Making Your Marketing Strategy Work
by Thomas V. Bonoma
Should we emphasize price or quality? Do we want to stay with smaller, upscale retailers or seek market expansion through large discount chains? Will our proposed new product take sales away from our existing line? These are the kinds of questions—ones of strategy—that marketers agonize over. But what happens once a particular strategy is agreed to? Will marketers effectively turn drawing-board strategy into marketplace reality? Too often a seemingly effective strategy fails to do what it is supposed to do, and marketing executives immediately assume that the strategy is at fault. The author argues that more often than not it is the implementation that goes awry. Implementation difficulties can result from a variety of organizational and structural problems as well as from inadequate personal skills. The author offers guidelines for identifying the most common difficulties as well as suggestions for remedying them.
The marketing literature is replete with research and analysis to help managers devise marketing strategies tailored to the marketplace. Yet when it comes to implementing those strategies, the literature is silent and the self-help books ring hollow. What top management needs in the 1980s is not new answers to questions about strategy but increased attention to marketing practice, to the signposts of good marketing management that direct clever strategies toward successful marketplace results.
The purposes of this article are to explain and help in diagnosing and solving marketing implementation problems, to catalog common problems of translating marketing strategies into management acts, and to recommend tactics for increasing the effectiveness of marketing practices. The examples and conclusions are drawn from a three-year clinical research program I conducted to initiate a course on marketing implementation at the Harvard Business School (see the insert for details of this study).
It is invariably easier to think up clever marketing strategies than it is to make them work under company, competitor, and customer constraints. Consider a pipe company that invented a new kind of triangular pipe 180% more efficient than the existing line, needing only two-thirds as much material. On the basis of value to users, the new marketing vice president wanted to price the new pipe high. He feared, however, that lack of support from other top managers, the company’s marketing systems, and the sales force would hamper his strategy. “Everything three generations of managers have learned about doing business in this market, everything the company is,” he complained, “seems to conspire against my being able to introduce this innovation properly.”
What to do—the marketing strategy—is clear to this vice president: price according to value, encourage cannibalization of existing lines, and reap the profits. How to accomplish the strategy—the marketing implementation—is problematic.
Top management encouraged this commodity-oriented culture by setting budgets with high fixed costs and maintaining a measurement system designed to track the selling price of each unit of raw material rather than of the pipe itself. The vice president rightly worried that simply declaring a high price on the new pipe by fiat or even constructing a marketing program for the innovation would be ineffective in combating the entrenched and commodity-focused way of doing business.
As this example suggests, problems in marketing practice have two components: structural and human. The structural one includes the company’s marketing functions, like pricing and selling, as well as any program based on these functions, any control systems, and policy directives. The second component is the people themselves, the managers charged with getting the marketing job done.
Strategy or Implementation?
Marketing strategy and implementation affect each other. While strategy obviously affects actions, execution also affects marketing strategies, especially over time. Despite the fuzzy boundary between strategy and execution, it is not hard to diagnose marketing implementation problems and to distinguish them from strategy shortfalls. When a 50-person computer terminal sales force sells only 39 of the company’s new line of “smart” microcomputers during a sales blitz in which sales of more than 500 units were forecast, is the problem with sales force management or with the strategy move to the smart machines? The question is answerable.
Intense competition is eroding margins on sales of its old “dumb” terminals. Additionally, the smart terminals category is expected to grow by over 500% during the 1980s. The new product, a portable microcomputer with built-in printer and memory, has many benefits that the target market values. But because sales representatives already earn an average of more than $50,000 a year, they have little incentive to struggle with an unfamiliar new product. Management also inexplicably set sales incentive compensation on the new machines lower than on older ones. Finally, the old terminals have a selling cycle one-half as long as the new ones and require no software knowledge or support. Here is a case where poor execution stifles good strategy.
The Exhibit shows how marketing strategy and implementation affect each other. The computer example falls in the lower left cell of the matrix and illustrates an important rule about strategy and implementation: poor implementation can disguise good strategy. As the exhibit indicates, when both strategy and implementation are on target, the company has done all it can to ensure success. Similarly, when strategy is inappropriate and implementation poor, implementation shortcomings may mask problems with the strategy; not only is failure the probable result, but such failures will be especially intractable because of the difficulty in identifying the cause of the problem.
