FUTURES RESEARCH

7245 Marketing Practice – Long-Range Marketing

LONG-RANGE MARKETING

By David Mercer

[Mercer, D, Long Range Marketing, pp 178-184 Journal of Marketing Practice, Vol. 4 No. 6 (1998)]

Senior Lecturer

Centre for Strategy & Policy

Open University Business School

Walton Hall

Milton Keynes

MK7 6AA

United Kingdom

Phone: 44 (0) 1908 232165

Fax: 44 (0) 1908 655898

Email: d.s.mercer@open.ac.uk

BIOGRAPHY

The author is Senior Lecturer in Marketing with the Open University Business School, Europe's largest business school, where he chairs the team responsible for the long-range marketing/corporate strategy element of the MBA programme. He was the first Head of its Centre for Strategy & Policy.

His previous career included FMCG brand and marketing management for a range of multinationals, and general management in manufacturing and retail sectors, as well as 15 years with IBM. More recently he has also advised organisations and international bodies overseas, as well as governments. He was Project Director of the School's programme teaching the MBA at Presidential level.

He is author of the United Kingdom MBA text-book, 'Marketing', now in its second edition, and co-author (with Kotabe and Czinkota) of its United States equivalent, 'Marketing Management', as well as being the author of the text, 'Marketing Strategy'.

LONG-RANGE MARKETING

ABSTRACT

Short-termism, especially in terms of marketing strategy, is supposed to be a problem afflicting many managements. We have found that one solution may be found in separating out longer-term robust strategies from shorter-term corporate strategy in a formal long-range marketing plan. Using this approach, which starts with scenario forecasting and ends with the robust strategies coming out of this being compared with existing corporate strategy. The differences are usually easily reconciled, where the two typically converge on much the same issues. As a result, organisations are better able to ensure survival in the longer term. If they follow sound marketing practices, indeed, the price they might have to pay, in terms of the short-term steering (changes), is usually small.

KEYWORDS

marketing, corporate, strategy, long-range, planning

LONG-RANGE MARKETING

INTRODUCTION

Short-termism, especially in terms of marketing strategy, is supposed to be a problem afflicting many managements. This, in particular, may be a problem where the longer-term robust strategies, protecting the organisation from major problems in the long-range future, may - at least in terms of core objectives - differ significantly from the shorter-term corporate strategy. Using an approach, which starts with a simplified form of scenario forecasting and ends with the robust strategies coming out of this being compared with existing corporate strategy, we now believe it is possible to reconcile at least some of the differing objectives involved in these two processes. In practice, the differences are usually easily reconciled; where the two typically converge on much the same issues. As a result, organisations - especially those smaller ones (and departments within larger ones) which traditionally have not been able to invest in long-range planning - may be better able to ensure survival in the longer term. If they follow sound marketing practices, indeed, the price they might have to pay, in terms of the short-term steering (changes), is usually small.

BACKGROUND

Marketing, as a discipline, already spans a wide range of subjects; wider, indeed, than most other management disciplines (Mercer, 1996b, 1996c). It is simultaneously, at one extreme, a philosophy which applies to all parts of an organisation and, at the other extreme, a set of practices which apply to selected functions within the organisation (Baker, 1985).

For more than three decades, the classic Western definitionxe " marketing: classic western definition", derived from economic theory and as succinctly summarised by Kotler (1976), has been;

`Marketing is human activity directed at satisfying needs and wants through exchange processesxe "exchange processes".'

Although this simple definition has been progressively developed, even many of the the later versions definition usually fail to emphasise the long term aspect of marketing; for example, that of building xe "long-term relationships, definition of marketing"relationships with customers. On the other hand, Grönroos (1990) summarises some more recent European developments in his definition;

"Marketing is to establish, maintain and enhance long-term customer relationships at a profit, so that the objectives of the parties involved are met. This is done by mutual exchange and fulfilment of promises."

It is generally accepted that a key element of marketing is now, as reflected in the all the above definitions, that (unlike almost all other business activities) it represents an outward looking philosophy (Morgan, 1988); which is firmly centred on the customer (Mercer, 1996a). On the other hand, the truly long-term aspects hinted at by Grönroos often are still largely ignored in practice.

