55. Implementation and Controlling in the Marketing Planning Process Learning Objectives After studying the section about organizing and implementing the marketing plan you should be able to do the following: describe the structure in the marketing planning process• describe the objectives of marketing implementation and change• describe and evaluate different ways of organizing the marketing • department understand the important issues in implementing the marketing plan• After studying the section about budgeting and control you should be able to do the following: understand why customer profitability is important.• describe the key elements of the marketing control system.• list the most important measures for marketing performance.• explain how a marketing budget is established.• After studying the section about ethical, social and environmental aspects of marketing planning you should be able to do the following: understand why ethical issues are important for the firm’s marketing • planning explain how ethical marketing is related to relationship building• discuss the nature of corporate social responsibility• differentiate among various levels of ‘green marketing’• After studying the section about developing and managing customer relationships you should be able to do the following: discuss loyalty, satisfaction and perception of value as determinants • for development of the CRM strategy. explain how Customer Lifetime Value (CLV) can be measured• describe the major trends and forces that are changing the marketing • landscape in this age of relationships. Kapitel_5.indd 345 03.08.2010 12:56:20 Uhr 5. Implementation and Controlling in the Marketing Planning Process346 5.1 Organizing and Implementing the Marketing Plan We have described and analysed each of the ingredients of a typical marketing mix. In developing a marketing plan an organisation will need to give careful consideration to each of these elements, whilst at the same being cautious not to fall into the trap of viewing each ingredient in isolation. As already stated in the first chapter, marketing and the marketing tools must constantly be viewed as a collective whole and opportunities for synergy will only be exploited if it is regarded accordingly. Each ingredient of the mix should consistently reinforce the ‘message’ being conveyed by the others. To ensure that the plan does represent a coherent whole, it is of key importance that the organisation’s approach to each of the marketing elements is presented in the plan in a clear and easy to read format. It should then become obvious whether ambiguities are present and corrective action can be taken. 5.1.1 The Process of Developing the International Marketing Plan The intention of this section is to summarize earlier chapters. Basically, marketing planning is a rational sequence and a series of activities leading to the setting of marketing objectives and the formulation of plans for achieving them. Companies generally undergo a management process in developing marketing plans. In SMEs this process is usually informal. In larger, more diversified organisations, the process is often systematized. 5.1.2 Deciding on the International Marketing Mix Companies that operate in one or more foreign markets have to decide how much, if at all, to adapt their marketing mixes to local conditions. At one extreme are international companies that use a standardised marketing mix, selling largely the same products and services and applying the same marketing approaches world-wide. At the other end is an adapted marketing mix. In the latter case, the company adjusts the marketing mix elements to each target market, bearing more costs but aiming at a larger market share and return due to a more sophisticated and tailored marketing mix. As we have already stated in previous sections, the question of whether to adapt or standardise the marketing mix has been much debated in recent years. On the one hand, some global marketers believe that technology is making the world a smaller place, and that customer needs around the world are becoming increasingly similar. This paves the ground for global brands and standardised global marketing. On the other hand, the marketing concept states that marketing strategies will be more effective if tailored to the unique needs of each targeted consumer group. Despite global convergence, customers in different countries still have widely varied cultural and personal backgrounds and still differ significantly in their needs and wants, spending power, product preferences, and buying behaviour. Because these differences are hard to change, most marketers adapt their products, prices, channels, and promotions to fit customer desires in each country targeted. Kapitel_5.indd 346 03.08.2010 12:56:20 Uhr 5.1 Organizing and Implementing the Marketing Plan 347 Ultimately, global standardization is a matter of degree. Numerous international marketers suggest that companies should ‘think globally but act locally’ – that they should seek a balance between standardization and adaption. These marketers advocate a ‘glocal’ strategy in which the company standardizes certain core marketing elements and localizes others. The corporate management level provides global strategic direction and local operating units focus on the individual consumer differences across international markets. We shall now summarize and describe the international marketing mix and its implications (Kotler and Armstrong, 2009). Product Basically, five strategies allow for adapting product and promotion to a global market (Keegan, 2002). We will first examine the three product strategies and then turn to the two promotion strategies (see Figure 5.1). Straight product extension implies marketing a product in a foreign market without any adaption and change. This approach has been successful in some cases and problematic in others. Gillette razors, Heineken beer and Rolex watches are all sold successfully in about the same form all over the world. But Philips began to make a profit in Japan only after it reduced the size of its coffeemakers to fit into smaller Japanese kitchens. Straight extension is attractive because it involves no additional product development costs, manufacturing changes, or new promotion. However, it can be very expensive in the long run if products fail to satisfy foreign customers. Product adaption entails changing the product to meet local conditions. For example, Procter & Gamble’s Vidal Sassoon shampoos contain a single fragrance world-wide, but the amount of scent varies by country. Product invention consists of creating something new for a specific country market. This approach might take two forms. It might imply maintaining or reintroducing earlier product forms that happen to be well adapted to the specific needs of a given country. Or a company might create a new product to meet a particular demand in a given country. For example, Sony added the ‘U’ model to its VAIO personal computer line to meet the unique wants of Japanese customers. Source: Adapted from Kotler and Armstrong, 2009, modified Product Do not change product Adapt product Develop new product Promotion Do not change promotion Straight extension Product adaption Product inventionAdapt promotion Communication adaption Dual adaption Figure 5.1: International product and promotion strategies Kapitel_5.indd 347 03.08.2010 12:56:20 Uhr 5. Implementation and Controlling in the Marketing Planning Process348 Promotion Organisations can either adopt the same promotion strategy used in their home market or change it for each market targeted. Some multinational firms use a standardized advertising theme around the globe. Obviously, even in highly standardized advertising campaigns, small changes are required to adjust for language and minor cultural differences. Colours, for example, are changed to avoid taboos in other countries. Purple is associated with death in most Latin American countries and white is a mourning colour in Japan. Other enterprises follow a strategy of communication adaption, completely adjusting their advertising messages to local markets. Kellogg ads in the United States, for example, promote the taste and nutrition of Kellogg’s cereals versus competitors’ brands. In France, where customers drink little milk and eat small portions for breakfast, Kellogg’s ads try to convince consumers that cereals are a tasty and healthful breakfast. Media also need to be adapted internationally because media availability varies significantly from country to country. TV advertising time is very limited in Europe, for instance, ranging from a few hours a day in France to none in Scandinavian countries. Consequently, marketers must buy time months in advance, and they eventually have little control over airtimes. Magazines also differ in effectiveness. For example, magazines are a major medium in Italy and a minor one in Austria (Clegg, 2002). Price Companies also face multiple challenges in setting their international prices. For example, how might Black & Decker price its power tools globally? Of course, a company might set a uniform price all around the globe, but this amount could be a price too high in poor countries and not high enough in rich ones. Enterprises could charge what customers in each country would bear, but this approach ignores differences in the actual costs from country to country. Finally, the company could use a standard mark-up of its costs everywhere, but this strategy might price the company out of the market in some countries where costs are high. In addition, the Internet also makes global price differences more obvious. When companies sell their products and services over the Internet, customers can immediately see how much products sell for in different countries. They might even order a given product directly from the company location or dealer offering the lowest price. This will force companies toward more standardized international pricing. We will discuss the effect of the internet on the international marketing later in this chapter in a separate section. Place The multinational company has to adapt a whole-channel view of distributing products to the final customers. This involves designing international channels that take into account all the necessary links in distributing the seller’s products to final buyers, including the seller’s headquarters organisation, channels among nations, and channels within nations (Kotler and Armstrong, 2009). Channels of distribution within countries vary substantially from nation to nation. There are large differences in the numbers and types of intermediaries serving each foreign market. For example, companies marketing in China must operate through a network of Kapitel_5.indd 348 03.08.2010 12:56:20 Uhr 5.1 Organizing and Implementing the Marketing Plan 349 state-controlled wholesalers and retailers. Chinese distributors often carry competitors’ products and frequently refuse to share even basic sales and marketing information. Another difference lies in the size and character of retail units abroad. Whereas largescale retail chains dominate the scene in the United States, much retailing in other countries is done by many small, interdependent retailers. In India, for example, millions of retailers operate tiny shops or sell in open markets. Their mar-ups are quite high, but the actual price is lowered through bargaining. Supermarkets could offer lower prices, but supermarkets are difficult to build and open because of many economic and cultural barriers. Average income is low, and people lack storage and refrigeration to keep food for several days. These factors have kept large-scale retailing from spreading rapidly in developing countries. 