1De La Obsesia Vanzarilor La Eficacitatea Mkt

8/3/2019 1De La Obsesia Vanzarilor La Eficacitatea Mkt

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From sales

obsession tomarketingeffectiveness

Althougli a company or divisionmay have a top-notch salesforce, if salesmen aren't

selling the right products andservices to the right customers,their energy counts for little

Philip Kotler

An enormous number ofU.S. companies are sales-minded, but only a feware marketing-minded.The difference is subtleand usually hard forsales executives to see, hutit spells the differencebetween unstable short-

term success and stahlelong-term growth. Thefirst aim of this articleis to show executiveshow to tell whetheran organization under-stands and practicesmarketing—and if so,how well. This can bedone by means of amarketing effectivenessaudit. The audit is a formfor rating marketing

effectiveness in each offive major functions; theresulting score tellswhere the organizationfalls on a scale rangingfrom no marketingeffectiveness to superioreffectiveness. The secondaim of the article isto show top managementhow to respond to a low ormediocre score by injecting

more marketing thinkinginto the division orcompany.

Well known to many HBRreaders, Mr. Kotler haswritten articles for pastissues on a variety ofmarketing topics-consumerism, demarketing,marketing strategy, andquantitative techniques.He is Harold T. Martin

Professor of Marketing inthe Graduate School ofManagement at North-western University. Inaddition, he is the authorof several books, includingMarketing D ecisionMaking (Holt, Rinehartand Winston, 1971),Maiketing For NonprofitOrganizations (Prentice-Hall, 197s), and MarketingManagement (Pren-tice-

Hall, 1976).

Drawings byRoland Topor.

The president of a major industrial equipmecompany with annual sales of over $1 billion wunhappy with his company's performance. Overasales were at a standstill; market shares were undattack in several key divisions; profits were low anshowing no signs of improvement. Yet the divisioprepared annual marketing plans and employemarketing executives and marketing services. Als

the sales force was well-trained and motivated.The president called in his corporate vice presideof marketing and said:

"1 would like to know how each division rates froa marketing point of view. I don't mean curresales performance. I mean whether it exhibits a dnamic marketing orientation. I want a marketinscore for each division. For each deficient divisioI want a plaa for improving its marketing effectivness over the next few years. I want evidence ne

year that each division is making progress."

The corporate vice president left feeling uncomfortable about this assignment. Marketing effectivness is a complex subject. What key indicators ainvolved? How can they be scaled? How can thehe combined into an index? How reliable wouthis index be?

When the vice president checked the marketinliterature, he got little help. He found some articldescribing "the marketing concept" in philosophicterms. He found a few articles featuring instrumen



Harvard Business Review November-December 19

The marketing vice president saw that he wouldhave to create his own marketing effectivenessauditing system. The system had to he hased on asound philosophical concept of the role of market-

ing in the modern corporation. It had to have credi-hiiity. It had to yield clear directions on steps thatthe corporation could take to improve marketingeffectiveness where it was lacking. It had to heavailahle for periodic application to measure prog-ress toward greater marketing effectiveness.

Contrasts in th inkin g

Yet the thinking of sales executives is very dferent from the thinking of marketing executive

One marketing executive recently complained: takes me about five years to train sales people think marketing. And in many cases I never suceed."

Sales executives tend to think in the followiterms:

Sales/marketing confusion

Marketing is one of the most misunderstood func-tions of the modem corporation. Of the Fortune"500" corporations, it seems to me that only a hand-ful—such as Procter & Gamhle, Eastman Kodak,Avon, McDonald's, IBM, Xerox, General Electric,and Caterpillar—really understand and practice so-phisticated marketing. Most of the other com-panies are only under the illusion they practice so-phisticated marketing. A chief executive in one ofthe world's largest automohile companies once saidto me.

"I thought we were doing marketing. We have acorporate vice president of marketing, a top-notchsales force, a skilled advertising department, andelaborate marketing planning procedures. Thesefooled us. When the crunch came, I realized thatwe weren't producing the cars that people wanted.We weren't responding to new needs. Our market-ing operation was nothing more than a glorified

sales de partmen t."

