The Marketing Book 5th Edition

Existing New

Existing

New

CUSTOMERS

PRODUCTS

MAIN

STRATEGIC

THRUST

Controlling marketing and the measurement of marketing effectiveness 525

field. Space does not permit any detailed
discussions of these approaches, but appro-
priate references are provided at the end of the
chapter for interested readers.
If the main strategic thrust of the business is
based on customers, it is also important that
these customers form an important element in
the performance measures used for the various
areas within the business. If this is not done,
many of the business support areas will focus on
achieving their own performance measures,
often to the detriment of the long-term develop-
ment of these critical customer-based assets.
This CAP analysis is complicated even
further when the business sells through an
indirect channel of distribution to the ultimate
user of the product, e.g. as is done by many
consumer goods businesses which sell directly
to wholesalers, distributors or retailers, which
then sell on to the consumers. Increasingly, this
type of business wants to have sound financial
analysis on both its direct customers and its
ultimate but indirect consumers. Thus, many
fast-moving consumer goods companies, par-
ticularly in the USA, have invested very large
sums of money in developing very extensive
consumerdatabases. This enables them to know
much more about who eventually uses their
product, even though they bought it indirectly.
Clearly, if the strategy is to develop new

products (which will appeal to these same

consumers), this knowledge is critical. How-

ever, it also illustrates a significant potential

competitive advantage for the indirect channel

of distribution (e.g. the retailer), because they

can gain even more detailed customer informa-

tion much more cost effectively. This is being

used very proactively by major retailers with

their significant investments in both customer

loyalty programmes (such as store cards, etc.)

and retailer branding, which enable them to

develop appropriately designed and tailored

new products.

Product-based strategies

An alternative, but possibly equally attractive,

strategic thrust is to base future growth around

existing products (Figure 20.10). These prod-

ucts may also be strongly branded, but the

critical element in the strategy is that the

growth opportunities are based on finding new

markets, new segments or new customer

groups to which to sell these products.

Not surprisingly, this strategic thrust

should be built on those products which can

achieve a sustainable level of super profit in

their existing markets. Hence, a key financial

Figure 20.10 Product-led strategies: maximizing value of existing products