5.1.3 E-Marketing and its Effect on the International Marketing Mix Evans and Wurster (1997, 1999 and 2000) have argued that the Internet has given rise to a new economics of information, with the ‘blowing up’ of the trade-off between the richness of information involved in a transaction and the number of people that it could reach. The Internet has made it is possible for companies to reach an extensive audience, while at the same time doing so with richness of information through the enhanced volume, design and interactivity of content that is feasible on a Web site. The authors identified three bases of competitive advantage: reach (referring to access and connection), richness (referring to detail and depth of information provided to customers), and affiliation (referring to whose interests the business represented). The internet has made inroads into both the business to consumer (B2C) and business to business (B2B) segments and online business is likely to be one of the biggest growth areas in the years ahead. Traditional companies, the so-called ‘brick and mortars’ (B&M), are being pressured to respond to the competitive threats by new e-business upstarts. The so-called internet ‘pure players’ have been able to create strong online brand recognition, provide good customer service, and are open 24 hours a day, seven days a week, and 365 days a year. Some organisations even give customers the option of customization and allow them to communicate with other customers through communities or discussion forums. The ability to customize service allows customers to build a relationship with the company while also being able to purchase products that they like. Physical stores can provide customers with good service but they cannot provide customers with the convenience and easy accessibility of purchasing online. In order for B&Ms to remain competitive and regain market share in their industries they have to make sense of how to best utilize the Internet. Example 37: Black & Decker power tool print ad Kapitel_5.indd 349 03.08.2010 12:56:20 Uhr 5. Implementation and Controlling in the Marketing Planning Process350 Why should B&Ms go Online? The reason is quite simple: to remain competitive, to increase profits and to increase market share. However, the road to becoming a successful online company for B&Ms is not uncomplicated. There are important issues that B&Ms have to tackle in order to ensure a smooth and successful transition to an online business. First and foremost, B&Ms have to develop a strategic vision for their online business and how it integrates with their established business. One sort of strategic vision is to focus on cost leadership. Web based transactions usually save the company some capital. For instance, the cost of internet based banking transactions is lower than the cost of a human teller transaction. Many companies that do not take advantage of this strategy may lose significant market share to those that compete on low cost. Another type of strategic vision is that of enhancing differentiating services. For example, car companies such as Toyota have developed personalized interactions with potential customers through customized navigation paths on their web sites. B&Ms need to think about why a customer would buy online from them. Some reasons include: superior functionality of the website, personalized interactions, streamlined transactions, security and privacy. These are all features that will draw customers to the dotcom world and encourage them to continue to use the web as a key way of buying products and services. Creating an informational or e-commerce site is an additional issue that B&Ms must address. An informational site is a much easier mission than an e-commerce site because there is no concern with the channels that are necessary for delivery of products, taxation, and/or contracts with distributors. An informational site is used primarily to inform consumers and other stakeholders about the company and offer a place to inquire about its products and services. The main requirement is whether the company has the technology or know how to create, implement and maintain its website or has to outsource this task to another corporation. Creating an e-commerce site poses greater challenges. A company must consider all the affected channels, which marketplace to enter, required technologies, etc. A major issue facing all e-commerce businesses is fulfilling the right order at the right time. Customer satisfaction in the digital era involves delivering the right product when, where, and how the customer wants it delivered, and answering customer inquiries fast and accurately. As already mentioned above, international Internet marketing has substantially changed some elements of the marketing mix. Marketing on the Internet is a very different process from conventional marketing. The key to a more successful marketing effort on the Internet will be an interactive relation marketing approach. However, this section focuses on marketing mix dimensions that may be facilitated through the use of the Internet (Hollensen, 2006). Product A product is anything that can be offered to a market for attention, acquisition, use, or consumption. The management of the product mix refers to the development and commercialization of new products, as well as to decisions, which determine the length of their cycles, namely, product rejuvenation and renewal, or elimination decisions. The Internet leads to faster discovery of customer needs, greater customization of the products, quicker product testing, and shorter product life cycles. The international marketers who Kapitel_5.indd 350 03.08.2010 12:56:21 Uhr 5.1 Organizing and Implementing the Marketing Plan 351 use the Internet should have comprehensive understanding of the foreign marketing environment to assess the relative advantages of their own products and services. Delivering a good product is not enough to gain customer loyalty. Manufacturers also need to provide online and offline after-sales service, which constitutes a new activity in the value chain. Therefore, they need to employ and train customer service staff to service their customers on- and offline. Bulletin boards, user groups and virtual communities can also aid customers to solve problems online, reducing the manufacturer’s time and effort while strengthening the producer’s virtual community. The rapidly developing virtual communities and social networks that provide the connections to allow customers to form strong relationships can influence consumer buying behaviour substantially. Consequently, relationships develop between those who contribute to the discussions within a forum (Stroud, 2008). The development of relationships between customers within social networks results in social and sometimes even emotional bonds being formed (Harridge-March et al., 2009). The Internet can considerably improve the entire product development process. This is especially the case if the product being offered can be transformed into a digital product. For example, time zone differences provide a driver for software development. By using the Internet, development work on software or engineering prototypes can continue 24 hours a day through a relay of contractors working in different time zones. Price The Internet has numerous influences on the price strategy; however, its use will lead to increasing standardization of prices across borders, or to a narrowing of price differentials as customers become further aware of prices in different countries. For example, an international marketer’s country-specific intermediates that advertise services locally (for the international marketer) have to recognize that there are international consequences to their strategies. For example if an international publisher were to offer a substantial discount on some products to its customers, readers all over the world could perceive this deal; but in some countries where the publisher already has distributors or does not have to discount to increase business, the special offer might be a problem. Additionally, Smart agents (software programs that make meta-searches of the Internet for products meeting pre-specified criteria) may further combat attempts at price discrimination by revealing different prices. In summary, these factors imply that the Internet will lead to increased standardization of prices across borders, or at least, diminished price spreads across country markets. In the Business-to-Business arena, it is likely that the bargaining power of customers is probably increasing since they will become aware of alternative products and services. Moreover, the ease of use of the Internet channel makes it easier for customers to exchange suppliers. However, there are still barriers to swapping since once a customer invests time in understanding how to use a Web site to select and purchase products, he or she may not want to learn how to use another service. The Internet has also enabled new pricing schemes, and these have encouraged start-ups to adopt pricing structures that depart a long way from traditional industry practice. The most famous example is the Priceline ‘name-your-own- price’ (C-t-B) model, which many people believed would become the dominant model for pricing but is now seen as another variation on well-established pricing formulas. The