Title: A Strategy Document on The New Marketing Paradigm Holistic Marketing ? Lateral Marketing ? High-tech Marketing by PHILIP KOTLER Documentation Sponsored by Canon
1A Strategy Documenton The New Marketing
ParadigmHolistic Marketing ? Lateral Marketing ?
High-tech MarketingbyPHILIP KOTLERDocumentatio
n Sponsored byCanon
2logo unit
3Kotler On MarketingHow To Create, Win, and
Dominate Markets
- Philip Kotler, Ph.D
- Kellogg School of Management
- Northwestern University
- Indiatimes Mindscape
- Mumbai and Delhi
- October 11, 12, 2004
4Two Challenges Facing Indian Companies
- Will Indian companies be able to defend their
market against the growing invasion of foreign
global brands? - Can Indian companies develop strong global
brands?
5Can Indian Companies Defend the Domestic Market?
- Foreign competitors will not only go after the
high end market in India. They will target the
middle and eventually the low end. - The main defense for India will be developing
stronger skills in innovation, differentiation,
branding, and service. In a word, MARKETING!
6But India Needs Stronger Marketing
- Confusing marketing with advertising.
- Advertising is hard sell.
- Sometimes ads appear before the product is in
distribution. - Some companies over-spend on advertising and go
broke. - Little use of marketing research cant trust.
- Therefore little segmentation of market and poor
targeting. - Over focus on winning through low price
neglecting differentiation. - Retailers carry the same goods and their service
is poor.
7Marketing is More Important than Production!
- The Indian manufacturer of a Hugo Boss shirt gets
only 12, or 10 of the final price of 120 that
is paid by a customer of Saks Fifth Avenue. - The retailer gets 60 (72) and the Brand company
gets 30, or 36. - Would you rather be the manufacturer, Brand
owner, or retailer? - The Indian manufacturer has no defense if the
Brand Owner wants to switch to another
manufacturer to whom he will pay 8 and keep 2
or pass it to the retailer to get more retail
support. - Yet India pays more attention to the product
engineer than the marketing engineer. But
Indias future success will require investing in
marketing and branding.
8The Strategic Trajectory for India
- Low cost, average quality domestic products.
- Low cost, good quality domestic products.
- Indian high-end products made for other
companies. - Indian branded products (regional).
- Indian branded products (global).
- Indian dominant brands (global).
9Ranbaxy Pharmaceuticals (India)
- Originally sold bulk substances to
unsophisticated markets but gross margins were
too low to cover export costs. - New CEO, Parvinder Singh, challenged Ranbaxy to
become a truly global company. He said Ranbaxy
cannot change India. What it can do is to create
a pocket of excellence. Ranbaxy must be an island
within India. - The company moved into higher-margin businesses
like selling branded generics in large volume
markets like China and Russia. - Ranbaxy then entered the U.S. and Western Europe.
In just five years, more than half of its US
250 million revenues now come from outside of
India.
10The Case of Haier
- Haier developed through three stages.
- 1. Fix quality
- (Zhang Ruimin smashed 76 refrigerators).
- 2. Diversify
- (Microwaves, toasters, air conditioners,
dishwasher, vacuum cleaners, etc.) - 3. Globalize
- (Asia Region, U.S., Europe)
- Haier entered with a U.S. partner and is
challenging Whirlpool and GE. - Haiers brand name products are sold in Wal-Mart,
Best Buy, Sears, Lowes, Home Depot and Target. - Haier is promoted as a global brand, not a
Chinese one. (Many people think it is German). - Puts lower price models in price-only stores and
higher price models in top stores.
11Five Cs Favoring India
- Capital India has and can attract capital.
- Cost Another 50 years of low cost production
- Capability Large number of trained workers,
engineers, scientists, and business people - Consumers Immense domestic market
- Calm and stability in a world of turmoil and
uncertainty
12A Quiz Who Said This?
