Wednesday, September 20, 2006

Hard Facts, Dangerous Half-Truths & Total Nonsense by Jeffrey Pfeffer and Robert I. Sutton


Some critics have suggested that "Hard Facts" borders on common sense but it is the apparent lack of common sense in business that often amazes and shocks me. In fact, the idea of common sense is exactly the type of the strongly held belief that "Hard Facts" puts into question. As far as I can tell, all people have sense but not much of it is common! There is so much about business management that appears to be obvious to so many when reading business literature or attending conferences and yet when we get back to the office we fall back on old behaviours and entreched belief systems. "Hard Facts" truly gives the hard facts on what is one of the most significant underlying problems with business life today. Business initiatives fail because they are initiated to solve problems that aren’t fully understood and achieve goals that aren’t clearly defined with methodology that at best is ineffective and at worse destructive!

Saturday, September 02, 2006

THE MARKETING PLAN: THE GOOD THE BAD AND THE UGLY

Following is another simple marketing plan template that I have used from time to time in my work. Like my earlier entry "The World's Shortest Marketing Plan" this plan template is very short and should be kept that way!

The Good

Virtually all companies conduct some sort of planning, whether it be it the form of budgets, strategic plans, business plans or marketing plans. Despite the various problems, some of which are described below, many companies have discovered the hidden benefits of planning activities. Here I would like to emphasize the planning activity as opposed to a planning document, tool or method. It is in the activity, the action of planning that the real value is achieved. As Dwight Eisenhower said "Plans are nothing, planning is everything".

Of course the planning activity must be documented in some way, however, a planning document should be living organism, continuously adapting to new situations and new environmental requirements. Like an organism it should be continuously developing and learning. As time goes, the document should reflect the accumulated knowledge and experience of the actors in the business which it represents. Many managers have discovered the value of planning and whether one intends to reveal the "truth" in an official document or not, many valuable "truths" can be discovered during the act of planning. These "truths", in the form of facts, ideas or discoveries of correlations and relationships between variables, are beneficial in the running of the business.

The Bad

Unfortunately, in many companies these planning tools are primarily seen as tedious routines which must be executed in order to satisfy requirements from top management. As soon as these plans are made and presented they are far too often filed away and never to be seen again. They may be brought out again next year to be used as a guide for the new plan.

One of the most common planning tools is the budget. Budgets are manipulated by everyone. Those responsible for creating the budgets build in buffers in order to insure that the budget can be achieved. Those who review and/or approve the budgets of others, fully aware of the manipulations which take place, regard most budgets with suspicion. This results in responses from senior management with arbitrary demands for higher sales, more margin or lower costs by amounts or percentages which, in objective terms, could only be interpreted as incompetence, either on the part of the budget maker or the evaluator. However, since everyone knows the rules, no such conclusions are drawn. In fact, a manager or director who attempts to budget "honestly" may be deemed incompetent since he will undoubtedly be judged according to the same measures as all others who are playing the budget manipulation game.
This manipulation is not limited to budgets. It is prevalent in all kinds of planning activities in many companies and organizations. For this reason one might question the validity of this type of planning tool as some companies have done and eliminated the use of budgets for example.

The Ugly

If these planning methods are not lost deep in a file cabinet and even if they are done with honest assumptions and good analysis they still run a risk of becoming "holy gospel". Many planning tools are mystically transformed from paper documents to stone tablets. These tablets are then followed blindly as a surrogate "Ten Commandments" and no deviations or alterations to the plan are allowed. Alternatively, these tablets are used to bash the heads of managers who have not achieved the goals set forth.

MARKETING PLAN

Depending on ones definition of marketing, the marketing plan could focus on everything from specific sales related activities, to virtually every aspect of the business that affects a company's competitive position in the market. This broader definition could involve relationships with suppliers for components or sub-assembly, financial institutions, production technology or anything else that could affect the strength of the company in the market place.
The following elements should be included in a marketing plan:

I. Facts and Analysis

A. Market size, in volume and value by product group
B. Average price by product and/or product group
C. Distribution channel analysis

1. Key distributors or channels

a. Description of their business or of the channel
b. Sales, and share of market
c. Sales of our products
d. Description of terms of business, (margins, logistics, etc)

D. Competition analysis

1. Brand positioning
2. Market share
3. Relationship to trade
4. Consumer image
5. Strengths and weaknesses
6. Expected reaction to our company or product

E. Our own strengths and weaknesses

1. Brand positioning
2. Market share
3. Relationship to trade
4. Consumer image
5. Strengths and weaknesses
6. Short-term product or market needs
7. Long-term product or market needs

F. Consumer Analysis

1. Buying Behavior
2. Purchase Criteria
3. Lifestyle Analysis (if possible)

II. Plan of Action

A. Define adjustments to strategy (product focus, brand positioning etc)
B. Define tactical actions

1. Attacks to competitors weaknesses
2. Target key competitors
3. Promotional Plan

a. Internal actions ( to promote products within own sales
organization)
b. Trade actions ( to promote products to distribution channels)
c. Consumer actions ( to promote products to Consumers)
d. Estimated costs

III. Financial Plan (targets/expectations for relevant period 1-5 years)
A. Market share
B. Sales targets
C. Selling Expenses
D. Returns (Net Operating Profit)
E. Market Investments
F. Cash Flow Analysis (Net Present Value)