approach works well with airline tickets because accurate, timely information about the best prices is hard to get Kapitel_5.indd 351 03.08.2010 12:56:21 Uhr 5. Implementation and Controlling in the Marketing Planning Process352 and the seats must be sold before the flight. But customers must be willing to put up with the inconvenience of not being able to choose their airline or time of day they will fly. Within this narrow niche Priceline has a loyal and potentially profitable The final issue in the price dimension is the currency rates. Shopping on the Internet needs to be convenient. This involves trading in local currencies. Therefore, consumers are unlikely to search for information on currency conversion rates. Companies who wish to market their products internationally have to evaluate adding a link from their web pages to a currency converter or provide a conversion rate for each country to which they are prepared to make sales Place Physical distribution is the place aspect of the marketing mix. The marketing channel can be defined as interdependent organisations involved in the process of making a product available for use or consumption. The Internet, by connecting end-users and producers directly, reduce the importance of traditional intermediaries in international marketing (i.e. agents and distributors). To survive, such intermediaries need to commence offering a different range of services. Their value-add will no longer be principally in the area of physical distribution of products but rather in the collection, interpretation and dissemination of an immense amount of information. If intermediaries can perform a different mix of services, they will continue to play critical roles and extract value. The distribution system of the company must have some capabilities and competences, for example, 24-hour order taking and customer service response capability, and regulatory and customer-handling expertise to ship globally. Companies should consider providing information on how the products are shipped and precautions taken to ensure their quality on arrival. Quality guarantees and/or special consideration for international returns or refunds may also be necessary. Unquestionably, the Internet has reduced many distribution issues. The opportunity to sell over the net in a standardized way eliminates many natural barriers to entry. Furthermore, any business connected to the Internet can retrieve other businesses products by ordering them from their websites. Companies no longer have to devise long and expensive distribution channels to bring their products to the customer. Promotion Promotion refers to all the various ways an organisation undertakes to communicate its products’ qualities and to persuade target customers to buy from it. The use of the Internet permits sales departments to have an interactive communication with the customers. Global advertising costs, as a barrier to entry, will be significantly reduced as the Internet makes it feasible to reach a global audience inexpensively. However, there are several online promotion techniques. Paying to place links on pages with audiences that mirror or include a company’s target customers is less expensive than conventional media. In addition, ‘free’ advertising on other sites can regularly be exchanged for mutual links. Postings on Internet discussion groups on topics relevant for specific products or markets are another way for marketers to attract visitors to their sites. Although there are many offline promotion techniques in order to attract potential customers to websites, such as traditional forms of advertising (e.g. magazine advertising or word of mouth). Kapitel_5.indd 352 03.08.2010 12:56:21 Uhr 5.1 Organizing and Implementing the Marketing Plan 353 However, there is a critical issue for the international marketers who use the Internet: the new challenge facing companies is the management of a global brand and corporate logo. Consumers may become confused if a company and its subsidiaries have different Web sites, each communicating a different format, image, message, and content. Consequently, a company should visibly define its policies about branding on the Internet. Szmigin et al. (2005) suggest that the modern networked society offers multiple opportunities for organisations to develop relationships with customers. The Internet and appropriate outline communities enhance relationship marketing by providing an opportunity for interaction with the relevant group and by understanding the nature and content of communities, organisations can better meet the needs and wants of those members. The above mentioned changes in the 4Ps have been the result of the interactivity nature of the Internet, which requires a shift in the marketing paradigm, toward a more relation-oriented approach, as will be discussed later in this Chapter. 5.1.4 Writing the Marketing Plan Document Marketing planning is widely adopted by organisations from all sectors. The process of marketing planning integrates all elements of marketing management: marketing analysis, development of strategy and the implementation of the marketing mix. Marketing planning can, therefore, be regarded as a systematic process for assessing marketing opportunities and matching them with own resources and competences. In this respect, the process aids businesses to effectively develop, coordinate and control marketing activities. Basically, the major functions of the marketing plan are to determine where the company is, where it wants to go, and how it can get there. Marketing planning is able to fulfil these functions by driving the business through three sorts of activities: (a) analyses of the internal and external situations, (b) development of marketing strategy, and (c) design and implementation of marketing programmes (Hollensen, 2006). The marketing planning process is linked to planning in other functional areas and to overall corporate strategy. It takes place within the larger strategic marketing management process of the business. To survive and flourish, the business marketer must properly balance the firm’s resources with the objectives and opportunities of the environment. Marketing planning is a continuous process that involves the active participation of other functional areas. The marketing plan itself is the written document that businesses develop to record the output of the marketing planning process. This document provides details of the analysis and strategic thinking that have been undertaken and outlines the marketing objectives, marketing mix and plan for execution and control. As such, the plan plays a key role in informing organisational members about the plan and any roles and responsibilities they possibly have within it. The plan also provides details of required resources and should highlight potential obstacles to the planning process, so that steps can be taken to overcome them. The marketing plan is a kind of road map, providing direction to help the business implement its strategies and achieve its objectives: the plan guides top management and all functional areas within the organisation. Kapitel_5.indd 353 03.08.2010 12:56:21 Uhr 5. Implementation and Controlling in the Marketing Planning Process354 Once the core marketing analyses are complete, the strategy development process follows. The key during this phase is to base any decisions on a detailed and objective view from the analyses. The most appropriate target markets will be identified, basis for competing and positioning strategies determined and detailed marketing objectives presented. As these choices will affect how the business proceeds in relation to its customers and competitors, there must be consistency with the company‘s general corporate strategy. The marketing strategy must also be realistic and sufficiently detailed to form the basis for the marketing programmes which follow. The final stage of the marketing planning process involves the determination of marketing mix programs and their implementation. A detailed explanation is needed of precisely what marketing tasks must be undertaken, how, by whom and when. There needs to be a comprehensive rationale connecting these marketing mix recommendations with the analyses and strategy preceding them. Assuming that appropriate attention has been devoted to the marketing analyses and marketing strategy that guide the marketing programs, managers must next ensure that adequate detail is provided to make the marketing mix genuinely implementable. This means that each component of the marketing program – product, price, promotion, distribution and people – must be discussed separately and the tasks required to action it are fully explored. Those involved in planning will usually prepare some form of written marketing plan document in which to explain the outputs of the process. The marketing plan provides a useful framework for the analytical and strategic thinking undertaken, the detailed marketing objectives and marketing programs, their implementation and control. Managers are able to refer back to the document for guidance and should regularly update it to ensure that a full record of the marketing planning activities is available. The document helps focus the views of senior management and explain the required marketing activities and target market strategy to other functional areas within the business, such as operations and finance (Dibb, 2002). The key components of the marketing plan are the following: 1. Title page 2. Table of contents 3. Executive summary 4. Introduction and problem statement 5. Situational analysis 6. Marketing objectives 7. Marketing strategies 8. Marketing programmes/action plans 9. Budgets 10. Implementation and control 11. Conclusion. We shall now examine each section of the marketing plan structure in further detail (Hollensen, 2006). 1. Title Page The title page is an identification document that provides the reader with the following essential information: Kapitel_5.indd 354 03.08.2010 12:56:21 Uhr 5.1 Organizing and Implementing the Marketing Plan 355 legal name of business• name of document (‘Marketing Plan for …’) • date of preparation or modification of the document• name, address, e-mail and phone number of the business or contact person• name, address, e-mail and phone number of the individual or business who prepared • the plan the planning period.