marketing must be a quality process discipline too!

ISA Transactions 32 (1993) 9-13 9 Elsevier

Marketing must be a quality process discipline too!

Jerry Vieira

Planar Systems, Inc., Beaverton, OR 97006, USA

Unders tanding customers ' wants and needs is the first step in total quality. Marketing is a key to success or failure in total quality implementat ion since unders tanding customers ' wants and needs is a marketing function. This paper provides an education in the difference between tactical and strategic marketing and points out our great American success in the one and great failure in the other. It then explains how we can achieve quality strategic marketing.

Introduct ion

Instrument Society of America is a name that, in its essence, bespeaks data collection, accuracy in measurement , and precision process control. It is the dream of scientists and engineers: the ability to point to data with confidence and from it draw conclusions or, in other circumstances, pos- tulate a theory and through instrumentation col- lect the precise data by which to validate or disprove that theory. In a related dimension, it is the ability to control processes with real-time feedback based on precise m e a s u r e m e n t s - - t h e essence of process quality.

Would not it be great if we could do the same thing with the marketing and business decision- making processes? How much bet ter off would we be in terms of the probability of success of our strategic business and marketing decisions if we could use control systems, statistical techniques, lots of real data and real-time feedback to chart our course? Or is quality process control, based on closed-loop feedback, exclusively the realm of the "hard sciences"?

The need for a better way

There are serious problems in the way we are running our businesses in the U.S. today. Re-

Correspondence to: Mr. Jerry Vieira, Plnar Systems, Inc., 1400 NW Compton, Beaverton, OR 97006, USA.

search has shown that nearly 50% of consumer products and more than a third of commercial product offerings fail. These results are, at best, a disappointment and at worst, a significant and unnecessary waste of precious human and invest- ment capital resources. An analysis of the root causes of these failures has revealed that the majority of the problems fall within the realm of marketing: the target market was too small, the target segment and product were a poor match for the capabilities of the company, there was a misunderstanding of the customer needs, there was an unperceived change in the customers ' tastes, poor competitive positioning, and a host of other market-related reasons.

We can argue all day that we here in the U.S. are the best marketers in the world. No one has a greater ability to promote, advertise, communi- cate, telemarket, get more publicity, and leverage mass media than we d o - - a n d we even have the likes of Michael Jackson, Michael Jordan, and Christie Brinkley to help us sell our products. In spite of all this, we have seen the U.S. market shares of major durable goods product market segments fall significantly in the last 30 years. This loss-of-share nightmare has repeated itself in consumer electronics, machine tools, automo- biles, musical instruments, and numerous other large ticket items.

If we are so good in marketing, why are we losing so badly? The problem is not tactical marketing (those items listed above that we so com- monly refer to as marketing) but in strategy. The

0019-0578/93/$06.00 © 1993 - Elsevier Science Publishers B.V. All rights reserved

10 J. Vieira / Marketing must be a quality process discipline

cold truth is that the best and most extravagantly expensive tactical marketing program will avail nothing in the long run if it is aimed at a funda- mentally ill-advised target segment or spent on a poorly conceived product. Remember the Edsel?

Our problem is in our collective inability to make the correct strategic marketing decisions. It is in the strategic arena that we need significant improvement. For it is in this arena that we set the course and predetermine the success of mas- sive amounts of resources, human and financial, that we will commit to the design, testing, launch, and promotion of our products and services.

To improve this situation we must immediately and significantly improve our strategic capability. We must develop a highly successful, repeatable strategic marketing process, and this process must avail itself of everything we have learned from the realm of strategic marketing science.

Is marketing a science?

The sciences with which we engineers are most comfortable and familiar are the physical sciences: physics, chemistry, electromagnetism. These are hard sciences. The formulas that de- scribe them are well established and proven. If one puts in the correct data and runs through a calculation or algorithm in one of these sciences, the answer pops out. It is always the same and is, therefore, dependable. Based on this theory, we are sure that airplanes can fly, that a computer- controlled spacecraft aimed at the moon eventu- ally gets there, and that when we precisely mix sodium and chlorine in the correct proportions we get salt, every time.

Now let us take a look at the "soft" empirical sciences: medicine, for example. Medicine is considered a science, even though there are no pat formulas for the diagnosis, treatment and therapy of a patient with a problem. Nonetheless, we would rarely consider being treated by a doctor who did not have training in medical science and was not aware of the latest research in medical science. There is a medical process, and it is supported by empirical medical research.

