Interview by: Giles Metcalfe
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Professor Malcolm McDonald MA (Oxon) MSc PhD D.Litt FCIM FRSA, was, until recently, Professor of Marketing and Deputy Director at Cranfield University School of Management, with special responsibility for e-business. He is now an Emeritus Professor at the University as well as being an Honorary Professor at Warwick Business School.
Coming from a background in business which included a number of years as Marketing Director of Canada Dry, Malcolm has successfully maintained a close link between academic rigour and commercial application. He has consulted to many major companies from the UK, Europe, USA, Far East, South-East Asia, Australasia and Africa, in the areas of strategic marketing and marketing planning, market segmentation, key account management, international marketing and marketing accountability.
Malcolm is currently chairman of six companies and works with the operating boards of a number of the world’s leading multi-nationals on all continents.
Professor McDonald has written over 40 books, including the best seller Marketing Plans: How to prepare them, how to use them, now in its seventh edition.
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GM: What was the background to you writing the seventh edition of Marketing Plans?
Professor Malcolm McDonald:
This book has sold over half a million copies and if it is to retain its broad appeal, it has to be updated at least every three years to reflect the changes in the business environment.
GM: You’ve got a new co-author, Professor Hugh Wilson. What has he brought to the party for this latest edition, and what has changed since the sixth edition?
Professor Malcolm McDonald:
At 73 years of age, I was determined that this book should continue its good work, even after I am unable to update it. I needed a co-author who knows my work, research and philosophy as well as I. This person was Professor Hugh Wilson. Our research into Marketing accountability, CRM, Key Account Management, Social, web and mobile marketing over the past five years have been incorporated into the seventh edition, so it is totally up to date and state-of-the-art.
GM: Most business books are playbooks, roadmaps, or toolkits – yours is very definitely a toolkit. If anyone is unfamiliar with your book in its previous editions, what does the book consist of?
Professor Malcolm McDonald:
This book consists of four basic components: the process of marketing planning; the output of the process – the marketing plan itself; the tools and techniques involved in preparing the plan; and the organizational/cultural implications of implementing the plans.
GM: It’s a monster tome, full of insight, processes and procedures…
Professor Malcolm McDonald:
The latest book is actually reduced in size. Some readers follow it from cover to cover. Others delve into it to look for answers to specific problems. Most, however, use it as a step-by-step guide to preparing marketing plans, which is, of course, its purpose.
GM: In the book, you say that you have analysed over 700 marketing plans over a 25-year time span. What are the common shortcomings, and what should be done to improve them?
Professor Malcolm McDonald:
Plans are frequently too long, contain too much detail, fail to focus on the basics of successful strategy and nearly always reveal themselves as sales and profit forecasts based on past performance.
I have devoted much of my life to studying best practice in the world’s best companies. My on-going findings are incorporated in the book. The core of best practice is a deep understanding of the market, correct, needs-based segmentation, understanding the needs of customers in these segments, putting together value propositions to meet these needs, and then communicating these benefits to the identified target markets.
Following the process spelled out in the book is all that is necessary.
GM: What is your definition of marketing planning? How does it dovetail with Key Account planning?
Professor Malcolm McDonald:
Marketing planning is a logical sequence and a series of activities leading to the setting of marketing objectives and the formulation of plans for achieving them. Any manager would agree that a sensible way to manage the sales and marketing function is to find a systematic way of identifying a range of options, to choose one or more of them, then to schedule and cost out what has to be done to achieve the objectives. Not only have we explained very clearly in Chapter 2 where Key Account Management (KAM) fits in with marketing planning, but we have also included a substantial section on KAM which summarises our fifteen years of research at Cranfield into KAM best practice.
GM: You state that “while as a process, (marketing planning) is intellectually simple to understand, in practice it is the most difficult of all marketing tasks”. What is the reason for this?
Professor Malcolm McDonald:
It is difficult to undertake world class marketing planning because it involves a deep understanding of complex markets and the competitive landscape; but also because it can only work in practice if those in the organization charged with delivering value to the customers – i.e. those functions outside the marketing function – buy into the plan.
