Think the unthinkable?

Managers of marketing, who are charged with the responsibility of getting and retaining business to produce profitable income for their employers, need to consider both the long and short term requirements of their employers business. Decisions that have short term positive results may have long term negative consequences, and visa versa.

As markets and businesses develop, so also do attitudes, legislation, and technology change, as well as other factors, which may profoundly alter the marketing environment in which a business operates. Such changes can and should bring about a full re-assessment of the business and its future, which may produce some radical views and ideas for consideration.

During the 1990s the Government of the day introduced legislation generally known as the Beer orders, to attempt to break up the control that the large brewing companies had over the pub trade through their tied public houses. This legislation severely limited the number of tied outlets that could be owned by a brewing company, and also required the remaining tied outlets to supply at least one beer from a different company, in order to improve customer choice and competition.

This change in the law was probably fundamental in a major reappraisal by Whitbread Group Plc, of its business and long-term future. Founded in 1742, Whitbread Group Plc was one of the largest brewing companies in Britain, with extensive interests in pubs, restaurants, hotels and leisure clubs. After careful re assessment of its business and future, and despite its origin and a long history of brewing, the company decided in 2001, to sell all its breweries and brewing interests to Interbrew, and the following year sold its pub estate, to Enterprise Inns.
The company is now firmly established in the hotel and restaurant market, and is totally divorced from its original business of brewing and pubs. Whitbreads radical departure from its original business is a good example of a business assessing it along term future, and radically altering where it would invest its assets and resources for the best sustainable return.

Marketers and managers in charge of getting and retaining business should, from time to time, be prepared to think the unthinkable. As businesses and markets develop and evolve, so the situation can arise where the founding work of the business may only provide short-term gains, but may no longer provide for a sustainable profitable long term future.

Marketers should not be deflected by vision statements, from their prime objective of producing income for the business. Vision statements are generally inspirational, but lacking in objectives, have little relevance to the day to day delivery of the business.

It is also possible that vision and mission statements may get in the way of clear thinking, obscuring rational and perhaps radical thought and creative solutions to changing markets and trading environments. Regardless of what vision and mission statements may say, the only purpose of any business is to make money for the benefit of both the shareholders and the workforce. As businesses develop and diversify into areas away from their original roots, marketers must be fully understand from where their profitable income is derived, where costs are incurred and where investment is needed for both short term requirements and the long term future.

While it was still heavily engaged in brewing and the pub trade, Whitbread had already expanded and diversified into the hotel and leisure industries, which had great scope for long term growth. By contrast, Whitbread considered that the opportunities in volume brewing were in decline, and therefore the requirement by legislation to sell the majority of their tied public house estate , was a singular opportunity to reassess the companys future both long and short term.

The principle lesson for marketers is that their prime responsibility is to produce and maximize sustainable profitable income of the business while minimizing costs, assets and investment, in order to develop and maintain the long term future of the business. The key question that has to be asked is, Are we in business to make a product or to make profitable income for the benefit of the shareholders and the livelihood of the workforce? Continuous analysis of the market environment and especially detailed analysis of the business’s performance within it, may frequently produce a requirement for cross road decisions, where there may be a choice between a short term gain with limited future, or a long term benefit for a sustainable future. Such decisions may be radical with serious repercussions. But sometimes thinking the unthinkable may, as with the example of Whitbread, be a road to a sustainable profitable long term future which is, after all, the purpose of business and marketing.

©N.C.Watkis, Contract Marketing Service 11 May 10
Contract Marketing Service, (Marketing Performance Consultants)

May 20, 2010   Posted in: marketing management

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