Experience with Marketing Improvement Programs

Services Marketing:
Consumer Goods Marketing:
Business to Business Marketing:

Services Marketing:

Performance of a marketing improvement program for an oilfield services company: The CEO of a successful company, specializing in sales of various services to the oil industry, wished to evaluate the company's current marketing effort. He was especially concerned that the company might need a fundamental change in its marketing strategy.

Consultants performing the marketing audit focused on developing a better understanding of the decision process customers used to award contracts for the company's services. Contrary to the expectations of most managers in the organization, price did not emerge as a dominant consideration among oil company customers' decision criteria. Instead, quality and reliability issues dominated the decision process. Moreover, the consultants found that the company had uneven quality of service delivery compared to competition.

Armed with this understanding, the auditors and company management reaffirmed the current marketing strategy, but placed heavy emphasis on improving operations and quality control, increasing sales call frequency, and promoting the company's strengths in technology and breadth of services. The company successfully raised prices on certain types of survey work while continuing to improve market penetration.

Performance of a marketing improvement program for a wireless telephone provider: For a new provider of wireless services using a brand new technology that could also provide a dispatch (i.e., multiple points of contact) service with its wireless system, Hamilton Consultants performed a marketing audit using its six-point evaluation technique. A variety of users were interviewed, as well as sales people and inside management. Distributors were also evaluated. The audit revealed that the target market needed much further refinement, especially in light of changing technology provided by other competitors. The main result of the study was a combining of sales forces and a targeting on some specific industries that the technology was best suited to address.

Performance of a marketing improvement program for a coin telephone division of an operating telephone company: Management of the coin telephone division of a large U.S. telephone company sought an extensive review of its current marketing strategy and activities. This review was to become the basis for developing a focused marketing strategy to exploit emerging market opportunities.

Consultants undertook a review of cost and revenue data pertaining to the individual coin phones as investment centers; they interviewed all division managers and the "territory managers" who placed telephones at various locations; and they traveled on the routes of several of the territory managers. The division's marketing organization was evaluated for efficient use of marketing resources. This "marketing productivity" analysis examined key accounting data, which sharply exposed the widely varying profitability among alternative services and market segments.

Final recommendations constituted a sweeping change of the division's organizational structure, measurement systems, information gathering and market planning functions. The division also emerged from the audit more committed to pursuing only those revenue opportunities that actually produced profit for the division. This was important in a regulatory environment that was beginning to value rate stabilization more than extension of service.

Performance of a marketing improvement program for a northeastern gas utility: Two marketing audits were conducted for the same gas utility over a ten year period. In the first assignment, the marketing auditors analyzed existing marketing efforts of the company and made recommendations in the areas of market analysis, promotion, and organization.

The initial marketing audit occurred a few years after the U.S. gas shortage that led to the paring down of sales operations at most gas utilities in the country. Analysis of trends in gas and oil supply and population growth, however, suggested a positive outlook for the gas utility. The outlook was particularly good if the utility emphasized economic extensions of mains and gas use on additional appliances for customers already on mains.

An analysis of market potential defined the characteristics and potential of eleven unserved residential market segments. The segments were defined according to whether customers were on mains or not, and which of the customers' four primary appliances (heating, hot water, stove, and dryer) used gas, oil, or electricity. The final report included recommendations on primary target market segments, promotion plans, and organizational changes to consolidate the sales and marketing operations from three locations to one.

The client implemented the recommendations and for a long period of time grew revenues by focusing its marketing on "converting" oil heating customers to gas. This conversion segment had been the dominant one the marketing auditors discovered in their marketing audit process.

Northeastern gas utility (continued): The second engagement with this same gas utility occurred nearly ten years later. The client had elevated marketing to a vice presidential post within the past year, and the President and new Vice President of Marketing were considering the best way to organize the marketing function, set priorities for marketing activities, allocate resources, and measure marketing performance.

At the outset, consultants determined that the market for converting oil heating customers to gas heat was declining, and that further growth would have to come from somewhere else. For residential customers, the consultants analyzed existing marketing programs, computerized customer data, market survey data, and financial investment models. They identified the six most important residential market segments for the company to pursue, and showed how programs for these segments could be financially evaluated.

