MARKETING MATERIAL
9090 MARKETING MANAGER 1 - PHILOSOPHY OF MARKETING
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Welcome, and thank you for giving up your time to read this book. In return I will try to ensure that - by the time you have finished it - you will find that your investment of time is fully rewarded. As you are my customer, it is as important to me, as it is to you, that I succeed. For, if I don't succeed, you will not be a satisfied customer and will not buy any of my other books, and - even worse - will not recommend your friends to buy them. Indeed, if your are very dissatisfied, you will almost certainly go out of your way to persuade your friends and colleagues not to buy my books - so I will have lost not just your business but that of perhaps ten more potential customers! I hope you can already begin to see why it is so important to develop satisfied customers; and to invest in marketing.
As I can't, unfortunately, ask you personally why your have chosen this book to read, and certainly can't then write the book which would exactly meet those requirements, let me start by telling you what I hope the book will do for you - and, if this is not what you want, you can put the book down and move on to one which better meets your needs.
This book is designed for managers and professionals in general, not for marketing practitioners. It is for 'ordinary' mortals who only come into contact with marketing from time to time; but still want to understand the strange language which its practitioners use - so that you can make some sense of conversations with them. It is for those of you who want to know why marketing is so important for the success of organisations, and want to understand something of how successful organisation make best use of it. Finally, it is so you, yourself can use some of the ideas to improve your own performance as a manager or professional.
Just to make certain that you are do fully understand, let me repeat that it is not for marketing practitioners. If are one of these you should read my book 'New Marketing Practice' (Penguin, 1997), which provides the detailed practical support you need. Neither is it for students on management courses; my own text-book 'Marketing' (second edition - Blackwell, 1997), or that co-authored for the US market (with Czinkotta & Kotabe - Blackwell, 1997), should provide the necessary level of academic theory you need to pass your exams! It is for the great majority of practising managers and professionals, who are not directly involved in the marketing function but who - unknowingly - provide most of the real marketing support for their organisations. If you are in this latter category, then please keep on reading. If you are in the former categories, please put it down immediately and choose something more suitable!
ACTIVITY
I have said that one aim of the book is to generate ideas you can use in your own work. To help this process along, I will regularly suggest related 'activities - exercises - for you to carry out, in order to give more practical meaning to the concepts I am describing; by putting them into the context of what actually happens in your own organisation in general, and within the department or group (the more general term I will use from now on) with which you work.
But, here, the first question is a personal one: "Do you fit into the (latter) category of readers who, I think, will benefit most from reading this book?"
If the answer is yes, then welcome once more. If the answer is no, but you still want to continue (for I cannot ban you from reading it!), then please take a minute to jot down why; so that you will be able to put the rest of your reading into a slightly different context from the one I am setting. I the answer is just plain no, then thank you for the courtesy of listening to me so far; if you haven't already, you can put the book down now!
This exercise nicely illustrates one of the most important (counter-intuitive) lessons of marketing, and that is the need to positively reject some business. If you haven't the right product or service for a customer then withdraw. Carrying on, with the wrong offering, wastes both your own time and that of the customer; and will lose you the goodwill for later sales which you might expect to win - whereas admitting your limitations builds the trust which will help you later. And another little recognised fact of marketing life is that it is usually those later sales which make all the effort worthwhile; it is very unusual to make a profit on your first sale (especially if it is to
be the only one).
ACTIVITY
What do you think we mean by the term 'marketing'?
WHAT IS MARKETING?
Surprisingly, in view of all that has been said and written on the subject, this is not an easy question to answer. In my academic text-book, addressing this question takes the first 30 pages - and, even then, I am not able to provide one simple answer. For 'marketing' means many different things to many different people. At one extreme, for instance, it is a philosophy which claims that the customer should be at the focus of all you so - not least at the centre of all your strategic decisions - adopted by many corporations claiming to be very successful as a result; so it must mean something worthwhile to them. We will examine this aspect in the rest of this chapter. At the other extreme it is a function, a department say within an organisation; to which marketing professionals are willing to dedicate their working lives - so it must also mean something to them. And it is, of course, also the theories and techniques - of advertising and market research and sales and promotion - which rule their working lives and which are used by that department to influence the buying behaviour of the organisation's customers. We will look at these through the rest of the book.
The two aspects, philosophy and function, should perhaps be complementary; but they can often come up with very different solutions. Thus, I spent some years as a brand manager in part of American Tobacco, where the whole focus of its operations was determined by what marketing activities we - operating as a key marketing (department) function within the company - set in place. Later, I held a general management role in IBM, where everyone across the organisation contributed to its key marketing philosophy; of 'customer service'. Both of these approaches worked - very successfully - but very differently.