• 2. Table of Contents This is the list of subjects covered in the marketing plan and where to find them. 3. Executive Summary This gives busy executives and managers a rapid overview, in form of a concise summary of the key points in the marketing plan. This section encompasses a one-page summary of the basic factors involving the marketing of the product or service along with the results expected from implementing the plan. 4. Introduction and Problem Statement The identification and clear presentation of the problem(s) or issue(s) facing the company is the most critical part of the introduction. Only a problem properly defined can be addressed. The marketer should shortly address the main problem in the marketing plan. The marketer needs to be on alert for symptoms parading as key issues and underlying problems. Strategic marketing problems are long-term, involve large sums of money, and affect multiple aspects of the firm. 5. Situational Analysis Based on a comprehensive audit of the market environment, competitors, the market, products, and the company itself, this section provides a condensed view of the market (size, structure, and dynamics), prior to a detailed analysis of individual market segments, which form the heart of the marketing plan. The process is based upon market segmentation – that is, homogeneous groups of customers with characteristics that can be exploited in marketing terms. This approach is taken because it is the one that is most valuable for managers in developing their businesses. The alternative product-oriented approach is hardly ever appropriate, given the varying requirements of the different customer groups in the market in which most organisations compete. It is necessary to summarize the unit‘s present position in its major markets, in the form of a SWOT analysis for each major market segment, product, or business group. The word SWOT derives from the initial letters of the words strengths, weaknesses, opportunities, and threats. The analysis includes the following issues: The Firm and its Market Identification and evaluation of the competences in the company (key personnel, ex-• perience, skills and capabilities, and resources), in comparison with competitors. The structure of the marketing organisation (lines of authority, functions and respon-• sibilities). Description of the total potential market (i.e. potential customers).• Kapitel_5.indd 355 03.08.2010 12:56:21 Uhr 5. Implementation and Controlling in the Marketing Planning Process356 How does the company’s product/service satisfy the needs of the market? • Description of the particular customers to be targeted. • Size of (a) total potential market (number of potential customers), and (b) the target • market. Estimates should be supported with factual data. Growth potential of (a) total potential market, and (b) the target market. The marketer • needs to look at local, national and international markets. Estimates should be supported with factual data. The company’s market share (firm's sales divided by the total market sales in per • cent) Competitive Environment Major competitors: name, location, and market share. • Comparison of the company’s product/service with that of the major competitors • (brand name, quality, image, price, etc.). Comparison of the company with that of the major competitors (reputation, size, dis-• tribution channels, location, etc.). How easy is it for new competition to enter this market? • What has the company learned from watching competition? • Are competitors' sales increasing, decreasing, steady? Why? • Technological Environment How is technology affecting the product/service? • How soon can it be expected to become obsolete? • Is the company equipped to adapt quickly to changes?• Socio-Political Environment Description of the changing attitudes and trends. How flexible and responsive is the • firm? New laws and regulations that may affect the business. What might be the financial • impact? From the SWOT analyses, key issues that must be addressed. Marketers should summarize the company’s internal and external assessment in form of a SWOT-matrix with the key points from the situation analysis. 6. Marketing Objectives Within this section, the marketing objectives in terms of sales volume, market share, return on investment, or other objectives or goals should be stated precisely (e.g. ‘To obtain a sales volume of 3.000 units equal to an increase in market share from 10 per cent to 15 per cent of total market, by the by the end of the next fiscal year.’). 7. Marketing Strategies The question addressed within this part is how to reach the company’s objectives and goals? Which strategic models should be used (new market penetration, penetration, market development, etc.). Kapitel_5.indd 356 03.08.2010 12:56:21 Uhr 5.1 Organizing and Implementing the Marketing Plan 357 8. Marketing Programs/Action Plans Marketing programs are the actionable means of achieving desired ends. They outline what needs to be done, how it will be done, when it will be done, and who will do it. How will the company implement the above strategy? • Product/service: quality, branding, packaging, modifications, location of service, etc. • Pricing: How will the firm price its product/service so that it will be competitive, yet • profitable? Promotion/advertising: How, where, when, etc. • Selling methods: Personal selling, mail-order, etc. The marketer must also include • number of salespersons, training required, etc. Distribution methods • Servicing of product • Other: the marketer is supposed to add any other relevant information• 9. Budgets Having detailed the steps that will be necessary to achieve the marketing objectives, the writer of the plan should then be in a position to cost the various proposals and to derive an overall marketing budget for the planning period. Of course, in reality, this is not uncomplicated. Cost will certainly have been in the minds of marketing planners even before they commenced the marketing planning process. At the very least, the development of a suitable budget is likely in practice to have been an iterative process, with proposals being re-evaluated in the light of budgetary constraint. There are a variety of ways of determining the marketing budget (see section 4.4.3). Irrespective of the method actually used, in practice it would be usual to specify how the eventual budget has been allocated and to include such a specification in the marketing plan itself. It would also be typical for an allowance to be made for contingencies in the event that monitoring by the organisation suggests that the objectives will not be met. Sufficient resources should then exist for some form of corrective action to be taken. A budget of cash flows should also be prepared. It identifies whether a company will have enough money to meet its cash requirements on a monthly basis. Some sales will be made in cash while others may be made on credit. Because sales made on credit will not result in the receipt of cash until a later date, they must not be recorded until the month in which the cash will actually be received. Therefore, the percentage of sales to be made in cash and the percentage to be made on credit must be estimated. The percentage of credit sales should be further broken down according to the business’ different collection periods (30 days, 60 days, etc.). 10. Implementation and Control As soon as the plan has been implemented, the management will then have to take responsibility for monitoring the progress of the organisation towards the goals specified. Managers will also need to concern themselves with the costs that have been incurred at each stage of implementation and monitor these against the budget. Thus, control mechanisms need to be put into place to monitor: the actual sales achieved, against the budget• the actual costs incurred against those budgeted• the performance of individual services against budget• Kapitel_5.indd 357 03.08.2010 12:56:21 Uhr 5. Implementation and Controlling in the Marketing Planning Process358 the overall strategic direction that the organisation is taking – i.e. will the overall • corporate objectives be achieved in a manner commensurate with the organisation's mission? If variances are detected in any of these areas, corrective action should be initiated, if necessary by utilizing resources allocated for contingency in the budget. 11. Conclusion This section briefly concludes the problems stated in the beginning of the report, based on the analysis in the marketing plan. The conclusion is not a summary. The executive summary will normally also include the key results of the market analysis 5.1.5 Implementation and the Management of Change Marketing strategy concerns the issues and challenges of what should happen and why it should happen. Implementation focuses on actions: who is responsible for different activities, how precisely the strategy should be carried out, where things will happen and when action will occur (Jobber, 2010). No matter how well conceived a strategy and marketing plan might be, it will definitely fail if people are incapable of carrying out the necessary tasks to make the strategy actually work in the market. Consequently, implementation capability is an integral part of strategy formulation. The implementation of a new strategy potentially entails profound effects on people in organisations. Unfortunately, most people most of the time are not open to change. It represents risk, uncertainty and more effort than the regular day job. Therefore, the implementation of a strategic move is usually associated with the need for people to adapt to change. Therefore, the management of change is an essential ingredient in effective planning and implementation. Against this background it is useful to understand the emotional stages that people pass through when confronted with difficult change. These stages are comprised in the transition curve and are shown in Figure 5.2. We shall now look at the different stages in more detail (Wilson, 1993): Numbness • The first reaction is typically shock. The scale of the consequences leads to emotions of being overwhelmed, despair and numbness. The outward symptoms include silence and lack of overt response and interaction. Denial and disbelief • The second sage is usually associated with denial and disbelief, leading to trivialising the change implications, denying it or joking about it. The aim is to reduce or minimise the psychological impact of the change. Self-doubt and emotion • As the certainty of the change becomes increasingly evident, personal feelings of uncertainty arise. The over reigning feeling is one of powerless, of being out of control. Acceptance and letting