What Finance people need to know about Marketing

Importance of marketing

“In this time of high uncertainty and  decreasing customer loyalty, how do you survive? Let me tell you how you survive. You build brands and not sell products. You provide  superior customer value. You invest in brand building and marketing.  Marketing becomes not just a function but the necessity an never consider money spent marketing and advertisement as an expense but consider it as an investment which you will reap in  future.”

Now, If I ask you simple question that whom do you think would have given this speech?

  1. CFO of the company
  2. CMO of the company

Take a guess.

Will it surprise you, If I say that  this speech was given by the CFO of the leading telecom service operator of India???

Conventional wisdom is that marketing spends money and finance is there to put roadblocks. Marketers talk about customer relationship and brand equity while finance people talk about P/E ration and debt to equity formula.

Finance guys always complain that Marketing dept doesnt do its job, ie  reduce the cost  and increase sales and  rather they talk about Reputation management, Visibility events, Viral marketing stunts, Brand Building.

But, Finance people need to understand that

1. Marketing makes product sell

Marketing does many things rather than just doing advertisement and events.

Managing product features, price of the product and place where product should be sold and to whom it should be sold. Everything is decided by marketing and these are the things that make product sell and earn money to company.

2. Marketing defends your profit margin

Which toothpaste do you buy? Colgate? Pepsodent? Do you know there are around 15 toothpaste that your retailed keeps but you buy just 2-3 of them? Why? Because they are famous. People know about it, talk about it and moreover they are in your mind. How they managed to do that?

This happens because marketer has invested money into creating and communicating brand value. What product stands for and what it means to you.

3. Marketing helps you earn more and more from existing market

Why do you think they they show man spraying whole ‘X’ on his chest in AXE advertisement? or Why do you see toothpaste covering whole surface of toothbrush in Colgate advertisement? or Why Colgate organized oral dental checkup care events?

Marketing/Sales always believes in selling more. Be it selling more to new people or selling more to existing customer. And this not only makes customer use your product more and frequently but also make them habituated to your product. And As this not only helps to increase top line but bottom line as well.

4. Marketing identifies business opportunity and strategy to tap this opportunity

Marketers are in constant tough with customers and customer trends. To satisfy their need of “Sell more”, they keep searching for new profitable horizons, do tremendous market research and identify opportunities where they can sell their products or create new product to sell. This not only helps company to introduce new products but also keep in consumer mind with variety of product and increase touchpoints.

5. Marketing guides your investment decision

Before company makes any huge investment in setting up a factory or researching new product, marketer not only helps you make right decision but also make sure that money is well spent and maximum return can be achieved

 6. YES, Marketing does cost lot of money

As you know, by now, that marketing does lot of things and these things costs money. But be well assured that all the decisions are taken after well defined research and keeping proper return in mind. Even if it not monetary for short  term, it will reap benefits in long term in terms of brand loyalty, fans, consumer equity, repeat purchase, good reviews, word of mouth etc.

So, Next time onward, think twice before you reject any marketing plan stating that it not useful!!!


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