The consultants also greatly simplified segmentation of the commercial and industrial customer base and designed research to determine the potential of each of the ten segments identified. Finally, the consultants worked with the Vice President of Marketing to develop an organization and set of measurements that would carry out the segment-oriented marketing strategy.

With new markets identified that comprise almost 100% of the existing size of the company, and a "game plan" developed with the consultants on how to exploit the markets, the client is pursuing aggressive growth goals with a new marketing organization in place.

Performance of a marketing improvement program for a women's career-oriented college: A private women's college sought assistance in determining what direction it should take in seven "strategic decision areas": size of total enrollment, size of enrollment of male students, the mix of day and resident students, academic programs for full-time students, academic programs for the community, adjustments to tuition and expense, and communications.

To fully evaluate these strategic alternatives, the consulting team used a marketing audit approach. It performed surveys of students, alumnae, faculty and administrators, guidance counselors, community leaders, employers, and other colleges. The consultants also performed analyses of financial, application, and enrollment data.

The consultants worked with the administration and planning committee of the trustees to develop final strategy recommendations, which centered on programs offered, enrollment policies, and promotional materials. One result of the audit was a re-affirmation to maintaining the orientation of the college as primarily a women's career-oriented institution.

Performance of a marketing improvement program for the installation, repair and maintenance division of a large equipment company: Management for a $100 million service division of a large equipment company requested a marketing audit one and a half years after making substantial organizational changes. They believed it was time to see if the new organization structure was working well, and whether marketing could be improved still further. This division, a profit center, was responsible for installing, repairing and maintaining large pieces of equipment sold by other divisions of the company.

The marketing auditors reviewed internal financial, sales and market research data, and visited both marketing regional offices and customers. The primary "competitors" to the division were those customers who chose to repair and maintain their own equipment, once installation was complete. Therefore, the challenge to the division was to demonstrate the superiority of its service and provide service enhancements that customers could not provide themselves.

Customer surveys revealed that the service provided was uneven in quality, and spare parts were not always available. Analysis of new business generation activity highlighted that it tended to be best in the immediate vicinity of local offices and weakest where equipment installations were several hundred miles away. In addition, ties between the division and the salesforces for original equipment sales were not strong.

Among the key recommendations for change were:

Deepen penetration in weaker areas through aggressive pricing (the company's prices had been rising faster than general price indexes and it was losing volume).

Develop a product based upon the amount of uptime the serviced equipment is running.

Communicate breadth of services and true costs of self-servicing to non-customers.

Develop measurement systems that favor selling new services, not just servicing existing customers.

Performance of a marketing improvement program for a building materials wholesaler: For a large midwestern supplier of building materials, Hamilton conducted a marketing opportunity analysis to address the declining market share of the company and its loss situation. The audit of marketing activities included an evaluation of pricing procedures as well as a review of the selling process, including ride-alongs with sales people. One of the significant findings was that customers felt prices from our client were low compared to competition, whereas client management had assumed they were higher than competition. A major result of this study was a change in pricing so that at least small orders would be priced to better reflect the higher costs of the lower quantities.

Consumer Goods Marketing:

Performance of a marketing improvement program for a fishing boat manufacturer: A leading provider of a specific class of fishing boats was reviewed by Hamilton Consultants at the request of its investor group. There was concern that additional profits were needed to cover the high debt service created by the recent leveraged buyout of the company. The owners believed that the company's extensive marketing costs, which were 15% of revenues, should be reduced to create better profit in the company.

Hamilton Consultants did an extensive audit of all marketing activities including advertising, sales, product design and pricing, and concluded that the marketing expenses that this company undertook were the linchpin for creating a whole industry for this class of boat, and without these expenditures the interest in the whole recreational area would decline. The investors were surprised at these findings but accepted them, and the company continued to lead the industry for the next ten years.

Performance of a marketing improvement program for a construction products company: Faced with stagnant sales and market share, the president and chief operating officer of a $60 million home construction products company sought a product and market strategy to recover lost ground and position the company for long term growth.

