Earlier this week, we described how marketing has historically fallen short of its ideal of predictability causing inefficiency and waste. Today, we’ll look at the traditional “Marketing Value Chain” to understand its shortcomings and why a new approach is needed.
A value chain can be defined as a set of activities that an organization performs in order to deliver a product or service. The concept was first popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance. While Porter was talking about the activities of entire organization, his idea can easily be applied to the marketing function alone. Like any system, it is made up of inputs, transformative processes and outputs. How value chain activities are carried out determines costs and affects profits.
The Old Marketing Value Chain worked by successfully employing the correct sets of “rules and tools.” Marketers mastered the following two-link chain and applied it to their products and brands, hoping high-quality “inputs” would lead to high-quality “outputs.” This marketing chain was undeniably effective, especially in comparison to marketing with no plan or strategy. But it also had key flaws, which meant that inefficiency and waste were a necessary byproduct of any marketing campaign, even successful ones.
In the “rules and tools” approach, rules refer to the guidelines marketers follow: best practices and conventional wisdom that the marketer has been taught and practiced throughout his or her career. These practices allow the marketer to shape a strategic approach based on what has worked before, on the theory that it will work again.
“Tools” include mass marketing, branding, lead generation and other approaches that have been proven effective. Again, these tools assume a static environment, in which what has worked will always work. The content may change, but the tools remain the same.
The Marketing Value Chain has changed dramatically in recent years. Visit our blog throughout the month to learn more about “The New Marketing Value Chain” and how to accordingly adjust marketing strategies to fit today’s world.
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