THE PHILOSOPHY OF MARKETING
So, starting - as I promised (and as a good marketer I always live up to my promises) - let's have a look at the philosophy. It is, as I indicated earlier, a philosophy which puts the customer at the focus of everything the organisation does; not least at the centre of its strategies. This is very easy to say. Indeed, it is a claim that almost all organisations would make. Only a few, in the public sector, would now insist that they - rather than their clients - know best; and even they, in their own way, are trying to help these clients. The problem is that, while it is easy to make the claim, it is much more difficult to do anything about it - and most organisations stumble at this point.
As we have seen, it is even difficult to decide exactly what is marketing. Even more problematic, therefore, is what a commitment to putting the customer at the focus of business means. Unfortunately, for most organisations it seems to mean, in very general terms, that they just (barely) recognise that they need someone (anyone!) to buy their product or service. This is, I suppose, better than those organisations which see their customers as 'pigeons' to be fleeced - if I may be excused a very mixed metaphor - but just avoiding that pitfall is nowhere like enough. If you really want to justify the claim that you are genuinely committed to a philosophy of marketing, you must start all your activities with the customer as the focus. You must then understand what are that customer's needs and wants; and your prime objective (even ahead of making a profit!) must me to meet those as best you can - and as the customer wishes.
In fact this, too, is unrealistic; since it is a counsel of perfection. Most organisations do not have the abilities, or resources, to exactly meet every one of their customers' needs - let alone their wants! Most suppliers have a limited set of products and/or services, and a limited set of skills ('core competences' in the jargon of management), and have to work within these. So there has to be some sort of compromise. I suppose, therefore, the test of good marketing, in this context, is that it looks to the customer first and then to the organisation's limitations second - rather than the other way around.
Perhaps the best 'philosophical' approach is to persuade everyone across the organisation to put the customer first. This sounds impossibly idealistic, but it was the main marketing strategy adopted by IBM at the time when it was so successful. Its key organisational philosophy, one of only three which drove the company and all who worked in it, was 'customer service'. This applied to everyone; from the telephone operators at head office to the workers on the assembly lines in the factories - just as much as the sales force. Whatever you were doing you had only one criterion; will this give the best customer service? It was simple, and actually sounds rather simplistic, but it was incredibly powerful in practice. Not least, you never had to worry if you were following company policy; there was only one, and most times it was obvious if what you were doing was in the customer's best interests. That is the best example, and indeed, definition, I can give of what I mean by a genuine philosophy of marketing!
It is, though, a long way from what most people think of as marketing. It does not demand charismatic selling skills, or creative advertising, or even good market research. It is an attitude of mind. It simply asks that you do your best to help the customer - something most people would like to do anyway. We all get a good feeling when we help others, so isn't it nice that this is also the best form of marketing!
ACTIVITY
Taking your organisation as a whole, what do you think its marketing philosophy is; and is that the same as management claim it is?
Taking your own group (department), what is your own marketing philosophy with regard to your own (internal?) customers - to those within the organisation you provide services for or work with?
SELLING OR MARKETING?
This leads into a debate which was prevalent a few decades ago when 'marketing' was in its youth. The question then was 'what are the differences between sales and marketing?' The answer, in crude form, was that as a sales team you 'sold' what you had produced, using your skills to persuade the customers to take what you had to offer, or - as a 'marketing' department - you found out what the customer 'wanted' and produced that; the very reverse. It is said that the debate has long since ended; everyone now knows that marketing is the best approach. Yet the reality on the ground is less clear, and an understanding of the two approaches can help you understand some of the tensions which still arise.
The debate, it turned out, had little to do with what constituted good selling or good marketing. The best sales departments conducted superb marketing campaigns. IBM, for instance, used to send in teams of sales personnel to spend months surveying their largest customers - to find out exactly what those customers needed - and then tailor-made the solution to exactly match those needs. IBM, in fact, thought it was selling - but it was really conducting near perfect marketing. On the other hand, many advertisers had used extremely sophisticated techniques to sell things their potential customers didn't want. The classic example, from many years ago, was the Strand cigarette; which used incredibly creative commercials to put over the message that 'you're never alone with a Strand'. The problem was that the punters didn't even want to think about being alone!
