Thomas V. Bonoma is Associate Professor in the Graduate School of Business Administration, Harvard University. Author of nearly 60 articles for a variety of business journals, he has established a national reputation for his work on marketing implementation and industrial marketing. Professor Bonoma holds a Ph.D. in social psychology from the State University of New York at Albany.Excerpt. © Reprinted by permission. All rights reserved.:
Marketing has made great strides in the last two decades toward strategic maturity. From its growing arsenal of models and analytics, the discipline increasingly helps managers tailor strategies to market requirements. Yet, when it comes to guiding the effective implementation of these strategies, the academic literature is silent and the self-help books ring hollow. The critical need of top management in the eighties lies not in new answers to the strategic questions, but in increased attention to marketing practice. What are the signposts of good marketing management which can translate clever strategies into bottom-line results?
The purpose of this chapter is to explore good marketing practice. I call this focus on the practice-based, tactical side of managing marketing activities marketing implementation. Understanding marketing implementation requires:
* Investigating what is unique about marketing practices
* Discriminating strategic problems from ones of practice in marketing
* Developing a vocabulary for and a way to think about marketing practice problems
* Generalizing management guidelines for good marketing practice
This chapter is only a beginning at each of these tasks. The points made here are based on three years of clinical research on 30 situations and in over 20 companies done during the development of a second-year course on Marketing Implementation at the Harvard Business School. The student will have an opportunity to analyze for himself or herself many of the cases alluded to here. Therefore, these thoughts should be taken as a preliminary "starter" framework for marketing implementation about which each student must develop his or her own deeper understanding.
Marketing Strategy and Marketing Acts
By marketing strategy, I mean the goals and objectives directing marketing activities. By marketing implementation, I mean the specific actions through which management actualizes its strategies. Consider the following example:
A pipe company invented a new kind of triangular drain pipe 180 percent as efficient but only two-thirds as materials-intensive as its current line. The new marketing vice president wanted to price the new pipe high, on the basis of value received by users. However, he believed that neither other top managers nor the sales force had the discipline to implement a high-price program without reverting to the volume-oriented, price-per-pound logic which made the firm successful. How can he change the marketing "theme" of the company so management can exploit its innovation?
What to do (strategy) is clear to this manager: value price, encourage cannibalization of existing lines for the new one, and reap increased profits. How to do it well is problematical. The firm, a privately held family company, had a history of producing very large quantities of pipe. This pipe was sold at low margins to cover fixed costs and keep the plants at capacity. Plant managers were paid on the basis of volume of pipe produced per minute. The sales force thought in terms of "shaving" retail prices to meet tough competition in this mature market. The firm's management unwittingly encouraged this commodity culture with a measurement system that tracked the selling price of each pound of plastic made into pipe. The vice president rightly worried that just setting a high price on the new pipe, or declaring a "marketing program" for the new introduction, would not be powerful long-term weapons to combat the entrenched way of doing things.
From this example, it can be seen that problems of marketing implementation involve both "hard" and "soft" issues. There are hard questions of what specific actions should be taken to implement the new pipe introduction, and of which company resources should be decked against it. There are also other, soft questions about execution policies, marketing systems, and those who would lead the marketing effort.
What's Unique About Marketing Practice?
Performing any management task raises a host of practice problems. Many of these are internal to the firm, such as building cross-functional cooperation or making management systems do what is needed of them. Marketing shares these problems and, to this extent, marketing implementation raises practice concerns similar to other business functions and to general management.
What is unique about marketing is that it "owns" the company's customer and trade relationships. Its tentacles reach out to, and its every act is reached by, these two key relationships. This means that, whatever "good practice" is in doing the marketing job, it requires a juggler's skill at keeping three very different balls in the air. Exhibit 1-1 shows this triple interface of company, customer, and trade relationships in marketing practice.
