ENTREPRENEURIAL MARKETING STRATEGIES
As a result of recent
This is the entrepreneurial age. More than 500
million persons worldwide either were actively
involved in trying to start a new venture or were
owner-managers of a new business in 2010. More
than one thousand five hundred new businesses
are born every hour of every working day in the
United States. Entrepreneurs are driving a
revolution that is transforming and renewing
economies worldwide. Entrepreneurship is the
essence of free enterprise because the birth of new
businesses gives a market economy its vitality.
New and emerging businesses create a very large
proportion of the innovative products and services
that transform the way we work and live, such as
personal computers (PCs), computer software, the
Internet and the World Wide Web (WWW or Web),
biotechnology drugs, overnight package deliveries,
and big-box stores. They generate most new jobs;
from 1993 through the third quarter of 2008,
companies with 500 or fewer employees created
64% of all new jobs in the United States.
(Lesson 1)
PROCESS-BASED MANAGEMENT
Process-based management is a management
approach that views a business as a collection of
processes, managed to achieve a desired result.
The processes are managed and improved by
organization in purpose of achieving their vision,
mission and core value. A clear correlation between
processes and the vision supports the company to
plan strategies, build a business structure and use
sufficient resources that are required to achieve
success in the long run.
From a process perspective, an organization
regards its business as a system of vision-
achieving vertical processes rather than specific
activities and tasks of individual functions. The
system is not a method or tool for a particular
process, but a holistic approach to manage all the
processes in one organization. Therefore, to
manage processes effectively, the organization
must have an effective team network and full
knowledge of their vision.
The general management system focuses on
specific work-knowledge and direct solutions for
cost and budget; on the other hand, process based
management applies these financial measurements
but in an operational way considering how each
performance affects the company as an amalgam
of different processes.
advances in technology and increased international
competition, more companies aim for better
methods of grouping and integrating organizational
activities.
Academics and professionals have continuously
stressed the need for better interactions between
marketing and the various business functions.
However, most have argued that in order to truly
impact fi rm performance, such relationships must
go beyond short-term cross-functional teams
typically formed within organizations to conduct a
specific task or achieve a one-time common goal.
Indeed, the evidence suggests that both function-
specific and organization-wide goals are better
achieved if marketing takes a lead role in the
various business processes central to an
organization’s activities. What is needed is a more
permanent relationship and enduring philosophy
that would allow for the absorption of marketing
thoughts such as “customer first” into the everyday
planning and strategic goals of the various
functions within an organization. That is, firms need
to develop and foster an environment and
organizational structure based on integrated
marketing-based decision making or Process-
Based Marketing Management. Perspectives and
paradigms supporting the notion of bringing
marketing to the forefront of organizational
processes are discussed and particular reference is
given to the implications for function-specific and
organization-wide performance. This includes a
discussion of market orientation and the role of
interdepartmental dynamics in the achievement of
organizational goals. It is followed by a discussion
of the literature focusing on the degrees of interface
across functions and the corresponding systems
and structures prevalent in today’s organizations.
The third section of the chapter is devoted to the
relevant literature focusing on the interface of
marketing with Sales, R&D, Operations/Production,
Finance/Accounting, and Human Resources.
Emphasis is given to the challenges and attempts
to improve inter-functional dynamics. The chapter
concludes with a discussion of various tools
facilitating and improving organizational integration
including ERP systems, process-based matrix
structures, and outsourcing.
Three stages in process-based management
1. Documenting the process
To manage its business from a process based
perspective, an organization requires to understand
what defines the process and which activities they
consist of.
A business consists of different departments in
charge of specific jobs or functions. Therefore, the
processes support these managerial sectors and
transform successful outputs. Then a process team
performs a set of sequential tasks to analyze
whether the organization delivers useful outputs to
the customers.
Basically, processes are built by information that
indicates the current state of company and
research data such as customer satisfaction. The
information includes customer-based agreement,
management documentation, purchasing manuals
and flow charts. For instance, the flow chart is a
useful information in order to control the flow of
processes and list several steps and activities in
detail.
2. Analyzing process performance
Analyzed and clarified processes are allowed to
implement on the actual business. Then, an
organization monitors its business and improves
the overall stage of process.
To evaluate the sequence of process,
measurement is an essential element that shows
results of process performance with numerical and
comparative data. In other words, organizations
obtain a relevant analysis using the measurements
that can be shown as graphical representations
such as pie charts, bar charts, cause-and-effect
analysis, and gap analysis.
Many organizations highly depend on data and
visual analysis processed by information system.
For this reason, organization must obtain accurate
analysis based on exact data and must be cautious
for mistaken output that impacts whole process of
their business.
As a result, the measurements help the company to
analyze current state of performance and give
guidance for the firm’s sustainable improvements.
3. Implementing the improvements
Having designed the processes of management
system and analyzed the performances using
useful measurements, the final step is how to
improve the system and maintain its effectiveness.
Therefore, implementing the improvements is a key
activity to examine the processes and improve the
flow of the management system.
An organization determines which part of
processes must be improved and modified. It
analyses how each process influences a set of
activities and applies the improvements to some
parts of system. The purpose of implementation is
to operate its business strategically and to deliver
sufficient resources. In effect, the process based
management results in outputs that satisfy their
customers and develop the business itself.
Marketing orientation
There is no universally accepted definition for
“process-based marketing management” (PBM).
Indeed, previous and current marketing literature
rarely uses such a term at all. However, PBM can
be considered to be an organization-wide
philosophy and structure where the concept of
“satisfying consumer needs” permeates all aspects
of business processes and decision making is
based on strong and positive inter-functional
dynamics. However, this idea that customer needs
should be at the heart of all business planning
processes is certainly not a contemporary one and
has been clearly documented in the marketing
concept/market orientation literature. The origins of
modern marketing can be attributed to the earlier
work of the father of modern management, Peter
Drucker. Remarkably, the fact that Drucker did not
consider himself to be a marketer made him all the
more credible in highlighting the important role of
marketing in any organization. Marketing, according
to Drucker, is “a central dimension of the entire
business. It is the whole business seen from the
point of view of its final result, that is, from the
customer’s point of view. Concern and
responsibility for marketing must, therefore,
permeate all aspects of the enterprise”. That is,
marketing is more akin to an overall managerial
philosophy than a specialized functional activity.
Drucker would later argue that while the goal of
most organizations is to create profit, the ultimate
purpose of any business should be “to create a
highly satisfied customer”. Therefore, profit is only a
means to an end and the true measure of success
is the effectiveness and efficiency in creating the
output. But since the output is typically evaluated
by the customer, the organization should be geared
towards the customer. Only if the consumer finds
value in the output will the business prosper. It is
these assertions by Drucker that brought about the
modern marketing era and the emergence of the
so-called marketing concept as a tenet of
contemporary management and organizational
strategy. The marketing concept emphasizes
“knowing the customer” or “satisfying customer
needs and wants” and it is often defined as “the
idea that an organization should strive to satisfy the
needs of consumers while also trying to achieve the
organization’s goals”. On the other hand, marketing
orientation has been defined as a set of shared
values and beliefs about putting the customer first
in business planning (Despande & Webster, 1987).
However, while intuitively appealing, these
definitions provided few insights into how fi rms can
incorporate such thoughts into actual business
processes. It is easier said than done to aim the
entire organization towards satisfying customers.
Somewhat echoing the vague nature of marketing
jargon persistent in the late 1980s, asked a simple
but thought-provoking question – What the hell is
“market orientation”? In his seminal work, Shapiro
put forth for discussion “how exactly does a fi rm
implement the so-called marketing concept?”
Shapiro noted that in order for a fi rm to truly
implement the marketing concept and reach a state
of “market orientation,” fi rms must embrace three
complementary processes:
• Information on all important buying influences
permeates every corporate function;
• Strategic and tactical decisions are made inter-
functionally and inter-divisionally;
• Divisions and functions make well-coordinated
decisions and execute them with a sense of
commitment.
While Shapiro did not offer empirical data, his work
is significant because it provided one of the earliest
illustrations of the role of marketing as a pillar of
organizational strategy and that the positive
implications of increasing such a role are
contingent on a firm’s ability to create systems
Companion to the Future of Marketing. Process
based marketing management 65 that advocate
and require inter-functional relationships in terms of
information sharing and shared decision making.
