Cranfield School of Management Interview: Professor Malcolm McDonald Marketing Plans: How to Prepare Them and How to Use Them SM Welcome to the Knowledge Interchange Podcast. I am Steve Macaulay from the Learning Services Team and I am interviewing Professor Malcolm McDonald on his book Marketing Plans: How to Prepare Them and How to Use Them. So Professor McDonald I would like to start off by understanding what led you to write the book, and what has been the reaction? MM Up to about 1984 all the research that I had been doing showed that marketing planning wasn’t practised in the main because there wasn’t really a coherent theory about marketing planning and most of the scholars said it was good thing, but they all agreed that about 90% of organisations around the world didn’t actually do it. And my own thesis, part of my PhD thesis in fact, was because there wasn’t a sort of step by step process, so I took my PhD thesis – I think I was the first to set out a fairly comprehensive step by step process and that was the first edition of the book and we are now about twenty three years later and we have sold half a million copies around the world and it is used as a basic set of templates by big companies like IBM and Shell and hundreds and thousands of others all over the world, and it is a set text in many universities – so it certainly was needed and it has had the right sort of impact. SM So I guess over those years, you have seen an enormous change in the theory and practice of marketing planning? MM Not really, because most processes, managerial processes, are universal and they are pretty permanent – permanent as a process. All that has happened over the years is that the environment has become more complex and competition has hotted up as markets have matured, consequently the need for a robust process has become even more self evident, but the actual process itself is exactly the same as it was in 1984 when I first started out on this road, and it has become even more essential to follow the process. Knowledge Interchange Podcasts Page 1 Cranfield School of Management Professor Malcolm McDonald SM So if you were to pick an enduring key message from the book that you would like people to remember, what would it be? MM Well, I think there are three things, not just my own PhD and not just emphasised in this book, but emphasised in subsequent PhDs that I have supervised and examined in different universities around the world, is the first thing is defining a market in terms of need sets, rather than in terms of products. For example, when I ask someone to define their key target markets they often talk about pensions or middle ware, and I say, no, no, these are your products. So it is defining markets in terms of need sets and understanding that. Then the second one is getting segmentation right, not confusing it with sectors and socio economics and demographics, but getting segmentation right and then the third thing that I have always emphasised – not just in the book, but on courses – is matching the offers that you make to the needs of the segments. Those three things. SM Now, if I look at your substantial experience over the years of working with managers and with organisations, I am sure you've come across ones that you can say well, these seem to exhibit a lot of things that I am talking about with marketing planning. If you were to kind of say well are there any themes that come out of the good ones, the ones that you can say, well these people have got it together – and does any one organisation stand out in your mind? MM Yes, I am very lucky I work at board level and have done for the past fifteen or twenty years. I am talking in the main about operating board level rather than the people who sit on Mount Olympus, I am talking about the people who run business units, those at that level of director and the one thing that I have discerned in successful companies is the points I have just made. They work very hard at understanding their markets, they do proper segmentation and they match the offers to the segments and then branding follows on from that. But, not so long ago the operating board of Tesco came to see me and spent a day with me, and Tesco is a classic example of a British company, whether you like them or not, that are fantastically successful and I can promise you, you put it down to proper segmentation and they understand their twelve million consumers, they match their communications to their needs, the offer that they make to each of us is outstanding. And when somebody like Walmart comes into the market and all they have got is a low cost supply chain, the truth is that they cannot beat Tesco because they don’t know anything their customers and their markets. All they have got is a low price Knowledge Interchange Podcasts Page 2 Cranfield School of Management Professor Malcolm McDonald offer, and that isn’t how markets work and its lovely to see Walmart even talking about wanting to take Tesco to the Competition Commission – that shows how successful companies like Tesco are. The others of course are companies like 3M, General Electric – another good one is British Oxygen. They are not all fast moving consumer goods companies. Then of course you get your Unilevers and your Proctor and Gambles and your Coca Colas, but if you are in those sorts of markets you cannot survive more than three months without doing these things and getting them right. SM I would be interested to hear a bit more about the strategic planning process and how important it is. MM Well, the first thing is that it is a process, it’s a managerial process that takes you through first of all a sort of diagnostic phase and it tells you what kinds of things need to be diagnosed and how you diagnose them, where you get all the data and information from, then there are a set of processes that turn that data and information into knowledge, into intelligence if you like and you have got to be disciplined about that because the world today, we have got far too much data and information and the processes that I spell out in the book and on my courses, they show you how to take all that mass of data and massage it and turn it into knowledge and intelligence, which is the basis of competitive advantage of course. And again, if you think about the process, the process has to be appropriate to the size and culture of the organisation, so in a Virgin type organisation you need to be much more creative and informal, whereas in the 3M and the General Electrics of the world you really have got