understanding marketing management

Program Formulation and Implementation

Oiiul' the business unit has developed its principal strategics, it must wop: out detailed support programs. A great marketing Strategy can bo sabotaged by poor implementation. If the unit has decided to attain technological leadership, it must plan programs to strengthen its I) department, gather technological intelligence, develop leading-edge products, train the technical sales force, ana develop ads to communicate its technological leadership.

Once the marketing programs are formulated, the marketing people most estimate their costs. Questions arise; Is participating in a particular trade show worth it? Will a specific sales contest pay for itself? Will hiring another salesperson contribute to tile ¡bottom line? Activity-based cost (ABC) accounting should be applied to each marketing program to determine whether it is likely to produce sufficient results to justify the cost.™

in i m piemen ting strategy, companies also must not lose sight of their multiple stakeholders and their needs. Traditionally, most businesses focused on stockholders, today's businesses arc increasingly recognizing til at unless they nurture other stakeholders—customers, employees, suppliers, distributors—the business may never cam sufficient profits for the stockholders. A company can aim to deliver satisfaction levels above tine minimum for different stakeholders, For example, it might aim to delight it» customers, perform well for its employees .mil deliver ;i threshold level id s:jlisi;iilinri to ¡is -aipplicis. In selling these leeels a company must be careful not 10 violate the various stakeholder groups' sense of fairness about the relative treatment they arc receiving.'1

There is a dynamic relationship connecting the stakeholder groups. A situtrt company creates a high level of employee satisfaction, which leads to higher effort, which leads to higher-quality products and services, which creates higher customer satisfaction, which leads to more repeat business, which leads to higher growth and profits, which leads iu high stockholder satisfaction, which leads to more investment, and so on. This is the virtuous circle til a i spells profits a: id growth. "Marketing insight; Marketing's Contribution tn Shareholder Value" highlights the increasing importance of the proper bottom-line view to marketing expenditures.

According to McKirtseyfj Company, strategy is only one of seven elements in successful business practice/1"The first three elements—strategy, structure, and systems- are Considered the "hardware" of succcss. The nest four—style, skills, staff, and shared values—are the "software."

Companies uoimarij'fccue on profit maximisation rather than en shareholder value maximization. Doyle, n iiis Vtiue-Basâd Marketing, charges that profit maxim lîa'ion leads lo sUort-tenr planning and underm^siment in marketing. It leatls la a locus on build ng sales, market snare and current prof is. I' leads to cost cutling and shedding assets to produce quick mpnouements in earnings, and erodes a company's long-term oompetiliveuesS by neglect ng to invest in new market opportun lies

Companies normally measure (heir p-'Ofit perfgrirance using flOl (return on investment. calculated by dividing prpfftjj by Investment) This has lwo pnoblems:

1. Piolits are arbitrarily measured and subject to man palation Casii flow is a»ne important As someone observed: Profits are a matter of 0p:iii0fi; ca&b is a lacl."

2. lvestment ignores ¡the real value ol the 1 rm. More of a company's value resides in its intangible marketing assets—brands, mjrke; knc^ledyy. customer relationships, and panne- fetalis-

sh os—than ir> ils Iwlanoe sheet, Hiese assets are the drivers ol Cong-term profits.

Doyle argues that marketing wil no: mature as a profession unt it can [lemciisircte iiie impacl of mailing on shrewder value Ibe marSíM vglue of a coiirjjany minus its debt. The marid value is if« Eiare price ;imes the number o1 shares outstanding. The share pr íe reliecis v:hat irroeslons estimate is Ihe present value ol the fJbwe ¡ retime earnings o' a company When management is choosing a marketing strolegy. Doyle v.ants it to apply sJiareho!dei value analys s (SVAi to see whkdl allernafr/e course nt acton will maxiflfce stareholder value.

II Doyte's argumentó are accepted, marking will Rally gei the atlSfitkn it descaes in Ibe boardroom, instead ol seeing markaiing as a Efustiric I ¡motion concerned only with ingress ng sale? úr market share, senior management wll see it as an mtegra'; pan ol the whole management process. It pill iudge markeling by how much it con-;r.bu;es to shareholder value.

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The first "sofi" element, style, means that company employees share a common woyof thinking and behaving. McDonald's employees smile at the customer, and J Ll.VT employees are very professional in their Customer dealings. The second, skills, means that the employees have the skills needed to carry our the company's strategy. The third. sKtjfingi means that ihe company has hired able people, trained them well, and assigned iheiti (o the right jobs. The fourth, shared ndaes, means that ihc employees share the same guiding values, When these elements are present, companies are usually more successful at Strategy implementation,

Another study of management practices found that superior performance over time depended on flawless execution, a company culture based on aiming high, a Structure that is flexible and responsive, and a strategy that is clear and focused.52

Feedback and Control

As it i tuple in en ts its strategy, a flrtn needs to truck the results and monitor new developments, Some environments are fairly stable from year to year. Other environments evolve slowly in a fairly predictable way. St ill other environments change rapidly in major and unpredictable ways. Nonetheless, a company can count on one thing: t he marketplace wilt change; and when ii does, the company will need tu review and revise its implementation, programs, strategies, or even objectives,

A company's strategic fit with the environment will inevitably erode because the market environment changes faster than the company's 7 Ss, Thus, a company might remain efficient while it loses effectiveness, i'etcr Drucker pointed otn that it is more Important to "do lite right thing" (effectiveness! than "to do things riglu" (efficiency). The most successful companies escel at both.

Oncean oiganizat ion fails to respond tu a changed environment, it becomes increasingly hard to recap t Lire its lost posit ion. Consider what happened to Umis, Oeveloptneni Corporation. Its Lotus 1-2-3 software was once the World's leading software program, and now its market share in desktop software has slipped so low that analysts do not even bother to track it.

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