[2012]
MARKETING MATERIAL
9085 MARKETING MANAGER 7 - PLANNING FOR SUCCESS
The 'climax' of most marketing books, especially text-books, is the chapter on strategy. This is where the lessons are supposed to come together. This is where you carefully craft the plans which will lead to your ultimate success. This is also the chapter, typically at the end of the book, where even more myths are perpetuated. It is, for example, where the Boston Matrix and the Product Life Cycle, both of which we have already looked at (and dismissed!), are introduced. Success, according to these myths, can be guaranteed by following a few simple laws. I hope that, by now, you realise that this is definitely not my own view of successful marketing. Indeed, marketing success comes about by a combination, a unique combination for each organisation, of all the things we have talked about. There is no single easy route to success. This chapter on 'strategy' is, therefore, about how you should bring all these elements together in the combination which is most effective for your own - highly individual - organisation. We will also, at the end of this chapter and in the next one, look at how these ideas can be extended into the wider environment.
MARKETING PLANNING
Having put forward all of these caveats, the marketing planning exercise - which most organisations feel obliged to undertake once a year - is valuable; not least because it is the only time most organisations think rationally about the subject! So, let's have a look at what it entails, in its simplest possible form. Reduced to its basics, as you will rarely see it in other marketing books, it just comprises simple three questions:
Where are you now?
Where to you want to be?
How do you get there?
WHERE ARE YOU NOW?
This is what the earlier part of the book, especially the chapters about customers and the market research processes which let you explore their needs and wants, was about. More specifically, the actual starting point - in the context of a marketing plan - must be a definitive statement, ideally a formal 'map' of some kind, of where you - as a result of your investigations - believe your product/service packages(s) currently is in terms of the market(s); and what are your core competences. This recognition of where you are starting from is arguably the most important step of all, and the one where most organisations fail. If you cannot recognise where you currently are (in terms of what really matters, especially to your customers) then you will not be able to plot how you will reach your objectives. We have looked at these processes individually. The only difference, at the level of the marketing plan, is that you have to review them rather more carefully and, in particular, you must integrate them into one meaningful overall picture of where you currently are - which, with so many distractions to deal with (with so many trees which hide the wood) - is often easier said than done. It is too easy, and such good fun, to get immersed in the detail - which is another reason why the discipline imposed by the annual plan is so important.
Even then, it is essential to spell out the assumptions you are making. Most organisations, however, do not even realise that they make such assumptions. You should, however, make as few of them as possible; and very carefully explain those you do make. Ideally, as an extension to this process, when (in the later steps) you estimate the results expected from your strategies, you should also explore a range of alternative assumptions. It is also useful to incorporate positioning maps at this stage - because many managers, like myself, find that they show us much more clearly where we are, where verbal descriptions are easily misinterpreted.
ACTIVITY
Where are you now? Briefly describe how you see - in marketing terms - the current position of your organisation's brands. Where, similarly, is your own group?
WHERE DO YOU WANT TO BE?
Perhaps the most important activity which is specific to the planning stages of marketing, is formally deciding where you want to be in the future. On the other hand, the organisation will already have existing marketing objectives, by design or by default. These, therefore, will severely limit your freedom of action. Whatever their origins, the marketing objectives may often contribute the most important elements of the overall corporate objectives - where the organisation primarily justifies its existence in terms of what it offers its customers or clients. They must, in any case, complement these corporate objectives. They typically relate to what products will be where in what markets (and must be realistically based on customer behaviour in those markets). They are essentially about the match between those products and markets. Furthermore, these objectives must emerge naturally from the product/service package and the core competences we looked at earlier.
To be most effective, the objectives should preferably be capable of measurement and therefore be quantifiable. This measurement may be in terms of sales volume, money value, market share, percentage penetration of distribution outlets and so on. One caveat, though, formal corporate objectives tend to be documented in terms of profit projections - our managerial culture demands as much - but the unpublished, informal objectives which really drive the actions of most organisations range much wider. It is these wider objectives which also need to be taken into account here. Even so, as far as possible, the relatively general long-term objectives need to be quantified as series of targets - and given timescales as well as numeric projections. Even intangible objectives, such as those relating to image, should be quantified in terms of measurable marketing research results. Ideally, some space should be dedicated to (two dimensional) maps of the most important parameters; showing on each the current position (along with that of the customers' ideal choice and that of key competitors' actuals), the targeted future positions and the planned path to these. This should, again ideally, be used to summarise the whole plan - but should in the process also be used as a further check on the validity of the proposed moves.