This poses problems, because many marketing departments spend their time on promotion, lack formal training in marketing skills, and fail to involve other departments in the planning process. Consequently, the plans are often inadequate and get ignored by most of the organization.
Take the example of a professional firm. Those who do the day-to-day marketing are people like accountants, lawyers, etc, so most market intelligence, needs analysis and value delivery takes place in these client interactions, whilst so-called “marketers” sit in the office producing promotional campaigns. They are, as a result, sidelined from real, corporate strategic planning. Consequently, when they try to produce marketing plans, they tend to be theoretical and lacking in real-world orientation.
GM: What is the difference between a strategic marketing plan and a tactical one?
Professor Malcolm McDonald:
“Strategy” is doing the right things, whilst “Tactics” is doing things right.
Having a good tactical marketing plan is pointless if an organization is doing the wrong things. It is a bit like making a stupid salesperson work harder – i.e., encouraging them to upset twice as many customers and to double the chaos! Marketing planning is similar. Preparing a good tactical marketing plan without an effective strategy can often result in doing the wrong things efficiently, which is clearly nonsense.
Hence, the strategic marketing plan should be prepared first. The one year marketing plan is merely the detailed scheduling and costing out of what needs to be done in the first year of the strategic plan.
GM: What is “anorexia industrialosa”?
Professor Malcolm McDonald:
In times of crisis, such as when there is a recession, accountants tend to recommend wholesale cost cutting. There are, however, only 100 pence in a pound, 100 cents in a euro etc, so cost cutting is finite, whereas value creation, the role of marketing, is infinite and is limited only by our creativity and imagination.
“Anorexia industrialosa” is an excessive desire to be leaner and fitter, leading to emaciation and eventually death.
GM: You say “In spite of the apparent simplicity of the process… marketing planning remains one of the most baffling subjects, both for academics and practitioners alike” – what are some of the myths surrounding the subject, and in what way do you debunk them?
Professor Malcolm McDonald:
We have a whole chapter explaining what these myths are, based on years of research at Cranfield and a number of doctoral theses. Let us explain here that these myths revolve principally around the perceived value of marketing planning. It is often considered to be a theoretical process, mostly because many marketing departments are populated by executives who lack formal marketing qualifications, who are, therefore, often very junior people. Such people lack the skills to prepare marketing plans and help to perpetuate the myth that it has little to contribute to corporate strategy.
Until marketing planning is undertaken by qualified executives, with the requisite skills to involve the whole organization in determining and delivering customer value propositions, the myth will prevail that it has little to contribute to corporate strategy.
GM: What barriers to adoption of a formalized marketing planning system stand in the way of a functional marketing executive? What do they need to do to get their message heard, and by which audience? How do marketing people best influence CEOs for instance?
Professor Malcolm McDonald:
Chapter 3 spells out unequivocally what needs to be done to overcome the problems of implementing and effective marketing planning process. Based on 37 years of practical experience and research into global best practice, we have identified ten steps, but rather than spell them out here, let us mention just a few:
- The first is cultural. Unless the board is customer/market focussed, there is little chance of implementing effective marketing planning. This is why the authors spend most of their time working at board level, following which; marketing planning is always successfully implemented.
- The second is that marketers need to acquire the necessary qualifications and skills. After all, no company would employ an accountant or a lawyer who wasn’t professionally qualified.
- The third is that, having acquired the necessary technical skills to carry out marketing planning professionally, marketers need to acquire political and communication skills, because it is only by getting the support of those in the organization who actually deliver customer value, that success will happen.
- Fourthly (and there are more), marketers need to learn the financial language of the boardroom. In particular, they need to learn how to justify promotional expenditure and, above all, to be able to prove that their marketing plans create shareholder value.
There is a whole chapter on this.
GM: How important is it to “plan for planning”?
Professor Malcolm McDonald:
“Planning for planning” means ensuring that the board is “on board”, that those in the organization who actually deliver value are trained to appreciate the role they have to play in marketing planning and that, when first introduced, a period of up to three years needs to be allowed before the process becomes fully effective. This is because mistakes are made in the first few years.
GM: What role does auditing play, and what are the best tools for the job? How can effectiveness be measured? Is there a metric?