In industrial goods companies, too, managementoften confuses sales and marketing. Sales and dis-tribution are the major elements of the marketingmix, with advertising playing a very minor role.Most if not all of the marketing talent in the com-pany comes from the sales organization. These peo-ple are not counterbalanced often enough with"brand management" personnel, who think in terms

of long-run produet strategy and its financial im-plications.

DSales volume ratber than p rofits—T hey aim to icrease current sales to meet quota commitmen

and to achieve good commissions and honuses. Thare usually not attentive to profit differences amodifferent products or customer classes unless theare reflected in compensation.

nshort-run rather than long-run terms—They are oented toward today's products, markets, customeand strategies. They don't tend to think aboproduct/market expansion strategies over the nefive years.

nIndividual customers rather than market segmeclasses—They are knowledgeahle about individuaccounts and the factors hearing on a specific saltransaction. They are less interested in developistrategies for market segments.DField work rather than desk worii—They prefer try to sell to customers instead of developing plaand strategies and working out methods of implmentation.

in contrast, marketing executives think in theterms:

DProfit planning—They plan sales volume arouprofits. Their aim is to plan product m ixes, custommixes, and marketing mixes to achieve profitahvolume and market shares at levels of risk that aaeceptahle.nLong run trends, threats, and opportunities—Th

study how the company can translate these innew products, markets, and marketing strategithat will assure long-term growth.



Marketing effectiveness

Good systems for mazket analysis, planning, andcontrol—They are comfortable with numbers andwith working out the financial implications ofmarketing plans.

A common dilemma

Once the managem ent of a company recognizes suchdifferences between sales and marketing thinking,it may decide to establish a high-level marketingposition. Here it faces a dilemma. No one in thecompany is a trained m arketing manager. The wholeindustry may be devoid of trained marketing man-agers. Yet trained marketers outside the industry

are not knowledgeable about the industry's prod-ucts and customers' buying patterns.

The company typically resolves the problem byprom oting its top sales managers to a new title—vicepresident of marketing. However, the new market-ing executive continues to think like a sales execu-tive. Instead of taking time to analyze environmen-tal changes, new eonsumer needs, competitive chal-lenges, and new strategies for company growth, hespends his time worrying about the disappointingsales in Kansas City last week, or the price cutinitiated by a rival corporation yesterday. He is prob-ably involved almost as much in putting out newfires as he was when he was a sales exeeutive.

Moreover, former sales executives heading the mar-keting operation often lack a balanced view of theeffectiveness of different marketing tools. They con-tinue to favor the sales force in the marketing mix.They are reluctant to take dollars out of the salesforce budget to help increase new-product develop-ment, advertising, sales promotion, or marketing

research. They underestimate the cost-effeetivenessor non-sales-foree marketing expend itures in increas-ing customer awareness, interest, eonvietion, andpurehase.

The sales exeeutive dressed in a marketing viecpresident's clothing often fails to appreciate thenegative impaet of aggressive sales action on acompany's bottom line. In one eompany where themarketing viee president is extremely strong, short-run sales-oriented promotions are constantly dis-

rupting production planning and cash flow require-ments. One of the company's plants, for example,operates at 50% eapacity much of the time and at



Harvard Business Review November-December 19

ExhibitOutline for marketing effectiveness (check one answer to each question)

Customer philosophy

A. Does management recognize the importance of designingthe company to serve the needs and wants ot chosen markets?

Score0 D Management primarily thinks in terms of selling current and new

products to whoever will buy them.

1 • Management thinks in terms of serving a wide range of marketsand needs with equal effectiveness.

2 n Management thinks in terms of serving the needs andwants ofwell-defined markets chosen for their long-run growth and profitpotential for the company.

B. Does management dev elop different offerings and m arket-ing plans for different seg ments of the market?

0 D No.

1 D Somewhat.

2 • To a good extent.

C. Does management take a whoie marketing system view(suppiiers, channeis, competitors, customers, environment)in planning its business?

No. Management concentrates on selling and servicing its imme di-ate customers.

Somew hat. Management takes a long view of its channels althoughthe bulk of its effort goes to selling and servicing the im mediatecustomers.

