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corresponding groups of wholesalers and retailers. It must surely be safer for a manufacturer to have a hundred healthy customers than four or five overgrown ones. Whether the client has the vision to perceive this is a matter for question.

15.2 Marketing operations

Different firms have different ideas about which operations are part of the marketing function and which are not. Selling, advertising, promotion, dealing with distributors, packaging, package design, new product concept development and market research are considered by most enterprises to fall within the responsibility of the marketing manager. Responsibility for transportation and storage of finished goods (physical distribution) is usually less clear.

For over two years, a Canadian firm deferred action on a consultant’s report which recommended the building of an intermediate storage and distribution warehouse, with expected savings to the firm of about Can$2 million a year. The simple reason was that no one could decide which department was to operate the proposed warehouse. While this degree of organizational futility is rare, the case nevertheless shows that top management may have difficulty in making decisions concerning the administration of activities that cross departmental boundaries.

Such situations should be detected at the diagnostic stage and the assignment formulated to include the appropriate recommendations. The marketing consultant who comes across such a case would be well advised to consult his or her supervisor, because organizational fuzziness in these areas could slow the progress of the assignment substantially or even stagnate it.

Sales management

The consulting activities in sales management are straightforward. Proper training and motivation of sales staff are key items to be checked, as is the way that sales staff divide their effective selling time between existing and potential customers, and among large, medium and small accounts. Another point to check is whether the client’s advertising is being used to increase the sales staff’s effectiveness by generating curiosity and interest in the minds of customers. Such interest makes it easier to obtain appointments and helps discussions to get off to a good start. This aspect of advertising is particularly important in marketing industrial goods.

Motivation of sales staff is a complex matter, given the conditions under which they work. A wide variety of incentive programmes is in use. The primary motivator, of course, is the payments system, which usually includes a base salary, a commission and a bonus component. The consultant should check that the incentive system is fair to the salesperson and is designed to obtain the results desired by the enterprise (to encourage the selling of profitable items in preference to less profitable ones).

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Application of information technology can do a great deal to increase sales effectiveness. It can save much time spent in producing reports, preparing orders, and so on, and leave more time for active selling, and it can promote more effective selling by making up-to-the-minute information on stock position and other relevant matters available during the sales call.

As the marketplace becomes more diverse and complex, so must the sales management process. The vice-president of sales must manage field sales managers, sales channel specialists (i.e. club stores, convenience stores, military commissaries, etc.), sales promotion or sales merchandizing specialists, private label specialists, and so on. Many of the field sales managers must also be trained to motivate brokers and/or distributors through whom they sell.

Sales management today must continually evaluate the advantages and disadvantages of assigning sales personnel by geographical area (all the accounts in a given area), channel (convenience stores, department stores) or account (Sainsbury, Kroger, K-Mart).

Customer relationship management

Maintaining and building the customer base is the foundation for growth. Businesses grow by maintaining current customers and increasing their purchases while, at the same time, adding new customers. Obtaining new customers at the expense of established ones is likely to slow growth and drain resources.

Customer relationship management (CRM) is a concept built on the premise that, by increasing customer satisfaction, maintaining databases on customer habits, preferences, and past purchases, and building ties between the customer and the seller, loyalty can be built among current customers and new customers can be more easily attracted. CRM is simply a process with the goal of making business relationships more profitable. To achieve this, marketing, sales and customer services must work together and share available information on the customer. New CRM computer applications facilitate this effort. With the development of faster computers with larger storage capacity, the opportunity to collect, store and utilize data on customers has provided new marketing opportunities (see also Chapter 16). Currently CRM tends to be viewed and treated by many consultants as a sophisticated IT application; however, it is above all a business concept and an attitude towards customers, and is therefore equally applicable in small firms with few customers and simple IT facilities.

Advertising and promotion

Usually companies can obtain good advice on advertising and promotion from an advertising agency, but occasionally a situation may arise in which those responsible are rather uninspired and new ideas are needed. The consultant should check that the role of advertising and promotion in the client’s marketing mix has been fully thought out, and is consistent with the type of product being sold: for example, “push–pull” advertising for fast-moving consumer products,

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producing leads for salespersons of industrial goods, or image-building for prestige goods. Next, the consultant should ensure that this role has been properly communicated to the advertising agency. Finally, the consultant should ensure that the agency has correctly interpreted the instructions in terms of the advertising message and the choice of media.