go • Acceptance is characterised by tolerating the new reality and letting go of the past. This is more likely to occur at an emotional low point but is the start of an upward Kapitel_5.indd 358 03.08.2010 12:56:21 Uhr 5.1 Organizing and Implementing the Marketing Plan 359 surge as comfortable attitudes and behaviours are severed, and the necessity to cope with the change is finally recognised. Adapting and testing • As people adapt to the changes they become more energetic, and they begin testing new behaviours and approaches to work, and alternatives are explored and evaluated. Construction and searching for meaning • As most people’s emotions become much more positive and they feel they have got to grips with the change, they strive for a clear understanding of the new. Internalisation • The final stage is where feelings reach a new high. The change is fully accepted by most of the people. The adaption is complete and behaviours alter too. Most people pass through all of the stages outlined above, although the movement from one stage to the next is rarely smooth. The implication for managing marketing implementation is that the acceptance of fundamental change will take time for people to accept. The venting of anger and frustration is an accompanying behaviour to this transition for the old to the new, and has to be accepted as such. The overriding objective of marketing implementation and change from a strategic perspective is the successful execution of the marketing plan. This may include (Jobber, 2010): gaining the support of key stakeholders in the company for the proposed plan and • overcoming the opposition of others gaining the required sources (e.g. people and money) to be able to implement the • plan gaining the commitment of individuals and departments in the company who are • involved in frontline implementation (e.g. marketing, sales, service and distribution staff) Source: Adapted from Wilson, 1993 Time Numbness Reaction to change Denial and disbelief Self-doubt and emotion Acceptance and letting go Adaption and testing Construction and searching for meaning Internalisation Figure 5.2: The transition curve Kapitel_5.indd 359 03.08.2010 12:56:21 Uhr 5. Implementation and Controlling in the Marketing Planning Process360 gaining the cooperation of other departments needed to implement the pan (e.g. pro-• duction and R&D). For some people, the objectives and execution of the plan are in line with their personal – career – objectives, interests and viewpoints and gaining their support is relatively easy. But there are likely to be others that resist change and implementation of the marketing plan. In the next section we shall discuss various barriers impeding the implementation of marketing plans and effective ways of overcoming resistance to change. 5.1.6 Barriers Impeding the Implementation of Marketing Plans Even though the benefits of adopting marketing planning are well established, the effectiveness of the process is not definite. A range of barriers to successful marketing planning have been highlighted in the literature. Consequently, careful attention is essential to ensure that marketing planning is effectively implemented. The starting point should be an appreciation of the probable barriers, so that preventative and remedial action can be taken. The following list is an amalgamation of the key issues raised by researchers in the marketing planning literature (Dibb, 2002; Simkin, 2002): Lack of marketing competence in the organisation• : insufficient marketing knowledge or skills, poor appreciation of the marketing concept in general, poor understanding of the distinction between the marketing planning process and its outputs, management’s failure to see across individual market sectors or brands to grasp the ‘integrated picture’ Isolation of marketing planning from other areas of the business• : unfortunate involvement of functions, lack of enthusiasm for planning amongst non-marketers, no authority for marketers to talk to other functions and the need to understand them better, are all aspects of one underlying problem in much marketing planning – nonmarketers have a wealth of knowledge and insights to bring to marketing planning. Organisational barriers• : a lack of acknowledged corporate value given to planning plus personal clashes, are facets of corporate life. The process of planning, however, requires sharing of information and ideas, effective communications, a focus on the market rather than internal politics. Too much short-term marketing planning• : too much emphasis on a one year planning time frame, leading to plenty short-term detail but little long term vision. This is fuelled by the increasing shareholder-value orientation in many organisations which fails to incorporate a more stakeholder driven sustainable approach to strategic management. Marketing plans developed in isolation rather than on marketing analyses• : insufficient marketing intelligence and/or lack of a marketing intelligence system (MIS), reduced sharing of marketing intelligence, deficient marketing analyses of customers, competitors and the wider trading environment, leading to an inappropriate understanding of these areas Lack of managers’ time resources for thorough marketing planning• : managers have difficulties balancing planning activities with the rest of their work load, so that the process is not entirely implemented. Kapitel_5.indd 360 03.08.2010 12:56:21 Uhr 5.1 Organizing and Implementing the Marketing Plan 361 The need for a plainly defined process is fundamental to successful marketing planning. This process should incorporate the required analyses, strategic thinking and marketing program development. However, if such a process is to be effectively put into practice and the barriers are to be avoided, businesses must also address certain infrastructure, processes and implementation requirements. The recommendation is that marketers should use the following three solutions (Hollensen, 2006): Solution 1• : provide the necessary infrastructure and resources for marketing planning activities Solution 2• : use a robust analytical process that is objective and complete in terms of the inclusion of the essential ingredients of marketing planning Solution 3• : devote managerial time and attention to the on-going management of the resulting plan’s implementation Solution 1: Infrastructure Requirements The infrastructure requirements for marketing planning can be conceptualized as a series of pre-requisites which companies should address at the outset of the process. The must to manage internal communication extends far beyond the marketing function. A well-conceived program to manage inter-functional co-ordination is supreme. It is vital to ensure that communication of the planning exercise and its outcomes extends throughout organisational hierarchies and right down the distribution channels. In addition, any marketing initiative requires purpose, process and vigorous propositions. Busy personnel cannot be expected to take ‘time out’ from routine operations to undertake strategic thinking and develop marketing plans without being provided with the resources for tackling such tasks. Too often senior managers expect a few line managers to undertake additional cumbersome tasks without being provided with necessary additional resources. Solution 2: Robust Processes There is no point determining tactical marketing mix programs if no analysis of the marketplace has been undertaken or if the target market strategy has not been up-dated to reflect these results. An effective marketing planning process should include a coherent and integrated process of analysis, strategizing and tactical program recommendation. The skills to undertake marketing analyses aid a strategic review and to accordingly modify often entrenched marketing tactics must be inherent or bought-in from external agencies. Solution 3: Facilitation of Implementation Strategy and planning activities must be managed and will not take place by chance: schedules, reviews, performance assessments and remedial actions, with praise and critics from senior management in the on-going evaluation process are important elements in this respect. Without attention to these requirements, fine marketing thinking eventually fails to result in actionable recommendations being implemented. The output from planning is usually summarized in the form of a detailed marketing plan document. The robustness of this document is a key factor in determining the success of the process. To be effective, the marketing plan document must explain the Kapitel_5.indd 361 03.08.2010 12:56:21 Uhr 5. Implementation and Controlling in the Marketing Planning Process362 background analyses undertaken during the planning process before specifying all aspects of the proposed strategy and marketing and sales programs. The required marketing strategy elements should include information of target segments, explanation of the basis for competing and identification of product and brand positioning strategies. The marketing and sales programs should encompass issues to do with the product range, pricing terms, promotional tactics, methods and channels of distribution and sales force planning. These recommendations must be seen to match the fixed marketing objectives and arise out of the analyses of the market, customers, competitors and the wider trading environment which have been undertaken. That is, there has to be a close relationship between the desires, characteristics and buying behaviour of the company’s target markets and the proposed marketing mix recommendations. Three areas which are particularly vital to implementation, but which are sometimes overlooked in the marketing plan, require specific analysis: communicating planning outputs, specifying the required implementation resources, and last but not least managing resistance to change in the organisation. Communicating Planning Outputs The importance of effective communication does not cease once the marketing planning recommendations have been completed. Instead, the emphasis shifts to ensuring clarity within and across functional areas, so that the newly designed marketing programs can be consistently and systematically implemented. A detailed plan of communication activity is required that specifies how this can be achieved and who needs to be involved. This plan should extend beyond the organisation itself to include all parts of the distribution structure. Specifying the Required Implementation Resources A suitable level of detail