MARKETING STRATEGY

What all the commentators do seem to agree upon, however, is that the 'highest' level of marketing is represented by 'marketing strategy' (for instance, Czinkota et al, 1997); and that this is an essential input into the overall corporate strategy (Johnson & Scholes, 1988), and usually determines the most important elements of that strategy. Typical approaches to the production of such marketing strategy, however, focus on the relatively short-term; for example, through the use of matrices balancing the impact of current actions (Ansoff, 1988), or derived from existing forces such as  competitive pressures (Porter, 1985),  or - even stressing the short-term nature of decisions - derived from incremental and emergent strategies (Quinn & Minzberg, 1991). Even so, it is often claimed that the popularly-reported problems of short-termism in corporate strategy come about not because the philosophy is incorrect, but because of management shortcomings.

On the other hand, we are now able to report the outcome of more than five years of action research (Mercer, 1998a, 1998c) in this field, as part of our teaching long-range planning to several thousand MBA students and advising a range of clients. This has been backed by qualitative and quantitative research amongst more than a thousand organisations (Mercer, 1997a, 1998a, 1998c). Based on this work, we have come to the conclusion that the main problems for most organisations are not the result of incompetent management but are caused by a confusion of objectives. Thus, we now believe that, in most organisations, there should be at least two quite separate processes at work; rather than the one traditionally recommended (Johnson & Scholes, 1993). There is, of course, the conventional corporate strategy process (Taylor, 1984), optimising performance in the shorter term, which we all know about; and the traditional marketing strategy is a valuable contributor to this (McDonald, 1989). But  we have come to believe - based on our research results (Mercer 1998a) - there should also be a separate, presently well-hidden, process of producing ‘robust' plans which underpin survival over the longer term (Taylor, 1984).

That there are, or should be, these two quite distinct legs to the strategy process – whether hidden or not – is best demonstrated by table1 below which clearly establishes the significant differences between them:

[insert table1]

Indeed, the two sets of strategies should have very different objectives. Thus, despite the often-quoted theory that the longer term factors should be included (and should even provide the starting point), in practice ‘corporate’ (short-term) strategy is typically about optimising current performance, 'matching the organisation's activities to the environment [and] …to its resource capability' (Johnson & Scholes, 1993). In the case of private sector organisations, the very practical - and urgent - demands of the financial markets require that they find the single short-term solution which will deliver the optimal (internal) performance most effectively; to which members of the organization can be persuaded to commit themselves; 'a reflection of the attitudes and beliefs of those who have the most influence' (Johnson & Scholes, 1993). The classical example, here, demands the single objective of producing the highest bottom-line profit for the current year. In the case of not-for-profit organisations the pressure may be less obvious, but increasingly their paymasters demand that they, too, address short-term productivity. In both cases, their 'corporate strategy' process understandably focuses on the internal resource allocations which critically influence the short-term performance demanded by their controlling stakeholders.

On the other hand, ‘robust’ strategies, using the terminology which is now emerging, are above all about survival in the longer term; ensuring that all the potential threats are covered (Pfeffer and Salancik, 1978). They demand that multiple, and often divergent, objectives are met; in order to exploit the potential emerging from changes in the (external) environment, and especially to guard against the whole range of threats which might endanger survival in the longer-term; with the aim of understanding what these might be. In general, these focus on crtical developments in the external environment, typically not just the marketing environment but the wider social environment, rather than on the manipulation of internal resources.

It should be clear, therefore, that there may be considerable tension between these two forms of strategy; not least because they have very different objectives aimed at producing potentially very different outcomes to satisfy very different groups of stakeholders! Thus, while the longer-term factors should - in theory - be included in corporate strategy, in practice the problems posed - by having to manage conflicting objectives within the single planning process - mean that the longer term is often sacrificed to allow effective planning to be undertaken for the shorter term. Thus, in our action research (Mercer, 1996d), we have observed that even our own students - after more than six months dedicated to learning how to undertake long-range planning - rapidly revert to conventional short-term processes when faced with the need to produce a traditional corporate strategy.

LONG-RANGE MARKETING

Based on our work with several hundred such students (Mercer, 1998a) - incrementally developing the techniques involved - we believe that the best answer to reconciling the differences between these two aspects of strategy is simply to separate the two processes, as in diagram 1 below; before reconciling the separate outcomes. This is the opposite of what is currently recommended (Wack, 1985).