Exhibit Marketing strategy and implementation problem diagnosis
When strategy is appropriate but implementation is poor or vice versa, diagnosis becomes tricky. Poor marketing execution may cause management to doubt even sound strategies because they are masked by implementation inadequacies (the lower left cell of the exhibit). As the foregoing computer company example suggests, management may hasten marketplace failure if it then changes its strategy. I have labeled such a situation the “trouble” cell on the matrix because poor execution hampers confirmation of the strategy’s rightness and can provoke unnecessary change.
When strategy is inappropriate and execution excellent (the upper right cell), management usually winds up with time to recognize and fix its strategic mistakes. Good branch office heads, for instance, have been known to modify potentially disastrous headquarters directives. Indeed, some companies that are noted for excellent marketing execution, like Frito-Lay, expect such modifications from their managers. But at other times, good execution of bad strategy acts as the engine on a plane in a nosedive—it hastens the crash. Because it is hard to predict the result of inappropriate strategy coupled with good execution, I label this cell “rescue or ruin.”
From this analysis two points stand out to help managers diagnose marketing implementation problems. First, poor execution tends to mask both the appropriateness and the inappropriateness of strategy. Therefore, when unsure of the causes of poor marketing performance, managers should look to marketing practices before making strategic adjustments. A careful examination of the how questions, the implementation ones, often can identify an execution culprit responsible for problems that are seemingly strategic.
Structural Problems of Marketing Practice
In his book Zen and the Art of Motorcycle Maintenance, Robert Pirsig proposes a catalog of traps that can sap the mechanic’s resolve to do quality work. He tells, for instance, how a five-cent screw holding an access cover in place can, if stuck, render a $4,000 motorcycle worthless and the mechanic a frustrated wreck headed for truly grave mistakes. Like mechanics, managers need a catalog of the traps in marketing practice.
In the following sections I take up the problems and pitfalls of each level, or “place,” in the structural hierarchy of marketing practice: functions, programs, systems, and policy directives. I then discuss the implementation skills required of those who are doing the marketing.
Functions: The Fundamentals
Marketing functions include selling, trade promotion, and distributor management. These low-level tasks are the fundamentals, the “blocking and tackling” of the marketer’s job. Yet I have observed that most companies and their managers have great difficulty with these tasks. Often the difficulty stems from a failure to pursue marketing’s fundamentals in any determined way, as when one CEO doubted that the company’s trade show expenditure was a good marketing communications device but continued to authorize $1 million every year thinking the company had to be there.
Although the pitfalls peculiar to each function are worthy of a separate article, there are some management problems common to all.
Problems with marketing functions generally outnumber problems at the marketing program, systems, and policy levels. Managers most often have trouble with sales force management, distributor management, or pricing moves. When functions go awry, it is often because headquarters simply assumes that the function in question will get executed well by someone else, somewhere else, and thus ignores it until a crisis intervenes.
In one company, for instance, management decided to offer low list prices with correspondingly low discounts from list prices. In making what it thought was a sound pricing move for its line of graphics computers, however, management failed to take into account how pricing got implemented. The pricing scheme that resulted satisfied no one because the buyers proved their effectiveness by the size of the discounts received.
Thus, implementation problems at the functions level are caused primarily by faulty managerial assumptions or, as they say in the sports world, by not keeping your eye on the ball. As might be expected, this “disease” is more prevalent in large operating units, where administrators have functional specialists to rely on, than in small ones.
A second cause of marketing function problems is structural contradiction. A highly promising start-up business with $600,000 in revenues decided after careful deliberation to expand its domestic distribution network by setting up—at great expense—its own sales offices. The purpose was to control its distribution channels. For international distribution, though, management was torn between its need for control and its unfamiliarity with international markets. The conflict was heightened when a potential foreign partner said it would guarantee $30 million in sales.
