The Marketing Process

The strategic plan defines the company's overall mission and objectives. Within each business unit, marketing plays ;i role in helping to accomplish the overall strategic objectives. Marketing's role and activities in the organization are shown in Figure 3.6, which summarizes die marketing process and the forces influencing marketing strategy.

marketing process The process of (1) analyzing marketing opportunities; (2) selecting target markets; f,3) developing tlie marketing mix; and (4) managing the marketing effort.

Marketing Strategy marketing strategy

Tlie marketing logic by which Che business unit liopcs co achieve its marketing objectives.

Target consumers are at the centre of the marketing strategy. The company identifies the total market, divides it into smaller segments, selects the most promising segments and focuses on serving them. It designs a marketing mix using mechanisms under its control: product, price, place and promotion. The company engages in marketing analysis, planning, implementation and control to find the best marketing mix and to take action. The company uses these activities to enable it to watch and adapt to the marketing environment. We will now look briefly at e;ieh factor in the marketing process and say where it is developed elsewhere in this book.

• Target Consumers

To succeed in today's competitive marketplace, companies must be customer centred - winning customers from competitors by delivering greater value. However, before it can satisfy consumers, a company must first understand their needs and wants. So, sound marketing requires a careful analysis of consumers. An understanding of buyer behaviour, discussed in Chapters 7 and 8, guides this process. Companies know that they cannot satisfy all consumers in a given market - at least, not all consumers in the same way. There arc too many kinds of consumer with too many kinds of need, and some companies are in a better position to serve certain segments of the market. As a consequence, each company must divide the total market, choose the best segments and design strategies for profitably serving chosen segments better than its competitors do. This process involves five steps: demand measurement and forecasting, market segmentation, market targeting, market positioning and competitive positioning.

The Competitive. Environment

Companies aim to serve their customers, but they must do so in an environment with many other Influences. At the widest level is the macroenvironment of Political, Economic, Social and Technological (PEST) influences that all organizations face. Besides this companies also face a unique micro environment, including suppliers, competitors, channels of distribution and publics - such as employees and the media - that are not necessarily customers. Chapters 4 and 5 explore these environments and their increasingly global dimensions.

• Demand Measurement and Forecasting

Suppose a company is looking at possible markets for :\ potential new product. First, the company needs to estimate the current and future size of the market and its segments. To estimate current market size, the company would identify all competing products, estimate the current sales of these products, and determine whether the market is large enough to support another product profitably. Chapter 6 explores ways of doing this and other types of marketing research and information system.

Equally important is future market growth. Companies want to enter markets that show strong growth prospects. Growth potential may depend on the growth rate of certain age, income and nationality groups that use the product. Growth may also relate to larger developments in the environment, such as economic conditions, the crime rate and lifestyle changes. For example, the future markets for quality children's toys and clothing relate to current birth rates, trends in

The Marketing Process • 107

consumer affluence and projected family lifestyles. Forecasting the effect of these environmental forces is difficult, but it is necessary in order to make decisions about the market. The company's marketing information specialists will probably use complex techniques to measure and forecast demand.

Market Segmentation

If the demand forecast looks good, the company next decides how to enter the market. The market consists of many types of customers, products and needs, The marketer has to determine which segments offer the best opportunity for achieving company objectives. Consumers are grouped in various ways based on geographic factors (countries, regions, cities); demographic factors (sex, age, income, education); psychographic factors (social classes, lifestyles); and behavioural factors (purchase occasions, benefits sought, usage rates). The process of dividing a market into groups of buyers with different needs, characteristics or behaviour, who might require separate products or marketing mixes, is market segmentation.

Every market has market segments, but not all ways of segmenting a market are equally useful. For example, Panadol would gain little by distinguishing between male and female users of pain relievers if both respond the same way to marketing stimuli. A market segment consists of consumers who respond in a similar way to a given set of marketing stimuli. In the car market, for example, consumers who choose the biggest, most comfortable car regardless of price make up one market segment. Another market segment would be customers who care mainly about price and operating economy. It would be difficult to make one model of car that was the first choice of every consumer. Companies are wise to focus their efforts on meeting the distinct needs of one or more market segments.

