CHAPTER 19

Work toward consensus-building.

"Ownership" of the plan by team members and stakeholders increases the chances for its success.

quantitative goals

"where the organization is going"

quantitative marketing metrics

"whether it is really getting there"

3 techniques tht are useful in helping corporate and marketing executives deciding allocation

(1) Porter's generic business strategies, (2) profit enhancement options, and (3) market-product synergies

marketing organizations include understanding

(1) how line versus staff positions and divisional groupings interrelate to form a cohesive marketing organization, and (2) the role of the marketing or product manager.

If a business wants to increase, or "enhance," its profits

(1) increase revenues, (2) decrease expenses, or (3) do both

Strategy options for decreasing expenses fall into two broad categories

(1) relying on scale economies or experience-curve benefits from an increased volume of production to drive unit costs down and gross margins up (2) decrease expenses is simply finding other ways to reduce costs, such as cutting the number of managers, increasing the effectiveness of the salesforce through more training, or reducing product rejects by improving quality.

critical that CMOs (chief marketing officer) understand

(1) the changing characteristics of domestic and global consumers, (2) the role of digital media and mobile marketing in integrated marketing efforts, and (3) the benefits of the many new multichannel data streams in decision making and marketing effectiveness assessment.

marketing managers must estimate

(1) the market share for the product, (2) the revenues associated with each point of market share (3) the contribution to overhead and profit (or gross margin) of each share point, and (4) possible cannibalization effects on other products in the line

Effective managers tracking progress on a struggling plan first try to identify whether the problems involve

(1) the plan and strategy, (2) its implementation, or (3) both, and then they try to correct the problems

action item list that has four columns:

(1) the task, (2) the name of the person responsible for accomplishing that task, (3) the date by which the task is to be finished; (4) and what is to be delivered. Action item lists are forward-looking, clarify the targets, and put strong pressure on people to achieve their designated tasks by the deadline.

planning phase four aspects

(1) the vital importance of metrics in marketing planning, (2) the varieties of marketing plans, (3) marketing planning frameworks that have proven useful, and (4) some marketing planning and strategy lessons.

output metrics

(common) measure results

improving implementation of marketing programs

1) Communicate Goals and the Means to Achieve Them 2) Communicate Goals and the Means to Achieve Them 3) Reward Successful Program Implementation but Don't Punish Failure 4)Take Action and Avoid "Paralysis by Analysis" 5)Foster Open Communication to Surface the Problems 6) Schedule Precise Tasks, Responsibilities, and Deadlines

how to exploit competitive advantage

1) finding and using what works for their organization 2) allocating resources effectively

two kinds of synergy that are critical in developing corporate and marketing strategies

1) marketing synergy and 2) R&D-manufacturing synergy

Problems in Marketing Planning and Strategy

1) plans may be based on very poor assumptions about environmental forces 2) planners and their plans may have lost sight of their customers' needs 3) too much time and effort may be spent on data collection and writing plans that are too complex to implement 4) line operating managers often feel no sense of ownership in implementing the plans

Example of a Cost Leadership strategy

1) raw materials from a lower-cost supplier 2) investments in capital equipment

Two important trends are likely to influence the strategic marketing process in the future

1) value-based planning 2) value-driven strategies

Find the right person to implement the plans.

But make sure that person is heavily involved in making the plans.

improvement of marketing ROI through marketing metric

Depending on the specific goal or objective sought, one or a few key marketing metrics are chosen, such as market share, cost per lead, retention rate, cost per click, sales per square foot, and so on. This is the "quantified goals" step

Utilize simple but clear and specific plans.

Effective execution of plans requires that people at all levels in the firm understand what, when, and how they are to accomplish their tasks.

Set measurable, achievable goals.

Ideally, goals should be quantified and measurable in terms of what is to be accomplished and by when. "Increase market share from 18 to 22 percent by December 31, 2017" is preferable to "Maximize market share given our available resources."

However, these disruptive innovations don't replace an existing product or technology overnight.

Instead, established firms in the industry initially conclude the disruptive innovation isn't worth pursuing because the new market is too small and takes scarce resources away from improving their existing products.

Make plans controllable and flexible.

Marketing plans must enable results to be compared with planned targets, often using precise marketing metrics and dashboards. This allows replanning—the flexibility to alter the original plans based on recent results.

Have complete and feasible plans.

Marketing plans must incorporate all the key marketing mix factors and be supported by adequate resources.

marketing efforts and sales revenue has

S-shaped relationship

The Paralysis of Analysis

Schedule Precise Tasks, Responsibilities, and Deadlines

some guidelines in developing effective marketing plans:

Set measurable, achievable goals//Use a base of facts and valid assumptions.//Utilize simple but clear and specific plans.//Have complete and feasible plans.//Make plans controllable and flexible.//Find the right person to implement the plans.//Work toward consensus-building.

Market-product concentration.

The firm benefits from "focus" on a single product line and market segment, but it loses opportunities for significant synergies in both marketing and R&D-manufacturing.

Selective specialization.