Yes. Management takes a whole marketing systems view recogniz-ing the threats and opportunities created for the company bychanges in any part of the system.

Integrated marketing organization

D.Is

there high-ievei marketing integration and controi of themajor marketing functions?

0 • No. Sales and other marketing functions are not integrated at thetop and there is some unproductive conflict.

1 n Somew hat. There is formal integration and control of the majormarketing functions but less than satisfactory coordination andcooperation.

2 D Yes. The major m arketing functions are effectively integrated.

E. Does marketing management work w ell with management research, man ufacturing, pu rchasing, physical distribution,and finance?

No. There are complaints that marketing is unreasonable in thedemands and costs it piaces on other departments.

Somewhat. The relations are amicable although each departmenpretty much acts to serve its own power interests.

Yes. The departments cooperate effectively and resolve issues inthe best interest of the company as a w hole.

F. How well-organized is the new product developmentprocess?

0 D The system is ill-defined and poorly handled.

1 n The system formally exists but lacks sophistication.

2 • The system is well-structured and professionally staffed.

Adequate m arketing information

G. When w ere the latest marketing research studies ofcustomers, buying influences, channe is, and competitorsconducted?

Several years ago.

A few years ago.

Recently

H. How well does m anagement know the sales potentiai andprofitabiiity of different market segments, customers, terri-tories, products, channels, and order sizes?

Not at all.

Somewhat.

Very well.

I. What effort Is expended to m easure the cost-effectivenes sdifferent marketing expenditures?

Little or no effort.

Some effort.

Substantial effort.

the adverse impact of their actions on manufacturingcosts or working capital costs.

Job of the m arketing executive

what is the proper conception of the job of a high-level marketing executive? The answer has gonethrough three stages of thinking.

The earliest and most popular view is that the mar-keting executive is an expert at demand stimula-

tion. He or she is someone who knows how tocombine the tools of marketing to create an efficient

features, personal selling, advertising, sales promtion, price, and service to stimulate purchasing bhavior.

More recently, a broader conception of the markeing executive has been proposed: he should be aexpert in demand management. The marketing eecutive works with a varied and changing set demand problems. Sometimes demand is too low anmust be stimulated; sometimes demand is too iregular and must be evened out or "smoothedsometimes demand is temporarily too high (as

a shortage period) and must be reduced with "dmarketing." '



Marketing effectiveness

Strategic orientation

J . Whatis

tiie extent offormai

maiiceting plann ing?Management does little or no formal m arketing planning.

Management develops an annual m arketing plan.

Management develops a detailed annual marketing pian and acareiul long-range pian that is updated annually.

K. Wiiat is the quality of the current m ariteting strategy?

The current strategy is not dear.

The current strategy is clear and represents a continuation oftraditional strategy.

The current strategy is clear, innovative, data-based, andwell-reasoned.

L. V^niat is the extent of contingency thinking and planning?

Management does little or no contingency thinking.

Management does some contingency thinking although little formalcontingency planning.

Management formally identifies the m ost important contingenciesand develops contingency plans.

Operationai efficiency

M. How we ll is the marketing thinking at the top communicatedand implemented down the line?

Poorly.

Fairly.

Successfully.

N. Is management doing an effective job with the marketingresources?

No. The marketing resources are inadequate for the job to be done.

Somewhat. The marketing resources are adequate but they are notemployed optimally.

Yes. The mefficiently.

rketing resources are adequate and are deployed

0. Does management show a good capacity to react quickland effectiveiy to on-the-spot deveiopments?

0 D No. Sales and market information is not very current and managment reaction time is slow.

1 D Somewhat. Management receives fairly up-to-date sales and mket information; management reaction time varies.

2 • Yes. Management has installed systems yielding highly currentinformation and fast reaction time.

