The-Factory

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4-5 Booths Yard Pudsey, Leeds
Phone: (113) 290-9244

Opinion: Is the traditional business model becoming outdated?

Over the last few years I have heard a relatively new phrase increasingly pop up in conversation when discussing the fortunes of any particularly successful company. It goes something like…

‘Ah yes, but they are a marketing company who sell _____ (insert product or service here)’.

I’ve been giving this a lot of thought lately. The traditional business model is similar to the diagram below…

marketing business model

You need systems and procedures to allow for expansion and continuity. You need sales and marketing to raise awareness and generate revenue and you need a healthy cash flow to fund it all.

This business model is recognised the world over and has been for centuries, with one slight exception. Marketing.

The first marketing course was only offered in 1905. The University of Pennsylvania offer a course called “The Marketing of Products”.

Prior to that, the recognised business model would feature Sales and Advertising, or possibly just Sales.

Marketing has only really come to maturation over the past 30 years or so. The ‘break-away’ moment from marketing being ‘something to do with advertising’ and starting to be considered as more of a discipline in it’s own right is arguably the advent of ‘relationship marketing’ and Kotler’s observation that customers cost considerably more to acquire than retain.

So with banks insisting on a marketing plan to be part of a companies business plan, and with Marketing Directors taking their place on the board along side the FD and MD, are we beginning to see a need to revisit the traditional business model to make our own companies successful?

The new business model in companies such as Wetherspoons, Starbucks, ASDA, EasyJet, Google et al is starting to look more like this…

marketing business model for companies

I have lost track of the amount of time I have heard Wetherspoons described as a ‘marketing company who sell beer’, but people are right when they say that.

Wetherspoons, like all the other companies listed above, have realised the massive potential of marketing to not only forge external opinion and create awareness but to drive the very internal cultures and practices of their organisations.

As social media now allows consumers to have a two way dialogue with giant companies and makes ‘shopping around’ easier than ever in the history of commerce, then doesn’t it make sense that the role of marketing needs to permeate even deeper into the running of our companies to survive.

What do we want from our local pub? Affordable beer, good quality food, a seat, friendly bar staff and to be able to hear ourselves talk. Not everyone wants this, but clearly the largest common denominator do, and Wetherspoons gives it to us in bucket loads.

Marketing has influenced staff training, pricing policy and ultimately cash flow to end up with arguably the most successful pub chain in the UK today. And the same can be said for all the other major competitors in the global market today.

I believe that the current business model needs to change in the current economic environment to enable you to compete effectively.