is needed to ensure sufficient financial, personnel and time are allocated to each of the marketing activities required. A weakness of many businesses’ marketing plans is that they fail to provide these compulsory implementation details, with the result that not all planned activities are put into practice. A key message is that marketing planning does not end when the marketing plan document has been prepared. At this stage, it is crucial that all aspects of the implementation details are attended to. Even once this part of the process is complete, the marketing plan document should continue to be continuously updated. Managing Resistance to Change in the Organisation Recognizing that planning may lead to organisational disruption and change is an important infrastructure pre-requisite. This is because change is often considered to be a threat to people in the organisation as already outlined above. Organisations can build up inertia that motivates people to resists changing their status quo, even though change might be beneficial (Robbins and Coulter, 2005). Why do people resist change? An individual is likely to resist change for the following reasons: uncertainty, habit, concern over personal loss, and the belief that the change is not in the company’s best interest (Strebel, 1996): Uncertainty • Change replaces the known with ambiguity and uncertainty. For example, when quality control methods based on statistical models are to be introduced into man- Kapitel_5.indd 362 03.08.2010 12:56:21 Uhr 5.1 Organizing and Implementing the Marketing Plan 363 ufacturing plants, many quality control managers have to learn the new methods. Some people may fear that they will be unable to do so and develop a negative attitude toward the change. In addition, they may be afraid that increased effectiveness and efficiency will potentially make them redundant. Habit • Another cause of resistance is that people do things out of habit. As business life is extremely complex people do not consider the full range of options for the multiple decisions they make every day. To cope with this complexity, people rely on habits or programmed response. But when confronted with change, this tendency to respond in their accustomed ways becomes a source of resistance. Concern over personal loss • The third cause of resistance to change is the fear of losing something already possessed. Change threatens the investment people have already made in the status quo. Naturally, the more that people have invested in the current plan or system, the more the resist change. They fear the loss of status, compensation, authority, relationships, personal convenience, or other benefits that they value. This explains why older employees tend to resist change more than younger workers as they have generally invested more in the current system. Belief that the change is not in the company’s best interest • A final cause of resistance is a person’s belief that the change is incompatible with the objectives and interests of the organisation. For instance, an employee who believes that a proposed new job procedure will reduce product quality or productivity can be expected to resist the change. Faced with the likelihood of resistance from vested interests, marketing managers should act as change agents and develop an implementation strategy that can deliver the required change. A change agent is a person who is responsible for driving through change within an organisation. In general, a manager can use any of the following six techniques for reducing resistance and implementing the change. These actions, listed in Figure 5.3, include education and communication, participation, facilitation and support, negotiation, manipulation, and coercion (Kotter and Schlesinger, 1993): Education and communication • In order to ensure that change happens in practice, the marketing plan must be communicated to employees with the aim of making them perceive the logic of the change. Employees can be educated through one-on-one discussions, memos, group meetings, or reports. In order to be effective, mutual trust and credibility between managers and employees is paramount. Participation • Another technique to reduce resistance to change involves allowing those who oppose a change to participate in the decision. The pre-requisite is, of course, that the employees have the expertise to make meaningful contributions. Involvement can substantially reduce resistance, obtain commitment to seeing change succeed, and increase the quality of change decision. Facilitation and support • Management might also provide supportive efforts such as employee counselling, new skills training, or paid leave of absence. This can be quite time-consuming and expensive. Kapitel_5.indd 363 03.08.2010 12:56:21 Uhr 5. Implementation and Controlling in the Marketing Planning Process364 Negotiation • Another managerial technique in this framework is negotiation. This involves exchanging something of value to reduce resistance. This is especially feasible if resistance comes from a powerful stakeholder. This approach is associated with high costs and the likelihood of having to negotiate with other resisters. Manipulation • Manipulation is covert attempts to influence such as twisting or distorting facts, withholding damaging information, or creating false rumours. Although technically an option this approach practically is not applicable for ethical reasons and given the fact that it is potentially most damaging. Coercion • Finally, using direct threats and force may also reduce resistance to change. Although it is an inexpensive and eventually easy way of getting support it may be illegal and – like manipulation – should practically not been taken into consideration because of the likelihood of detrimental consequences. Throughout the change management process along the transition curve (see Figure 5.2) management has to continuously support employees in order to successfully implement the marketing plan and manage resistance to change (Owen, 2009). When implementing the marketing plan, marketers and management is advised not to ask people to do too much too soon. Instead, commitments should be staged. It is instrumental to start with something effortless for them to do. This has two effects: it builds Education and communication Actions to reduce resistance to change Negotiation ParticipationCoercion Manipulation Facilitation and support Figure 5.3: Managerial actions to reduce resistance to change Kapitel_5.indd 364 03.08.2010 12:56:21 Uhr 5.1 Organizing and Implementing the Marketing Plan 365 people’s confidence and they perceive that they can succeed. In addition, it creates a sense of obligation: having started, they will feel obliged to see the whole process through. In addition, management should set expectations early and identify some early wins. A few symbolic acts will often help convince employees that management is serious about the change and that there is real momentum. Another important aspect is to challenge but not to break people. Fundamental change takes people outside their comfort zone. This can lead to increased performance if they are well managed. But if people are overwhelmed with tasks and responsibilities, they become too stressed and eventually resist change. The marketer should also focus on the positives which involves recognising and reinforcing the right behaviours and performance. It is of central importance to find something that each stakeholder in the change process is doing well, recognise it and build their confidence accordingly. 5.1.7 Deciding on the Marketing Organisation Marketing organisation provides the framework in which marketing implementation takes place. The firm’s organisational structure is a critical variable for the implementation of the company’s marketing plans. The following summary highlights the main reasons for this (Hollensen, 2006): There may be difficulties in coordinating and controlling operating units of different • sizes and levels of complexity. Personnel in different markets will have diverse abilities and expectations, and or-• ganizing such a heterogeneous group can be challenging. There may be excessive head-office control.• Effective marketing planning only comes about when the marketing strategy and organisational structure correspond. The elementary question ‘Do we have the right organisation for our strategy?’ is one that all chief executives should be asking. This question can be broken down into four ‘basic’ parts, the first two of which are concerned with the division of responsibilities amongst the labour force, whilst the remaining questions focus on coordination and control: What tasks are required to put the strategies into operation?• To whom should these tasks be assigned?• How interdependent are these tasks?• How can the organisation be sure that the tasks assigned will be performed?• There is nothing like the correct answers, and consequently there are accurate structures for all organisations, but successful firms are those that tend to have organisational structures that fluently fit their specific needs in terms of corporate objectives, strategies, corporate culture, etc. There are many ways in which a multinational company and marketing can be organised. The most relevant are the following organisational structure archetypes (Jobber, 2010): no marketing department• functional structure• international division structure• product-based structure• Kapitel_5.indd 365 03.08.2010 12:56:22 Uhr 5. Implementation and Controlling in the Marketing Planning Process366 geographic structure• matrix structure• No Marketing Department It is quite common that some – usually small – companies have no marketing department. In small enterprises, the owner-manager may carry out some of the functions of marketing, such as developing customer relationships, providing market feedback and product development. In larger organisations, which may use the traditional production, finance, personnel and sales division, the same task may be undertaken by those departments, especially sales (e.g. customer feedback, sales forecasting). The classic example of a company that refused to set up a marketing department was the Body Shop although the company is based on many of the essentials of marketing (e.g. a clearly differentiated product range, consistent positioning and effective PR). Functional Structure As small firms grow, the most likely emergence of a formal marketing structure is a section within a sales department. At this early stage of internationalization, the