After a company has defined market segments, it can enter one or many segments of a given market. Market targeting involves evaluating each market segment's attractiveness and selecting one or more segments to enter. A company should target segments in which it has a differential advantage over its competitors; where it can generate the greatest customer value and sustain it over time. A company with limited resources might decide to serve only one or a few special segments; this strategy limits sales, but can be very profitable, Alternatively, a company might choose to serve several related segments - perhaps those with different kinds of customer, but with the same basic wants. Or perhaps a large company might decide to offer a complete range of products to serve all market segments. The closely linked processes of market segmentation and targeting are both developed in Chapter 9.

Most companies enter a new market by serving a single segment, and if this proves successful, they add segments. Large companies eventually seek full market coverage. They want to be the 'General Motors' (GM) of their industry. America's GM says that it makes a car for every 'person, purse, and personality'. Similarly. Japan's Seiko is proud of its range of 2,500 watches designed to cover consumer segments across the world. The leading company normally has different products designed to meet the special needs of each segment.

• Positioning

After a company has decided which market segments to enter, it must decide what 'position' it wants to occupy in those segments. A product's position is the murkci segmentation Dividing a market into distinct groups of buyers teitft different needs, characteristics or behaviour, laho might require separate products or marketing market segment A group of consumers who respond in a similar 'way to a given set of marketing stimuli.

market targeting The process of evaluating each market, segment's al.tracCioeness and selecting tine or more segments to enter.

product position The way the product is defined by consumers nn important attributes -the place the product occupies in Consumers' minds relative to competing products.

Market positioning: Red Roof Inns positions on value - it doesn't 'add frills that only add to your bill.' In contrast, Four Seasons Hotels positions on luxury. For those tci/to can afford it, Four Sea-sons offers endless amenities - such us a seamstress, a valet and a 'tireless individual who collects your shoes each night and returns them at dawn, polished to perfection'.

market positioning Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in tlie minds of target consumers. Formulating competitive positioning for a product and a detailed marketing mix.

place the product occupies in consumers' minds. If a product were perceived to be exactly like another product on the market, consumers would have no reason to buy it.

Market positioning gives a product a clear, distinctive and desirable place in the minds of target consumers compared with competing products. Marketers plan positions that distinguish their products from competing brands and give them the greatest strategic advantage in their target markets. For example, Ford says, 'Everything we do is driven by you'. Renault builds cars that 'take your breath away', Mitsubishi's are 'designed to be driven'. BMW is 'the ultimate driving machine'. Rolls-Royce cars are 'Strictly for the wealthy arrived individual', while the equally luxurious Bentley is 'The closest a car can come to having wings'. Such simple statements are the backbone of a product's marketing strategy.

In positioning its product, the company first identifies possible competitive advantages upon which to build the position. To gain competitive advantage, the company must offer greater value to chosen target segments, either by charging lower prices than competitors or by offering more benefits to justify higher prices. However, if the company positions the product as offering greater value, it must deliver greater value. Effective positioning begins with actually differentiating the company's marketing offer so that it gives consumers more value than is offered by the competition.

The company can position a product on only one important differentiating factor or on several. However, positioning on too many factors can result in consumer confusion or disbelief. Once the company has ehosen-a desired position, it must take steps to deliver and communicate that position to target consumers. Chapter 10 focuses on positioning and tells how the company's entire marketing programme should support the chosen positioning strategy.

Marketing Strategies for Competitive Advantage

To be successful, the company must do a better job than its competitors of satisfying target consumers. Chapter 11 shows how this increasingly depends upon establishing relationships with customers and other participants in the value chain by providing them with quality, value and service. Recently there has been a major shift from marketing as a single transaction between supplier and buyer ro establishing a longer-term relationship with customers through loyalty schemes and data-based marketing. These recognize that it is far more expensive to obtain customers than to retain them.

Providing excellent value and customer service is a necessary but not sufficient means of succeeding in the marketplace. Besides embracing the needs of consumers, marketing strategies must build an advantage over the competition. The company must consider its size and industry position, then decide how to position itself to gain the strongest possible competitive advantage. Chapter 12 explains how to do this.

The design of competitive marketing strategies begins with competitor analysis. The company constantly compares the value and customer satisfaction delivered by its products, prices, channels and promotion with those of its close competitors. In this way it can discern areas of potential advantage and disadvantage. The company must formally or informally monitor the competitive environment to answer these and other important questions: Who are our competitors? What are their objectives and strategies? What are their strengths and weaknesses? How will they react to different competitive strategies we might use?

