Marketing Planning

Marketing Planning

Now than most companies are getting ready for 2014, hundreds of thousands of professionals will start making their marketing plans.

Issue is that most of times, those plans will start by the wrong end of the process: good old 4 Ps

Product will be already locked down, price and placement almost fixed too and most discussions will be about promotional activities.

It will be an inside out exercise. 

And just at the very end, customers will be included in the equation; 'okay, we have to sell $Xm of products A, B, C with attached product mix to hit our GM targets through our channel...by the way, do we have any value proposition for demand generation activities?'

Of course, during that upside down process, tons of data will be requested. Most companies will do some data crunching and get to information. But only a few of them, those ones really customer centric, will get to insights; because that's the place where insights live, our customers. They are the answer to all 'why?'

Let's review now how a marketing planning process should look like (at least from my point of view). It is 'easy' , you just need to answer 3 questions

Step 1. Background Analysis – Where are you now?

The background analysis answers the question “Where are you now?”. It includes a market analysis, a competitive analysis and a performance history.

Step 2. Objectives – Where do you want to go?

The objectives answer the question “Where do you want to go?”.  It starts with the identification of problems and opportunities that need to be addressed in the plan. Then it moves to the forecast of sales volume -Most (wrong) plans start directly here-, the marketing objectives that specify the market segments from which the volume will be generated, and the positioning of the product in the customers’ minds.

Step 3. Strategies – How can you get there?

This section answers the question “How can you get there?”. They must provide management with a concise marketing and financial summary of objectives and strategies along with requirements to achieve the objectives.

And for all 3 questions the process is the same:

Maximizing shareholder value

Maximizing shareholder value

On 1981, Jack Welch made a speech called ‘Growing fast in a slow-growth economy’ that is often acknowledged as the "dawn" of the obsession with shareholder value.

Actually, there is nothing wrong about it.

Problems have to do with the 'holder' part of stockholder.

What's a stockholder? Select best answer

1. A high frequency algorithm?
2. An investment fund just worried about quarterly results?
3. JP Morgan, Goldman Sachs?
4. None of above

I'm afraid is number 4.

Christ Driving the Money Changers from the Temple
by El Greco

All the rest are like the money changers from the Temple of Jerusalem, when Jesus Christ accuses them of turning the Temple into a den of thieves through their commercial activities.

In fact, they are exactly that, "money changers", not stock holders.

Because...what's a holder?

Let's have a look at several definitions:

1.

• a. To have and keep in one's grasp
• b. To aim or direct; point
• c. To keep from falling or moving; support
• d. To sustain the pressure of

2.

• a. To keep from departing or getting away
• b. To keep in custody
• c. To retain (one's attention or interest)
• d. To avoid letting out or expelling

Most of them sound like "keeping", "supporting", "sustaining"...not like 'hit and run', do they?

So, if your company has in its mission something like "maximizing shareholder value", make sure it understands what a shareholder is, otherwise you are doomed.

In fact, back in March 2009, Jack Welch criticized parts of the application of this concept, calling a focus on shareholder quarterly profit and share price gains "the dumbest idea in the world".

I personally think that any company mission must be maximizing customer satisfaction and value in a sustainable way, all the rest is corporate bullshit.

Some of you will think...give your products for free! Wrong answer, you forgot the 'in a sustainable way' part; it doesn't maximize customer satisfaction, as you will go bankrupt and will not be able to support those products, invest in R&D or deliver your services.

Let's end up with three good examples:

Hewlett-Packard Mission Statement: 

"To provide products, services and solutions of the highest quality and deliver more value to our customers that earns their respect and loyalty." 

Apple Mission Statement:

"Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings." 

Amazon.com Mission Statement: 

“Our vision is to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.” 

Profitable Marketshare

Profitable Marketshare

In principle, there is nothing wrong with 'profitable marketshare'...actually that is what we all want, don't we?

The problem comes when you add the time variable to the sentence. 

As most companies are slaves of Wall Street, they look for short term profitable marketshare; what the heck is that? 

