======================================
e-Xpertise in Industry Issue #20
======================================

March 2004

In this issue...

Quote for Today

"Imagination is more important than knowledge. Knowledge is limited, imagination encircles the world" Albert Einstein

Feature Article: Building Bridges in Marketing

Something strange is happening in marketing departments. We're seeing headcount cuts despite a resurgence of IT vendor growth. And some vendors have marketing budget but insufficient headcount to use it effectively.

Is this why marketing teams seem unhappy despite the return to growth? Marketing morale used to mirror the business cycle of boom and bust, but not any longer.

What's driving this change? In many ways it's the success of marketing's own PR. The board now believe that marketing is the life blood of the company, that branding and marketing strategy are critical success factors for the business. So much so, that they're not prepared to leave these crown jewels solely in the care of the marketing department. The Sales Team want to play. As the late David Packard of HP said "Marketing is much too important to leave to the marketing department". What a reward for success!

But on the other hand, the execution of promotional activity has become more specialised, more varied, more complex and more automated. It's no longer a core competency but a candidate business process for outsourcing to agencies and execution specialists. And the remaining three P's of marketing (Product, Price, and Place) have often become the responsibility of other functions within the organisation.

These movements in strategy and execution open up a gap along the fault line that separates them. They break intrinsic communication bonds between the various functions in the traditional marketing department. No longer is there a seamless connection between strategy and execution. The holistic approach has fractured; a gap has appeared in our marketing process.

As Tim Ambler, senior fellow at the London Business school observed in ft.com last year "Marketing is on the rack…marketers have brought this plight upon themselves by failing to make either of the two professional responses: formal and informal development of the business model."

It's because of this gap that some marketing departments are seen purely as a service function: "they do brochures and events". Once the direct and visible link between corporate objectives and marketing deliverables has gone, it has indeed become a service department, an overhead not a revenue creator.

To bridge the gaps between management, marketing and sales, we need to improve communications and build connections between strategic and tactical plans. Business objectives, marketplace data, and buyer behaviour determine the key parameters on the marketing programmes side: audience, message, channel, cost, return and link to revenue and profit.

In the B2B world, we use our 'Buyer Influence Maps' as one technique for doing this. These maps reflect the behaviour of buyers in complex decision making units (DMU).

Many are already familiar with terms like 'Project Initiator' and 'Economic Buyer' when analysing the workings of the DMU. But there is another dimension. In reality, there are two decisions being made: the decision on whether to buy the solution, then, which vendor to buy it from. Different people may be involved depending on which decision is under discussion. They may be in different functions or even different companies (one may be an outsourcer for instance).

Tactics need to reflect this. The message, audience and channel are all likely to be different when convincing someone to buy the solution, as opposed to influencing someone in their choice of vendor for that solution. Buyer Influence Maps show these two different axes of decision making: deciding on solutions and choosing vendors.

The map reflects how far different companies (DMUs) have progressed towards a solution decision - how far along the solution axis are they? We also show how these same DMUs perceive the vendor. Are they aware of them, would they consider them, do they prefer them - how far along the vendor axis are they? The map illustrates progress from nothing (never heard of the solution, unaware of the vendor) through the sales and marketing process, all the way to closed business. Such maps can go on to form the basis for a rigorous model linking marketing strategy and objectives to the activities to be executed. They provide the basis for communication among the stakeholders.

There's another dimension to this bridging or modelling process: metrics. Metrics can be a either a bridge or a barrier. They can be the lingua franca of the business or akin to the Tower of Babel. They have their disciples and detractors. The economist Robert Chambers covered both viewpoints when he said: "Quantification brings credibility. But figures and tables can deceive, and numbers construct their own realities"

Both views are right. The real question is which metrics to use to reap the benefits of measurement but without the distortion? Peter Drucker neatly summed it up when he said: "Management by objectives works if you first think through your objectives. Ninety percent of the time you haven't."

What's wrong with the usual metrics? On the one hand metrics like budget and headcount are universal across the company but merely represent inputs to the business process.

Then we have the specific performance metrics for our various branches of marketing promotion e.g. OTS (Opportunities To See) in advertising, column inches for PR, response rates for direct marketing and click throughs for the web.

These metrics may be fine for checking the efficiency of execution but they fail on two counts. Firstly, they do not measure the impact of the activity on business objectives (revenue, customer loyalty etc.). And secondly, they are meaningless to anyone outside marketing.

What everyone wants is a set of metrics that demonstrate the effectiveness of marketing in supporting corporate objectives in terms that are understandable to non-marketers.

Which brings us back to the need for a model to encapsulate the workings of the marketing programme.It should also illustrate the connection between the activity and its impact on business objectives with meaningful metrics.

Perhaps most important of all, building end-to-end connections in this way for your marketing processes increases understanding from all parties, including your external agencies. Results get better and morale improves.

As Kotler says in the introduction to his latest book, "The good news is that marketing will be around forever. It just won't be the way you learned it."

The outlook for marketing is not so bad after all.

Mike Butcher

back to top

Hot Topic: The future for RFID

During 2003, the proposed adoption of RFID (Radio Frequency IDentification) technology by leading retailers such as Wal-Mart and Tesco provoked a heated debate in the media, centred around the capture of customer data and the freedom of the individual. Much of that debate was ill-informed - but then, newspapers never usually let that get in the way of a good story! So what will introduction of this new technology really mean?

Last Autumn, I attended the SmartLabels Europe 2003 conference in Cambridge, hosted by IDTechEx and sponsored by a number of the leading players in this technology, in the hope of finding some answers. Well, for a start, RFID is not exactly new - the concepts have been around since the 1950's. However, the ability to execute these concepts is now closer to becoming a reality, thanks to major technical and standards' development.

