principles of marketing

Principles of Marketing

Presented by

Ian Rheeder Chartered Marketer (SA)

©© 2006 Markitects Consulting. All rights reserved.

2Principles of Marketing

Programme Overview – 3 Days

Lecture & Pages Lecture Topic

1: p.4 -7 Intro to Marketing Management & Plan 2: p.8 - 48 The Marketing Manager as a Strategist 3: p.49 - 53 Introduction to Marketing 4: p.54 - 61 Research (Like the Ps, a great marketer’s tool) 5: p.62 - 73 Personality styles & Consumer behaviour 6: p.74 - 79 Segmentation 7: p.80 - 81 Targeting

Intro

8: p.82 - 86 Positioning

10: p.87-98 Product, USP, CA’s, Differentiation, PLC 11: p.99 -104 Pricing techniques 12: p.105 -111 Placement techniques

4Ps

13: p.111-152 Promotion/IMC techniques

14: p.153-158 Services Marketing

15: p.159-164 Forecasting techniques

16: p.165-167 Budgeting techniques

17: p.168-173 KAM Introduction (Key Account Management) 18: p.174-178 High Trust Selling

7Ps

Evaluation: 30 Mark

“There is only one purpose for an organisation, that is to obtain and retain a

customer.” (Drucker)

A Marketers’ task is to self-destruct by making themselves unnecessary, because they have succeeded in making the whole organisation market-

oriented. (Tom Bowman 1990)

Because market orientation is an organisation-wide prescription, it is necessary that the whole company is organised and coordinated to serve the customer. (Leyland Pitt 1998)

©© 2006 Markitects Consulting. All rights reserved.


Exercises: Day 1, 2 & 3

Exercise & Page Type of Exercise 1: start of notes Pre-evaluation; go over the 30 Mark Test 2. p.30 Key Success Factors & Key Issues 3. p.31 - 32 Your Company SWOT 4. p.39 Positioning ‘gap’ exercise 5. p.41 Strat-map #1: Segmentation 6. p.42 Strat-map #2: Market Analysis, Strat-map #3 at end 7. p.48 Strategy Homework for day one 8. p.56, 59 Research Problem, Hypothesis, Sample, Type of Questions 9. p.61 Personality Styles, fill in questionnaire 10. p.71 Consumer Values for Tag watch 11. p.81 Segmentation, Targeting

Intro to the

Ps

12. p.82 Positioning, Carling Black Label

Exercise & Page Type of Exercise 1: p.88 Product need satisfaction 2. p.92 Citi Golf Case 3. p.98 Product Portfolio: Boston Matrix 4. p.101 Price Exercise #1 5. p.104 Price Exercise #2 6. p.105 Distribution Exercise #1 7. p.108 Distribution Exercise #2 8. p.149 Promotion General 9. p.150 Promotional Mix 10. p.151 Promotion Budget

The 4Ps

11. p. 152 Promotion Recall

Exercise & Page Type of Exercise 7Ps 1: p.153 Service (another 3Ps in the Mix)

The aim of marketing is to make selling superfluous. (Peter Drucker)

The exchange between parties must be so mutually satisfying, that the product should almost sell itself.


Outcome of programme

Learners will be able to do the following:

1. Grasp the Marketing Strategy concept and apply the guidelines to writing a Strategic Marketing Plan

2. Define Marketing 3. Explain what marketing concepts and objectives are, and analyse their

impact on the business 4. Explain the importance of the marketing research ‘tool’ 5. Explain consumer behaviour & different personality styles 6. Explain guidelines for segmenting consumer markets 7. Apply guidelines for identifying attractive market segments to target 8. Explain positioning and discovering positioning gaps 9. Product: Explain new product development, branding advantages, and the

product life cycle (PLC) 10. Price: Explain factors to consider when setting price 11. Place: Explain the distribution of a product, and the importance of

marketing channels 12. Promotion: Discuss Integrated Marketing Communications (IMC) 13. Explain Personal Selling 14. Discuss the advantages & disadvantages of Advertising 15. Explain PR, Sponsorship, Direct Marketing, Sales Promotion

“A business is market-oriented or focused when its culture is systematically and entirely committed to the continuous creation of customer va lue ... this entails collecting and coordinating information on customers, competitors, and other significant market influencers ...it provides a unifying focus for the efforts and proje cts of the organization, thereby leading to superior performance and a sustainable competitive advantage .”

