1 managing marketing performance introductions. 2 about david kilburn head of business development,...
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MANAGING MARKETING PERFORMANCE
INTRODUCTIONS
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about David Kilburn
• Head of Business Development, Associate Professor and DSGi Marketing Fellow, formerly Barclays Fellow
• DipM, MCIM, Chartered Marketer• Marketing management experience in retail industry- home
improvements, food, and consumer electronics• Worked part time for CMC for 5 years• Marketing Director for BSM Electronics• Store Director – WHSmith Do-It-All • Online marketing tutor/ Dissertation advisor for worldwide
MBA programme - Liverpool University • External Examiner for Marketing/Business University of
Wales in Spain and Italy• Marketing Tutor for ISTUD in Milan, Italy each summer
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ABOUT YOU!
• Tell us something about yourself– Who you are?– Where you work?– What your role is? – Your marketing experience?– Academic path?– Your involvement with strategic
marketing management issues?
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SETTING THE SCENE• Assignment or exam?
– Dates, requirements and deadlines
• Use College Web facilities• CIM Learning Zone and EBSCO• Reading• Study Guide – text book• Previous papers and answers• Examiners comments• Tutor Forum – February 2009• Webinars• Revision session – assignment session• Contact me –
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The 5 elements
1. Creating organisational context for effective implementation of strategy
2. Managing change and internal marketing
3. Implementing strategy through marketing activities
4. Management techniques for managing the marketing function
5. Measurement, evaluation and control
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Fit with overall pg syllabi
• Strategic marketing• Evaluation of performance• Internal analysis• External analysis• The global marketplace
ANALYSIS & EVALUATIONANALYSIS & EVALUATION
• Organisational context• Internal marketing• Implementing strategy• Managing marketing• Measurement & control
MANAGING MARKETING MANAGING MARKETING PERFORMANCEPERFORMANCE
• Competitive advantage• Innovation/reorientation• SMD in global marketplace• SMD in portfolio management• Investment decisions/control
STRATEGIC MARKETING STRATEGIC MARKETING DECISIONSDECISIONS
Learning outcomes only. No specified
syllabus elements
STRATEGIC MARKETING IN STRATEGIC MARKETING IN PRACTICEPRACTICE
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Scope of the syllabus
• ‘How to do the job of marketing’– relates to marketing practice
• Tests application rather than knowledge:– extend knowledge into thinking– from ‘what’ to ‘why’ and ‘how’
• Draws on a wide range of resources
• CONTEXT
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Focus
• The “How” of marketing rather than the “what”
• Delivery emphasis is on “ Listen and Challenge”
• Shift from analysis to critical evaluation
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MMP ‘AUDIT’
• Discussion with examiner
• Key points
• Tutor forum
• Last ‘diet’
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MMP Focus Meeting Feedback
• Key issues resulting from the first set of marking– Referencing is important but there is recognition
of the work based nature of the assignments and the increase thereby in Internet based referencing.
– Looking for sound theoretical underpinning– Looking for ‘Trail of evidence’ - linkage between
audit, selection of options and recommendations– Students need to define the boundaries of the
project clearly e.g. 1 or 2 products in 1 or 2 markets is enough
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MMP Focus Meeting Feedback
• Good practice– Trail of evidence– Support in audit findings– A good audit is: -
• Relevant to the topics• Linked to the report• NOT cut and pasted!
– Numbered report and good structure– Good index – KEY– Do mind maps to sort ideas prior to writing the
report
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MMP Focus Meeting Feedback
• Good practice more..– Evaluation (acid test is ‘so what?’)– Depth not breadth is critical
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MMP Focus Meeting Feedback
• Poor practice– Unapplied models (Senior examiner’s
bete noir) – vital to apply in context– Too much description not evaluation –
looking for ability to use data to discriminate in decisions
– Poor referencing – misspelling of authors’ names!
– Poor use of appendices – this is a business report
Grade Descriptors
• Example assignment from last assessment
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MY ASSUMPTIONS!
• You have prior knowledge and some experience of using the theories that apply to this syllabus
• If you are unsure at any stage – SHOUT!
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CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING PERFORMANCE
Session 1
The role and practice of leadership
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CIM Definition of Marketing
Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.
