Managing marketing performance introductions about David Kilburn



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MANAGING MARKETING PERFORMANCE

  • INTRODUCTIONS

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

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?

SETTING THE SCENE

  • Assignment or exam?
    • Dates, requirements and deadlines
  • 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

  • Creating organisational context for effective implementation of strategy
  • Managing change and internal marketing
  • Implementing strategy through marketing activities
  • Management techniques for managing the marketing function
  • Measurement, evaluation and control

Fit with overall pg syllabi

  • ANALYSIS & EVALUATION
  • Organisational context
  • Internal marketing
  • Implementing strategy
  • Managing marketing
  • Measurement & control
  • MANAGING MARKETING PERFORMANCE
  • Competitive advantage
  • Innovation/reorientation
  • SMD in global marketplace
  • SMD in portfolio management
  • Investment decisions/control
  • STRATEGIC MARKETING DECISIONS
  • Learning outcomes only.
  • No specified
  • syllabus elements
  • STRATEGIC MARKETING IN PRACTICE

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

Focus

  • The “How” of marketing rather than the “what”
  • Delivery emphasis is on “ Listen and Challenge”
  • Shift from analysis to critical evaluation

MMP ‘AUDIT’

  • 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

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

MMP Focus Meeting Feedback

  • Good practice more..
    • Evaluation (acid test is ‘so what?’)
    • Depth not breadth is critical

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

Grade Descriptors

  • Example assignment from last assessment

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!

CIM PROFESSIONAL PG DIPLOMA MANAGING MARKETING PERFORMANCE

  • Session 1
  • The role and practice of leadership

CIM Definition of Marketing

  • Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.

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

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

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
  • exceeds expectations
  • Focus
  • controlling
  • unlocking potential
  • (John Kotter)

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_hersey_blanchard.htm

Mini Case -Autoglass:- Leadership success factors

  • 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.

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?

What guides the organisation?

  • Strategy
  • Leadership
  • Culture
  • Employees
  • ‘Strategic fit’
  • Values
  • Style

Leadership skills (Belbin)

  • 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
    • 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
  • 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

Life cycle of marketing

Relationship marketing – implications for marketing practice

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

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?

CIM PROFESSIONAL PG DIPLOMA MANAGING MARKETING PERFORMANCE

  • Session 2
  • Planning the team

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.

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

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
  • 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)

6 differences between a team and a group (Belbin)

  • 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 needs
  • Group needs
  • Individual needs
  • Task Roles
  • Initiating Information Seeking Strategic planning Evaluating Decision-making
  • Individual maintenance roles Objective setting Feedback Recognition Training Empowerment Counselling
  • Group maintenance roles Encouraging Clarifying vision Standard setting Peace-keeping
  • www.johnadair.co.uk

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

Designing a team

  • 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
    • (Specialist)
  • www.belbin.co.uk

TEAM DEVELOPMENT (TUCKMAN AND JENSEN)

  • STAGE 1 - Forming
  • STAGE 2 - Storming
  • STAGE 3 - Norming
  • STAGE 4 - Performing
  • Tuckman (1965)
  • STAGE 5 - Dorming
  • Tuckman and Jensen (1977)
  • 2
  • 3
  • 4

Choosing the right people is not always straightforward

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

Handy: team effectiveness

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

Types of Teams

  • Multi-disciplinary
  • Multi-skilled
  • Project
  • Virtual
  • Managers role – prioritisation, planning, control, decision making & problem solving
  • Leadership

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

Case Studies

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
  • 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

CIM PROFESSIONAL PG DIPLOMA MANAGING MARKETING PERFORMANCE

  • Session 3
  • Developing and managing teams

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.

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)
  • Action
  • Result
  • Need
  • Want

Maslow’s hierarchy of needs

  • Physiological Needs
  • Safety Needs
  • Love/Social Needs
  • Esteem
  • Self-
  • actualisation
  • Fulfilment of potential
  • Independence
  • Relationships, affection, belonging
  • Security, order, predictability, freedom
  • Food, shelter

Maslow

Herzberg

  • Herzberg identifies two factors which affect motivation at work:
  • Hygiene factors
    • elements which cause job dissatisfaction
  • The motivators
    • elements which cause job satisfaction

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
  • http://www.businessballs.com/charleshandy.htm

Schein (1965) says that different people are motivated in different ways

  • 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.