Stanley F. Slater and John C. Naver Market Orientation, Customer Value, and Superior Performance

Business Horizons March-April 1994, Vol. 37, p. 22.


1. Marketing Plan Structure (p.5-48)

1. Executive Summary (2 pages) � Introduction, Goals/Milestones to be achieved, � Key Issues aggravating the objectives, Core Strategies � Market Niche (key market drivers/success factors), Key Competitor Sales � Product, Price, Place & Promotion strategy overview � Financial Outlook. I.e. 2006 Budget/Plan 2. Strategic Management Planning � Three year Objectives/Goals/ROI � Core marketing strategic thrusts and Key Success Factors � Vision: Customers, Competitors, Company � Core Purpose and Marketing BHAGs � PESTI Environment � Competitive Conditions/Analysis/ their Key Success Factors � Resources SWot, General SWOT � Financial, R&D, Personnel, Production � Management Culture � Distinctive Competencies (Marketing, Financial, Technology, Information

Systems)

3. Strategic Marketing Planning � Basic strategic thrusts � Build, hold, harvest, divest strategies (Boston Matrix/PLC) � Strategy: Segmentation, Target Marketing, Positioning/Differentiation � Marketing Mix Programmes (4Ps), Growth Strategies

4. Strategic Marketing Dept Decisions � Market Access (KAM, Distributors, Telemarketing, Agents, Internet,

Alliances) � Acc Relationship Strategy (Transactional, Consultative, Enterprise) � Action to be taken by individuals with deadlines (Strategy translated)

5. The Marketing Budget � Calculations of budget spend, where to spend it (training, recruitment,

marketing aids, commission, motivation, recognition awards etc), � Expenditure, Forecast Sales, projected profit & loss statement � Notes & Assumptions Re: Financial Projections, Appendices


The Six Steps to Plan a Marketing Strategy (Note: This is done after the Environmental Analysi s (PESTIE and Micro) has been done.)

Define Corporate business Mission: Step 1

� Decide on Product Portfolio; and Customer Segments (markets) to be served. What are the Customer’s Drivers/needs for ‘Positioning’.

Identify & Assess attractive market opportunities: Step 2 � Do resource & product SWOT. Do market SWOT.

Select target market segments: Step 3

� Do detailed customer analysis, segmentation and decide which segments to target

� Do competitor analysis (Start with Key Success Factor model)

Set Marketing Objectives: Step 4

� Revisit Mission, the market opportunities and target market segments to check if objectives are realistic

Design a marketing mix strategy: Step 5

� Design 4-8P Mix, target segment with an SCA for superior ‘positioning’ vs. competitors

� Draw up budget to implement Product Mix Strategy Price Mix Strategy

Target Segment/s

Distribution Mix Strategy Promotion (IMC) Mix

Implementation & Control Step 6 of marketing strategy and action programmes: Feedback


Introduction to Marketing Principles

As marketing is an organic subject, it just keeps changing. Marketing is also an art and a science, requiring right (art) and left-brain (logical) disciplines. However, too many marketers try and hide behind the fact that it is all ‘arty’, when in fact, marketing should be able to quantify the ROMI (return on marketing investment), albeit calculating the ROMI of a creative/arty advertising campaign. Marketing is also such a broad subject, it would take at least a lifetime to master, which is why one tends to specialise in a particular field that hopefully matches our particular temperament, personality style or aptitude. Imagine the following ‘marketing’ fields and realise how broad the subject is: Strategist, researcher, statistician, sales manager, marketing or brand manager, salesperson, public relations, sponsorship, advertising (radio, TV, print, Internet or below-the-line), creative director, direct marketing, sales promotion, e-commerce expert, distribution and product development. The layman usually thinks that marketing is purely ‘advertising’, when in fact marketing is an extremely broader matter, comprising of the four basic “Ps”, namely Product, Price, Placement (distribution) and Promotion. Advertising falls under Promotion, however, to fully grasp the Promotional Concept, one must explain this later under a much broader promotional concept called Integrated Marketing Communication (IMC).

