MANAGING MARKETING
PERFORMANCE
INTRODUCTIONS
1
about David Kilburn
• Head of Business Development, Associate Professor and
DSGi Marketing Fellow, formerly Barclays Fellow
• DipM, MCIM, Chartered Marketer
• Marketing management experience in retail industry- home
improvements, food, and consumer electronics
• Worked part time for CMC for 5 years
• Marketing Director for BSM Electronics
• Store Director – WHSmith Do-It-All
• Online marketing tutor/ Dissertation advisor for worldwide
MBA programme - Liverpool University
• External Examiner for Marketing/Business University of
Wales in Spain and Italy
• Marketing Tutor for ISTUD in Milan, Italy each summer
2
ABOUT YOU!
• Tell us something about yourself
– Who you are?
– Where you work?
– What your role is?
– Your marketing experience?
– Academic path?
– Your involvement with strategic
marketing management issues?
3
SETTING THE SCENE
• Assignment or exam?
– Dates, requirements and deadlines
•
•
•
•
•
•
•
•
•
•
4
Use College Web facilities
CIM Learning Zone and EBSCO
Reading
Study Guide – text book
Previous papers and answers
Examiners comments
Tutor Forum – February 2009
Webinars
Revision session – assignment session
Contact me –
dkilburn@bournemouth.ac.uk
The 5 elements
1. Creating organisational context for
effective implementation of strategy
2. Managing change and internal marketing
3. Implementing strategy through marketing
activities
4. Management techniques for managing
the marketing function
5. Measurement, evaluation and control
5
Fit with overall pg syllabi
STRATEGIC MARKETING
DECISIONS
ANALYSIS & EVALUATION
• Strategic marketing
• Evaluation of performance
• Internal analysis
• External analysis
• The global marketplace
MANAGING MARKETING
PERFORMANCE
•
•
•
•
•
6
Organisational context
Internal marketing
Implementing strategy
Managing marketing
Measurement & control
•
•
•
•
•
Competitive advantage
Innovation/reorientation
SMD in global marketplace
SMD in portfolio management
Investment decisions/control
STRATEGIC MARKETING
IN PRACTICE
Learning outcomes only.
No specified
syllabus elements
Scope of the syllabus
• ‘How to do the job of marketing’
– relates to marketing practice
• Tests application rather than
knowledge:
– extend knowledge into thinking
– from ‘what’ to ‘why’ and ‘how’
• Draws on a wide range of resources
• CONTEXT
7
Focus
• The “How” of marketing rather than
the “what”
• Delivery emphasis is on “ Listen and
Challenge”
• Shift from analysis to critical
evaluation
8
MMP ‘AUDIT’
•
•
•
•
9
Discussion with examiner
Key points
Tutor forum
Last ‘diet’
MMP Focus Meeting Feedback
• Key issues resulting from the first set of
marking
– Referencing is important but there is
recognition of the work based nature of the
assignments and the increase thereby in
Internet based referencing.
– Looking for sound theoretical underpinning
– Looking for ‘Trail of evidence’ - linkage
between audit, selection of options and
recommendations
– Students need to define the boundaries of the
project clearly e.g. 1 or 2 products in 1 or 2
markets is enough
10
MMP Focus Meeting Feedback
• Good practice
– Trail of evidence
– Support in audit findings
– A good audit is: • Relevant to the topics
• Linked to the report
• NOT cut and pasted!
– Numbered report and good structure
– Good index – KEY
– Do mind maps to sort ideas prior to writing the
report
11
MMP Focus Meeting Feedback
• Good practice more..
– Evaluation (acid test is ‘so what?’)
– Depth not breadth is critical
12
MMP Focus Meeting Feedback
• Poor practice
– Unapplied models (Senior examiner’s
bete noir) – vital to apply in context
– Too much description not evaluation –
looking for ability to use data to
discriminate in decisions
– Poor referencing – misspelling of
authors’ names!
– Poor use of appendices – this is a
business report
13
Grade Descriptors
• Example assignment from last
assessment
14
MY ASSUMPTIONS!
• You have prior knowledge and some
experience of using the theories that
apply to this syllabus
• If you are unsure at any stage –
SHOUT!
15
CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING
PERFORMANCE
Session 1
The role and practice of leadership
16
CIM Definition of Marketing
Marketing is the management
process responsible for identifying,
anticipating and satisfying customer
requirements profitably.