Which competitive marketing strategy a company adopts depends on its industry position. A firm that dominates a market can adopt one or more of several market leader strategies. Well-known leaders include Chanel (fragrances), Coca-Cola (soft drinks), McDonald's (fast food), Komatsu (large construction equipment), Kodak (photographic film), Lego (construction toys) and Boeing (civil aircraft).

Market challengers are runner-up companies that aggressively attack competitors to get more market share. For example, Pepsi challenges Coke and Airbus challenges Boeing. The challenger might attack the market leader, other firms of its own sixe, or smaller local and regional competitors. Home runner-up firms will choose to follow rather than challenge the market leader. Firms using market follower strategies seek stable market shares and profit by following competitors' product offers, prices and marketing programmes.14 Smaller firms in a market, or even larger firms that lack established positions, often adopt market nicher strategies. They specialize in serving market niches that large competitors overlook or ignore. Market nichers avoid direct confrontations with the big companies by specializing along market, customer, product or marketing-mix lines. Through clever niching, low-share firms in an industry can be as profitable as their large competitors.

Developing the Marketing Mix

Once the company has chosen its overall competitive marketing strategy, it is ready to begin planning the details of the marketing mix. The marketing mix is one of the dominant ideas in modern marketing. We define marketing mix as the set of controllable tactical marketing tools that the firm blends to produce the response it wants in the target market. The marketing mix consists of everything the firm can do to influence the demand for its product. The many possibilities gather into four groups of variables known as the 'four Ps'; product, price, place market leader The firm in an industry 'with the largest marker share; it usually leads other firms in price changes, new product introductions, distribution coverage and promotion Spending.

market challenger A runner-up firm in an industry that infighting hard to increase its market share.

market follower

A -ntnner-upfirni in an industry that wants to hold its share without rocking the boat market metier A firm in an industry that serves small segments that the other firms overlook or ignore.

marketing mix The set of controllable tactic-id marketing tools - product, price, place and promotion - that tliv firm blends to produce the response it wants in che target market.

product

Anything that can be offered to a market for attention, acquisition, use or consumption thai might satisfy a want or need. It includes physical objects, .seroic-es, persons, plnccn, organizations and ideas.

price

The amount of money charged for a product or service, or the sum of the values thai consumers exchange for the benefits of having or using the product or service.

place

All the company activities chut make the product or service available to target customers.

promotion Activities tl\at communicate the product or service and its 'merits to target customers and persuade them to buy.

Timotei Marketing Mix
Figure 3.7

The four Ps: the marketing mix and promotion.15 These are the subject of the second part of this hook, Chapters 13-22. Figure 3.7 shows the particular marketing tools under each P.

Product means the totality of 'goods and services' that the company offers the target market. The Honda Civic 'product' is nuts, bolts, spark plugs, pistons, headlights and many other parts. Honda offers several Civic styles and dozens of optional features. The car comes fnlly serviced, with a comprehensive warranty and financing that is as much a part of the product as the exhaust pipe. Increasingly, the most profitable part of the business for car companies is the loan that they offer to car buyers.

Price is what customers pay to get the product. Honda suggests retail prices that its dealers might charge for each car, but dealers rarely charge the full asking price. Instead, they negotiate the price with each customer. They offer discounts, trade-in allowances and credit terms to adjust for the current competitive situation and to bring the price into line with the buyer's perception of the car's value.

Place includes company activities that make the product available to target consumers. Honda maintains a body of independently owned dealerships that sell the company's cars. They select dealers carefully and support them strongly. The main dealers keep a stock of Hondas, demonstrate them to potential buyers, negotiate prices, close sales, arrange finance, and service the cars after the saie.

Promotion means activities that communicate the merits of the product and persuade target customers to buy it. Honda spends millions on advertising each year to tell consumers about the company and its products. Dealership salespeople assist potential buyers and persuade them that a Honda is the car for them. Honda and its dealers offer special promotions - sales, cash rebates, low financing rates - as added purchase incentives.