The IMC concept recognises the added value of a synergistic ‘media plan’ which will ‘advertise’ your product or service with maximum impact and clarity. Advocates of IMC therefore argue that it is one of the easiest ways for a company to maximise its promotional ROI. ‘Adverting’ only form part of the IMC Concept in your promotional mix, and can basically be split into print, radio, Internet, outdoor and TV. History in the making: Marketing’s first real cornerstones were laid down in the 1940’s by Neil Borden & Jerome McCarthy. Borden referred to marketing as: product, pricing, branding, distribution channels, personal selling, advertising, promotions, packaging, display, servicing, physical handling, and fact finding & analysis. McCarthy simplified this and documented the 4P Mix (Product, Price, Placement & Promotion). It was James Culliton (1940’s) who rightfully first described the Marketer as a “mixer of ingredients”.


Marketing today; 4P now 7P Mix: (7Ps expanded on p. 46) Because we live in such a hyper-competitive world, marketing has become very refined! Marketers are commanding huge salaries today because they are very often the difference between placing the Company on the race-podium or just being an ‘also-ran’ in your industry. If you are in the manufacturing, trading or service sector, all business have a ‘service’ side to them. Marketers have therefore created additional Ps; People (your staff), Processes and Physical Facilities/Evidence. The next 100 pages will logically and systematically cover the cornerstones of Marketing Strategy, and Marketing Principles. Marketers need to achieve 3 objectives: meet Customer’s needs (customer-centric orientation), implement strategies (achieve company goals) and make enough profit . This course covers the Principles of Marketing , however no marketing practitioner can venture into the field of marketing without an introduction to Marketing Strategy (Lecture 2: p.8-48) and the contents of a Marketing Plan (p.5). This course therefore begins with these topics to weave the Principles of Marketing together, without which, the Principles of Marketing are unguided and useless. Marketing Strategy can be very complex in theory! I have therefore unbundled complex concepts, and logically and systematically made graphic notes to practically lead you through the process. I have burrowed from the richest and most up-to-date sources available, and much of my thinking reflects their thinking. The rest is extracted from years of very varied practical marketing experience as a manager and consultant. Looking at the programme overview, we cover the full spectrum of Marketing Principles, however, marketing is a VERY broad subject and therefore only the most important cornerstones of each principle are covered. Having said this, if you keep these notes by your side, they will help you through 90% of your Marketing career challenges. Promotion is a massive subject, so I have included 40 pages on the subject (excluding consumer behaviour). Enjoy the most dynamic journey on earth. Marketing!


2. The Marketing Manager as a Strategist

There is no doubt that the Marketer should also be a Strategic Marketing Manager. My personal definition of Marketing Management is “research your target market, then give them what they want, at a profit.” This sounds simple, but most marketing consultants will tell you that few companies do this. To do this properly one needs to wear both sales & marketing caps, requiring research skills to depth-probe Product, Price, Distribution and Promotional issues.

It’s important to embrace the sales department. Sales is actually part of the marketing “P”, Promotion. Thus personal selling, or any form of selling, falls under Marketing. This is perhaps why it is also widely accepted that the sales function is part of, and should report to the marketing function. Whichever way you look at it, marketing and sales overlap heavily and should strategise together as a closely intertwined team. If the Sales Team is the “sharp tip of the pencil”, then marketing is the next most important part of the writing instrument. Sales and Marketing Overlap under the “P” called Pr omotion (see page 46)

The basic 4Ps of product Marketing is shown below. Note, if one is in the service industry, we have 3 more Ps. (People, Processes, Physical Facilities)

Which is the most important P? Over the long-term, definitely Product! Without Product you can’t Price, Place or Promote effectively. Customers will not support a suspect Product, even though your other Ps are brilliantly executed! Unethical marketers can manipulate and misrepresent a Product using the other 3Ps, but will not succeed over the long-term. Over the short-term? Price . Price is the only P that can be manipulated immediately with staggering results. The best answer to which P? This depends on your Product Life Cycle (PLC), Competitor activities and the uncontrollable PESTIE environment (PESTIE can bolter or destroy your Sales Plan).