The first circle on the exhibit refers to the relationship of the marketers to other marketers, to other management functions like sales or production, and to the business systems making up the firm. Relevant questions about internal practice, for example, include how well marketing and sales interact, the marketing-manufacturing interface, and the reporting and control systems used by managers in order to monitor marketplace results.
The second and third circles reference parties and problems outside the firm. The second concerns relations with intermediaries or trade (distributors), and the third reaches to the end-user himself or herself. How well is the trade being managed? The end-users? Is the flow of information between the field and the company truly two-way, or are customers "unfortunate constraints" on management's otherwise perfect plans?
The exhibit shows quality in marketing practice as "goodness" at this triple intersection of company, customers, and trade. We shall have more to say about marketing quality below.
Which Is It -- Strategy or Implementation?
Strategy and implementation form a circle, or cycle, each affecting the other. While it is well known that strategy affects acts, an equally important generalization is that execution also affects marketing strategy, especially over time. Because they are intertwined, it is sometimes difficult on first examination to distinguish problems of marketing strategy from those of its execution.
Despite this fuzzy boundary, it is not hard to diagnose marketing implementation problems, or to differentiate them from strategy shortfalls. When a 50-person computer terminals sales force sells only 39 of the company's new line of "smart" microcomputers during a sales blitz in which sales of over 500 units were forecast, is the problem with sales force management or with the strategy move to the smart machines?
Assigning the symptoms to strategy causes does not fit the available evidence well. The company is experiencing eroding margins on its sales of "dumb" terminals because of intense competition from a major vendor. Additionally, the smart terminals category is expected to grow by over 500 percent during the 1980s. The product itself, a portable terminal with built-in printer, has many benefits desired by the target market.
Assignment of the poor sales performance to marketing implementation causes better fits the situational analysis. The average company sales representative earns over $50,000 annually from dumb terminal sales alone. Consequently, there is little sales force hunger to struggle with an unfamiliar new product. Worse, sales incentive compensation on the new machines was set lower than on the old ones, a puzzling implementation move. The old terminals, moreover, have a selling cycle only one-half as long as the new ones, and require no software knowledge or support. Here is a case where poor execution stifled good strategy.
The computer example asserts an important diagnostic rule about strategy and implementation. When strategy is good, poor implementation can disguise that fact. Thus, it is difficult to assess the worth of marketing strategy when execution problems mask strategic adequacy. This condition is shown in Exhibit 1-2, where the computer company falls into the lower-left cell of the matrix.
The exhibit crosses the appropriateness of management's marketing strategy with the excellence of its marketing implementation. When both strategy and implementation are excellent, all that can be done has been done to assure success. When strategy is inappropriate and implementation poor, failure is the probable result. However, failures may be especially intractable, for management can be tempted to blame all its problems on the perhaps more visible poor execution of its plans, rather than questioning its basic strategy. Hence, it may court repeated failure by devising better ways to execute bad strategy.
When marketing execution is poor but the firm's strategy is appropriate, management may not trust in its strategy soundness because of implementation inadequacies. What can happen here is that management assumes the strategy is inappropriate, changes it, and hastens marketplace failure. The "trouble" cell on the matrix drives management toward marketplace failure because inadequate execution masks good strategy.
The remaining off-diagonal cell of Exhibit 1-2 has unpredictable results. When strategy is inappropriate and execution excellent, good implementation may drive the firm more quickly toward failure, just as the engine on a plane in a nosedive serves only to hasten the crash. But there are times when excellent execution can make up for inappropriateness in strategy, as when field sales offices "modify" headquarters directives they know are disastrous. Because it is impossible to predict whether excellent execution coupled with inappropriate strategy will hasten or stave off marketplace failure, I label this the "roulette" cell.
In his Zen and the Art of Motorcycle Maintenance, Robert Pirsig writes a catalog of traps which can sap the mechanic's resolve toward quality work, and lead to poor cycle repairs. He tells, for instance, how a five-cent screw holding an access cover can, if stuck, render a $4,000 motorcycle worthless and the mechanic a frustrated wreck headed for a really major mistake. Managers need a vocabulary of marketing practice, labeling its screws and covers. From this, we can investigate how the manager practices marketing, and catalog execution traps as well as learn from successes. What follows is my vocabulary for and a model of marketing implementation, with special reference to some things that go wrong when marketers "work on the motorcycle."