Hamilton Consultants used its 6-step marketing audit approach to structure the research, analysis and recommendations for the client. The consultants conducted in-depth market research including industry trend analysis, review of pricing and distribution alternatives, and competitor analysis. Both millwork jobbers and lumber dealers were interviewed in person and over the telephone. Internal analysis focused on product line profitability, sales penetration, manufacturing capabilities, and competitive advantages.

The audit concluded with an all-day meeting of the executive committee to review results, and to assign analytical and action tasks to be performed by fifteen management members to implement the new strategy. Examples of the re-directions in marketing strategy recommended by the marketing auditor and subsequently adopted were:

Customize the marketing strategy to the buying practices and construction techniques of different regions of the U.S.

Increase the size of the salesforce by forty percent to penetrate underserved markets.

Add features to a high price, high profit product to enhance its perceived value relative to other lower-priced, similar products.

Develop a contingency plan in case of loss of the biggest distributor customer. (This helped the company improve its negotiating posture with this customer; later, when this customer dropped our client's product line, the client was well prepared to "blitz" the market, and sold directly to the distributor's customers until a new distributor was named.)

Re-affirm the company's selling of systems made up of both manufactured and distributed items; financial analysis showed that substantial contribution was generated from distribution as well as manufacturing.

The company continues to be a leading merchandiser and product innovator in its industry.

Performance of a marketing improvement program for a major publishing company: A major reference book publishing firm, faced with several years of declining market share, retained consultants to conduct a detailed marketing opportunity analysis in search of solutions to the current market share trend.

The consultants conducted a literature search to characterize the historic and current market environment. Customer focus group interviews, management interviews, and observations of competitors' sales presentations provided additional background. A sales forecasting model based upon demographic and psychographic data helped frame final recommendations and action plans.

The consultants recommended two new marketing approaches for the product line, one a radical departure from industry practice. Both recommendations were implemented. Implementing the revised marketing strategy was one of several actions taken by management to bring the company back to a strong financial position.

Performance of a marketing improvement program for a canned food packager: A Hamilton principal managed a marketing audit for the combined operations of two canning companies. Both companies had just been acquired by a large, diversified firm.

The two companies, operating in the same industry, utilized radically different marketing approaches. Therefore, a key element of successfully combining the companies' approaches was to develop a central marketing philosophy and strategy to guide both operations. The marketing auditors interviewed principals of both companies and a variety of market participants to establish the relative position of both operations in the market place. This analysis identified unique strengths and weaknesses of both operations.

From this basis, the consultants established a central marketing strategy that provided leverage from the strengths of both companies and positioned the combined operation for growth. The consultants and management team generated both a short and long term marketing plan that emphasized the following:

Keeping one brand as the national brand, and using the other only in regions where it had been strong

Adding food brokers and increasing promotional efforts in weak territories

Substituting special pack promotions and advertising for some of the existing price concessions, and

Adding a "selects" product that would be of higher quality and sell for a higher price.

All recommendations were followed by the client. Five years later, division management financed purchase of their business from the parent, an industrial company, and the new company operates successfully as an independent today.

Performance of a marketing improvement program for a telephone company Yellow Pages division: A Hamilton Consultants principal led a three-person marketing audit team in their work with the management of a Yellow Pages operation for one of the big telephone companies. Management of the department expressed four objectives at the beginning of the assignment:

Evaluate the uniqueness of the company's particular Yellow Pages market.

Evaluate the effectiveness of the marketing effort.

Recommend improvements in marketing.

Recommend methods for measuring performance.

The team undertook a number of research efforts, including executive and staff interviews, field interviews with salespeople and observation of the sales process while accompanying salespeople, one day visits with Yellow Pages departments in six other telephone companies, and detailed analysis of sales results data.

Among the recommendations made by the marketing audit team were a call for consolidation of all marketing activity from two locations to one, setting up a new product management function, setting up the ability to measure profitability by market and even the individual directory level (some directories appeared to be very profitable and subject to potential competition due to a high price umbrella and some directories were very unprofitable), and using their own internal results data much more effectively to pinpoint where sales effort would be most profitably applied.