Market-oriented firms create value and achieve
competitive advantages through inter-functional
synergy. In defining market orientation, the first and
probably most rigorous effort was Kohli & Jaworski
(1990), who defined market orientation as, “the
organization wide generation of market
intelligence pertaining to current and future
customer needs, dissemination of the
intelligence across departments, and
organization wide responsiveness to it.” This
definition echoes the assertion by Levitt (19 that an
organization’s path forward should be the result of
the marketing department’s ability to communicate
with and educate other functions and that a
marketer’s most important role may lie in “selling”
the marketing concept within the firm.
CUSTOMER FOCUSED MANAGEMENT
Customer-focused management is a concept that
goes far beyond just smiling, answering queries,
and communicating with buyers. It transcends
customer service training. Companies must change
their focus from products and processes to the
values they share with customers.
What does customer focus mean?
To properly understand what the concept ‘customer
focus’ refers to and what being customer focused
means, let’s first look at the broader picture and
how customer focus relates to and differs from
‘customer orientation’. At this point, some might ask
“Aren’t they the same thing?”. Well, not really,
they’re not. But, they are closely related. To
understand how they interrelate, a good place to
start is to define customer orientation (in the
context of selling and buying).
Customer orientation
When searching for a definition, nowadays many
people turn to a search engine for help. A quick
Google search results in the Business Dictionary
being awarded a top hit for defining customer
orientation. That definition is rather narrow, merely
focusing on actions. This is to some extent helpful
but does not quite solve the riddle, which is why a
somewhat more scientific approach is selected.
The seminal scientific study on sales vs. customer
orientation of salespeople in the Journal of
Marketing Research by Saxe and Weitz (1982),
customer-oriented selling refers to the degree to
which salespeople practice the marketing concept
by trying to help customers make purchase
decisions that will satisfy customer’s needs. In their
article, they present a scale that can be used to
determine the degree to which a salesperson is
sales oriented or customer oriented, the SOCO
scale. Being sales oriented refers to focusing on
the salesperson’s and selling firm’s interest,
whereas being customer oriented refers to focusing
on the customer. A highly customer-oriented
salespeople engage in behaviors aimed at
increasing customer long-term satisfaction.
Moreover, as pointed out, adopting a customer-
oriented way of working involves avoiding actions
that sacrifice customer interest and satisfaction to
increase the likelihood of making an immediate
sale.
For an organization or salesperson to be truly
customer oriented, this involves a customer
oriented behavior and mindset. In the context of
sales adaptation, it refers to this as double-loop
sales adaptation. A Conceptual Model and an
Empirical Investigation published in the Journal of
Business-to-Business Marketing.
Customer focus
With the above introduction, customer orientation
can be understood as an approach, as a mindset
that puts the customer and his/her interest first.
Although customer focus is closely related to that,
customer focus can be understood as forming the
strategy for customer orientation for the
salesperson or organization. Customer orientation
is – or seems to be – on a higher level of
abstraction than customer focus. This is not always
prevalent or even included in definitions for
example found through a simple Google search
(see, for example, customer focus by the Business
Dictionary). In the context of sales and the
interaction between the seller and buyer, being
customer focused refers to the seller taking the
viewpoint of the customer. This means putting
oneself in the shoes of the customer and viewing
things from the buyer’s or customer’s perspective.
This entails feeling what the customer is feeling,
thinking of what the customer is dreaming of and
what is aspiring to achieve or become. In brief, it
means putting the customer in the driving seat and
focusing on the customer’s needs, wishes,
aspirations and dreams – as opposed to focusing
on oneself and the business.
Why is it advisable to be customer focused?
As we have defined, discussed and clarified the
concepts customer orientation and customer focus,
it probably makes sense to elaborate on why it
makes sense to be customer focused. Putting in
the customers’ situations and viewing things from
their perspective is important because it helps
better understand the customer and what is likely to
form the right solution. It helps to take away some
of the guesswork and puts the seller on the same
page with the buyer/customer.
Being customer focused puts in a better position to
help the customers, in an honest way. The
customer will sense and see that one is making an
extra effort to understand the situation at which
they are and to really understand them to be better
able to help them get where they want to be.
Focusing on the customer usually makes it more
appealing for customers to work with, it creates
mutual engagement. A problem that the customer
first thought they are facing suddenly becomes a
mutual project between the entrepreneur and
customer. Also, the goal becomes a mutual goal
that both the customer are aiming at. For example,
perhaps the customer wants to be awarded a
contract with their customer, but they are missing
something that their competitor has. Once the focus
on the customer and understand their situation, it is
in a better position to help them. Their
challenge/problem becomes the entrepreneur and
customer’s mutual problem. Their challenge to
become awarded that contract becomes the mutual
goal.
As a result of being customer focused, it will not
only feel good about both are doing and are
working, but it is also likely to sleep better (knowing
that the customer are not being taking advantage),
and – maybe most importantly, at least from a sales
perspective – it will probably be more successful
than compare to the competitors. In fact, it is not
unlikely that the “tide will turn” and that you are
more frequently than before contacted by
customers who want your help, as opposed to you
having to chase them to offer your support. The
power of word-of-mouth should not be
underestimated.
How to become customer focused?
As pointed out in the double-loop sales adaptation,
also being customer focused can be understood as
occurring on two levels: behavior and mindset.
These two are interconnected. Hence, one needs
to work at both levels.
Customer-oriented mindset
First, it needs to switch on the mindset of focusing
on the customer. This involves letting go of
personal priorities – and ego. Let go of focusing on
one’s needs and wants, and focus on those on the
customer. A question should be asked in oneself:
How someone can help customer?
Train and practice customer focus skills in reverse:
when being in a situation where the customer, work
on ones senses and reflection. Ask how the seller
or service provider makes feel better.
Customer-oriented behavior
When it comes to improving customer-focused
behavior, also there it can be worked in reverse.
When you are the customer, reflect on what the
seller or service provider does that causes you to
feel the way you do. How do they behave, what do
they do, and how do they do it? Analyze what they
could do better, how they could improve their
performance? Consider what you would do in their
situation that could increase the level of
satisfaction, appreciation, and happiness that you
are experiencing. Train yourself in customer focus
skills by making the most of service encounters in
daily situations, no matter how small or big they
might be.
Combining mindset and behavior
When you are selling to or serving a customer,
focus on both your mindset and behavior. Ask
yourself if your mindset is tuned to primarily help
your customer and if you are acting in the best
interest of your customer. Be honest, be sincere. If
not, customers will sense your dishonesty and
insincerity, and you will not sleep well (I hope).
Keep your focus on your customer and act in the
best interest of your customer.
When done right, focusing on your customers can
help change a company from an ordinary company
to a great one. In fact, as a result of transforming
their approach and strategy to become highly
customer focused, the biggest challenge a Swedish
company, Upplands Motor which I have covered
before, that it was coping to serve all new
customers that chose to switch to them. That
shows how powerful an approach customer
orientation can be and what the strategy of
customer focus can result in when properly
implemented. To me, that validates the points that
I’m making in this post.
Hope this clarifies what customer focus is and, why
being customer focused matters, and how to
practice becoming more customer focused.
ENVIRONMENTAL SCANNING
What is Environmental scanning?
Environmental scanning - is the process of
gathering information about events and their
relationships within an organization's internal and
external environments. The basic purpose of
environmental scanning is to help management
determine the future direction of the organization.
Organizational environment consists of both
external and internal factors. Environment must be
scanned so as to determine development and
forecasts of factors that will influence organizational
success. Environmental scanning refers to
possession and utilization of information about
occasions, patterns, trends, and relationships within
an organization’s internal and external
environment. It helps the managers to decide the
future path of the organization. Scanning must
identify the threats and opportunities existing in the
environment. While strategy formulation, an
organization must take advantage of the
opportunities and minimize the threats. A threat for
one organization may be an opportunity for
another.
Internal analysis of the environment is the first step
of environment scanning. Organizations should
observe the internal organizational environment.
This includes employee interaction with other
employees, employee interaction with
management, manager interaction with other
managers, and management interaction with
shareholders, access to natural resources, brand
awareness, organizational structure, main staff,
operational potential, etc. Also, discussions,
interviews, and surveys can be used to assess the
internal environment. Analysis identifying strengths
and of internal environment helps in weaknesses of
an organization.
