| Tom
Hespos' a few weeks back is still one of the hottest discussion
topics on the Spin Board. He wrote an open letter to the news media,
saying, "I just thought I'd write you a letter to let you know how
disappointed I am in your coverage of world events. Ten years ago, I
would have taken the word of CNN or The New York Times as gospel.
These days, I'm a lot more skeptical."
More than 70 people (an unprecedented volume for the Spin Board) were inspired to respond and the debate is still hot. One posting read, "This is without question, far and away, the best piece I've ever read in Online Spin." |
Friday, March 28, 2003
Marketing Logistics Revisited
By David L. Smith Two short years ago (seems like light years) I wrote an article for MediaDailyNews regarding marketing logistics and how we get our business and marketing terminology from warfare. The nightly news has definitely brought this back to mind. As I was watching on Wednesday night, seeing the convoy of gas trucks charging and sometimes fighting their way to the front lines to enable the tanks to continue their move on Baghdad, I was reminded of the Battle of the Bulge, where the allies beat a superior German tank force because the Germans ran out of fuel. Today's Spin brings that article forward to 2003 with some comments revisited and some updated.Up until the early 1980's, strategy and tactics defined wars. World War II was largely a strategic war, for both sides. Vietnam was a war fought for strategic purposes that ended up being tactical. The Falkland's War was different. It was the first war ever fought that was based on logistics. There was certainly no strategic reason for Britain's insisted ownership of these "rocks". While the Brits are proud of fighting this battle "alone", they required American satellite intelligence and U.S. naval logistical support for supplies in order to defeat the Argentinean invasion (or from the Argentinean perspective, repatriation).
The first Gulf War was also fought from a logistical standpoint. The Desert Storm Coalition (headed by the U.S.) did not go across the "line in the sand" until everything was in place. Planes, fuel, ammunition, tanks and men brought by ship and plane. Ships gathered in the Persian Gulf. We crossed the line when we were fully supplied and ready. I don't know that there has been another war in history whose start was so calculated. Now as Yogi Berra said, it is déjà vu all over again. We started the second Gulf War on a schedule, based on when we had our pieces in place.
Marketing Logistics
In marketing, we talk about strategy and tactics. Both terms from warfare. The lessons of Sun Tzu about warfare can easily be translated into marketing and business lessons.
We would argue that now is the time to make a serious study of your marketing logistics and what you have to do to improve on them or what new ones you must adopt to "win the war".
This may or may not be obvious, so I'll give some examples. Most center on data, but there are other issues too.
Sales
In the videogame category, success used to be judged based on the initial sell in and eventual reorder(s). These days, the videogame industry has become more and more like the movies. It is all about hits and the first weekend is everything. Rather than order all or much of their inventory up front, most retail operations order enough to stock the shelves. It then becomes the goal of a software publisher to create an out of stock situation on the first weekend so that there are reorders the next Monday. No reorders, little or no additional volume. This is a fine line as the publisher wants a reorder situation but does not want to miss too many sales in the first weekend. And the retailer does not want to load up with too much inventory.
In fact, inventory for many retail categories is becoming more and more "just in time". If you want to learn more about this and do not sell through retail, check out what is happening with the major retailers like Wal-Mart these days and how they have changed their inventory management through business intelligence and in some cases business process management relative to "just in time" inventory control.
Another sales example: most categories of products outside of consumer package goods have inadequate sales information. For example, computer software, hardware and peripheral companies, consumer electronic companies and many other upscale categories sell to distributors who sell to stores, in the simplest scenario. Good real time tracking systems do not exist for most of these companies. And unlike consumer package goods, there is no Nielsen or IRI like service to track sales. Without good sales data, (time/date of sale, location of sale), it is incredibly hard to attribute or predict sales activity as a result of marketing expense. The result is that huge companies are flying blind with their budgeting process.
Importantly, the package goods folks are not stopping with the best tracking in business. Procter and Gamble is testing the embedding of chips into toothpaste and other packages. They will know when it goes off the shelf, into a basket, if you put it back on the shelf, and for sure, when it is rung up and where. While we recognize that this is in early stages, if it turns out that they can afford to do this with good reliable data resulting, the value of application of this technology to other categories could be beyond calculation. So, where are the technology companies in this, getting led by a soap factory? They have little data on when and where software packages actually move off the shelf and yet they don't have an apparent industry initiative to fix this situation.
Intelligence
Specific to the world of advertising, we could use better competitive media spending intelligence. The online category has a low degree of accuracy (oftentimes +- 50% for a campaign and +- hundreds of percentage points for an individual site within a campaign). But the data is available quickly. From some sources, within a week. The offline spending metrics are often as close as 10-30%, but it takes months before we get the data. We need better data faster. We also need easier ways to track creative executions and strategy changes. Wonder how far this AI stuff really is from execution?
There are other examples in the world of resources and tracking advertising effectiveness. I'm sure that some of you have other examples of marketing systems that could be made better through logistics improvements. This remains an area of great leverage. We'd like to hear your input.
David L. Smith is CEO of Mediasmith, Inc.
