Drivers for Change

Change is inevitable and in marketing it is a constant.  Strategic marketing plans are not static documents, they live and need to be refined and amended constantly.   Too many organisations see business planning as an annual chore, something that takes place at the start of the financial year.  In previous blog posts, I have discussed the fact that many small businesses have no forward plan – and those that do probably only look forward for no longer than twelve months.

For a business to grow and to thrive in the long-term, you need, at least, to have widely defined long-term goals.  A strategic marketing plan should look forward three or five years.  There should be set aims for the end of that period.  Within the plan there should be incremental SMART objectives which must be met.  These are stepping-stones to the achievement of the long-term goals.  Incremental objectives should reflect the speed of the industry or sector within which the business operates.  For many businesses an annual goal will be the norm.  However, consider H & M, the fashion retailer, they have short-term strategic goals counted in weeks.  They can turn around their stock inventory in eight weeks, a fraction of the time of other high street fashion retailers.

Here are some prominent drivers of change:

  1.  Customer Expectations:  Do you find that ‘customers are demanding the impossible with increasing regularity’?  Consumers have become used to their needs and wants being at the forefront of highly competitive markets such as fast-moving consumer goods (FMCGs), groceries and fashion.  Now they expect the same of services and non-commercial organisations e.g. local government.  As consumer expectations intensify, concepts such as brand loyalty and retention may appear less effective.  You have to work harder to hold onto existing consumers as they become less loyal to your brand.  You certainly cannot take their loyalty for granted.  Consumers are facing an explosion of choice.  So if a consumer feels a brand is falling behind its competitors or that they are being taken for granted, they will switch to a competitor.  If you are perceived as not giving them what they want, when they want it, and at what they see as a reasonable price, they will switch.  Consumers no longer have to put up with second choice.  Loyalty has to be earned, it is not a right.  Astute managers will use customer demand for their products to drive through organisational change.   The ability to investigate and understand market changes is crucial to an organisation’s survival into the future.  It isn’t just knowledge of the factors behind change which is required.  You must have the ability to communicate those factors to all the stakeholders of the organisation.
  2. Revenues:  Cash, profits and turnover are the lifeblood of an organisation.  All to often they are the primary focus of senior management and investors.  If there is a recession, cuts will be made.  If there is a bull market, firms will expand and market manoeuvres (playing with the gears).  In downturns cost-cutting takes place (hitting the brakes) and there can be financial manoeuvring.  Such activity can quickly exhaust an organisations financial reserves.  When things start to pick up, and business sees the potential for further income and growth from their target consumers they increase activity (hitting the accelerator).  But again, customer have to be top of the agenda and marketing managers must push that agenda.  Long-term revenues come through product quality and customer retention, not price.  If you don’t build a customer-focused top line, there won’t be a bottom line to count.
  3. Competition:   It isn’t just technology that is driving increased competition and breaking down market barriers.  We discuss technological change next.  Markets are fragmenting.  Competition is increasing in every market.  It is an ever intensifying battle to gain new customers and to retain customers.  There are also an increasing number of new market entrants looking to disrupt market norms.  As consumers have more choice than ever before, it is crucial that a clear and differentiated position is developed.  You must give consumers good, simple and relevant reasons to choose your product over that of your competitors.  Customer value and customer orientation are crucial to surviving white-hot competition.  Increasing competition is a high-profile driver for change.
  4. Innovation:  There is much discussion and promotion of market disruptors; businesses which use new technological solutions to overturn market norms and ways of operation e.g. Uber, AirBnB.  There are also many column inches being devoted to automation; the use of artificial intelligence and new electronic technologies to replace jobs in service industries currently carried out by people.  For example, Associated Press have developed an application that can produce 4000 thousand short news stories per second with little or no input from journalists.  It is estimated that 40% of all jobs in the USA will be replace by artificial intelligence over the next two decades.  Priority areas for automation are the likes of customer services and routine sales.  However, innovation shouldn’t be for innovation’s sake.  Innovation should be targeted at product innovations which provide customer value, increased market share and profitability.  The innovation must produce solutions which were more relevant to consumers.  It must also be remembered that uncontrolled or excessive innovation can be a business risk.
  5. Cheap Imports:  The world is filled with cheap products made in China, India and other developing countries.  These countries often have huge levels of available human and other resources.  Labour is cheap and regulatory enforcement is low.  Does your firm want to fight these countries bargain basement costs?  Surely it is better to develop a customer focused, added value, option?

