the discipline has real value to offer managers

Transcription

1 Marketing in a Nutshell: Key Concepts for Non- Specialists Mike Meldrum and Malcolm McDonald Butterworth-Heinemann 2007 ISBN: , 294 pages Theme of the Book Mike Meldrum and Malcolm McDonald set out 59 key marketing concepts and topics in a compact book designed for rapid easy access to any particular topic. The idea is to look up a topic and 15 minutes later you ll have the insight you need. This insight has the very solid feeling that can only come from enormous knowledge and experience often backed up by Cranfield research. Underlying the book s reason for being is this belief: marketing is sufficiently important to virtually every organisation that its discipline and principles should be better... marketing remains an enigma. Many know that understood by the discipline has real value to offer managers managers far beyond across the whole of an organization, but too often any department with a that value is never realized. Marketing label. This way, everyone in the organisation can work towards best applying marketing to the individual corporate situation and circumstances. For the non-specialist target reader the book raises awareness of marketing issues and concerns, goes a long way to aid communication on marketing topics (not least by making much of the jargon plainly comprehensible) and sets out marketing approaches and ways of working in a manner designed to

2 bring managers into greater alignment of purpose and mutual understanding in larger and more established organisations. Those using this book in smaller or start-up companies where there is less operational demarcation may find that the enlightenment (and tools) it provides can even more directly inform and lead to action. Knowledge Interchange Book Summaries Page 2

3 Key Learning Points Marketing has never been more important to the long-term success of most organisations. Marketing must be thought about philosophically, strategically, and tactically. Marketing is all about focussing on customers and their needs. Market segmentation, the process of identifying different people s different needs, is the most difficult of marketing skills but is vitally important to marketing success. Embracing the marketing philosophy, the mindset level of marketing, is the hardest and most important aspect; there are many tools to help and experience to draw on to underpin strategic and tactical marketing progress. Knowledge Interchange Book Summaries Page 3

4 Understanding the Basics of Marketing The Discipline of Marketing: marketing is a worthy subject for attention because when One of the best [definitions] describes marketing as the successful way in which an organization matches its human, financial and physical resources with the wants and organisations are needs of its customers....the definition... does focus analysed, they are attention on the crucial elements which the whole usually good at organization has to manage correctly the mechanisms marketing, and the by which a relationship is developed between that less successful are organization and its customers so that mutually beneficial exchanges will take place. often not. One reason why marketing is both difficult and often badly understood is that it has three levels: philosophical, strategic, and tactical. Marketing as a Business Process Knowledge Interchange Book Summaries Page 4

5 Expressing marketing as a process like this helps towards thinking of it as a discipline, and shows its very wide A market orientation exists when scope within an organisation and people make sense of their business, its orientation towards the customer. justify actions and authorise spending by reference to customers. Marketing meets needs, but does not and cannot create them, as Marketing and Ethics argues. Ironically, consumerism is promarketing; it wants the marketing approach to business implemented in a sincere rather than cynical spirit. World-class Marketing gets down to the how to of the 10 factors identified by Cranfield research as the way towards long-term competitive success through marketing, offering guidelines towards each one. Marketing orientation Competitive advantage Environmental scanning Competitor surveillance Market segmentation Strengths and weaknesses analysis Mirroring market dynamics Adopt a portfolio management approach Set strategic priorities Be professional Knowledge Interchange Book Summaries Page 5

6 Different Types of Marketing Those new to the marketing of anything, whether consumer products, industrial products, service products, high-tech products, capital goods, or trade marketing, Internet marketing, and marketing internationally, need to be aware of and give attention to the differences between all of these in their features, the issues surrounding them, and the various ways of facing each one s present and future challenges. Understanding Customers By illustrating the complexity of a consumer purchase decision, the point is made that getting a grip on all of this will be difficult: Knowledge Interchange Book Summaries Page 6

