Question 1: The role of marketing in the firm (25 points)
A. Many people have argued that marketing has been losing ground in the firm.
1. Discuss three trends that according to Webster et al. (2005) have, over the years,
lead to reducing marketing spending.
2. However, reducing marketing spending may be detrimental for the company.
Provide three potential outcomes for the company named in the same study, and
discuss why they would be harming the company.
B. Verhoef and Leeflang (2009) as well as Feng, Morgan and Rego (2015) investigated
the influence of the marketing department in the firm. Their conclusions partly
overlap, partly not. Discuss findings of the two studies, and show how they are
similar/different with regard to:
1. The influence of marketing in the firm.
2. The impact of stronger influence of marketing on firm performance.
C. In any case, investing in marketing is not without value for companies, Chandly et al.
(2014) investigated the importance of marketing and financial skills for small firms in
emerging countries. How does marketing differ from finance in creating value for
companies in this research? Please link them to the two main types of competitive
strategies (and name these strategies) as proposed by Porter (1980).
A. 1. Focus on short-term revenues, earnings, stock prices etc.; inability to prove
marketing’s contribution, lack of accountability, shift in channel power, pressure for
cost reduction.
2. Weakened brands: brands are less appealing, less brand equity, less revenue
premium. Lack of true innovation: true (radical) new products create most value for
the company.
Declining market power: more powerful brands have better deals with retailers and
suppliers, and mostly more effective in marketing actions.
Price erosion: less revenue premium, margins under pressure.
B. 1. VL: influence of marketing is perceived as not high
FMR: influence of marketing is up
2. VL: no direct but positive indirect effect of marketing influence on firm
performance, fully mediated by market orientation.
FMR: no direct but positive indirect effect of marketing influence on ST firm
performance (return on assets). Positive direct and indirect impact of marketing on LT
firm performance (total shareholder return).
C. Marketing: growth path:
Marketing/sales activities that increase sales; based on market research, marketing
tactics, sales tactics.
Can be linked to Differentiation strategy of Porter.
Finance: efficiency path:
Finance/accounting activities that decrease costs, based on financial tracking.
Can be linked to Cost Leadership strategy of Porter.
A. Many people have argued that marketing has been losing ground in the firm.
1. Discuss three trends that according to Webster et al. (2005) have, over the years,
lead to reducing marketing spending.
2. However, reducing marketing spending may be detrimental for the company.
Provide three potential outcomes for the company named in the same study, and
discuss why they would be harming the company.
B. Verhoef and Leeflang (2009) as well as Feng, Morgan and Rego (2015) investigated
the influence of the marketing department in the firm. Their conclusions partly
overlap, partly not. Discuss findings of the two studies, and show how they are
similar/different with regard to:
1. The influence of marketing in the firm.
2. The impact of stronger influence of marketing on firm performance.
C. In any case, investing in marketing is not without value for companies, Chandly et al.
(2014) investigated the importance of marketing and financial skills for small firms in
emerging countries. How does marketing differ from finance in creating value for
companies in this research? Please link them to the two main types of competitive
strategies (and name these strategies) as proposed by Porter (1980).
A. 1. Focus on short-term revenues, earnings, stock prices etc.; inability to prove
marketing’s contribution, lack of accountability, shift in channel power, pressure for
cost reduction.
2. Weakened brands: brands are less appealing, less brand equity, less revenue
premium. Lack of true innovation: true (radical) new products create most value for
the company.
Declining market power: more powerful brands have better deals with retailers and
suppliers, and mostly more effective in marketing actions.
Price erosion: less revenue premium, margins under pressure.
B. 1. VL: influence of marketing is perceived as not high
FMR: influence of marketing is up
2. VL: no direct but positive indirect effect of marketing influence on firm
performance, fully mediated by market orientation.
FMR: no direct but positive indirect effect of marketing influence on ST firm
performance (return on assets). Positive direct and indirect impact of marketing on LT
firm performance (total shareholder return).
C. Marketing: growth path:
Marketing/sales activities that increase sales; based on market research, marketing
tactics, sales tactics.
Can be linked to Differentiation strategy of Porter.
Finance: efficiency path:
Finance/accounting activities that decrease costs, based on financial tracking.
Can be linked to Cost Leadership strategy of Porter.