To reiterate the point, this difference is not between functions within an organisation. Indeed, the sales function should be just as marketing oriented as the marketing department; which is just as well since, despite the image portrayed by the media, most marketing is actually carried out, face-to-face, by sales personnel. At one extreme this is seen in the retail environment, where everybody coming into contact with the customer has a sales role - the checkout operators just as much as designated sales assistants - especially in those outlets offering services - such as banks and hairdressers. Many of those in the public services, librarians through to nurses, have much the same responsibilities for marketing in their own roles - indeed the are said to have a vocation for helping their 'customers'. Though they rarely describe this vocation in terms of customer service, their 'caring' approach once more represents more near perfect marketing! At the other, it is seen in those industrial companies selling capital equipment, where teams of sales people may work on just one tender for literally years. Unlike most other marketing books, which tend to highlight consumer goods advertising, I will therefore try to use sales activities as my main models; partly because it is easier to explain the concepts in such practical terms, partly because it is likely that these will be the focus of your own organisation's marketing activities, but also because you should be able to identify a wider range of practical elements which you can use yourself. And, after all, you are probably not going to launch into your own mega-advertising campaigns!
Indeed, the days when the stereotypical 'cowboy' salesman went out to persuade the poor 'prospect' to buy something he didn't want are largely a matter of history. Now it is all 'relationship management'; investing in the long-haul - so that the customer learns to trust you - and there is only one way of doing that, showing the customer time after time that you really are trustworthy!
ACTIVITY
Almost certainly, your organisation will claim it has a marketing philosophy? But is this really true?
How about your own group? What notice do you take of your own (internal) customers?
CO-OPERATION OR COMPETITION?
Indeed, relationship marketing was, in many respects, a reaction against the very aggressive policy of 'competition' promoted by many consultants and academics in the 1980s. At that time, when the Cold War was coming to an end, governments in the West placed great emphasis on the 'market' as a place where suppliers fought battles against each other - much as gunslingers did in Westerns. It might have been significant that the then US President learned his trade in precisely those films! What the politicians forgot was that the market was invented to allow people to co-operate. What the suppliers often forgot was that not merely should they focus on customers, but they should co-operate with them. That is not to say that competitors should be ignored. You would be a foolish manager if you were not well aware of what your competitors were doing, and didn't respond to their activities. But, above all, you should want to be better than them, to be best of all in serving the customer; to win the business. It is also to say that you put yourself in the best position to become best if you work with your customers rather than against them.
Surprisingly, it is also true if you work with your competitors; at least in terms of what is best for your industry. The Japanese, who seem to excel in most aspects of business, have just about the most ruthless competition between companies anywhere on Earth; but at the same time they work far more closely together with those same competitors to further the position of the industry they share - not least against us less effective marketers in the West! But this is not just another aspect of Eastern deviousness, something like it operates here - it's just that we don't like to talk about it. Our research has show that most companies co-operate with their competitors. And if they do so with their competitors they surely do so with their customers; exactly as they should do!
Indeed, the essence of marketing is co-operation; with your customers - to best meet their wants and needs. The bonus, which almost always comes along, is that this usually also optimises your own organisation's performance (financial or otherwise); and helping them may also give you a warm feeling.
The question, therefore, is not 'what can I sell you' but 'how can I help you'? It is a shame that sales assistants are now persuaded not to say 'can I help you?' - albeit that 'how can I help you?' is better, since it does generate the almost automatic response of 'no!' But, even with its shortcomings, the traditional phrase encapsulates the most important aspect of their job; helping the customer.
In your own case, most likely working largely within an organisation, such co-operation is paramount. You may talk of competition with other departments, and may sometimes engage in forms of rivalry, but it would be suicidal - for the organisation overall - if you really did compete as aggressively as the politicians would have you do. Your own first question to your 'customers', from other parts of the organisation, should also be 'how can I help you?'
ACTIVITY
How competitive or co-operative are your relations with each of the other groups for which you provide services or - in particular - work alongside? If they are competitive, why? If they are co-operative, do you make the most of the co-operation?
RELATIONSHIP MARKETING
This leads on to the major change in marketing philosophy, which emerged at the end of the 1980s, the concept of relationship marketing. Derived from a philosophy of co-operation, and perhaps as a reaction against the aggressive competition promoted earlier in the 1980s, it stresses that you should build positive relationships with your customers. In part, at least, it represents a recognition of what I said earlier; that you make your profit across a number of sales, or (if you are in the public sector) improve your performance across a number of contacts, not on the first one. Indeed, the first 'sale' is often made at a loss; as it demands an investment in building the initial relationships - in getting to know your client and his or her 'business' . This investment traditionally used to be thrown away as salesmen started afresh, to contact their next (new) 'cold' prospect! In fact, the whole strange culture of sales used to revolve around making just those one-off sales. The fabled difficulties involved were legendary in sales circles - and, of course, sales campaigns really were difficult where there was no existing relationship, and no trust! If, however, you choose to build on that first contact, you can make later 'sales' without anywhere as near as much investment of your time - and indeed you find that (with greater trust on both sides) your performance gets better with every new (repeat) sale.