As business becomes more competitive, and there
are rapid changes in the external environment,
information from external environment adds crucial
elements to the effectiveness of long-term plans.
As environment is dynamic, it becomes essential to
identify competitors’ moves and actions.
Organizations have also to update the core
competencies and internal environment as per
external environment. Environmental factors are
infinite, hence, organization should be agile and
vigile to accept and adjust to the environmental
changes. For instance - Monitoring might indicate
that an original forecast of the prices of the raw
materials that are involved in the product are no
more credible, which could imply the requirement
for more focused scanning, forecasting and
analysis to create a more trustworthy prediction
about the input costs. In a similar manner, there
can be changes in factors such as competitor’s
activities, technology, market tastes and
preferences.
While in external analysis, three correlated
environment should be studied and analyzed
• immediate / industry environment
• national environment
• broader socio-economic environment / macro-
environment
Examining the industry environment needs an
appraisal of the competitive structure of the
organization’s industry, including the competitive
position of a particular organization and its main
rivals. Also, an assessment of the nature, stage,
dynamics and history of the industry is essential. It
also implies evaluating the effect of globalization on
competition within the industry. Analyzing the
national environment needs an appraisal of
whether the national framework helps in achieving
competitive advantage in the globalized
environment. Analysis of macro-environment
includes exploring macro-economic, social,
government, legal, technological and international
factors that may influence the environment. The
analysis of organization’s external environment
reveals opportunities and threats for an
organization.
Strategic managers must not only recognize the
present state of the environment and their industry
but also be able to predict its future positions.
IMPORTANT FACTORS FOR ENVIRONMENTAL
SCANNING
Before scanning the environment, an organization
must take the following into consideration:
• Events – These are specific occurrences which
take place in different environmental sectors of a
business. These are important for the functioning
and/or success of the business. Events can occur
either in the internal or the external environment.
Organizations can observe and track them.
• Trends – As the name suggests, trends are
general courses of action or tendencies along
which the events occur. They are groups of similar
or related events which tend to move in a specific
direction. Further, trends can be positive or
negative. By observing trends, an organization can
identify any change in the strength or frequency of
the events suggesting a change in the respective
area.
• Issues – In wake of the events and trends, some
concerns can arise. These are Issues.
Organizations try to identify emerging issues so
that they can take corrective measures to nip them
in the bud. However, identifying emerging issues is
a difficult task. Usually, emerging issues start with a
shift in values or change in which the concern is
viewed.
• Expectations – Some interested groups have
demands based on their concern for issues. These
demands are Expectations.
(Lesson 2)
DEMAND MANAGEMENT (Market and
Technology Forecasting)
Demand management is a planning methodology
used to forecast, plan for and manage the demand
for products and services. Demand management
has a defined set of processes, capabilities and
recommended behaviors for companies that
produce goods and services.
The purpose, objectives, scope, activities, key
concepts, triggers, inputs & outputs, challenges,
risks, the critical success factor (CSF) and key
performance indicators (KPI) of Demand
Management process.
Demand Management and service lifecycle
Demand management is a critical aspect of service
management. Poorly managed demand is a source
of risk for service providers while Excess capacity
generates cost without creating value that provides
a basis for cost recovery. Service production
cannot happen without the concurrent presence of
demand that consumes the output. It is a pull
system in which consumption cycle stimulates
production cycle. Demand pulls capacity. Demand
cannot exist simply because capacity exits Demand
management through lifecycle:
• Forecast demand and communicate to design &
Support Supplier Performance Management (SPM)
• Confirm service assets are designed to meet
capacity & availability requirements
• Testing & validating services for forecast
utilization & the Patterns of Business Activity (PBA)
• Technical, application & operations management
functions will monitor services to ensure demand is
within normal levels
• Identify trends in PBA and to initiate changes in
capabilities of provider/customers In the next slide
let us understand the purpose and objective of
Demand Management.
Purpose and Objectives of Demand
Management
The purpose of demand management is to
understand, anticipate and influence customer
demand for services and to work with capacity
management to ensure the service provider has
capacity to meet this demand. Demand
management works at every stage of the lifecycle
to ensure that services are designed, tested and
delivered to support the achievement of business
outcomes at the appropriate levels of activity. This
is where the service provider has the opportunity to
understand the customer needs and feed these into
the service strategies to realize the service
potential of the customer and to differentiate the
services to the customers. The objectives of
demand management are to:
• Identify and analyze patterns of business activity
to understand the levels of demand that will be
placed on a service
• Define and analyze user profiles to understand
the typical profiles of demand for services from
different types of user
• Ensure that services are designed to meet the
patterns of business activity and the ability to meet
business outcomes
• Work with capacity management to ensure that
adequate resources are available at the appropriate
levels of capacity to meet the demand for services,
thus maintaining a balance between the cost of
service and the value that it achieves
• Anticipate and prevent or manage situations
where demand for a service exceeds the capacity
to deliver it
• Gear the utilization of resources that deliver
services to meet the fluctuating levels of demand
for those services. In the next slide we will look at
the scope of Demand management.
Scope of Demand Management
The scope of the demand management process is
to identify and analyze the patterns of business
activity that initiate demand for services, and to
identify and analyze how different types of users
influence the demand for services. Demand
management activities should include:
• Identifying and analyzing patterns of business
activity associated with services
• Identifying user profiles and analyzing their
service usage patterns
• Identifying, agreeing and implementing measures
to influence demand together with capacity
management.
This is sometimes called the ‘management of
demand’. This could be in situations where service
demand exceeds capacity, and where capacity
increases are not feasible (e.g. differential
charging, incentives, penalties). It could also be in
situations where a new service has been launched
and IT wishes to encourage users to use it more.
Also, it could be used to reduce demand in peak
utilization times and shift it to less active times –
thus more efficiently balancing overall utilization
levels. Demand management is active in every
stage of the service lifecycle, and works closely
with several other processes. One of the closest of
these is capacity management. It is important to
note the difference in scope between these two
processes. At first glance the scopes of capacity
and demand management seem to overlap, and it
might appear that demand management is just one
aspect of capacity management. However, this is
an oversimplification of both processes. Both are
concerned with achieving the same business
outcomes, and both are concerned with optimizing
investment, but the processes themselves are
different. To generalize, demand management
focuses primarily on the business and user aspects
of providing services, whereas capacity
management focuses primarily on the resourcing
and technology aspects. Like any other process,
let’s see how demand management adds value to
business in the next slide.
Value to the Business
The main value of demand management is to
achieve a balance between the cost of a service
and the value of the business outcomes it supports.
The other service strategy processes define the
linkage between (and the investment required for)
business outcomes, services, resources and
capabilities. Demand management refines the
understanding of how, when and to what level
these elements interact. This enables executives to
evaluate the real investment required to achieve
business outcomes at varying levels of activity.
Moving ahead, let us learn about the challenges in
managing service demand.
4 Basic Concepts
1. From a strategic perspective, demand
management is about matching supply to
 demand. Consumption produces demand
and production consumes demand in a
highly synchronized pattern as mentioned
in the figure. Unlike goods, services cannot
be manufactured in advance and stocked
in a finished goods inventory in anticipation
of demand. Demand and capacity are far
more tightly coupled in service systems
even when compared with just-in-time (JIT)
manufacturing.
2. In the Figure, customer assets present a
pattern of demand to the service provider.
Each time a user consumes a service
demand is presented to the service
provider, and this consumes capacity of
the service assets. This, in turn, results in
the service being supplied to meet the
consumer’s demand. The greater the
consumption of the service, the higher the
demand, the higher the consumption of
capacity, and the more of the service is
supplied. This cycle of demand and supply
will only function effectively while the
service assets have available capacity. As
soon as capacity is no longer available, the
service provider will not be able to supply
enough of the services to satisfy customer
demand. For this reason, a major part of
demand management is to understand the
potential demand, and the impact of the
demand on the service assets. This allows
capacity management to manage service
assets (and investments) towards optimal
performance and cost. The productive
capacity of resources available to a service
is adjusted according to demand forecasts
and patterns. Some types of capacity can
be quickly increased as required and
released when not in use. The arrival of
demand can be influenced using pricing
incentives. However, it is not possible to
produce and stock service output before
demand actually materializes.