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Learning outcomes
• At the end of the session you will be able to:– Explain the role of the strategic leader in
managing marketing performance– Explain the role of the strategic leader in
achieving marketing orientation– Explain the role of the strategic leader in
building shareholder value through marketing activities
– Explain the role of the strategic leader in ensuring marketing effectiveness
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What is leadership?
• Leadership is the process of influencing others to work willingly towards the achievement of organisational goals.
• Leadership can be characterised in terms of traits or characteristics (of leaders) and styles (which are to be adopted).
• Leadership skills can be learnt and improved
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Manager or leader - differences?
Managers Leaders
Cope with complexity change
Address the present and the short term
the future and the longer term
Performance meets expectations
exceeds expectations
Focus controlling unlocking potential
(John Kotter)
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Models of leadership style
• Huneryager and Heckman; Likert– Dictatorial, autocratic, democratic, laissez-faire
• Ashridge Management College– Autocratic, persuasive, consultative, democratic
(omits the extremes at each end)– Tells, sells, consults, joins
• McGregor– Theory X and theory Y
• Hersey and Blanchard: situational leadership– Match the style to the development level of the
subordinatehttp://changingminds.org/disciplines/leadership/styles/
situational_leadership_hersey_blanchard.htm
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Mini Case -Autoglass:- Leadership success factors
• Customer driven• Energy, drive and change• Analytical thinker• Commercial ideas and action• Planner and implementer• Open communicator• Leading and motivating teams• Partnership builder (see handouts)
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Mini Case -Autoglass:- Leadership success factors
Question one
Think of two successful leaders that you have known, preferably selecting examples that display different approaches. Assess each of them in relation to the various Autoglass success factors.
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Mini Case -Autoglass:- Leadership success factors
Question two
Now consider a less effective leader. To what extent did he or she demonstrate the various success factors?
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What guides the organisation?
Strategy
LeadershipCulture
Employees
‘Strategic fit’
Values
Style
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Leadership skills (Belbin)
• Versatility• Feedback• Charisma• Integrity• Altruism
• Decision making• Problem solving• Initiating action• Fostering linkages• Assisting in
evolution and change
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What does the leader do?
• Adair identifies 8 leadership activities – Defining the task– Planning– Briefing– Controlling– Evaluation– Motivating– Organising– Setting an example
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Leaders determine how organisations develop
• Strategic choice theory (Stacey, 2003)
• Formulation and implementation of strategy are different
• It is the role of leaders to formulate strategy and to direct its implementation
• Theory of the learning organisation (Senge, 1990)
• Organisations evolve as a result of high levels of learning by individuals and teams
Marketing Management’s Role
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Life cycle of marketing
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Relationship marketing – implications for marketing practice
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Useful web-sites• www.shapetheagenda.com
– Go to ‘past agendas’ then select ‘hard edged marketing’.– The most recent paper on ‘managing marketing people’
is also worth a look
• www.wnim.com– What’s new in marketing
• http://www.thewisemarketer.com/– VERY GOOD!
• www.cim.co.uk• www.excellencenorthwest.co.uk/Resources/
Steve_Kempster_19th_July.ppt– A useful overview
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Minicase - Leadership
Consider a small manufacturing company, t/over circa £25m p/a, marketing team of 3 – Manager (you), executive and assistant. The corporate objective is to increase sales by 25% over the next 3 years and the marketing objectives are to increase brand awareness by 50% & the number of new prospects by 50%.
You need to increase your team by one, what are the leadership issues to consider?
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CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING PERFORMANCE
Session 2
Planning the team
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Learning outcomes
• At the end of the session, you will be able to:– Appraise the requirements of a given set of
tasks and their context, and assess the impact of relevant factors on the creation or development of a team to perform those tasks.
– Determine the skills, characteristics and roles required within a team to carry out specific tasks effectively.
– Prepare a plan showing how the team should be structured, selected, formed and developed to ensure effective performance.
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A group is a collection of people …• …. who perceive
themselves to be a group!
• In ‘Understanding Organisations’ Charles Handy differentiates a group from a random collection of individuals.
