Business

Does your board know what its marketing capabilities are?

Sales Pitch

Herman Alvaranga

Wednesday, September 27, 2017



Late last week one of my favourite young marketers called me in distress. His board of directors was asking for triple-digit growth, but historically his company had never exceeded 20 per cent growth in any year.

By way of background, this company is in a mature industry with restraining factors regarding whom they may target in their pursuit of market development. Expecting triple-digit growth was downright ridiculous!

The board was insisting that marketing should go and find the business; but did marketing have the capabilities to do so?

SETTING BHAG

This marketer believes in setting big, hairy, audacious goals (BHAG). But is there a limit beyond which marketing cannot create additional demand? Come to think of it, what institutional capabilities underpin marketing's ability to record outstanding achievements? And does your board of directors understand what marketers can and cannot do? Let's take a quick look at what is required.

MARKETING ASSETS

Let us assume that a business starts out with a base of resources that it wants to transform into valuable assets that create a certain return on investment. Let us also remember that a resource becomes an asset only when it is actively used to improve the organisation's performance in the marketplace. Marketing assets can be grouped as follows:

• Customer-based and reputational assets

• Internal or marketing support assets

• Supply chain assets

• Alliance-based assets.

Given our constraints we will consider only the first two listed above.

Customer-based marketing assets are those assets of the company, either tangible or intangible, valued by the customer or potential customer. Often they exist in the mind of the customer and they are essentially intangible in nature. They may, however, be one of the most critical issues in building a defensible competitive position in the marketplace.

Companies such as BMW and Audi have a clear image of supplying a particular set of customer benefits (driving dynamics, prestige, overall quality) in the markets in which they operate.

Perhaps even more important in some instances is the reputation of brands. Here in Jamaica, for example, the LASCO brand name promises certain attributes and values.

Internal marketing support assets include:

• Corporate culture

• Cost advantages

• Information systems and market intelligence

• Existing customer base

• Technological skills

• Partnerships

Undoubtedly, the most difficult of these to create and imitate is corporate culture.

DEVELOPING MARKETING CAPABILITIES

All the marketing assets in the world, however, are of little value if they are not actively exploited in the marketplace. The processes and practices that deploy marketing assets are referred to as marketing capabilities.

Marketing capabilities are effectively implementation capabilities — the ability to implement marketing mix activities, such as effective advertising campaigns, sales and trade promotions, personal selling, public relations, price deals, special offers to customers, packaging redesign and so on.

DYNAMIC MARKETING CAPABILITIES

Having looked at marketing capabilities at their most fundament level, let us now turn to what matters most - dynamic marketing capabilities. Broadly there are three types of dynamic marketing capabilities which a company must master if it wants to deliver the BHAG that we spoke of earlier. They are:

1. Absorptive capabilities - market-sensing and learning capabilities

2. Adaptive capabilities - targeting, positioning and CRM capabilities

3. Innovative capabilities - new product and service development capabilities.

Marketing capabilities take time to develop. Dynamic marketing capabilities take even longer, and can only be achieved with careful marketing planning and the financial and other resources to ensure timely and effective implementation — in a word, within a learning organisation.

In our opinion, directors need to analyse and evaluate the dynamic marketing capabilities of their organisations so that they can have a clear understanding of what is possible and what is not possible.

This should give them a good guide to settling SMART objectives instead of setting unattainable targets that will only lead to frustration and, as is happening in the cited case, a loss of some of their best people.

Herman Alvaranga, FCIM, MBA, is president of the Caribbean School of Sales & Marketing (CSSM). For more insights on sales and marketing, please go to his blog: www.cssm.edu.jm

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