While the principles of marketing have changed gently in the last few decades, their original form is recognisable in most of today’s theory and practice. Decide what your corporate strategy lays down as marketing objectives, understand your general and close environments (markets, competitors, economy, customers etc.), how they are changing and how you can influence them, determine what you want to do with customers (and with which ones, through segmentation and targeting), and how (the marketing mix), then implement it via a planning and implementation process that ensures delivery, with feedback (monitoring, control etc.) processes occurring at every stage to allow previous stages to be reconsidered.

New developments and greater variety

New developments and greater variety – whether in customers’ patterns of behaviour, new technologies for us and our customers to access each other, new ways of gathering, holding and making available information about customers - have all made marketing more complex and in some senses more difficult, but have also allowed us to move faster and to change how we do our marketing more easily. If we do it better and faster than our competitors, we can leave them behind. We can make small changes, or we can make big changes. That’s where the idea of new models of marketing comes in.

There are several different models of marketing

What do I mean by a model? I mean “the way we do things around here”. It includes processes, skills, critical success factors, key performance indicators, levels of detail of particular decisions, type of relationships with customers and business partners and customers (companies higher up the supply chain supply, marketing service suppliers, distributors) and the relative importance of different decisions/areas (e.g. segmentation relative to individual targeting and customer responsiveness, branding and “pull” marketing relative to selling and “push” marketing). As with any other model or way of doing things, “the way we do things round here” also changes for a given model, as changes occur in, for example, customer needs and expectations, standards of living, regulation and legislation, or product and marketing technology. But still, a particular model remains recognisably different from other models.

The idea of a model is best explained by a few examples, which are summarised (and simplified!) below:

Notice that most of these examples involve big changes to the way customers buy and how they are accessed (distribution and communication channels). Technological change is important, in terms of what customers use and the systems used to manage customers. New skills are required, sometime being hired in or developed by companies, sometimes made available through outsourcing e.g. Tesco/Dunn Humby. The Internet is often a factor, but not always the deciding factor – often working to accelerate the change rather than determine its direction (as in direct banking, direct insurance and low cost airlines, all of which became possible because of changes in call centre technology, new services provided by telephony operators, and advances in direct mail).

Notice too that many companies run hybrid models e.g. an airline running scheduled and low cost models, an insurer marketing direct and through brokers. Interestingly, this often creates problems, not primarily through inconsistency of strategy (e.g. what used to be called channel conflict and is now called channel contention as it has been realised that you can’t tell customers what to do, you can only motivate them to do so), but through inconsistency in processes, skills requirements, motivational approaches, information management requirement and the like. For example, a company that decides to sell direct rather than through distributors is normally faced with making radical changes to many areas of marketing and systems and may not have the skills to do so.

Finally, note too that a particular sector can evolve through several models, possibly returning to its original model, as market conditions change. For example, the information technology industry has oscillated over the years between a very product-marketing-based approach to a services-based approach.

So far, this is just a list of examples. But discernible in the list are a few core models, and it’s complete or partial changes between these models that creates both opportunity and threat for marketers and all who depend upon them. Here, a classic pattern of innovation is followed. Successful companies ride the waves of changes – more, they anticipate them, perhaps even creating the wave in the first place. Fast followers examine hard the pros and cons of the new model and often come in with a more tightly defined, slicker and faster variant. Laggards react late, but may do well just by retreating to that part of the market which is unaffected by the change. Most interesting of all, the models are rarely completely new – usually they are imported from another sector and adapted. But this is often forgotten, with companies relearning the essentials of their new model, reinventing the wheel.

Smart leaders: no mistakes about it

However, smart leaders don’t make this mistake. So, or example, a leading utility realises that it is now using the same marketing model (broadly CRM based) as suppliers of credit cards and general (e.g. motor/household) insurance. It uses the same suppliers, recruits the same type of marketer, uses the same kind of marketing planning approaches, and marketing and sales systems. So while its marketing planning is still strongly focused on product and price (as the planning in these other sectors, its implementation is very focused on acquiring higher quality customers and retaining them.

A large FMCG supplier that adopted the classic B2B/key account model of, for example, computing and telecoms, for managing its very largest retail customers, borrows its ideas from that area. A package and parcels delivery company adopted the outsourcing disciplines and systems from the IT industry to manage the global inventory of some of its large customers. What’s more, these successful “model-changers” keep an eye out for the next wave of change – either coming towards them or – better – make it happen. It’s the marketers who don’t recognise this process that get left behind – as do their marketing service suppliers, much as many market research companies have become marooned on islands of customer satisfaction surveys while database and related companies have developed tools for companies to understand their customers directly.

So, what are the main models, and their variants?

Here are the main ones:

These four models are a bit of a simplification. I could add others e.g. charities (similar in many ways to a mixture of consumer goods and interactive), public sector (very varied, but parts are similar to financial services direct marketing, others to retail consumer services, others to B2B).

A simple test for models is the question, if you had to hire a marketing director from outside your sector, and you had the choice of several excellent marketers (i.e. their underlying quality is not an issue), are there any sectors you would look at with more favour? The answer might “we’re in sector X, but we need someone who has directed marketing in sector Y, because they have disciplines/skills that are scarce in my sector”. This would be for a company that wanted to explore a change in model. Or the answer might be “we know our model, we just want someone to execute it better.” Here, as advances in information and communication technology allow existing models to be deployed faster, more efficiently and so more competitively and profitably, a company aiming to “pep up” its marketing might seek someone from their own sector but with a track record of “pepping up”.

What questions should you ask?

So, the main questions facing marketing directors are:

• Is the model I’m following the right model
• If so, does it need to be enhanced or accelerated?
• Can I improve how I work my model e.g. by choosing better partners, getting better marketers, working on how the marketing function works with other functions?
• If the model needs to change, how does it need to do so?
• If so, should it change by borrowing from other models or by evolving in totally new directions?
• Am I equipped to do the necessary – whether to improve how I use my model, or change it?

These questions need to be addressed and answered, for unless they’re dealt with, a marketing director might end up with an approach that works very well, but is wrong for the time, the market etc. That’s like a general having an army that marches very fast in the wrong direction!

Professor Merlin Stone,
Director, WCL

Email: Merlin.Stone@w-c-l.com
Mobile: +44 7968 271937
Web: http://www.w-c-l.com/

Background:

Merlin is one of the UK’s most experienced consultants, lecturers and trainers in all areas relating to changing organisational capability to meet the needs of customers and stakeholders, including CRM, database marketing and customer service. His consulting experience covers many sectors, including financial services, utilities, pharmaceutical, telecommunications, travel and transport, retailing, automotive, energy, IT and the public sector.

He is also the author of many articles and thirty books on transforming marketing and customer service capabilities, including Up Close and Personal – CRM @ Work, Customer Relationship Marketing, and Successful Customer Relationship Marketing…

Merlin speaks at many conferences and is a challenging and innovative thinker and critical commentator on changing capabilities in marketing, sales, service and IT. The Chartered Institute of Marketing listed him in 2003 as one of the world’s top 50 marketing thinkers, while NOP World nominated him in 2004 as one of 100 most influential individuals for their input and influence on the development and growth of e-commerce and the Internet in the UK over the last 10 years…