Change has to be managed but the reasons behind that change must be communicated.  I used to work in local government and can point to several examples where change was initiated terribly.  One example was the merging of two services due to local government reorganisation.  The following factors were in evidence:

  • The management tried to force a new culture onto staff from different organisations.  It must be remembered that culture belongs to all stakeholders within an organisation not to the management of that organisation.  Management controls process not culture.
  • The management initiated change which was a copy of the activities of other organisations.  They did not research whether these changes were a suitable solution for their organisation.  The local authority in question was a large rural council yet the changes to be applied came from small urban councils with staff based in a single office.  In applying the changes, the managers of the authority ignored the environment in which they worked.
  • The management of the council stated that they wanted to consult staff on the changes.  Members of staff, including me, responded to the consultation giving alternative, and in my opinion, better, and cheaper, solutions to the reasons behind the change.  These were ignored.  All management achieved was the complete alienation of the staff tasked with service provision.  they also ignored crucial factors such as economies of scale.
  • The change process became increasingly secretive and when staff questioned management decisions, all communication was shut down.  Rather than a goals down, solutions up process, the organisational change became a wholly top down dictatorial exercise.
  • As management began to realise their plans were increasingly unworkable, they began to lie.  For example, they claimed that they were creating a matrix organisational structure but all organisation charts were traditionally hierarchies.  Some staff pointed out that the new structure meant the authority was in danger of breaching its statutory obligations, in particular the law relating to staff qualifications.  These warnings were dismissed as ‘a little local difficulty’.  No solutions to these intractable issues was ever found.
  • Most importantly, the changes implemented by management were inward-looking. They were all about internal organisation and managerial power games.  The group of stakeholders who were completely ignored were the service users; the council’s customers.  Massive changes were implemented without reference to the needs and wants of the council’s customers.  There was a complete absence of customer-focus.

Why do many small firms incorrectly define marketing?

I recently bought a marketing text which includes Chapters by prominent academics such as Professor Malcolm McDonald of Cambridge Business School.  In the book, Professor McDonald despairs about the state of the marketing profession.  he argues that in too many businesses marketing is side-lined as a peripheral business function and not treated as part of a business’s core strategic development.

All to often, Professor McDonald argues, marketing is seen as a function of a firm’s sales team and when organisations say they need to do marketing, they are talking about promotion and advertising.  One of the examples he gives is the house building industry and it can be seen just around the corner from my home.  A new estate is being built and at its entrance is a temporary building emblazoned with the words ‘Marketing Suite’.  This firmly places the word marketing within the definition of ‘the place you come to get sold to’.

Professor McDonald is also critical of the Chartered Institute of Marketing for stating that: ‘Marketing isn’t a function; it’s an attitude of the mind’. He feels this statement is deficient.  How do you measure, research protect and examine an attitude of the mind.

A better way to define Marketing is as the process of:

  • Defining markets
  • Identifying customer groups in those markets
  • Quantifying the needs of those customer groups
  • Creating value propositions to meet those needs
  • communicating those value propositions
    • to the staff who deliver them; and,
    • to those who need them
  • playing an appropriate role in delivering those value propositions (usually through communication); and,
  • monitoring the actual value delivered.

In short, marketing properly calibrated within a business is at the core of corporate strategy development and delivery.  The marketing process is fundamental in determining corporate success.