Rating marketing effectiveness

The auditing outline can be used in this way. The auditor collects informatias it bears on the 15 questions. The appropriate answer is checked for eacquestion. The scores are added —the total will be somewhere between 0 a30 . The following scale shows the equivalent in marketing effectiveness;

0-5

6-10

11.15

16-20

21-25

26-30

None

Poor

Fair

G o o d

Very good

Su p er i o r

To illustrate, 15 senior managers in a large building m aterials company werecently invited to rate their company using the auditing instrument in thisexhibit. The resulting overall marketing effectiveness scores ranged from alow of 6 to a high of 15. The m edian score was 11, with three-fourths of thescores between 9 and 13. Therefore, most of the managers thought theircompany was at best "fair" at marketing.

Several divisions were also rated. Their median scores ranged from a low o

to a high of 19. The higher scoring divisions tended to have higher profitabHowever, some of the lower scoring divisions were also profitable. An exa mination of the latter showed that these divisions were in industries where thcompetition also operated at a low level of m arketing effectiveness. Themanagers feared that these divisions would be vulnerable as soon as comtion began to learn to market more successfully.

An interesting qutistion to speculate on is the distribution of median markeeffectiveness scores for Fortune " 50 0" com panies. My suspicion is that vefew companies in that roster would score above 20 ("very good" or "superin marketing effectiveness. Although marketing theory and practice havereceived theirfullKst expression in the United States, the great majority of companies probably fail lo meet the highest standards.

skills in demand management rather than abilitiesonly in demand stimulation. The varying fortunesof different company divisions is another reason.Every multidivision company has certain divisionswhose low sales growth, market share, or profitabil-ity may call for a strategic objective other thangrowth. The strategic objective might be to main-tain, "harvest," or terminate sales. Hence the mar-keting executive must be skilled at more tasks thansimply stimulating demand.

Even the conception of the marketing executiveas an expert in demand management may be toolimited. The newest view is that he should be ef-

focuses only on attaining a certain demand levmay cause undue costs in engineering, purchasinmanufacturing, servicing, or finance. The marketiexecutive should be able to develop marketing stregies and plans that are profitable. These plashould strike a balance between the needs of tmarketing mix (sales force effort, advertising, prouct quality, service), business functions [manufaturing, finance, marketing), and the external syste(customers, distributors, suppliers) from the vantapoint of profit.

Where is this person to come from? The idemarketing manager should have general manag



72 Harvard Business Review November-December 19

vertising, the sales force, and marketing research,the m arketing executive should have moved throughthese departments on the way u p. He should under-stand the problems of these other departments; andthey should know that he knows all ahout theirproblems.

Auditing effectiveness

Opemtional efficiency—Aie marketing plans impmented in a cost-eflective manner, and are the rsults monitored for rapid corrective action?

The Exhibit presents the questions that should hasked in auditing the marketing effectiveness ohusiness. This audit has heen helpful to a numhof companies and divisions. In the n ext few sectionI will elaborate on each main part of the marketinaudit.

Many top managers believe that a division's perfor-

mance in terms of sales growth, market share, andprofitability reveals the quahty of its marketingleadership. The high-performing divisions have goodmarketing leadership; the poor-performing divisionshave deficient marketing leadership. Marketing ex-ecutives in the high-performing divisions are re-warded; the others are replaced.

Actually, marketing effectiveness is not so simple.Good results may he due to a division's being in theright place at the right time rather than the conse-

quence of effective management. Improvements inmarket planning might boost results from good toexcellent. At the same time, another division mighthave poor results in spite of the best strategic mar-keting planning. Replacing the present marketingleaders might only make things worse.

In my view, the marketing effectiveness of a com-pany, division, or product line depends largely ona comhination of five activities:

Customer philosophy—Does management acknowl-edge the primacy of the marketplace and of customerneeds and wants in shaping company plans andoperations?2integrated maiketing organization-Is the organiza-tion staffed so that it will he able to carry out mar-keting analysis, planning, and implementation andcontrol?3Adequate maiketing information-Does manage-

ment receive the kind and quality of informationneeded to conduct effective marketing?

Customer philosophy

The first requirement for effective marketing is thkey managers recognize the primacy of studyinthe market, distinguishing the many opportunitieselecting the best parts of the market to serve, angearing up to offer superior value to the chosen cutomers in terms of their needs and wants. Threquirement seems elementary, yet many executivnever grasp it.

