From crisis to sustenance : You need more than setting your marketing objectives to maximize your pr

14 October 2013 06:31 am Views - 3266

Developing and implementing a marketing plan is not enough to reach marketing objectives. Marketing plans and strategies are required to be monitored, evaluated and adapted to meet the changing market environment, needs and opportunities. Marketing control ensures performance improvement by minimizing the gap between the desired results and actual results.
Marketing control is a four- step process:

• Corrections and alterations Follow-up
• Marketing objectives and performance standards
• Compare results against standards
• Let us study each of them in little depth.

A marketing objective is a standard which is used to measure the performance of the subordinates. Such standards may be of two types - Quantitative standards and Qualitative standards.

Quantitative standard can be easily defined and measured. For example, the number of products, number of customers, cost, net profit, time limits, etc. Qualitative standard cannot be easily defined and measured. For example, measurement of morale, measurement of job satisfaction, measurement of effect of a training programme, advertisement programme, etc. However, today there are many new techniques for measuring Qualitative standards.
Whatever the standards adapted, they should be as clear as possible and easily understood by both superiors and subordinates. The responsibility of each individual should also be clearly defined.

After establishing the standards, the subordinates should be provided with all the resources for performing the job. They should be properly directed and motivated to perform the job. After each job (or at regular intervals), their performance should be carefully measured.
The actual performances of the subordinates are compared with the established standards and then deviations are found out. The deviations found out may be positive or negative. Positive deviation means, the actual performances are better than the established standards. Positive deviations should be appreciated. Negative deviation means, the actual performance is less than the established standards. The management should pay special attention to negative deviation. It should find out the causes of negative deviations.

Generally, minor (small) deviations are ignored. However, major deviations should be immediately addressed and reported to the top management. PERT, budgetary control, observation, inspection, reports, etc. are some of the methods used for comparison.

After finding out the negative deviations and their causes, the managers should take steps to correct these deviations. Corrective actions should be taken promptly. Corrective action may include providing better motivation, giving better training, using better resources, etc. The management should take essential steps to prevent these deviations in the future.

After taking corrective action, the management must do a follow-up. Follow-up is done to find out whether the corrective actions are taken properly. It also finds out whether the deviations and their causes are removed. If follow-up is done properly, the actual performance will be equal to or better than the established standards.

Measures
Several measures may be taken in effecting marketing control in relation to the marketing plan, including (1) sales analysis, (2) market share analysis, (3) expenses to sales ratios, (4) attitude tracking, (5) profitability and efficiency.

Sales analysis
Actual sales can be compared to sales targets and budgets and an analysis of any variance between the two would be carefully examined. Say, for example, the ABC Canning Company Managing Director is told by the marketing manager that sales are up by 10 percent by units on the target and that revenues are 5 percent above budget, this would be a cause for celebration. Or would it? Before answering this question the managing director would wish to look at these figures a little more analytically.

Let us analyse the operating results for a canned product. (See the diagram). It can readily be seen that although the sales have exceeded expectations, the planned price was not achieved and so, the product made a lower contribution than expected. In this case, the price mechanism would need investigating as would the estimates of market share. Whilst the company recorded an increase in unit sales of 10 percent, the market as a whole was 20 percent above the target. Seen in this light, there is more cause for concern than for celebration. This approach to sales analysis can be extended to specific products, market segments and/or sales areas, etc. to evaluate the profit contributions of each and to identify those that were poor performers. From there, consideration can be given to the underlying reason for that performance.



Market share analysis
A market share analysis compares the status of a business with competitors in its sales region. There are many types of information collected for this type of analysis, including the names of competitors, indicators of market size and the study of past and projected market growth. A typical goal of a market share analysis is to determine the portion of market share that the business will target.

An important task of a market share analysis is to determine the value of market share for the type of business being examined. In order to find this value, several factors must be determined. This includes the size of the industry’s market and what kinds of products are sold. The overall size of the market can be determined by revenue and sales volume.

Once the size of the market is known, the next step of a market share analysis is to determine what percentage each business holds. If a small number of businesses make a high percentage of sales, then the region has a highly concentrated market. When sales are more evenly distributed across several different businesses, then the market is fragmented. The primary purpose of this exercise is to determine the top competitors in the field. An analysis of both the most and least successful competitors in the market can be another important factor of market share analysis. By understanding why one business is succeeding while another is struggling, a company can devise a sound strategy for expanding the business. This includes avoiding the missteps of smaller businesses and learning from the victories and mistakes of the larger businesses. A market share analysis will show not only the overall percentage a business holds in the market but also a more detailed analysis of its status in different areas. For example, a business may have a fairly low market share overall but dominate in the sales of a particular product.
Understanding this aspect of market share can help a company to strategize future product development, whether it is to continue to grow a strong sector or to compete more strongly in other areas.

Another aspect of market share analysis is the study of market growth. By anticipating how the market demand and the overall economy are expected to change in the next few years, a business can create a growth strategy. This can include determining where there may be more opportunities to take more market share by filling a new need, serving a different population or adapting to developments in areas such as technology.

(To be continued next week)
(Lionel Wijesiri, a corporate director with over 25 years’ senior managerial experience, can be contacted at  lionwije@live.com)