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Marketing basics for those who approve the budgets

Marketing is the discipline that governs what a company sells, at what price, where, and how the market hears about it. Four Ps: product, price, place, promotion. Anyone who sees only advertising in it is approving budgets for a quarter of the pitch, then wondering about the result.

Daniel Votruba · 6 July 2026 · 3 min read

Marketing is not the department that does campaigns

McCarthy's 4P framework is over sixty years old and still holds: product, price, place, promotion. In the practice of most boards, though, marketing has shrunk to the last word: banners, trade fairs, social media. Yet the biggest growth levers lie elsewhere. A badly set price can destroy margin faster than any campaign; weak distribution means even the best advertising sends demand to the competitor who is on the shelf or in the tender. When marketing sits over product and price, it is a growth function. When it merely communicates, it is a design studio with a bigger budget.

The test for your company is simple: who last decided the price list, the discount policy, the channels you sell through? If nobody from marketing was in the room for any of those decisions, you are not approving a marketing budget. You are approving an advertising budget and hoping the other three Ps sort themselves out.

Penetration beats loyalty

The most cited empirical finding in marketing science comes from the Ehrenberg-Bass Institute: brands grow primarily by acquiring new and occasional buyers, not by deepening the loyalty of existing ones. In How Brands Grow Byron Sharp shows the same picture across dozens of categories: big brands have more buyers, not dramatically more loyal buyers. Loyalty also rises with penetration on its own, a phenomenon known as double jeopardy.

The practical consequence for leadership: loyalty programmes, retention campaigns and deepening the relationship have their place, but a growth strategy built exclusively on them is arithmetically doomed to stagnate. Budget should go where mental and physical availability is built, so that more people think of you in more buying situations and so that you are easy to buy.

Four metrics that belong in front of the board

  • Penetration. What percentage of category buyers bought from you in a given period. The cleanest indicator of growth.
  • Market share. Your position against competitors. Absolute growth in a growing market can mask relative decline.
  • Net sales. After discounts and rebates. Gross turnover lies, and discount policy is a marketing decision too.
  • Profit. The final arbiter. Marketing that does not lift profit over the long run is a hobby.

Everything else, meaning CTR, reach, engagement and per-channel ROAS, is operational diagnostics. Useful for the team, worthless as a steering metric for leadership, because it can be tuned without the company growing. Board reporting should have four lines and a three-year trend. A forty-slide deck full of click charts usually masks the fact that those four lines are not moving.

Three mistakes that cost the most money

1) Marketing is a cost. In accounting terms yes, economically it is an investment in future cash flows. Binet and Field demonstrated on IPA data that brand building improves price elasticity and reduces dependence on discounting. That effect shows up months to years later, though. A company that cuts brand in a recession sells more cheaply long after the recession has ended.

2) Brand equals logo. A logo is a brand asset, not the brand. The brand is the sum of associations in buyers' heads, built with consistent, recognisable signals over years. Not by rebranding every three years whenever a new CMO needs to leave a mark.

3) The performance trap. Performance channels harvest demand somebody had to sow. When budget escalates exclusively into harvesting, CPA looks superb at first and then rises year after year, because the field went unsown. Binet and Field recommend roughly 60:40 in favour of long-term brand building as a starting orientation. The exact mix depends on category and company stage; the principle of balance does not.

If you want these principles turned into a concrete strategy with numbers and priorities, that is exactly what we build, or write to us directly. The first opinion is free.

Key takeaways (TL;DR)

  • Marketing is four Ps: product, price, place, promotion. Anyone who sees only advertising is approving a budget for a quarter of the pitch.
  • Brands grow primarily through penetration, not loyalty; loyalty rises with penetration on its own (double jeopardy). Growth built on retention alone is arithmetically doomed to stagnate.
  • Four metrics belong in front of the board: penetration, market share, net sales and profit. CTR, reach and ROAS are operational diagnostics, not steering numbers.
  • The three costliest mistakes: treating marketing as a cost, confusing brand with logo, and escalating budget into performance. The orientation ratio is 60:40 in favour of brand building.

FAQ

Is marketing a cost or an investment?

A cost in accounting terms, an investment in future cash flows economically. Brand building raises penetration and price elasticity: customers pay more and arrive more easily. Cut across the board in a recession and rebuilding mental availability costs a multiple of what maintaining it would have.

Which metrics should the board track?

Four: penetration, market share, net sales and profit. Everything else, CTR, ROAS, reach, engagement, is operational diagnostics for the marketing team, not a steering metric for leadership.

Why do brands grow through penetration rather than loyalty?

Ehrenberg-Bass empirical work across categories shows big brands differ from small ones mainly in number of buyers, not in loyalty. Loyalty rises with penetration almost automatically (double jeopardy); it does not work the other way round.

Sources: Byron Sharp, How Brands Grow (Ehrenberg-Bass Institute) · Les Binet & Peter Field, The Long and the Short of It (IPA) · E. J. McCarthy, Basic Marketing · our own practice across 750+ projects.