2. Bifurcation of short term and long term marketing investment:
No bifurcation between the short term and long term marketing investment create huge misunderstanding between the two functions i.e. finance and marketing. It is very difficult to identify the long term (Creative) and short term (routine) marketing cost. Short term (routine) marketing cost means costs incurred on advertising through different channels like electronic media, print media, social websites, internet etc., while long term (Creative) marketing cost generally referred to the costs incurred on brand building. Short term marketing investment’s profitability reflects immediately in the profit and loss account while long term marketing investment’s profitability takes time to realize and this generates conflict. Therefore, finance department needs to understand the facts behind the scene before reaching towards any sort of conclusion. They have to keep an eye on the future prospects of the marketing benefits that can add long term value towards the shareholders return.
3. Focus on one business goal i.e. maximizing shareholders’ value:
Marketing department’s personnel often claims the number of prospective consumers they reached for-example; they said we have reached 1 million likes on the Facebook, we have gathered 50,000 people on an event; these sort of litigations are useless unless they add some value to the profit. Therefore, both the finance and marketing department should concentrate on one single motive that is to maximize the shareholders’ return and that is the key to align the two functions.
4. Benchmarking:
To cope with the conflicts between the two functions, one way is to set those companies, who perform well in the industry, a benchmark, for marketing expenditure and the value these companies generate from that expenditure. This will create the confidence of the marketing department and the accountability as well if the marketing strategy goes wrong.
The benchmarking need to be done with both two costs; i.e. creative marketing cost (the cost incurred for brand building) and routine marketing cost (Cost incurred on routine marketing of different products). After creating the benchmark, it is necessary to wipe out the unnecessary cost duplications by taking directions from the expert marketing consultants. This will reduced the overall marketing cost by unnecessary spending and boost up the MROI.
5. To convince marketing and finance on they are two sides of the same coin:
Another way to resolve conflicts between the finance and marketing departments is to convince the both that they are on the same board. Marketing personnel should involve finance personnel in planning process of marketing department whereas the finance personnel should invite marketing personnel input in formulating the marketing budget. This will not only result in shrinking the communication gap between the two departments but also allow both departments to make the necessary adjustment in the budgets time to time as required by the global norms.
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