Marketing execution takes place at four levels in the firm: actions, programs, systems, and policies. The actions level is the five-cent screw one uses for marketing, while the policies level concerns the theory of the marketing motorcycle. Further, individual managers bring (or fail to bring) to the job some critical skills which foster or inhibit execution efficacy. Good marketing practice is a complex function of the level at which marketing is carried out, and the skills of the practitioners.
At the lowest level of execution are marketing actions, which involve marketing's subfunctions, like selling, trade promotion, or distributor management. These low-level marketing tasks are the fundamentals, the "blocking and tackling" of the marketer's job. Many firms and managers have real difficulties with these low-level actions. Often, the difficulties experienced are ones of never really having addressed the fundamentals, as when a firm doubted the worth of its trade show expenditures but continued regularly to spend $1 million and uncounted management hours solely because "we have to be there."
Yet, how does management know if its promotional allocations are spent wisely, or whether these monies ought to be reallocated to increased sales force manning? How are its products to be priced, absolutely and relatively, with regard to other items in the line and the competition's entries? Actions-level problems like these are among the most frequently encountered by practicing managers. Many of the actions problems experienced by firms involve the sales force or distributor management, for that is where trouble often occurs in low-level marketing execution. The computer company cited above is one illustration.
In the best managements, by contrast, there is real facility at handling marketing actions tasks. No management is good at everything, but the better marketers concentrate on doing an outstanding job at a few marketing subfunctions and an adequate job with the remainder. Frito-Lay, for instance, is an example of a company we'll study later which refined a single actions-level skill, distribution, to such heights that it now serves as the competitive base for all the company's programs. Gillette, another firm in the book, has made a science of advertising in the same way. For many others, there seemed to be a willingness on management's part to ignore the "down-and-dirty" marketing details, to assume they'd get done, and to trust that someone, somewhere, had the ability to take care of them.
At the programs level, management is concerned with blending marketing actions (e.g., pricing, selling, product development) into an integrated program. Programs usually have either a product or customer segment focus, and are management's attempts to blend its subfunctions together coherently in product or customer "bundles." Management of a line of shampoos/conditioners, or instituting a program for key accounts, are examples of such focused integrations of marketing's tools. If marketing subfunctions are the blocking and tackling of the job, programs are management's "playbook" by which the customers will be courted and the competition confounded.
A graphics computer vendor we'll learn about, for example, wished to install a national account program to better service its few but growing key accounts. A manager very successful at national account management in another firm was recruited. He was given a secretary, and a presidential mandate to "put a key account program together." How, exactly, is this to be gone about?
Perhaps he should attempt to create a headquarters-based dedicated national account sales force, with the attendant risks that competition with the sales vice president (his superior) and a very successful sales force implies? Or, is he better off working in a dotted-line capacity through the firm's sales managers, attempting no sales or service coordination beyond simple persuasion, and running different risks?
The presence of many clever marketing programs, a great "playbook," is not a sign of good marketing practice by management. Where strong execution systems and policies don't exist, these programs go off in all directions, resulting in diffusion of effort and random results. Where strong action-level abilities are not present, clever programs fail for want of the basic skills needed to actualize them. Without subfunctional soundness on the one hand and clarity of purpose on the other, management often seems to dream up "Statue of Liberty" plays that it has neither the focus nor fundamental skills to make work.
At the level of marketing systems, we are concerned with the firm's formal organizational, m...
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Book Description Free Press, 1984. Hardcover. Book Condition: New. Bookseller Inventory # P110029037204
Book Description Free Press, 1984. Hardcover. Book Condition: New. Bookseller Inventory # DADAX0029037204