Professor Malcolm McDonald:
The components of a marketing audit are fully explained in Chapters 4 and 5. Without a deep understanding of the environment in which organizations conduct their business (political, social, economic, technological), the competitive landscape and how our organizations compares with best current practice, it is impossible to develop a winning strategy.
There isn’t a metric as such, but the best organizations (by “best”, we mean companies that continuously grow the earnings per share and the capital value of the shares), always do a thorough audit prior to preparing their marketing plans. This ensures that analysis and the ensuing objectives and strategies are based on the latest information. Without such audits, marketing plans would be extremely risky.
A full list of what should be covered in a marketing audit is given in Chapter 2.
GM: Is top-down or bottom-up planning best, or does it depend on the organization?
Professor Malcolm McDonald:
It is explained in detail in Chapter 12 that in small, focussed organizations, top down planning is more effective, whereas in complex, multi-product, multi-market, multi-national, multi-functional organizations, a requisite marketing planning system is a combination of top down/bottom up planning. It isn’t this simple, however, because our research shows that during an organization’s development, sometimes centralised control, sometimes decentralised control is appropriate, whereas sometimes top down directive control is necessary, at others a bottom up approach is necessary. IT is too complex to explain here. Suffice it to say that we have simplified this topic in the book and provided exercises to turn the theory into practice.
GM: As the world moves ever faster, does planning still have a role to play in the fast-changing, fluid environment we operate in?
Professor Malcolm McDonald:
The faster the world changes and the more volatile the environment becomes, the greater the need to develop a strategy to deal with such challenges. To deny this is to misunderstand the role of strategic planning. Let’s remember that, although an audit is only carried out once a year, an organization’s management information system is continuously measuring the effectiveness of the tactical marketing plan. This tactical marketing plan, as explained in the book, contains assumptions about the future. These are risk-assessed and appropriate actions are taken (within the agreed strategy) to deal with deviations from the assumptions.
Strategic planning is more important than it has ever been, as customers have always sought the best value and it is interesting that most of the truly great companies have been around for a very long time.
GM: Who has had the most influence on you, either personally or in terms of your work?
Professor Malcolm McDonald:
Working with the operating boards of the world’s most successful companies continues to inspire me. As long as I can continue to work with perennially successful organizations, I will continue to learn more about best practice.
GM: You are currently the chairman of six companies and work with the operating boards of a number of the world’s leading multi-nationals. How do you find the time to combine this with being an Emeritus Professor at Cranfield University School of Management, fulfilling your other commitments, and write books too?
Professor Malcolm McDonald:
Throughout my career, I have learned the value of productivity. An ability to focus on the 20 per cent of things that produce 80 percent of the value enables me to achieve more. I have also applied the principles spelled out in the book to my private life. Have a clear strategy, and then devote energy to delivering the first parts of your plan.
I am retired; still play squash, golf, tennis and other sports. I still devote time to my family and grandchildren. Having a sense of proportion and knowing when to stop work is an important skill.
Above all, however, life is about focus and productivity.
GM: Are students and practitioners being let down or sold short by the existing literature and academic orthodoxy? Do you advocate a radical shake-up? What do you think Publishers could do to help the spread of good marketing planning?
Professor Malcolm McDonald:
I have just written a polemic to the British Universities Minister about the appalling gap which has opened up between most Business Schools and the world of practice. Our new generation of academics has no hope of a decent career unless they publish in the highest rated double blind refereed academic journals (most of which are in an American, closed shop, twisted citation system). They are accordingly disincentivised from teaching and spend their time writing quantitative papers on issues which are too trivial to be of any relevance to practitioners. In my view, whilst there is a case to be made for pure scholarly research in marketing, the REA/REF funding process has pushed this to such extremes that very few academics are capable any longer of teaching their research in a meaningful way. Consequently, students are often being taught by inexperienced assistant researchers and students are warned by their faculty about complaining, lest it lessens the quality of their degree. This closes the loop quite nicely!! For those who want the full polemic, with references, please contact [email protected].
GM: How has the discipline changed and what for you have been the most dramatic developments over the last 25 years?