Management was stumped. Its policy dictated that it should own foreign channels, but implementation was beyond its capabilities. Cash flow needs eventually seduced the company into deciding on indirect foreign distribution, with a different partner and arrangement in each country. The overall result was a complicated patchwork of direct and indirect distribution, which the thin ranks of executives could not handle. Management’s attempts to balance the contradiction between desired control policies and functional-level distribution structure were ineffective and led to conflicts among company executives and foreign distributors.
And a third cause of problems is when the head office fails to pick one marketing function for special concentration and competence and instead takes satisfaction in doing an adequate job with each—what I call “global mediocrity.” Officials thereby spread resources and administrative talent democratically but ineffectively. Typically, the pricing, advertising, promotion, and distribution functions are satisfactory, but no one function is outstanding.
The best companies have a facility for handling one or two marketing functions and are competent in the remainder. No marketers are good at everything, but the most able concentrate on doing an outstanding job at a few marketing functions. Frito-Lay is an example of a company that has refined two functional skills—selling and distribution—to such heights that they serve as the company’s marketing basis. Gillette’s Personal Care Division makes a science of advertising. Both these companies allocate resources, often unequally, to maintain competitive preeminence in the “showcase” functions.
Programs: The Right Combination
A marketing program is a combination of marketing and nonmarketing functions, such as sales promotion and production, for a certain product or market. Marketing programs are a basic reference point for marketing practice analyses; from them, it is possible to look down at the functions comprising the programs or up at the systems and policies directing the programs’ execution.
At the program level, management seeks to blend marketing and nonmarketing functions in an attempt to sell a particular product line or penetrate a target segment. Managing all aspects of the Silkience hair conditioner line is an example of a marketing program; so is managing a company’s key accounts and their special needs. If functions are the blocking and tackling of execution, marketing programs are the playbook showing how customers will be courted and the competition confounded.
A computer vendor, for example, wished to install a national account program to better serve its small but growing number of key accounts. The vendor recruited a highly regarded national account manager from another company, gave him a secretary, and issued a presidential mandate to put a key account program together.
Exactly how was this to be done? Perhaps the manager should try to create a headquarters-based, dedicated national account sales force despite the attendant risks that competition with the sales vice president, his supervisor, implied. Or was he better off working in a dotted-line capacity through the company’s sales managers, attempting no sales or service coordination beyond simple interfunctional persuasion, and running different risks with the customer base? The art of blending functions into programs is a poorly understood one at best, often left to on-the-job learning by trial and error.
One common program problem stems from what I call “empty promises” marketing, which results from instituting programs that either are contradicted by the company’s identity or are beyond its functional capabilities. The computer graphics company alluded to previously made a generalized piece of computer equipment that served all the industry’s segments, but most purchasers were small single-site users. Indeed, with the exception of its national account manager, every implementation action and policy directive geared the company to small customers. Unlike many businesses that obtain 80% of revenues from the largest 20% of customers, this company received only 30% of its revenues from its large accounts. In short, the business’s national account program ran counter to what the company was set up to do in marketing. The program was an empty promise internally and to the marketplace.
In another case, the country’s largest producer of private-label light bulbs decided it had to give its bulbs a brand name and place them on the grocery shelves to preempt others from an attack on its profitable main business. The company, which specialized in industrial lighting products, had no experience in consumer marketing or advertising and only a little in important retailing areas like trade promotion. Nonetheless, it created “Project Shopping Cart.” After spending several million dollars for the design of a new display and packaging for the bulbs and even more to sponsor athletic events and recruit a host of brokers to place the bulbs, management accrued a .3% share of the market in two years. The marketing functions in this industrially and generically oriented company were unable to supply the retail blocking and tackling that headquarters simply assumed would be there to implement its well-conceived program.
A second program-level execution error is one I term “bunny marketing.” It arises not from a functional inability to execute program plans but from a lack of direction in top management’s execution policies. One heavy manufacturing company was continually frustrated because it came out late with new products in an industry in which spare parts inventories and operator loyalties give the first-in vendor a significant advantage. One of its products, a machine for special mining conditions, came out almost two years after the competition’s entry. Headquarters had kept its thin developmental engineering staff busy with a torrent of engineering projects, some to rework machines already in the field, one to come up with an automatic machine prototype under government grant, and another to design the new machine. In short, the profusion of programs lacked focus because it stemmed from a poor sense of what the company was and what it did.