The client adopted many of the recommendations and continued to grow its revenue, despite a slow growing regional economy. Management later shared the results with the other yellow pages companies that had participated in the study.

Performance of a marketing improvement program for a photographic products company: A multinational company was concerned that one of its in-country divisions competing in the photographic products industry was unprofitable and was losing market share. Senior corporate management sought a marketing audit as a diagnostic tool to improve division performance.

The marketing auditors examined both the consumer and professional retail markets and concluded the company would have further difficulties competing against the dominant competitor in this industry unless several changes were made:

The division needed short term transfer price or profit relief in order to afford the penetration marketing it required.

The company needed to round out its product line with an important product it was missing.

The division had to stop offering its products at prices lower than competition, when, in fact, its product quality was better than the competition. This was causing confusion to the trade.

With a major product void, the division continues to struggle. The volume of its existing product lines, while somewhat profitable, does not throw off the contribution needed to afford major advertising programs that compete with those of large competitors. The division has begun to shift its emphasis to other equipment product lines.

Business to Business Marketing:

Performance of a marketing improvement program for an automotive parts manufacturer: The new president of a supplier of truck and trailer brake components brought in consultants to conduct a marketing audit, with heavy emphasis on understanding the current market environment. The consultants visited present and potential customers, interviewed management, and reviewed available industry data.

An immediate threat to the company was that its biggest customer, an intermediate supplier to truck and trailer original equipment manufacturers (OEMs) of systems that used the company's product, was starting to manufacture its own version of the product the client provided. If the client company did nothing new, it faced a declining sales picture.

Examples of consultants' recommendations included:

Initiate a high degree of sales contact by the new president with existing customers to demonstrate the new company leadership, and that the company would emphasize high quality and service in the future.

Design and introduce a communications campaign with all OEMs, especially those being served by the intermediate supplier who was starting to manufacture a competitive component.

Develop a brochure to convey the company's high-quality image and the variety of products it was selling.

Start up a more aggressive program for working with engineering departments at customer companies to determine other needs so that new products could be developed.

The client followed these marketing recommendations, and at the same time streamlined his manufacturing operations. The company eventually became the industry leader in volume and product quality.

Performance of a marketing improvement program for the fibers division of a major chemical company: The general manager of a $200 million synthetic fibers division of a major chemical company hired consultants to conduct a marketing audit. The primary objectives of the audit were to increase top and middle management's marketing orientation and to instill a broad, strategic perspective in the planning process. Information sources used by the consultants were:

Interviews with a sample of mill, distributor, and retail principals.

Travels with members of the sales force.

A tour of the fiber plant and R&D center to relate cost, quality and technology issues to marketing.

Interviews with several levels of division management in a variety of functions.

Attendance at the division's quarterly business meeting.

Review of division plans.

Review of existing marketing research reports.

As a result of the audit, the consultants found this division to be one of the most planning-oriented and marketing-oriented organizations it had seen. Nevertheless, the consultants recommended several refinements that were later implemented by management. Among them were:

Increase emphasis on account-by-account analysis and planning.

Determine, through research, which marketing elements are important to customers and require emphasis.

Integrate second-level people into planning.

Develop techniques for forecasting consumer demand by region and style.

Emphasize tightly controlled merchandising programs instead of price discounts.

Increase division contact with mill, distributor, and retail salespeople.

Emphasize target marketing in foreign markets.

Make a concerted attack on product image problems.

Determine possible customer-salesperson interface problems in accounts to which the division was not selling.

The division continued to be a strong market-driven competitor in the fibers markets it serves.

Performance of a marketing improvement program for a semiconductor manufacturer: Consultants were retained by a diversified electronics manufacturer to conduct a marketing audit for the company division that designed and manufactured semiconductors. This division was serving both internal company markets and external merchant and custom markets.

The audit process started with a detailed historical review of the division to identify the roots of current strengths and weaknesses, its traditional responses to problems and challenges, and its current stage of development. Consultants also reviewed critical elements of the overall semiconductor environment and provided focused examination of both the internal and merchant market environments.