An effective marketing programme blends the marketing mix elements into a co-ordinated programme designed to achieve the company's marketing objectives. The marketing mix constitutes the company's tactical tool kit for establishing strong positioning in target markets. However, note that the four Ps represent the sellers' view of the marketing tools available for influencing" buyers. From a consumer viewpoint, each marketing tool must deliver a customer benefit. One marketing expert suggests that companies should view the four Ps as the customer's four Cs:10

FOUK Ps FOUR Gs

Product Customer needs and wants

Price Cost to the eustomer

Place G onve me nee

Promotion Communication

Winning companies are those that meet customer needs economically and conveniently and with effective communication.

The Marketing Plan

Each business, product or brand needs a detailed marketing plan. What does a marketing plan look like? Our discussion focuses on product or brand plans that are a development of the general planning process in Figure 3.1. A product or brand plan should contain the following sections: executive summary, current marketing situation, threats and opportunities, objectives and issues, marketing strategies, action programmes, budgets and controls (see Table 3.1).

Executive S urmnary

The marketing plan should open with a short summary of the main goals and recommendations in the plan. Here is a short example;

The 1999 Marketing Plan outlines an approach to attaining a significant increase in company sales and profits over the preceding year. The sales target is #240 million - a planned 20 per cent sales gain. We think this increase is attainable because of the improved economic, competitive, and distribution picture. The target operating margin is $25 million, a 25 per cent increase over last year. To achieve these goals, the sales promotion budget will be S4.8 million, or 2 per eent of projected sales. The advertising budget will be S7.2 million, or 3 percent of projected sales ... [more details follow]

The executive summary helps top management to find the plan's central points quickly. A table of contents should follow the executive summary.

Marketing Audit

The marketing audit is a systematic and periodic examination of a company's environment, objectives, strategies and activities to determine problem areas and opportunities. The first main section of the plan describes the target market and the company's position in it (Table 3.2 gives the questions asked). It should start with the strategic imperatives: the pertinent objectives, policies and elements of strategy passed down from broader plans. In the current marketing situation section, the planner provides information about the market, product performance, competition and distribution. It includes a market description that defines the market, including chief market segments. The planner shows market size, in total and by segment, for several past years, and then reviews customer needs together with factors in the marketing environment that may affect customer marketing audit .4 eompreftensfee, systematic; independent and periodic examination of a company's environment, objectives, strategies and activities to determine problem areas mid opportunities, and to recommend a plan of action to improve the company's marketing performance.

current marketing situation The section of a marketing plan that describes the target market and the company's position in it.

Contents of a marketing plan

Action programmes

Objectives anil issues

Executive summary section

Marketing strategy

Current marketing situation

SWOT analysis

Controls

Budgets

PURPOSE

Presents a quick overview of the plan for quick management review.

The marketing audit that presents background data on the market, product, competition and distribution.

Identifies the company's main strengths and weaknesses and the main opportunities and threats facing the product. Defines the company's objectives in the areas of sales, market share and profits, and the issues that vviJl affect these objectives. Presents the broad marketing approach that will be used to achieve the plan's objectives.

Specifies what will be done, ro/io will do it, 'when it will be done and what it will cost.

A projected profit and loss statement that forecasts the expected financial outcomes from the plan.

Indicates how the progress of the plan will be monitored.

purchasing. Next, the product review shows sales, prices and gross margins of the principal products in the product line. A section on competition identifies big competitors and their individual strategies for product quality, pricing, distribution and promotion. It also shows the market shares held by die company and each competitor. Finally, a section on distribution describes recent sales trends and developments in the primary distribution channels.

Managing the marketing function would be hard enough if the marketer had to deal only with the controllable marketing-mix variables. Reality is harder. The company is in a complex marketing environment consisting of uncontrollable forces to which the company must adapt. The environment produces both threats and opportunities. The company must carefully analyze its environment so that it can avoid the threats and take advantage of the opportunities.

The company's marketing environment includes forces close to the company that affect its ability to serve its consumers, such as other company departments, channel members, suppliers, competitors and other publics. It also includes broader demographic and economic forces, political and legal forces, technological and ecological forces, and social and cultural forces. The company must consider all of these forces when developing and positioning its offer to the target market.

The SWOT analysis section draws from the market audit. It is a brief list of the critical success factors in the market, and rates strengths and weaknesses against the competition. The SWOT analysis should include costs and other nonmarketing variables. The outstanding opportunities and threats should he given. If plans depend upon assumptions about the market, the economy or the competition, they need to be explicit.