- The purpose of a company is to create a
customerThe only profit center is the
customer. - A business has twoand only twobasic functions
marketing and innovation. Marketing and
innovation produce results all the rest are
costs. - The aim of marketing is to make selling
unnecessary. - While great devices are invented in the
Laboratory, great products are invented in the
Marketing department. - Marketing is too important to be left to the
marketing department.
13My Message
- Marketings performance has been disappointing.
- You must replace your Old Marketing with New
Marketing that is - holistic,
- technology-enabled,
- and strategic.
14Facing the Increasing Pressure for Marketing
Accountability
- Marketing has become a one P discipline
selling. - Marketing involves a great deal of waste.
- 2 million for 30 seconds on the Superbowl.
- Direct mail campaigns with a 1 response rate.
- Cold sales calls which play the numbers.
- High rate of new product failure.
- Marketing costs are high and rising.
- Marketing lacks accountability.
- Marketing does not create major new ideas.
- Marketing is too involved in short-term thinking.
- Marketing doesnt focus on its real assets.
- Brands, customers, service quality, stakeholder
relationships, intellectual capital, corporate
reputation
15NeededHolistic Marketing
- Marketing must become strategic and drive
business strategy. - A company needs to take a more holistic view of
- the target customers activities, lifestyle, and
social space. - the companys channels and supply chain.
- the companys communications.
- the companys stakeholders interests.
- Holistic marketing will require strong software
support.
16HOLISTIC RELATIONSHIP MARKETING FRAMEWORK
1) Who is involved?
CORPORATION
COLLABORATORS
CUSTOMERS
MARKET SPACE
2) How can we define relevant market space?
3) What are the potential opportunities emerging
from the market space?
POTENTIAL OPPORTUNITIES
4) What business capabilities and infrastructure
required?
BUSINESS INVESTMENT
CUSTOMER FOCUS
CORE COMPETENCIES
COLLABORATIVE NETWORK
174 COMPETITIVE PLATFORMS
Customer Focus
Core Competencies
Collaborative Network
COGNITIVE SPACE
COMPETENCY SPACE
RESOURCE SPACE
Business Architecture
Market Offerings
BUSINESS PARTNERS
CUSTOMER VALUE
BUSINESS DOMAIN
Creating Value
Marketing Activities
Operational System
Delivering Value
CRM
ERP
SCM
18Responding to Low Margins and the Economic
Slowdown
- Commoditization and rapid imitation leading to
shorter product life cycles. - Competition of cheaper brands from China and
elsewhere. - Rising selling and promotion costs and decreasing
sales effectiveness. - Shrinking margins.
- Proliferation of sales and media channels.
- Power shifting to giant retailers who are
demanding lower prices. - Recession lower incomes and purchasing power.
- Mergers, large company bankruptcies.
19Improving Marketing Efficiency and Effectiveness
- Improving marketing efficiency
- buying inputs more efficiently
- hunting down excessive communication and sales
travel expenses - closing unproductive sales offices
- cutting back on unproven promotion programs and
tactics - putting advertising agencies on a
pay-for-performance basis - Improving marketing effectiveness
- replacing higher cost channels with lower cost
channels - shifting advertising money into better uses
- reducing the number of brands or skus
- Improving supply chain responsiveness
20Responding to the Economic Slowdown
- Reevaluate your current resource allocations.
- Geographical mix
- Market segment mix
- Customer mix
- Product mix
- Channel mix
- Promotion mix
- Decide whether to attack to gain market share
rather than retrench. - Be sure to maintain the value proposition
promised by your brand. - Try to add value instead of cutting the price.
21Marketing Strategies Are Showing Diminishing
Returns
- Product differentiation is harder to achieve.
- Acquisitions and mergers have as many failures as
successes. - Internationalization is offering less
opportunities because either the good markets are
overcrowded or the poor markets have no money. - New products unfortunately fail more times than
they succeed. - Price cutting doesnt work because competitors
will match. - Pricing raising doesnt work since there isnt
enough differentiation to support it. - Cost cutting has eliminated much of the fat but
is now risking cutting the muscles.