[insert diagram 1]

In view of the fact that it deals almost exclusively with forces which come from outside of the organisation itself, which would normally be incorporated – if at all - in ‘marketing’ strategy, we call this process long-range marketing. This philosophy is formally encapsulated in the production of a long-range marketing plan. Much like the conventional (short-term) marketing plan, and following a similar format to that successfully used in many organisations (McDonald, 1989), this ultimately feeds into the corporate plan. This is the ‘long-range planning’ process we now teach our students, and recommend for our consultancy clients, with some success; at least in terms of raising their awareness of long-term trends. Production of a typical long-range marketing plan might follow the steps shown in diagram 2 below:

[insert diagram 2]

SCENARIO FORECASTING

The overall process starts with scenario forecasting, though in a much simpler form (Mercer, 1995) than the approaches which were more usually adopted in the past (Van Der Heijden, 1996, Ringland, 1998). The techniques we deploy, however, have been derived from those traditionally used; most notably from those publicised by Shell (Wack, 1985, Van Der Heijden, 1996) - with whose managers we have worked - which were claimed to have been responsible for much of that corporation's success. Whatever approach is adopted, and we have explored a range of these (Schwarz, 1991, Van Der Heijden, 1996, Ringland, 1998), this is inevitably still the most complex part of our overall planning process. On the other hand, we have found (Mercer, 1998a) that in practice the simpler we can make this the better it works; not least because those involved understand what is happening! We now quite simply focus on just the key 'drivers' for change - affecting the industry being investigated, over a two decade timescale - without exploring the 'complications', such as 'event strings', favoured by previous practitioners. It can be argued that, as a result, we may lose some 'accuracy'; especially in terms of the fine detail about the future the process reveals. On the other hand, following the 80:20 Rule, we seem to be able to detect almost all the key developments, certainly all those which have been surfaced by other methods (Mercer, 1998a), covering the great majority of expected  'drivers'. More important, the process is now so simple that even non-specialists can practice it effectively, with just a few hours of training; and can complete it within a day. Indeed, this part of the overall planning process can be undertaken in as little as half a day, with a management team of six to eight members, using a variation on well-understood focus group techniques combined with some from scenario forecasting; and with little more than Post-It-Notes stuck on a wall to facilitate their thinking (Mercer, 1997c). Even so, this is a critical aspect of the process; since only if the key turning points are identified in these scenarios will the (robust) strategies developed in response be valid.

Reducing the rest of the process to the bare minimum, there are just five further, simple steps to producing a long-range marketing plan:

Decide the Key Issues

The starting point of the plan itself must be a definitive statement, of what has emerged from the scenario work. This is the most critical step of the planning process, and will typically demand some time, perhaps spread over a number of weeks, to assimilate the strategic implications of the drivers surfaced in the group work. Ideally the output of this process should be a formal 'map' of some kind; of the issues, the turning points, which will decide the long-term future of your organization - perhaps its very survival. This is the step which defeats most organisations. If you do not recognize what factors will determine your fate, then you will not be able to create the most effective robust strategies to address them.

Whilst many of these key turning points may revolve around conventional marketing issues - especially those relating to the core relationships with customers - not a few of them - often the most potentially damaging 'wildcards' - bring into play factors in the social environment (as well as those in politics and economics). Possibly the greatest benefit, therefore, is that the process brings into consideration factors which would otherwise be overlooked by more conventional (marketing) planning processes.

Develop the Robust Strategies

This stage clearly is at the heart of the whole process. What is needed is a set of strategies to protect against (or to capitalise on) what has emerged from the previous step - in terms of effectively addressing the key turning points (Wack, 1985, Mercer, 1998a). In practice, it often proves to be easier than the earlier stages; since, as is often the case, asking the right question is harder than producing the most effective answer. Indeed, where we run one day workshops for organisations - covering the whole process from the start of the scenarios to the final strategies - the development of the robust strategies themselves usually takes no more than fifteen per cent of the overall time; though this is - needless to say - a cathartic element which the organisations involved justifiably take very seriously (Mercer and Wilter, in press).

It is probably easier to understand these processes if we look at a specific case. The example I will use in this paper is that - shown in table 2 below - of the long-range planning work we undertook, in the Open University Business School, a couple of years ago. They were part of a one day scenario/robust strategy workshop we ran - the first we undertook - involving the thirty top 'managers' of the School:

Table 2

Compare with ‘Corporate’ Strategy

The step which follows is the one which definitively separates the new approach from the traditional one. It is' however, one which requires a degree of self-confidence! It is to take these (long-term) ‘robust’ strategies and map them onto the (short-term) ‘corporate’ strategy which already exists (or is in the process of emerging from the other parts of the strategy process). Exactly what form this comparison takes will depend upon what form you have adopted for presenting these strategies. The essence, however, is that each (robust versus corporate) should be compared statement by statement; as is the case in the example.

Decide Strategic Changes

Emerging directly from the 'test' will be a clear definition of the divergences, if any, between the two types of strategy. This will, therefore, immediately highlight the nature of any changes to be made. These should then be addressed, again statement by statement, in terms of the changes which will accordingly be made in the overall corporate strategy statement - as shown in the example in Table 3 - even if the decision is to do nothing!

