Assimilation of marketing strategies and organizational integration

Introduction
Schewe & Haim (1998) provide an overview of the field of marketing, tracing its roots and development until the end of the 20th century. This era set much of the foundation for how marketing works today, although the modern marketing organization leverages modern technology in ways that were unavailable to practitioners in the 20th century. Schewe and Haim make the case that marketing is a critical element of business success, but that marketing as a function need not be expressly the work of a marketing department. The argue instead that the core essence of marketing lies not just with attracting new customers, but also with ensuring the satisfaction of existing ones.
The inherent logic of this argument is fairly straightforward – marketing is about revenue generation. There are two components to revenue – new business and repeat business. To take a holistic view of marketing is to recognize this reality, and build your marketing strategy around that. Evidence shows that the cost of retaining an existing customer is much lower than the cost of attracting a new one. A customer relationship is inherently a value one – a company must continue to deliver value to the customer in order to continue to earn revenue (Buchanan & Gillies, 1990). Customer satisfaction often comes down to marketing principles – the same appeals that are made explicitly during the marketing and sales processes continue to be made on an implicit level once someone becomes a customer (Rust & Zahorik, 1993).
This is what Schewe and Haim mean when the say "customer first, last and always" – marketing is always about the customer. All efforts of the company are in one way or another about the customer, and thus all should be done with a marketing mindset.
Who Is the Market?
Schewe and Haim provide the framework for understanding the market. They explain how marketers typically break the market down into manageable, understandable segments. They explain the process of profiling customers – this allows marketers to either work with target markets or personas, as means of understanding who the customer is, and to get a better sense of buyer behavior. The outline what are essential six types of buyers based on their behavior style – the initiator, influencers, decider, buyer, consumer and evaluator. For many transactions, these might be the same person. But that is not always the case. In general, when a purchase is larger, or one that requires a greater level of thought and analysis, there will be many of these roles filled by different people. In a B2B transaction, there are almost always at least these six, if not more, people involved in the buying process, and the buying cycle can take months as a result.
Another element of the buyer that Schewe and Haim analyze is that of culture. In their view, variables like culture and social class can matter – and these are variables that are fairly easy to understand because they relate to data that arise from the census. But the key takeaway from the discussion about the different roles that marketers must be aware of is that these roles are unique to each product and transaction – it is of utmost importance that the marketer should understand which apply to their transaction, and set out a marketing strategy accordingly.
The Four Ps
The four Ps of marketing are product, position, price and promotion. These form one of the most fundamental concepts of marketing. Schewe and Haim (1998) discussion positioning in terms of understanding the target market. First, a marketer should know who the target market is, and get a sense of that target market's behaviors. Then, the marketer can start to think about what positioning it wants to take. In a sense, the product will dictate that. But there is also a role here for the Product Marketing Manager, a role that specifically takes information gained from marketing efforts and helps product teams translate that into either new products, or enhancements to existing products. An example of positioning for a target market as Schewe and Haim discuss would be an airline that starts a budget division. The airline might be happy with its core business, but feel that there is an opportunity for a budget division that offers slimmer margins but higher volumes – that it risks losing customers if it does not offer this. So the airline is now designing a product specifically for a new target market, one that presumably it does not currently have a product for.
Kawasaki (2006) argues that one of the best approaches to the product side of the marketing mix is to develop disruptive products. This is much more difficult than it sounds, of course, but has the value of being correct. A company that markets products that offer little distinctive is one that will have typically have trouble winning share away from existing customers. The product aspect of the marketing mix needs to be disruptive in some way, and that is really just the starting point for marketing excellence.
Ries & Trout (no date) argue this point on several fronts. First, they argue that leadership is the best approach to marketing. This means being the innovator in a category, or at the very least finding something that you do better than the competition, whether that is the product itself, the pricing, the promotion – but some element of the marketing mix should be excelled at. With product leadership, there is at least something around which the marketing team can build – and it will be difficult to succeed without some sort of leadership. They follow up this argument with a case that just because a company or product is the leader does not preclude a strong #2. Not by accident, but because there will likely be a weakness in that leading product, and a company can be successful by exploiting that weakness. But as Trout and Rivkin (2006) point out, there has to be some genuine differentiation in order to carve out this niche, and without that a company will have a much more difficult time succeeding in the market.
Promotion
Cialdini (2009) discusses the promotional aspect to some extent in his book Influence. He argues that there are several different sources of influence, including social proof, liking, authority, scarcity, commitment and reciprocation. On a high level, he is really saying that humans are influenced by other humans. If a company can cultivate this influence, that they are going to be more success in their marketing efforts. A lot of marketing promotion, particularly with respect to messaging, is about creating influence. Think about the timing of a new product launch. First you want to get the early adopters on board, and if you can do that successfully that will lay the foundation for everybody else. In the social media age, the company can release a new product, put up a little bit of social, and then seek the attention of known influencers in the field. If you have a microbrewery, for example, and you want to release a special beer, you can leverage this to a very high level.
You would start by bringing in whatever local beer bloggers or reviewers there are, and the people who run the best bars/stores in town that beer nerds like to patronize. These are your influencers – these people might actually buy very little of any one beer, but they are going to influence thousands. A couple dozen people get a free bottle, and they influence thousands because they have the credibility. If some write about the beer online, that creates social proof and authority. If this is combined with scarcity, that beer might never make the company money, but will increase its prestige, which can carry over to the brewery's other, high-volume products. And this is just with one element of the product launch, one that costs very little. There are definitely opportunities with many products to adopt this sort of approach, simply by understanding the roles that different consumers play in the promotional process, and then shaping the messaging and promotional strategy around the different types of buyers and influencers.