Some managements are product-oriented. The

think the trick is to make a good product and gout and sell it. Some are technology-oriented. Theare fascinated with the challenge of new technoogies and pay little attention to the size and requirments of the market. Still others are sales-orienteThey think anything can be sold with sufficiesales effort.

If a company starts with the marketplace wheit is designing the organization's structure, planand controls, it is well on the way to effective maketing.

Integrated organization

The organizational structure of the company or dvision must reflect a marketing philosophy. Tmajor marketing functions must he integrated ancontrolled by a high-level marketing executivVarious marketing positions must be designed serve the needs of important market segments, teritories, product lines. Marketing management mu

be effective in working with other departments anearning their respect and cooperation. Finally, torganization must reflect a well-defined system f



Marketing efEectivenest

Adequate information

Effective marketing calls for the executives to haveadequate information for planning and allocatingresources properly to different markets, products,territories, and marketing tools. A telltale sign ofthe quality of information is whether managementpossesses recent studies of customers' perceptions,preferences, and buying habits. Many marketingmanagers operate primarily on what tbey learnedas sales managers in that industry 20 years earlier.They don't want to spend money for marketing re-search because "we already know the market." They

spend little to monitor direct and indirect competi-tion.

Another sign is the presence of good informationregarding the sales potential and profitability ofdifferent market segments, customers, territories,products, channels, and order sizes. The controllermust work closely with marketing and provide aresponsive accounting system that gives proHt in-formation by line item. Finally, skillful marketersneed information to evaluate the results of theirmarketing expenditures.

Strategy &. operations

Marketing effectiveness depends also on whethermanagement can design a profitable strategy outof its philosophy, organization, and information re-sources. First, this requires a formal system for an-nual and long-range marketing planning. Second,the system should lead to a core strategy that isclear, innovative, and data-based. Third, manage-

ment should look ahead toward contingent actionsthat might be required by new developments in themarketplace.

And last, marketing plans do not bear fruit unlessthey are efficiently carried out at various levels ofthe organization. The interests of the customersmust be of param oun t concern to employeesthroughout the organization. Marketing manage-ment must have the right amount of resources todo the job. It also must have systems that enable

it to react quickly and intelligently to on-the-spotdevelopments.



H arvard Business Review Novem ber-Decem ber 1

Improving poor performance

The auditing instrument enables management toidentify marketing weaknesses in a company or di-vision. But diagnosis is not enough. Managementshould follow up by forming a marketing com-mittee staffed with top executives of the companyor division and a suitable complement of functionalmanagers. The task of the committee is to reviewthe results of the audit and prepare a marketingimprovement plan. The plan should deal with theseneeds:

1 Tra ining of officers, such as seminars to pro-vide a better understanding of modem marketing.

2 Hiring of consultants to bring into the companyspecific marketing improvements that are needed.

3 Creation of new positions in the marketing or-ganization.

4 Personnel transfer where necessary.

5 Increased investment—or sometimes just moreefficient investment—in marketing research.

6 Installm ent of improved formal plann ing pro-cedures.

Suppose these steps are no t pursued vigorously? Thissituation is not unlikely in an organization withpoor marketing ability; the managers prefer to thinkexclusively in terms of production, sales, or research.

Choosing an effective approach

To visualize w hat top managem ent can do, considerthe following case:

One division of a large company was headed by ageneral manager with the vice presidents of manu-facturing, finance, and sales reporting to him. Thisdivision had enjoyed steady growth of sales and

profit during the past decade. However, during thepreceding two years there had been a sales decline.Managers thought the decline reflected the maturing

The corporate marketing vice president applied tmarketing audit to the division and found thatscored very poorly. The division's executives did nhave a marketing philosophy,- there was no hig

level marketing position; marketing information wpoor; and there was little strategic thinking.

The corporate marketing vice president expresshis concern to the general manager. Together, thagreed on the need to infuse modem marketithinking into the division, but in a way tha t did nalienate those in power, especially the vice presideof sales.

They considered three different strategies for brin

ing marketing thinking into the division:

The first called for convincing the sales vice predent to add a marketing person to his staff. Thperson would handle such activities as marketiresearch, problem solving, and planning. T he hopefor result was that the sales vice president wougradually come to develop a better appreciation marketing thinking.