Product Price Place Promotion (IMC) People Processes Phy sical Evidence Productivity & QualityPackaging Cost Storage Personal Selling Skills IT Facilities TQMRange Customers Transport Advertising Dress HR Staff OEQuality Competitors Stock Direct Marketing Motivation Invoicing StationaryWarranty Price Lists Distributors New MediaTraining Credit terms Location Sales Promotions

PRSponsorship

Customer Cost Convenience Communication (4C's)Solutions Value Access Information (SVAI) (4Cs & SVAI left = Customer's perspective)

Product Marketing (4Ps), Product = Car, TV;

Service Product Marketing (8Ps), Service = Dry cleaning, haircut, restaurant, theatre/Service Product Marketing (8Ps)


Core Purpose: Centre of Strategy (This article may save your career and your company.)

Too many marketing managers rely on strategic initi ative to be lead from the top, but it often never comes! It’s quite disturbing how many MDs literally hate Vision Statement. It’s even more absurd when one considers that all the greatest strategists (and le aders) agree that a shared Vision and Purpose is by far the most import ant part of strategy! Helen Keller put it succinctly. “What is worse than being blind is to have perfect sight, but no vision.” So how do Sales Managers overcome this common and painful managemen t dilemma? Understanding your role as Strategic Marketing Manager may require much more ‘stretching’ than you may be comfortable with, however, there’s no alternative when you consider the benefits. Take the high ground and lead your superiors through a joint-strategic-workshop. You may even need to do this to keep your job, the company afloat or to simply make target! Strategic Reticence and Tension If your execs aren’t acquainted with solid strategic processes and language, boardroom meetings clumsily feel a bit like trying to crack a foreign code. To increase tension and mistrust further, they sometimes feel intimidated by their lack of strategic prowess, while we feel incapacitated because marketing managers have only been empowered to run ‘marketing’. In my experience as a consultant, this ‘gap’ always exists; it’s just the extent that differs. Unless you’re working with a recently strategically qualified and enlightened MD, your qualification and experience probably has a much higher strategic value than you realise; all you need to do is sell yourself better as a strategic facilitator. So what’s the solution? Carefully write a strategic Power Point presentation for your next company conference or meeting to facilitate a live interactive-joint-strategic-session. Take advantage of technology and realise you can actually do live updates on the projected-screen while your colleagues are debating amongst themselves. Test it out on a colleague, and then e-mail your ‘workshop’ to your MD to book your slot at the next Strategic Planning Meeting.


What the Workshop must cover A featured Harvard Business School article suggested that just two things make managers brilliant; focus and energy. One could obviously add many other attributes to the list, however this is what separated the ‘busy’ looking space-cadet with the best there was. Focused energy leads to focussed activities. However companies are not run with personalised agendas, but should be shared by everyone in the organisation, and then translated into action through a strategic plan for each individual. Because I believe that finding a company’s Core Purpose is the most important area that must be covered in a strategic workshop, I’m going to focus on that area. However, for the more aspirant two-day workshop junkie, here’s my agenda recommendation for your fix (and the Company’s). Selection of a Strategic Business Unit (SBU) & Targeted Segment, Key Success Factors for SBU chosen with Competitor Analysis, in depth SWOT, Objective Setting, “Problems” Target Market is Experiencing, Choice of a Value Proposition/Positioning Strategy, Selecting Resources Capabilities to match/fit Strategy, Desired Brand Essence Workshop with Pay-off Line/Slogan/Ad-Promise Confirmation, Actionable Vision with Core Purpose and 3 Major Goals , Group Problem Solving Workshop and then finally Set Specific Tasks with Deadlines. Why Core Purpose? What's your Core Purpose? If you don't know, and if it's not customer centric, you're treading on thin ice! If you’re a marketer or sales manager and don’t believe in Core Purpose, please don’t let the marketing police find you! When lecturing or facilitating sales or marketing workshops, I’ve given up asking managers what their particular company’s Core Purpose is; they either embarrass themselves with their answers or just don’t know! One cannot even begin to set strategic activities when you don’t know what the most important Big Hairy Audacious Goals (BHAGS) are, which should be inline with your Core Purpose.

