Interview: Dr Paul Baines
Contemporary Strategic Marketing
SM
Hello, I am Steve Macaulay and this is a Cranfield School of
Management podcast. I am interviewing today Paul Baines about his
book Contemporary Strategic Marketing that he has written with
Ross Brennan, Paul Garneau and Lynn Vos. So Paul, let’s start off
with maybe a controversial statement – many of the books I look at
contain the word strategic, so when I saw this again, I thought well
here we go, we have just added another word on here, without
actually much depth in it. Tell me more about strategic and why
that is so important.
PB
Well, to be honest Steve, I think a lot of companies tend to operate
tactical marketing strategies when really they should be looking at
more strategic marketing strategies. So many companies go for
organic growth rather, say, than market penetration and so on,
rather than looking at some of the wider possibilities – diversification,
merger and acquisition and so on. I know mergers and acquisitions
are a bit more difficult because often enough it’s difficult to put two
companies together with differing cultures, but there are also other
opportunities – market development increasingly. Market
development not just through overseas expansion, but also through
the internet increasingly and I think that is the thing. The internet
now allows us to increase our markets in a way that we never would
have dreamed possible more than fifteen years ago. So the point
about strategy and the reason why we have focused specifically on
strategy is because we want the practitioner to really think much
more about where the company is heading to marry what is
happening in the environment with the organisation’s mission and
vision, and to take advantages of the market place and to shift
forward on that basis.
SM
So, although they are clearly linked, how does a marketing strategy
differ from business strategy?
PB
Oh, business strategy really takes into account a whole host of
areas such as operations, such as finance. I mean one could argue
that strategic marketing strategy is, in essence, very similar to
business strategy. But I think the point is that the focus is much
more on the customer from the marketing perspective – the strategic
marketing perspective – looking at future revenue flows from
customers, rather than looking at a whole host of areas that the
Dr Paul Baines
company brings together in strategy more generally.
SM
Now, at the risk of sounding controversial, many companies have
been very successful by adopting the kind of organic or tactical
approach that you have talked about. What is the advantage of
getting strategic?
PB
I think we could say that many of them have been successful, but in
the short term, not necessarily in the long term. If you look at, for
instance, the Fortune 100, many of the companies that existed one
hundred years ago are no longer operating. The companies – in
the UK – the companies that are still operating in our supermarkets
from a hundred years ago are few and far between, the only
company that I can think of that has lasted nearly two hundred years
is Robinsons Squash. There are very few other companies that
have been around that long.
So I think the point is that strategic marketing is really not just about
operating on one or three year time horizons, we are really looking
to the future to predict what will happen in the market place and to
take advantage of it. You know, in tactical marketing strategy, often
enough a company can be lucky. It can just hit a trend at the right
time, often enough through intuition, possibly through market
research, but if it doesn’t keep that kind of analysis up, then it is
unlikely, I think, to survive in the long term.
SM
So, let me get down to some nitty gritty then – what does strategic
marketing actually entail?
PB
Well, strategic entails three different phases, if you like. The first
phase would be an analysis phase, the second phase would be a
development phase and the third phase would be an implementation
phase. So what we are hoping with this book is to outline those
different phases and some of the contemporary issues in strategic
marketing that are occurring at the moment. So we hope to provide
an understanding of how to analyse customer behaviour, both from
a consumer and organisational buying behaviour perspective,
looking at the nature of the changing environment – the macro
environment, the competitive environment – looking at how to do
analysis providing examples of tools – the very common tools like
Ansoff’s matrix, for instance, but also other tools like PEST analysis,
environmental analysis.
Many of the standard tools and techniques which managers are
often familiar with, but not necessarily able to use in a way that is
really useful. They have got some understanding of them, but often
enough they are not actually putting them into practice,
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Dr Paul Baines
implementing these tools and techniques as well as they might, and
the book hopes to bridge that gap. In addition to the analysis, there
is also discussion of implementation, of how to go about
implementing strategy and formulating it and so on. And some of
the more contemporary issues associated with it – relationship
marketing, with e-marketing in the new channels that exist as a
result of going on line and the shift towards services rather than
produce marketing, and finally a discussion of international
marketing, the nature of international markets and how to go
international. So, selection of markets, but also entry methods in
those new markets.
SM
So, it’s very much a how to book, effectively?
PB
Yeah. I think it is a how to book, but it’s a how to book with a
descriptive element. So here is how other companies have done it
through case studies, but also here is how you can analyse your
own environment in order to make the best of the opportunities that
exist in the market place. And so we have got a chapter on
analysing strategic marketing cases for the practitioner who wants
to, I think, understand his or her own company’s environment and
use some of the tools and techniques in the book for their own
situation.
SM
Give me an example from the book, or elsewhere from your
experience, of companies that are exemplars at putting into practice
this idea of strategic marketing and it’s working well.
PB
I think there are many excellent companies – probably in the UK at
the moment perhaps the best example is the retailer Tesco.
Tesco’s ability to understand their environment, take advantage of
that environment, is unparalleled in Britain at the moment. But there
are also highly innovative companies like Dyson, the maker of
vacuum cleaners and of a whole variety of other electronic goods
these days, who understand not just how to market a product to
customers, but also who understand how to innovate and develop
really new, exciting products.