The firm does not get either marketing or R&D-manufacturing synergies because of the uniqueness of the market-product combinations.

Product specialization.

The firm gains R&D-manufacturing synergy through production economies of scale, but gaining market distribution in the three different geographic areas will be costly.

Market specialization.

The firm gains marketing synergy through providing a complete product line, but R&D-manufacturing have the difficulty of developing and producing three different products.

Full coverage.

The firm has the maximum potential synergies in both marketing and R&D-manufacturing. The question is whether it is spread too thin due to the resource requirements needed to reach all market-product combinations.

Use a base of facts and valid assumptions.

The more a marketing plan is based on facts and valid assumptions, rather than guesses, the less are the uncertainty and risk associated with executing it. Good marketing research helps.

product manager or brand manager.

This person and the assistants in the product group are the basic building blocks in the marketing department of most consumer and industrial product firms. The function of a product manager is to plan, implement, and evaluate the annual and long-range plans for the products for which he or she is responsible.

Annual Marketing Plans

Usually developed by a marketing or product manager in a consumer products firm such as General Mills, annual marketing plans deal with marketing goals and strategies for a product, product line, or entire firm for a single year.

How can marketing managers recognize and incorporate disruptive innovations in their long-range plans?

While no perfect answer exists, the first giant step toward an answer: Ask tough, focused, disruptive questions.

What are the probable increases in sales revenue for Cheerios + Ancient Grains in year 1 and year 4 if General Mills were to spend an additional $1 million in marketing effort?

Year 1 Increase in marketing effort from $3 million to $4 million = $1 million Increase in sales revenue from $30 million to $50 million = $20 million Ratio of incremental sales revenue to effort = $20,000,000:$1,000,000 = 20:1 Year 4 Increase in marketing effort from $6 million to $7 million = $1 million Increase in sales revenue from $70 million to $73 million = $3 million Ratio of incremental sales revenue to effort = $3,000,000:$1,000,000 = 3:1

time-based agenda approach,

a meeting agenda shows the running time allocated to each agenda item. In short, time is shown as running time (2:00, 2:03, etc.) and not target time (3 minutes, 10 minutes, etc.), which lets participants know better how the meeting is progressing.

optimal resource allocation

allocate firm's marketing, production, and financial resources to the markets and products where the excess of incremental revenues over incremental costs is greatest

toyota's program "bundled develpment"

allows suppliers to develop parts three or four years in advance, independent of a vehicle's design, to create "better performance, easier manufacturing, and higher quality"

improvement of marketing ROI through marketing dashboards

an effective marketing dashboard displays highlights—often in colour—where actual results vary significantly from plans. This alerts the manager to potential problems.

sales response function graph (horizontal)

annual marketing effort

sales response function graph (vertical)

annual sales revenue

what industries rarely go beyond 5 years in their marketing plan because of uncertainties?

autos, steel, or forest products

small organization's structure

becomes bureaucratic with managers

structure

build and maintain a fast, flexible, flat organization

how are company resources allocated effectively in the strategic marketing process?

by converting marketing information into marketing actions.

example of diversification

canadian tire: increased market penetration, market expansion, introduce new products, diversify thru aquisition of fgl sports

value-based planning

combines marketing planning ideas and financial planning techniques to assess how much a division or strategic business unit (SBU) contributes to the price of a company's shares (or shareholder wealth). Value is created when the financial return of a strategic activity exceeds the cost of the resources allocated to the activity.

what improves decisions and actions in the earlier phases of strategic marketing process?

corrective action memos

evaluation output report

corrective action memos, triggered by comparing results with goals, often using the firm's marketing metrics and dashboards

Disruptive innovations

create a new market by initially reaching new customers through displacing an existing market's low-end product. The innovation eventually displaces the original product or technology, creating havoc for organizations that operate in the old, displaced market and disrupting their long-range marketing plans.

what happens to product managers as more Canadian firms embrace customer-intimacy?

customer relationship management (CRM), and customer experience management (CEM) strategies, product managers are no longer the only ones responsible for managing the product or customer base. // Some Canadian firms have created new positions, such as "manager of student segment," "VP of financial services clients," or "director of customer management," which shadow the traditional product manager roles.

culture

develop and maintain a performance-oriented culture

execution

develop and maintain flawless operational execution

strategy

devise and maintain a clearly stated, focused strategy

high performing firms' structure

empower employees to make decisions and provide an environment where internal communications are encouraged (active problem solving)

cost leadership strategy

focuses on reducing expenses and lowering product prices while targeting an array of market segments

Category managers (recent position)

have profit-and-loss responsibility for an entire product line

staff positions

have the authority and responsibility to advise people in line positions but cannot issue direct orders to them.

market-product grid

helps identify important trade-offs in the strategic marketing process.

product line groupings,

in which a unit is responsible for specific product offerings

Effective planning and plans are

inevitably characterized by identifiable objectives, specific strategies or courses of action, and the means to execute them.