It must also be remembered that the marketing process is cyclical.  Changes need to be made as the environment the business operates within changes.  Changes to strategy need to be made as customer demographic change.  Marketing is a process of adaptation.  It is a critical process for business leaders.  Corporate boards need to understand that customer satisfaction is key to profitable success and they need to share this common understanding will all stakeholders in the organisation.  Business strategies need to be evaluated against the market.  Tactical marketing activities need to be implemented within the context of market-led strategies.  Customer satisfaction is not a function of the marketing or complaints department.  Marketing has a central role in creating sustainable competitive advantage.

The aim of a business is to produce high returns for stakeholder investment.  This is the true ‘bottom line’.  Some firms use sharp accounting practices to give the impression of high returns; others pair costs to the bone; but such returns are best achieved by placing marketing at the core of your business strategy.



How marketing affects your organisation

Most senior business managers and business proprietors see marketing in terms of contact with individuals and groups external to their organisation.  Many only see it in terms of the promotion of their goods and services to customers.  In the last blog entry, it was shown that marketing has a far wider impact on an organisation and that it affects all its functions.  It is clear that a strategic marketing plan has significant implications for the internal processes and the people within an organisation.

The Oxford English Dictionary defines an organisation as an organised body of people with a particular purpose e.g. a business.  Wikipedia defines an organisation as a formal group of people with shared goals.  Note, shared purpose and shared goals.  If members of an organisation are unsure of their purpose in that organisation or if they are unsure about the goals of an organisation, it is possible that the organisation will fail and it is probable that it will fail to meet its defined goals.

Napoleon Bonaparte is quoted as saying:

“A man does not have himself killed for a half-pence a day or for a petty distinction, you must speak to the soul in order to electrify him”

Napoleon was, of course speaking about sending his men into battle.  He knew that if his goal was to be achieved, he needed men who ‘bought in’ to his vision and goals, not just men who turn up for money or medals.  Businesses are also in a sort of battle, competition, and therefore you need to have staff who both understand and who support your competitive goals.  You need to develop those people and to include them in the decision-making process.

Organisations are about people.  A commercial organisation involves organising the energies of the people who comprise it, to deliver its benefits to those outside the organisation; the customer.

To successfully deliver a marketing strategy, you need to know how people inside and outside your organisation think and behave.  This level of this understanding will have a major impact on how the short, medium and long-term.

An organisation needs to know what its core competencies are.  These include its unique core competencies, its competitive core competencies, its future core competences and its latent core competencies.  Many of these competencies will lie with its people.

Strategy that isn’t implemented is a waste of time and energy.  Marketing strategy that does not include every member of an organisation WILL NOT BE IMPLEMENTED.

The focus of many managers on marketing communications, product specifications or productivity rates, has blinded them to the critical importance of developing a customer focus across all functions of their organisation.

One of my marketing lecturers during my post-graduate marketing studies  tells of one such example.  He worked for a firm making carpet tiles as marketing manager.  He visited the shop floor and found the quality of many of the tiles was extremely poor.  The production manager shrugged his shoulders and said that customers could always return the ill-fitting tiles. My lecturer blew his top.  How could he promote and sell the product to customers if the product was so inconsistently produced.  The production managers sole concern was to produce as many tiles as he could as quickly and as cheaply as he could.  His productivity focus was hampering the organisation in meeting its corporate goals.

Remember, extended marketing mix includes aspects which are largely internal to an organisation such as people, process and place.  You must spend both effort and time developing a customer-focus across your organisation.  It is also important that your products, your processes and your promises match the efficiency of your marketing communications.

There is a whole sub-profession within marketing.  That of the internal marketer.  These individuals are wholly tasked with ensuring that management know the views and skills of an organisation and with communicating the organisations shared goals and values to its members.  A huge part of their role is ensuring that members of an organisation both ‘sing from the same hymn sheet’ and understand why that hymn sheet exists.  They are also a conduit for communication between an organisation’s leaders and its members.

When you think of marketing in the future, do not think of it as a process affecting only those external to your organisation, it has a major effect and importance to the internal activities of your business.