• Members of a group:– have a common sense of
identity and belonging– are loyal to the group and
conform to its standards
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A group is not a team: teams have synergy
• A team is a small number of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable
• Katzenbach and Smith, The Wisdom of Teams, 1994
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Groups become teams when they have a sense of purpose
• Needs are complex and multi-layered and need to be managed as such (Adair)
• Their members play particular roles (Belbin)
• They are likely to pass through stages of development (Tuckman)
• Their effectiveness depends on their terms of reference and their conduct (Handy)
• Leadership is key (Ashridge; Belasco & Stayer)
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6 differences between a team and a group (Belbin)
Teams Groups
Size Limited Medium/large
Selection Critical Limited
Leadership Shared/rotating Solo
Perception Mutual knowledge Focus on leader
Style Role spread Conformism
Spirit Dynamic interaction Togetherness
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John Adair identified 3 overlapping needs
Task needs
Group needs
Individual needs
Task RolesInitiatingInformation SeekingStrategic planningEvaluatingDecision-making
Individual maintenance rolesObjective settingFeedbackRecognitionTrainingEmpowermentCounselling
Group maintenance rolesEncouragingClarifying visionStandard settingPeace-keeping
www.johnadair.co.uk
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Team skills, characteristics and roles
• Need for key competences across the team
• Need to achieve a balance of personalities and skills
• Need to consider the tasks to be undertaken, the individuals who make up the team, and the cohesiveness of that team
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Designing a team
• Meredith Belbin identified 9 distinct management roles– Chairman - presides and has a co-ordinating style– Shaper- team leader with a directive style– Plant- introvert but intellectually dominant/ imaginative– Monitor/ Evaluator - analytically intelligent/ critical– Resource Investigator - source of contacts.– Company Worker / Implementer - getting the job
done– Team Worker - handles personal relationships in the
team– Completer/ Finisher - keeping the team to
its deadlines– (Specialist)
www.belbin.co.uk
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TEAM DEVELOPMENT (TUCKMAN AND JENSEN)
• STAGE 1 - Forming
• STAGE 2 - Storming
• STAGE 3 - Norming
• STAGE 4 - Performing Tuckman (1965)
• STAGE 5 - Dorming Tuckman and Jensen (1977)
2
3
4
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Choosing the right people is not always straightforward
eligibilityentry criteria
suitabilityperformance criteria
qualificationsrelvant experience
referencesacceptability(at interview)
aptitudeversatility
assessmentsrole fit
(with others)
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Forming and developing (marketing) teams
• Teams don’t just ‘happen’
• There is a process
• Leader needs to nurture the team through these stages of development
• Recruit for attitude, train for skill
• Consider motivational and morale issues
• Consider the personal and skill development needs
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Handy: team effectiveness
The Givens
memberstask
environment
The Intervening Factors
motivationprocesses + procedures
leadership
The Outcomes
productivityteam satisfaction
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Planning and control is a discipline
• Plan, do, check and adjust (PDCA)– Plan what is to be done– Do it– Check that it has been done right– Adjust: make any changes necessary
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Types of Teams
• Multi-disciplinary
• Multi-skilled
• Project
• Virtual
• Managers role – prioritisation, planning, control, decision making & problem solving
• Leadership
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Virtual teams
• No manager: this makes them very democratic
• No meetings: this is enabled by modern technology
• No organisation or structure: members are typically multi-skilled
Case Studies
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Finally: Elton Mayo and the Hawthorne studies
• Performance responds to attention• People perform better if they perceive that
they are a group singled out for attention– Tom Peters….
• Relationships within work are important to employees
• Groups develop spontaneously and can set their own rules, attitudes and standards
• www.accel-team.com/human_relations/hrels_01_mayo.html
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Useful web-sites
• www.belbin.com– A basic introduction to Belbin ideas
• www.teamtechnology.co.uk– Leadership, management, teamwork and
business
• www.buildingyourteam.com– Free articles and tips for team building
• www.greatplacetowork.com– Does what it says on the tin
• www.johnadair.co.uk– Leadership and management
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CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING PERFORMANCE
Session 3
Developing and managing teams
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Learning outcomes
• At the end of the session, you will be able to:– Demonstrate an ability to manage the work of
teams and individuals to achieve objectives and create effective working relationships within the team and with other teams
– Critically evaluate the productivity, satisfaction and effectiveness of teams against their objectives using appropriate techniques.
– Analyse the causes of any sub-optimal performance and recommend how to improve the team’s performance, including plans to improve motivation, commitment and loyalty.
