11.5 Ongoing Marketing Planning and Evaluation

An Ongoing Process

As previously mentioned, a marketing plan should be regarded as a dynamic document that evolves over time; it should incorporate mechanisms that prompt a company to reassess its strategies in response to various scenarios.

These scenarios may unfold promptly. For instance, when a product is introduced to the market, it elicits reactions. Journalists start covering the launch, competitors react, and regulators may take notice. In such a situation, several questions arise: What actions should be taken if the product exceeds its sales targets by a significant margin? Should its pricing be adjusted upwards or downwards? Should subsequent offerings be introduced sooner? What if a competitor launches a similar product a week later? Or worse, what if the competition introduces a vastly superior product? The essence of a successful ongoing marketing strategy lies in two key elements: grasping causality and effectively executing the marketing plan. Each of these aspects will be elaborated upon in the subsequent discussion.

Causality

Causality denotes the relationship between two variables, where one variable directly influences the other. For a scientist conducting experiments in a laboratory, establishing causality is relatively straightforward since the causal variable can be controlled, and its effects can be observed. However, for marketers, achieving such control is more of an aspiration than a reality. Consequently, identifying causality poses a significant challenge.

Why is causality of paramount importance? Consider a scenario where a decline in sales is attributed to a competitor offering lower prices. If you respond by lowering your prices to match the competitor’s, without recognizing that the poor sales are actually a result of seasonal factors, consumers may perceive your product as inferior or cheap. This misconception could further exacerbate the decline in sales. Drawing erroneous conclusions about causality can lead to detrimental outcomes.

Control represents a closely related concept. In this context, control refers not to the extent of influence over an outcome but rather to the ability to isolate the impact of a variable on a particular outcome. For instance, you have full control over the pricing of your product, allowing you to manipulate this aspect. Conversely, you lack control over seasonal variations. Nonetheless, you can identify and factor in the influence of these seasonal fluctuations.

There are two types of control to consider. First, managerial control empowers you to dictate how variables within a marketing plan are implemented. For instance, you can decide the number of stores that will carry your product, and adjusting this number can impact sales. Second, statistical control enables you to mathematically eliminate the impact of a variable on an outcome. For example, you cannot control the seasonality effect. If your product targets babies and more babies are typically born in August compared to other months, sales may surge in September. Statistical control allows you to mitigate the impact of seasonal fluctuations on sales, thereby enabling you to ascertain the extent to which changes in sales are attributable to other factors, particularly those within your sphere of influence. While statistical control entails techniques learned in regression analysis, the numerical calculations involved can be simplified without necessitating complex equations.

Doing a simple analysis such as this at least gives you some idea that something new is going on that is lowering your sales. You can then explore the problem more completely.

So how do you figure out exactly what is the cause of such a decline? In some instances, marketing executives speculate about the potential causes of problems and then research them. For example, if the product’s price is perceived to be the problem, conversing with a number of former customers who switched to competing products could either verify this hunch or dispel it. In a B2B environment, salespeople who are aware of a competitor’s new lower prices might be the first to identify the problem, rather than marketing executives. Nonetheless, the firm’s marketing executives can then try to verify that lower prices led to the sales decline. In consumer-goods markets, there are often many segments of consumers. Rather than asking a few of them what they think, formal market research tools such as surveys and focus groups are used.

The Marketing Audit

Another investigative tool that can be used to research a drop in a company’s sales performance is a marketing audit. A marketing audit is an examination or snapshot of the state of a company’s marketing strategies as they are actually implemented. Here, managerial control becomes important. Was the strategy implemented as intended? Is the strategy working?

Fidelity is the degree to which the plan is being implemented as it is supposed to be. In the example of the Xerox workstation, there was substantial fidelity—the plan was being implemented right—but the plan was poor. Usually, though, the problem is that the plan is not executed properly.

More serious issues require more in-depth study. When Mark Hurd took over as Hewlett-Packard’s CEO in 2005, he ordered an immediate audit of HP’s sales and marketing activities. Metrics such as the win/loss ratios of business deals, the length of time it took to get a proposal approved and presented to a customer, and other factors exposed numerous problems Hurd needed to fix. The audit identified the causes, many of which Hurd and his team were able to deal with quickly. As a result, HP increased market share and captured the lead in the PC market in the first year following Hurd’s appointment.

What Factors Should a Marketing Audit Consider?

According to the marketing consulting company Copernicus, a marketing audit should assess many factors, but especially those listed below. Does any of the information surprise you?

You were probably surprised by a few items on the list. For example, did your marketing plan include a plan to market the marketing program to important internal parties, such as the company’s managers and employees? We discussed earlier that the marketing plan should persuade others to invest in the plan’s success. Part of that persuasion process could actually include a plan to communicate the plan! A marketing audit should assess the extent to which the plan was successful in achieving the goal of getting important people and departments within an organization to buy into the plan.

Do you think the “top ten” list above is prioritized correctly? Some people would argue that the first four or five factors that need to be examined are the most important. Other people would argue that only the financial factors (factors 7–10) matter. Which group is right?

The answer really depends on what’s important at the time to a company. Because HP hired Hurd to improve the company’s poor financial performance, financial issues were likely his top priority. He knew, however, that the causes of the poor financial performance probably lay elsewhere, so he had his team look deeper. Financial problems are usually the first to prompt a marketing audit.

Many firms don’t wait for problems before conducting an audit. Either they hire consultants like Copernicus Marketing Consulting to conduct the audit, or they do the audits themselves. If a firm’s budget doesn’t allow for a complete audit annually, the company will often focus on one particular area at a time, such as levels of satisfaction among its customers and channel partners. The following year, the company’s communications strategy might be audited. Rotating the focus ensures that every aspect is audited regularly, if not annually.

“16.5 Ongoing Marketing Planning and Evaluation” from Principles of Marketing by [Author removed at the request of original publisher] is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.—modifications: rewrote first six paragraphs; removed audio clips and review questions.