company has no international marketing specialist and the domestic marketing department may have the responsibility for the global marketing activities. The export department may be a sub department of the sales and marketing department (see Figure 5.4). The export department is the first real step in internationalizing the organisational structure. It is particularly suitable for SMEs, having low product and area diversities. Functionalism bring the benefit of specialisation of task and a clear definition of responsibilities, and it still the most common form of marketing organisation (Workman et al., 1998). However, as the product range widens and the number of markets served increases, the structure may become unwieldy with insufficient attention being attributed to specific products and markets since no one has full accountability for a particular product or market. ProductionSales &Marketing Research & Development Finance Domestic Export Source: Adapted from Hollensen, 2006, modified Managing Director Figure 5.4: Example of the functional structure Kapitel_5.indd 366 03.08.2010 12:56:22 Uhr 5.1 Organizing and Implementing the Marketing Plan 367 International Division Structure As international sales grow, at some point an international division structure may emerge. In Figure 5.5, the company’s activities are separated into domestic and international divisions, with a major objective being to develop the firm’s international business interests. This structure is most suited for firms which: wish to develop international business and greater international expertise• do not have adequately trained executives to manage an international organisation.• However, there are drawbacks to this structure which will be exposed as the firm expands, bringing problems of coordination as the business becomes too diverse. In addition, as the domestic and international spheres develop, conflict may emerge in the areas of product development and research and development (R&D). Product-Based Structure The need to give sufficient care and attention to individual products has led numerous companies to move to a product-based structure. A common structure is for a product manager to overlook a group of brands within a product field (e.g. shampoos) supported by brand managers who manage specific brands. Their role is to coordinate the business Product Division B Product Division A International Division North AmericaEurope ChinaJapan Country organisations Managing Director Corporate staff Germany United Kingdom Domestic divisions Source: Adapted from Hollensen, 2006, modified Figure 5.5: Example of the international division structure Kapitel_5.indd 367 03.08.2010 12:56:22 Uhr 5. Implementation and Controlling in the Marketing Planning Process368 management of their brands. This entails dealing with advertising, promotion and marketing research agencies, and function areas within the firm. Their dilemma stems from the fact that they have accountability for the commercial success of their brands without the power to force through their decisions as they have no authority over other functional areas such as sales and finance. The product structure is suitable for companies with more international business experience and with diversified product lines. Under the product-based structure the major focus is on product lines. The firm is divided along product lines and each division becomes a cost centre. A key feature is the decentralization of the structure which allows local managers greater freedom in their decision-making. This structure suits companies which have: a diversified product line• the products have potential for worldwide standardization• a wide variety of final customers• production sites in many locations.• Corporate staff CEO Product Division C world-wide Product Division B world-wide Product Division A world-wide Product Division A Europe R&D Marketing Personnel Source: Adapted from Hollensen, 2006, modified Figure 5.6: Example of the product structure Kapitel_5.indd 368 03.08.2010 12:56:23 Uhr 5.1 Organizing and Implementing the Marketing Plan 369 The advantages of this structure are that adequate attention is given to developing a coordinated marketing mix for each brand, and assigning particular responsibility means that speed of response to market is quicker than relying on a committee of functional specialists. In addition, this structure is likely to enable a highly motivated group of divisional heads. However, there are also several drawbacks. First, this structure might eventually promote rivalry and counter-productive competition between product managers. Furthermore, certain product areas may be overlooked, particularly minor ones. Finally, when division heads move up the corporate ladder, there is a danger that they may bias policies in favour of their former networks and ultimately product areas. In response to these difficulties some enterprises are introducing category management to provide a focus on a category of brands. Category management is the management of brands in a group, portfolio or category. Companies such as Unilever and L’Oréal have moved to category management to provide greater clarity in strategy across brands. Geographic Structure If product acceptance and operating conditions vary substantial across world markets, then the geographical structure is likely to be the most favourable. This structure is especially useful for enterprises that have a homogeneous range of products, but at the same time need speedy and efficient adaptation to local market conditions. Typically, the world is divided into regions, as illustrated in Figure 5.7. There are mainly two reasons for dividing into different regions: Asia/ Pacific Africa/ Middle EastNorth AmericaLatin AmericaEurope Country subsidiaries Country subsidiaries Country subsidiaries Country subsidiaries Country subsidiaries Corporate staff CEO Production Production Production Production Production Marketing Marketing Marketing Marketing Marketing Source: Adapted from Hollensen, 2006, modified Figure 5.7: Example of the geographical structure Kapitel_5.indd 369 03.08.2010 12:56:23 Uhr 5. Implementation and Controlling in the Marketing Planning Process370 1. When sales volume in a particular region becomes significant there need to be some specialized staff to focus on that specific region, to better exploit the potential of an already growing market. 2. Homogeneity within regions and heterogeneity between them require treating each important region separately. Therefore a regional management centre becomes an appropriate organisational feature. Parallel to a regional centre, each country has its own organisational unit. Countrybased subsidiaries are characterized by a high degree of adaptation to local conditions. Since each subsidiary develops its own unique activities and its own autonomy, it is sometimes relevant to combine local subsidiaries with an RMC: for example, to utilize opportunities across European countries. Firms may also organize their operations using a customer (Key Account or Global Account) structure, especially if the customer groups they serve are very dissimilar: for example, businesses and governments. Marketing to these diverse groups may require the concentration of specialists in particular divisions. The product may be the same, but the buying processes of the various customer groups may differ. An advantage of this type of structure is a clear demonstration of authority. In addition, the coordination of different functional areas of management is enhanced and resources could be pooled. However, to work efficiently, the structure depends on a small group of highly effective managers. Furthermore, there is the likelihood that certain product lines will be ignored as there is no overall responsibility for a specific product Matrix Structure For companies with a wide product range selling in various and diverse markets, a matrix structure may be most feasible. The product structure tends to offer better opportunities to rationalize production across countries, thus gaining production cost efficiencies. On the other hand, the geographical structure is more responsive to local market trends and needs. In the matrix organisation product and market managers are employed to give attention to both facets of marketing activity (see Figure 5.8). The strength of this structure is that it can respond to different political and economic environments because it incorporates the elements of product-based and geographic management. For example, the product manager would have world-wide responsibility for Product X, whilst the geographic managers would be responsible for all product lines, including Product X, in the market. Thus both managers would overlap and this is a good basis from which to make major decisions. Another feature of matrix Structures is the duality that exists – in dual budgeting, dual personnel evaluation systems, etc. This could be seen as positive in that interdependence of opinion and contributions would be the outcome. However, the matrix structure is a resource-extensive method of organisation. Besides, the possibility of a power struggle as a result of the dual command structure: As illustrated in Figure 5.8, the sales manager for product Z in Argentina would have two superiors to refer to. As communication becomes more complicated clear lines of decision-making authority need to be drawn up in order for the system to work effectively. Finally, uncertainty exists in determining who decides what in certain circumstances. For example, who decides the price of the product? Kapitel_5.indd 370 03.08.2010 12:56:24 Uhr 5.1 Organizing and Implementing the Marketing Plan 371 Marketing organisation and implementation are inevitably intertwined as the former affects the day-to-day activities of marketing executives. The structures adopted by enterprises tend to reflect their management outlook, experience and history; organisations can even adapt the three basic types to produce hybrid models. The main point to bear in mind, however, is that the best organisational structure is the one which fits the organisation’s environment and internal characteristics. If the strategy changes or the firm makes further internationalization moves, this has to have some effect on the organisation structure. Also, the organisation structure might change if the management experiences problems with its existing structure (Hollensen, 2006). CEO Product W Europe North America Africa / Middle East South America Product X Product Y Product