SHEEP AND GOATS
This does, however, imply that you are making an investment in that new customer. So you will need to be convinced that this investment will pay off over time; over a number of sales. The first rule of relationship marketing, therefore, is that you should make absolutely certain that you are marketing to people who need and want your product or service. If they don't, they simply won't come back for a second helping, and you will almost inevitably lose money on the deal!. In the old days, the measure of a good salesman was how well he was able to overcome the objections of the prospect; to sell him something he didn't want. That is the very reverse of relationship marketing. As I said earlier, making such a sale is very unproductive. Not only will it take even more time and effort than any other first sale, where there are usually plenty more customers to be recruited elsewhere, but it will not result in a follow-on sale; because the customer will soon realise he has been conned. Worse still, it will ruin your reputation with that customer and with his or her many friends and acquaintances.
Surprisingly, therefore, the first rule of marketing - in any form - is to select those 'prospects' who really are likely to buy. And the real measure of a good salesperson is how well he or she rejects prospects who are not likely to buy - as a waste of time. Indeed the acid test of, sales personnel's time management, is how well he or she says no to time-wasters!
This, of course, would be true even if you were making the one sale. Where you are planning to make repeat sales then your attitude must be very different; you must almost welcome the customer into your extended family! So, the first task is always to find out what the prospect really wants; so you can judge whether you can provide that, and- beyond that - enter into a productive long-term relationship. And that last point is not just a throwaway. Even if you can easily make the first sale, you may not be able to build on it for later sales - so you have to ask whether it is a sound investment of your time. The essence of good relationship marketing is how the relationship develops over time, over the longer term. And the core of this is the development of trust, so that both sides implicitly trust each other.
ACTIVITY
What is your organisation's relationship with its customers? Might it be regarded as a genuine 'relationship', even if it isn't called that? Why not? Do you trust them, and do they trust you? Why not?
INVESTMENT OVER TIME
This brings us to an aspect of marketing which is only now starting to emerge - and is still unrecognised by most organisations - the relationship over time; and, in particular, the investment in that relationship. Traditionally, on the other hand, marketing has been seen as a current cost. The implication has almost been that you should begrudge anything spent on promotion - perhaps as a necessary evil, but certainly as a short-term cost. Indeed, a number of organisations facing harder times in the 1980s actually cut promotional spending; as you would expect them to do if they simply saw it as an unwelcome cost. Symbolically, promotional expenditure is recorded, in the company's accounts as a cost on the profit & loss statement; not on the balance sheet, as it should be if the investment aspect is to be taken into account.
In fact, most forms of promotion - in particular advertising in the consumer goods field and relationship management in selling - take time to have an effect. Thus, spending money now on 'image' advertising may not reap maximum results for a year of more; and, equally, dropping expenditure now may not cause an obvious loss of momentum for a number of months. The pitfall which a number of organisations, not least IBM, fell into in the 1980s was thinking that - as a result of these 'cost-savings' (without any immediate loss of sales momentum) they had found a new level of marketing efficiency! Indeed, the impact of promotion in general is not just long-term it is cumulative. But, regardless of what the bean-counters think, it should still be clearly seen as an investment process; and we will look at this aspect later in the book. It should be considered in much the same context as the other items, such as capital equipment, on the balance sheet. In particular, the investment in brand position or customer relationship must be safeguarded in the same way as any other corporate investment. You do not see plant managers stopping all maintenance on the production lines, because this will cut costs!
Indeed, the only significant exception to all of this is the money spent on 'sales promotion'; most typically spent on price promotion - 'money off'! This really does have a short-term impact, and is a true cost - in that all the evidence suggests that money spent in this way may improve sales in the short-term (as short-sighted marketers want) but at an uneconomic cost. It is paradoxical, therefore, that the greatest increase in promotion during the 1980s was on such sales promotion; so that it now accounts for more than half the total - in an unproductive waste of investment potential.
ACTIVITY
Does your organisation view marketing expenditure as an investment or as a cost? How, then, does it expect to protect its position with (its investment in) the customer?
How do you see your group's relationship with its 'customers'. Do they waste your time, or do you enjoy meeting them?