Core Purpose Illuminated Core Purpose should be customer centric, for instance “We will maximise our Clients profits by doing xyz.” This may sound easy, however may take hours of brainstorming to pinpoint and usually requires Customer research to fully expose and confirm. To give you an example how obscenely off the mark some companies are, one company’s Core Purpose read “To make as much profit as possible by manufacturing a quality range of widgets to ISO


9002 standards.” This company was focussing all their attention on quality, when in fact our research showed that their quality was already too high! They were ironically planning their activities to go out of business. What their clients wanted was increased responsiveness and on-time-delivery. Their new Core Purpose read “To maximise our customers profitability by delivering value-for-money widgets on time, every time.” This new Core Purpose completely changed the BHAGS, activities of the company and the performance appraisal system for most staff. Employees in this company now know exactly what their Core Purpose is because it’s in their letter of appointment, performance appraisal and makes up 25% of their annual bonus if their ‘core purpose’ activities are achieved. If you ask the layman what McDonald’s Core Purpose is, they simultaneously shout out burgers! Some deeper thinkers then shout out toys or property rental. Thank goodness they’re not marketing McDonald’s! McDonald’s Core Purpose is not burgers (now you know why their burgers aren’t the best), or toys or property rental, but Consistent Convenience for the Customer! Imagine the difference in focussed goals they set for each individual as apposed to toys, burgers and property rental! Find your company’s Customer Centric Core Purpose by group consensus, and then make sure all the bosses and troops are committed to driving it. Sustainable Competitive Advantage Once you know what your shared Core Purpose is, the customer centric BHAGS follow swiftly, allowing all SBUs to align their objectives and activities with it. Decisions to invest in achieving the companies mission/vision now becomes so much easier; “Will it achieve our Core Purpose?” “Yes”. “Well then spend it!” Morale, focus and energy levels increase dramatically. But most of all, Marketing is doing what it’s designed to do, which is to create handsome profits by giving customers what they want. Like Tom Bowman says, “A Marketers’ task is to self-destruct by making themselves unnecessary, because they have succeeded in making the whole organisation market-oriented.” The article was written by Ian Rheeder to assist Marketing Managers grasp the bigger picture of their responsibility towards Strategy. The secondary aim was to gently persuade executives to embrace Marketing Strategy, and of course to find a Customer Centric Core Purpose to drive Strategic Activities. (Published in Journal of Marketing SA, Aug 2005)


Definitions

Marketing Management is: The management of the Innovation and Imitation Processes, that firms use to Identify and Increase Customer Satisfaction, and Reduce Costs, Faster than their rivals. (Prof R. Abratt, 2003) Personal Selling is: a) “Direct communication between paid Representatives & Prospects that lead to purchase orders, customer satisfaction, and account development” (Dalrymple, Cron & DeCarlo, 2001) b) “Non-manipulative face-to-face communication to assist people to purchase.” (Ian Rheeder)

Sales Management is: (not Selling Definition) “The planning, organising, leading, and controlling of personal contact programs designed to achieve the sales and profit objectives of the firm” (Dalrymple, Cron & DeCarlo, 2001)

Marketing Managers have Major Responsibilities! 1. Meet Customers needs (at a profit) 2. Achieve and implement strategies 3. Make enough profit 4. Develop & motivate Marketing & Sales Staff


Marketing Strategy

Why do Marketing & Sales Managers need to be Strate gists? The world has become hyper-competitive! Ford only offered cars in black, however when General Motors offered more colours, Ford lost a huge slice of ‘his’ pie. Running a business is a war zone. The Sales & Marketing department needs intelligence to modify its strategies, or the enemy wins. Companies go out of business every minute of the day because their go-to-market strategies are flawed, or at least the implementation of the strategy is flawed. Customer Centric Oriented Approach Note that in the center of the marketing environment (macro & micro) is the Customer. Sales Managers must continually update/modify the 4P Marketing Mix, which surrounds the Customer. Never stop doing market research.

