The Marketing department never operates in isolation from other departments in a business organization. Marketing and other departments in a firm collaborate very closely. This is very important.
Peter Drucker, the guru of modern Marketing, once said:
‘Marketing is not only much broader than selling, it is not a specialized activity at all. It encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer’s point of view. Concern and responsibility for Marketing must therefore permeate all areas of the enterprise.’
It is absolutely crucial that the product, either good or service, must meet customers’ needs and wants. Although the marketing function is normally carried out by a specialized department, Marketing thinking must permeate the entire firm. Developing an effective marketing plan will require close links with other functional areas of the business. Peter Drucker also said that Marketing is:
‘The whole business seen from the customer’s point of view.’
What Peter Drucker is saying is that Marketing must be seen as a business philosophy, in that the existence of any business depends on satisfying customer needs and wants. This cannot be the sole responsibility of the Marketing department itself. Marketing is a strategic discipline which underpins most activities of the business and is an essential ingredient of corporate strategy.
Why Marketing must cooperate with other departments?
Many business objectives (corporate objectives) such as survival, growth and maximizing profits are directly linked with the marketing objectives.
It is Marketing that will be driving the success of the company because main responsibilities of the Marketing department include sales, hence sales revenue and final profits of the business organization. Therefore, the objectives of the Marketing department must be aligned with the corporate objectives of the entire firm.
In fact, the links between the Marketing department and other departments are an essential component of a successful Marketing strategy. Hence, the other departments in a business organization will be supporting the marketing objectives when it comes to Finance, Human Resources (HR) and Production / Operations.
How does Marketing and other departments interrelate?
Having strong Marketing alone does not guarantee anything. It is the proper cooperation with other business functions that ensures sustainable future business success. Now, let’s take a look in details how the Marketing department cooperates with them.
Marketing → Finance
MARKETING: The Marketing department concentrates on achieving high sales volume and building large market share. It will spend available resources on building the products that customers need and want to buy and promoting those products effectively. Hopefully, profitable market opportunities will emerge over the time and the products will become top sellers.
The Marketing department will work closely with the Finance Department when it comes to sales forecasting and setting operational budgets. The Finance department will use the sales forecasts and proposed budgets to construct the Cash Flow forecasts. Of course, marketers would love to have unlimited budgets to get the maximum exposure to the market to attract target customers. However, the Finance department must make sure that the Marketing department works within and does not exceed the allocated and approved budgets.
In addition, sales personnel will offer extended trade credit to some customers who are not able to pay in cash right away to entice them to make the purchase. The Finance department has to be aware of any interest-free payment plans as this can cause liquidity problems for the whole firm.
FINANCE: The Finance department ensures that the whole business organization operates within its financial capabilities following budgets. The Finance department’s job is mainly focused on producing Final Accounts including Profit and Loss Account (P&L Account), Balance Sheet and Cash Flow Statement.
In order to run the business profitably and remain liquid, the Finance department will monitor various costs and prices as well as cash flows in and out of the business. Prices will need to cover the costs in order for the firm to generate profit. This can put additional pressure on the Marketing department as sometimes products will need to be sold cheaply in the short-term (even below the cost of production) to get established in the market.
The Marketing department will also need to work closely with the Finance department to make sure that there is enough necessary capital for researching new products and improving current Product Portfolio, promotion and distribution to customers.
Areas for conflict of interests:
Both departments need to work collaboratively to achieve a balance between their own interests. However, there might be conflict between the Marketing Department and the Finance department about:
- Setting budgets: Flexible Budgets or Fixed Budgets?
- Prices: elasticity, pricing strategies, selling at the loss, Break-Even Analysis.
- Trade credit: customer credit history, credit risk, credit terms, debt collection management.
- Spending on Research and Development (R&D): market research, innovation, prototyping, test marketing, etc.
Marketing → Human Resources (HR)
MARKETING: The Marketing Manager needs competent and creative employees for his department to research new product ideas, develop them into successful goods and services, meet production targets and establish ambitious sales teams. The Marketing data, such as the sales forecasts and any anticipated spending on promotion, will help the Human Resources (HR) department to identify recruitment needs to ensure that appropriate staffing levels are in place.
Devising a workforce plan will be mainly based on the current and future marketing strategy of the business. For example, creating new products may require extra workers to conduct market research while additional sales personnel will be needed for launching a new product to the market to boost sales in the initial stage of product introduction.
HUMAN RESOURCES (HR): The Human Resources (HR) department will have to balance its recruitment obligations to the Marketing department with its own recruitment needs and recruitment needs of other departments including Finance and Production / Operations.
When it comes to Marketing, the main role of the Human Resources (HR) department is to make sure that the business has the right quantity and quality of employees to make the Marketing Mix successful. By fulfilling recruitment and training demands of various business functions, the business will finally be able to meet the needs and wants of its customers.
Appropriately qualified, knowledgeable, skilled and experienced Marketing staff can not only produce and sell the products, but also manage to increase sales volumes as expected by the Board of Directors (BOD).
Areas for conflict of interests:
Both departments need to work collaboratively to achieve a balance between their own interests. However, there might be conflict between the Marketing Department and the Human Resources (HR) department about:
- Personnel: number of sales people, number of production workers, training needs, bonus structures, onboarding new hires
- Employer branding.
Marketing → Production / Operations
MARKETING: The Marketing department first needs to conduct necessary market research in order to provide data and information for new product development. This will enable the firm to produce and sell goods and services that satisfy current and future customer needs and wants. The Marketing Manager will want to get the products delivered to the market as fast as possible to ensure the competitive advantage over rival firms.
The Marketing department will set deadlines for the Production department to manufacture the goods according to the quantity and quality specifications requested by the customer.
Production will also test and control products to ensure that they are not defective, meet all quality standards and fulfill health and safety requirements as specified by the law.
PRODUCTION / OPERATIONS: The Production / Operations department will work directly with the Marketing department on researching, designing, developing, manufacturing, testing and launching products to meet the constantly changing needs of customers.
The Production / Operations department will receive the sales forecasts from the Marketing department as it will have to prepare production schedules to meet tight deadlines. The Production Manager may need to arrange for the purchase of new machines or the upgrade of current machines to be used in the manufacturing process. He will also need to plan for the capacity needed as more products may be required than what the current factory is able to produce.
Planning and purchasing raw materials based on the sales forecast also belong to the responsibilities of the Production / Operations department. Stocks required for meeting the output levels will include raw materials, components and finished goods, hence supply chains must be managed accordingly.
Any poor planning, causing delays in launching new products, not only means leaving market demand unfulfilled and loss of sales, but it will also be severely damaging to the brand image of the whole firm.
Areas for conflict of interests:
Both departments need to work collaboratively to achieve a balance between their own interests. However, there might be conflict between the Marketing Department and the Production / Operations department about:
- Production methods: Job Production, Batch Production, Mass (Flow) Production, Mass Customization.
- Capacity: number of products, types of products, outsourcing, changing demand.
- Inventory: supply-chain management, stock levels, Just-in-Case (JIC) or Just-in-Time (JIT), standard parts or non-standard parts, order lead times.
- Quality: quality issues, Quality Assurance or Quality Control
- Product development: To Buy or To Make, timeline, schedule flexibility, number of models
In summary, most business decisions will be focused around achieving the central marketing objectives, such as increasing sales, sales revenue, market share and ultimately profits. That is why it is very important to emphasize the central role that the Marketing department will have in coordinating the work of other departments. It must be done to help to achieve marketing objectives and then corporate objectives.
Nevertheless, business managers need to remember that the nature of departmental business organizations means it is likely that there is the high potential for conflicts between those different functional areas.