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Motivation: what is it and what’s the theory?
• Motivation is simply reason(s) for behaviour• There are two types of theories:
– Content theories eg Maslow (hierarchy of needs) and Herzberg (two-factor theory)
– Process theories eg Vroom (expectancy theory) and Handy (motivation calculus)
Action ResultNeed Want
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Maslow’s hierarchy of needs
Physiological Needs
Safety Needs
Love/Social Needs
Esteem
Self-
actualisation
Fulfilment of potential
Independence
Relationships, affection, belonging
Security, order, predictability, freedom
Food, shelter
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Maslow
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Herzberg
• Herzberg identifies two factors which affect motivation at work:
1.1. Hygiene factorsHygiene factors – elements which cause job
dissatisfaction
2.2. The motivatorsThe motivators – elements which cause job satisfaction
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Handy’s motivational calculus
• Each individual has a motivation calculus which is concerned with:– Energising behaviour;– Direction of behaviour; and– Sustaining behaviour
• Motivation is based on strength of need• E= effort, energy, enthusiasm and
expenditure of time, resources and passion
• http://www.businessballs.com/charleshandy.htm
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Schein (1965) says that different people are motivated in different ways
• Rational economic: scientific management• Social man: human relations• Self-actualising man: Maslow/Herzberg• Complex man: all of the above
• Schein, E.H. (1965) Organisational Psychology. Prentice-Hall Inc, New Jersey
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Schein also talks of a psychological contract
• This exists between individuals and their employer:– Coercive: employee feels he/she is being
forced to contribute– Calculative: employee accepts a reward/effort
relationship– Co-operative: employee identifies with the
organisation
• Motivation exists when both the individual and the employer view the contract in the same way.
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Then the accepted motivators are well known
• Job design, enrichment, enlargement and rotation
• Participation in decision making and empowerment
• Pay and incentive schemes– Individual and group
• Good people management
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Creating effective working relationships
Nine strategies for creating trust (Robbins & Finley)
• Have clear, consistent goals• Be open, fair and willing to listen• Be decisive – and how to be
decisive• Support all other team members• Take responsibility for team
actions• Give credit to team members• Be sensitive to the needs of
team members• Respect the opinions of others• Empower team members to act
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Evaluating team performance
• Performance management/performance appraisal systems
• Review achievement to objectives• Discuss progress of the team and of
individuals• Look forward – don’t slip into a ‘blame
culture’ approach• Learn lessons from mistakes and move on• Review regularly• Give recognition and praise where due• Celebrate team success
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Be sure about 4 key factors
• Goals– must be established at the forming stage
• Roles– Should be established before the
norming stage
• Processes– Often get developed during storming
• Relationships– Critical for performing
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Management of Peripheral Workers
• What sort of working?
• Benefits
• Challenges
• Management Challenges– Trust– Communication– Measurement & achievement– Involvement
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Summary
• Forming and developing marketing teams– Teams don’t just ‘happen’– “Forming, storming, norming and performing”– Leader needs to nurture the team through these
stages of development– Recruit for attitude, train for skill– Consider motivational and morale issues– Consider the personal and skill development
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Minicase – Motivation & Team Management
In your small marketing team of 5 there is a manager, 2 executives and 2 assistants. One of the executives is not performing to full strength and complains a lot!
Taking the role of manager, discuss how you would try to motivate this executive and how you would manage this situation going forward?
Which theories might assist in your management strategy?
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LUNCH
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CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING PERFORMANCE – Managing Change
Session 4
Strategic marketing, culture and change
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Learning outcomes
At the end of the session, you will be able to:• Recommend how an organisation should
become more strongly market oriented, taking into account the nature of its environment and culture.
• Assess the main pressures on an organisation to change and the initiatives available or being used to respond.
• Critically evaluate the role and content of an internal marketing communications plan and its contribution to managing change in an organisation.
Market Orientation
• Definition 1– ..entails one of more departments engaging in
activities geared towards developing an understanding of customers’ current and future needs and the factors affecting them, sharing of this understanding across departments and the various departments engaging in activities designed to meet select customer needs
(Kohli and Jaworski, 1990)
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Market orientation
An organisational culture where beating the competition through the creation of superior customer value is the paramount objective throughout the business.