Diag 1: The Micro & Macro Marketing Environment (Ad apted from P Kotler)

Customer Centric

•Manufacturers

•Retailers

2. PriceObjectivesDiscounts Payment Terms Credit Increases Price Lists

3. PlaceObjectivesLocation Storage Transport Speed Stock Agents Distributors

1. ProductQuality, Range, Packaging, Delivery Speed, Training,

Warranty,

4. PromotionIMC Objectives,

Advertising, Sales force, Training, Motivation,

SuppliersProduction

Sister Companies

Ad Agency

Competitors

Distributors/AgentsSales/M

arketing

Plan

Adjust/measure

Control Plans

Resea

rch

Analys

is

All Dep

ts. Im

plem

ent

‘Mar

ketin

g’

Legal Bill

WTO

New Technology speeding up service. World keeps changing

Price sensitive world looking for value

New investors in Africa are notAfrican

Public

Internal DirectMicro Direct

Micro Direct

MACRO/PESTI


Understanding the Strategy Planning Process Using the above and below diagrams (Diag. 1 & 2), strategic planning becomes less complicated. One must also warn that a too simplistic approach to strategy has caused major business disasters! Strategy is a broad subject, requiring lengthy planning sessions to scan many possible alternatives. Authors of The Balanced Score Card, Kaplan & Norton warns, “Many companies continue to use management processes – top down, financially driven – that were designed to run yesterday’s organizations.”

The Planning Process is more important than the Pla n The key in planning is NOT the plan. Plans outdate fast, and are also worth very little if management and staff do not collectively buy-in. A manager can write the best customer oriented plan, but may fail dismally if the plan was not also co-written by colleagues. (Read article on Core Purpose, page 8-10). This is because the plan needs to be well implemented, not just written. The solution is to have dedicated Strategic Planning meetings, to review and address strategic issues.

Strategy Planning Process, Marketing (Spot the Ps & PESTI)

Customer & MarketNeeds & other segmenting

dimensions of Micro Environ (unmet needs,

size, key success factors)

CompanyObjectives & Resources

(internal/self analysis, Vision)

CompetitorsCurrent & Prospective

(do analysis, SWOT)

SWOT

Segmentation & Target Marketing

Differentiation & Positioning

Target Market

(Customer)

4-8P Mix

Narrowing down to focused product-market strategy,w ith Quantitative (I.e. ROI) & Qualitative (I.e. SWOT) S creening Criteria

External Macro Market Environment,P.E.S.T.I. (uncontrollable variable)

Controllable Mix

Market Orientated Strategy!

ROI%=Net Profit/Assetsx100/1

Dire

ctE

nviro

n In

tern

al &

Mic

ro

Blend &

Adapt

Diag 2: Logical steps in planning marketing/sales/business strategy (Mc Carthy 2001)


Strategic Thrust Options for Sustainable Competitiv e Advantage (SCA) One Sustainable Competitive Advantage (SCA) is to be different from your competitors by developing a hard to copy, and relevant Unique Selling Proposition (USP). The Japanese were the first marketers to perfect low cost production while simultaneously differentiating the product through innovation, imitation and quality. Up until then, it was considered impossible to make the best camera with relatively low input costs. In today’s hyper-competitive market environment this is becoming necessary for survival; i.e. to combine more than one ‘thrust’, however, depending on the relative competitive environment, you may just be lucky and get away with “only producing it in black”. (Chose your ‘overall generic marketing strategies’; i.e.: cost leadership)

Strategic Thrust OptionsPorter’s alternative generic strategies

Strategic Thrust

Low Cost(Input costs)

Differentiation(Safest car)

Synergy(Join forces)

Pre-emption(First to do…)

Focus(niche segments)

Highlight Your Choice

Diag 3: Companies must choose their basic Strategic Thrust (Aaker)

6 x Key Terms (when talking strategy, see p.49 for detail): � USP – Unique Selling Proposition (can be an SCA if relevant) � SCA – Sustainable Competitive Advantage � Differentiation – Meaningful USP or SCA relevant to the target market � Positioning – What you wish to do to the minds of your audience � Marketing Mix = Product, Price, Placement, Promotion = Strategy � Key Success Factors: E.g. Cell phone KSF is reception!