cost focus strategy

involves controlling expenses and, in turn, lowering product prices targeted at a narrow range of market segments

example of product development strategy

johnson and johnson: new products to complement popular brands

toyota's doctrine

kaizen which means continuous improvement

long-range marketing plans

lasts for two to five years; directed to top-level executives and board of directors

marketing plans that set direction for the marketing activities of an organization

long-range plans and annual marketing plans

success (effective and appropriate)

market program achieves its objectives

failure (ineffective, and inappropriate)

market program flounders and fails to achieve its objectives

how can firms achieve growth with innovation

marketing departments working closely with R&D and operations departments to complete successful innovation projects

which metric is easier to measure

marketing inputs

planning output report

marketing plans (situation swot analysis, market product focus, marketing program)that define goals and the marketing mix strategies to achieve them

input metrics

measure efforts going into developing new products

"increased customer value" can take many forms:

more products, improved quality on existing products, lower prices, improved distribution, and so on.

example of input metrics

number of ideas or concepts in the new-product pipeline and r%d spending as a percentage of sales

generic business strategy (michael porter) aka porter's framework

one that can be adopted by any firm, regardless of the product or industry involved, to achieve a competitive advantage

share points

percentage points of market share, as the common basis of comparison to allocate marketing resources effectively for different product lines within the same firm

example of market penetration strategy

procter and gamble: concentrated in becoming the market leader, increased customer satisfaction, increased market share

Matrix Organization

product groupings + market-based groupings

what are different the divisional groupings that most marketing organizations use?

product line, functional, geographical, and market-based// goal: to implement plans and achieve their organizational objectives.

benefits to product manager system

product managers become strong advocates for the assigned products, cut red tape to work with people in various functions both inside and outside the organization and assume profit-and-loss responsibility for the performance of the product line.

sales response function

relates the expense of the marketing effort to the marketing results obtained

differentiation strategy

requires products to have significant points of difference in product offerings, brand image, higher quality, advanced technology, or superior service to charge a higher price while targeting a broad array of market segments. (allows firm to charge price premium)

Differentiation

requires products to have significant points of difference to target one or only a few market segments

Implementation output report

results that describe the outcomes of implementing plans

example of output metric

revenue growth due to new g&s and customer satisfaction

toyota best known for

revolutionizing auto manufacturing

geographical groupings

sales territories are subdivided according to geographic location. Each director of sales has several regional sales managers reporting to him or her, such as western, eastern, and so on.

costco's focused strategy

sell a limited selection of branded high-end merchandise at low prices

capitalist's dilemma (christensen and van bever)

since the recession some companies have preferred to retain capital rather than invest in new products

trouble (ineffective, appropriate)

solution lies in recognizing tht only implementation is at fault and correcting it

trouble (effective, innapropriate)

solution lies in recognizing tht only the strategy is at fault and correcting it

Product/ Program Champion

someone who is able and willing to cut red tape and move the program forward. Such a person often has the uncanny ability to move back and forth between big-picture strategy questions and specific details when the situation calls for it. Program champions are notoriously brash in overcoming organizational hurdles.

For example, General Electric's continuing leadership in lighting combines

strong innovative products (planning and strategy) with excellent advertising and distribution (implementation and execution).

functional groupings,

such as manufacturing, marketing, and finance, which are the different business activities within a firm.

line positions

such as senior marketing manager for Biscuits, have the authority and responsibility to issue orders to the people who report to them

what does individual management tools and techniques have no direct relationship to?

superior business performance

marketing ROI

the application of modern measurement technologies to understand, quantify, and optimize marketing spending

dangers to product manager system

they have relatively little direct authority, and so most groups and functions must be coordinated to meet the product's goals.

through what means can marketing ROI improve

through the effective use of marketing metrics and dashboards

critical step in the external analysis is

to assess how these merger and acquisition strategies provide the organization with synergy—the increased customer value achieved through performing organizational functions more efficiently

corporate and marketing executives search to find a competitive advantage. whts the competitive advantage?

unique strength relative to what competitors are doing now and are likely to do in the future

example of market development strategy

walt disney: market expansion

ikea's cost leadership strategy

warehouses and electronic data interchange with its suppliers-->huge cost savings

value-driven strategies

which incorporate concerns for ethics, integrity, employee health and safety, and environmental safeguards with more common corporate values, such as growth, profitability, customer service, and quality.

management by exception

which means identifying results that deviate from plans to diagnose their causes and take new actions.

program schedules,

which show the relationships through time of the various program tasks. Scheduling an action program involves (1) identifying the main tasks, (2) determining the time required to complete each, (3) arranging the activities to meet the deadline, and (4) assigning responsibilities to complete each task.

market-based groupings,

which utilize specific customer segments, such as the banking, health care, or manufacturing segments.

strategic marketing process

1. Planning 2. Implementation 3. Evaluation

four basic business management practices

1. Strategy 2. Execution 3. Culture 4. Structure

the four basic generic stategies

1. cost leadership 2. differentiation 3. cost focus 4. differentiation focus

increasing revenues

1. market penetration 2. product development 3. market development 4. diversification