12 guidelines for effective marketing

Understand the sources of competitive advantage Figure 2.9 shows a universally recognized list of sources of competitive advantage (Port...

Understand the sources of competitive advantage

Figure 2.9 shows a universally recognized list of sources of competitive advantage (Porter, 1985). For small firms, these are more likely to be the ones listed on the left. It is clearly possible to focus on highly specialized niches with special skills and to develop very customer-focused relationships not possible for large organizations. Flexibility is also likely to be a potential source of competitive advantage.

Understand the sources of competitive advantage

What all firms should seek to avoid wherever possible is competing with an undifferentiated product or service in too broad a market. This leads on to the second point.

Understand differentiation

Guideline 2 takes this point a little further and spells out the main sources of differentiation.
In the box below, the fifth item in the list, superior service, in particular is likely to be the main source of competitive advantage, and firms should work relentlessly towards the differential advantage that these sources will bring.

Understanding differentiation covers:
● superior product quality;
● innovative product features;
● unique product or service;
● strong brand name;
● superior service (speed, responsiveness, ability to solve problems);
● wide distribution coverage.
It is essential to be committed to innovation. Continuously strive to serve customer needs better.

Understand the environment

Guideline 3 spells out what is meant by the word ‘environment’. Although this one will be the least appealing to many organizations, nonetheless there is now an overwhelming body of evidence to show that it is failure to monitor the hostile environmental changes that is the biggest cause of failure in both large and small companies. Had anyone predicted the transformation of IBM over a decade ago, they would have been derided. Yet it was their failure to observe the changes taking place about them that caused a strategic rethink.

Clearly, marketing has a key role to play in the process. This means devoting at least some of the key executives’ time and resources to monitoring formally the changes taking place about them. If they do not know how to go about doing this, they should get in a good consultant to start them off and then continue to do it themselves.

The macro environment:
● political/regulatory;
● economic;
● technological;
● societal.
The market/industry environment:
● market size and potential;
● customer behaviour;
● segmentation;
● suppliers;
● channels;
● industry practices;
● industry profitability.
Carry out a formal marketing audit.

Understand competitors

Guideline 4 is merely an extension of the marketing audit. Suffice it to say that, if any organization, big or small, doesn’t know as much about its close competitors as it knows about itself, it should not be surprised if it fails to stay ahead.

Again, if anyone is unsure how to go about this, use a consultant initially, although our advice is to use a modicum of common sense and sweet reasonableness in this process, stopping short, of course, at industrial espionage!

Closely connected with this is a final piece of information in this process we have referred to as a marketing audit.

● Direct competitors.
● Potential competitors.
● Substitute products.
● Forward integration by suppliers.
● Backward integration by customers.
● Competitors’ profitability.
● Competitors’ strengths and weaknesses.
Develop a structured competitor monitoring process. Include the results in the marketing audit.

Understand your own strengths and weaknesses

Guideline 5 sets out potential sources of differentiation for your own organization. It represents a fairly comprehensive audit of the asset bases. Along with the other two sections of the marketing audit (the environment and competitors), it is important to make a written summary of your conclusions from all of this. If you cannot summarize on a couple of sheets of paper the sources of your own competitive advantage, it has not been done properly. If this is the case, the chances are that you are relying on luck. Alas, luck has a habit of being somewhat fickle!

Carry out a formal position audit of your own product/market position in each segment in which you compete. In particular, understand by segment:
● what the qualifying features and benefits are;
● what the differential features and benefits are;
● how relatively important each of these is;
● how well your product or service performs against your competitors’ products or services on each of these requirements.

Understand market segmentation

Guideline 6 looks somewhat technical and esoteric, at first sight. Nonetheless, market segmentation is one of the key sources of commercial success and needs to be taken seriously by all organizations, as the days of the easy marketability of products and services have long since disappeared for all but a lucky few. The secret of success, of course, is to change the offer in accordance with changing needs and not to offer exactly the same product or service to everyone – the most frequent, production-oriented mistake of large organizations.

● Not all customers in a broadly defined market have the same needs.
● Positioning is easy. Market segmentation is difficult. Positioning problems stem from poor segmentation.
● Select a segment and serve it. Do not straddle segments and sit between them:
– Understand how your market works (market structure).
– List what is bought (including where, when, how, applications).
– List who buys (demographics, psychographics).
– List why they buy (needs, benefits sought).
– Search for groups with similar needs.