Macro: P.E.S.T.I.E Environment

Enter ‘PESTIE’ Centre Stage! Is the Uncontrollable Variable completely out of ou r control? This is a very topical discussion in SA with the pressing iss ues created by globalisation. Generally speaking, any one of below three environmental reasons is the cause of a sales manager’s strategic failure: 1. Lack of understanding of PESTI Factors or the adjustment to the macro

(external), and micro (internal) marketing environment 2. Improper blending of the four Ps (eight Ps if the product is a service) 3. Lack of in depth market research (Customer-microenvironmental data

collection) Points two and three above need no introduction in their ability to change marketing’s destiny, however, the traditionally less obtrusive ‘uncontrollable’ PESTI Factors seemed to have recently dominated the marketing force field. In fact, this is what is really creating our recent hyper-competitive environment, where consumers and retailers are demanding sobering price-performance-ratios from manufacturers. What are the PESTIE Factors? To avoid a fatal flaw in your SWOT and sales strategy, it is imperative to study ones marketing environment under three headings. Internal environment (i.e. company, staff, processes), Micro environment (customers, agents, distributors, competitors) and thirdly, the Macro environment, summarised by the acronym PESTIE (Political, Economic, Sociocultural, Technological, Internationalisation/Globalisation and Environment).


PESTIE Political (and Legal) Factors

Political decisions create havoc with businesses barriers-to-entry and the power of consumers. Consider these ‘uncontrollable’ variables and how they impact on your ‘controllable’ four Ps and ability to create a sustainable competitive advantage: 1. How will the WTO deregulation on 1st January 2005 affect your marketing

mix? 2. How has the Government interfered with the R/US$ exchange rate? 3. What is the Government’s position on the recent flood of cheap Chinese

imports and legislation on unfair dumping? 4. How has the Government’s stance on minimum wages impacted on your

price competitiveness? 5. What alternative strategies do you have in place if our Free Trade

Agreement with the USA is withdrawn? DESTROY Or SUPPORT!

“PESTIE can destroy or bolster your Sales Strategy. ”


PESTIE Economic Factors

1. How does the ‘changing economic dragon’ i.e. international interest rates, inflation and exchange rates affect your Pricing and Distribution?

2. Are you going to climb on the export ‘learning curve’ or stay in the dark forever?

3. The strong rand has decimated local production; will you exploit export markets in Africa as a stopgap, or go global? Are you going to hang on to your international market and nurture it until our currency depreciates?

4. What are your alternative strategies if the rand strengthened below R5/US$?

How does high unemployment and recent GDP per capita impact on your “mix”?

Due to Globalisation, 911 changed the Political, Legal, Economic, and Sociocultural environment, instantly . Many companies suffered, and many were bolstered by this ‘uncontrollable’ PESTIE Envi ronment.


PESTIE Sociocultural Factors Social and cultural influences vary from country to country. Consider the following demographic and lifestyle factors in SA: 1. How are the Baby-boomers (age 55-65), Generation X (age 25-34) and the

Millennial Generation (younger than 14 years old) changing their lifestyles? Does your traditional psychographic segmentation still apply?

2. What are South African’s attitudes and buyer behaviour to foreign products?

3. Tension between the ‘have’ and ‘have-nots’ is growing. In 2003 there were more Black millionaires in SA than any other segment. Are you targeting the right race groups in your advertising? Do they still live in the same suburbs?

PESTIE Technological Factors Adopting the right technology can create instant competitive advantage: 1. Customers often far preferred being updated via SMS instead of e-mail? 2. Have you or your competitors exploited the latest software (i.e. SMS)? 3. Can you distribute faster using Internet technology? 4. Will all cell phones need to have a built in digital camera to compete?

PESTIE Internationalisation (Globalisation) We need a global village mentality, as our competition is now the entire world! 1. Considering our local idiosyncrasies, will your ‘global’ ad-campaign work? 2. Are your sister companies your biggest competitors? 3. Has China undercut your prices by 50%? 4. Do your customers go to tender on the Internet? 5. Have you considered using India for your call-centre base?

PESTIE Environmental Factors The environmental impact of disposing your product (i.e. neon tubes) can put you in or out of business. Phillips took the neon tube market by storm in the USA by making the first easy to dispose neon bulb.


