What sets winning organizations apart from their competitors?
One study examined 40 industry groups of 4 companies in each, all with similar financial
numbers and apparent prospects. They noticed that what separated winning and losing
companies (as measured by total shareholder return) were two factors: strategy and execution.
1. Winning organizations devise and maintain a clearly stated, focused marketing strategy
The marketing strategy is a simple value proposition that is based on a deep understanding of
the customers. It is an organizations ability to create superior value for its customers and, in the
process, give it a competitive edge over its rivals. If a company has a clear and focused
marketing strategy, it is more likely to succeed than if it has an unstable strategy, such as Kmart,
who couldnt decide whether to go upscale to avoid competing with Wal-Mart or go head-to-
head with Wal-Mart, which simply confused customers and led to its bankruptcy.
2. Winning organizations execute their marketing strategy flawlessly
The second factor that separates winners from losers is their ability to execute their marketing
strategy. There is a gap between devising and implementing a good strategy. Someone in top
management may have the idea that customer service is a good strategic priority for the business,
but unless they win the hearts of employees, the execution of the strategy is likely to be weak.
What is marketing?
Marketing is a disciplined process used by organizations to solve business problems.
Problems solved by marketing in a for-profit organization:
- Low-priced competitors flooding the market
- Lack of differentiation from competitors
- How to generate more revenue
- Managing the explosion in media and channels
- Dealing with more sophisticated and price-sensitive customers
- How to build a customer-focused organization
Problems solved by marketing in a non-profit organization:
- How to differentiate from other non-profit organizations
- How to increase awareness of our brand
- How to increase funding from donors
- How to build partnerships with for-profit organization
- How to motivate volunteers
Marketing is a disciplined process to solve business problems
Marketing process step #1: understand customers
- Customer needs: the very first step. Different customers have different needs. (Ch. 2)
- Customer segments: the first step in figuring out which customers we want to serve is
called market segmentation. (Ch. 3) - Target customer: the second step in figuring out which customers we want to serve is
called targeting (target marketing). These steps involve recognizing different sets or
groups of customers based on their needs and other criteria. (Ch. 3)
Marketing process step #2: create customer value
The next marketing step is to create value for the chosen target segment. This is done through
four strategies, which are called the marketing mix. They are:
- Product strategy (Ch. 5)
- Pricing strategy (Ch. 6)
- Channel strategy (Ch. 7)
- Marketing communications strategy (Ch. 8)
Marketing process step #3: deliver customer value
The understand-create-deliver-manage value marketing process described here is captured in a
strategic document called the marketing plan. It describes what target segments it will serve,
how it will serve them, and how it will win by differentiating itself from its competitors.
Although many strategies in the plan are implemented by the marketing function, many
marketing strategies are implemented by other functions such as sales, customer service, and
shipping. A marketing strategy of customer focus may not be implemented well because another
function is implementing it. To accomplish delivery of value, two things must happen:
1) Sales execution: marketing strategies must translate into sales strategies and other
functional strategies (Ch. 9)
2) Cross-functional alignment: the organization must align all its functions to focus on the
customer. This cross-functional alignment is called customer focus. (Ch. 10)
The marketing plan plays an important role it contextualizes the market for the other functions.
Marketing process step #4: manage customer value
The final step is a feedback loop to review marketing strategies and make changes to ensure the
business is keeping pace with changing market conditions. At the end of every year, a business
must conduct a review of four items:
- Customer satisfaction measurement (Ch. 11,12)
- Segment review (Ch. 3,4,12)
- Customer review (Ch. 3,4,6,12)
- Product mix review (Ch. 4,5,12)
What do world-class marketing organizations do?
The 10 tasks of marketing
1) Identify opportunities: must have communication between strategic planning and
2) Segment and target markets: make recommendations on which customers to serve.
3) Develop a marketing strategy: use the marketing mix to connect with the customer.
4) Implement the marketing strategy: marketing must help the other functions who are
implementing it develop functional plans.
5) Assess and innovate: assess marketing strategies, make changes, and innovate. 6) Provide a competitive advantage to the sales force: it does so by market segmentation,
target marketing, and brand building.
7) Be the customers champion within the organization: it is the task of marketing to be the
voice of the customer.
8) Build a customer-focused business: every function and employee has to be customer-
9) Make marketing accountable: one does not build a strong brand by throwing money at the
10)Be a change agent within the organization: the motto of top marketing organizations is if
it is not broken, fix it, as opposed to leave well enough alone.
Characteristics of organizations that are not marketing led
Key dimensions When marketing is not When marketing is influential in
influential in corporate corporate decisions
Definition of Ambiguity about the role and Clear understanding of the role of
marketing importance of marketing and marketing and culture of customer
customer orientation orientation
Top-management Focus on stock price, EPS, cost Focus on long-term growth in
objectives reduction, market share, sales revenue, profits, EPS, and cash flow
Orientation and Little marketing experience; Deep understanding of the
functional mostly focused on financial importance of marketing; compelling
background of CEO community vision of customer value
Top-management Cost reduction, labour Customers, resellers, and key
priorities productivity accounts. Use of market information
and tracking data.
Growth strategy Through mergers and Through serious commitment to
acquisitions R&D, product innovation
Role of brands Strong brands use to fund Substantial investment to build and
acquisitions, growth strategy maintain brand equity
Focus on new product Product-focused, technology- Customer analysis is hard-wired into
development focused product innovation and new business
Portfolio strategy Managed for cash flow; pricing Customer portfolio analyzed and
used to achieve volume goals managed for loyalty, profitability
Avoid mistakes made by companies that do not understand customer needs
Companies that do not base their decisions on customer needs make some common mistakes that
cost them time, money, and resources. Many eventually go out of business. Example: The 18- to 34-year-old segment is notorious for being price sensitive and brand
disloyal. It isnt the right strategy to demand more advertising dollars when bigger companies
are taking away your sales.
Example: While marketing is busy trying to build a strong brand and maintain price premiums,
the sales function is devaluing the brand in the market in order to get more sales.
Example: in organizations where there is no clear and widely shared understanding of customer
needs, organizational silos exist. In these businesses, each function does its own thing, often
with negative consequences. This situation exists because there is no glue to hold this business
together. A deep and widely shared understanding of customer needs and the target customer
segments is one such glue.
Meet companies that win by developing a deep understanding of customer needs, and learn
valuable lessons they offer
Objective: understanding customer needs is crucial to success
Objective: accurate understanding of customer needs helps in target marketing
Lessons offered by companies that develop a deep understanding of customers
1. Talk to your customers whenever and wherever you can: while formal research is useful,
so is informal ways to listen to customers.
2. Use data you already have: there is a wealth of data already in the company. Some
sources include sales professionals and customer care specialists.
3. Establish clear standards for research: figure out the answers to these: what is the value of
the information? What is the cost of incorrect information? How will the d