If you are interested in marketing, whether in pursuit of a professional qualification, or in order to make an effective contribution
key MARKETING SKILLS key MARKETING SKILLS 2nd edition strategies, tools and techniques for marketing success peter cheverton London and Sterling, VA Publisher’s note Every possible effort has been made to ensure that the information contained in this book is accurate at the time of going to press, and the publishers and authors cannot accept responsibility for any errors or omissions, however caused No responsibility for loss or damage occasioned to any person acting, or refraining from action, as a result of the material in this publication can be accepted by the editor, the publisher or any of the authors First published in Great Britain and the United States in 2000 by Kogan Page Limited Second edition 2004 Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: 120 Pentonville Road London N1 9JN United Kingdom www.kogan-page.co.uk 22883 Quicksilver Drive Sterling VA 20166–2012 USA © Peter Cheverton, 2000, 2004 The right of Peter Cheverton to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988 ISBN 7494 4298 British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Cheverton, Peter Key marketing skills : turning marketing strategy into marketing reality, a complete action kit of strategies, tools and techniques for marketing success / Peter Cheverton – 2nd ed Includes index ISBN 0-7494-4298-0 Marketing Strategic planning I Title HF5415.C52254 2004 658.8—dc22 2004017032 Typeset by Saxon Graphics Ltd, Derby Printed and bound in Great Britain by Scotprint Contents Foreword Preface to the second edition Preface to the first edition Acknowledgements PART I ix xi xii xiii DEFINITIONS, PURPOSE AND PROCESS What is marketing? What the public thinks 3; So what you think? The Marketing Model Testing the model 10 Issues raised by the Marketing Model 13 What business are you in? Are you product led or market led? 14; Should your activities be for the benefit of your own business, the customer, or the market? 16; Which side should you be working on: changing capabilities or influencing needs? 17; Should fmcg marketers be more concerned with the right side, and B2B marketers with the left? 21; Is it market needs or consumer needs? The concept of the market chain 22; Is profitability the automatic consequence of a good match? 25; How far ahead must you be looking? 26 In search of ‘good marketing’ 28 Good marketing and reading the signals 30; Good marketing and providing value 31; Going beyond ‘good marketing’ 33; Consumer, business to business, or service? 34 v Contents The marketing process 35 The marketing plan 37; The market audit: information and analysis 40; The sanity check 41; Implementation and review 42; The ‘three-stage’ process 42 Writing the marketing plan 44 Why write a plan? 44; The planning cascade 46; The planning horizon 47; The template 48; Ten tips on writing the marketing plan 48 PART II THE STRATEGIC MARKET AUDIT Market research 53 Research and decisions 56; Types of research 56; Focusing your data needs 59; Commissioning your own research 61; Act of faith? 63 Chakravati’s piano, or, why you need market research… 65 The strategic audit 71 Analytical tools and decisions 71; PESTLE analysis 72; Market mapping 78; Michael Porter’s ‘five forces’ analysis 80; The SWOT analysis 83; The Directional Policy Matrix (DPM) 85 10 The CONNECT Inc case study 87 The company background 87; Sales organization 88; The new market 89; The new sales team 89; The ‘unknown’ market 90; Targets and forecasts 91; The business in 1992 91; The marketing review 92; Case study questions 92 PART III STRATEGIC POSITIONING 11 Vision and objectives 97 Managing the future 97; Vision: the mission statement 100; Marketing objectives 101; The financial imperatives 102 12 How will we grow? 105 The Ansoff matrix and risk 105; Gap analysis 111 13 How will we compete? 113 Porter’s choices 113 14 What will drive us? 118 Value drivers 118; Push or pull strategies 123; Asset management 123; Summary 125 15 Who will we serve? Segmentation 126; Why segment? The strategic options 128; Benefits of segmentation 130; The segmentation process 132; Step 1: Identifying the criteria for segmentation 132; Step 2: Targeting – the selection of vi 126 Contents segments 145; Step 3: Positioning 147; Segmentation and market research 152 16 Branding 153 Brand architecture: putting it all together 156; Brand positioning: a place in mind 163, Valuing the brand 169 PART IV DELIVERING THE VALUE 17 The segment audit 175 Delivering the value 175; Defining value 176; Segment audit tools 176; Value chain analysis 177; The total business experience 178, Shared future analysis 184 18 The value proposition 186 Making a positive impact 192; Some hints on using the process 196 19 Relationship management 198 The market-focused structure 199; Key account management (KAM) 200; Customer classification and distinction 213; Customer service 216; Customer relationship management (CRM) 219 20 Brand management 223 The history of delivering value 223; The brand relationship 226; Building positive associations: moments of truth 237; Brand extension 245; The learning brand 246 21 Functional alignment 249 The supply chain 249; The capability audit 251 22 Portfolio management 254 The challenge 254; The Boston Box 255; The Directional Policy Matrix 258 PART V THE TACTICAL MIX 23 The tactical audit 265 Customer satisfaction surveys 266; Tracking of promotional spend effectiveness 268 24 The four P’s… or the four C’s? 269 25 Product 271 The commodity 272; Added value 272; Product life cycles 279 26 Place 290 Channels of supply 291; Channel management 302; Logistics and supply chain management 308; Marketing and sales 311 vii Contents 27 