3. Gearing service assets, The balance of
supply and demand is achieved by gearing
the service assets to meet the dynamic
patterns of demand on services. This is not
just a case of responding to demand as it
presents itself, but it involves anticipating
the demand, identifying the signals of
increasing or decreasing demand and
defining a mechanism to scale investment
and supply as required. Managing service
assets according to demand involves a
number of service management actions,
including the following:
• Identifying the services (through service
portfolio management)
• Quantifying the patterns of business
activity
• Specifying the appropriate architecture to
deal with the type and quantity of demand
(for example, deciding on dedicated versus
virtualized processing environment) •
Capacity and availability planning to
ensure that the right service assets are
available at the right time and are
performing at the right levels
• Performance management and tuning
service assets to deal with variations in
demand.
4. Demand management through the lifecycle
to be fully effective, demand management
needs to be active throughout the service
lifecycle. It might be tempting to assume
that processes that are active in each
stage of the lifecycle will address demand
issues. However, if demand management
is not consciously coordinated and
managed, this will only tend to happen on
an ad hoc, reactive basis. The activities of
demand management in each stage of the
lifecycle will include:
• Service strategy Identify the services and
outcomes, and the patterns of business
activity that are generated by achieving
these outcomes. Forecast demand based
on service utilization scenarios and
communicates to design teams. Support
service portfolio management by
estimating activity levels to achieve specific
outcomes.
• Service design Confirm customer
requirements regarding availability and
performance, and validate that the service
assets are designed to meet those
requirements. In this stage the primary
process interfaces are capacity
management and availability management,
although demand management will also
contribute to sizing of service continuity
options.
• Service transition Demand management
is involved in testing and validating
services for forecast utilization and
patterns of business activity. The ability to
influence and manage demand for a
service should also be tested.
 • Service operation Technical, application
and operations management functions will
monitor service assets and service
utilization levels to ensure that demand is
within normal levels and, if not, will initiate
performance tuning or corrective action.
• Continual service improvement Demand
management will work to identify trends in
patterns of business activity and to initiate
changes to the capabilities of the service
provider, or changes to the behavior of
customers where appropriate.
Challenges in Managing Service Demand
Here are Challenges encountered in Managing
Service Demand
• Source of Risk
• Poorly managed demand because of uncertainty
of demand
• Excess capacity generates cost without creating
value
• Customers are reluctant to pay for idle capacity
unless it has value for them
• Certain amount of unused capacity is necessary
to deliver service levels
• Insufficient capacity impacts quality of services
delivered and limits the growth of the service
• Techniques such as off-peak pricing, volume
discounts etc can influence demand.
Management of Operation Demand
Management of Operational Demand One of the
activities of demand management during service
operation is to manage or influence the demand
where services or resources are being over utilized.
Typically, this would occur in the following
situations:
• The patterns of business activity were inaccurate,
resulting in over- or underutilization of the service.
Demand management could assist by providing
penalties or incentives for users to reduce service
usage, to use it at off-peak periods or (where the
service is being under-utilized) to increase
utilization. An example of a measure to influence
demand is differential charging, where customers
are billed higher rates for using the service during
peak times. This is normally done in conjunction
with capacity management, service level
management and financial management for IT
services.
• The business environment changed, resulting in a
change to the pattern of business activity. This
should be dealt with in conjunction with service
level management and capacity management to
understand the new utilization patterns, and to gear
the resources and capabilities of the service
provider appropriately. The new service
requirements should also be reflected in the service
portfolio.
• The service provider’s forecast for resources was
inaccurate, and there is insufficient budget to
increase capacity. It is important to note that
demand management does not work in isolation
when influencing demand. This is a complex
situation involving changes to services, the service
provider’s ability to meet customer demand and the
achievement of business outcomes. As a result,
demand management always works in conjunction
with capacity management, service level
management, service portfolio management and
financial management for IT services.
Activities
The Activities of demand management is; To
identify Patterns of business activity (PBA), coded
and shared across process for clarity and
completeness of detail. One or more attributes such
as frequency, volume, location and duration
describe business activity. They are associated
with requirements such as security, privacy and
latency or tolerance for delays User profiles (UP)
are based on roles and responsibilities within
organizations for people, and functions and
operations for processes and applications. As
suggested earlier, business processes and
applications are treated as users in many business
contexts. Let us understand demand and capacity
in the next slide.
Activity based Demand Management
Business processes are the primary source of
demand for services. Patterns of business activity
(PBA) influence the demand patterns seen by the
service providers. It is very important to study the
customer’s business to identify, analyze and
classify such patterns to provide sufficient basis for
capacity management. Visualize the customer’s
business activity and plans in terms of the demand
for supporting services. For example, the fulfillment
of a purchase order (business activity) may result in
a set of requests (demand) generated by the order-
to-cash process (business process of customer).
Analyzing and tracking the activity patterns of the
business process makes it possible to predict
demand patterns for services in the catalogue that
support the process. It is also possible to predict
demand for underlying service assets that support
those services. Every additional unit of demand
generated by business activity is allocated to a unit
of service capacity. Demand patterns occur at
multiple levels. Activity-based demand
management can daisy-chain demand patterns to
ensure that the business plans of customers are
synchronized with the service management plans
of the service provider. Let us understand this
better with a help of a diagram in the next slide.
Activity based Demand Management
For example, in the figure of activity-based demand
management, if a business plan calls for the
allocation of human resources, the addition of an
employee can be translated into additional demand
for the service desk function in terms of service
requests and service incidents. Similarly, new
instances of business processes can be used as
predictors of demand for the service demand in
terms of incidents and requests. After validating the
activity or demand model it is possible to make
adjustments to account for variations such as new
employees, changes to business processes and
technology upgrades on the customer’s side. Some
of the benefits for analyzing PBA are in the form of
inputs to service management functions and
processes such as the following:
• Service design can optimize designs to suit
demand patterns.
• Capacity management translates the PBA into
workload profiles so that the appropriate resources
can be made available to support the levels of
service utilization.
• Service catalogue can map demand patterns to
appropriate services.
• Service portfolio management can approve
investments in additional capacity, new services or
changes to services.
• Service operation can adjust allocation of
resources and scheduling.
• Service operation can identify opportunities to
consolidate demand by grouping closely matching
demand patterns.
• Financial management for IT services can
approve suitable incentives to influence demand. In
the next slide we will look at the benefits of
analyzing patterns of business activity in the next
slide.
Benefits for analyzing PBA
PBA can benefit a company in many ways. Some
of the benefits with the implementation of PBA are:
• Service Design can optimize designs to suit
demand patterns
• Service catalogue can map demand patterns to
appropriate services
• Service portfolio management can approve
investments in additional capacity, new services, or
changes to services
• Service Operation can adjust allocation of
resources and scheduling
• Service Operation can identify opportunities to
consolidate demand by grouping closely matching
demand patterns
• Financial Management can approve suitable
incentives to influence demand Let us now proceed
to understand coding patterns of business activity.
Codifying of PBAs
Coding patterns helps in:
• Multidimensional Analysis.
• criteria such as likeness and nearness.
• Develops a simple and standard catalogue of
patterns
• Reduces the number of patterns, make analysis
easier, and avoid complicated solutions In the next
slide let us understand User profiles.
User Profile
User profiles (UPs) are based on roles and
responsibilities within organizations. As suggested
earlier, business processes and applications are
treated as users in many business contexts. Many
processes are not actively executed or controlled
by staff or personnel. Process automation allows
for processes to consume services on their own.
Processes and applications can have user profiles.
Each UP can be associated with one or more PBA,
as shown in the Table. This allows aggregations
and relations between diverse PBAs connected by
the interactions between their respective UPs. User
profiles are constructed using one or more
predefined PBA. They are also under change
control. UPs represent patterns that are persistent
and correlated. Therefore, lets understand PBAs
and user profile relation in the next slide.
PBA and User Profile
PBA and User Profile relation ensures that:
• Pattern matching using PBA and UP ensure a
systematic approach to understanding and
managing demand from customers.
• Customers better understand their own business
activities and view them as consumers of services
and producers of demand.
