Marketing in India was easier in the 1990s than now, reminisces S. Shajahan in ‘Strategic Marketing: Text and cases’ (www.vivagroupindia.com). That was an age when markets were more monolithic, a few companies competed, and buying tastes were much more uniform, he adds. “The producers controlled the market. With fewer producers and products, and more shared consumer tastes, mass advertising worked.”
Not so in today’s environment, because ‘other’ has become a major player in almost all markets, from fast foods to personal computers, notes the author. He finds that consumers are increasingly willing to try a new name brand; and that with most industries fragmenting rather than consolidating since the 1990s, more of everything available to the consumer.
Four types of companies
In a section titled ‘new business philosophies,’ the book lists four types of companies, thus: those that make things happen, those that watch things happen and respond, those that watch things happen and don’t respond, and those that didn’t notice that anything had happened.
In the first category are companies that go beyond just finding needs and filling them. Aptly cited is the quote of Sony’s Akio Morita: ‘We don’t serve markets. We create markets.’ Consumers never thought of videotape recorders, video cameras, fax machines, palmtops, and so on, until they were made, Shajahan reminds.
He also mentions the example of Anita Roddick, who started The Body Shop not only with the assumption that many women want products that give good care to their skin, but also that many women care about social issues and will patronise a company that cares. A validation, one may say, of Tom Siebel’s advice: “Focus on satisfying your customers, becoming a market leader, and being known as a good corporate citizen and a good place to work. Everything else follows.”
Intangible competitor
The book draws attention to the insight of Theodore Levitt, that the new competition is not between what companies produce in their factory in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value. Intangible competitors are emerging out of new technology or by extending the market of some other products/ services to the current business realm of the company, explains Shajahan,
“When marketing managers resist change, they are facing an intangible competitor. When entrepreneurs begin thinking in the bureaucratic style of ‘large-corporation man,’ they are up against an intangible competitor. Not handling these intangible competitors skilfully is the primary reason marketing fails.”
Business approaches
Technology has made the world a smaller, faster place that penalises slow-moving, fixed institutions, the author cautions. In today’s scenario – where product life cycles are accelerated, distribution channels are in a constant flux, traditional promotional media amplify the noise level and fail to communicate clear messages, and forecasting or research do not provide a clear path of action – companies that can quickly disseminate ideas and information through their organisational set-up will have distinct competitive advantages over others, he assures.
Drawing upon the work of Mohanbir Sawhney of Kellogg School of Management, differentiating the ‘sense and respond’ approach from that of ‘make and sell,’ the book instructs how the former category of businesses embeds expertise in processes and products, while the latter depends on expertise embedded in people.
Sense and respond
The ‘make and sell’ model believes in mass production, whereas ‘sense and respond’ goes for modular customisation. In terms of organisational priority, ‘make and sell’ invests in efficiency and predictability, emphasising repeatable procedures, standardisation and replaceable parts; not so in the ‘sense and respond’ business, where investment is made in system and competencies for rapid and dynamic dispatch of capabilities into processes for customer response.
And, importantly, as Sawhney elucidates, the ‘make and sell’ approach focuses on budgets and margins, economies of scale, and share of market, considering strategy to be a plan. In the opposite, the ‘sense and respond’ businesses think of ROI (return on investment), economies of scope, share of customer spending on a class of needs, and treat strategy as ‘adaptive design.’
Recommended read for marketers on the move.
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