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

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

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

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

Management of Peripheral Workers

  • What sort of working?
  • Benefits
  • Challenges
  • Management Challenges
    • Trust
    • Communication
    • Measurement & achievement
    • Involvement

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

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?

LUNCH

CIM PROFESSIONAL PG DIPLOMA MANAGING MARKETING PERFORMANCE – Managing Change

  • Session 4
  • Strategic marketing, culture and change

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.

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)

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)

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

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.

Culture

  • “ The way we do things around here” – Deal
  • and Kennedy 1982
  • “Collective programming of the mind” – Distinguishes one group from another – Hofstede (1991)

Corporate Cultures

  • Speed of feedback
  • Slow
  • Fast
  • Attitude
  • to risk
  • High risk
  • Low risk
  • Source: Deal and Kennedy (2000)
  • ‘Bet your company culture’
  • ‘Hard macho culture’
  • ‘Process culture’
  • ‘Work hard/play hard culture’

Changing philosophies and orientations

  • Product
  • Orientated
  • Sales
  • Orientated
  • Market
  • Orientated
  • Societal
  • Orientated
  • DEMAND
  • EXCEEDS
  • SUPPLY
  • DEMAND
  • EQUALS
  • SUPPLY
  • SUPPLY
  • EXCEEDS
  • DEMAND
  • CUSTOMER
  • NEEDS
  • EXPAND
  • Seller’s market -
  • Emphasis is on
  • increasing
  • output
  • Supply
  • increases
  • Supply
  • increases
  • Environmental
  • concerns
  • Products are
  • pushed
  • at customers.
  • Emphasis is on
  • advertising and
  • selling
  • Buyers’ market
  • Emphasis is on
  • customer needs
  • and
  • allocation of
  • resources
  • to satisfy them
  • 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
  • Source: Kotler

A model of market orientation

Elements of a market orientation

  • Culture
  • Norms
  • Values
  • Mindsets
  • Behaviour
  • Capabilities
  • Sensing what customers
  • want
  • Linking customer needs to
  • company capabilities
  • Building relationships
  • Strategic Thinking
  • Processes
  • Abilities
  • Organisation
  • Structure
  • Systems
  • Control
  • Customers
  • Understand
  • Satisfy
  • Retain
  • Knowledge
  • generation
  • Knowledge use

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
  • 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

What’s driving all this? Changes outside

Environmental analysis

External analysis

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

Marketing and change

“Nothing is permanent except change”

  • Heraclitus

Organisation & Change Model

  • All of these could change!
  • Effective internal marketing
  • can help!
  • McKinsey 7S model

Kenichi Ohmae got there first; the strategic triangle

Key drivers of change?

  • ICT
    • Eg Music marketing
  • Globalisation
    • Wal-Mart?
  • Ethical concerns
    • Fair Trade
    • Cause related marketing

The world is changing

  • External issues
  • (PESTER)
  • Political
  • Economic
  • Sociological
  • Technological
  • Environmental
  • Regulatory
  • and
  • Competitive
  • 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’

Kotler sums it up as a marketing triangle

  • (1999)

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

Internal marketing - 3 phases

  • Employee motivation and satisfaction
  • Customer orientation
  • Strategy implementation and change management
  • Source : Ahmed and Rafiq (2002)

First segment the market

  • Segmentation
  • Different levels of management
  • Different functions
  • Different locations, cultures
  • Supporters, opposers, neutrals (Jobber 2001)
    • It’s not single dimensional

STAKEHOLDERS

  • Key Players
  • Keep Satisfied
  • Low Interest High Interest
  • Low Power
  • High Power
  • Minimal Effort
  • Keep Informed
  • Mendelow’s power/interest matrix

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
  • 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?

Useful references

  • www.valuebasedmarketingmanagement.net
    • a useful reference about just about everything marketing
  • www.organisationalchange.co.uk
    • a consultancy in organisational change
  • www.mad.co.uk
    • delivering business insight

CIM PROFESSIONAL PG DIPLOMA MANAGING MARKETING PERFORMANCE

  • Session 5
  • Change management

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.

