A New Definition of Marketing
In August of 2004, the American Marketing Association (AMA) changed its definition of marketing. Unfortunately, this change received little recognition in higher education and that's unfortunate. Because the change actually telegraphs enormous opportunities not only for marketers, but for the organizations in which they work and the customers they serve, it warrants further attention. Since 1985, this was the AMA's definition of marketing:
Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of goods, ideas, and services to create exchanges that satisfy individual and organizational goals.
Most practitioners were reasonably comfortable with this definition through the '90s. However, as changes in technology, an increased awareness of the importance of customers, and a greater understanding of lifetime value began to be felt in the profession, the definition lagged. Fortunately, the AMA took up the challenge and unveiled a new definition in 2004:
Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
Let me outline four reasons why this new definition is important.
First, this new definition places responsibility for marketing at the organizational level, rather than the individual or even departmental level. With this definition, marketing is rightly recognized as a central, core operating principle; quite literally part of an organization's DNA. There is no longer a simple, separate marketing function that falls neatly within one division or in one person's job description. Rather, marketing is seen as an organization-wide, or in our context, campus-wide, understanding and responsibility.
Recognizing this sea change, the question is no longer "how can our marketing department do a better job?" Rather, the question is "what are the marketing ramifications of decisions made in academic affairs or student services...or parking?"
With this definition, everyone is involved in marketing. It is no longer a tool, but an attitude. It is no longer the commitment of a single individual, but the commitment of all individuals in the organization. By extension, individuals who do not value this "we are all in the marketing boat" commitment, especially if they are in positions of authority, imperil the very organizations they try to lead.
Marketing must have a seat at the major decision-making table of the institution.
There will be less of a need for a separate marketing plan that tries to do all the heavy lifting. Rather, there should be a marketing dimension in all existing plans, especially the strategic plan. In fact, every plan should include a question: what are the marketplace implications of this goal or activity?
quite literally as part of
an organization's DNA.
Because group responsibility often means no responsibility, senior leaders must make sure that this collective responsibility is felt and acted upon in a systematic and engaging way and that correct attitudes and behaviors are rewarded.
In an interesting turn of events, the chief marketing officer (CMO) is now really a coordinator. Rather than trying to exert his or her will on a recalcitrant campus, the CMO works through, or coordinates, the marketplace impact of decisions made in the other primary functional units.
Second, the new definition of marketing emphasizes integration. Like many practitioners, I have long proposed that of the two words that comprise "integrated marketing" the more important, useful, and compelling word of the two is "integrated" or "integration." This new definition affirms that insight.
Marketing is all about shared goals, as all major functional areas work toward the fulfillment of a common vision. As a result, it is less about new dollars and resources and more about coordinated dollars and resources. To illustrate the impact this notion of integration has, consider for just a moment eight rowers in a racing shell (yes, here we go again with my favorite illustration). When all eight rowers are in sync, the shell moves swiftly and leaves its competitors behind. When all senior administrators are in sync, communicate, and instill this synchronicity in their middle managers, great things occur.
Of course, this means that all eight rowers must be willing to row toward a common vision and understand their role in helping to achieve that vision. This occurs much less often, and with less enthusiasm, than one might hope. If integration is critical, and it is, then building a senior team of like-minded administrators will become the most important undertaking facing all college presidents.
It is all about sharing goals and resources and coordinating activities toward the accomplishment of a single, well-focused set of goals that support the institutional vision.
Because there is less emphasis on new dollars and more emphasis on shared dollars, institutions and individuals who blame a lack of funds for their inept or inadequate marketing attitude and activities (typically and wrongly translated as advertising) will find themselves without an argument.
Strategies to increase and measure levels of integration will be of critical importance.
It is all about the team.
Third, this changed definition affirms, again rightly, that marketing is about creating, communicating, and delivering value, not merely communication. A couple of things are going on here. First, creating, communicating, and delivering must be seen as different places on the same continuum and guided by the same vision. Second, our goal is value. And as Drucker rightly observed, customers play a critical role in defining value. While what you do must be of value to stakeholders, it must also be of value to those who pay the bills. Furthermore, you should not communicate or imply value when there is none. Remember, effective strategy, or value creation, always precedes effective communication, or value awareness.
At the risk of offending, let me offer a basic economic principle: If the marketplace truly values and is aware of what you offer, then your discount rate is going down and your tuition revenue is going up. If the marketplace truly values what you offer, then your annual fund contributions and gifts from donors are going up as well.
The relationship between what you offer to students and donors, how you communicate that offer, and how you deliver what you offer is inseparable or, to carry our theme, integrated.
Care must be taken to understand the difference between what you value as an institution and what customers value from you. Ideally, what customers actually value is how you translate and deliver on those core values. In other words, what do they get out of a relationship with you.
Faculty and staff must always care deeply about what you do, but so must the students and donors who pay bills with tuition checks and gifts.
Fourth, marketing has the goal of managing lifetime customer relationships in ways that benefit both the customer and the organization. There are two important nuggets here. First, the idea of lifetime customer relationships. It is not about a one-time sale or buy, but a lifetime of sales and buys. It is not about recruiting freshmen, but freshmen who want to be seniors. It is not about recruiting one-time donors, but lifetime donors.
Second, there is the notion of a relationship that benefits both the organization and the customer. It is, as our high school biology teachers once told us, all about mutualism. There's no longer a sense that if the organization wins, someone must lose. Rather, successful relationships foster win-win.
This is an incredibly high bar. Engaging students and donors over multiple years, even over the course of a lifetime, is very difficult and must become as important a core value as academic quality.
A greater sense of lifetime customer value will cause us to recalculate how much it costs to recruit a student and compare that total against the lifetime value of that student. We should be willing to invest more resources in recruiting the right kind of student if we can demonstrate that the lifetime contribution (as students and donors) of that freshman is significant.
This emphasis on lifetime value will also force IHEs to look again at how they manage and transition relationships, from prospective student all the way to eventual donor. We will likely see more interest in the idea of a VP of Market Relations who oversees a seamless database of individuals, contacts, and interactions. A significant investment in customer or constituent relationship management will be the order of the day.
donors over a lifetime is very difficult.
In the same way, attention must be paid to how you "grow" first-year students into graduates and smaller donors into larger donors. A careful laddering of increasingly significant experiences will be the order of the day.
IHEs must reverse the all-to-high attrition rate from first-year to second-year students with greater care taken in identifying what students need, and a willingness to customize programs to meet their needs (or suggest that their needs are better served elsewhere). You simply can't develop a lifetime relationship if the first experience is debilitating.
We applaud the definition not only for the courage it took to make, but for its timeliness and the opportunities that it presents.
This new definition of marketing begs an important question: What now is the difference between an integrated marketing plan and a strategic plan? In our minds, very little.
Bob Sevier is a senior VP of Stamats Communications. He explores the principles of successful branding in his book Building a Brand That Matters: Helping Colleges and Universities Capitalize on the Four Essential Elements of a Block-Buster Brand, available from Strategy Publishing (www.strategypublishing.com).