– Oriented towards customer– Alert to competitive situation– Co-operation between functions– Emphasis on profit, not turnover– Responsiveness to changes
• (Piercy, Market Led Strategic Change, 2001)
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Market Led Strategic Management
• Market orientation– ‘…beating the competition through the
creation of superior customer value…’ (Piercy)
• Components– Customers, Competition, Inter-functional,
Culture, Long-term profit focus
• Challenges – New: Customers, Competitors, types of
organisation, ways of doing business
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Organisational Culture
• The sum total of the beliefs, The sum total of the beliefs, knowledge, attitudes of knowledge, attitudes of mind and customs to which mind and customs to which people are exposed during people are exposed during their interaction with the their interaction with the organisation.organisation.
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Culture
“ The way we do things around here” – Deal
and Kennedy 1982
“Collective programming of the mind” – Distinguishes one group from another – Hofstede (1991)
Corporate Cultures
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Speed of feedbackSlow Fast
Attitude to risk
High risk
Low risk
Source: Deal and Kennedy (2000)
‘Bet your company culture’
‘Hard macho culture’
‘Process culture’ ‘Work hard/play hard culture’
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Changing philosophies and orientationsProduct
OrientatedSales
OrientatedMarket
OrientatedSocietal
Orientated
DEMANDEXCEEDSSUPPLY
DEMANDEQUALSSUPPLY
SUPPLYEXCEEDSDEMAND
CUSTOMERNEEDSEXPAND
Seller’s market -Emphasis is onincreasing output
Supplyincreases
Supplyincreases
Environmentalconcerns
Products are pushedat customers.Emphasis is onadvertising and selling
Buyers’ marketEmphasis is oncustomer needs and allocation of resourcesto satisfy them
Demands are now on quality issues. Management must satisfy long-term interests of society and individual – as well as needs of customers and the organisation’s missionSource: Kotler
A model of market orientation
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• Customers: know them well enough to give superior value
• Competition: what are their short and long-term capabilities?
• Inter-functional: mobilise the entire company to create superior customer value
• Culture: employee behaviour should be managed to ensure customer satisfaction
• Long term profit focus: have a strategic but realistic vision
• Hooley, Sounders and Piercey; 2003
Key components of achieving marketing orientation
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Role of marketing in strategic management
• Identify and monitor customer needs and market situation
• Link customer needs to organisation’s capabilities
• Contribute to determining competitive positioning
• Implement marketing programmes to deliver value and retain customers
• Measure the effectiveness of marketing activities
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What’s driving all this? Changes outside
rising expectationssophisticationcynicismfrom other countriesdifferent business modelsoutsourcingcollaborationalliancesstakeholder influencescustomer specific marketingdatabase marketinginternet marketingcustomer co-operatives
new customers
new competitors
new types of organisation
new ways of doing business
Environmental analysis
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External analysis
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If everyone in the company does marketing what does marketing do?
• It orchestrates the marketing that everyone else does
• It is the font of all knowledge– About customers;– About competitors; and– About the company and its
products/services
• It is the ‘engine’ of growth
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Marketing and change
“Nothing is permanent except change”
Heraclitus
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Organisation & Change Model
All of these could change!
Effective internal marketingcan help!
McKinsey 7S model
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Kenichi Ohmae got there first; the strategic triangle
other stakeholders
customer needs
competitorscompanycompetitor focus
company aims to satisfy customer
needs
competitors offer alternative
satisfactions
analyse competitors'
resources and competences
interference with competitors' marketing programs
innovate, differentiate,
imitate?
Key drivers of change?
• ICT– Eg Music marketing
• Globalisation– Wal-Mart?