The problem is that the objectives may be much more complex than the existing processes, and their emphasis on simple 'wish-fulfilment', allow for. But they must be achievable; otherwise in publishing them you are simply going to demoralise your troops. If nothing else, the objectives have to allow for reality; they have to take into account your limitations as much as your potentials. On the other hand, they should not be undemanding; they must push the organisation towards developing its full potential.
ACTIVITY
What are your organisation's marketing objectives? Are they realistic, achievable? Do they take into account what is really important, and do they stretch the organisation to near its full potential?
What are your group's objectives? Are they realistic, and yet stretch your capabilities to the full?
CORPORATE MISSION
In recent year it has become very fashionable to describe a 'corporate mission'; which provides the context for the corporate objectives - and most organisations now routinely include such a statement as part of their annual report. This 'corporate mission' can be thought of as a definition of what the organisation is, of what it does: "Our business is......" Unfortunately, as with most fashions in management theory, it has now become an almost meaningless appendage. To be effective it must have real teeth. Indeed, perhaps the most important factor in successful marketing is a genuine 'corporate vision' rather than a bland 'mission'. Surprisingly, in view of its wider importance, this aspect of planning is one which is often neglected by marketing textbooks; though not by the popular exponents of corporate strategy.
If the organisation in general, and its chief executive in particular, has a strong vision of where its future lies then there is a good chance that the organisation will achieve a strong position in its markets (and attain that future). This will be not least because its strategies will be consistent; and will be supported by its staff at all levels. What is a worthwhile vision is, however, usually open to debate, indeed to considerable debate. It is not sufficient to merely say, as some do, that we want to maximise profit or even that we want to invest in the customer relationship. An effective mission statement must say something genuinely important about the organisation; and must explain why it is in business (and why it should be allowed to stay in business!).
Indeed, Theodore Levitt pointed out one shortcoming - which he memorably described as marketing myopia - that most organisations defined their business perspectives too narrowly; typically based upon the technological processes they employed (but, at best, upon internal factors). His view, which was enthusiastically seized upon by the more adventurous organisations, was that the link with the consumer, the 'customer franchise', was the most important element. As you will have gathered, this is also my own view. The corporate vision must, therefore, be defined in terms of the customer's needs and wants.
ACTIVITY
What is the stated corporate mission of your own organisation? Does it say anything worthwhile? What do you think the real 'vision' is, if there is one?
How does your own group's vision of its future fit in with that spelled out in the corporate mission statement?
HOW DO YOU GET THERE?
This - last step - should simply explain what marketing strategy is to be adopted to move the organisation from its present position to its targeted ones over the longer-term . These strategies describe, in principle, the 'how'; how the objectives will be achieved. This strategy statement can take the form of a purely verbal description of the strategic options which have been chosen. Alternatively, and perhaps more positively, it might include a structured list of the major options chosen. On the other hand, 'strategy' is too often a term used to allow the senior management to do what they want, regardless of reality, and without undue interference - 'it is the board which sets the strategy, not you, you are just responsible for the results!' It is used to dignify their hunches, and to deflect criticism when these are wrong.