Promotion 313 The purpose of promotion 313; The campaign and the communication 314; The effective communication 317; The choice of media: pros and cons 318; Selecting and briefing an agency 328 28 Price 332 Why price matters 332; Setting the price: four generic methods 337; Competitive pricing strategies 350; Open book trading 356; A pricing self-assessment 356 29 The Ambient Ltd case study PART VI 358 MAKING IT HAPPEN 30 The marketing health check 367 31 Getting further help 373 Application tools 374; Training opportunities 374; On-the-job experience 375; Further reading 375 Index viii 377 Foreword to the first edition Why does the world need another book on the principles and practice of marketing? Well, for one thing, marketing by its very nature must keep pace with the changing business practices of the real world, and perhaps it is now more than at any other time in the last 30 years that these changes promise to alter the shape of the marketer’s vision That is the up side If misunderstood, these new practices also threaten to disrupt the poorly informed marketer’s equilibrium, sending them back into the dark age of a secondary support function What are these changes? They include the so-called ‘new economy’ heralded by the e-revolution – does it change the rules of marketing? Another is the increasing focus on Key Account Management – does that move the responsibility for marketing elsewhere? And a third, looking beyond the hype that almost threatens to engulf and suffocate Customer Relationship Management – is there genuine value for the marketer? In answering these questions this book shows how the marketer’s vision can indeed be reshaped, but perhaps the more important contribution to the practice of marketing lies in the stress given to the continued importance of a disciplined approach, without hyperbole or false expectations The sad truth behind many of today’s marketing failures is the false belief that fundamentals such as understanding the market, segmentation, positioning, marketing planning and management of the marketing mix are no longer relevant Twenty years ago companies were too often guilty of investing millions in advertising campaigns with little or no understanding of their true impact, or sometimes even of their purpose This book certainly shows how to avoid ix Foreword such mistakes, and lays down the warning not to repeat the malpractice with today’s ‘new toys’ The fundamentals still apply, but it isn’t just about ‘sticking to your knitting’ The new concepts provide opportunities for these fundamental tools of marketing to be used and envisioned in radically different ways The Internet certainly changes the face of the marketing mix, Customer Relationship Management offers approaches to segmentation that would previously have been extremely difficult or expensive, whilst Key Account Management provides the opportunity to build barriers to entry and achieve sustainable competitive advantage through integrated relationships The second reason that this book is needed (and any marketer knows that needs are what drive the market) is that professional marketers are crying out for help with the practical application of marketing tools and concepts This book’s approach is throughout a practical one Written by a practitioner, for practitioners, it uses real case studies in abundance to illustrate what could otherwise sometimes seem rather abstract concepts As such, the book is a mine of inspiration, and of timely warnings Case studies, particularly those that are still running their course, are always dangerous territory for the author This author chooses his with an eye first and foremost on whether they instruct and illuminate If posterity sees some of them turn the ‘wrong way’ then so be it – the emphasis here is on learning, not prediction My third reason for welcoming this new book to the distinguished list of marketing texts is perhaps a more depressing one The role of marketing in guiding and directing business strategy is a vital and fundamental one, yet for many companies it is still their ‘weak link’ All too often marketing is seen as the promotional arm of an organization rather than the function that informs all other functions what their contribution should be to creating customer value This book is intended to help raise the profile of marketing as a crucial element of corporate strategy It offers help to experienced marketers through a disciplined focus on what the activity really means By stripping away some of the trees we have a welcome re-sighting of the wood Newcomers will benefit from the hugely efficient explanation of key tools and concepts, while those from the so-called ‘non-marketing functions’ will appreciate the wealth of cases that bring the activity to life, rather than shrouding it in abstruse and academic models If you are interested in marketing, whether in pursuit of a professional qualification, or in order to make an effective contribution to your own company’s marketing activity, or simply to better understand and work with your marketing colleagues, please be assured that reading this book will be a rewarding experience Professor Malcolm McDonald September 2000 x .. .key MARKETING SKILLS key MARKETING SKILLS 2nd edition strategies, tools and techniques for marketing success peter cheverton London and Sterling,... Cataloging-in-Publication Data Cheverton, Peter Key marketing skills : turning marketing strategy into marketing reality, a complete action kit of strategies, tools and techniques for marketing success / Peter Cheverton... you be looking? 26 In search of ‘good marketing? ?? 28 Good marketing and reading the signals 30; Good marketing and providing value 31; Going beyond ‘good marketing? ?? 33; Consumer, business to business,