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

Implementing and Controlling Marketing Plans: Evolution and Revolution 567

So far we’ve emphasized sales analysis. But sales come at a cost. And costs can and

should be analyzed and controlled too. You can see why in the case of Watanake Pack-

aging, Ltd. (WPL). WPL developed a new strategy to target the packaging needs of

producers of high-tech electronic equipment. WPL designed unique Styrofoam inserts

to protect electronic equipment during shipping. It assigned order getters to develop

new accounts and recruited agent middlemen to develop overseas markets. The whole

marketing mix was well received—and the firm’s skimming price led to good profits.

But over time competing suppliers entered the market. When marketing managers at

WPL analyzed costs, they realized their once-successful strategy was slipping. Personal

selling expense as a percent of sales had doubled because it took longer to find and

sell new accounts. It was costly to design special products for the many customers who

purchased only small quantities. Profit margins were falling too because of increased

price competition. In contrast, the analysis showed that online sales of ordinary card-

board shipping boxes for agricultural products were very profitable. So WPL stopped

calling on smallelectronics firms and developed a new plan to improve its website and

build the firm’s share of the less glamorous, but more profitable, cardboard box

business.

Detailed cost analysis is very useful in understanding production costs—but much

less is done with marketing cost analysis.^10 One reason is that many accountants show

little interest in their firm’s marketing process—or they don’t understand the

different marketing activities. They just treat marketing as overhead and forget

about it.

In the next chapter, when we discuss the relationship between marketing and

accounting in more detail, we’ll explain how some accountants and marketing man-

agers are working together to address this problem. For now, however, you should

see that careful analysis of most marketing costs shows that the money is spent for

a specific purpose—for example, to develop or promote a particular product or to

serve particular customers.

Marketing Cost Analysis—Controlling Costs Too

For a restaurant to be profitable,

the manager needs to worry not

only about satisfying customers

but also about how much each

item contributes to overall costs.

Marketing costs

have a purpose