02.16.04
 By
Michael L. Perla
In a recent article, Andrew Ehrenberg writes that “many goals in marketing
are unrealistic” and “doomed to failure from the start.” His comments
appeared in a piece titled “Marketing: Are You Really a Realist?”
in Strategy+Business, the newsletter from Booz Allen Hamilton, the
global management and technology firm.
Ehrenberg, a professor of marketing at London South Bank University,
writes that marketers are “chasing rainbows” in setting impossible
objectives around sustained growth, brand differentiation, persuasive
advertising, profit maximization and knowledge management. |
As
implied by Ehrenberg’s commentary, the first objective is hyperbolic,
the second is futile, the third is temporary, the fourth is unrealistic
and the fifth is often unusable and ungeneralizable.
In a nutshell, Ehrenberg states that marketers need to set achievable
goals that fit within the marketing purview. This objective seems
reasonable. But it belies the fact that marketing’s outputs should
be an integral part of a company’s corporate and business unit strategies,
which often include profit hunts, growth initiatives, and brand extensions.
In many ways, marketing’s decisions are a company’s strategy, along
with some sort of feasibility analysis and a potential ROI check.
Four key areas are pertinent to any business/growth strategy, which
marketing should be prime on: which offerings, which segments, what
value proposition and which channels.
Which Offerings?
A fundamental business decision is which products and/or services
a company will offer. In general, the main objective is to fill a
need in a profitable manner. The first question is, What need are
you trying to fill? The second is, Can you fill it in a profitable
manner?
If you don’t know the answer to the first question, then it’s hard
to understand the customer benefits and your value proposition to
the market. If you don’t know the answer to the second question, you
could become another Pets.com or Webvan in losing hundreds of millions
of dollars (over a billion in the latter case) of other people’s capital.
Accordingly, the question around which offerings a company chooses
to develop and market is the essence of one’s corporate strategy,
and it is directly related to marketing’s circle of competence. The
product marketing or brand manager role typically aligns with this
strategic area, and is analogous to a general manager or president
of a single line of business, with one product/brand.
A couple of questions to flesh out this area:
1. What is the 80/20 (e.g., which 20% of offerings contribute
to 80% of your sales) with regard to your offerings in terms of revenue,
profits and growth?
2. How can you augment/extend your offerings to add more value
to your customers?
Which Segments?
 There
are hundreds of books on the art and science of segmenting customers
via demographics, psychographics, needs, etc. The subject could never
be exhausted in a couple of paragraphs.
Nevertheless, it’s important to understand what companies are tying
to accomplish. The essence of segmentation is to find relatively homogeneous
clusters that are profitable enough to penetrate and in which to execute
targeted marketing campaigns. There is also one-to-one marketing,
which is more personalized and customized for each customer, but is
still more similar than different since many of us have related desires,
goals, and needs.
Identifying a substantial segment allows a company to leverage some
marketing economies in utilizing its marketing resources. If there’s
a reasonable probability that all the customers in segment A think,
feel, and/or buy in a similar manner, then I can execute campaign
B, which is targeted for segment A, as a way to capture the awareness
and interest of a large group in an economical and efficient manner.
It’s sort of like the franchise model in that certain areas (locations,
demographics, segments) respond to a particular concept, no matter
what state or country or province.
A couple of questions to flesh out this area:
1. What are the best segmentation bases to use in identifying
substantial, actionable and reachable segments?
2. Which customers are most satisfied with your offerings,
and what other businesses have similar needs and/or characteristics?
What Value Proposition?
Once you understand what needs that your offerings are satisfying,
you have the potential to craft a unique value proposition to your
customers. As I’ve written elsewhere, value (like beauty) is often
in the eye of the beholder.
 However,
companies typically use a number of big buckets in defining value,
which may be different for any one buyer (see personal versus business
agendas/pain). As stated, value is often defined in a set number of
ways: financially (e.g., above the hurdle rate), strategically (e.g.,
the capture of a new market), and operationally (e.g., more efficient
processes).
Marketing is the area that should define the corporate value proposition,
which is shared with analysts and Wall Street; the unit value propositions,
which are aligned to the corporate version; and the offering value
propositions, which are unique to the customer needs that the offerings
are attempting to satisfy. The value proposition components should
be built by marketing, with marketing educating the sales force on
how to assemble, configure and adapt the components to each specific
selling situation.
A couple of questions to flesh out this area:
1. What are the key value proposition components that should
be a part of each value proposition, from corporate to unit to offering?
2. What will drive value for each of your customers in the
future, and how can you link to those expectations?
Which Channels?
In terms of channels (aka “place”), you’re typically looking at five:
Web, call center or tele-, field sales, partners (often called “the
channel”), and retail.
Depending on your business and your offerings, each channel has a
certain sweet spot. You’re probably not going to sell low-priced books
via a high-cost field sales channel, just as you’re unlikely to sell
multimillion-dollar enterprise solutions via a call center. In a nutshell,
marketing should analyze each offering, which channel it is best suited
for, and how customers want to buy.
A company’s merger and acquisition strategy and its go-to-market model
are dependent on marketing’s due diligence around its channels. Marketers
need to be involved in build or buy decisions and how they impact
their company’s channel, offering and segmentation strategies.
A couple of questions to flesh out this area:
1. How do customers “touch” your company in evaluating options,
buying products/services and getting post-sale service and support?
2. What is your company’s channel strategy in terms of your
offerings, your segments and your value propositions?
Summary
The net-net of this article is that marketing’s broad purview, as
discussed by Ehrenberg, should be aligned with a company’s corporate
and business unit strategies in terms of their foci on growth, profits
and brand equity. As widely discussed today, the strategy-to-revenue
gap is around the “operationalization” of strategy into something
that people can execute day to day while still keeping their eyes
on the larger goal.
Marketers should set broad, encompassing goals, but they need to make
sure that they operationalize and execute on their game plan and not
leave it to others to define for them. Setting success and process
metrics (see “Do Your Metrics Measure Up?”) up front is a powerful
way to deliver the message that marketing is all about accountability
and getting tangible results.
In some companies, the Chief Marketing Officer has a seat at the table
in setting strategy and direction. But in many other firms, marketing
is left outside the strategy room.
Although big goals can be somewhat nebulous, as Ehrenberg notes in
his commentary, it’s marketing’s responsibility to provide the content
and strategy to hit the stretch targets, which it needs to help set,
define and communicate.
*Originally published at MarketingProfs.com
About the Author:
Michael L. Perla is Principal Consultant with a leading customer relationship
management (CRM) software company. In a former life, Michael worked
as a school psychologist. He can be reached at michaelperla@bellsouth.net.
Read this newsletter at: http://www.MarketingNewz.com/2004/0216.html |
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| From the Forum: | | eBook Marketing Advice |
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