However, the corporate vice president and the geeral manager realized that the first approach migfail. The sales vice president might choose not hire anyone, or to hire a person but give him littresponsibility, or to hire an incompetent person anprove that marketing planning is a waste. Manmarketing staff people who report to sales vice presdents complain that their bosses do not pay attetion to plans and recommendations. Therefore thtwo executives decided to consider a possible seconapproach.

This approach was to hire a marketing vice presidefrom the outside and place the incumbent sales vipresident (whose title might be changed to genersales manager) under him. In addition, advertisincustomer service, and other marketing functiowould be placed under th e new m arketing vice presdent. T he message would come across loud and clethat sales was only one, albeit the most importanof several elements in a coordinated marketing planing system.

The danger of this solution is that the sales vicpresident and his sales force could become ang



Maiketing effectiveness

The third approach fell between the two extremesand called for the general manager to appoint amarketing director to his staff. The marketing di-rector would not have control or responsibility forfield sales. He would prepare studies of new prod-ucts, markets, and marketing strategies; he wouldestimate the profitability and cost-effectiveness ofdifferent marketing activities; he would conductstudies of customer perceptions, preferences, andbuying habits; aiid he would supervise the prepara-tion of marketing plans. The general manager couldthen decide to give this person the title of corporatemarketing director, marketing planner, or planningdirector.

The third approach has the most to recommend it.The new m arketing director would not be under thethumb of the sales vice president; nor would he beappointed over the sales vice president, with all theproblems that this move might create. Over time,the marketing director might be promoted to mar-keting vice president to run all the marketing activ-ities, including sales. But this would be done onlyafter that person developed a record of accomplish-ment and proved able to work harmoniously withthe sales vice president, sales managers, and otherkey people.

Conclusion

We tend to confuse marketing effectiveness withsales effectiveness. This is our big mistake—and inthe end it hurts sales as well as marketing, A eom-

pany or division may have a top-notch sales forcethat could not perform better. But if the salesmendon't have the right products to sell, know the bestcustomers, and have the best values to offer, theirenergy counts for little.

One way to view the difference between marketingand sales is in terms of the difference between seed-ing a field and harvesting the erops. Good market-ing work is tantamount to planting seeds; withoutplanting, there would be no future crops. Good

sales work is equivalent to efficiently harvesting thecrops. In the short run, the harvest may be goodand sales will take the credit. But if there is no

This is not to say that the top marketing exeeutivis supposed to keep his head in the clouds and staout of the daily storms beating the field. He has tdo both. He is responsible for this year's profits awell as long-run profitability. If he spends all hitime slugging it out w ith competitors to reap todayprofits, he makes his job harder tomorrow. If he on lconsiders tomorrow, he may be lashed for todayinadequate profits. He has no choice but to balanchis time between both objectives.

Marketing tliinking is not easy to introduce into aorganization. It tends to be misunderstood or, oncunderstood, easily forgotten in the wake of succesMarketing is characterized by a law of slow learn inand rapid forgetting.

The corporation, and particularly the corporate viepresident of marketing, has the responsibility oassessing marketing efiectiveness in each divisioAn audit of the type described can be a useful tooUsing it, the top executive can work constructivelwith general managers of divisions that have a lowscore, apprising them of the factors that make umarketing effectiveness. This plan may include atending marketing seminars, reading the marketinliterature, hiring inside experts or outside consutants, carrying out fresh research, and improvinstrategy and planning.

In some divisions, as I have pointed out, top management may need to intervene. It may need to hira marketing-trained person to work for the salevice president, a marketing director to work for thgeneral manager, or a marketing vice president thead all sales and marketing activity.

The results of trying to improve the division's liiaketing efiectiveness can be evaluated eaeh year. Thamount of progress can be measured by using thaudit. If progress has been good, the division wibe encouraged to develop a new plan for furtheprogress. If progress has been poor, top management w ill have to eonsider the need for more d raststeps to protect the interests of the corporatioagainst the marketing division with poor marketinskills.



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1De La Obsesia Vanzarilor La Eficacitatea Mkt