The reality is, as I said at the beginning of this chapter, it is simply made up of the decisions which enable you to get from where you are to where you want to be! To achieve this you may wish to use some of the ideas contained in this book; but only those few which are genuinely relevant to your needs should be employed. This is a very different approach to that traditionally employed - for this is the part of most books where the gimmicks come flooding out - where the techniques employed at each stage tend to be pre-specified by the 'experts' who have devised the planning process. Thus, for instance, the Boston Matrix will be used to persuade you that you must milk your cash cows until they are dead, and the PLC will, in any case, suggest they are probably already well on their way to that death. But not all of these gimmicks are totally ineffective. Indeed, the most widely used of these techniques, that of SWOT, seems to provide some comfort for most managers:
SWOT (STRENGTHS WEAKNESSES OPPORTUNITIES THREATS) ANALYSIS
It is a very popular device, which is often used as a framework for analysing the external environment. It groups some of the key pieces of information, which you might have unearthed in your investigations, into two main categories (internal factors and external factors) and then by their dual positive and negative aspects (Strengths and Opportunities, as the former aspects, with Weaknesses and Threats representing the latter);
INTERNAL FACTORS
(1) Strengths and
(2) Weaknesses
The internal factors, internal to the organisation - but relating to its strategies and position in relation to its competitors, may be viewed as strengths or weaknesses depending upon their impact on the organisation's positions (for they may represent a strength for one organisation but a weakness, in relative terms, for another). They may refer to the physical product or intangible service, or to promotional activities or to personnel, finance etc.
EXTERNAL FACTORS
(3) Opportunities and
(4) Threats
The external factors, presented by the external environment and the competition, again may be threats to one organisation while they offer opportunities to another. They may include such matters as technological change, legislation, socio-cultural changes etc, as well as changes in the market-place or competitive position.
The technique is often presented as a form of matrix;
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
You should note, however, that - no matter how popular it is - even if its use is justified SWOT is just one aid to categorisation. It is not, as many organisations seem to think, the only technique. We would, however, strongly recommend that you think very carefully before using it, since has major weaknesses. In particular, it tends to persuade companies to compile lists rather than think what is really important to their business. It also presents the resulting lists uncritically, without clear prioritisation; so that, for example, a large number of weak opportunities may appear to balance a few strong threats.
One aspect of strategy which is often overlooked is that of timing. Exactly when is the best time for each element of the strategy to be implemented is often critical. Taking the right action at the wrong time can sometimes be almost as bad as taking the wrong action at the right time. Timing is, therefore, an essential part of any plan; and should normally appear as a schedule of planned activities in the last section of the document - but must be allowed for at this stage in the strategies themselves.
Having completed this crucial stage of the planning process, you will need to re-check the feasibility of your objectives and strategies in terms of the market share, sales, costs, profits etc. which these demand in practice. As in the rest of the marketing discipline, you will need to employ judgment, experience, market research or anything else which helps you to look at your conclusions from all possible angles.
ACTIVITY
If you can, critically examine your organisation's strategy. How effective do you think it is? You may want to use SWOT analysis as a framework; but, please remember, do not get addicted to this approach (and remember its real limitations). Do the same for your own group.
WHAT ACTION?
Finally, we need to positively do something! The shorter-term (more certain) elements of the strategies need to be translated into the necessary actions (and related timescales). Ideally, the plan should also contain space for the entry of actual results versus these targets - since this will emphasise the true role of the plan and its relationship to the subsequent monitoring, though the amount of information on the page may them demand a very small type size!
Such a marketing plan, as you will now realise, should be contained in just a few pages - though the related appendices may be much longer. The acid test is how short it is. Longer than ten pages may mean that it is not read. It is also, within these important space constraints, free-form. The content of each section is dictated solely by what is important to the organisation - the philosophy we have been following throughout the book.
ACTIVITY
If you can get a copy of your organisation's marketing plan, critically examine it in terms of what you have learned from this book. Try and sketch out the changes you think should be made to it.
Make a (simpler) version for your own group.
INCREMENTAL STRATEGY IN PRACTICE
Such rational decision-making is, even once a year, the exception rather than the rule - though it provides most of the content of traditional management text books. The reality is that much of strategy is set incrementally by small decisions taken, as the need arises, through the year. Thus, something happens in the market-place and you have to react immediately; and you simply don't have the time to change the strategy - or even consult it! These small decisions then accumulate to ultimately dictate the overall strategy when this comes to be formalised, in written form, at the end of the year. The importance of this concept emerges in two contexts. The first is that managers moving into the rational phase of the annual planning process need to be aware of the limitations posed by the legacy of incremental decisions which have built up since the last annual exercise. The second is that an understanding of this process helps you put such incremental decision-making in perspective. Most important of all, it alerts you to the fact that it is happening - all the time.