17
Learning outcomes
• At the end of the session you will be able
to:
– Explain the role of the strategic leader in
managing marketing performance
– Explain the role of the strategic leader in
achieving marketing orientation
– Explain the role of the strategic leader in
building shareholder value through marketing
activities
– Explain the role of the strategic leader in
ensuring marketing effectiveness
18
What is leadership?
• Leadership is the process of influencing
others to work willingly towards the
achievement of organisational goals.
• Leadership can be characterised in terms
of traits or characteristics (of leaders) and
styles (which are to be adopted).
• Leadership skills can be learnt and
improved
19
Manager or leader - differences?
Managers
Leaders
Cope with
complexity
change
Address
the present and
the short term
the future and the
longer term
Performance meets
expectations
Focus
controlling
(John Kotter)
20
exceeds
expectations
unlocking potential
Models of leadership style
• Huneryager and Heckman; Likert
– Dictatorial, autocratic, democratic, laissez-faire
• Ashridge Management College
– Autocratic, persuasive, consultative, democratic
(omits the extremes at each end)
– Tells, sells, consults, joins
• McGregor
– Theory X and theory Y
• Hersey and Blanchard: situational
leadership
– Match the style to the development level of the
subordinate
http://changingminds.org/disciplines/leadership/styles/situational_leadership_he
rsey_blanchard.htm
21
Mini Case -Autoglass:Leadership success factors
•
•
•
•
•
•
•
•
22
Customer driven
Energy, drive and change
Analytical thinker
Commercial ideas and action
Planner and implementer
Open communicator
Leading and motivating teams
Partnership builder
(see handouts)
Mini Case -Autoglass:Leadership success factors
Question one
Think of two successful leaders
that you have known, preferably
selecting examples that display
different approaches. Assess
each of them in relation to the
various Autoglass success
factors.
23
Mini Case -Autoglass:Leadership success factors
Question two
Now consider a less effective
leader. To what extent did he or
she demonstrate the various
success factors?
24
What guides the organisation?
Strategy
‘Strategic fit’
Style
Employees
Culture
Leadership
Values
25
Leadership skills (Belbin)
•
•
•
•
•
26
Versatility
Feedback
Charisma
Integrity
Altruism
•
•
•
•
•
Decision making
Problem solving
Initiating action
Fostering linkages
Assisting in
evolution and
change
What does the leader do?
• Adair identifies 8
leadership activities
–
–
–
–
–
–
–
–
27
Defining the task
Planning
Briefing
Controlling
Evaluation
Motivating
Organising
Setting an example
Leaders determine how organisations develop
• Strategic choice
theory (Stacey,
2003)
• Formulation and
implementation of
strategy are
different
• It is the role of
leaders to
formulate strategy
and to direct its
implementation
28
• Theory of the
learning
organisation
(Senge, 1990)
• Organisations
evolve as a result
of high levels of
learning by
individuals and
teams
Marketing Management’s Role
29
Life cycle of marketing
30
Relationship marketing – implications for
marketing practice
31
Useful web-sites
• www.shapetheagenda.com
– Go to ‘past agendas’ then select ‘hard edged
marketing’.
– The most recent paper on ‘managing marketing
people’ is also worth a look
• www.wnim.com
– What’s new in marketing
• http://www.thewisemarketer.com/
– VERY GOOD!
• www.cim.co.uk
• www.excellencenorthwest.co.uk/Resources
/Steve_Kempster_19th_July.ppt
– A useful overview
32
Minicase - Leadership
Consider a small manufacturing company,
t/over circa £25m p/a, marketing team of 3 –
Manager (you), executive and assistant. The
corporate objective is to increase sales by
25% over the next 3 years and the marketing
objectives are to increase brand awareness by
50% & the number of new prospects by 50%.
You need to increase your team by one,
what are the leadership issues to consider?
33
34
CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING
PERFORMANCE
Session 2
Planning the team
35
Learning outcomes
• At the end of the session, you will be able
to:
– Appraise the requirements of a given set of
tasks and their context, and assess the impact
of relevant factors on the creation or
development of a team to perform those tasks.
– Determine the skills, characteristics and roles
required within a team to carry out specific
tasks effectively.
– Prepare a plan showing how the team should
be structured, selected, formed and developed
to ensure effective performance.
36
A group is a collection of people …
• …. who perceive
themselves to be a
group!
• In ‘Understanding
Organisations’ Charles
Handy differentiates a
group from a random
collection of
individuals.