22Strategies for Firms in Different Market Positions
Jagdish Sheth, Singapore Marketer, 2002
23Five Winning Strategies
- Cost reduction (IKEA, Southwest Airlines,
Wal-Mart, Enterprise Rent-a-Car). - Improved customer experience (Starbucks, Harley
Davidson) - Innovative business model (Barnes Noble,
Charles Schwab, FedEx, Sony). - Improved product quality (PG, Toyota).
- Niching (Progressive Insurance, Tetra)
24Dual Strategies
- Planning for today
- Defining the business.
- Shaping the business to meet needs of todays
customers - Improving alignment between functional activities
and business definition - Organization mirrors current business activities
- Optimizing current operations to achieve
excellence.
- Planning for tomorrow
- Redefining the business
- Reshaping the business to compete for future
customers and markets - Making bold moves away from the existing ways of
doing business - Reorganizing for future business challenges
- Managing change to create future operations and
processes
25In many markets, the growing number of
competitors in mature markets leads companies to
target niches of low profitability.
Y O G U R T S M A R K E T
Number of competitors
Market Size
Time
Average profitability of all competitors or
players
26Some Vertical Marketing Methods
- Modulation
- The juice manufacturer varies the sugar content,
fruit concentrate, with or without vitamins - Sizing
- Potato chips are offered in sizes 35 grams, 50
grams, 75grams, 125 grams, 200 grams,
multi-packs - Packaging
- Nestles Red Box chocolates comes in different
containers cheap paper box for the grocery
trade, premium metal box for the gift trade - Design
- BMW designs cars with different styling and
features... - Complements
- Biscuits with sugar spread on it, with cinnamon,
with chocolate, with white chocolate, with black
chocolate, filled biscuits - Efforts reduction
- Charles Schwab offers different channels for
transacting such as retail stores, telephone,
internet.
27The case of Cereal Bars
Lateral Marketing Process
28The case of Barbie
Lateral Marketing Process
Baby dolls market
New category
Teenager
To feel as...
Doll varieties
Vertical Marketing Process
29Other Examples of Lateral Marketing
- Kinder Surprise candy toy.
- Seven Eleven food depot.
- Actimel yogurt bacteria protection.
- Gas station stores gas station food.
- Cyber cafes cafeteria Internet.
- Be the godfather of a kid Donation
adoption. - Huggies Pull-ups diapers 3 year olds.
- Walkman audio portable
- Source Philip Kotler and Fernando Trias de Bes,
Lateral Marketing A New Approach to Finding
Product, Market and Marketing Mix Ideas (Wiley,
2004)
30Check Where You Stand
- Marketing does the marketing -gt everyone does the
marketing. - Organizing by product units -gt organizing by
customer segments. - Making everything -gt outsourcing more goods and
services. - Using many suppliers -gt working with fewer
suppliers. - Emphasizing tangible assets -gt emphasizing
intangible assets. - Building brands through advertising -gt building
brands through integrated communications. - Attracting customers to stores -gt making products
available on-line. - Selling to everyone -gt selling to target
markets. - Focusing on profitable transactions -gt focusing
on customer lifetime value. - Focusing on market share -gt focusing on customer
share. - Being local -gt being glocal.
- Focusing on the financial scorecard -gt focusing
on the marketing scorecard. - Focusing on shareholders -gt focusing on
stakeholders
31Building Brand Equity
- MARKETING IS THE ART OF BRAND BUILDING
-
- IF YOU ARE NOT A BRAND,
- YOU ARE A COMMODITY.
-
- THEN PRICE IS EVERYTHING
- AND THE LOW-COST PRODUCER
- IS THE ONLY WINNER!
321. How Important is Branding?
- The NUMMI plant in California produces two nearly
identical models called the Toyota Corolla and
the Chevrolet Prizm. - Toyota sold 230,000 Corollas compared to sales of
52,000 Prizms. - And Toyotas net price is 650 higher!