• Service providers have the information necessary
to sort and serve the demand with appropriately
matched services, service levels, and service
assets.
• This leads to improved value for both customers
and service providers by eliminating waste and
poor performance. Moving on, in the next slide let’s
understand the differentiated offerings.
Differentiated Offerings
When analyzing the PBA, it may become apparent
that different levels of performances are required at
different times, or different combinations of utility. In
these cases, it is important to work with service
portfolio management to define service packages
that meet the variations in PBA. For example, a
company that produces seasonal goods may vary
its sales process during periods of peak demand.
During quieter times, sales staff may complete the
entire order process (log the sale, check for
inventory, initiate shipping and bill the customer),
thus using all the utility of the service each time an
order is placed. During periods of peak activity, the
sales people may only log the sale and check for
inventory, passing the order to temporary staff for
shipping and billing, and then moving to the next
order. In this case there might be two differentiated
offerings to reflect the two PBA.
Triggers Inputs and Outputs
Now let us discuss about the Triggers, inputs and
outputs of demand management. Firstly, the
triggers are:
• A request from a customer for a new service, or
change to an existing service. This will be initiated
through business relationship management and
service portfolio management.
• A new service is being created to meet a strategic
initiative – this will be initiated through service
portfolio management.
• A service model needs to be defined, and
patterns of business activity and/or user profiles
must be defined.
• Utilization rates are causing potential performance
issues, or a potential breach of service level
agreement (SLA).
• An exception has occurred to forecast patterns of
business activity. Inputs to demand management
include:
 Initiative to create a new service, or to
change an existing service. These inputs
can come from service portfolio
management or from change management.
 Service models need to be validated and
patterns of business activity associated with
each service model will need to be defined.
 The customer portfolio, service portfolio and
customer agreement portfolio, all of which
will contain information about demand and
supply for services.
 Charging models will be assessed to ensure
that under- or over-recovery does not occur
in internal service providers; or that pricing
will be profitable for external service
providers.
 Chargeable items will need to be validated
to ensure that customers actually perceive
them and use them as defined.
 Service improvement opportunities and
plans will need to be assessed in terms of
their impact on demand. Let us understand
the outputs in the next slide.
Outputs
Outputs of demand management include:
• User profiles
• Patterns of business activity will be formally
documented and included in the service and
customer portfolios
• Policies for management of demand when
resources are over-utilized
• Policies for how to deal with situations where
service utilization is higher or lower than anticipated
by the customer
• Documentation of options for differentiated
offerings that can be used to create service
packages. In the next slide we will discuss about
the interfaces of Demand management.
Interfaces
Major interfaces with demand management include:
• Strategy management for IT services will identify
the key business outcomes and business activities
that will be used to establish patterns of business
activity and user profiles.
• Service portfolio management uses information
from demand management to create and evaluate
service models, to establish and forecast utilization
requirements and to identify the different types of
user of the service. In addition, SPM will be able to
develop service packages based on the information
about patterns of business activity and user
profiles.
• Financial management for IT services will help to
forecast the cost of providing the demand based on
forecast patterns of business activity. In addition, it
will work with demand management to identify
measures to regulate demand when there is over-
utilization of the service (e.g. through differential
charging). Financial management for IT services
will also identify the relative costs of each
differentiated offering.
• Business relationship management is the primary
source of information about the business activities
of the customer. Business relationship
management will also be useful in validating the
user profiles and differentiated service offerings
before they are confirmed in the customer and
service portfolios. Service level management will
help to formalize agreements in which the customer
commits to levels of utilization, and the service
provider commits to levels of performance. Actual
levels of performance and utilization will be
reviewed at the regular service level review
meetings (using information from demand
management and capacity management) and any
deviations noted. Demand management will work
with service level management to define policies for
how to deal with variances in supply and demand.
• Capacity management will work closely with
demand management to define exactly how to
match supply and demand in the design and
operation of the service. Capacity management will
monitor the actual utilization of service and work
with demand management to understand trends of
utilization and how to adjust the services for future
use.
• Availability management uses information about
patterns of business activity to determine when
service availability is most important. This
information is also helpful for performing service
outage analysis and project service availability
reporting.
• IT service continuity management will use
demand management information to perform
business impact analysis. It will be able to
determine which workloads are impacted, and what
volume of work is impacted by major outages at
different times. Demand management information
is also helpful in sizing recovery options to be able
to deal with the minimum levels of business activity
to ensure business continuity.
• Change management will work with demand
management and capacity management to assess
the impact of changes on how the business uses
services. This is helpful in confirming the impact of
the change and also in evaluating the true cost of
changing the service (a ‘simple’ change may push
demand over a threshold where significant
additional investment is required).
• Service asset and configuration management will
identify the relationship between the demand
placed on services and the demand placed on
systems and devices. This is an essential link in
ensuring that operational teams are able to execute
what was anticipated during strategy and design.
• Service validation and testing will ensure that the
service has correctly dealt with patterns of demand,
and that measures taken to prevent over-utilization
are effective.
• Event management, if instrumented correctly, can
provide information about actual patterns of service
utilization and validate the anticipated patterns of
business activity for a service. Any deviation can be
assessed and adjustments made to the service
through service portfolio management. In the next
slide, we will look at the information management of
demand management process.
Information Management
The documentation and information required for
effective demand management have been
described earlier, but an overview of the main
sources is as follows:
• The service portfolio
• The customer portfolio to obtain information about
customers and the opportunities that they represent
• The project portfolio to ensure that all projects
have included demand management as a
component
• Minutes of meetings between business
relationship managers and customers
• Service level agreements are used to set a
baseline for previous demand levels, and to define
limits and policies for future utilization The
configuration management system to map service
assets, customer assets and business outcomes.
Let us now proceed to learn about the CSFs and
KPIs of Demand management.
Critical Success Factors
The Next two slides provides examples of critical
success factors (CSFs). These are the conditions
that need to be in place, or things that need to
happen, if the demand management process is to
be considered successful. Each CSF will include
examples of key performance indicators (KPIs).
These are metrics that are used to evaluate factors
that are crucial to the success of the process. KPIs,
as differentiated from general metrics, should be
related to CSFs. The following list includes some
sample CSFs for demand management. Each
organization should identify appropriate CSFs
based on its objectives for the process. Each
sample CSF is followed by a small number of
typical KPIs that support the CSF. These KPIs
should not be adopted without careful
consideration. Each organization should develop
KPIs that are appropriate for its level of maturity, its
CSFs and its particular circumstances.
Achievement against KPIs should be monitored
and used to identify opportunities for improvement,
which should be logged in the CSI register for
evaluation and possible implementation.
• CSF The service provider has identified and
analyzed the patterns of business activity and is
able to use these to understand the levels of
demand that will be placed on a service.
• KPI Patterns of business activity are defined for
each relevant service.
• KPI Patterns of business activity have been
translated into workload information by capacity
management. Next CSF: The service provider has
defined and analyzed user profiles and is able to
use these to understand the typical profiles of
demand for services from different types of user.
• KPI Documented user profiles exist and each
contains a demand profile for the services used by
that type of user.
Key Performance Indicators
Next CSF as A process exists whereby services
are designed to meet the patterns of business
activity and meet business outcomes.
• KPI Demand management activities are routinely
included as part of defining the service portfolio.
Let’s take one more CSF which states that There is
a means to manage situations where demand for a
service exceeds the capacity to deliver it.
• KPI Techniques to manage demand have been
documented in capacity plans and, where
appropriate, in service level agreements.
• KPI Differential charging (as an example of one
such technique) has resulted in a more even
demand on the service over time. Now let us look
into the challenges of demand management.
Challenges
Challenges for demand management include:
• The availability of information about business
activities – especially if demand management is not
included in the overall set of requirements and has
to be collected separately. Customers have a
limited tolerance for how many people gather
information about their service requirements.
• Customers might find it difficult to break down
individual activities that make sense to the service
provider. Business relationship management
should be able to assist in making this translation.
• Lack of formal service portfolio management
process or service portfolio. This will make it
difficult to understand the business requirements,
relative value and priority of services, and will mean
that demand management information might be
recorded on an ad hoc basis, often with little
coordination and duplicate effort. In the next slide
we will look at the risks of demand management.