• Members of a group:
– have a common sense
of identity and
belonging
– are loyal to the group
and conform to its
standards
37
A group is not a team: teams have synergy
• A team is a small
number of people with
complementary skills
who are committed to
a common purpose,
performance goals,
and approach for
which they hold
themselves mutually
accountable
38
• Katzenbach and
Smith, The Wisdom of
Teams, 1994
Groups become teams when they have a sense
of purpose
• Needs are complex and multi-layered and
need to be managed as such (Adair)
• Their members play particular roles
(Belbin)
• They are likely to pass through stages of
development (Tuckman)
• Their effectiveness depends on their terms
of reference and their conduct (Handy)
• Leadership is key (Ashridge; Belasco &
Stayer)
39
6 differences between a team and a group (Belbin)
40
Teams
Groups
Size
Limited
Medium/large
Selection
Critical
Limited
Leadership Shared/rotating
Solo
Perception Mutual knowledge
Focus on leader
Style
Role spread
Conformism
Spirit
Dynamic interaction
Togetherness
John Adair identified 3 overlapping needs
Task Roles
Initiating
Information Seeking
Strategic planning
Evaluating
Decision-making
Task
needs
Group maintenance roles
Encouraging
Clarifying vision
Standard setting
Peace-keeping
www.johnadair.co.uk
41
Group
needs
Individual maintenance
roles
Individual
needs
Objective setting
Feedback
Recognition
Training
Empowerment
Counselling
Team skills, characteristics and roles
• Need for key competences across the
team
• Need to achieve a balance of
personalities and skills
• Need to consider the tasks to be
undertaken, the individuals who make
up the team, and the cohesiveness of
that team
42
Designing a team
43
• Meredith Belbin identified 9 distinct management roles
– Chairman - presides and has a co-ordinating style
– Shaper- team leader with a directive style
– Plant- introvert but intellectually dominant/
imaginative
– Monitor/ Evaluator - analytically intelligent/ critical
– Resource Investigator - source of contacts.
– Company Worker / Implementer - getting the job
done
– Team Worker - handles personal relationships in
the team
– Completer/ Finisher - keeping the team to
its deadlines
www.belbin.co.uk
– (Specialist)
TEAM DEVELOPMENT
(TUCKMAN AND JENSEN)
•
•
•
•
2
STAGE 1 - Forming
STAGE 2 - Storming
STAGE 3 - Norming
STAGE 4 - Performing
Tuckman (1965)
•
3
STAGE 5 - Dorming
Tuckman and Jensen (1977)
44
4
Choosing the right people is not always
straightforward
45
eligibility
entry criteria
suitability
performance criteria
qualifications
relvant experience
references
acceptability
(at interview)
aptitude
versatility
assessments
role fit
(with others)
Forming and developing (marketing) teams
• Teams don’t just ‘happen’
• There is a process
• Leader needs to nurture the team
through these stages of development
• Recruit for attitude, train for skill
• Consider motivational and morale issues
• Consider the personal and skill
development needs
46
Handy: team effectiveness
47
The Givens
The Intervening Factors
The Outcomes
members
task
environment
motivation
processes + procedures
leadership
productivity
team satisfaction
Planning and control is a discipline
• Plan, do, check and adjust (PDCA)
– Plan what is to be done
– Do it
– Check that it has been done right
– Adjust: make any changes necessary
48
Types of Teams
•
•
•
•
•
Multi-disciplinary
Multi-skilled
Project
Virtual
Managers role – prioritisation,
planning, control, decision making &
problem solving
• Leadership
49
Virtual teams
• No manager: this makes them very
democratic
• No meetings: this is enabled by
modern technology
• No organisation or structure:
members are typically multi-skilled
50
Case Studies
51
Finally: Elton Mayo and the Hawthorne studies
• Performance responds to attention
• People perform better if they perceive that
they are a group singled out for attention
– Tom Peters….
• Relationships within work are important to
employees
• Groups develop spontaneously and can set
their own rules, attitudes and standards
•
52
www.accel-team.com/human_relations/hrels_01_mayo.html
Useful web-sites
• www.belbin.com
– A basic introduction to Belbin ideas
• www.teamtechnology.co.uk
– Leadership, management, teamwork and
business
• www.buildingyourteam.com
– Free articles and tips for team building
• www.greatplacetowork.com
– Does what it says on the tin
• www.johnadair.co.uk
– Leadership and management
53
CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING
PERFORMANCE
Session 3
Developing and managing
teams
54
Learning outcomes
• At the end of the session, you will be able
to:
– Demonstrate an ability to manage the work of
teams and individuals to achieve objectives and
create effective working relationships within the
team and with other teams
– Critically evaluate the productivity, satisfaction
and effectiveness of teams against their
objectives using appropriate techniques.