33A Strong Brand Improves Demand and Supply
- On the demand side
- higher price
- increased sales volume
- lower churn
- more brand stretching
- On the supply side
- greater trade acceptance, more favorable supplier
terms, lower rejection - lower staff acquisition and retention costs
- lower cost of capital
- better scale economics through higher volume
34Names are Important in Branding
- Donald Trumps family name is Drumpf. But he
cant call it Drumpf Towers. - Alan Aldas name was Alphonso DAbruzzo.
- Chinese gooseberry was renamed kiwifruit.
- Paradise Island in the Bahamas used to be Hog
Island.
35A Brand Must be More Than a Name
- A brand must trigger words or associations
(features and benefits). - A brand should depict a process (McDonalds,
Amazon). - A great brand triggers emotions
(Harley-Davidson). - A great brand represents a promise of value
(Sony). - The ultimate brand builders are your employees
and operations, i.e., your performance, not your
marketing communications.
36Your Companys Brand
- What word does your brand own?
- 2. Write down other words triggered by your brand
name? - A. Circle the favorable words square the
unfavorable words. - B. Underline the words that are favorable but
not widely known. - C. Double underline the words that are unique to
your company. - 3. Are any of the following a source for
strengthening your brands personality? -
- A. Founders
- B. Spokespersons
- C. Characters
- D. Objects
- E. Stories and mythologies
372. How Do You Develop a Brand Concept?
- The brand must be an essence, an ideal, an
emotion. It must be supported by beautiful
logos, clever tag lines, creative turns, edgy
names, rave launch parties, big ticket giveaway
promotions, and publicity buzz-making.
(Advertising agency view) - The brand should have a target group in mind and
be positioned to solve one of their problems
better than competitive offerings. Furthermore
the brands reputation is ultimately based on
product quality, customer satisfaction, employee
communications, social responsibility, etc.
(Kevin Clancy, CEO of Copernicus)
38Branding Components
- Name
- Short, suggestive, memorable, unique,
pronounceable - Slogan
- Logo and typeface
- Colors
- Music
- Themelines (Got Milk!)
- Stationery and business cards
- Offices
- Trucks
- Dress code
39Brand Slogans
- BA, The Worlds Favorite Airline
- American Express, The Natural Choice
- ATT, The Right Choice
- Budweiser, King of Beers
- Ford, Quality is 1 Job
- Holiday Inn, No Surprises
- Lloyds Bank, The Bank that Likes to Say Yes
- Philips,
- From Sand to Chips
- Philips Invents for You
- Lets Make Things Better
40There is No Such Thing as a Commodity
Differentiate by Segments
- Mobil conducted a study of 2,000 gasoline buyers
and identified five segments - Road Warriors (always driving)
- True Blues (brand or dealer loyal)
- Generation F3 (liked convenience store aspect)
- Homebodies (fills up at nearest station)
- Price Shoppers (20 of all the buyers)
- Mobil rolled out Friendly Serve cleaner
property, bathrooms, better lighting,
well-stocked stores, and friendlier personnel. - Mobil charged .02 more and sales increased by
20-25 percent.
413. How Do You Promote a Brand?
- How do I justify spending millions on creating
an image. Thats millions my customers have to
spend when they buy from us. Tom Parker, CEO
of Clarks shoes. - Brands are built by performance, not advertising.
42Dont Overuse Advertising to Build a Brand
- People dont pay that much attention to ads
anymore (wallpaper). - Some exceptional TV ads grab attention but do not
provide motivation. - Advertising doesnt have much credibility or
believability. - The existence of so much advertising makes
advertising less effective. Yet the cost of
advertising keeps rising.