7 Components of a Consumer s Purchase Decision In business-to-business marketing, within an organisation the different individuals involved with a As examples: users will be concerned purchase and interacting with each about ease of use, consistency and continuity of supply; influencers such as other will all have differing finance people will be concerned with information needs. cost, while influencers such as design engineers will more likely be interested in quality; and deciders such as the chief executive may be concerned with reputation or status. Market segmentat The objectives of market segmentation are: ion is an allimportant To help to determine and to focus the direction of marketing resources through the analysis and understanding of trends and buyer behaviour central aspect of To help to determine realistic and achievable marketing objectives marketing because it helps to To create a basis for developing sustainable competitive advantage. crack these issues. Understanding Markets Corporate decision-making must be based on information rather than anything less factual so that such information should be acquired directly, via market research, towards this end. Knowledge Interchange Book Summaries Page 7

8 This is often one of the biggest problems in drafting a market research brief or in specifying a marketing information system: distinguishing between what it would be nice to know and what is actually needed for management purposes. Part of the solution to this is fully effective working for both parties with a specialist research agency at all stages of the process starting with the issuing of a briefing document which gives useful guidance without being stifling in its effect to the agency or consultant receiving it. Back will come their proposal:... it represents their ability to communicate, and this should be a selection factor given that the organization subsequently commissioned to carry out the research is providing an indication or preview of its listening, communication and presentation skills. The proposal is therefore an opportunity to provide additional clues as to the likely quality of the final product. This assessment opportunity for the client should not be overlooked! Auditing a Market should be carried out on a regular basis and checklists for both external and internal It is also important to understand that a audits will help with this. The SWOT is constructed for a specific market, results of such audits feed into segment or customer. While it is possible to various decisions, and a perform a SWOT for an organization which useful way of summarising relates to the whole range of its activities, it is unlikely that the strengths and weaknesses their findings is with a SWOT identified will be relevant to all the markets in analysis; how to do this which it operates. comes complete with a warning: Knowledge Interchange Book Summaries Page 8

9 Product Management A brand name is not enough; a successful brand is what is important, with both positioning and the brand s personality as major factors in this success. As a product goes through its lifecycle, your marketing mix strategies must be geared to the changing circumstances within the different phases. New product, for example, is taken up in the marketplace by different types of purchasers (The Diffusion of Innovation) and much is known about this; nevertheless, the possible hurdles to adoption mean that not all new products will fulfil their market potential. Diffusion and adoption are not inevitable and marketing organizations have to develop strategies which will overcome the blockages they are likely to encounter. Tools which can help with this include The Ansoff Matrix for organising objectives relating to existing and new products in existing and new markets; The Boston Matrix to aid thinking about an organisation s activities in relation to its markets and The Directional Policy Matrix: The purpose of the matrix is to diagnose an organization s strategic options in relation to the two composite dimensions of business strengths and market attractiveness. Key Elements of Positioning A strong pricing strategy is highly desirable, not least because there will be many other factors influencing price alongside the chosen strategy. Since most customer profit calculations are based on invoices, organizations can easily overestimate the profitability of individual customers. The difference between invoice price and the price effectively paid has been shown to be as much as 29 per cent in some cases. Knowledge Interchange Book Summaries Page 9

10 Advertising is a tightly controlled promotional activity, as evidenced by a sample pro-forma for an advertising plan. There is however rising interest in the (much less controllable) Public Relations, not least because in a world overcrowded with advertising: A message received... via an editorial can be up to five times more influential than one received via an advertisement. Sponsorship Management Cycle With Sponsorship enjoying fast growth in importance within the marketing mix, a very clear focus on useful objectives is needed to gain the best from this positioning activity. Knowledge Interchange Book Summaries Page 10

11 Marketing Relationships Relationship marketing goes beyond the four Ps, with their possible downside of over-focus on transactional marketing, to a larger marketing mix: Expanded Marketing Mix Key Account Management (KAM) is an equivalent trend, in business-tobusiness marketing, to Organizationally, KAM must be positioned at relationship marketing to the highest level as a result of its potential consumers: The strategic impact and the authority that the key emphasis is on moving account manager requires in order to call in away from one-off, resources from across the organization. exploitative transactions Knowledge Interchange Book Summaries Page 11