Table 3

Translate To Action

The final stage of any planning process should always be to do something (McDonald, 1989)! It may be that, here, the action is to positively incorporate these changes in the overall corporate plan. In this case, a single sentence, stating that this has happened may be enough; though to reassure yourself, at least, that this has happened, you may want to incorporate a brief statement of what real changes have then taken place. The more thorough alternative is to produce a separate action plan where the shorter-term (more certain) elements of the revised strategy are translated into the necessary actions (and related timescales); as shown in Table 4 below. Even if the considered decision is to 'do nothing', this should also be documented; as a recognition of the longer term implications of what is still a positive decision.

Table 4

CONVERGENCE OF STRATEGIES

The process could pose problems for management, especially where they might be asked to definitely reduce short-term profits to safeguard against possible problems in the longer-term; when they will probably have retired - on a  pension linked to those short-term profits! Fortunately, in practice the problem is usually not as acute as it might be expected to be. Thus, in our experience (Mercer and Wilter, in press) – despite the seeming contradictions -  the two types of strategy typically converge on much the same approach.

‘GENERIC’ ROBUST STRATEGIES

The approaches we have focused on up to this point have revolved around determining the specific robust strategies which will offer the best long-term future for an organization; making the most of the potential which becomes available and avoiding the worst threats to its survival. Clearly, such ‘tailored’ solutions must be the best.

But, in practice, the two processes most often converge on a range of ‘generic’ long-term strategies; most typically on strategies which are, in any case, justifiable as sound marketing practice -  such as ‘building relationships’ with customers - which prove equally effective in both the shorter- and longer-term (Grönroos, 1990). Indeed, our work has shown that there are some traditional ‘investments’, typically in intangibles, which can go some way to underwriting the long-term survival of most organisations regardless of what the future developments are. We refer to these as ‘generic’ robust strategies. It should be noted that these are quite different to Michael Porter’s (1985) generic strategies – which relate to the province of (shorter-term) corporate strategies.

As suggest above, in general, the main investments - in this category - relate to the relationships built up (invested in) with the main groups of stakeholders. In essence, the benefit of such investment is to create the goodwill which allows any organization the breathing space necessary for it to regroup - for instance carrying through a programme of creative imitation - in the face of changes which would otherwise be cataclysmic. Of course, the organization has to have sufficient speed of reaction to overcome the problems before the goodwill runs out, and that is gained by building goodwill with the staff, but the customer goodwill itself is what allows the possibility of recovery.

STEERING

It is important, in the context of this book, to note that the ‘combined strategy’ resulting from the comparison, between the robust strategies and corporate strategy, is not introduced – as it usually is – just because of its shorter-term efficacy but because, if well implemented, it will usually also underpin long-term survival. Even so, even if the two progenitors prove to be almost identical, the process of separately establishing what the robust strategies might be is not just worthwhile but necessary. Without undertaking the work it is impossible to see whether there are any hidden conflicts between the two. It may be more comfortable to remain in ignorance: indeed, 'it is much more fun to do something' (Taylor, 1986). But in terms of survival it is much better to know about any longer-term problems you may be creating for yourself in this way.  Fortunately, where the implied conflict between the two sets of requirements might even so pose problems for planners, in practice it is most likely that there will only be minor changes; needed to ensure an even more secure long-term future. Indeed, despite any irrational fears, with the knowledge that - in most cases - the long- and short-term strategies complement each other, you will gain the additional confidence to positively reinforce your short-term strategies.

Generally speaking, therefore, the impact of undertaking a separate identification of robust strategies is not a major revision of corporate strategy. In the relatively few cases where that is needed, the robust strategies clearly need to become the dominant part of the whole planning process. In general, though, it is to develop a new prioritisation of existing strategy; with the emphasis subtly shifted to allow for the longer-term in addition to the shorter one.

We refer to the final part of the process, implementing the changes that are found to be necessary, as ‘steering’; since it is analogous to the way an aircraft’s autopilot makes regular small changes to its short-term heading (the corporate strategy) in order to reach its ultimate destination (the robust strategies).

Even so, the techniques underpinning the long-range marketing planning processes are inevitably different from those more conventionally adopted, Not least, in view of the greater degree of uncertainty, they are more open-ended than prescriptive. Thus, the starting point is more typically a blank sheet of paper (Mercer, 1997d) than one of the matrices recommended for shorter term planning (McDonald, 1989). In addition, as might perhaps be expected in view of the long timescales, they place much greater emphasis on investment. Thus, for instance, promotion is seen in this context as an investment in the longer term (Mercer, 1997b) – be it in brand position or customer relationships – rather than a current cost.