• Ethical concerns– Fair Trade– Cause related marketing
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The world is changing
External issues (PESTER)
• Political• Economic• Sociological• Technological• Environmental• Regulatoryand• Competitive
Internal issues -• Retention or gain of
competitive advantage• Cost-savings• New senior
management• New owners and other
stakeholders
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Internal marketing
• Deals with internal customers - an important stakeholder group
• Essential in effecting marketing oriented culture
• Marketing techniques can help to motivate staff and increase level of ‘involvement’
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Kotler sums it up as a marketing triangle
plans
company
customersemployees
external marketing program
internal marketing program
interactive marketing
(1999)
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Internal marketing
• Provides communication to help employees identify with corporate objectives - the common goal
• Breaks down ‘them and us’ culture• Competitive advantage can be achieved
through employee knowledge• Product/service innovation can come from
employee ideas• Good customer service needs constant
reinforcement
Internal marketing - 3 phases
1. Employee motivation and satisfaction
2. Customer orientation
3. Strategy implementation and change management
Source : Ahmed and Rafiq (2002)
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First segment the market
Segmentation
• Different levels of management
• Different functions
• Different locations, cultures
• Supporters, opposers, neutrals (Jobber 2001)– It’s not single dimensional
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Key Players Keep Satisfied
Low InterestHigh Interest
Low Power
High Power
Minimal Effort Keep Informed
Mendelow’s power/interest matrix
STAKEHOLDERS
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Then use the marketing mix internally
Product• Strategy and process
of change• Job or function may be
internal ‘product’
Price• Psychological price -
loss of status, uncertainty, loss of productivity
Promotion• Clear communication
essential• Noticeboards,
meetings, intranet, newsletters, etc
Place• Information, training
etc - channel providing services to the internal customer
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Discussion point
• Why do so many organisations fail in their efforts to be truly marketing oriented?
• List the internal cultural barriers that may be frustrating their ambitions and provide suggestions as to ways in which these barriers might be overcome.
• What theories might assist?
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Useful references
• www.valuebasedmarketingmanagement.net – a useful reference about just about everything
marketing
• www.organisationalchange.co.uk – a consultancy in organisational change
• www.mad.co.uk – delivering business insight
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CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING PERFORMANCE
Session 5
Change management
104
Learning outcomes
At the end of the session, you will be able to:• Identify and evaluate the sources of and
the techniques for overcoming resistance to change.
• Assess the impact of change in a marketing department.
• Prepare a plan to deal with change in the marketing department, including the development of appropriate skills and capabilities to meet the objectives.
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Managing Strategic Change
• Styles– Education/comms, collaboration/partic, intervention,
direction (coercion).
• Roles– Leadership/change agent, middle mgt., outsiders
• Levers– Organisational routines– Symbolic processes– Politics/Alliances– Communications
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What kind of change?The Johnson and Scholes model
nature of change
incremental transformational
managem
ent role
proactive
tuning planned
reactive
adaption forced
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Change and the individual: people don’t like change
• They resist it because of:– Fear– Uncertainty– Lack of confidence– Dissonance
• It changes them– Physiologically– Circumstantially– Psychologically
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People respond to change in different ways
• Acceptance– Enthusiastic or otherwise
• Indifference
• Passive resistance
• Active resistance
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Change is a process: it can be managed
1: determine need for change2: plan the change3: analyse possible reactions4: consider alternatives5: develop final plan6: communicate the plan7: implement, review and evaluate, modify as
appropriate
Put it all into the hands of a change agent but make sure that he gets visible top management support.
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Force Field Analysis –the three step model
Driving forces(for change)
Current State Restraining forces(resistance)
Ideal Position
A requirement ofNew legislation.
Professional CommitmentTo controlling the organisation.
Requirement to reportTo external agencies
A concern for quality
Cynicism about change‘another fad’
Existing systemsare sufficient
Trade Union concernOver effects on jobWorking conditions
Complexity of producingSuch reviews
Cost of carryingout such reviews
Kurt Lewin
Emergent approach
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Stable/ predictable environment
Turbulent/ unpredictable environment
Planned change
Emergentchange
The change continuumSource:Adapted from Burnes (1996)
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John Hunt (Managing People at Work)Unlearning is as important as learning
• Unfreezing requires:– A ‘trigger’ – eg a crisis or event– A champion to challenge
inherited thinking– Buy-in from colleagues– Restructuring
UNFREEZE
Existing behaviour
Attitudinal/behavioural change
REFREEZEnew
behaviour
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Creating major change (Kotter 1996)
1. Establish sense of urgency
2. Create the guiding coalition
3. Develop a vision and strategy
4. Communicate the change vision
5. Empower broad-based action
6. Generate short term wins
7. Consolidate gains and produce more change
8. Anchor new approaches in the culture
Making time for change
1. Global change
2. Organisational change
3. Personal change
Source: Robbins and Finley (1998)
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The Change Curve
Originally developed by Kubler-RossAnd adapted by Wilson 1993
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Think about 3 phases in change(Conner and Patterson)
• Preparation– Contact– Awareness
• Acceptance– Understanding– Positive perception
• Commitment– Installation– Adoption– Institutionalisation– Internalisation
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• Get prepared• Hampden –Turner
– Find the dangers– Bring conflicts into the open– Play out corporate dramas– Reinterpret the corporate myths– Look at symbols, images, rituals– Create a new learning system
• Take it through the entire organisation• Wait 3 (or even 8) years!