SWOT Analysis

Objectives and Issues

Having studied the strengths, weaknesses, opportunities and threats, the company sets objectives and considers issues that will affect them. The objectives are goals that the company would like to attain during the plan's term. For example, the manager might want to achieve a 15 per cent market share, a 20 per eent pre-tax profit on sales and a 25 per eent pre-tax profit on investment. If current market share is only 10 per cent, the question needs answering: Where are the extra sales to come from? From the competition, by increasing usage rate, by adding, and so on?

Marketing Strategy

In this section of the marketing plan, the manager outlines the broad marketing strategy or 'game plan' for attaining the objectives. Marketing strategy is the marketing logic by which the business unit hopes to achieve its marketing objectives. It shows how strategies for target markets and positioning build upon the firm's differential advantages. It should detail the market segments on which the company will focus. These segments differ in their needs and wants, responses to marketing, and profitability. The company should put its effort into those market segments it can best serve from a competitive point of view. It should develop a marketing strategy for each targeted segment.

Marketing Mix

The manager should also outline specific strategies for such marketing mix elements in each target market: new products, field sales, advertising, sales promotion, prices and distribution. The manager should explain how each strategy responds to the threats, opportunities and critical issues described earlier in the plan.

Action Programmes

Marketing strategies become specific action programmes that answer the following questions: What will be done? When will it be done? Who is responsible for doing it? How much will it cost? For example, the manager may want to increase sales promotion as a key strategy for winning market share. A sales promotion action plan should outline special offers and their dates, trade shows entered, new point-of-purchase displays and other promotions. The action plan shows when activities will start, be reviewed and be completed.

Budgets

Action plans allow the manager to make a supporting marketing budget that is essentially a projected profit and loss statement. For revenues, it shows the forecast unit sales and the average net price. On the expense side, it shows the cost of production, physical distribution and marketing. The difference is the projected profit. Higher management will review the budget and cither approve or modify it. Once approved, the budget is the basis for materials buying, production

Table 3.2

Marketing audit questions

MARKETING ENVIRONMENT AUDIT

THE MACROEKVIRONMENT

1. Demographic. What primary demographic trends pose threats and opportunities for this company?

2. Economic. What developments in income, prices, savings and credit will impact on the company?

3. Natural. What is the outlook for costs and availability of natural resources and energy? Is the company environmentally responsible?

4. Technology. What technological changes are occurring? What is the company's position on technology?

5. Political. What current and proposed laws will affect company strategy?

6. Cultural. What is the public's attitude towards business and the company's products? What changes in consumer lifestyles might have an impact?

THE TASK ENVIRONMENT

1. Markets. What is happening to market size, growth, geographic distribution and profits? What are the l;irge market segments?

2. Customers. How do customers rate the company on product quality, service and price? How do they make their buying decisions?

3. Competitors. Who are the chief competitors? What arc their strategies, market shares, and strengths and weaknesses?

4. Channels. What main channels does the company use to distribute products to customers? How are they performing?

5. Suppliers. What trends are affecting suppliers? What is the outlook for the availability of key production resources?

6. Publics. What key publics provide problems or opportunities? How should the company deal with these publics?

MARKETING STRATEGY AUDIT

1. Mission, is the mission clearly defined and market-oriented?

2. Objectives. Has the company set clear objectives to guide marketing planning and performance? Do these objectives fit with the company's opportunities and strengths?

3. Strategy. Does the company have a sound marketing strategy for achieving its objectives?

4. Budgets. Has the company budgeted sufficient resources to .segments, products, territories and marketing-mix elements?

MARKETING ORGANIZATION AUDIT

1. Formal structure. Does the chief marketing officer have adequate authority over activities affecting customer satisfaction? Are activities optimally structured along functional, product, market and territory lines?

2. Functional efficiency. Do marketing, sales and other staff communicate effectively? Are the staff well trained, supervised, motivated and evaluated?

3. Interface efficiency. Do staff work well across functions: marketing with manufacturing, R & D, buying, personnel, etc.?

MARKETING SYSTEMS AUDIT

1. Marketing information system. Is the marketing intelligence system providing accurate and timely information about developments? Are decision makers using marketing research effectively?