Cialdini rightly points out that marketing has a large psychological element to it, and would be well to note the sociological element as well. The psychology of the buyer is basically that they are convinced by arguments, but Cialdini does not note that these arguments are often sociological in nature – so many times it is people convincing other people, and usually indirectly. If a marketer can successfully influence the influencers, there is a lot of power in that.
Schewe and Haim (1998) contribute to the discussion about promotion. A lot of their discussion is focused on the enterprise domain, and on advertising. They note that there is a need to find a way to cut through the noise – that companies have to create unique and memorable ads that speak to people. What would be an interesting addendum to this take on advertising as the sole source of promotion – I guess PR has to fit in there somewhere as well – is the role that social media plays. Modern sources – if you look at the Hubspot blog for example – talk extensively about how companies use blogs and social to bring in customers. Advertising as a form of promotion still lives in Google – the drawback of using a 1998 text is that Google has since transformed the role of promotion. But there are modern forms of inbound marketing that are also worth discussing on a higher level as well, because modern promotion taps into the core of what promotion is – getting your name out there and conveying an image of the company – but also about delivering eyeballs to the website, and using your website to sell directly to consumers. I am fascinated by the way that marketing has changed so much in recent years, and wish I could get Schewe and Haim’s take on it.
Rosen (2006) discusses the role of word of mouth in a promotion plan. Word of mouth is one of those interesting things in marketing – you simply cannot predict how it will flow, but you seek it and want to get as much of it as possible. So you try to figure out how to make it work. And furthermore you create proxies such as testimonials and trustmarks that help you. So when Rosen discusses buzz, he is really talking about creating evangelists, getting customers who will promote your product or service for you. When that occurs, your cost of new customers will probably drop, and the positive buzz will have an amplification effect on the rest of your marketing program.
Godin (2006) further elaborates on this concept. And it comes back to Product. The oft-overlooked P in marketing is that it really does help to have a great product; you can do so much more with an innovative, effective product. At the end of the day, that’s how you can best leverage that. Woe be the marketer who works for a company that is hopelessly mediocre. Godin points out that this means “making a product you will talk about” rather than making a remarkable product. There is a difference, and that places some emphasis on marketing and messaging – and making sure this is effective enough that people are willing to buy into it.
Price
The issue of price is an interesting one. In a sense, price is really about the value that you want to convey to the consumer. If you compete by undercutting your competitors, you are at best saying that you can do it better for less, but in many cases will be more associated with "worse". Luxury brands leverage price to not only create scarcity but to enhance their credibility as luxury. Even in a world where tens of millions of people can afford "luxury", when scarcity is created through very high prices, many consumers buy into that and feel that they are special for owning the good in question.
Raphel and Raphel (2006) talk about loyalty, and this is an interesting theme when linked with price. They make the case that customers can be turned into advocates. By offering the value you promise, this is something that can occur - loyalty is rewarded and given special treatment, but loyalty can also be created by paying attention to product, price and position – you can position yourself as premium, and offering higher value that competing products, if in fact you are able to deliver on that with the product. What this illustrates is that while there are many different ways to approach these dynamics, ultimately a good marketer will pay attention to them all, and seek alignment between them.
Ries and Trout (no date) also note that effort is not the only thing you need in order to succeed in marketing. They make the point that concept matters – being able to conceptualize the best approach is one of the key traits of an effective marketer. Banging away at a bad strategy is not nearly as effective. On a practical level, this really means that it is critical to measure the success of your activities. Marketing isn’t product launch – it’s something you do every day. As such, you have to treat it like that, track every effort that you make, and then ensure that you make sound decisions based on data. The magic of marketing may be art, but a lot of effective marketing is really down to science. Note that this does not imply throwing everything at the wall and seeing what sticks – but that is a better approach that assuming you can simply work harder at whatever strategy you’re doing, without considering whether that strategy is legitimately effective.
Place
The marketing literature actually does not talk too much about place, which is a shame because place matters. Schewe and Haim (1998) do take time to talk a bit about international marketing. They point out that succeeding in international markets is much more difficult than one might think – you actually are often better off starting from scratch with your marketing plan than attempting to replicate past successes, and that is because each market is very different. There are literally examples of companies that are hugely successful in the United States and can’t make it work in Canada (i.e. Target), let alone in China, India, Europe or some other lucrative market.
But these failures can help inform us about the domestic market, too. For our similarities, there are significant differences between the people in the US. Think of someone in downtown Seattle versus someone in rural Louisiana. That’s the same country, and some companies thrive in both locales, but ultimately those can be two very different markets. And few companies can point to success in both markets – maybe a gas station or something like that. One thing that definitely needs to be taken into account is place – sell your product in the wrong place, and your market will simply not respond, and may not even be there at all.
Schewe and Haim further elaborate on the key component of marketing that is distribution – how your product gets to its place. They note, in fact, that distribution “is strikingly important but often overlooked.” For many marketers, it is much more enticing to think about such things as advertising and pricing, than about the rather mundane task of distribution. Yet distribution actually can be a huge differentiator. Think about Wal-Mart, and the amount of money that they put into distribution. They negotiate how their suppliers will ship. They have a network of warehouses to serve their stores. They invest heavily in technology to track their goods through the supply chain, and ensure that deliveries are done on time. Why do they do this? In order to help support their mission to compete on cost. Yes, they bargain for the lowest prices, but they also seek to extract efficiencies from their supply chain, and want to do this better than their competitors. The opposite side of this are the luxury brands. They use distribution as a means of establishing prestige. An example of this would be someone like Hermes. You can literally buy a unique item from anywhere in the world, and they will FedEx that to you next day. If you’re in Hong Kong and the item you want is in Dubai, you’ll have it tomorrow. That is part of what you pay for with a brand like that – it establishes them as delivering a level of service that other companies simply refuse to match.