Taking the example of positioning, as and when position drift is detected the wise brand manager will react immediately; he or she will recognise that such response cannot wait for the annual plan. If they understand the implications of incremental strategies, however, they will inject some of the rational thinking which is supposed to lie at the heart of the annual planning process - the key to such incrementalism is, indeed, that it is still a logical process. In this way it can be just as rational as the traditional process. It is not the same as the random decision-making which infects many organisations. Because it recognises the reality that decisions are driven by real events rather than a theoretical planning process, it may indeed be rather more effective, but the decisions take place almost randomly throughout the year rather than tidily during the annual planning process.
One of the hidden implications of the above processes, which reflects my own experiences of much of such decision-making (and is supported by significant amounts of research data), is that making of strategy is a much more diffused process than most managers think. A less obvious implication still is that the process is not limited to senior management alone, as traditional theory would suggest. In practice, the process is spread through a number of layers of management - with different degrees of involvement depending upon what particular incremental aspect of strategy is under review. This has major implications for managers, such as yourself perhaps, who before probably did not realise just how important was their own contribution.
Even though incrementalism is very different to the traditionally described theory it is still a very rational approach to management; and one where the manager is still very much in control. Although this is much closer to reality than traditional theory it still neglects one very important aspect; which is that a considerable amount of strategy emerges as a result of unpredictable changes in the environment rather than from rational control by management. This emergent strategy means that managers are forced to follow courses of action which they had not planned.
EMERGENT STRATEGY
Here, the intended strategy, decided upon traditionally or incrementally, is overtaken by events in two main ways. One, which will probably be recognised by the organisation is that of unrealised strategy, where it proves simply impossible to implement the chosen strategy in practice. Less obvious is the emergent strategy which is decided by events in the external environment; and, thus, forced upon the organisation. This may not necessarily be recognised, in its totality, by the organisation - since many of its implications may be hidden. As markets become more complex, however, such emergent strategies are becoming more common.
Many organisations see both these processes in terms of failure - they have been forced, usually by unpredictable events, to abandon their own strategy. There is, accordingly, a tendency for these unwelcome facts to be ignored until they are so obvious that they cannot be avoided. This is a major error. Such deviations must be recognised (probably through one or other form of environmental analysis coupled with networking) as soon as possible- so that the organisation can react in good time. Indeed, this is not a failure but a success - if handled properly.
Thus, much more powerful approach is to positively seize upon these deviations as the basis for future developments. What needs to be recognised is that emergent strategies are the most powerful strategies of all - since they must, by definition, be derived from the needs of the market. Where even successful deliberate strategies may not ideally match market needs, emergent strategies are, thus, likely to be vigorous ones.
There are two main approaches to capitalising on such emergent strategies. The first of these, favoured in the West, is the umbrella strategy. This is a form of very positive delegation, in that the overall strategies, the umbrella, are very general in nature - and allow the lower level managers, who are closest to the external environment, the freedom to react to these (emergent) changes.
A much more direct, and hence even more powerful, approach is that favoured by the Japanese corporations. They integrate emergent strategies with their own. Indeed it is arguable that, in terms of marketing, to a large extent they use emergent strategies instead of their own deliberate strategies. This is evidenced as much by an attitude of mind as by any other feature. They deliberately go out to look for the symptoms of such emergent trends which can be detected in the performance of their own products. More than that, though, they often deliberately launch a range of products, rather than a single one, to see which is most successful. It is almost as if they deliberately seek out the emergent strategies by offering the best environment for them to develop - the very reverse of the Western approach which seeks to avoid them! The Japanese then go on to build on these emergent strategies with a number of very effective tools - most of which are designed to overcome the major problem which accompanies emergent strategies, that they emerge on the scene much later than deliberate ones (and are likely to be visible to all the competitors at the same time) so that time is the essence. Thus, time management techniques (including parallel development along with flexible manufacturing and JIT), which have been developed to a fine art by the Japanese offer them a significant competitive advantage in handling such emergent strategies.