During the conference, Wal-Mart updated attendees on the progress of their RFID initiative. As the world's largest retailer, with over 5,000 outlets worldwide, Wal-Mart currently uses bar-coding and UPC's (Unique Product Codes) to identify items and cases/pallets of goods as they move through their supply-chain and out to their stores. By 2005, they expect to have live implementations of RFID tagging using new EPC's (Electronic Product Codes, which can carry more data than UPC's) with selected suppliers on cases and pallets at Distribution Centres, followed by item-level tagging at a later date. EPC's on tags should be easier and quicker to read than barcodes - no need to unpack pallets to check contents, as RFID readers do not require line-of-sight like bar-code scanners - resulting in less labour, fewer errors and better management of inventory. Wal-Mart expects to share these benefits with their suppliers and customers in the form of lower costs.

Of course, as with any new technology implementation, there will be teething problems and Wal-Mart (and others) have identified a number of issues that could impact successful implementation. Although many vendors have demonstrated success in reading multiple tags in close proximity - "stacking" - the misread rate or "collision" of tags is still a potential problem in real-world situations. So too is interference - from metal racks, door-frames, fork-lift trucks and the like - which requires careful positioning of tags and readers alike, especially whilst read-ranges of high-frequency tags remain quite short. Similarly, the frequencies available vary across the globe, requiring international agreement on wavelengths and signal strengths.

As I mentioned earlier, perhaps the biggest constraint to public acceptance is the "Privacy" question, which was hyped by the press and a number of consumer organisations. In theory, these issues are already with us - whether it be data on loyalty cards from stores, credit cards, or cell-phones - since these technologies have already created a data collection infrastructure which could be used to compromise personal data. In this context, RFID is just another low-level data collection tool (and less powerful than some of the above-mentioned technologies already in use). Indeed, considering the huge amount of data which could be produced from RFID at item level, it would take a huge effort to collect, store, filter and then act on that data, not to mention the cost of the infrastructure to support that effort. Common sense, not hype, needs to prevail.

As public acceptance of RFID grows, some of the other barriers to wider adoption will be broken down. At present, we are in a "chicken-and-egg" situation - until more companies commit to RFID, the cost of tags and other infrastructure will remain high. In 1999, typical smart-label tags were between $1- $2 each; now we are looking at volumes in millions, costing 30 cents. This is projected in to billions of tags on individual items, using existing technology, the cost falls to 5-7 cents. Eventually the price falls to fractions of a cent, with new technology and even greater volumes. Finding the path to these volumes, with applications and integrated solutions, must be the way forward. There are many scenarios where a 30 cent tag can be justified now; companies which adopt RFID will surely steal a march on their competitors. All that is lacking is the will and vision to commit.

The conference also included a number of very interesting presentations outlining the current state of RFID technologies; label creation and production, plastic chip developments, intelligent shelving and packaging, to name but a few. Examples of pilots run by companies like Tesco gave some idea of the benefits and returns from wider exploitation of the technology. All-in-all, SmartLabels 2003 provided those who are implementing, or thinking of implementing, RFID in their businesses, with the confidence that constraints have been identified and solutions are being sought. With developers like HP and SAP putting their weight behind RFID, it will surely not be long before this technology becomes mainstream.

(For more information, visit: http://www.idtechex.com)

Bob Brown

back to top

Book Review: Selling the Wheel, Jeff Cox and Howard Stevens.
Simon & Schuster ISBN 0-671-03310-7

Selling the Wheel is written as a novel set in the ancient world. It tells the story of Max, who invents the wheel. Max finds it tough to sell a wheel to someone who has never seen one. Max discovers that, at the birth of a market, selling needs special skills. He hires Cassius the closer, who creates dreams of wheeling for prospective customers, resolves their objections and closes the deal. Max becomes rich while Cassius wheels and deals.

However, as the wheel market matures, Max needs to change his sales methods. The story takes us through three further market phases: fast growth; incremental growth and maturity. For each phase a different sales approach, and individual, works best. We meet Toby the Wizard; Ben the Builder; and Caleb, the Captain of Sales; each of whom has the technique that drives sales best in each phase of the market. At the end of the novel Max is a billionaire!

Jeff Cox, co-writer of this entertaining book is co-author of The Goal, a novel that popularised the OPT scheduling technology in the mid 80's. This novel is even better. In both cases the message is carried by a strong story and characters that the reader can identify with. This shows how a fictitious story can be effective at making points a reader will remember. Of course, the skill of telling parables goes back to the New Testament!

Selling the Wheel is an excellent sales oriented companion to the classic high technology marketing book Crossing the Chasm. It provides an exemplary lesson on how to get people to select appropriate go to market strategies for business lines. Those who have to hire sales representatives will do well to study the characteristics of Cassius, Toby, Ben, and Caleb, then look for appropriate sales techniques.

Mike Evans

back to top

Noticeboard

COFES 2004: The Congress on the Future of Engineering Software will be held from April 1 - 4, 2004, in Scottsdale, Arizona. Allan Behrens will be representing Cambashi at COFES 2004.

Solid Modelling: The event for product development technology - will take place from the 31st March to the 1st April at the NEC, Birmingham. Nick Ballard will be representing Cambashi.

MACH 2004: The International Exhibition of Machine Tools & Manufacturing Technology - is being held fromthe 19th to 23rd April at the NEC, Birmingham.

A full list of industry events can be found at IT industry events on the Cambashi website

back to top