CONCLUSION

In this way, we have found that, simply by separating out the longer-term robust strategies from the shorter-term corporate strategy in a formal long-range marketing plan, organisations are better able to take account of the longer term, avoiding the problems which can arise from the short-termism generated by the pressures currently facing managements. In any case, if they follow sound marketing practices, the price they might have to pay, in terms of short-term steering, is usually small; where the long-term benefits – not least continued survival - may be great.

REFERENCES

Ansoff, Igor (1988), Corporate Strategy, London: Penguin

Baker, M. J. (1985), Marketing Strategy and Management, London: Macmillan

Czinkota, M R, M Kotabe and D Mercer, D (1997), Marketing Management,

Grönroos, Christian (1990), "Marketing Redefined", Management Decision, 28  5-9

Johnson, Gerry and Kevan Scholes (1993), Exploring Corporate Strategy (3^rd. ed.), Englewood Cliffs, New Jersey: Prentice Hall.

Kotler, Philip (1976), Marketing Management (3^rd. ed.), Englewood Cliffs, New Jersey: Prentice Hall.

McDonald, M. H. B. (1989), Marketing Plans (2^nd. ed.), Oxford: Heinemann.

Mercer, D (1995), "Scenarios Made Easy", Long Range Planning, 28 81-86.

---- (1996a), "Management's Commitment to Marketing Theory Compared with Actual Practice”, Marketing Education Group (MEG) Conference, July.

---- (1996b), Marketing (2^nd. ed.), Oxford: Basil Blackwell.

---- (1996c), Marketing Practices in the 1990s, Journal of Targeting, Measurement and Analysis for Marketing, 5 175-181.

---- (1996d),  Industry Scenarios - Short Termism Revealed, Industrial Management and Data Systems, 96 (8) 23-27

---- (1997a), "Determining Expectations of Future Outcomes", Technological Forecasting and Social Change, 55 155-164

---- (1997b), "Frameworks for Advertising Investment", ADMAP, May

---- (1997c), "Robust Strategies in a Day", Management Decision, 35 219-223

---- (1997d), New Marketing Practice, London: Penguin.

---- (1998a), Marketing Strategy: The Challenge of the External Environment, London: Sage

---- (1998b), Future Revolutions, A Comprehensive Guide to Life and Work in the Next Millennium, London:Orion

---- [1998c] Mercer, D, Techniques in Futures Research - British Academy of Management (1998)

---- and A. Wilter, "Surrey Strategies", in press.

Minzberg, Henry  and James Brian Quinn (1991), The Strategy Process,  Englewood Cliffs, New Jersey: Prentice Hall.

Morgan, G (1988), Riding the Cutting Edge of Change, San-Francisco: Jossey-Bass.

Oxford: Blackwell.

Pfeffer, J. and G. R. Salancik (1978), The External control of Organisations; A Resource Dependent Perspective, New York: Harper & Row.

Porter, Michael (1985), Competitive Advantage, New York: The Free Press.

Ringland, Gill (1998), Scenario Planning, Managing for the future, Chichester, England: Wiley

Schwartz, Peter (1991), The Art of the Long View, London :Doubleday

Taylor, Bernard (1984), "Strategic Planning - Which Style Do You Need?", Long Range Planning, 17 51-62

Van Der Heijden, Kees (1996), Scenarios: The Art of Strategic Conversation, Chichester, Sussex: Wiley.

Wack, Pierre (1985), Scenarios: Shooting the Rapids”, Harvard Business Review, Nov/Dec 139-150

 Table 1                ‘CORPORATE’ STRATEGY        ‘ROBUST’ STRATEGIES

Objectives            OPTIMISING PERFORMANCE     ENSURING SURVIVAL

Characteristics    SHORT-TERM,                         LONG-TERM,

                              SINGLE-FOCUS                            DIVERGENT-COVERAGE

Outcomes             EFFECTIVE                                    COMPREHENSIVE

                              COMMITMENT                              UNDERSTANDING

Beneficiaries        INDIVIDUAL                                 COMMUNITY

                              PROFITEERS                                 STAKEHOLDERS

Table 2

Table 3

Table 4

                                    Diagram 1

PRODUCTION
OF SCENARIOS

 DECIDE KEY

ISSUES

DEVELOP

ROBUST

STRATEGIES 

 COMPARE
WITH
CORPORATE
STRATEGIES
 

DECIDE

STRATEGY

CHANGES

 TRANSLATE

TO ACTION

Diagram 2

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