43Tools for Building Brands
- Advertising (e.g.,Absolut Vodka)
- Sponsorships (e.g., Kodak and Olympics)
- Clubs (e.g. Nestles Casa Buitoni Club)
- Company visits (e.g., Cadburys theme park,
Hallmarks Museum) - Trade shows
- Traveling exhibits
- Worldwide web casts of presentations,
roundtables, entertainment - Distribution outlets (e.g., Haagen-Dazs)
- Public facilities (e.g., Nestle Nestops)
- Social causes (e.g., American Express)
- High value for the money (e.g. buzz created by
Ikea, etc.) - User community building (e.g., Harley-Davidson)
- Founders personality (e.g., Colonel Saunders)
- Celebrity spokespersons
444. What Makes a Strong Brand?
- Strong brand Product Benefits x Distinct
Identity x Emotional Values - Peter Doyle, Marketing Management Strategy,
1997
45THE YR MODEL OF BRAND STRENGTH
- A successful brand has brand vitality and brand
stature. - Brand vitality consists of
- 1. Differentiation, the brand is distinct
- 2. Relevance, the brand is meaningful and
personally - appropriate.
- Brand stature consists of
- 1. Esteem, the brand is seen to have quality and
momentum. - 2. Familiarity, the brand is known and
understood by many people. - Some conclusions
- 1. A brand that has high familiarity but low
likeability is a troubled brand. - 2. A brand that has high likeability but low
familiarity has high advertising potential. - 3. A brand with high vitality but low stature has
excellent potential. - 4. When a brands differentiation and relevance
start slipping, esteem will slip next, and then
familiarity will decline.
46Characteristics of Strong Brands
- Provides superior delivery of desired benefits.
- (Starbucks, FedEx, Amazon)
- Maintain innovation and relevance for the brand.
- (Gillette, Charles Schwab)
- Establish credibility and create appropriate
brand personality and imagery. - (Apple, Virgin)
- Communicate with a consistent voice.
- (Coca-Cola, Accenture)
- Strategically design and implement a brand
hierarchy and portfolio. - (BMW, The Gap)
47Strong Brands Supply Use Value as Well as
Purchase Value
- Nestle
- Sells baby food
- Provides free dietitian phone line
- Nestops along the highway
- Home Depot
- Sells home improvement products, such as paint,
electrical supplies, plumbing - Offers free kitchen remodeling design service
- Offers free workshops on how to paint, fix
faucets, etc. - Volvo
- Teaches safe driving,
- Supports lower insurance rates for safe drivers
48When Do You Stretch a Brand Name?
- Mercedes is putting its name on large, medium and
small cars. - Gap decided to invent Old Navy in going down and
buying Banana Republic in going up.
49How Do You Revitalize a Brand?
- A dowager brand pioneered the market but now is
declining. It will be hard to reverse the decline
and give it new life but the decline can be
slowed down. - Two general approaches
- Marketing mix modification
- Improve the product, distribution, price, or
promotion - Market modification
- Find new segments, new usage benefits or
occasions, more frequent usage, etc. - Find out to whom the dowager brand is losing
share - Old peer brands
- New peer brands
- Retail store brands
- Generic brands
- Elite brands
- Find out to whom the dowager brand is losing
sales. - Interview people who defected to each competitive
class and their dissenting rationales. - Determine a counterlogic for each group and
direct them to the groups that can most easily be
won back. - Source Dennis W. Rook and Sidney J. Levy,
Defending the Dowager Communication Strategies
for Declining Main Brands.
50How Do You Rationalize Your Product Line?
- Unilever found that the largest 50 brands
accounted for 63 of its revenues. - Unilever decided to emphasize 400 core brands and
dispose, delete or consolidate 1,200 of its
marginal brands. - Unilever selected its 400 core brands based on
brand scale, brand power (1or 2), and brand
growth potential. - 40 brands were designated as core global brands
(e.g., Dove, Knorr, Lipton), and 360 as regional
core brands. - The core brands would get disproportionate
investments in advertising and promotion,
innovation, marketing competence and management
time. The core brands would be extended. - Weak brands had small market shares poor
profitability negative cash flow weak channel
support disproportionate consumption of
management time. - The weak brands would be milked, sold, delisted,
or their attribute would be migrated to another
brand.