2. Planning system. Does the company prepare annual, long-term and strategic plans? Are they used?

3. Marketing control system. Are annual plan objectives being achieved? Does management periodically analyze the sales and profitability of products, markets, territories and channels?

4. New-product development. Is the company well organized to gather, generate and screen new-product ideas? Does it carry out adequate product and market testing? Has the company succeeded with new products?

PRODUCTIVITY AUDIT

1. Profitability analysis. How profitable are the company's different products, markets, territories and channels? Should the company enter, expand or withdraw from any business segments? What would he the consequences?

2. Gost-effectweness analysis. Do any activities have excessive costs? How can costs he reduced?

MARKETING FUNCTION AUDIT

1. Products. Has the company developed sound product-line objectives? Should some products be phased out? Should some new products he added? Would some products benefit from quality, style or feature changes?

2. Price. What are the company's pricing objectives, policies, strategies and procedures? Arc the company's prices in line with customers1 perceived value? Are price promotions used properly?

3. Distribution. What are the distribution objectives and strategies? Does the company have adequate market coverage and service? Should existing channels be changed or new ones added?

4. Advertising, sales promotion and publicity. What are the company's promotion objectives? How is the budget determined? Ts it sufficient? Arc advertising messages and media well developed and received? Does the company have well-developed sales promotion and public relations programmes?

5. Sales force. What are the company's sales force objectives? Is the sales force large enough? Is it properly organized? Is it well trained, supervised and motivated? How is the sales force rated relative to those of competitors?

scheduling, personnel planning and marketing operations. Budgeting can be very difficult and budgeting methods range from simple 'rules of thumb' to complex computer models.17

Controls

The last section of the plan outlines the controls that will monitor progress. Typically, there are goals and budgets for each month or quarter. This practice allows higher management to review the results of each period and to spot businesses or products that are not meeting their goals. The managers of these businesses and products have to explain these problems and the corrective actions they will take.

Implementation

Planning good strategies is only a .start towards successful marketing. A brilliant marketing strategy counts for little if the company fails to implement it properly.

marketing implementation The process that turns marketing strategies und plans into marketing actions in order to accomplish strategic marketing objectives.

Marketing implementation is the process that turns marketing strategies and plants into marketing actions to accomplish strategic marketing objectives. Implementation involves day-to-day, month-to-month activities that effectively put the marketing pkn to work. Whereas marketing planning addresses the what and why of marketing activities, implementation addresses the who, where, when aivihow.

Marketing Organization

The company must have people who can carry out marketing analysis, planning, implementation and control. If the company is very small, one person might do all the marketing work - research, selling, advertising, customer service and other activities. As the company expands, organizations emerge to plan and carry out marketing activities. In large companies there can be many speeialists: brand managers, salespeople and sales managers, market researchers, advertising experts and other specialists.

Modern marketing activities occur in several forms. The most common form is the functional organization, in which functional speeialists head different marketing activities - a sales manager, advertising manager, marketing research manager, customer service manager, new-product manager. A company that sells across the country or internationally often uses a geographic organization, in which its sales and marketing people run specific countries, regions and districts. A geographic organization allows salespeople to settle into a territory, get to know their customers, and work with a minimum of travel time and cost.

Companies with many, very different products or brands often create a product management or brand management organization. Using this approach, a manager develops and implements a complete strategy and marketing programme for a

Marketing Organization * 117

specific product or brand. Product management first appeared in Procter & Gamble in 1929. A new soap, Camay, was not doing well, and a young P & G executive was assigned to give his exclusive attention to developing and promoting this brand. He was successful, and the company soon added other product managers. Kince then, many organizations, especially in the food, soap, toiletries and chemical industries, have introduced the brand management system, which is in widespread use today.

Recent dramatic changes in the marketing environment have caused many companies to rethink the rule of the product manager. Today's consumers face an ever-growing set of brands and are now more deal-prone than brand-prone. As a result, companies are shifting away from national advertising in favour of pricing and other point-of-sale promotions. Brand managers have traditionally focused on long-term, brand-building strategies targeting a mass audience, but today's marketplace realities demand shorter-term, sales-building strategies designed for local markets.

A second significant force affecting brand management iw the growing power of retailers. Larger, more powerful and better-informed retailers are now demanding and getting more trade promotions in exchange for their scarce shelf space. The increase in trade promotion spending leaves less resources for national advertising, the brand manager's primary marketing tool.