Other Knowledge
Ries and Trout (n.d.) discuss the role that failure plays in marketing. There will always be failures in marketing. The reality is that many companies are in a position where they don’t know all that much about the market they are trying to convince. This is especially true in a new product launch – even if you have a large testing budget and run focus groups and everything, you are still in a position where a failure can occur. Ries and Trout point out that many companies fall for the sunk cost fallacy – that ultimately they put good money after bad, chasing success when a product clearly isn’t working out. After so much investment, they are more likely just going to try to find success, and try a lot of different things. What does this mean for testing? Well, certainly some testing can reveal marketing that is more effective, such as A/B testing different slogans on your Facebook ads to see which one gets the most traction. But at the end of the day, part of success is admitting when something is a failure and then walking away at the right time, instead of lighting more money on fire.
Another critical piece of learning from Ries and Trout (n.d.) is that sacrifice is required for success. They explain that often you have to give something up – an idea, a product, a market – in order to succeed. It is almost impossible to be all things to all people, and it is futile to try. This is something fundamental in marketing – we don’t develop personas and target markets and psychographics in order to take a shotgun approach to marketing. We develop them in order to get it right. And that means correctly identifying the best opportunity in the market and then finding the best trade-offs that we need in order to execute.

Conclusions
There are a lot of takeaways from these works. One that jumps out is as much for its absence as anything else – place. The distribution function is not perfunctory; it can legitimately add value. Because of this, it should not be given such short shrift. Yes, promotion is sexy. It’s fun and creative and people see it in their living rooms every day. But it is important not to sleep on the other elements of the four Ps as well, because those have a lot of value, and can really help your company.
Each of the different elements of the marketing mix are critical, in order to ensure successful marketing. It is simply a matter of aligning the different elements, and as a consequence there is a need to focus on getting all of the different elements together. Definitely pay attention to the modern techniques, focused on things like the internet, and inbound marketing. So at the end of the day, the four Ps are a key element in the marketing mix, and there are a lot of different individual things to think about.



References

Rosen, E. (2006) The anatomy of buzz. The Marketing Gurus Penguin: New York

Schewe, C. & Haim, A. (1998) The Portable MBA in Marketing, 2nd Edition. John Wiley & Sons: New York.

Buchanan, R. & Gillies, C. (1990). Value managed relationships: The key to customer retention and profitability. European Management Journal. Vol. 8 (4) 523-526.

Rust, R. & Zahorik, A. (1993) Customer satisfaction, customer retention and market share. Journal of Retailing. Vol. 69 (2) 193-215.

Kawasaki, G. (2006). Drive the competition crazy. The Marketing Gurus. Penguin: New York.

Ries, A. & Trout, J. (no date). The 22 Immutable Laws of Marketing. In possession of the author.

Trout, J. & Rivkin, S. (2006) Differentiate or die. The Marketing Gurus. Penguin: New York.

Cialdini, R. (2009) Influence. Harper Collins: e-book.

Raphel, M & Raphel, N. (2006). Up the loyalty ladder. The Marketing Gurus. Penguin: New York.