51What Are the Most Frequent Causes of Brand
Failure?
- Failure to live up to the brand promise.
- Failure to adequately support the brand.
- Failure to adequately control the brand.
- Failure to properly balance consistency and
change with the brand. - Failure to do brand equity measurement and
management.
52Building Customer Equity
- How customer-centered is your company? How do
you measure this? - Does your company need to be more
customer-centered? To all customers or only the
more important customers? - How can you go about becoming more
customer-centered? - How much would this cost you in new technology
and training? - How much would you gain as a result of becoming
more customer-centered?
53Achieving Outcomes in Market Space
- Achieving a deep customer focus is not done
simply by building a customer database or
customizing your product offerings. - A company must define its marketspace not in
terms of products but in terms of customer
outcomes. - Baxter Healthcare supplies home-recovery
enhancement, not just nursing care or
wheelchairs. - IHI, a health insurance company, operates in the
lifetime health and personal safety
marketspace. - A company then examines the customer activity
cycle and the value gaps. -
- The company then invests in filling the major
value gaps. -
- The company ends up being favored and grows
through doing more things better for their
customers. - Source Sandra Vandermerwe, Achieving Deep
Customer Focus, MIT Sloan Management Review,
Spring 2004, pp. 26-34
54Achieving Deep Customer Focus
- Create strategic excitement.
- Enlist points of light.
- Articulate the new market space focused on
customer outcomes. - Identify the value opportunities through using
the customer activity cycle. - Build a compelling case (not through a plan but a
story). - Size the prize.
- Modeling the concept with a few chosen customers.
- Get people working together.
- Get critical mass.
- Gather momentum.
55Building Customer Equity
- Reduce the rate of defection.
- Increase the longevity of the relationship.
- Enhance the growth potential of each customer
through cross-selling and up-selling. - Make low-profit customers more profitable or
terminate them. - Focus disproportionate effort on high value
customers.
56Components of Customer Equity
- Customer equity is driven by
- Value equity
- Brand equity
- Relationship equity.
- Companies must decide which driver(s) underlie
each equity. - Source Roland T. Rust, Valerie A. Zeithaml, and
Katherine A. Lemon, Driving Customer Equity (New
York Free Press 2000).
57Transaction Marketing vs.Customer Relationship
Marketing
- Customer Relationship Marketing (CRM) represents
a paradigm shift from Transaction Marketing (TM). - TM companies focus on products and making a sale.
CRM companies focus on building a long-term
relationship that produces satisfaction for the
customer and profitability for the company. - TM companies promote everywhere in search of
customers. CRM companies promote to a defined
customer group and aim to make the right offer at
the right time using the right channel to the
right customer. - All companies must practice a mix of TM and RM.
TM will be stronger in companies facing a large
number of customers RM will be stronger in
companies facing a small number of customers.
58Treat Different Customers Differently
- Most profitable customers
- Most unprofitable customers
- Most growable customers
- Most vulnerable customers
59NeededTechnology-Enabled Marketing
- Technology-enabled marketing (TEM) combines
information technology, analytical capacities,
marketing data, and marketing knowledge, made
available to one or more marketing decision
makers to improve the quality of marketing
management.
60A 5 Step Model for Database Marketing
- Gather useful data on customers.
- Classify customers by their needs and by their
value to the firm. - Prepare business rules that select the best
prospects. - Customize marketing treatments for each prospect
in terms of product offers, service mix, media,
and channel. - Set up accountability procedures.
61Database Marketing is Expensive!
- Requires a tremendous investment in information
gathering about individual customers and
prospects. - Requires constant updating of information.
- Some critical information may not be available.
- Requires a high investment in hardware and
software. - Requires integrating individual customer
information from a variety of sources. - Requires people skilled at data mining.