The presence of many clever marketing programs—a great playbook—is often associated with implementation problems. This is so because when a strong sense of marketing identity and direction are absent, programs tend to go off in all directions. Such bunny marketing results in diffusion of effort and random results.
Systems: Bureaucratic Obstacles
Marketing systems include the formal organization, monitoring, budgeting, and other “overlays” that foster or inhibit good marketing practice. Systems can be as simple as voice telecommunications or as complex as profit accounting.
Of the systems at lower organizational levels, the most problematic is sales force reporting and control. Of the pervasive systems, those concerned with the allocation of marketing resources and those that help management monitor results are bugbears in all but a few companies. Especially in smaller companies, allocation systems cause many problems; in larger ones, control systems do more damage. Other kinds of systems as well as personnel and the formal organizational structure can also be problematic, but managers usually can get around these obstacles by exercising their execution skills.
Three problems that commonly occur at the systems level are errors of ritual, politicization, and unavailability. Errors of ritual arise when the company’s systems drive it down habitual pathways, even when good judgment dictates a different course. At one concrete producer, the marketing control system relied on a plant backlog measure. When backlogs were low, the sales force beat the bushes for jobs no matter how marginal, the estimators (who control pricing in construction companies) shaved the margins, and everyone from the CEO on down got nervous. When backlogs were high, reactions were the opposite. As a consequence, the low-margin business taken in bad times hindered the company when it sought high-margin business in better times. When the president accepted suggestions for a new sales control system to remedy the problem, he instituted new forms and reports but refused either to modify backlog management or to approach profitability by job as a means toward more effective segmentation and selling.
The problem of politicization is never more evident than when observing sales force reporting and control systems and, in particular, call reports. Sales managers often weed out their call reports to fit their preconceptions. Even more dangerous, call reports can lose their intelligence function altogether and become instead a device with which to punish sales representatives who submit “inappropriate” ones.
The politicization of systems is in no way limited to sales controls, however. In one case, division management in an equipment rental company chose to report to headquarters that its new pricing scheme would increase unit revenues by 11% and margins by 13%. It neglected to note, unfortunately, that the rental equipment would be obsolete a year sooner than headquarters had planned!
The final, and most pervasive, systems problem is unavailability. That is, some systems designed to make line officers’ lives easier just don’t do so. In all but a handful of the companies I studied, for example, the financial accounting and sales accounting systems can only be called perverse in failing to meet marketing’s requests.
One would expect that in today’s data-oriented companies managers could make projections based on detailed analysis of results. Few executives, however, have any idea of profitability by segment, to name one element. Rarer still are good numbers on profitability by product, and only once have I seen a system that allowed profitability to be computed by individual account. Instead, managers either are treated to incomprehensible, foot-thick printouts of unaggregated data or else are told in response to their requests that “accounting won’t give it to us that way.” The inevitable result is a kind of bell-jar environment in which it is impossible to make sound decisions.
Policies: Spoken & Unspoken
At the broadest structural level of marketing practice are policy directives. While policies cover the spectrum of administrative activity, I focus here on two especially important marketing implementation policies: identity policies—those relating to what the company is—and direction policies—those concerning what it does. By policies I do not mean only verbal or written statements; indeed, some of the policies most central to good marketing practice are unspoken.
Identity problems are the most common policy difficulties and, paradoxically, occur more often in mature than in young business units. Marketing theme and marketing culture are two terms I use to capture the powerful but often unspoken feeling of common purpose that the best implementers have and others do not. Theme and culture transmit the company’s identity policies.
Marketing theme is a fuzzy but significant term that refers to management’s shared understanding of marketing’s purpose. In one company, some executives perceived themselves as heading a commodity vendor with the only hope for the future being blue-sky R&D projects. Others believed that the company’s key attribute was in differentiating its basic lines. The managers consistently functioned according to their different understandings, and the result was a confused and ineffective marketing effort—a sales force that thought headquarters gave it contradictory signals, a divisive trade, and unhappy customers.