Risks
Demand management risks include:
• Lack of, or inaccurate, configuration management
information, which makes it difficult to estimate the
impact of changing demand on the service
provider’s infrastructure and applications.
• Service level management is not able to obtain
commitments to minimum or maximum utilization
levels, and it is therefore difficult to commit to levels
of service. This situation often results in higher than
necessary levels of investment to enable the
service provider to keep ahead of demand – even
when not essential. With this we come to the end of
learning 6, let us recap in the next slide.
Demand Management Summary
In this learning unit we looked at the purpose,
objectives, scope and value to business of demand
management. We also discussed about the
concepts of PBA & UP, challenges in managing
demand, triggers, inputs, outputs, interface, CSFs
& KPIs, challenges and risks of demand
management.
(Lesson 3)
STRATEGIC CORPORATE KNOWLEDGE
Marketing Defined
What is marketing? Many people think of marketing
as only selling and advertising. We are bombarded
every day with TV commercials, catalogs, sales
calls, and e-mail pitches. However, selling and
advertising are only the tip of the marketing
iceberg.
Today, marketing must be understood not in the old
sense of making a sale—“telling and selling”—but
in the new sense of satisfying customer needs. If
the marketer understands consumer needs;
develops products that provide superior customer
value; and prices, dis- tributes, and promotes them
effectively, these products will sell easily. In fact,
according to management guru Peter Drucker, “The
aim of marketing is to make selling unnecessary.”
Selling and advertising are only part of a larger
“marketing mix”—a set of marketing tools that work
together to satisfy customer needs and build
customer relationships.
Broadly defined, marketing is a social and
managerial process by which individuals and
organizations obtain what they need and want
through creating and exchanging value with others.
In a narrower business context, marketing involves
building profitable, value- laden exchange
relationships with customers. Hence, we define
marketing as the process by which companies
create value for customers and build strong
customer relationships in order to capture value
from customers in return.
The company should analyze its markets and
marketing environment to find attractive
opportunities and identify environmental threats. It
should analyze company strengths and
weaknesses as well as current and possible
marketing actions to determine which opportunities
it can best pursue. The goal is to match the
company’s strengths to attractive opportunities in
the environment, while eliminating or overcoming
the weaknesses and minimizing the threats.
Marketing analysis provides inputs to each of the
other marketing management functions.
Through strategic planning, the company decides
what it wants to do with each business unit.
Marketing planning involves choosing marketing
strategies that will help the company attain its
overall strategic objectives. A detailed marketing
plan is needed for each business, product, or
brand. What does a marketing plan look like? Our
discussion focuses on product or brand marketing
plans.
The Company
In designing marketing plans, marketing
management takes other company groups into
account— groups such as top management,
finance, research and development (R&D),
purchasing, operations, and accounting. All of these
interrelated groups form the internal environment.
Top management sets the company’s mission,
objectives, broad strategies, and policies.
Marketing managers make decisions within the
strategies and plans made by top management.
As we discussed in Chapter 2, marketing managers
must work closely with other company
departments. Other departments have an impact on
the marketing department’s plans and actions. And,
under the marketing concept, all of these functions
must “think consumer.” According to a former Xerox
CEO, to provide a great customer experience,
Xerox must “find out what customers are facing—
what their problems and opportunities are.
Everyone at Xerox shares this responsibility. That
includes people and departments that have not
always been customer facing, like finance, legal,
and human resources.”
Suppliers
Suppliers form an important link in the company’s
overall customer value delivery net- work. They
provide the resources needed by the company to
produce its goods and services. Supplier problems
can seriously affect marketing. Marketing managers
must watch supply availability and costs. Supply
shortages or delays, labor strikes, and other events
can cost sales in the short run and damage
customer satisfaction in the long run. Rising supply
costs may force price increases that can harm the
company’s sales volume.
Most marketers today treat their suppliers as
partners in creating and delivering customer value.
For example, Toyota knows the importance of
building close relationships with its sup- pliers. In
fact, it even includes the phrase achieve supplier
satisfaction in its mission statement.
Toyota’s competitors often alienate suppliers
through self-serving, heavy-handed dealings.
According to one supplier, U.S. automakers “set
annual cost-reduction targets [for the parts they
buy]. To realize those targets, they’ll do anything.
[They’ve unleashed] a reign of terror, and it gets
worse every year.” By contrast, rather than bullying
suppliers, Toyota partners with them and helps
them meet its very high expectations. Toyota learns
about their businesses, conducts joint improvement
activities, helps train sup- plier employees, gives
daily performance feedback, and actively seeks out
supplier concerns. It even recognizes top
performers with annual performance awards. High
supplier satisfaction means that Toyota can rely on
suppliers to help it improve its own quality, reduce
costs, and quickly develop new products. Even
after the recent massive recall following
unanticipated acceleration problems with some
Toyota models, the company didn’t point blame at
the accelerator part supplier. Instead, Toyota took
blame for a faulty part design and even issued a
statement supporting the “long-term and valued
supplier.” In all, creating satisfied suppliers helps
Toyota produce lower-cost, higher-quality cars,
which in turn results in more satisfied customers.
Marketing intermediaries
Firms that help the company to promote, sell, and
distribute its goods to final buyers.
Marketing intermediaries help the company
promote, sell, and distribute its products to final
buyers. They include resellers, physical distribution
firms, marketing services agencies, and financial
intermediaries. Resellers are distribution channel
firms that help the company find customers or
make sales to them. These include wholesalers
and retailers who buy and resell merchandise.
Selecting and partnering with resellers is not easy.
No longer do manufacturers have many small,
independent resellers from which to choose. They
now face large and growing reseller organizations,
such as Walmart, Target, Home Depot, Costco, and
Best Buy. These organizations frequently have
enough power to dictate terms or even shut smaller
manufacturers out of large markets.
Physical distribution firms help the company stock
and move goods from their points of origin to their
destinations. Marketing services agencies are the
marketing research firms, advertising agencies,
media firms, and marketing consulting firms that
help the company target and promote its products
to the right markets. Financial intermediaries
include banks, credit companies, insurance
companies, and other businesses that help finance
transactions or insure against the risks associated
with the buying and selling of goods.
Like suppliers, marketing intermediaries form an
important component of the company’s overall
value delivery network. In its quest to create
satisfying customer relationships, the company
must do more than just optimize its own
performance. It must partner effectively with
marketing intermediaries to optimize the
performance of the entire system.
Competitors
The marketing concept states that, to be
successful, a company must provide greater
customer value and satisfaction than its
competitors do. Thus, marketers must do more
than sim- ply adapt to the needs of target
consumers. They also must gain strategic
advantage by positioning their offerings strongly
against competitors’ offerings in the minds of
consumers.
No single competitive marketing strategy is best for
all companies. Each firm should consider its own
size and industry position compared to those of its
competitors. Large firms with dominant positions in
an industry can use certain strategies that smaller
firms cannot afford. But being large is not enough.
There are winning strategies for large firms, but
there are also losing ones. And small firms can
develop strategies that give them better rates of
return than large firms enjoy.
Publics
The company’s marketing environment also
includes various publics. A public is any group that
has an actual or potential interest in or impact on
an organization’s ability to achieve its objectives.
We can identify seven types of publics:
• Financial publics. This group influences the
company’s ability to obtain funds. Banks, in-
vestment analysts, and stockholders are the major
financial publics.
• Media publics. This group carries news, features,
and editorial opinion. It includes news- papers,
magazines, television stations, and blogs and other
Internet media.
• Government publics. Management must take
government developments into account. Marketers
must often consult the company’s lawyers on
issues of product safety, truth in advertising, and
other matters.
• Citizen-action publics. A company’s marketing
decisions may be questioned by consumer
organizations, environmental groups, minority
groups, and others. Its public relations department
can help it stay in touch with consumer and citizen
groups.
• Local publics. This group includes neighborhood
residents and community organizations. Large
companies usually create departments and
programs that deal with local community issues and
provide community support. For example, the P&G
Tide.
Any group that has an actual or potential interest in
or impact on an organization’s ability to achieve its
objectives.
Loads of Hope program recognizes the importance
of community publics. It provides mobile
laundromats and loads of clean laundry to families
in disaster-stricken areas. P&G washes, dries, and
folds clothes for these families for free because
“we’ve learned [that] sometimes even the littlest
things can make a difference.”