While medicine does not have pat formulas as does physics, it does, nonetheless, have a founda- tion in statistical research. There is no scientifi- cally established algorithm with which one can input raw data and calculate the disease, the diagnosis, the treatment and the prognosis. Medi- cal treatment is based on empirical science; being attended by a physician who is not trained and educated in the latest science is the equivalent of being treated by a witch doctor.

Medical science is based on medical research: studies that include large populations of people studied under controlled conditions for extended periods of time generating raw medical data. Then statistical methods are used for establishing the relationships between: (1) symptoms and diagnoses; (2) diagnoses and treatments; (3) treatments and results; (4) results and prognoses; and (5) prognosis and ultimate condition.

So, medicine is a process based on empirical science. Medical researchers, private, academic and government, continue their work, periodi- cally adding their results to the great and growing body of medical science. The result is increasing survival rates from such malevolent afflictions as cancer and heart disease.

What does this have to do with marketing?

Marketing is also an empirical science. Re- searchers in marketing science have been doing much the same kinds of process research for years, studying large populations of strategic business units to understand the relationships between: (1) symptoms and core problems; (2) problems and strategies; (3) strategies and successes; and (4) successes and ultimate growth and profitability.

One of the best known data bases for this type of strategic marketing science is PIMS ® data base. PIMS stands for "The Profit Impact of Market Strategy". This data base contains data from approximately 3,000 strategic business units collected over a period of 2 to 15 years. This data base has been studied by marketing researchers for a number of years and certain statistically validated conclusions can be drawn from it.

J. Vieira / Marketing must be a quality process discipline 11

The most important conclusion is that quality is the primary component of financial success. More specifically, achieving the highest relative perceived quality within the target segment of choice vis-a-vis the competition, leads to domi- nant market share, which in turn leads to in- creased profitability (see Fig. 1).

It is that simple. It is similar to the common medical paradigm or rule of thumb: exercising regularly, eating a low fat diet, and keeping weight under control leads to a healthy individual. How do we know this medical paradigm is true? Nu- merous studies have been conducted on large segments of the population; the paradigm is a result of the statistical analysis of the data from those studies.

How do we know the PIMS successful market paradigm is valid? The PIMS research data was analyzed and statistically validated it.

Now, as a medical patient, an individual may wish to argue that she is different--that the study results, even though they apply to the majority of the general population, do not apply to her. This may be true, but the overwhelming odds are that it is not. And anyway, at worst the medical paradigm is a good place to start.

Marketing and business decisions are very much the same. There is a large body of marketing science research of which marketing and business professionals can avail themselves. Individ-

ual business may argue that they are different, unique in some kind of way that makes the paradigm invalid for their particular circum- stance. However, the odds are that their business is not different. At worst, the successful market paradigm is a good place to start.

Marketing science

Here are just a very few examples of strategic marketing science research that are available for the marketing practitioner to use in establishing business strategy: (1) Research conducted by Professor Tom

Bonoma of Harvard regarding why strategies fail and why they succeed.

(2) Research summary of the PIMS Data Base published by the Free Press and compiled by Stanley Gayle and Robert Buzzell. This research details the relationships between quality, market share, and profitability.

(3) Research results of what makes a company marketing-oriented conducted by Professor Bernard Jaworski of the University of Ari- zona and Ajay Kohli of the University of Texas.

(4) Research results of what the optimum model of quality is for the delivery of consumer services, compiled by a team led by Professor

QUALITY

LEADERSIIIP

LEADERSIIIP

MARKET

SIIARE

PROFITABILITY

BALDRIGE

AWARD PROFITABILITY

Fig. 1. Successful market paradigm.

12 J. Vieira / Marketing must be a quality process discipline

Valerie Zeithaml of Duke University. The results have been published for the practitioner to read and understand. In general they are available through most bookstores. Several of the best have been published by the Free Press.

So we ask ourselves, " I f this material is available for our marketing and business management teams to use to improve the quality of the business decisions they make, why don't they use them?" If the process data in a process control situation is easily accessible, we would certainly use it to optimize the process and the quality of the resulting product.

Why do not we use this marketing science research data?

The answer is simply that the vast majority of marketing professionals do not know that this material exists. They do not know the material exists because they are not truly educated in the science of marketing.

