Marketing and Finance – Creating Shareholder Value 2e

<p>Foreword by Anne Godfrey, Chief Executive, CIM xi<br /> <br /> Foreword by Charles Tilley, Chief Executive, CIMA xiii<br /> <br /> Foreword from the First Edition by Sir Michael Perry, GBE xv<br /> <br /> A note for busy people: How to get the best out of this book xix<br /> <br /> List of figures xxi<br /> <br /> List of tables xxv<br /> <br /> Part 1 What is Marketing Due Diligence? 1<br /> <br /> Chapter 1 The lessons of experience 3<br /> <br /> Fast track 3<br /> <br /> Introduction 3<br /> <br /> Success stories 5<br /> <br /> Starbucks: A holistic offer based on insight and culture 5<br /> <br /> The Economist: Side stepping in time to the future 6<br /> <br /> Yamazaki Mazak: Matching itself to the market 7<br /> <br /> Essilor: Growing the pie 8<br /> <br /> Failure stories 9<br /> <br /> Blockbuster: Left behind 9<br /> <br /> Gateway: Playing a zero–sum game 10<br /> <br /> Microsoft s Zune: So what s better? 11<br /> <br /> Nortel: Playing the wrong game 12<br /> <br /> Woolworth s: Failure to focus 13<br /> <br /> Seeing a pattern 14<br /> <br /> Financial smoke and mirrors 14<br /> <br /> Share and share alike 16<br /> <br /> Marketing accountability 16<br /> <br /> A new approach 18<br /> <br /> Chapter 2 A process of Marketing Due Diligence 21<br /> <br /> Fast track 21<br /> <br /> What is marketing? 22<br /> <br /> What is the connection between marketing and shareholder value? 23<br /> <br /> What is the Marketing Due Diligence diagnostic process? 25<br /> <br /> Explicating the strategy 27<br /> <br /> Assessing the risks 29<br /> <br /> Assessing shareholder value creation 34<br /> <br /> What is the Marketing Due Diligence therapeutic process? 39<br /> <br /> Implications of the Marketing Due Diligence process 41<br /> <br /> Chapter 3 The implications of implementing Marketing Due Diligence 43<br /> <br /> Fast track 43<br /> <br /> The linkage to shareholder value 44<br /> <br /> The risk and return relationship 45<br /> <br /> A focus on absolute returns rather than risk 48<br /> <br /> Using probability estimates to adjust for risk 51<br /> <br /> Alignment with capital markets 56<br /> <br /> Turning Marketing Due Diligence into a financial value 57<br /> <br /> Adjusting marketing planning outcomes 57<br /> <br /> Placing the adjusted fi nancial return into context 58<br /> <br /> Allowing for capital at risk 60<br /> <br /> Highlighting deficiencies and key risks 62<br /> <br /> Implications for users 63<br /> <br /> Part 2 The Marketing Due Diligence Diagnostic Process 65<br /> <br /> Chapter 4 Assessing market risk 67<br /> <br /> Fast track 67<br /> <br /> Some important background to what constitutes success 68<br /> <br /> Short–term success 68<br /> <br /> Strategy and tactics 70<br /> <br /> The strategic marketing plan 71<br /> <br /> Market risk 71<br /> <br /> The meaning of product and market 72<br /> <br /> Combining product and market 77<br /> <br /> Product/market growth or decline 78<br /> <br /> Product and market combined 82<br /> <br /> Market risk assessment 86<br /> <br /> Conclusion 93<br /> <br /> Chapter 5 Assessing share risk 97<br /> <br /> Fast track 97<br /> <br /> What do we mean by share risk? 98<br /> <br /> How do we assess share risk? 100<br /> <br /> Assessing target market risk 101<br /> <br /> Assessing proposition risk 103<br /> <br /> Assessing SWOT risk 106<br /> <br /> Assessing uniqueness risk 108<br /> <br /> Assessing future risk 110<br /> <br /> Assessing other sources of share risk 113<br /> <br /> Aggregating and applying share risk 116<br /> <br /> Step 1: Explicate the marketing strategy 117<br /> <br /> Step 2: Assess the explicated strategy against the sub–components of share risk 117<br /> <br /> Step 3: Aggregate the sub–components into an overall assessment of share risk 119<br /> <br /> Step 4: Identify the growth component of the strategy 120<br /> <br /> Step 5: Moderate the growth component of the strategy to allow for risk 121<br /> <br /> Step 6: Allow for complex strategies 122<br /> <br /> The outcomes of share risk assessment 122<br /> <br /> Chapter 6 Assessing profit risk 125<br /> <br /> Fast track 125<br /> <br /> Introduction 126<br /> <br /> Profit pool risk 129<br /> <br /> Profit sources risk 135<br /> <br /> Competitor impact risk 138<br /> <br /> Internal gross margin risk 142<br /> <br /> Other costs risks 144<br /> <br /> Summary 148<br /> <br /> What do weak marketing strategies look like? 148<br /> <br /> Part 3 The Marketing Due Diligence<br /> <br /> Therapeutic Process 151<br /> <br /> Chapter 7 The key role of market defi nition and segmentation 153<br /> <br /> Fast track 153<br /> <br /> Introduction 154<br /> <br /> Correct market definition 155<br /> <br /> A crucial business discipline, not just a philosophical argument 155<br /> <br /> Market mapping 158<br /> <br /> Leverage points 162<br /> <br /> Market segmentation 165<br /> <br /> How customers vary: Needs–based segmentation 170<br /> <br /> Some final thoughts 178<br /> <br /> Chapter 8 Creating strategies that create shareholder value 181<br /> <br /> Fast track 181<br /> <br /> Starting from where we are 181<br /> <br /> Understanding and managing market risk 183<br /> <br /> Understanding and managing product category and market existence risk 183<br /> <br /> Understanding and managing sales volume, forecast and pricing risks 189<br /> <br /> Understanding and managing share risk 191<br /> <br /> Reducing target market risk 192<br /> <br /> Reducing proposition risk 192<br /> <br /> Reducing SWOT alignment risk 196<br /> <br /> Reducing uniqueness risk 198<br /> <br /> Reducing future risk 199<br /> <br /> Other components of share risk 200<br /> <br /> Understanding and managing profit risk 203<br /> <br /> Reducing profit pool risk 203<br /> <br /> Reducing profit source risk 205<br /> <br /> Reducing competitor impact risk 206<br /> <br /> Reducing internal gross margin risk 207<br /> <br /> Reducing other costs risk 209<br /> <br /> Summary and conclusions 210<br /> <br /> Chapter 9 Managing high–risk marketing strategies 211<br /> <br /> Fast track 211<br /> <br /> Allowing for risk 212<br /> <br /> Risk equals volatility 213<br /> <br /> Controllable versus uncontrollable volatility 214<br /> <br /> Using real option analysis 219<br /> <br /> Real option example 223<br /> <br /> Summary 228<br /> <br /> Chapter 10 Fast track: A summary and reminder of the marketing and finance interface 229<br /> <br /> The lessons of experience 229<br /> <br /> A process of Marketing Due Diligence 229<br /> <br /> The implications of implementing Marketing Due Diligence 231<br /> <br /> Assessing market risk 232<br /> <br /> Assessing share risk 233<br /> <br /> Assessing profit risk 234<br /> <br /> The key role of market definition and segmentation 236<br /> <br /> Creating strategies that create shareholder value 237<br /> <br /> Managing high–risk marketing strategies 238<br /> <br /> Afterword: What to do now 241<br /> <br /> References and further reading 243<br /> <br /> Index 245</p>