– Analyse the causes of any sub-optimal
performance and recommend how to improve
the team’s performance, including plans to
improve motivation, commitment and loyalty.
55
Motivation: what is it and what’s the theory?
• Motivation is simply reason(s) for behaviour
• There are two types of theories:
– Content theories eg Maslow (hierarchy of needs) and
Herzberg (two-factor theory)
– Process theories eg Vroom (expectancy theory) and
Handy (motivation calculus)
Need
56
Want
Action
Result
Maslow’s hierarchy of needs
Fulfilment of potential
Selfactualisation
Independence
Relationships, affection,
belonging
Security, order,
predictability, freedom
Food, shelter
57
Esteem
Love/Social Needs
Safety Needs
Physiological Needs
Maslow
58
Herzberg
• Herzberg identifies two factors which
affect motivation at work:
1. Hygiene factors
– elements which cause job
dissatisfaction
2. The motivators
– elements which cause job satisfaction
59
Handy’s motivational calculus
• Each individual has a motivation calculus
which is concerned with:
– Energising behaviour;
– Direction of behaviour; and
– Sustaining behaviour
• Motivation is based on strength of need
• E= effort, energy, enthusiasm and
expenditure of time, resources and passion
•
60
http://www.businessballs.com/charleshandy.htm
Schein (1965) says that different people are
motivated in different ways
61
•
•
•
•
Rational economic: scientific management
Social man: human relations
Self-actualising man: Maslow/Herzberg
Complex man: all of the above
•
Schein, E.H. (1965) Organisational Psychology. Prentice-Hall Inc, New Jersey
Schein also talks of a psychological contract
• This exists between individuals and their
employer:
– Coercive: employee feels he/she is being
forced to contribute
– Calculative: employee accepts a reward/effort
relationship
– Co-operative: employee identifies with the
organisation
• Motivation exists when both the individual
and the employer view the contract in the
same way.
62
Then the accepted motivators are well known
• Job design, enrichment, enlargement
and rotation
• Participation in decision making and
empowerment
• Pay and incentive schemes
– Individual and group
• Good people management
63
Creating effective working relationships
Nine strategies for creating trust
(Robbins & Finley)
• Have clear, consistent goals
• Be open, fair and willing to listen
• Be decisive – and how to be
decisive
• Support all other team members
• Take responsibility for team
actions
• Give credit to team members
• Be sensitive to the needs of
team members
• Respect the opinions of others
• Empower team members to act
64
Evaluating team performance
• Performance management/performance
appraisal systems
• Review achievement to objectives
• Discuss progress of the team and of
individuals
• Look forward – don’t slip into a ‘blame
culture’ approach
• Learn lessons from mistakes and move on
• Review regularly
• Give recognition and praise where due
• Celebrate team success
65
Be sure about 4 key factors
• Goals
– must be established at the forming stage
• Roles
– Should be established before the
norming stage
• Processes
– Often get developed during storming
• Relationships
– Critical for performing
66
Management of Peripheral
Workers
•
•
•
•
What sort of working?
Benefits
Challenges
Management Challenges
– Trust
– Communication
– Measurement & achievement
– Involvement
67
Summary
• Forming and developing marketing teams
– Teams don’t just ‘happen’
– “Forming, storming, norming and performing”
– Leader needs to nurture the team through these
stages of development
– Recruit for attitude, train for skill
– Consider motivational and morale issues
– Consider the personal and skill development
68
Minicase – Motivation &
Team Management
In your small marketing team of 5 there is a
manager, 2 executives and 2 assistants. One
of the executives is not performing to full
strength and complains a lot!
Taking the role of manager, discuss how you
would try to motivate this executive and how
you would manage this situation going
forward?
Which theories might assist in your
management strategy?
69
LUNCH
70
CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING
PERFORMANCE – Managing Change
Session 4
Strategic marketing, culture and
change
71
Learning outcomes
At the end of the session, you will be able to:
• Recommend how an organisation should
become more strongly market oriented,
taking into account the nature of its
environment and culture.
• Assess the main pressures on an
organisation to change and the initiatives
available or being used to respond.
• Critically evaluate the role and content of
an internal marketing communications plan
and its contribution to managing change in
an organisation.
72
Market Orientation
• Definition 1
– ..entails one of more departments engaging in
activities geared towards developing an
understanding of customers’ current and future
needs and the factors affecting them, sharing of
this understanding across departments and the
various departments engaging in activities
designed to meet select customer needs
(Kohli and Jaworski, 1990)
73
Market orientation
 An organisational culture where beating
the competition through the creation of
superior customer value is the paramount
objective throughout the business.
