Some of the most important expenses a business can have relates to the marketing and advertising of its products or services. While a business must be able to market its product, it must also be able to manage the related costs. This is the foundation of the relationship between Marketing and Finance.
With the marketing industry growing more complex, specialised financial experts are needed to help marketing organisations gain spending visibility, manage costs and budgets while still providing value. Those on both sides of the table are witnessing a shift and are pulling together to deliver a shared vision for success. With time, it’s possible to transform finance into an ally and turn marketing into a performance-driven unit at the same time.
According to Chief Marketer, global competition, commoditisation, market fragmentation and strict financial regulation have all converged to create an environment requiring companies to create better processes, address controls, and assess risk. This marks a new age for marketing in the 21st century; The Age of Accountability.
Marketers are being pushed to shift their focus from awareness and image to increasing revenue, the business’s cash flow, and customer acquisition.
Who will benefit from such a relationship?
Finance is concerned with all financial aspects of a business such as profits, costs, the feasibility of projects, and overall financial performance while marketing focuses on product development, pricing strategy, distribution channels, promotions, sales targets, sales volume, sales in comparison with competitors, brand awareness and publicity.
A relationship between the two would be mutually beneficial since, without marketing, product lifecycles won’t be managed and sales will decline, resulting in lost profit. On the other hand, without the Finance function, there would not be a marketing budget. The objective of Finance is to find ways to increase profits. Therefore, should there be no profit, their role will become redundant.
It’s fairly clear then that a Marketing – Finance relationship will benefit both parties and as such they must find ways to work together.
Easier said than done
The Finance and Marketing departments have always been held separate – they think and behave differently. Marketers are driven by creativity and brainstorm their ideas while financial people are compelled by numbers and budgets. While both departments have the company’s best interest at heart, they see the business in different ways. This creates a barrier to effective collaboration.
In the past there was a combative tug of war between the two departments with Marketing spending money while Finance is trying to cut costs. Fortunately, this relationship is evolving into more of a symbiotic relationship where both departments work together to achieve a common goal.
How can the relationship be improved?
To make this relationship work, the marketing department takes on the responsibility of managing and developing the growth of a business while the finance department works closely with marketing to monitor trends in the business as well as manage the efficiency of marketing initiatives. Marketing needs Finance now more than ever. From a marketing perspective, here are 3 ways in which the relationship with the Finance department can be improved:
Communication is key: The perception is that Marketing is always going to ask for more money and Finance is always going to cut the budget without taking the reasons for spending into account. Regular meetings between the two departments are needed to negotiate and discuss expenses and budgets in alignment to company goals.
Share the success: When Finance sees a large expense, without knowing anything about it, they are going to want to cut back on spending. That’s their job. Those in Marketing must take the time to explain why the funds are needed and how it will benefit the business. Both departments need to be willing to compromise.
Think alike: As a marketer, research how much a project will cost before presenting it to Finance. That way Finance is not handing Marketing their numbers, Marketing is handing in their own numbers. This will make the negotiation process a lot faster and easier.
If you are in Finance and want to have a better understanding of Marketing or are in Marketing and want to have a better understanding of Finance, why not upskill with one of IMM’s short courses such as Fundamentals of Marketing or Finance for Non-Financial Managers. For more information on these and other short courses offered by IMM call 0861 466 476 or visit https://www.immgsm.ac.za/