Control – the basic principles - Marketing Strategy

The basis of control is the ability to measure. In essence it compares what should have happened with what actually happened or is likely to happen. Given the importance of measurement, a tendency exists to measure what is easy to quantify rather than what is important. Project managers must guard against this and focus on the key areas. Good control systems often detect and rectify problems before they become significant and managers should remember that prevention is better than cure. Try to be proactive rather than reactive.

The process is broken down into a series of simple steps. Firstly, a target is set. Ideally, this is integrated into overall strategic planning. Secondly, a method of measurement has to be determined and implemented. Finally, measured results are compared with the predetermined target(s) and corrective action, if required, is undertaken. There are two sides to the control equation – inputs and outputs. If only output is considered then the system is one of inspection as opposed to control. Correctly addressing both sides of the equation allows management to optimize the process and take a strategic view.

Typical inputs include :

• Finance :investment, working capital and cash.
• Operations :capacity, usage, efficiency and application of machines, systems and other assets.
• People :numbers, quality and skills of staff.

Output is measured in terms of overall system performance. Performance is derived from a combination of efficiency and effectiveness:

• Efficiency : How well utilized are the inputs? Do we make maximum use of finance, minimize cost and operate at optimum levels of capacity?
• Effectiveness : Are we doing the right things? This relates to actual performance and will include sales revenue, profit, market share and measures of customer satisfaction.

Remember, it is better to pursue effectiveness. For example, accompany may be a very efficient producer (low cost, high volume, etc.) but relatively ineffective at finding buyers for its goods. Control systems can operate as simple feedback loops. The Below Figure illustrates the concept. However, more sophisticated systems of feed forward control are possible. Such systems try to pre-empt problems by anticipating the effect of input(s) on overall performance. However, such systems are more complex and consequently more difficult to set up.

Feedback control.

The Below Figure illustrates the application of a basic control loop to the marketing management process. Here marketing objectives, such as increasing market share, are translated into performance targets. These targets define a specific measurable basis against which managers will be judged. The objective of increasing market share would be quantified. For example, we may aim at a 7 per cent increase over twelve months. Responsibility for achieving the target is assigned and actual performance is evaluated against planned performance. The adjustment of the process is achieved by management action and/or altering the objectives or standards within the system. In this way, the system becomes flexible and can react to changes in performance and the business environment.

Marketing control systems.