TO HEIGHTEN YOUR MARKETPLACE SUCCESS, AVOID THESE THREE MARKETING SINS
By Philip Kotler
The practice of marketing is suffering these days from a number of ailments: a high rate of product failure, declining effectiveness of TV commercials and advertising in general, a very low response rate from direct marketing initiatives, and so on. Marketing’s role has been marginalized in many companies. Instead of performing its role as the architect and driver of business strategy, marketing is at the mercy of an unwieldy mix of marketers, operations people, and financial types.
The result is a huge number of companies whose profits consistently fall below expectations. Too many are committing some common marketing “sins,” which in the end keeps them from succeeding. Three of the most egregious marketing sins follow:
Sin 1: Your company has not done well in finding new opportunities
How many new products and services has your business launched in the last five years? And how many have succeeded?
The first way to find new promising opportunities is to set up a system for stimulating the flow of new ideas from employees and marketing’s partners throughout the organization. One way of doing this would be to set up an Idea Committee, with a high-level executive acting as the “Idea Captain.” Employees and partners with new ideas would submit them to the Idea Committee. The Committee would meet regularly to evaluate new ideas and move the better ones forward. Those who submitted the most successful ideas would rewarded, in the form of bonuses, holiday vacations and/or extra vacation days. Using creativity systems to generate new ideas is another way to find new opportunities. Many companies search for new ideas by starting with a current product and varying it in some way; in other words, vertical marketing. Companies also need to make use of the alternative idea-generating process known as lateral marketing — thinking of a product in relation to another product, service or idea. The lateral marketing concept has great potential to create new product categories and new markets. It’s important for a company to implement both vertical and lateral marketing in the search for new ideas.
Sin 2: Your Company’s Marketing Planning Process is Deficient
Three major signs indicate that your company’s marketing planning process is deficient. First, your marketing plan format doesn’t carry the right components or logic. Namely, your company may be missing clear and compelling statements of objectives, strategy and tactics in its marketing plan. Second, your plans lack a means for simulating the financial implications of alternative strategies. Your plan needs to incorporate sales-response functions and cost functions that estimate the likely results of any combination of changes in product features, price, advertising, sales promotion and sales force size. And finally, your plans lack contingency planning. Many companies do not plan for some major contingencies. For example, if the economy suddenly dips into a recession, have you determined in advance how you’d change the current plan?
One solution is to establish a standard plan format that includes a situational analysis, SWOT (strengths, weaknesses, opportunities and threats) analysis, objectives, major issues, strategy, tactics, budgets and controls. These components are interdependent, meaning the situational analysis leads to figuring out the company’s strengths, weaknesses, opportunities and threats. A strategy can then be formed based on the SWOT analysis to achieve the objectives. Tactics, budgets and controls can then be established. A second solution for marketing managers is to prepare flexible budgets. The planners should describe what they would do with, say, a 20 percent increase in the budget or with a 20 percent budget cut. This is a good way to tell which managers think they can utilize an increase in budget the most, and, over time, it will become clear which managers can competently forecast the results of the budget. A third solution is to run an annual internal marketing awards program with prizes for the best plans and performances. Awarding winning marketing plan teams is a great way to celebrate their success and also to set higher performance standards for the other teams.
Sin 3: Your Company’s Product and Service Policies Need Tightening
Large companies are recognizing that a small percentage of products usually account for a large amount of their sales and profits. Companies continue to add products more readily than they remove them, and then in an effort to rectify the situation, wipe out a whole swath of products to thin their product line and increase profitability. In addition, too many services are given away free, when they could have produced revenue. There is also too little cross-selling – companies that sell a range of products and services tend to do a poor job of selling other items in their portfolio beyond what’s specifically requested by the customer. For instance, a customer who buys a suit may not be advised by the salesperson to buy shirts or ties that wear well with the suit.
The first of three solutions to remedy these weaknesses is to establish a product tracking and evaluation system. Such a system will allow companies to see which products are making the most money. Most companies have a group of products, usually called core or power brands, which hold the key to their future. These products have great growth potential if they can command a larger budget. By tracking the performance of all of the products, companies can decide which products to make more of and which to eliminate. The second solution deals with a company’s pricing structure. Companies want to avoid giving away products and services that customers are willing to pay for. They should also avoid giving away free items that customers don’t use or value. Both situations are a waste of money. Instead, the company should establish different customer segments and determine up front which will have to pay for the services and which will get the service free. Third, improve the sales process by cross-selling and upselling. This can be accomplished by supplying proper training on the company’s products and services so the salespeople know how they inter-relate and complement each other. Another way to improve these processes is to offer the sales staff incentives to encourage the promotion of related products or upgraded products that might interest customers. Resolving not to commit these and other marketing sins will help your company’s marketing department develop and implement plans that succeed in the marketplace. Marketing’s true role is that of driving business strategy, but that can’t be fully realized if your company can’t find new opportunities, your company’s marketing plan and planning process are off kilter and if the company’s product and service policies need tighter discipline.
Philip Kotler is the S.C. Johnson & Son Distinguished Professor of International Marketing at Northwestern University’s Kellogg School of Management in Chicago. He is the author of 35 prominent books in the field of marketing management, including Marketing Management: Analysis, Planning, Implementation and Control (Prentice Hall, now in its 12th edition), the most widely used marketing book in graduate business schools worldwide. This article is drawn from one of his recent books,Ten Deadly Marketing Sins: Signs and Solutions (Wiley, April, 2004).