- Requires managing and training employees,
dealers, and suppliers.
62Does Every Business Need CRM?
- No. The following businesses may not benefit
from CRM - Businesses where the CLV is low.
- Businesses with high churn.
- Businesses where there is no direct contact
between the seller and ultimate buyer. - Companies that are in the best position to invest
in CRM. - Companies that collect a lot of data (banks,
insurance companies, credit card companies,
telephone companies). - Companies that can do a lot of cross-selling and
up-selling (GE, Amazon, etc.). - Companies whose customers have highly
differentiated needs and are of highly
differentiated value to the company.
63Marketing Technology Platforms on the Market
Development Curve
Historical Database Analytics
Campaign Management
Database Management Warehousing
Database-Driven Marketing Performance Dashboards
Yield-Based Pricing Optimum Tools
Marketing Mix Modeling /
Predictive analytics
Marketing Resource Management
Marketing Management Work-Flow Solutions
Introduction
Growth
Mature
Decline
Source Gary Morris, Adapted from Marketing
Advocate, Inc.
64Precision Marketing
- Precision marketing is achieved through looking
at large quantities of historic data with the
help of data mining tools that search for
meaningful patterns, and then creating
mathematical equations that represent the
underlying relationships within the data. - Predictive analytics are used to identify the
right offers and right messages to beam through
different channels to narrow customer segments,
based on the propensity to respond. The expected
profit of a campaign can be estimated. - Many tactical marketer tasks will be automated
and free up marketers to focus on more strategic
decision making.
65SALES AUTOMATION
- The objective is to empower the salesperson to be
an informed salesperson who virtually has the
whole companys knowledge at his or her command
and can provide total sales quality.
66Marketing Automation
- Areas Ripe for Marketing Automation
- Selecting names for a direct mail campaign
- Deciding who should receive loans or credit
extensions - Allocating product lines to shelf space
- Selecting media
- Customizing letters to individual customers
- Targeting coupons and samples
- Pricing airline seats and hotel reservations
67Marketing Decision Models and Marketing Mix
Response Models
- BRANDAID
- CALLPLAN
- DETAILER
- MEDIAC
- PROMOTER
- ADCAD
- See Kotler, Marketing Models
68Marketing Dashboards
- Tools dashboard
- Processes dashboard
- Performance dashboard
69Marketing Work-Flow Process Tools
- Project management
- Product management
-
- New product development
-
- Campaign management
70Exploit the Internet!
- Research a new product on the Internet (panel
research, chat rooms). - Create a site to explain how an existing or new
product works (ex., Tide). - Create a site that consults on a category
(Colgate on dental problems). - Create a site that consults on the customers
profile (Elizabeth Arden). - Sponsor a chat room around your product category.
- Answer email questions instantly (Nestle baby
care questions). - Send free samples of new products
(freesample.com). - Send coupons of new products (coolsavings.com).
- Customize your product (Acumin vitamins).
- Offer to sell very large orders direct.
- Offer valuable information to people who will
register on the site.
71Is New Technology Enough?
- NT OO EOO
- New Technology Old Organization Expensive Old
Organization -
72Technology-Enabled Marketing Examples
- Royal Bank of Canada
- Decision to purchase CRM
- Halifax Bank
- Teller suggests financial products
- Capital One
- A credit card for everyone, but with different
interest rates, credit lines, and cash advances. - Tesco supermarkets
- Tesco has identified 5,000 customer needs
segments. It sends out some 300,000 variations
of any given offer with redemption rates of 90.
It has formed clubs such as Baby Club, A World of
Wine Club, My Time Club - Kraft
- Kraft has the names of 110 million customers and
20 thousand facts for each household. Kraft
launched print magazine, Food Family, that is
delivered to the homes of 2.1 million Kraft
customers in 32 versions tailored to 32 segments.
7310 Earmarks of the New Marketing
- Recognize growing customer empowerment.
- Develop a focused offering to the target market
- Design the marketing from the customer-back.