Mission, vision, aims and objectives

A strategic marketing plan aims to address four questions in relation to an organisation:

  • Where are we now?
  • Where would we like to be?
  • How do we get there? and
  • Are we on course to meet that target

So a strategic marketing plan should:

  • Define the ‘mission’ of the business
  • Audit the existing market
  • Identify strengths and weaknesses
  • Set objectives
  • Develop a core strategy which takes account of target segments through variations in the marketing mix
  • Set timescales and describe control measures

Regarding the first of these actions; defining the business mission, I have come across several organisations who seem confused as to what their mission is.  In many cases they confuse the business mission with their commercial vision.

Ackoff defined the mission of a business as, “A broadly defined, enduring statement that distinguishes a business from others of that type i.e. It must last over time, be specific to the organisation and be a source of differentiation.

Many business mission statements I have read are too generic or they do not accurately define the business and more importantly, its culture and values.

A business mission statement is about the present situation; the ‘here and now’.  A vision statement should represent the future i.e. where you want the business to go not where it is now.

A vision statement is usually short, often a single sentence or phrase.  For example Samsung’s current vision statement, which runs until 2020, is ‘Inspire the world, create the future’.  Lloyd’s Banking group’s vision is ‘To be the best bank for the future’.

Mission statements are usually, but not always longer, running to a couple of paragraphs or a page of bullet points.  A mission statement should:

  • Describe the customer group to be served.
  • Refer to the customer needs to be satisfied.
  • Describe the process through which those needs are to be satisfied.

Google’s mission statement is: “To organise the world’s information and make it universally acceptable and usable”

For many years, Canon Photocopiers mission statement was ‘Beat Xerox’.

Often a mission statement gives wider intent than the physical actions of a company.  For example, Apple’s mission statement makes no mention of the manufacture and sale of computers, phones and digital music players.  It is to “solve customer’s information problems”.

An effective mission statement should:

  • Show a solid understanding of the business.
  • Show the strong personal conviction of the business leader and their motivation.  For example, Disney’s mission statement is to ‘make people happy’ reflecting the motivation of its founder Walt Disney.
  • Create the strategic intent of winning throughout the organisation.  It should build common purpose.
  • Enable success:
    • by giving managers the authority to make strategic decisions without micro-management by senior managers.
    • Senior managers role is to reflect the interests of stakeholders through policy development and monitoring those policies.

An appropriate and accurate mission statement is key to marketing planning.  It defines which opportunities and threats are to be addressed and it defines the boundaries which new opportunities must be set within.

Where a mission statement is either too long, or short, to easily communicate, a marketing plan will often include an elevator pitch.  This is a short description of what a business is about.  It is written with a journey in an elevator.  You get on at the ground floor with another passenger and by the time you get out at your destination you have described your business to that other passenger.

Once you have properly defined your businesses vision and mission, it is time to set aims and objectives.

Aims relate to the long-term and to the business vision.  Samsung’s vision statement related to the decade between 2010 and 2020.  If these aims are met, the organisation will achieve its vision.

Objectives relate to the current business mission.  They are for the shorter-term and should be SMART (Specific, Measurable, Achievable, Realistic, Time-bound).  Often they are set annually and they should be reviewed regularly.

In the sitcom ‘Only Fools and Horses’ one of the character Del Boy’s catchphrases is an example of a very poor business objective:

  • It is not specific.  It does not say how the Trotters are to become millionaires and it usually refers to the latest money-making wheeze or scam.
  • There is a time limit but is it realistic? As Del Boy is usually operating on the margins of bankruptcy, how achievable is it that he will earn a lot of money quickly?
  • There is no indication as to how this target will be monitored e.g. is there any measurement of income on a weekly or monthly basis, measurement of increases in sales or growth in the customer base?

The vision statement, mission statement, aims and SMART objectives are the framework around which a successful marketing strategy, and a successful business are built.

Marketing strategy: Central to your organisation

The traditional view of marketing is that it deals with the relationships between an organisation and its external stakeholders.  This view, that marketing relates to the promotion of goods and services alone, is long out of date.  Modern theory states that marketing as a strategic function of business is as concerned with the internal culture and processes of an organisation as it is with external commercial relations.