• General public. A company needs to be
concerned about the general public’s attitude to-
ward its products and activities. The public’s image
of the company affects its buying.
• Internal publics. This group includes workers,
managers, volunteers, and the board of directors.
Large companies use newsletters and other means
to inform and motivate their in-ternal publics. When
employees feel good about the companies they
work for, this positive attitude spills over to the
external publics.
Publics: P&G’s Tide Loads of Hope program
recognizes the importance of community
publics. It washes, dries, and folds loads of
clothes for families struck by local disasters. A
company can prepare marketing plans for these
major publics as well as for its customer markets.
Suppose the company wants a specific response
from a particular public, such as goodwill, favorable
word of mouth, or donations of time or money. The
company would have to design an offer to this
public that is attractive enough to produce the
desired response.
Business New Product Development
For products, the old proverbs, “If it works, don’t fix
it” is overtaken by the new proverb, “If it works, it’s
probably out of date”. Innovation is the fuel of
corporate longevity. Heightened competition in both
domestic and international markets often forces
firms to develop new products or find new markets
for their existing products. Without continuous
innovation, organizations sputter and die. In many
years business-to-business firms, the designs of
the new products (especially scientific and technical
products) is the sole responsibility of people within
the engineering discipline. However, much
marketing literature argues that business marketing
managers should pay a major role in the design
(development) of new products through the
guidelines that marketing research can provide. It
appears today that the important role of business
marketers in the design and development of new
products finally is being recognized. Marketing and
sales personnel frequently are called on to work
with – and sometimes to lead – specialists from
other functional areas in the development of the
new products. Of necessity, a major concern of
sales and marketing managers must be new
product development.
Two important trends are facing managers as we
enter this century. First, worldwide enterprises are
creating new technology at an increasing rate. In
some segments of industry, technology is changing
both how business is conducted and the nature of
competition. It also is changing product
development and introduction processes by
shortening the time firms have to bring new
products to market (time-to-market). New product
development in today’s technology-driven business
sector is loaded with risk, yet it is something that
must occur if a firm is to remain viable. In addition
to technological change that is revolutionary rather
than evolutionary, an unpresented level of
aggressive competition from across the globe
resulting in unbelievable rapid market saturation is
characteristic of many business markets today. As
an example of this second important trend
marketers face, an adhesive product in New Jersey
that traditionally has competed for orders with
regional competitors now competes with set that
traditionally has competed for orders with regional
competitors now competes with producers from
South Africa to East Asia – all wanting part of the
market. In addition to a daunting force of
competitors, twenty-first century adhesive
marketers will have to be constantly alert for
substitute product in development and new
approaches to adhesiveless stantly alert for
substitute product line can be obsoleted by a less
expensive, or stronger, or longer-lasting, or more
environmentally friendly alternative. A company
must look to its marketing function to assure that its
product are positioned optimally.
STRATEGIC INFORMATION SYSTEMS
(discussion attached)
Strategic information systems (SIS) are information
systems that are developed in response to
corporate business initiative. They are intended to
give competitive advantage to the organization.
(Lesson 4)
MARKETING MEASUREMENT AND ANALYSIS
Marketing measurement and analysis is critical
today in terms of real returns and profitability.
Sometimes the sheer affordability of direct mail,
email and social media marketing can lure small
business owners into a false sense of comfort
surrounding this allocation of their marketing funds.
Relaxed attitudes in regards to analysis and
refinement means these marketing methods may
not be reaching their full potential, which ultimately
equals wasted dollars. This is especially impactful
for firms that have little to no room for error when it
comes to their marketing budgets.
Lean startups and businesses striving for
operational excellence – each of which are
characterized by the complete eradication of waste
– tend to enjoy fewer risks, greater agility and,
perhaps most importantly, stronger profit margins
over time.
If you want to model your overall business strategy
after successful ones such as these, the main
takeaway is to understand (and truly believe) that
no dollars should be spent unless the investment
directly leads to greater revenues, earning potential
or decreased expenses in one department or
another.
What does this mean for marketing budget?
When it comes to company’s advertising, the song
remains the same, as leaders must ensure that
they are doing everything in their power to make
every piece of the marketing budget count. How do
you achieve this? One of the only ways to
accomplish this objective is to focus on the
accurate and consistent measurement of
performance, ROI and engagement, and kill off any
marketing methods that aren’t bearing any fruit.
That may be putting the cart before the horse
though. The real first step toward improving
marketing measurement and analysis is to actually
implement it in the first place.
How to get the numbers that matter
When it comes to direct mail, email and social
media marketing, data is king. After all, how can
you know what marketing investments to continue if
you don’t know which are profitable? Below is some
direction as to how you can build marketing
measurement and analysis into your strategy, but
we also have a handy ROI calculator if you’re in a
hurry.
Direct Mail
Direct mail proves to be one of the more
challenging aspects of marketing measurement and
analysis. VentureBeat pointed out that losses are
logged because direct mail advertisements are sent
to incorrect addresses, or non-targeted campaigns
cause lead generation to be off the mark. These
losses can add up quickly, but are also largely
avoidable with the right approach to management.
The easiest and best way to measure the success
of a direct mail campaign is to require recipients to
return some form of your collateral in exchange for
the goods or services you were trying to promote
(think returning a coupon for a free oil change, a
free meal, a free item, etc.). By obtaining something
from each offer redemption and pairing it with the
total sales that resulted, you can now track your
return on investment.
When your campaign has ended, add up the
revenue that resulted from all redemptions, then
subtract the cost of the marketing and your cost of
goods/labor (the actual cost, not the retail value).
The remaining amount is your net profit. Keep in
mind too that your profits should continue to grow,
as many customers will return to purchase many
times in the future, assuming you provided a
positive experience for them.
Email
Similar to direct mail, we recommend asking
customers to show an email promotion (either
printed or on a smartphone) in order to redeem an
offer. You could also implement the use of certain
promo codes or special phrases to keep track of
which campaigns lead to which revenue amounts.
Again, by tallying up the sales which result from
specific email campaigns, you can subtract the cost
of marketing, then goods and services to arrive at
your net profit.
You can enhance your analysis capabilities even
further by monitoring customer engagement rates
on the emails themselves. Talk to your email
marketing provider about which of your subject
lines tend to garner the highest open rates, and
then match that up with whatever offers give your
business the highest net profits.
Social Media
This digital tactic is notoriously harder to measure,
but you can take steps to ensure that you’re
gleaning some useful data from your social media
marketing efforts. Again, you can make use of
certain promo codes and coupon offers to track
which of your promotions are leading to actual
sales.
It’s important to keep in mind, however, that there
are certain, crucial trickle-down effects that an
effective social media presence provides, even if
they aren’t immediately quantifiable. For example,
directing more traffic to your site leads to stronger
brand recognition and a greater probability of
purchasing down the line.
If you’re an active webmaster, use custom
campaigns in Google Analytics to track what effect
social media ads and posts have on the number of
users and their resulting behavior on your website.
Develop a strategy to categorize your social
outreach, and compare that against things such as
brochure downloads, contact form submissions or
email list signups to get a better idea of how social
media is contributing to the growth of your
customer base.
Consider a third-party tool for marketing
measurement and analysis
VentureBeat recently explained some of the more
prominent challenges business leaders and chief
marketing officers are facing with respect to
reporting, performance management and metrics in
both digital and traditional advertising strategies. In
light of these challenges, analytics tools have
become the single most sought after solution
because of the their ability to help make sense of
massive volumes of information.
It goes without saying that you’ll probably need to
get the help of your webmaster or developer to
implement these tools, but firms are beginning to
make use of newly available data to inform their
decision making and refine their marketing
strategies. In fact, the source explained that
researchers from McKinsey and Company found
that accurate, integrated analytics solutions can
save companies as much as 20 percent on their
marketing investment, which is nothing to shake a
stick at.
Which tools can to use to get the job done?
 Google Analytics (Free). The juggernaut
of marketing measurement and analysis,
Google Analytics is the most widely used
platform, implemented by businesses big
and small across the country. There’s a bit
of a learning curve when it comes to
navigating the interface, but the data
collection is robust, and the potential
insights are endless.