A recent analysis of a large multi-billion dollar technology firm revealed that of all the people with marketing in their titles, less than 10% had formal marketing education. What results could be expected if only 10% of the civil engineers in a bridge building company had formal civil engi- neering education? The answer is that a lot of bridges would fall.

The results that we are seeing in the loss of market share and high rates of unsuccessful products are in large part due to the ignorance of strategic marketing science. It is that simple. It is all too common to treat marketing as a "touchy- feely" kind of assignment. But that is not going to enable us to compete successfully in the future.

rhe road to success and turnaround is blocked with simple ignorance

In recent discussions, with a number of marketing professors at several universities across the country, a common frustration has revealed itself. It seems that these professors are stymied by the difficulty of getting marketing practitioners to use the results of the research that they have pro-

duced. This is the equivalent of not being able to disseminate medical research. Companies are destined to live in ignorance and with a continu- ing unacceptable success rate of new business ventures if this information is not communicated.

Would a doctor refuse to review the latest research on a disease that he was required to treat? The answer is a resounding NO! Why? Because he has taken an oath to provide health care and he also could be cited for malpractice if, while treating the patient, he was unaware of the test findings.

Why do we let our business managers and marketing professionals get away with developing strategies based on less than fact and strategic marketing science? What can be done to improve the situation?

You get what you accept

We get significant product failure rates because we accept them. But the times, they are a-changing. In the past, the days of seemingly unlimited human and financial resources, a ca- sual approach to strategic marketing could be used. There were enough resources and time to try something different if the first approach did not work.

Now things are different. We must husband our resources, and we need to assure that our strategic directions are, for the most part, correct - - r igh t out of the barrel. Neither the level of resources nor the competition will allow for significant iterations.

One of the reasons the Japanese are so good at strategy is that they are used to living under the constraints of limited resources. Their strategic decisions need to be well considered before they commit the resources. Once they decide on a strategic direction, they focus on the objectives with Samurai intensity. Their success rate speaks for itself. Their success formula is simply good strategy followed by impeccable execution.

So what is the way out?

Here is an approach to consider in order to improve your company's quality marketing process and its resultant product success rate:

J. Vieira / Marketing must be a quality process discipline 13

\ I /

~ OVERALL

IDEAS[ MARKET

~ ASSESSMENT TARGET

SEGMENT

SELECTION SEGMENT

NEEDS

ASSESSMENT

OFFERING

DESIGN PRODUC T

LAUNCH SALES

AND

,SALES SUPPORT

\ 1 / IDEAS ~ lOP:AS

MARKETING PROCESS AUDITS

Fig. 2. The quality marketing process cycle.

(1) Admit that you do not have all the answers. The hubris of business management is arrogance. Unless top management is willing to accept that they are not omniscient, nothing can be achieved.

(2) Commit to a quality marketing process. Noth- ing will happen until management commits to using a quality marketing process and begins to reward quality strategic marketing behavior. This does not have to be done to the exclusion of tactical marketing and sales activities, but certainly the management team must be very visible in its acceptance, adherence, and practice of strategic quality marketing principles.

(3) Establish a quality marketing process. Figure 2 shows a process that supports the successful market paradigm. If this does not fit, then use a simple business planning guideline book for new market ventures. A number of the "Big 8" ac- counting firms have small start-up venture support organizations that will be glad to provide you

with copies of their business planning outline. These planning documents ask difficult questions and are designed to screen out bad market ideas, leaving only the best for venture capitalists to consider.

(4) Educate your marketing staff. Educating the marketing staff means accepting strategic marketing as a science; set the expectations of the marketing staff in terms of formal education in the science of marketing and commit to the quality marketing process--and grandfathering does not work any more than making a midwife a doctor through a grandfather clause. There are many strategic marketing consulting firms. If you must use them, be sure that they are using empirical strategic marketing principles widely accepted by the profession.

(5) Recruit only marketing-educated professionals. Start now by improving the quality of the marketing education coming into your company. Edu-

14 Z Vieira / Marketing must be a quality process disctpline

cate the existing marketing staff through volun- tary courses in strategic marketing.

(6) Do not be afraid to say no. Strategic marketing assessments do not always validate precon- ceived notions. The true test of commitment to a

quality marketing process is to accept the results of the process: it is committing to "management by fact" and being willing to accept it as valuable to the marketing process as it is to any other business or scientific process.

marketing must be a quality process discipline too!

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