Marketing as a Profit Center
Marketing involves many activities including selling; but it is many things more than selling. Transportation, storage, credit, packaging, and even buying are marketing activities. Sound marketing management consists of seeing to it that all marketing activities (transportation and warehousing as well as selling and advertising) are also effectively and efficiently performed, in harmony toward the common goal of profit.
Historically, we have produced in order to be able to sell. Now, we market – have a marketing organization – in order that we may justify production. When the typical (or average) consumer product (food, clothing, autos, appliances) is purchased, more than half of its price pays for its marketing, only half or less goes to production, manufacturing.
Until recently, our methods of production were generally more efficient than our methods of marketing. Currently, greater strides are taking place in marketing than manufacturing. Yet there is still more room for improvement in marketing than in manufacturing.
Today, the production costs of different firms are more likely to be competitive than their marketing costs. Assuming that the firm’s production costs are competitive, the question of profit lies in efficient marketing. No firm can succeed if (1) its production costs are excessive or (2) its marketing program is less efficient than that of its competitors.
Production should thus provide marketing with a product that is cost-competitive and can be priced and sold at a profit. It is then up to marketing to bring about these sales with maximum efficiency. Thus, marketing management becomes a center responsible for the production of profit.
“Profit” does not accrue until the goods are sold, delivered, and paid for. Hence, if production costs tend to be almost identical and the price competition is keen, the question of profit lies almost entirely in relative marketing efficiency as between producers. If “marketing” encompasses all activities beyond production and if profit losses can occur in any phase of distribution, then it is marketing efficiency that makes or breaks profits.