 Facebook Insights (Free). This tool,
included on the left side of the mini-feed
under the “Developer” heading, offers just
about everything you need to analyze your
Facebook post engagement. You can see
how your overall page is performing as well
as dive into the metrics for each individual
post as well. Additionally, you can use Ads
Manager (also located in the mini-feed in
the top left) to monitor paid ad
performance.
 Google Sheets (Free). Ok, so this isn’t
nearly as exciting as the previous two tools,
but if you only need basic capabilities, such
as tracking coupon redemptions from a
direct mail campaign, this may be the ideal
solution for you. Because the spreadsheet
is located in Google Drive, you can add to it
anywhere and give others access to it.
Manually record the sales amounts from
different initiatives and automatically do the
math to see your net profits (or plug your
totals into our ROI calculator). Of course,
you could use Microsoft Excel as well.
The path forward
Businesses getting involved in Print & Digital
marketing campaigns ought to know that there are
so many factors that can lead to inaccurate record
keeping, poor measurement and a lack of optimally
efficient marketing strategies. However, simply
taking a more intelligent approach to these matters
can make all the difference in the world.
When in doubt, partnering with a firm that
specializes in not only marketing best practices, but
also the measurement and management aspects of
the campaigns to boot, can work to reduce the risk
of wasteful spending or poor returns on investment
over time.
MARKET VALUE CHAIN MANAGEMENT
Products move from the producer to the customer
through the market value chain. This chain includes
anyone who handles or enhances the product on its
way to the market. Your analysis of this chain can
help you improve profits by helping you understand
where costs are accruing, where customer service
is breaking down and why the competition is failing
to provide products efficiently. A little time spent in
analyzing this chain can boost your business.
Identifying Your Place in the Chain
Analysis of the market value chain begins by
finding your place in the chain. For example, if you
sell groceries, you have a grower, shipper and a
distribution warehouse ahead of you in the chain.
You are next in line in the chain, just before the
customer. To give another example, if you
manufacture plastic containers to hold other
companies' products, you are somewhere in line
between the producers of those products and their
shippers. The farther you are down the chain, the
more costs have been added to the product. You
pay all the costs for people ahead of you in the
chain.
Evaluating the Strengths of Chain Actors
Each member of the chain must act in a manner
that makes it possible to pass the product forward.
One weak member can cause the chain to break.
For example, if a delivery service can't deliver
products on time, the receiving entity can lose
money. A store that can't get shipments on time will
lose customers. Look at the companies in your
market value chain and identify any potential
problems with one or more of them. You can
reconstruct your chain by replacing the entire chain
or by encouraging the removal of under-performers
in your existing chain.
Identifying Competitive Opportunities in the
Value Chain
Your analysis can result in an understanding of how
you can compete better. For example, if you
produce an item and you find that a regional
distributor down the chain is routinely overcharging
its customers, you can create your own distribution
system. This will allow you to charge less than the
distributor was charging while adding to your own
revenues. Similarly, if you are a distributor and you
find that a producer makes an inferior product, you
can switch to a new producer and offer better
quality to your customers.
Identifying Vertical Linkages
Though you can think of the chain running from
producer to customer, your analysis should take
into account the fact that each stop along the way
may involve other companies. For example, the
plastic container company that packages a product
depends on natural gas producers, ethane
producers, styrene producers, polystyrene
producers and a container manufacturer to provide
the containers. One link in your chain could have its
own chain. The failure of any one of those
providers could affect your business.
ENTREPRENEURS IN A MARKET ECONOMY
Entrepreneurs are frequently thought of as national
assets to be cultivated, motivated, and
remunerated to the greatest possible extent. Great
entrepreneurs have the ability to change the way
we live and work. If successful, their innovations
may improve standards of living, and in addition to
creating wealth with entrepreneurial ventures, they
also create jobs and contribute to a growing
economy. Entrepreneurship is thus important for a
number of reasons, from promoting social change
to driving innovation.
Entrepreneurs Spur Economic Growth
New products and services created by
entrepreneurs can produce a cascading effect,
where it stimulates related businesses or sectors
that need to support the new venture, furthering
economic development.
For example, a few information technology
companies made up the IT industry in India during
the 1990s. The industry quickly expanded and
many other sectors benefited from it. Businesses in
associated industries—such as call center
operations, network maintenance companies, and
hardware providers—flourished.
Education and training institutes nurtured a new
class of IT workers who were offered better, high
paying jobs. Infrastructure development
organizations and even real estate companies
capitalized on this growth as workers migrated to
cities where employment was growing.
Similarly, future development efforts in
underdeveloped countries require robust logistics
support, capital investments, and a qualified
workforce. From the highly qualified programmer to
the construction worker, entrepreneurship benefits
a large part of the economy.
Entrepreneurs Add to National Income
Entrepreneurial ventures help generate new wealth.
Existing businesses may remain confined to
existing markets and may hit the glass ceiling in
terms of income. New and improved products,
services or technology from entrepreneurs enable
new markets to be developed and new wealth to be
created.
Additionally, increased employment and higher
earnings contribute to better national income in the
form of higher tax revenue and higher government
spending. This revenue can be used by the
government to invest in other, struggling sectors
and human capital. Although it may make a few
existing players redundant, the government can
soften the blow by redirecting surplus wealth to
retrain workers.
Entrepreneurs Create Social Change
Through offering unique goods and services,
entrepreneurs break away from tradition and
reduce dependence on obsolete systems and
technologies. This results in an improved quality of
life, improved morale, and greater economic
freedom.
For example, the water supply in a water-scarce
region will, at times, forces people to stop working
to collect water. This will impact their business,
productivity, and income. Imagine an innovative
and automatic pump that can fill people's water
containers automatically. This type of innovation
ensures people are able to focus on their jobs
without worrying about a basic necessity like water.
More time to devote to work translates to economic
growth.
For a more contemporary example, smartphones
and apps have revolutionized work and play across
the globe. Smartphones are not exclusive to
wealthy countries or people. As the growth of the
smartphone market continues, technological
entrepreneurship can have a profound, long lasting
impact on the world.
Moreover, the globalization of technology means
entrepreneurs in lesser-developed countries have
access to the same tools as their counterparts in
richer countries. They also have the advantage of a
lower cost of living, so a young entrepreneur from
an underdeveloped country can compete with a
multi-million-dollar existing product from a
developed country.
Community Development
Entrepreneurs regularly nurture ventures by other
like-minded individuals. They also invest in
community projects and provide financial support to
local charities. This enables further development
beyond their own ventures.
Some famous entrepreneurs, such as Bill Gates,
have used their money to finance good causes,
from education to public health. The qualities that
make one an entrepreneur are the same qualities
that help motivate entrepreneurs to pay it forward.
Is All Entrepreneurship Good?
Are there any drawbacks to cultivating
entrepreneurs and entrepreneurship? Is there a
limit to the number of entrepreneurs a society can
hold?
Italy may provide an example of a place where high
levels of self-employment have proved to be
inefficient for economic development. Research
has shown that Italy has experienced large
negative impacts on the growth of its economy
because of self-employment. There may be truth in
the old saying, "too many chefs and not enough
cooks spoil the soup."
The Role of Government
Regulation plays a crucial role in nurturing
entrepreneurship. Unregulated entrepreneurship
may lead to unwanted social outcomes including
unfair market practices, pervasive corruption, and
criminal activity.
Findings from the United Nations University also
indicate the possible implications of “over nurturing"
entrepreneurship. European economist Wim Naudé
argues that “while entrepreneurship may raise
economic growth and material welfare, it may not
always result in improvements in non-material
welfare (or happiness). Promotion of happiness is
increasingly seen as an essential goal.”
Paradoxically, a significantly high number of
entrepreneurs may lead to fierce competition and
loss of career choices for individuals. With too
many entrepreneurs, levels of aspirations usually
rise. Owing to the variability of success in
entrepreneurial ventures, the scenario of having too
many entrepreneurs may also lead to income
inequality, making citizens more unhappy.
The Bottom Line
The relationship between entrepreneurship and
economic development is important to understand
for policymakers and business owners.
Understanding the benefits and drawbacks of
entrepreneurship allows a balanced approach to
nurturing entrepreneurship to be taken, which can
result in a positive economic and societal impact.