– Oriented towards customer
– Alert to competitive situation
– Co-operation between functions
– Emphasis on profit, not turnover
– Responsiveness to changes
• (Piercy, Market Led Strategic Change, 2001)
74
Market Led
Strategic Management
• Market orientation
– ‘…beating the competition through the
creation of superior customer value…’ (Piercy)
• Components
– Customers, Competition, Inter-functional,
Culture, Long-term profit focus
• Challenges
– New: Customers, Competitors, types of
organisation, ways of doing business
75
Organisational Culture
• The sum total of the beliefs,
knowledge, attitudes of
mind and customs to which
people are exposed during
their interaction with the
organisation.
76
Culture
“ The way we do things around here” –
Deal
and Kennedy 1982
“Collective programming of the mind” –
Distinguishes one group from another
– Hofstede (1991)
77
Corporate Cultures
Speed of feedback
Slow
High risk
‘Bet your company
culture’
Fast
‘Hard macho culture’
Attitude
to risk
Low risk
‘Process culture’
Source: Deal and Kennedy (2000)
78
‘Work hard/play hard
culture’
Changing philosophies and orientations
Product
Orientated
Sales
Orientated
Supply
increases
DEMAND
EXCEEDS
SUPPLY
Seller’s market Emphasis is on
increasing
output
Source: Kotler
79
Market
Orientated
Supply
increases
DEMAND
EQUALS
SUPPLY
Products are
pushed
at customers.
Emphasis is on
advertising and
selling
Societal
Orientated
Environmental
concerns
SUPPLY
EXCEEDS
DEMAND
Buyers’ market
Emphasis is on
customer needs
and
allocation of
resources
to satisfy them
CUSTOMER
NEEDS
EXPAND
Demands are now on
quality issues. Management
must satisfy long-term
interests of society
and individual – as
well as needs of
customers and
the organisation’s
mission
A model of market orientation
80
Key components of achieving marketing orientation
• Customers: know them well enough to give
superior value
• Competition: what are their short and long-term
capabilities?
• Inter-functional: mobilise the entire company to
create superior customer value
• Culture: employee behaviour should be managed
to ensure customer satisfaction
• Long term profit focus: have a strategic but
realistic vision
•
82
Hooley, Sounders and Piercey; 2003
Role of marketing in strategic management
• Identify and monitor customer needs and
market situation
• Link customer needs to organisation’s
capabilities
• Contribute to determining competitive
positioning
• Implement marketing programmes to
deliver value and retain customers
• Measure the effectiveness of marketing
activities
83
What’s driving all this? Changes outside
new customers
new competitors
new types of
organisation
new ways of
doing business
84
rising expectations
sophistication
cynicism
from other countries
different business models
outsourcing
collaboration
alliances
stakeholder influences
customer specific marketing
database marketing
internet marketing
customer co-operatives
Environmental analysis
85
External analysis
86
If everyone in the company does marketing
what does marketing do?
• It orchestrates the marketing that
everyone else does
• It is the font of all knowledge
– About customers;
– About competitors; and
– About the company and its
products/services
• It is the ‘engine’ of growth
87
Marketing and change
88
“Nothing is permanent
except change”
Heraclitus
89
Organisation & Change
Model
All of these could change!
90
McKinsey 7S model
Effective internal marketing
can help!
Kenichi Ohmae got there first; the strategic triangle
customer needs
interference with competitors'
marketing programs
company aims to
satisfy customer
needs
competitors offer
alternative
satisfactions
innovate,
differentiate,
imitate?
company
other stakeholders
91
competitor focus
analyse
competitors'
resources and
competences
competitors
Key drivers of change?
• ICT
– Eg Music marketing
• Globalisation
– Wal-Mart?