ACTIVITY
How does your organisation handle incremental decisions? Does it recognise their impact/ How does it handle emergent strategies? Does it capitalise on them, or does it treat them as failures of planning?
How does your own group recognise, and manage, the incremental (and emergent) changes facing it?
THE PLANNING PROCESS
Despite the many shortcomings in practice, we should not dismiss the production of a marketing plan as too flawed to use. There are many different forms which are recommended for such plans, and you will find some of these in my own books, but all that is necessary is that you record - as briefly as possible - what are your key decisions; as to how you will achieve your objectives, in terms of strategy and, in particular, in terms of positive actions. At the same time, you should recognise that almost nobody will then read the plan! But, though the plan itself may not be as central to marketing actions as theorists would like, its production still produces some important benefits;
1) REVIEW - the process forces a full review of all the marketing factors, not just those which are currently the focus of attention, albeit that the review only occurs once a year.
2) AGREEMENT - it acts as a positive stimulus to involvement of a wide range of personnel in the strategic decision-making, and then as a framework for generating formal agreement amongst them.
3) COMMUNICATION - the output, the marketing plan itself, can be an especially useful vehicle for communicating the organisation's marketing intentions to the wider community (amongst its staff).
At this stage there may be, if the process is well managed, considerable benefit to be gained from the active involvement of a wide range of staff. This must, as a matter of principle, include all the managers who will be asked to implement it, but it should also be extended to the largest possible number of other employees. Involvement in the planning of your own future is highly motivational at all levels of staff and management - and exclusion from the process leads to frustration and fear.
The review process should, if properly managed, pose a suitably stimulating challenge to the embedded wisdom; especially where decisions taken on the spur of the moment - with little thought - have subsequently been incorporated as a strategy which is never then challenged (regardless whether it is right or wrong). This debate should be as wide ranging as possible. Nothing should be exempt from scrutiny, and no idea should be dismissed until fully considered. The range of creativity tools, such as brainstorming, can also be brought into play. It is the one chance, during the year, to think the unthinkable.
Probably the most productive part of the whole process is, though, the opportunity to gain a shared understanding of what the marketing plan means - the fact that it has been 'published' in no way guarantees that it is then understood by the recipients. By positively involving them in its production you best ensure that they will be firmly committed to its implementation. This process is probably best accomplished in an extended meeting away from the pressure of day to day business; and this will inevitably cover far more then is eventually enshrined in the plan itself. It is this shared 'flavour' which will inform their actions over the succeeding year - and is the most potent outcome of this part of the process.
ACTIVITY
Who is involved in the planning processes of your own organisation? Are you yourself involved? If not, why not?
Who do you involve in the planning processes of your own group? Do you use them to motivate your own staff?
COMPETITION
One element of marketing that has only been dealt with incidentally so far is that of how the marketer competes against other manufacturers or service providers in the market. Competition is a major factor in most markets, and hence in most marketing activities. Above all, it should be remembered that the key product (or service) characteristics are not seen as absolute, in isolation, by the customers. Rather they are seen as relative, in comparison with the other suppliers' offerings. The marketer must know, therefore, what his offering's relative performance is; on all fronts.
Led by Michael Porter, the marketing developments of the 1980s (and indeed those of overall corporate strategy) were dominated by competitive policy. This focus remedied the previous neglect of the subject; but there was a degree of over-reaction, to the extent that for some companies - and some governments - competitive policy is now too often seen as more important than all other aspects of marketing - including the customer!
According to the theory developed in this field, the first level of understanding of the competitive environment is that of the 'industry' (in its broadest sense, be it frozen foods or health service provision) within which the organisation operates. Thus, the 'character' of that industry is supposed to largely determine the competitive activities taking place within it; and the profits of most of the participants.
Thus, the larger the market the more attractive it will generally be to new entrants; and the more important it may become. On the other hand, the larger the market the more likely it will be that it will be segmented. It might also seem that the greater the number of organisations in a market the more competitive it might be, and this is generally true - if the brands are of roughly the same size. But the level of competition may also be related to the pattern of concentration of the overall business into the hands of the major players; clearly a monopoly will significantly reduce competitive forces! The most stable, and profitable, market (apart from a pure monopoly) is usually that with one or two dominant brands and a few smaller brands.
