At some point in the late 1990s, I wrote a short piece for Word on the Street, the Brackenbury Group’s client newsletter, which demonstrates one of the core propositions behind the Escondido Framework very clearly. The relationship between the organisation and all its “stakeholders” is at its heart a marketing relationship:
Marketing is too important to be left to the marketing department. Marketing departments address only the consumers of the products or services that a company sells to those it thinks of as its customers. But the truth is far wider than this.
Companies should apply the marketing way of thinking in all the markets in which they operate. This means not just the “downstream” market, but also to the “upstream” markets: funding, labour, bought in goods and services. The company is marketing an investment opportunity to its shareholders and debt providers. It is marketing careers and contracts to existing and prospective employees. It is providing opportunities to its suppliers with markets and channels to other markets.
The marketing mindset involves understanding the differing needs of differing customer segments, thinking about how to adapt your offer to meet the needs of your target customer and then doing it consistently, understanding the trade-offs they make between different attributes of the product or service you provide – of which price is only one dimension, determining where you can achieve an advantage over your competitors. It also includes what most non-marketing people understand as “marketing”, communicating these benefits to customers in ways that lead eventually to a profitable sale.
In most companies, marketing activity occurs sporadically in the functions that face “upstream”. Presentations are given to investors and financial PR consultancies are returned to put a positive gloss on results. Advertisements are placed, glossy brochures and upbeat web pages prepared, and roadshows taken round campuses to attract prospective recruits. Invtitations to tender and requirements lists are circulated, and subscriptions taken to web-exchanges as part of the sourcing process, whether for services, real estate, or components and real estate.
But in few companies does marketing explicitly underpin the way in which directors and managers in finance, HR, buying and purchasing, IT, property approach their responsibilities. They need to think about their “customers” in the same way that their downstream facing colleagues do about the people or businesses that are customers for the products and services the company sells. Applying tried and tested approaches from the downstream markets to the upstream markets to dealing with the financial markets will yield precious basis point reductions in the cost of capital and reduce paranoia about awkward investors or even takeover. In HR policy, it will reduce total employment costs – not just outlays on wages and salaries, or even improved retention, but also through enhanced productivity. And in purchasing it will translate into competitive advantage through lower total costs of supply, higher service and priority treatment.