By contrast, another company’s management and entire 10,000-person sales force could recite (with conviction): “We are the premier vendor of snack foods in this country. Our products are great. But we have only two seconds to reach the supermarket shopper, so we live or die on service.” Management’s shared understanding and continual reinforcement (through compensation, training, and the like) of this theme, simple though it sounds, promoted exceptionally effective sales performance and consistent customer reactions.
It is tempting to dismiss the notion of fostering a common understanding of the company’s marketing theme as a vague and insignificant idea. A test of your company executives’ perceptions of that theme may stir up some concern. To conduct this test, write a single sentence describing your company’s marketing essence. Then have your key people do so as well. The results are usually as instructive as they are shocking.
Marketing culture is a broader notion than theme. Whereas themes often can be verbalized, culture is the underlying and usually unspoken “social web” of management. It subtly but powerfully channels managers’ behavior into comfortable ruts. Culture can be observed clearly from such things as lunchroom conversations and mottoes management puts on the walls.
For example, when I asked managers in one company why they were planning a $700-million plant addition to support a new product line that market research suggested would require only one-half that capacity, the marketing vice president responded, “We don’t see much sense around here in chinning ourselves on the curb.”
Direction policies refer to both marketing strategy and leadership. While marketing strategy is outside the realm of this article, leadership deserves attention as a key aspect of implementation. It has become fashionable in corporations to blame shortcomings in practice on culture. It is undeniably true, however, that some top marketing managers are top-notch leaders and others are not. The former inspire us with their eagerness to get out into the field; they are clever at designing simple and effective monitoring methods, and their understanding of customers is powerful. Others are much less effective as leaders, being immersed in complex conceptualizing or unwilling to leave their leather chairs for the marketplace; they are inspirational only as models of what their juniors hope not to become.
The quality of marketing leadership has a far-reaching effect on the quality of marketing practice. Indeed, of the business units I observed that had low-caliber leaders, not one had high-quality marketing practices overall.
Whether a strong theme and culture are brought about by the charisma of the person on top or orchestrated through memoranda is irrelevant. The critical question is whether these intangibles of identity, or “who we are,” and direction, or “what we are about,” exist as powerful though unquantifiable forces that impose themselves on an observer in the same way they permeate the company.
Gap Bridging: Execution Skills
Up to this point I have analyzed the motorcycle without much attention to the mechanic. Indeed, the primary reason good marketing practice occurs is that managers often use their personal skills to supplant, support, and sometimes quietly overthrow inadequate practice structures. I call this substitution of personal skills for weak structure a “subversion toward quality.” Poorly functioning formal marketing systems are frequently “patched up” when the managers using them exercise informal organizing skills. Similarly, informal monitoring schemes often are created to get data the control system can’t, and budget “reallocations” often are designed to subvert formal policy constraints. Managers bring four execution skills to the marketing job: interacting, allocating, monitoring, and organizing.
The marketing job by its nature is one of influencing others inside and outside the corporation. Inside, there is a regular parade of peers over which the marketer has no power to impose preferences; instead he has to strike horse trades. Outside, the marketer deals with a plethora of helpers, including ad agencies, consultants, manufacturers’ reps, and the like, each with an agenda and an ax to grind. I observed that those managers who show empathy, that is, the ability to understand how others feel, and have good bargaining skills are the best implementers.
The implementer must parcel out everyone’s time, assignments, and other resources among the marketing jobs to be done. Able managers have no false sense of egalitarianism or charity but are tough and fair in putting people and dollars where they will be most effective. The less able ones routinely allocate too many dollars and people to mature programs and too few to riskier and amorphous programs.
It is by using monitoring skills that a manager can do the most to reconstruct degraded corporate information and control systems. Good implementers struggle and wrestle with their markets and businesses until they can simply and powerfully express the “back-of-the-envelope” ratios necessary to run the business, regardless of formal control system inadequacies. Poor implementers either wallow blissfully in industry clichés or get mired in awesome and often quantitative complexity that no one understands. The general manager of a company with 38 plants and 300,000 customers, for instance, ran everything he considered crucial according to notations on two three-by-five-inch index cards. By contrast, the sales manager of a company about a hundredth that size generated hand-truckfuls of computer printouts monthly in his monitoring zeal, then let them age like cheese.