In any case, to avoid competition the most sophisticated marketers will aim to differentiate their product or service from the others in the market. In general, the more that products or services are differentiated the products or services; the less direct will the competition.
It is often considered, by those most influenced by competition theory, that economies of scale are the main features of any market. The theory is that the greater the economies of scale, the greater will be the benefits coming to those with large shares of the market; and hence the greater the competition to achieve such larger shares. Such economies of scale may come about because larger plants are more efficient to run, and cost relatively less per unit of output to build. Or they may come about because there are overhead costs which cannot be avoided, even by the smaller organisations, but which can be spread over larger volumes by the bigger players. Or they may come about because of 'learning effects', in this case related to accumulated volume; the more that is produced the more that the manufacturer learns - finding ever more efficient ways of production. All of these effects tend to increase competition, by offering incentives to 'buy' market share in order to become the lowest cost producer.
But there can be less obvious barriers raised against new entrants. It has long been the case that sitting tenants in large markets have managed to persuade government, paradoxically often as a response to complaints of cartels dominating the market, to enact legislation to govern the competitive behaviour of the main players; even if that was against the intention of the original government intervention. Alternatively, if the distribution channels can be denied to competitors then competition can be limited. It is rare for single products to achieve this, though the brewers and the oil companies with their 'tied' outlets have achieved something close to this. Supermarket chains, however, will often only stock the two leading brands - thus effectively limiting serious competition to those two brands.
Perhaps the most sensitive indicator of price competition is, though, the degree of over-capacity. Beware those markets, particularly those with economies of scale, where there is a significant amount of spare capacity. If it exists you can be sure that everyone will be focusing on sales (and hence production) levels, almost regardless of price; and - as we have seen -that almost inevitably leads to low, commodity-based, prices.
ACTIVITY
What, in your opinion, determines competitive strategies in your industry?
COMPETITIVE RESPONSES
In practice, in most stable markets, the best indicator of competitive strategies is simply history; what has happened before. The previous reactions of competitors will to a large extent indicate what the new competitive moves will be; particularly in terms of reactions to new entrants.
Even so, probably the most important, but often neglected, analysis is determining how each of the competitors may respond to future changes. There are four main categories of possible response;
NON-RESPONSE(or slow response) - it may be that this competitor is in such a strong position that it does not see the need to respond directly to any changes in the environment, or - conversely - it may be in a particularly weak position, and cannot resource any reaction.
FAST-RESPONSE - but there are also a few organisations which have a policy of immediate and substantial response (often a deliberate 'overkill) - as much as a deterrent to future challengers as to the current threat. This strategy usually is the most effective over the longer term; and the most cost effective - since the sooner the threat is removed the sooner high profits can be generated again.
FOCUSED-RESPONSE - some competitors will only respond to certain types of challenge (typically on price), either refusing to accept or simply not recognising other forms of challenge (particularly those in the form of 'product' developments).
UNPREDICTABLE RESPONSE - the most difficult to deal with, however, are those organisations whose responses cannot be predicted at all!
ACTIVITY
What is the form of your organisation's normal competitive response, and those of its competitors?
STRATEGY: A FOOTNOTE
As we have seen, there are many suggestions - not least in many books - as to how you should develop your strategy; and as many suggestions - freely given, uninfluenced by the facts of your situation - as to what must be the ideal strategy. I will simply suggest that the perfect strategy for your own organisation will be the unique one which specifically matches your needs. The heart of the matter is quite simply the question: 'How will you get from where you now are to where you want to be?' Only you can decide what the answer is - based largely upon your common sense rather than any high-flown theories - but please do remember to invest in your long-term survival. That is, as we will see in the final chapter, a crucial element of marketing. That usually means investing in the relationship with your customers - indeed, it always makes sense to have dialogue with those customers, but - I repeat - it would be both arrogant and foolish of me, or any other marketing academic, to predict exactly what might emerge from that dialogue!
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