Managing Strategic Change

  • Styles
    • Education/comms, collaboration/partic, intervention, direction (coercion).
  • Roles
    • Leadership/change agent, middle mgt., outsiders
  • Levers
    • Organisational routines
    • Symbolic processes
    • Politics/Alliances
    • Communications

What kind of change? The Johnson and Scholes model

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

People respond to change in different ways

  • Acceptance
    • Enthusiastic or otherwise
  • Indifference
  • Passive resistance
  • Active resistance

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.

Force Field Analysis –the three step model

  • Driving forces
  • (for change)
  • Current State
  • Restraining forces
  • (resistance)
  • Ideal Position
  • A requirement of
  • New legislation.
  • Professional Commitment
  • To controlling the organisation.
  • Requirement to report
  • To external agencies
  • A concern for quality
  • 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
  • Kurt Lewin

Emergent approach

  • Stable/ predictable environment
  • Turbulent/ unpredictable environment
  • Planned change
  • Emergent
  • change
  • The change continuum
  • Source:Adapted from Burnes (1996)

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
  • 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

Making time for change

  • Global change
  • Organisational change
  • Personal change
  • Source: Robbins and Finley (1998)

The Change Curve

  • 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
    • 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!

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

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?

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?

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

CIM PROFESSIONAL PG DIPLOMA MANAGING MARKETING PERFORMANCE

  • Session 6
  • Building shareholder value through marketing activities

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.

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

Implementation

  • Shareholder Value Analysis
    • Computing Value
      • Economic profit = NOPAT – (CE x cost of capital)
    • Discounting Cash flows
    • Value based management
    • Marketing assets

Firstly a useful reference

  • 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

Shareholder value and total shareholder return

  • Investors are most interested in what will generate cash in future
  • Investors focus 80% of their decision on cash beyond 4 years
  • Today
  • +10 years
  • Total shareholder return (TSR)
  • TSR = dividends + share price growth
  • Source : Valueline and PA Consulting Group 2002
  • www.cim.co.uk/mediastore/PA_unlockingrealvalue.pdf

Value drivers

  • Read Doyle!
  • Value based marketing

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

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

Marketing strategies to create value

  • Marketing assets
  • Marketing knowledge
  • Brands
  • Customer loyalty
  • Strategic channel relationships

Marketing and shareholder value

  • Marketing activities
  • Marketing skills
  • Marketing assets
  • Value drivers
  • Marketing results
  • Financial results
  • CUSTOMERS
  • SHAREHOLDERS

Strategies to develop SV

  • Economies of scale
  • Economies of scope
  • Cost advantages
  • Product differentiation
  • Access to distribution channel
  • Government policy
  • Source: Peterson (2004)

Boston matrix and shareholder value

  • A selected few
  • Competitive position
  • Remainder divested
  • Liquidated

Limitations of SVA

  • Forecasting
  • Cost of Capital
  • Estimating terminal value
  • Baseline business value
  • Options for the future
  • Market valuation

Brands

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

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.

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

Brand building process

  • Product
  • Name
  • Quality
  • Logos
  • Pack
  • Features
  • Design
  • Basic
  • brand
  • Services
  • Delivery
  • Technical support
  • Extras
  • Training
  • Guarantees
  • Installations
  • Augmented
  • brand
  • Potential
  • brand

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

Components of a brand

  • CORE VALUES
  • EXPRESSIVE VALUES
  • CENTRAL 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
  • From Commodity Brand to Power Brand

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?

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

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?

Valuing Brands

  • Should brands be valued?
  • Methods
    • Cost
    • Royalties
    • Market Value
    • Economic Use Value
    • SVA Approach to brand Valuation
      • Discount rate
      • Future earnings

Business Week/ Interbrand valuations 2007

Young and Rubicam’s Brand Asset valuator

  • www.yrbav.com

Millward Brown’s BrandDynamics

  • www.millwardbrown.com

Interbrand’s strength index

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.

CIM PROFESSIONAL PG DIPLOMA MANAGING MARKETING PERFORMANCE

  • That’s all for day 1!


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