Understand the dynamics of product/market evolution

While at first sight Guideline 7 looks as if it applies principally to large companies, few will need reminding of the short-lived nature of many retailing concepts, such as the boutiques of the late 1980s. Those who clung doggedly on to a concept that had had its day lived to regret it.

Understand your portfolio of products and markets

Guideline 8 suggests plotting either products/services or markets (or, in some cases, customers) on a vertical axis in order of the potential of each for you to achieve your personal and commercial objectives as, clearly, they can’t all be equal. Organizations will obviously have greater or lesser strengths in serving each of these ‘markets’. For each location on the four-box matrix in Figure 2.10, put a circle, the size of which represents current sales. This will give a reasonably accurate ‘picture’ of your business at a glance and will indicate whether or not it is a well-balanced portfolio. 

You cannot be all things to all people. A deep understanding of portfolio analysis will enable you to set appropriate objectives and allocate resources effectively. Portfolio logic arrays competitive position against market attractiveness in a matrix form (Figure 2.10):

The McDonald Portfolio Matrix

● Box 1: Maintain and manage for sustained earnings.
● Box 2: Invest and build for growth.
● Box 3: Selectively invest.
● Box 4: Manage for cash.

Follow the guidelines given and there is no reason why any firm should not have a healthy and growing business.

Set clear strategic priorities and stick to them

Guideline 9 suggests writing down the results of your earlier endeavours in summary form (a marketing/business plan).

● Focus your best resources on the best opportunities for achieving continuous growth in sales and profits.
● This means having a written strategic marketing plan for three years containing:
– a mission statement;
– a financial summary;
– a market overview;
– SWOT analyses on key segments;
– a portfolio summary;
– assumptions;
– marketing objectives and strategies;
– a budget.
● This strategic plan can then be converted into a detailed one-year plan.
● To do this, an agreed marketing planning process will be necessary.
● Focus on key performance indicators with an unrelenting discipline.

While it is not our intention to stifle creativity by suggesting that any firm should get into a bureaucratic form of planning, it remains a fact that those individuals and organizations that can make explicit their intended sources of revenue and profits tend to thrive and prosper in the long term. This implies something more sophisticated than forecasts and budgets. This implies setting clear strategic priorities and sticking to them.

Understand customer orientation

Guideline 10 will be familiar to all successful firms. BS 5750, ISO 9001 and the like, while useful for those with operations such as production processes, have little to do with real quality, which, of course, can be seen only through the eyes of the customer. It is obvious that making anything perfectly that no one buys is somewhat of a pointless exercise.

● Develop customer orientation in all functions. Ensure that every function understands that it is there to serve the customer and not its own narrow functional interests.
● This must be driven from the board downwards.
● Where possible, organize in cross-functional teams around customer groups and core processes.

● Make customers the arbiter of quality.

While it is, perhaps, easier for small companies than for large companies to check out customer satisfaction, this should nonetheless be done continuously, for it is clearly the only real arbiter of quality.

Be professional

Guideline 11 sets out some of the marketing skills essential to continuous success. Professional management skills, particularly in marketing, are becoming the hallmark of commercial success in the new millennium. There are countless professional development skills courses available to all firms. Alas, too many directors consider themselves too busy to attend, which is extremely short-sighted. Entrepreneurial skills, combined with hard-edged management skills, will see any firm through in the new world of the 21st century.

Particularly in marketing, it is essential to have professional marketing skills, which implies formal training in the underlying concepts, tools and techniques of marketing. In particular, the following are core:
● market research;
● gap analysis;
● market segmentation/positioning;
● product life cycle analysis;
● portfolio management;
● the marketing mix (four or seven Ps):
– product management;
– pricing;
– place (customer service, channel management);
– promotion (selling, sales force management, advertising, sales promotion);
– people;
– process;
– physical evidence.

Provide leadership

Guideline 12 sets out the final factor for success.
● Do not let doom and gloom pervade your thinking.
● The hostile environment offers many opportunities for companies with toughness and insight.
● Lead your team strongly.
● Do not accept poor performance in the most critical positions.

Charismatic leadership, however, without the 11 other pillars of success will be to no avail. Few will need reminding of the charisma of Maxwell, Halpern, Saunders and countless others. Charisma, however, without something to sell that the market values, will ultimately be pointless. It is, nonetheless, still an important ingredient in success.

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