For example, in his book Marketing Strategy: The Difference Between Marketing and Markets, Paul Fifield presents his model of developing a marketing strategy.  He uses the mnemonic SCORPIO:

  • Segmentation
  • Consumers
  • Organisation (processes and culture)
  • Retention Strategies
  • Positioning and Branding
  • Industry or Market thinking
  • Offerings

Note that Fifield places the internal relationships within an organisation, its culture and processes at the heart of developing a successful marketing strategy.

The Oxford English Dictionary defines an organisation as “an organised body of people with a particular purpose e.g. business”.

When developing a marketing strategy, the following internal aspects of an organisation need to be taken into account:

  1.  A clear definition of what makes up the organisation and what people are in it, i.e. does it include sub-contractors, agency staff or franchisees?
  2. Who are the management, what roles do they have and do they address the four basic tenets of management –
    1. Managing change;
    2. Resolving conflict;
    3. Optimising efficiency; and,
    4. Delivering strategy.
  3. Who are the staff, the people who actually deliver the organisation’s benefits to stakeholders and who satisfy customer needs.  Do they understand WHY they do certain activities and what benefits those activities bring to customers?  Is there a common view amongst staff as to the why? Do they properly understand what their role contributes to the organisation? Staff means all staff in the organisation, not just certain groups such as middle managers or a selected clique.
  4. Process – This is the glue which binds an organisation together.  It should unite customers, management and staff.
  5. Change – The lifeblood of organisations.  Those organisations which are best at handling change will always be among the most successful organisations.

It is important to note that People and Process are critical elements of the extended marketing mix.

To develop a successful marketing strategy, an organisation’s internal focus should be directed to satisfy the needs of external stakeholders.  This is a customer focused organisation.  An organisation that becomes obsessed with internal structures will not produce satisfactory results.

To develop a successful strategy, you need to concentrate on what an organisation is really good at and ensure those activities are what your customers want.  Those activities must :

  • Provide client benefits
  • Be difficult for competitors
  • Be leveraged widely to different targeted market segments.

An organisation must invest in those activities which provide difference and core competencies must be central to its operations.  Those core competencies must be a distinct source of differentiation in the marketplace.

An organisation’s culture does not belong to its management; it belongs to everyone within that organisation.  Management cannot control or impose a culture.  They can only influence that culture by defining clear and sensible processes which are fully understood by the membership of the organisation.  It is also difficult for someone who is part of an organisation to see exactly what the culture is. Organisational cultures can be self-protecting and can resist attempts to change their nature. ‘the way we do things round here’ belongs to the attitudes and beliefs of an organisation’s staff, not its management.

So if you are looking to change an organisation and the internal aspects of its marketing strategy, a top down, secretive, dictatorial approach will likely flounder.  Instead you need to involve staff in the process and give them sufficient information so that the understand the reasons why change is being made.  If staff feel they are not being trusted, there can be direct effects on the organisation’s relationships with its external stakeholders.

Management must behave internally as they expect their staff to behave externally and in a manner which is in accordance with the organisation’s offer.  Management of a firm offering a low-cost product or service should not behave as if they are operating a high margin business where money grows on trees.

I remember a local authority where management all signed up for car lease deals which provided prestige vehicles such as BMW’s and Mercedes.  The local authority, like most, was continually being asked to make efficiency savings and some services were being reduced.  Meanwhile, the council office car park increasingly looked like a luxury car showroom.  Even though the management were paying for the cars through their salaries, the impression given was that Council money was being wasted on expensive management perks whilst residents were having their services cut.  Suffice to say, there was significant cognitive dissonance amongst council tax payers and local politicians received many complaints.  This was a clear example of an organisations culture being at odds with its role and ‘market’ position.

Remember, marketing strategy is not just about the exterior gloss on an organisation.  It sits at an organisation’s core and it affects the internal operation of an organisation not just its external communication with stakeholders.