A common but undesirable practice is that of setting advertising expenditures purely as an arbitrary percentage of sales, either past sales or forecast sales. It is much sounder to plan advertising campaigns in terms of objectives and to calculate the money needed to attain these objectives. This amount may be quite out of line with the resources available, in which case the objectives should be redefined on a more modest scale. This method has the advantage of giving the client some idea of what might be expected from the advertising expenditure.

Advances in information technology, allowing the use of large demographic databases, are leading to changes in advertising practices and the way campaigns are planned and managed. Data are now collected from all types of sources (shoppers at a specific store, purchasers of a specific brand or category, frequency of using a specific service, etc.). The resulting databases (which some consider an intrusion on personal privacy) afford the opportunity specifically to target individuals or groups within a larger population.

In working with a client’s advertising agency, or with issues which may be considered the agency’s responsibility, the consultant must continually be aware of the sensitive nature of the client/agency relationship and should avoid becoming an adversary of the advertising agency. Such a situation is unproductive and could lead to the consultant’s dismissal from that phase of the project.

Distribution channels

The trend towards concentration in the retailing of consumer goods is bringing with it corresponding changes in the distribution channel for these goods. The manufacturer is increasingly being replaced by the retailer as the “channel captain”. The reduction in the number of independent retailers, and in their share of trade, is also reducing the importance of the wholesaler. This trend is reinforced by the increasing sophistication of the physical distribution process, which reduces the need for the intermediate storage function performed by wholesalers. Interest charges increase the costs of holding stock and also contribute to the weakening of the wholesaler. This reduction in available options means that marketing consultants will be less involved than previously in assignments involving channel policies. These will be replaced to some extent by assignments dealing with physical distribution.

This increase in retail concentration is also present in developing countries, although so far it is not as advanced as in the developed countries. In developing countries the wholesaler is still an important factor in the distribution channel. However, consultants should be aware that many manufacturers, particularly the larger ones, have a tendency to maintain large sales forces who visit retailers

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directly, bypassing the wholesalers. This may be because of a desire by marketing managers to keep tighter control, but unless the manufacturer has a wide product range it is likely to be excessively costly. The consultant should be able to evaluate the costs of this and other alternatives.

Franchising is a form of distribution channel which has been widespread in the United States for many years, and is now increasingly found elsewhere. Marketing consultants have seldom had much work with franchises, but this will probably change as an ever wider variety of goods and services is marketed through this type of structure.

New product development

New product development is very much an interdepartmental process, involving overall strategy, marketing, R&D, engineering, production, finance, sales, and so on. Information about the size of the potential market, competing products, competitors’ possible reactions, prices, the way customers will use the product, even the ability of distributors to provide maintenance and repair services, should be analysed and evaluated at the very beginning, if the design work is to start off in the right direction. The marketing department’s involvement should, if anything, increase as the development progresses.

The consultant’s role in this function is twofold. In the first place, the consultant should verify that the marketing department can supply reliable information of the type described and, if not, advise on how to develop that capability. Secondly, he or she must ensure that accurate and usable data are provided to all functional groups involved in the process and that all parties are in agreement on the assumptions made.

New product development is a vital function, because the firm’s future lies in these products or services. Yet the process of new product development is very often a hit-and-miss affair, which attracts little attention from top management.

Packaging

Package design, both structural and graphic, is an intrinsic part of new product design, and is often the major component in refurbishing existing products. Its importance, particularly in the case of fast-moving consumer goods, is often underrated. The package can enhance convenience of use (as in the case of spray containers for window-cleaning products) or can even be used for other purposes (as when honey is packaged in coffee mugs or beer mugs), thus giving otherwise indistinguishable products a distinct competitive edge.

Attractive packaging design is a way of getting customers’ attention on crowded supermarket shelves, particularly in health and beauty aids. There is also an opportunity to create a coherent brand image by developing a matched set of containers for a range of products. At the same time the package must satisfy retailers’ requirements for stackability (there was a case of an otherwise

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