to be very disciplined and formalised – and the IBMs of the world following the procedures, but I don’t, and never have, just said you pick it up, you follow it and it will work because a lot of the research I did in the early days was on the culture of organisations and making the process fit the organisational culture. So it isn’t one size fits all, but the underlying process is still universally applicable. SM That is interesting, I mean, I hear so many companies, and I am sure you do, say how important the customer is, how important market orientation is and yet often, I see and I am sure you see too, their practices actually fall very much short of that – how do you get an organisation that is genuinely market responsive and to have that throughout the organisation. MM You have just put your finger on the biggest problem that faces all people who are marketers. People generally in the world think Knowledge Interchange Podcasts Page 3 Cranfield School of Management Professor Malcolm McDonald that marketing is about promotion, they think it is about advertising and pushing messages into the mushy brains of end consumers, and the answer of course is it's not, it is a strategic process about understanding markets. It's about deciding who you are going to sell to, what you are going to sell them and why they should buy from you rather than somebody else. Now to get that message over, what I have always insisted on – certainly for the past fifteen years – when companies ask me to do workshops for them, I say no, not unless I can spend a day or half a day with the board, so recently I have just spent half a day with the main board of Standard Bank in South Africa. That will push the frontiers of marketing forward by light years. So if you don’t get the decision makers to understand the importance of customers and markets, they will indeed fall back on the things they have always done which is financial husbandry, or technical orientation, or whatever. So, the way I do it is putting myself about at board level – that is the only way I have found of winning it. The other way of course I find of doing it is to take a part of a company, not try and change the whole thing, but take a part of a company, do an excellent job on a part of it and then sort of spill it out from there. SM Can I focus a bit more on implementation and you describe a whole host of tools, core processes, even mindsets – without going into the whole detail of the book, are there any highlights that you would want to get me, other than the ones that we have mentioned already, that say for you to really implement this successfully, then what are the sort of things you need? MM Well, I am great admirer of fully qualified chartered accountants, chartered engineers, people like bankers who are professionally qualified, to a universally accepted standard and I do a lot of work with the Chartered Institute of Marketing – I am Vice Dean of the Academic Senate, I was the world’s first Chartered Marketer, so this is sort of voluntary work that I do because I am great believer that if you want to be successful in implementing the kind of stuff that people like me promulgate through books and courses, if you are not professionally qualified, if you don’t understand the tools and techniques in great detail, you are not going to be able to implement anything that I have said in the book. A book, it can’t be a crutch, it can’t replace having that in depth technical knowledge of how, for example, you analyse data, how you put it into these different structures and frameworks. It won’t be done just by reading a book, can’t be done. So my message, all of my life, has been become professionally qualified and this stuff will work. Knowledge Interchange Podcasts Page 4 Cranfield School of Management Professor Malcolm McDonald SM Now, I would like to turn now to a date in the future when your sixth edition comes out … MM Seventh edition. SM Seventh edition – right. So we are looking ahead now and saying what are the trends that you can see coming up and getting stronger, what are the things that you would say well when we started out it looked like this, but looking ahead … MM Well, the simple answer to that is that the core of the book, as I have said, over twenty three years hasn’t changed, the processes that you use are going to be the same twenty years from now because they are universal. It's about taking data about your competitors, your markets, your customers, analysing it, working out what they need, what you have got to do, pulling the right leaders. That isn’t going to change. What is changing and has already changed has been driven by changing technology. I mean one of the biggest changes is that consumers and customers now know more about their suppliers than suppliers know about them and the way I keep up to date is by running research clubs at Cranfield, so we have a CRM research club, we have a multi channel integration research club, we have got a key account management research club, we have got a marketing accountability research club, sponsored by some of the biggest and best companies in the world and where you see, for example, multi channels in silos, not talking to each other – for example I was phoned by a company only yesterday who were totally unaware of my dealings and complaints with three different departments, which an absolute disgrace because they were trying to sell me something and so it is the complexity of multi channel integration and communications, but the only way you will ever solve those is by coming back to the basics and understanding your markets, the segments, their needs and the way that people prefer to behave – not the way we want them to behave, but the way they actually prefer to behave. So, I think the biggest change is going to be complex environments, technology transfer and of course markets becoming much more competitive, but in changing channels and that kind of thing and you have to keep on top of that. But the underlying process is not going to change at all. Knowledge Interchange Podcasts Page 5 Cranfield School of Management SM Professor Malcolm McDonald That is fascinating – I will come back when you have produced that edition and we will look ahead still more. So, Professor McDonald, thank you very much indeed. Transcript prepared by Learning Services for the Knowledge Interchange www.cranfield.ac.uk/som Knowledge Interchange Podcasts Page 6 Cranfield School of Management Produced by the Learning Services Team Cranfield School of Management © Cranfield University 2007