• Ethical concerns
– Fair Trade
– Cause related marketing
92
The world is changing
External issues
(PESTER)
• Political
• Economic
• Sociological
• Technological
• Environmental
• Regulatory
and
• Competitive
93
Internal issues • Retention or gain of
competitive advantage
• Cost-savings
• New senior
management
• New owners and other
stakeholders
Internal marketing
• Deals with internal customers - an
important stakeholder group
• Essential in effecting marketing
oriented culture
• Marketing techniques can help to
motivate staff and increase level of
‘involvement’
94
Kotler sums it up as a marketing triangle
company
internal marketing
program
plans
employees
customers
interactive marketing
(1999)
95
external marketing
program
Internal marketing
• Provides communication to help
employees identify with corporate
objectives - the common goal
• Breaks down ‘them and us’ culture
• Competitive advantage can be achieved
through employee knowledge
• Product/service innovation can come from
employee ideas
• Good customer service needs constant
reinforcement
96
Internal marketing - 3 phases
1. Employee motivation and
satisfaction
2. Customer orientation
3. Strategy implementation and change
management
Source : Ahmed and Rafiq (2002)
97
First segment the market
Segmentation
• Different levels of management
• Different functions
• Different locations, cultures
• Supporters, opposers, neutrals
(Jobber 2001)
– It’s not single dimensional
98
STAKEHOLDERS
Mendelow’s power/interest matrix
Low Interest
Low Power
High Power
99
Minimal Effort
Keep Satisfied
High Interest
Keep Informed
Key Players
Then use the marketing mix internally
Product
• Strategy and process
of change
• Job or function may be
internal ‘product’
Price
• Psychological price loss of status,
uncertainty, loss of
productivity
100
Promotion
• Clear communication
essential
• Noticeboards,
meetings, intranet,
newsletters, etc
Place
• Information, training
etc - channel providing
services to the internal
customer
Discussion point
• Why do so many organisations fail in their
efforts to be truly marketing oriented?
• List the internal cultural barriers that may
be frustrating their ambitions and provide
suggestions as to ways in which these
barriers might be overcome.
• What theories might assist?
101
Useful references
• www.valuebasedmarketingmanagement.ne
t
– a useful reference about just about everything
marketing
• www.organisationalchange.co.uk
– a consultancy in organisational change
• www.mad.co.uk
– delivering business insight
102
CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING
PERFORMANCE
Session 5
Change management
103
Learning outcomes
At the end of the session, you will be able to:
• Identify and evaluate the sources of and
the techniques for overcoming resistance
to change.
• Assess the impact of change in a
marketing department.
• Prepare a plan to deal with change in the
marketing department, including the
development of appropriate skills and
capabilities to meet the objectives.
104
Managing Strategic Change
• Styles
– Education/comms, collaboration/partic, intervention,
direction (coercion).
• Roles
– Leadership/change agent, middle mgt., outsiders
• Levers
–
–
–
–
105
Organisational routines
Symbolic processes
Politics/Alliances
Communications
What kind of change?
The Johnson and Scholes model
nature of change
transformational
proactive
tuning
planned
reactive
management role
106
incremental
adaption
forced
Change and the individual: people don’t like change
• They resist it because of:
– Fear
– Uncertainty
– Lack of confidence
– Dissonance
• It changes them
– Physiologically
– Circumstantially
– Psychologically
107
People respond to change in different ways
• Acceptance
– Enthusiastic or otherwise
• Indifference
• Passive resistance
• Active resistance
108
Change is a process: it can be managed
1: determine need for change
2: plan the change
3: analyse possible reactions
4: consider alternatives
5: develop final plan
6: communicate the plan
7: implement, review and evaluate, modify as
appropriate
Put it all into the hands of a change agent but make
sure that he gets visible top management support.
109
Force Field Analysis –the three step model
Driving forces
(for change)
A requirement of
New legislation.
Professional Commitment
To controlling the organisation.
Requirement to report
To external agencies
A concern for quality
Current State
Restraining forces
(resistance)
Cynicism about change
‘another fad’
Existing systems
are sufficient
Trade Union concern
Over effects on job
Working conditions
Complexity of producing
Such reviews
Cost of carrying
out such reviews
110
Kurt Lewin
Ideal Position
Emergent approach
Stable/ predictable
environment
Turbulent/ unpredictable
environment
Planned
change
The change continuum
Source:Adapted from Burnes (1996)
111
Emergent
change
John Hunt (Managing People at Work)
Unlearning is as important as learning
• Unfreezing requires:
– A ‘trigger’ – eg a crisis or event
– A champion to challenge
inherited thinking
– Buy-in from colleagues
– Restructuring
UNFREEZE
Existing
behaviour
112
Attitudinal/
behavioural
change
REFREEZE
new
behaviour
Creating major change (Kotter 1996)
1. Establish sense of urgency
2. Create the guiding coalition
3. Develop a vision and strategy
4. Communicate the change vision
5. Empower broad-based action
6. Generate short term wins
7. Consolidate gains and produce more
change
8. Anchor new approaches in the culture
113
Making time for change
1. Global change
2. Organisational change
3. Personal change
Source: Robbins and Finley (1998)
114
The Change Curve
115
Originally developed by Kubler-Ross
And adapted by Wilson 1993
Think about 3 phases in change
(Conner and Patterson)
• Preparation
– Contact
– Awareness
• Acceptance
– Understanding
– Positive perception
• Commitment
–
–
–
–
116
Installation
Adoption
Institutionalisation
Internalisation
Cultural change is the most difficult
• Get prepared
• Hampden –Turner
–
–
–
–
–
–
Find the dangers
Bring conflicts into the open
Play out corporate dramas
Reinterpret the corporate myths
Look at symbols, images, rituals
Create a new learning system
• Take it through the entire organisation
• Wait 3 (or even 8) years!