The audit determined that division attention to growth and profit goals for the external market were seriously undermining its credibility and capability for serving the important internal market. The division was running behind schedule on important semiconductor design projects for sister divisions.

The consultants then worked with division and corporate management to show that corporate goals would be better realized if the division focused on serving the design needs of sister divisions. In fact, the company eventually sold off its semiconductor foundry, realizing that the key to corporate success was in chip design, not manufacturing.

Performance of a marketing improvement program for an industrial filter company: Consultants worked within a large processing company to perform a marketing audit for a division that manufactured industrial filters. Division management especially wished to explore new market opportunities for their existing product line and uncover new filter opportunities to be gained from technical product improvements.

Utilizing in-depth interviews of existing and potential customers and a review of market trends, consultants effectively identified high growth segments within the food, beverage and chemical processing industries. The analysis was further refined to identify major technical problems experienced by current filter customers, the filter purchase decision process, competitor analysis, and industry growth projections.

Armed with a detailed understanding of customer needs and industry trends, management of this filter manufacturer focused their business generating efforts on a few attractive markets. Using the audit results, management of the division later negotiated with corporate management for a leveraged buyout of the division so the organization could better focus on the newly defined opportunities.

Performance of a marketing improvement program for a division of a large company selling materials to the shoe industry: At the request of corporate management of a diversified company, consultants performed a marketing audit for a division selling shoe upper materials. The primary objectives were to evaluate the division's future business prospects and, in turn, to recommend what should ultimately be done with the division.

An extensive survey was made of buyers in shoe companies to determine their attitudes about the company and the products it supplied, particularly a new product that division management hoped would be a major factor in the division's growth. The consultants also reviewed published industry data and interviewed corporate and division executives to develop a detailed analysis of the division's marketing process.

The consultants determined that unless the new product became highly successful within two years, the company should divest itself of the division. This recommendation was made because the division's business was in a poor competitive position, and was only weakly related to the basic business of the larger corporation. This division required an extensive degree of merchandising and product reformulation to meet fashion trends, while the core corporate business was in industrial chemicals. The new product never did gain wide acceptance, and the company eventually sold the division, consistent with the consultants' earlier recommendation.

Performance of a marketing improvement program for a hybrid corn seed company: Corporate management of a multibillion dollar company commissioned a number of divisional marketing audits as part of a corporate-wide effort to raise marketing awareness and expertise. A Hamilton Consultants principal was asked to manage a marketing audit for a $50 million division producing and distributing hybrid corn seed. The division had been an industry leader in earlier decades, but was headed toward becoming a lesser player in an industry dominated by one very successful company.

The marketing audit team undertook extensive interviews with farmers and "farmer-dealers" for the company's and competitors' corn seed. In addition, review of the division's past marketing practices identified several marketing mistakes, such as cutting back the salesforce and trying to advertise strengths in the company's product line that it did not have. The essential problem, however, was that the company's hybrids, for a period, had not performed up to the level of competitors' products.

The consultants encouraged a "go slow" policy of introducing and then broadly distributing new hybrid products. The company's future success was dependent upon its new hybrids, and the only way farmers would adopt them was knowing that they had been tested under a variety of geographic and climatic conditions over several growing seasons. The market research had shown that the company needed to minimize farmer risk. Therefore, rapid distribution of hybrids, in hopes of catching up to competition, would only serve to increase farmer risk inordinately.

The company adopted this realistic view that regaining market share via new products would be a slow process, but was the optimal direction to pursue. Upon the consultants' recommendations, it also added more salespeople to expand volume, and changed its advertising policy.

Performance of a marketing improvement program for an energy trading company: Hamilton was asked by a client trading gasoline and other fuels to audit its efforts to market various packages of energy services. The company group was very successful financially in its trading business, but its marketing company was not a big money-maker. Hamilton's consultants interviewed over 75 CFO's and energy buyers in a variety of customers and non-customers in industries ranging from transportation to home heating oil dealerships. Internal operations were also evaluated according to Hamilton's extensive six-category framework.

The audit revealed that buyers were not looking for sophisticated risk management energy packages, but simply lower-priced energy. As a result, the salesforce efforts were scaled back and concentrated on customers most economically served.