Bass Chair in Marketing at the Faculty of Economics and Business at the University of Groningen. He has authored or coauthored 15 books, including Building Models for Marketing Decisions (2000). Other examples of his published work can be found in Journal of Marketing, Journal of Marketing Research, Marketing Science, Quantitative Marketing and Economics, International Journal of Research in Marketing, Management Science, and Journal of Econometrics, among other outlets. Currently, he is an editorial board member on multiple journals, including Marketing Science, Journal of Marketing Research, and International Journal of Research in Marketing. As a Professor of Marketing, he is affiliated with the European Institute of Advanced Studies in Management in Brussels (Belgium). He is a member of the Royal Netherlands Academy of Arts and Sciences. Since 2004, he has also been an affiliated professor at the Johann Wolfgang Goethe Universität at Frankfurt am Main.
Journal of Marketing, Volume 73, Number 2, March 2009
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