To cope with this change, Campbell Soups created brand sales managers, These combine product manager and sales roles charged with handling brands in the field, working with the trade, and designing more localized brand strategies. The managers spend more time in the field working with salespeople, learning what is happening in stores, and getting closer to the customer.

Other companies, including Colgate-Palmolive, Procter & Gamble, Kraft and Lever Bros, have adopted category management, which has brands grouped according to the sections or aisles in supermarkets or other stores. Under this system, brand managers report to a category manager who has total responsibility for a category. For example, at Procter & Gamble, the brand manager for Dawn liquid dishwashing detergent reports to a manager who is responsible for Dawn, Ivory, Joy and all other light-duty liquid detergents. The light-duty liquids manager, in turn, reports to a manager who is responsible for all of P & G's packaged soaps and detergents, including dishwashing detergents, and liquid and dry laundry detergents. This offers many advantages. First, the category managers have broader planning perspectives than brand managers do. Rather than focusing on specific brands, they shape the company's entire category offering. Second, it better matches the buying processes of retailers. Recently, retailers have begun making their individual buyers responsible for working with all suppliers of a specific product category. A category management system links up better with this new retailer 'category buying' system. The aim of a supplier is to become a category leader who works closely with the retailer to increase category sales rather than that of one brand. These category leaders have considerable power and responsibility. They can clearly directly influence the saies of their competitors' products but not if it damages retailers' profits.

Some companies, including Nabisco, have started combining category management with another idea: brand teams or category reams. Instead of having several brand managers. Nabisco has three teams covering biscuits - one each for adult rich, nutritional and children's biscuits. Headed by a category manager, each category team includes several marketing people - brand managers, a sales planning manager and a marketing information specialist handling brand strategy, advertising, and sales promotion. Each team also includes specialists from other company departments: a finance manager, a research and development specialist, and representatives from manufacturing, engineering and distribution.

Thus category managers act as a small business, with complete responsibility for the performance of the category and with a full eomplement of people to help them plan and implement category marketing strategies.

For companies that self one product line to many different types of market that have different needs and preferences, a market management organisation might be best. Many companies are organized along market lines. A market management organization is similar to the product management organization. Market managers are responsible for developing long-range and annual plans for the sales and profits in their markets. This system's main advantage is that the company is organized around the needs of specific customer segments.

FJkla Gibbs, Unilever's personal care products division, has scrapped both brand manager and wales development roles. It had many strong brands, including Pears, Faberge Brut, Kignal and Timotei, but sought to improve its service to retailers and pay more attention to developing the brands. To do this it created two new roles: brand development managers and customer development managers. (Customer development managers work closely with customers and have also taken over many of the old responsibilities of brand management. This provides an opportunity for better co-ordination of sales, operations and marketing campaigns. The change leaves brand development managers with more time to spend on the strategic development of brands and innovation. They have the authority to pull together technical and managerial resources to see projects through to their completion.

Elida Gibbs' reorganization goes beyond sales and marketing. Cross-functional teamwork is central to the approach and this extends to the shop floor. The company is already benefiting from the change. Customer development managers have increased the number of correctly completed orders from 72 per cent to 90 per cent. In addition, brand development managers developed Aqua tonic - an aerosol deodorant - in six months, less than half the usual time.18

Marketing Control marketing control

The process of measuring and evaluating the results of marketing strategic.'! and plans, and Caking corrective action to ensure that marketing objectives are attained.

operating control Checking on-going performance against annual plans and taking corrective action.

strategic control Checking whether the companys basic strategy matches its opportunities and strengths.

Because many surprises occur during the implementation of marketing plans, the marketing department must engage in constant marketing control. Marketing control is the process of measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure the achievement of marketing objectives. It involves the four steps shown in Figure 3.8. Management first sets specific marketing goals. It then measures its performance in the marketplace and evaluates the causes of any differences between expected ami actual performance. Finally, management takes corrective action to close the gaps between its goals and its performance. This may require changing the action programmes or even changing the goals.