Professor Malcolm McDonald:
The discipline as a domain hasn’t changed much over a quarter of a century. The problem with marketing is that there have been no dramatic developments at all – and please don’t say “Relationship Marketing” (RM). RM is what good marketing has always done. But the RM “Nordic, happy-clappy, touchy-feely, muesli-eating, hand-holding, humming school” (sic), banging on about delighting customers, puts us back rather than moves us forward, and thank goodness we are now back to normality. I can prove in a flash why delighting customers will send you bankrupt. There never was any substance to it.
Marketing will only progress if we get the basics right. Market segmentation, for example, the heartbeat of successful strategy, is still grossly misunderstood and badly taught over fifty years after Wendell Smith first introduced the topic.
Key account management has grown in importance as markets matured and as customers got bigger and more powerful. But again, very few Business Schools even bother to put it on the curriculum, in spite of its crucial importance. Cranfield, where we have been researching KAM global best practice for 15 years, and Portsmouth, are rare exceptions.
Without doubt, however, it is the advent of popular technology that has changed the balance in favour of customers, who now know more about suppliers than they know about them. (See my comments in response to the next question). This will force suppliers to abandon the old-fashioned, input/output models, which were based on a supine consumer responding to messages from the supplier.
GM: How has the advent of digital and social media marketing channels impacted on your work?
Professor Malcolm McDonald:
I recently gave a keynote address at a Technology for Marketing and Advertising event at Earls Court. There were 2,000 managers racing around the stalls, all of whom were offering Web, Mobile, Digital etc “Solutions”. I made the point (see my answers to question 9 above) that without a deep understanding of how their market works and without proper needs-based segmentation and an understanding of the needs of the customers in each segment, messing about with the likes of social media is a waste of time – a classic case of doing the wrong thing more efficiently!
As I said above, the customer is now in charge and will no longer tolerate untargeted, generalised, manipulative messages in media favoured by the sender. Each segment has its own preferences for the use of media at different stages of the sales process and, unless these are understood, marketing as a discipline will continue to be largely ignored. It’s what causes some marketers to boast of getting a 3 per cent response rate from a direct mailout, which means that their untargeted rubbish upset 97 per cent of those who received it!
However, as long as I continue to focus on the basics and encourage my clients and students to do the same, absorbing the impact of technology through media is really easy. We have substantial sections in the book on mobile, web, social and multi-channel marketing.
GM: What do you think the future has in store for marketing? Will the trend of moving away from push to pull marketing continue, or will some form of hybrid emerge or evolve?
Professor Malcolm McDonald:
Marketing will continue to be a much-divided discipline until we learn to speak the financial/fiscal language of the boardroom. The 2008 Deloitte report made it clear that CEOs and CFOs are no longer tolerant of CMOs who continue to spend substantial sums of money without financial justification.
There is a new chapter in the book (based on ten years of research at Cranfield) called “Marketing Accountability”. In it we spell out three levels of financial measurement of marketing:
- the strategic level
- the tactical level, such as promotional effectiveness
- the corporate level, justifying to the board that our strategies create shareholder value, having taken account of the time value of money, the cost of capital and the risks associated with our strategic marketing plan.
There is no choice. Senior Marketers must embrace these techniques if they are to be taken seriously.
Finally, as stated above, successful marketing has always been customer/market driven, so we will definitely see a move away from push marketing – otherwise, firms will just not survive.
GM: Finally, are there any closing comments you would like to make?
Professor Malcolm McDonald:
I am a passionate believer in professionalism in Marketing. In the UK alone there are a million so-called “Marketers”, of whom only a minute fraction are qualified professionals. I have devoted much of my life to bodies such as the Chartered Institute of Marketing. I spent at least half of my working life encouraging students and managers to become professionally qualified. I am a chartered Marketer myself (CIM) – indeed, I was the world’s very first Chartered Marketer. We will soon have a critical mass of around ten thousand Chartered Marketers and we will then be able to lobby boards of directors to recruit only qualified marketers. After all, they don’t recruit accountants, engineers, lawyers and the like who aren’t qualified.
For me, then, this is my biggest hope for the future of the discipline we all love – to be held in the same high regard as other professionals.
June 2011.