I think Apple, the computer company – it’s more than just a
computer company now, it’s an entertainment company in many
ways – is a fabulous example of an extraordinarily successful
company, regarded as the world’s most innovative company for I
think about five years running. And British Telecommunications is a
company that has shifted from public services, from the government
sector, to a thriving world telecommunications company – a
company that has increasingly realised that its future is in the
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internet field and that is covered as a case study in the book.
Another example is the shift towards marketing of destinations.
Increasingly we are seeing destinations being marketed in the same
way that we have seen soap powder and toothpaste being marketed
and I think that is a shift as people increasingly move around the
world for leisure purposes. So Australia is an excellent example of
a country which is marketing itself very well to tourists. Another
good example, again it comes from that part of the world, are the
wine companies – both Australian wines and New Zealand wines –
which are increasingly dominating the UK market. Those wines
have managed to dominate what is essentially a very attractive
market by standardising their product offering in a way that the
French, Italian and Old World producers have not really been able to
match. So I think we have seen a shifting out of Old World wine
producers from the Australasian wine producers – and Californian
and New World more generally. So again, that is an inability, if you
like, of those Old World producers to understand the shifts in their
market environment and not change their production practices to suit
the changes in the market.
So, overwhelmingly, if a company doesn’t recognise changes in
tastes, I think it, if you like, loses the plot and its success can decline
as a result.
SM
We touched on changing customer behaviour – I would like to look
at this area and I’ll quote from your book: “effective strategic
marketing requires planners to be almost obsessive about
understanding the needs of their customers.” How does that
translate into practice? I mean, I remember years ago hearing Tom
Peters talk about everybody has got to be wild about customers and
so on – I haven’t actually seen that kind of thing really get translated
into practice.
PB
Well, it is translated into practice by exemplar companies – you
know a good example would be First Direct. First Direct, the HSBC
telephone and online banking operation has been obsessive about
customer service for many years. In fact since its inception originally
as telephone and then later as an online offering, and I think the way
in which it has understood how to pare down costs and shift to an
alternative channel, has been both wise and increasingly successful
for it. So I think they are an example of an organisation that is
obsessive about customer service.
Another example, probably better known, but not necessarily as well
experienced by us all is Harley Davidson. Harley Davidsons had a
strategy of what they called super customer engagement for some
time and so they go beyond offering a bike – a motorbike. It’s also,
if you like, a way of life, a vision or escapism. So, whereas many
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people might simply be buying a motorbike, what you are buying
with a Harley Davidson is you are buying into a particular way of
being and a way of feeling – one that is encapsulated by the Harley
Owners’ Group for instance. So you buy this bike, but you also
enter a biking community and they make it easier for you to interact
with other people that have bought the Harley Davidson brand and I
think that kind of tribal, cult like following that it has developed is
incredibly attractive to someone who is wanting to buy a new bike.
It must be because Harley seems to be able to charge a significant
price premium above the more powerful Japanese bikes. So I think
this iconic status has arisen as a result of the way in which they
have built their strategy around the customer and the customers’
needs – not just the functional needs, but also the emotional needs.
SM
I would now like to turn to the e-world and you have got a chunk of
your book on e-marketing and from reading what I have read, then
it’s more than just setting up a website.
PB
Well, setting up a website is now ubiquitous and I think anybody that
has got a company would set up a website. Many though wouldn’t
realise that setting up a website is more than simply setting up a
series of pages. I think a website is both an opportunity to
communicate your brand and an opportunity to distribute your brand.
So, interactive websites are absolutely fundamental in the business
to business world. Selling goods and products through eprocurement is increasingly important in the B2B world. But in the
B2C world, it’s also fundamental. But I think the importance with
online e-marketing strategy is that it’s really an opportunity to build
your brand, in many cases with a new market with a group of people
that you may not necessarily have been hitting in the past.
As we penetrate the market population more generally with the
internet, increasingly it will operate just like the standard market.
But at the moment we are able to sell goods and services to people
that we have never been able to sell goods and services to before.
The other point, of course, is that the internet is not location specific.
So you could sell books to people in Iceland, just as easily as you
could sell books to people in Ethiopia – as long as they are prepared
to pay postal charges and all the rest of it.
So, I think the point is that what we are seeing with the internet are
the greater possibilities of distribution around the world, but we are
also seeing the opportunities that build up new markets where those
markets haven’t necessarily previously existed – so, younger
consumers who are more likely to be online, who may not have
bought things from your particular company in the past.
There is also another area – so there is B2B, B2C, but there is also
increasingly C2C, consumer to consumer. Customers are selling
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each other things on e-Bay for instance, on Amazon Exchange.
Many of these goods are CDs and books and small items which are
more easily postable, but what we have also seen in the last few
years is a shift to selling much higher value items – so for instance,
e-Bay UK, I understand, has become the country’s largest seller of
second hand cars. Now that is amazing – the fact that people trust
each other sufficiently to sell through e-Bay is phenomenal and that
is something that they didn’t necessarily think would happen, so it
almost happened by accident. So I think what we are seeing is a
shift, a very strong shift, towards the development of new markets.
The internet does change marketing in many different ways and
companies really do need to understand its possibilities.
SM
It’s interesting – we have covered quite a bit of ground about what is
quite a fast changing and complex world now and I think you have
given us some useful pathways to have a look at marketing through
a strategic perspective, so thank you very much.
PB
Thanks very much Steve.
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