Good implementers have an almost uncanny ability to create afresh an informal organization, or network, to match each problem with which they are confronted. They “know somebody” in every part of the organization (and outside too) who, by virtue of mutual respect, attraction, or some other tie, can and will help with each problem. That is, these managers reconstruct the organization to suit the marketing job that needs to be done. They customize their informal organization to facilitate good execution. Often, their organization and the formal one have little in common.
Good Practice in Marketing
The administration of marketing is problematic in all but a few companies, and management’s adeptness often is restricted to a few functions or programs within the marketing discipline. Yet, some of the businesses in my sample showed truly excellent marketing implementation, and it is from them that some simple but important characteristics that differentiate good marketing practice emerge:
- In the best companies, a strong sense of identity and of direction in marketing policies exists. There is no confusion and little disagreement among managers over “who they are.” Further, the leaders are strong and able. There is, indeed, clarity of theme and vision.
- The best implementers continually appeal to the customers, including the trade or distributors, in several unusual ways. Customer concern is an ingrained part of the culture and is always prominent in the theme of the best implementers. Interestingly, the distributors are also viewed as customers, and management has as a main objective the maintenance of a partnership with both distributors and end-users. I call this behavior “profit partnership with wide definition.”
I did not find that the good implementers are less profit oriented than the poor ones; quite the opposite. Yet, managers best at execution take special care to see that the end-users also profit in terms of true value for the money they spend. The trade profits in more traditional ways, with dollar margins, but also benefits from having good implementers consider them as key accounts. The companies less competent at implementation never form a partnership with these two key marketing constituencies or, worse, lose a focus they once had.
- In the best organizations, management is able and willing to substitute its own skills for shortcomings in the formal structure. At United Parcel Service, the story is told with some pride of the regional manager who took it on himself to untangle a misdirected shipment of Christmas presents by hiring an entire train and diverting two UPS-owned 727s from their flight plans.1 When top management learned of his actions, it praised and rewarded him. The culture supported the manager’s substitution of skill for structure, but the regional manager was also “combat ready” to defend his judgment.
- Finally, in the companies that handle execution best, top management has a distinctly different view of both the marketing structure and the managers than do bosses in other companies. In the best companies, without exception, the importance of the executives dominates the importance of the execution structure. That is to say, marketing (and other) managers are top management’s “key accounts” and are treated with a latitude not found in other corporations. Top executives in companies that are good at marketing encourage their followers to challenge and question them because it is not always possible for those at the top to be right. Those who are poor at following continually thwart the tendency for policies and structure to become religion, which causes management to lose its flexibility in times of change.2 This process can be characterized as a “good leaders, poor followers” common theme.
Top managers in the best companies also view the marketing structure differently. They tend to foster a philosophy of “allocation extravagance with program pickiness” in marketing investments. It is not always easy to get new programs approved by these managers, but the plans that are endorsed are staffed, funded, and otherwise fully supported to maximize their chances of success.
The full endorsement of fewer, sounder marketing programs seems to give these officers the critical mass they need to make the programs work in good times and bad and limits the risk to the company. This approach worked well for one business-jet distributor I studied, which weathered the recession of the early 1980s in much better shape than its more programmatically prolific peers.
Again, in the best companies, management concentrates on one or a few marketing functions that it fosters and nurtures into a competitive distinction through expertise. When strong theme and culture, program pickiness, and functions-level concentration are combined, the conclusion that emerges is that the businesses best at marketing execution encourage soundness at the top (policies) and at the bottom (functions), rather than flashiness in the middle (programs).
When all is said and done, quality in marketing practice is not a guarantee of good marketplace results. There’s just too much luck, competitive jockeying, and downright customer perverseness involved to hope for that sort of predictive accuracy. Rather, good marketing practice means using skill artfully to cope with the inevitable execution crises that blur the strategies for managing customers and middlemen. Individually, such threats are not much to fear. Taken collectively, they are strategy killers.