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.
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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
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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
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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.
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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.
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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
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Cranfield School of Management
Produced by the Learning Services Team
Cranfield School of Management
© Cranfield University 2007