Operating control involves checking on-going performance against the annual plan and taking corrective action when necessary. Its purpose is to ensure that the company achieves the sales, profits and other goals set out in its annual plan. It also involves determining the profitability of different products, territories, markets and channels. Strategic control involves looking at whether the companys basic strategies match its opportunities and strengths. Marketing strategies and programmes can quieldy become outdated and each company should periodically reassess its overall approach to the marketplace. Besides providing the background for marketing planning, a marketing audit can also be a positive tool for strategic control. Sometimes it is conducted by an objective and

Marketing Control • 119

Figure 3.8

The control process

Figure 3.8

The control process experienced outside party who is independent of the marketing department. Table 3.2 shows the kind of questions the marketing auditor might ask. The findings may come as a surprise - and sometimes as a shock - to management. Management then decides which actions make sense and how and when to implement them.

Implementing Marketing

Many managers think that 'doing things right' (implementation) is as important, or even more important, than 'doing the right things'(strategy):

A -surprisingly large number of very successful large companies don't have long-term strategic plans with an obsessive preoccupation on rivalry. They concentrate on operating details and doing things well. Hustle is their style and their strategy. They move fast and they get it right ... Countless companies in all industries, young or old, mature or booming, are finally learning the limits of strategy and concentrating on tactics and execution.19

Implementation is difficult - it is easier to think up good marketing strategies than it is to carry them out.

People at all levels of the marketing system must work together to implement marketing plans and strategies. Marketing implementation requires day-to-day decisions and actions by thousands of people both inside and outside the organization. Marketing managers make decisions about target segments, branding, packaging, pricing, promoting and distributing. They work with people elsewhere in the company to get support for their products and programmes. They talk to engineering about product design, with manufacturing about production and inventory levels, and with finance about funding and cash flows. They also work witli outside people. They meet with advertising agencies to plan ad campaigns and with the media to obtain publicity support. The sales force urges retailers to advertise, say, Nestles products, provide ample shelf space and use company displays.

Successful implementation depends on several key elements. First, it requires an action programme that pulls all the people and activities together. The action

I Ic wlett-PackarcFs sir nature evolves

Marketing

Highlight

In 1939, two engineers, Bill Hewlett and David Packard, started Hewlett-Packard in a garage. Bill and Dave did everything themselves, from designing and building their equipment to marketing it. As the firm grew out of the garage and began to offer more and different types of test equipment, Hewlett and Packard could no longer make all the necessary operating decisions themselves. They hired functional managers to run various company activities.

By the mid-1970s, Hewlett-Packard's 42 divisions employed more than 30,000 people. The company's structure evolved to support its heavy emphasis on innovation and autonomy. Each division operated as an autonomous unit and was responsible for its own strategic planning, product development, marketing programmes and implementation.

Peters and Waterman, in their book In Search of Excellence, cited HP's structure as an important reason for the company's continued excellence. They praised HP's non-restrictive structure and high degree of informal communication (its t-Packard began in thin garage in 1939. It now operates globally through a sophisticated complex of facilities and communications networks.Its structure and culture have changed ivith growtli.

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MBWA style - management by wandering around), which fostered autonomy by decentralizing decision-making responsibility and authority. The approach became known as the 'HP Way', a structure that encouraged innovation by abolishing rigid chains of command and putting managers and employees on a first-name basis.

But by the mid-1980s, although still profitable, Hewlett-Packard had begun to encounter problems in the fast-changing microcomputer and minicomputer markets. According to Business Week:

Hewlett-Packard's famed innovative culture and decentralization [had] spawned such enormously successful products as its 3000 minicomputer, the hand-held scientific calculator, and the ThinkJet non-impact printer. But when a new climate required its fiercely autonomous divisions to co-operate in product development and marketing, HP's passionate devotion to 'autonomy and entre-prcneurship' that Peters and Waterman advocate became a hindrance.

Thus Hewlett-Packard moved to change its structure and culture in order to bring them in line with its changing situation. It established a system of committees to foster communication within and across its many and varied divisions and to co-ordinate product development, marketing, and other activities.

The new structure seemed to work well, for a while. However, the move towards centralization soon got out of hand:

The committees kept multiplying, like a virus. [Soon] everything was by committee ... no one could make a decision ... By the late 1980s, an unwieldy bureaucracy had bogged down the HP Way. A web of committees, originally designed to foster connmmication ... had pushed costs up and slowed down development.

Entering the 1990s, HP had no fewer than 38 in-house committees that made decisions on

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