THE FUNCTION OF MARKETING
Now let us look at the other end of the spectrum, at the functional elements of marketing. In most organisations these are typically encapsulated in a sales or marketing department; which is formally responsible for contact - in person or via the media - with the customer. Within this function a whole range of specialist techniques are deployed; and it is often these that are seen, by the general public, as 'marketing'.
These can be split most obviously between market research, finding out what the customers want, at one extreme, and advertising, to tell them what you have actually got, at the other; though, in the case of selling, the two can look much the same. Unfortunately, much of the functional aspect has been bogged down in the sort of obscure language that aspiring professionals use to keep outsiders at bay. Indeed, we are now saddled with a 'profession' of marketing, with its insiders, which is silly when you consider that the whole aim of marketing should be to bring the outside world into the organisation! My intention, in this context, is to try and simplify some of these unnecessary complications; to demystify them.
THE MARKETING DIALOGUE
The best way to appreciate what is happening is to think of it as a dialogue. Indeed, in the case of face-to-face selling that is exactly what is happening; with the 'conversation' taking place between the sales-person and the customer. In this case, the dialogue starts with the sales-person asking a lot of questions; to establish what the customer wants. Indeed, it is reckoned that the best sales professionals listen for more than two thirds of the time. They are good listeners rather than having the gift of the gab which most people would expect! As we will see later, in the chapter on selling, in practice this is not as easy - or as simple - as it might seem; but at this stage it offers a very useful picture of what is going on.
Only when the sales-person fully understands what the customer wants should he or she switch into the other mode - explaining to the customer what is available to match these wants; switching from asking to telling, from listening to talking. Exactly the same basic process should happen across all forms of marketing. Thus, in the consumer goods markets you use market research to find out what (groups of ) customers want and advertising is deployed to tell them what you have to match that. In database marketing, the customer's file - derived from purchases under a club membership say - will tell you what they probably will want next, and some form of direct 'mail' will then be used to tell them what you have to match that. The emphasis here is on exactly, since you can now deal in this way with the individual rather than the group.
In essence, most powerful form of marketing must be face-to-face selling; as long as this is conducted by good salespeople - of which there are, unfortunately, still too few! Suppliers of mass consumer goods only use advertising, say, because they cannot afford to fund the many millions of face-to-face contacts which would be necessary to sell baked beans in this way. So they seek out the statistics which tell them what groups want and then - by their seductive commercials - they try to convince members of these groups, you and me, that we have experienced something similar to a face-to-face contact and, they hope, this is as persuasive. But it can never be so, for the essence of effective marketing is interaction, and especially listening. Indeed, to put it brutally, you are wasting your breath until you know exactly what the customer wants - and that you can meet that want. Only then should you speak. That is the shape the book will follow, with the next few chapters talking about the customers, and how you can find out about them; through the various forms of formal and informal market research. To match the customer's wants, we will then examine the product or service you have on offer; possibly with some surprising results. Only in the second half of the book will we look at how you can talk to your customers; to explain how ell you can match their needs and wants.
Within the overall split, between listening and talking (and especially the latter), there are a number of sub-topics which greatly fascinate practitioners and academics - such as myself - and some of these may even be important in specific cases! These are often referred to as the marketing mix. Accordingly, we will investigate a number of these in later chapters. In the process I will try to demystify some of the myths of advertising, and of public relations, which are much more a matter of common-sense than of glamour. And I will look at the problem of price - which stampedes too many managers into frenzies of price-cutting - and of the soothing effects of sound strategic planning; and, in particular, of long-range marketing, which too few organisations consider.
SELLING TO YOUR STAKEHOLDERS
Especially, though, we will look at the magic of selling, to see if some of it can rub off on you. For, although I have talked so far about customers, there are actually a range of participants in the processes of marketing. These are, rather formally, described as 'stakeholders' (or, even worse as 'publics!). But all this means is that these are the people who have an interest in the 'sale'; and there are more of these than you might expect.
Thus, at the customer end there are others involved. Not least are the consumers; the family who the baked beans are bought for, and who have a very direct influence of the choice. And the members of their peer group, your existing customers, who recommend the product in the first place. At your - supplier's - end there are all your workers involved in offering the product, and especially the service, who you have to persuade - by inner marketing (of which more later) - to do their very best for the customer; and your own suppliers, and the local community who claim to have an interest, and so on and so on. It is surprising just how many people you need to convince; all of whom are susceptible, in one way or another, to the charms of marketing.
ACTIVITY
Who are your organisation's key stakeholders; customers. Employees, suppliers, local communities, etc.?
Who are your own group's stakeholders? What does each of these groups of stakeholders want from you?
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