Well, lack of leadership and strategic view, together with a 'smart' guy playing with Excel 'Goal seek' function.

We must seek for long term profitable market share, even if it means short term losses. I think it is pretty obvious; we do it every day:

• You 'lose' short term money paying your degree or MBA, expecting future profitability thanks to a better job.
• You 'lose' short term money when you buy a car, expecting future benefits like a more convenient, faster transportation.
• Actually, you 'lose' money every time you eat healthy food, but we all do it as we expect that when we get to our golden years, we will be better.

Now let's have a look to a true strategic visionnaire's thinking, Jezz Bezos': 

1. When you have a window of opportunity, go for the jugular – even if you have to exhaust a huge number of resources. 

2. Think long-term meaning 5 – 7 years, not 5 – 7 months. 

3. Long-term market share is more important than short-term profits because without long-term market share there will be no long-term profits.

4. It’s ok to make mistakes but it’s not ok to be timid.

5. Obsess over Customers. 

6. Be first in a big market. 

More details here


Even if Bezos doesn't care much about short term profit and wall street, have a look at AMZN stock:

Short term "profitable marketshare" is also a symptom of different Business Units, even Product Categories within same Business Unit, working in silos; "everyman for himself!"

The Boston Consulting Group explained long, long time ago that you must use your cash cow (today's profit) to invest into your raising Star (future).

It is easy, it just needs leadership and vision to decide losing money on some categories to secure the future and forgetting about Wall Street.

Key take aways:

1. Forget about Wall Street
2. One size doesn't fit all...you cannot pay all your Sales Reps and Category Managers with the same Sales Plans; some of them might have Margin on their Sales letters, but many other must not have it at all, but Market Share
3. VPs and above must have Companywide targets, and not BG/BU focused ones.

Business Developers

Business Developers

Wikipedia: "Business development and its associated tasks and processes are often indiscernible from traditional management and marketing approaches, such as strategic management, marketing management, sales and marketing, and entrepreneurship."

So...why should you have them?

Any company has general management, marketing and sales executive roles; unless those folks don't do what they are supposed to do, you don't need Business Developers.

They usually tend to be those (poor) guys attending lots of calls and meetings, requesting tons of reports, producing a zillion power points, but accountable for nothing and with no budget...if the guy is a good performer, probably he will burn out, and if it is a poor performer, he will feel at home or even better, like at SPA.

Once again, the root cause of biz dev roles is a lack of leadership, failing to set the right priorities and refocusing the whole organization accordingly. 

True leaders see the future and have no fear to risk the present for the future. Night school managers cannot see the forest for the trees, just care about today's targets and allocate a biz dev role to focus on strategic initiatives, instead of refocusing the department, business unit or company.

Close the gap

'Close the gap plan' 

When a forecast is submitted and it doesn’t match quota, those words seem to be The Philosopher's Stone. 

No matter if the market is decreasing, you do not have the right offering or both…a close the gap plan is all you need. The problem is that it points in one of following directions: 

• Sales Directors do not trust your sales managers, and think that when they were submitting forecast they were doing a poor job and not considering how to make as much as possible. Options are: 
• Change Sales Managers, if they really do a poor job
• Or…change Sales Directors, as either they do not have leadership skills, but managerial ones, or do not trust their team

• Sales managers, for some reason, are not eager to hit their number
• Most probably, you do not have the right Sales Comp plan in place
• Or quotas are not challenging, but impossible, and sales reps simply don’t care

• Everybody is playing their role in Corporate Bullshit Vaudeville: 
• sales managers know that if they provide a forecast at quota, will be requested to do more, so they do sandbagging. 
• Sales Directors also know that, and request a ‘close the gap plan’, usually to be provided in 24hrs. 
• And then, out of the blue, a close the gap plan is submitted in 24hrs, and everybody is happy: sales manager were not requested to do more, and sales directors feel they are really smart and are ‘adding value’ 

In any case, the root cause is lack of proper, consistent strategy, tactics and action plans, and hence the whole organization is simply firefighting.