Cultural change is the most difficult
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Don’t forget HR implications
• There may be redundancies. These need to be carried out legally and meet the company’s social responsibility policies;
• Recruitment policy and practice may need to be reviewed; and
• Training is probably going to be a major need to bring everyone up to speed
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Group discussion point
Overcoming resistance to change through internal marketing. Consider (one of):
• A small B2B machinery supplier looking to become a more market led organisation following recent acquisition
• A national charity looking to change its strategy for attracting donations from local charity shops to national advertising
• A local supermarket chain looking to build alliances with retailers elsewhere
How would you do it?
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Mini Case – Managing Change
A new marketing director has come in to the business and is making changes in the strategy of the marketing team. This will result in job losses and changes in the structure of the team. To make matters worse their style is very ‘dictatorial’.
What obstacles do you think this person will come up against, and how should they overcome them?
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Summary
• Change is inevitable, but it is not always welcomed, and often resisted.
• Success with change programmes can be improved by taking people’s fears into account
• May be necessary to have a ‘Change Agent’• You can’t change too much too often – cynicism
sets in and that is the most difficult to overcome• Cultural change is difficult
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CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING PERFORMANCE
Session 6
Building shareholder value through marketing activities
123
Learning outcomes
At the end of the session, you will be able to:• Explain the link between marketing activities and
shareholder value.• Explain the measurement of economic value added• Determine the contribution to shareholder value of
marketing activities undertaken.• Critically appraise methods available for valuing
brands.• Explain how brand equity can be built and brands
can be valued.• Recommend an appropriate approach for the
organisation.
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Strategic decisions are concerned with …
• The long term direction of the organisation
• Achieving some advantage
• Scope of an organisation’s activities
• Matching the activities of the organisation to the environment in which it operates
Source: Johnson & Scholes
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Implementation
• Shareholder Value Analysis– Computing Value
• Economic profit = NOPAT – (CE x cost of capital)
– Discounting Cash flows– Value based management– Marketing assets
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Firstly a useful reference
• SVA: shareholder value analysis
• EVA: economic value added
• NOPAT: net operating profit after tax
• ROCE: return on capital employed
• DCF: discounted cash flow
• NPV: net present value
127
Economic profit versus accounting profit
• Accounting profit is what is reported in a company’s results and what is reported is strictly controlled by the principle of prudence (tell that to Enron!)
• Many expenditures which are in fact investments and will pay off in the future are treated as expenses
• Economic profit may treat such expenditures as investments
128
Investors are most interested
in what will generate cash in
future
Investors focus 80% of their decision on
cash beyond 4 years
Today +10 years
Total shareholder return (TSR)TSR = dividends + share price growth
Source
: Valu
elin
e a
nd P
A C
onsu
lting G
roup 2
00
2www.cim
.co.uk/mediastore/P
A_unlockingrealvalue.pdf
Shareholder value and total shareholder return
129
Value drivers
Read Doyle!
Value based marketing
130
Key to enhancing value is to understand the drivers
• Financial– Volume– Timing– Risk– Sustainability
• Marketing– Choice of markets– Target customers– Positioning
• Organisational– Internal and external
131
• Product leadership
• Operational excellence
• Brand superiority
• Customer intimacy
• There are often examples of all four positions taken in an industry
Positioning for differential advantage is a little more complex
132
Marketing strategies to create value
Marketing assets
• Marketing knowledge
• Brands
• Customer loyalty
• Strategic channel relationships
133
Marketing and shareholder value
Marketing activities
€
Marketing skills
Marketing assets
Value drivers
Marketing results
Financial results
CU
STO
MER
SS
HA
REH
OLD
ER
S
Strategies to develop SV
1. Economies of scale
2. Economies of scope
3. Cost advantages
4. Product differentiation
5. Access to distribution channel
6. Government policy
Source: Peterson (2004)
134
Boston matrix and shareholder value
135
A selected few
Competitive position
Remainder divested
Liquidated
136
Limitations of SVA
• Forecasting
• Cost of Capital
• Estimating terminal value
• Baseline business value
• Options for the future
• Market valuation
137
Brands
138
Strong brands can increase cashflow
Strong brands can increase cashflow by
• Obtaining higher prices; and
• Higher volume growth; resulting in– Lower costs; and– Higher asset utilisation
139
But what’s a brand?