12 to longer-term synergistic relationships, with the aim of developing a KAM relationship enabling value to be created in the marketplace by the buyer and seller together which is greater than the value either could create without the other. For organisations selling through intermediary channels, the possible upsides and downsides of working this way mean that a long term channel strategy is essential, and that firm channel management is needed to take this strategy forward and avoid problems that can often occur. Towards Multi-channel Integration, findings from Cranfield School of Management research can assist you towards choice of channel strategies, as can an understanding of channel-chain analysis. Another shift in marketing that has come about with the Regarding communications as an interactive growth in possibilities for process, rather than a one-way stream of communications and in sales promotional activity, adds new dimensions to / distribution methods is that sales planning. the distinctions between these are shrinking fast with important implications for product development and elsewhere: Management, Planning and Control Forecasting Sales is increasingly hard as markets and their surrounding environments change ever more rapidly but still essential. The task of marketing managers, when adopting a forecasting role, is to take whatever relevant data is available to help to predict the future. They must apply to them whatever quantitative techniques are appropriate, but then use qualitative methods, such as: expert opinions; market research; analogy; and so on, to predict what will be the likely discontinuities in the same time series. It is only through sensible use of the available tools that management will begin to understand what has to be done to match its own capabilities with carefully selected market needs. Without such an understanding, any form of forecasting is likely to be a sterile exercise. Knowledge Interchange Book Summaries Page 12

13 Equally important, and not to be confused with sales forecasting, is Marketing Planning: The process of marketing planning is a more sophisticated approach which is concerned with identifying what, and to whom, sales are going to be made in the longer term to enable revenue budgets and sales forecasts to have any chance of being achieved. It is done through separate strategic (for three years or more) and tactical (generally for one year) marketing plans which are created within the cycle of necessary strategic and operational planning. Although considerable overlap is likely, a marketing plan is not the same as a full business Successfully implemented marketing plan; what the former must do is planning systems will have profound provide clear market-based benefits for a business. However, recent performance requirements that will research has confirmed that 80 per cent act as a starting point for, say, of organizations do not have an engineering plans, financial plans, integrated, coordinated and internally consistent plan for their marketing logistics planning, and so on, that activities. will impact on the marketing mix. The relationships between organizational structure and marketing can change, with different possibilities for spreading marketing, and responsibility for it, usefully throughout an organisation as it grows; trends indicate that this is happening and will continue to do so. Zero-based budgeting, Variable cost budgeting, Lifecycle budgeting and Operational and opportunity budgeting are four approaches to the matter of Budgeting for Marketing Ultimately, however, the interweaving of a difficult not least because of market orientation into all areas of operations so that appropriate judgements can be made, the question of what the will be most beneficial in directing and marketing budget should controlling marketing expenditure. actually include. Two more essentials are Marketing Due Diligence which is concerned with how to subject the possible risks that may be inherent in a marketing strategy to analysis and assessment by use of Marketing Due Diligence methodology Knowledge Interchange Book Summaries Page 13

14 and Marketing Metrics. A map of the marketing domain is a tool to help clarify what should be measured; the Ansoff Matrix is another possible starting point for developing metrics, and one which will give rise to critical success factors which in turn can be given weightings, compared with competitor equivalents, and assessed over time. Knowledge Interchange Book Summaries Page 14

15 Authors MIKE MELDRUM, formerly a Lecturer in marketing at Cranfield School of Management for many years, now runs own consultancy company specializing in marketing, leadership development, and coaching. MALCOLM MCDONALD, is Emeritus Professor of Marketing and until recently, Deputy Director, of Cranfield School of Management. Formerly Marketing Director of Canada Dry, UK. Knowledge Interchange Book Summaries Page 15

16 Produced by the Learning Services Team Cranfield School of Management Cranfield University 2007