117
Don’t forget HR implications
• There may be redundancies. These
need to be carried out legally and
meet the company’s social
responsibility policies;
• Recruitment policy and practice may
need to be reviewed; and
• Training is probably going to be a
major need to bring everyone up to
speed
118
Group discussion point
Overcoming resistance to change through
internal marketing. Consider (one of):
• A small B2B machinery supplier looking to
become a more market led organisation
following recent acquisition
• A national charity looking to change its
strategy for attracting donations from local
charity shops to national advertising
• A local supermarket chain looking to build
alliances with retailers elsewhere
How would you do it?
119
Mini Case –
Managing Change
A new marketing director has come in to the
business and is making changes in the
strategy of the marketing team. This will
result in job losses and changes in the
structure of the team. To make matters
worse their style is very ‘dictatorial’.
What obstacles do you think this person will
come up against, and how should they
overcome them?
120
Summary
• Change is inevitable, but it is not always
welcomed, and often resisted.
• Success with change programmes can be
improved by taking people’s fears into account
• May be necessary to have a ‘Change Agent’
• You can’t change too much too often – cynicism
sets in and that is the most difficult to overcome
• Cultural change is difficult
121
CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING
PERFORMANCE
Session 6
Building shareholder value through
marketing activities
122
Learning outcomes
At the end of the session, you will be able to:
• Explain the link between marketing activities and
shareholder value.
• Explain the measurement of economic value
added
• Determine the contribution to shareholder value of
marketing activities undertaken.
• Critically appraise methods available for valuing
brands.
• Explain how brand equity can be built and brands
can be valued.
• Recommend an appropriate approach for the
organisation.
123
Strategic decisions are concerned with …
• The long term direction of the
organisation
• Achieving some advantage
• Scope of an organisation’s activities
• Matching the activities of the
organisation to the environment in
which it operates
Source: Johnson & Scholes
124
Implementation
• Shareholder Value Analysis
– Computing Value
• Economic profit = NOPAT – (CE x cost of capital)
– Discounting Cash flows
– Value based management
– Marketing assets
125
Firstly a useful reference
•
•
•
•
•
•
126
SVA: shareholder value analysis
EVA: economic value added
NOPAT: net operating profit after tax
ROCE: return on capital employed
DCF: discounted cash flow
NPV: net present value
Economic profit versus accounting profit
• Accounting profit is what is reported in a
company’s results and what is reported is
strictly controlled by the principle of
prudence (tell that to Enron!)
• Many expenditures which are in fact
investments and will pay off in the future
are treated as expenses
• Economic profit may treat such
expenditures as investments
127
Shareholder value and total shareholder return
Investors focus 80%
of their decision on
cash beyond 4 years
Today
Total shareholder return (TSR)
TSR = dividends + share price growth
128
+10 years
Source : Valueline and PA Consulting Group 2002
www.cim.co.uk/mediastore/PA_unlockingrealvalue.pdf
Investors are
most interested
in what will
generate cash in
future
Value drivers
Read Doyle!
Value based marketing
129
Key to enhancing value is to understand the drivers
• Financial
–
–
–
–
Volume
Timing
Risk
Sustainability
• Marketing
– Choice of markets
– Target customers
– Positioning
• Organisational
– Internal and external
130
Positioning for differential advantage is a little more complex
•
•
•
•
Product leadership
Operational excellence
Brand superiority
Customer intimacy
• There are often examples of all four
positions taken in an industry
131
Marketing strategies to create value
Marketing assets
• Marketing knowledge
• Brands
• Customer loyalty
• Strategic channel relationships
132
Marketing and shareholder value
€
CUSTOMERS
133
Value
drivers
Marketing
skills
Marketing
results
Marketing
assets
Financial
results
SHAREHOLDERS
Marketing
activities
Strategies to develop SV
1.