• It’s an entity with ‘a collection of attributes that strongly influence purchase’ (Hugh Davidson)
• It comprises an effective product, a distinctive identity and added values.
140
Branding
• What is a brand?– ‘A name, sign, symbol, design or combination
of them, intended to identify goods or services of one seller or group of sellers and to differentiate them from those of competitors’
(Kotler)
• What makes up a brand?• Benefits of branding
– Customers, Marketers, Shareholders
141
Brand building process
Product
Name Qualit
yLogos
Pack
FeaturesDesign
Basicbrand
Services
Delivery
Technical support
Extras
Training
GuaranteesInstallations
Augmentedbrand
Potentialbrand
142
• Attribute brands – image conveys confidence in its functional attributes – e.g. Volvo (safety), Persil (washes whiter)
• Aspirational brands – image conveys a lifestyle to which people aspire – e.g. Martini (sophisticated jet-setter), Rolex (top professional)
• Experience brands – conveys an image of shared associations and emotions – e.g. Nike (just-do-it), Marlboro (rugged masculine values)
Doyle ‘Value-Based Marketing, 2000
Types of brand/brand image
143
CORE VALUES
EXPRESSIVE VALUES
CENTRAL VALUES What the brand and the consumer share at a fundamental level
What the brand says about the consumer
What the brand does for the consumer
From
Com
modit
y B
rand t
o P
ow
er
Bra
nd
Components of a brand
144
Brands are used in different ways: brand architecture
• Company brands eg Mercedes• Source brands eg Kelloggs
Corn Flakes• Range brands eg Sharwoods• Product brands eg Ronseal• Umbrella brands eg Philips
What’s the difference between a range brand and an umbrella
brand?
145
Brand stretching: be careful
• What is it?– Using a brand name successful in one market
to enter another• Why do it?
– It’s cheap, uses an existing asset and is less risky than a new brand
• When to do it– When the brand core values are applicable to
the new market and when activity in the new market will not adversely affect them
• But: it may damage the first brand and it’s not a substitute for real marketing
146
Brand Planning & Strategies
• Brand Planning – Market Analysis– Brand Situation Analysis– Targeting future positions– Testing new offers– Planning & evaluating performance
• Brand Strategies– Brand Stretching– Revitalising brands– Global or local?
147
Valuing Brands
• Should brands be valued?• Methods
– Cost– Royalties– Market Value– Economic Use Value– SVA Approach to brand Valuation
• Discount rate• Future earnings
Business Week/ Interbrand valuations 2007
148
149
Young and Rubicam’s Brand Asset valuator
brand strength brand stature
BrandAsset Valuator
differentation relevance esteem knowledge
www.yrbav.com
150
Millward Brown’s BrandDynamics
presence
strong relationship/high share of category expenditure
weak relationship/low share of category expenditure
nothing else beats it
does it offer something better than the others?
can it deliver?
does it offer me something?
do I know about it?
bonding
advantage
performance
relevance
www.millwardbrown.com
151
Interbrand’s strength index
element weightingcommentleadership 25% how dominant is the brand in its sector?market 10% is it growing?stability 15% how loyal are the customers?international scope25% how far does the brand reach?trend 10% are sales growing?support? 10% how much is being spent and how well?protection 5% what's the IP position?
152
Summary
• Organisational value drivers – McKinsey 7 S model identifies these
• SVA approach is good but has limitations• NPV = Sum of the present values of all
future cashflows.• NPV can be used for project appraisal• Brands are important differentiators and
can be, perhaps inaccurately, valued & exploited.
153
CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING PERFORMANCE
That’s all for day 1!