Z Corporate staff G eographical m anagers W or ld w id e pr od uc t m an ag er s Sales manager for product Z in Argentina Sublevel example Source: Adapted from Hollensen, 2006, modified Figure 5.8: Example of a matrix structure Kapitel_5.indd 371 03.08.2010 12:56:24 Uhr 5. Implementation and Controlling in the Marketing Planning Process372 5.1.8 The Role of Internal Marketing As more companies come to understand the importance of people in the implementation process, they are becoming disillusioned with traditional approaches to marketing implementation. These forces for change have been caused by several factors: High rates of employee turnover and its associated costs, and continuing problems in the implementation of marketing strategy. These problems have led many organisations to adopt alternative approaches to marketing implementation. One of these alternatives is internal marketing (Hollensen, 2006). The Internal Marketing Approach The concept of internal marketing originates primarily from service organisations where it was first practiced as a strategy for making all employees aware of the need for customer satisfaction. Generally speaking, internal marketing refers to the managerial actions necessary to make all members of the organisation understand and accept their individual roles in implementing marketing strategy. This means that all employees, from the chief executive officer to frontline marketing personnel, must realize how each individual job assists in implementing the marketing strategy. Under the internal marketing approach, every employee has two sets of customers: external and internal. Ultimately, successful marketing implementation results from an accumulation of individual actions where all employees are responsible for implementing the marketing strategy. The Internal Marketing Process In the case of service organisations, the 4Ps marketing mix is felt to be insufficient. Some authors have suggested extending it to the so-called 7Ps approach which includes people, process and physical evidence (Booms and Bitner, 1981). In services, people often are the service itself; the process of how the service is delivered to the customer is usually a key part of the service, and the physical evidence – the design of a shop, for example – is so critical to success that it should be considered as a separate element in the services marketing mix. Figure 5.9 contrasts the 4Ps and the 7Ps approach. Ensuring that all staff, whatever their status, deliver a service of the highest quality to both internal and external customers is a key issue for all organisations. The inseparability of services makes it impossible to distinguish between service production and service delivery and it is the people of the organisation who are, ultimately, responsible for both. In this section of the marketing plan the organisation must, therefore, give consideration to the people skills that it will need to provide its service and, indeed, to deliver every component of the marketing plan. This can then be matched against the profile of the existing human resource and appropriate gaps identified. The organisation can then ensure that those ‘gaps’ are represented in the staff recruitment programme and that the appropriate person specifications are in place. The interaction between the internal and external marketing programmes is illustrated in Figure 5.10. Certainly it is typically much easier to develop and retain existing staff than it is to attain new ones. The second focus of this section of the plan is therefore to identify what steps need to be taken to retain existing personnel. By far the easiest way of achieving this is probably to survey those who decide to leave and having discovered the reasons for Kapitel_5.indd 372 03.08.2010 12:56:25 Uhr 5.1 Organizing and Implementing the Marketing Plan 373 dissatisfaction implement any changes that may be necessary to ensure that problems are corrected. One can also ensure that an ongoing dialogue is maintained with existing staff so that they do not feel compelled to leave in the first place. Contrasting the 4Ps and the 7Ps model, there is no reason the – useful – extensions of the latter cannot be integrated within the 4Ps framework (Buttle, 1989; Jobber, 2010). People, process and physical evidence can be discussed under ‘product’, for example. The important issue is not to neglect them, whether the 4Ps approach or some other method is used to conceptualise the decision-making areas of marketing. 4 Ps of classical consumer goods marketing 7 Ps of service marketing Promotion Product Personnel Physical Facilities Process Management Price Place Place Promotion Product Price Figure 5.9: The 4Ps and 7Ps model Marketing strategy Marketing implementation External marketing programme (4 x Ps) Internal marketing programme External customer ? Higher perceived value Internal customer ? Higher loyalty Better marketing performance Source: Adapted from Hollensen, 2006, modified Figure 5.10: Internal marketing – a framework Kapitel_5.indd 373 03.08.2010 12:56:25 Uhr 5. Implementation and Controlling in the Marketing Planning Process374 Summary Success of a company mainly depends upon its marketing activities and the effectiveness of these activities. In order to know if the marketing function of the company is effective all aspects need to be analyzed. With this information a strategic marketing planning can be created and applied in the years to come. By analyzing the current marketing data flaws in the planning and weaknesses in the company’s (or the competitor’s) products or strategies can be discovered. Proper action can then be taken to ensure a better functioning of the weak parts of the marketing engine or to make better use of the competition’s weaknesses and flaws. This can best be done by performing a marketing analysis before writing a marketing plan. If you have the marketing data readily available this is not necessary. The marketing plan has the following framework: I Title Page II Table of Contents III Executive Summary IV Introduction and problem statement V Situational Analysis VI Marketing Objectives and Goals VII Marketing strategies VIII Marketing programmes/action plans IX Budgets X Implementation and Control XI Conclusion In the implementation of the international marketing plan one of the following organisational structures may be used: Functional structure, international division structure, product structure, geographic structure and matrix structure The success of a marketing plan depends on three areas: The process that is followed; – The infrastructure that is established prior to and throughout the process; – The implementation controls that are put in place. It is self-evident that effective market- – ing planning must be based on a clearly structured and well-articulated process. Those involved in planning must understand the expectations, which are being placed upon them and be provided with clear guidance as to what they must do. However, putting this process in place is not enough in its own right to ensure success. No matter how sound the analysis undertaken during the process or the strategy and marketing programs determined, insufficient attention at this final stage can lead to implementation breakdown. Care must also be taken to ensure adequate implementation resources are made available and also to fully communicate the outcomes of the plan to all interested parties. Finally, the planning process and the resulting implementation of the plan’s recommendations must be closely monitored so that remedial action may be quickly carried out to rectify any problems and to remove obstacles to the successful implementation of the plan. Kapitel_5.indd 374 03.08.2010 12:56:26 Uhr 5.2 Budgeting and Control 375 Questions for discussion 1. What kind of market information would be necessary for international marketing planning, and how might it be obtained? 2. What are the major challenges faced by marketers in developing and implementing international marketing plans? 3. What are the practical internal issues to be addressed by marketers when developing an international marketing plan? 4. What are the main problems associated with the links between international marketing strategy and organisational structure? 5. What are the principal issues to be considered in organisational design? 6. How does a firm’s size at home and abroad influence the organisational structure? 7. Outline the main organisational structure types that are used by international organisations 8. What are the advantages and disadvantages in adopting a matrix approach in terms of organisational structure? 5.2 Budgeting and Control An organisation needs to budget in order to ensure that its expenditure does not exceed its planned income. Accordingly this section discusses how to use rational process for developing budgets and allocating resources. Marketing control is an essential element of the marketing planning process because it provides a review of how well marketing objectives have been achieved. Consequently, this section will outline the need for a control system to supervise the marketing operations of the company. 5.2.1 Marketing Productivity and Economic Results The productivity of an operation is related to how effectively input resources in a process are transformed into economic results for the service provider and value for its customers. The traditional productivity conception has been developed for manufacturers of physical goods as a production efficiency concept. Existing productivity models and measurement instruments are also geared to the context of manufacturers. Moreover, they are based on assumptions that production and consumption are separate processes and that customers do not participate in the production process (Hollensen, 2006). High productivity is commonly assumed to be a primary goal in so much as a productive operation is more likely to have lower costs. It is the close connection with the cost performance of an operation of process that accounts for the interest in understanding and measuring productivity. Although the definition of productivity appears straightforward, productivity can be difficult to deal with for different reasons, but first of first of all the outputs are usually expressed in different forms to the inputs. Outputs are often measured in physical terms such as units (e.g. cars produced), tonnes (of paper), kilowatts (of electricity), or value (Euros), for example. However, the inputs are usually physically Kapitel_5.indd 375 03.08.2010 12:56:26 Uhr