2.
3.
4.
5.
6.
Economies of scale
Economies of scope
Cost advantages
Product differentiation
Access to distribution channel
Government policy
Source: Peterson (2004)
134
Boston matrix and shareholder value
A
selected
few
Remainder
divested
Liquidated
Competitive position
135
Limitations of SVA
• Forecasting
• Cost of Capital
• Estimating terminal
value
• Baseline business
value
• Options for the future
• Market valuation
136
Brands
137
Strong brands can increase cashflow
Strong brands can increase cashflow by
• Obtaining higher prices; and
• Higher volume growth; resulting in
– Lower costs; and
– Higher asset utilisation
138
But what’s a brand?
• It’s an entity with ‘a
collection of attributes that
strongly influence purchase’
(Hugh Davidson)
• It comprises an effective
product, a distinctive identity
and added values.
139
Branding
• What is a brand?
– ‘A name, sign, symbol, design or combination
of them, intended to identify goods or services
of one seller or group of sellers and to
differentiate them from those of competitors’
(Kotler)
• What makes up a brand?
• Benefits of branding
– Customers, Marketers, Shareholders
140
Brand building process
Basic
brand
Augmented
brand
Extras
Pack
Training Features
Guarantees
Potential
brand
141
Services
Name
Product
Design
Delivery
Quality
Logos
Installations
Technical
support
Types of brand/brand image
• Attribute brands – image conveys
confidence in its functional attributes –
e.g. Volvo (safety), Persil (washes
whiter)
• Aspirational brands – image conveys a
lifestyle to which people aspire – e.g.
Martini (sophisticated jet-setter), Rolex
(top professional)
• Experience brands – conveys an
image of shared associations and
emotions – e.g. Nike (just-do-it),
Marlboro (rugged masculine values)
Doyle ‘Value-Based Marketing, 2000
142
From Commodity Brand to Power Brand
Components of a brand
143
CENTRAL VALUES
EXPRESSIVE VALUES
CORE VALUES
What the brand and the
consumer share at a
fundamental level
What the brand says
about the consumer
What the brand does for
the consumer
Brands are used in different ways: brand architecture
• Company brands eg
Mercedes
• Source brands eg Kelloggs
Corn Flakes
• Range brands eg Sharwoods
• Product brands eg Ronseal
• Umbrella brands eg Philips
What’s the difference between a
range brand and an umbrella
brand?
144
Brand stretching: be careful
• What is it?
– Using a brand name successful in one market
to enter another
• Why do it?
– It’s cheap, uses an existing asset and is less
risky than a new brand
• When to do it
– When the brand core values are applicable to
the new market and when activity in the new
market will not adversely affect them
• But: it may damage the first brand and it’s
not a substitute for real marketing
145
Brand Planning & Strategies
• Brand Planning
–
–
–
–
–
Market Analysis
Brand Situation Analysis
Targeting future positions
Testing new offers
Planning & evaluating performance
• Brand Strategies
– Brand Stretching
– Revitalising brands
– Global or local?
146
Valuing Brands
• Should brands be valued?
• Methods
– Cost
– Royalties
– Market Value
– Economic Use Value
– SVA Approach to brand Valuation
• Discount rate
• Future earnings
147
Business Week/ Interbrand valuations 2007
148
Young and Rubicam’s Brand Asset
valuator
differentation
relevance
esteem
brand strength
brand stature
BrandAsset
Valuator
www.yrbav.com
149
knowledge
Millward Brown’s BrandDynamics
bonding
nothing else beats it
does it offer something
better than the others?
can it deliver?
advantage
performance
does it offer me
something?
relevance
do I know about it?
presence
www.millwardbrown.com
150
strong relationship/
high share of category expenditure
weak relationship/
low share of category expenditure
Interbrand’s strength index
element weightingcomment
leadership
25% how dominant is the brand in its sector?
market
10% is it growing?
stability
15% how loyal are the customers?
international scope
25% how far does the brand reach?
trend
10% are sales growing?
support?
10% how much is being spent and how well?
protection
5% what's the IP position?
151
Summary
• Organisational value drivers – McKinsey 7
S model identifies these
• SVA approach is good but has limitations
• NPV = Sum of the present values of all
future cashflows.
• NPV can be used for project appraisal
• Brands are important differentiators and
can be, perhaps inaccurately, valued &
exploited.
152
CIM PROFESSIONAL PG DIPLOMA
MANAGING MARKETING
PERFORMANCE
That’s all for day 1!
153