Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic

Marketing: A

Global−Managerial

Approach, 14/e

19. Implementing and
    Controlling Marketing
    Plans: Evolution and
    Revolution

Text © The McGraw−Hill

Companies, 2002

566 Chapter 19

Smith is having real trouble with portable cassette players. Was the problem

Smith or the players?

Further analysis by product for the whole region shows that everyone on the

Pacific Coast is having trouble with portable players because customers there are

buying MP3 players that come from another company. But higher sales on other

products hid this fact. Since portable player sales are doing all right nationally, the

problem is only now showing up. You can see that this is the majorproblem. If

Stereo doesn’t offer an MP3 player, it will just slowly lose sales as more customers

shift to MP3.

Since overall company sales are fairly good, many sales managers wouldn’t bother

with this analysis. Some might trace the problem to Smith. But without detailed

sales records and performance analysis, they might assume that Smith—rather than

the missed opportunity to add a new product—is at fault. And Smith herself might

not be able to pinpoint what’s happening.

This case shows that total figures can be deceiving. Marketing managers need

facts to avoid rash judgments based on incomplete information. Some students want

to fire Smith after they see the store-by-store data (Exhibit 19-9).

The home office or computer network should have the records to isolate prob-

lem areas—managers then rely on the field staff for explanations and help with

locating the exact problem. Continuing detailed analysis usually gives better insights

into problems, as this case shows. With computers, managers can obtain informa-

tion routinely and in great detail, provided they ask for it.

One of the most interesting conclusions from the Stereo illustration is the

iceberg principle—much good information is hidden in summary data. Icebergs

show only about 10 percent of their mass above water level. The other 90 percent

is below water level, and not directly below either. The submerged portion almost

seems to search out ships that come too near.

The same is true of much business and marketing data. Since total sales may be

large and company activities varied, problems in one area may hide below the sur-

face. Everything looks calm and peaceful. But closer analysis may reveal jagged edges

that can severely damage or even sink the business. The 90:10 ratio—or the 80/20

rule we mentioned earlier—must not be ignored. Averaging and summarizing data

are helpful, but be sure summaries don’t hide more than they reveal.

Sales ($000)

500

400

300

200

100

Product:

Performance to

quota:

Quota

Actual

Others

100%

Speakers

110%

Stereo

turntables

100%

Portable

cassette

players

37%

Compact

disc players

114%

(^801001105050)
(^160150150)
430
70
Exhibit 19-10
Sales Performance by
Product for Shanna Smith in
Portland District,
January–June ($000)
Stay home and use
the computer
The iceberg principle—
90 percent is below
the surface