PESTIE Conclusion The uncontrollable PESTIE Factors, in spite of the acronym ‘pest’, can in fact bolster and propel your company when exploited. Spend time and money doing this! Sales Managers need to continuously research the shifting macro environment and actually become excited about the eminent prospect of implementing alternative strategies. Yes, you can tame the uncontrollable variable by choosing innovative strategies that will change the rules of the game for your competitors, or you may want to be really proactive and attempt to influence the environment yourself. Silently recite your new mantra – ‘I love change and the possibilities it brings’.

Product Price Place/Channel Promotion/ IMC

Quick development due to fast PLC

Electronic Auctions/Bids

Internet Space Clicks

Database targeting

CAD & R&D Teams Exchange rate analysis

Vertical Integration

Global comms

Better quality & technology

Excel for Price Analysis

Larger retailers SMS

Shift away from diversification

Value based pricing

Real-time inventory

Interactive media

Attention to superior category value

Faster JIT response

Global Agencies

Environmental concerns

Logistic outsourcing

Direct response TV

Table 1: How the ‘uncontrollable’ PESTI environment is affecting the 4P ‘controllable’ Mix

“The Planning Process is far more important than the Plan!

Plans outdate fast!”

“Nobody plans to fail; they just fail to plan the planning process.”


Market Planning: Write the Plan

Because market orientation is an organisation-wide prescription, it is necessary that the whole company is organised and coordinated to serve the customer. (Leyland Pitt 1998) Without deadlines, Strategy is just a dream or a wish. However, a Strategic Marketing Plan has deadlines/timelines with specific tasks for specific people that must be achieved. However, Marketing/Sales Strategy and Planning must meet the Company objectives (see below), which is why Marketing/Sales Managers need direct communication with their CEO/MD who both MUST be well versed in strategy, and involved in the Planning Process.

Hierarchy of Objectives

CompanyObjectives

ProductionObjectives

FinanceObjectives

MarketingObjectives

HRObjectives

R&DObjectives

ProductObjectives

PriceObjectives

PlaceObjectives

PromotionObjectives

IMC PromotionObjectives

Company objectives lead to Marketing & Sales Object ives

Diag 4: Hierarchy of objectives. All ‘functions’ fo llow the Company’s objectives. (‘Functions’ are all the separate depar tments. I.e. IT, Sales)


Selling in the Marketing Mix

MarketingMix

4-8Ps

Products PricesPromotion

IMCPlace

DistributionChannels

Advertising“pull”

Non-personal

PRSponsorship Personal Selling

“push”Rifle Approach

SalesPromotion

Sales Management

About 14% of the total workforce are in Sales!

Planning MotivatingBudgeting CompensatingRecruiting TerritoriesTraining Evaluating

Diag 5: Sales Management (Selling) falls under Prom otion Sales Management is the management of the Personal Selling Function and includes far more than ‘selling’. Personal Selling (also referred to as Face-to-Face Selling), falls under the Promotion ‘P’ in the Marketing 4P Mix. Although Selling falls under Promotion it does not mean that the Sales Manager should ignore Product, Price and Place! Sales Managers must become professionals, and become involved in Product, Price and Placement (Distribution) decisions. Not all companies have Marketing Managers, and therefore in their absence, the Sales Manager must take full responsibility for these P disciplines.


Setting Marketing Objectives

Qualitative and quantitative elements of objectives explain and contribute to each other. Qualitative a statement in words. Quant itative the words in numbers. Examples:

Qualitative Growth, Introduce x, Maintain market share, Hold Strategy, Build/Invest, Harvest, Divest (get rid of), Become market

leader, Profit

Quantitative Sales, Market share, Profit, Growth %,

Expenses,

SALES (MILLIONS)

MARKET SHARE

Year 1 Launch 5 new products R2.0 45%

Year 2 Market leader R6.0 50%

Year 3 Maintain market leadership position

R10.0 50%

Qualitative and quantitative objectives are used to check each other for consistency and objectivity.

� Objectives need to be realistic & measurable. � Resources need to fit the objectives. � Have you calculated the Market and Industry Potenti als? � What is your Industry Growth Rate vs. your growth r ate?

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