- Focus on delivering outcomes, not products.
- Draw in the customer to co-create value.
- Use newer ways to reach the customer with a
message. - Develop metrics and ROI measurement.
- Develop high-tech marketing.
- Focus on building long run assets.
- View marketing holistically to regain influence
in the company.
741. PG Recognizes the New Consumer
- Consumers want a conversation, to dialogue, to
participate, to be more in controlWere going
from one-dimensional, product-myopic marketing to
three-dimensional marketing that offers better
solutionsmore delightful experiences and the
opportunity for on-going relationships. - Alan Lafley, CEO, PG
75Do-It-Yourself Marketing
- Self-Inform Customers can research products and
issues without relying on experts (e.g., WebMD,
MedlinePlus.com) - Self-evaluate Customers can compare product
features and prices with a few clicks of a mouse
(e.g., PriceGrabber.com, DealTime.com) - Self-segment Customers can design and configure
products (e.g., Dell, Reflect.com) - Self-price Customers can propose prices to
sellers (e.g., eBay, PriceLine.com, Free Markets) - Self-support Customer can resolve problems by
searching knowledgeable bases and discussion
forums (e.g., www.remotecentral.com,
www.treocentral.com) - Self-program Customer can define their own media
programming (e.g., TiVo, MyYahoo!) - Self-organize Customers can join communities of
interest to discuss products and issues (e.g.,
Meetup.org., IVillage) - Self-advertise Customers can create feedback for
their peers (e.g., Amazon.com, Planet Feeeback,
BlogSpot.com) - Self-police Customers can monitor reputations of
manufacturers (e.g., eBay, BizRate.com) - Source Mohan Sawhney lecture
76The Evolution of Marketing
Transactional Marketing Relationship Marketing Collaborative Marketing
Time frame 1950s 1980s Beyond 2000
View of value The company offering in an exchange The customer relationship in the long run Co-created experiences
View of market Place where value is exchanged Market is where various offerings appear Market is a forum where value is co-created through dialogue
Role of customer Passive buyers to be targeted with offerings Portfolio of relationships to be cultivated Prosumers-active participants in value co-creation
Role of firm Define and create value for consumers Attract, develop and retain profitable customers Engage customers in defining and co-creating unique value
Nature of customer interaction Survey customers to elicit needs and solicit feedback Observe customers and learn adaptively Active dialogue with customers and communities
Adapted from Prahalad and Ramaswamy 2004
772. Develop a Focused Offering to the Target
Market
- Value customers Which customer segment(s) do we
want to serve? -
- Value proposition Can we create a value
proposition that delivers superior value through
dramatically higher benefits or lower costs? - Value network Can we run a better network or
radically redefine the value delivery system for
the industry such as Dell and IKEA have done? - 3Vs framework of Nirmalya Kumar
78Choose to Serve a Unique Set of Customer Values
- 1. Identify the value expectations of potential
customers. -
- 2. Select the values on which to compete.
- Nike values Winning, roar of the crowd, extreme
effort, the smell of sweat, physical development - New Balance values Self-improvement, inner
harmony, balanced, the smell of nature, spiritual
development - 3. Analyze the ability of the organization to
deliver those values. -
- 4. Communicate and sell the value message.
-
- 5. Deliver the value promised and continuously
improve the company's value model. - See J. Nicholas Debonnis, et. al, Value-Based
Marketing for Bottom Line Success 5 Steps to
Creating Competitive Value (McGraw-Hill, 2004)
793. Design the Marketing From the Customer-Back
- Marketing must be run as a set of value finding,
creation, and delivery processes, not 4P
functions. The four Ps are seller oriented. - The 4As are buyer oriented.
- Awareness (A1)
- Acceptability (A2)
- Affordability (A3)
- Accessibility (A4)
- Market value potential A1 x A2 x A3 x A4
- If A1100, A2100, A350, A450, Then MV25
- Source Jagdish Sheth
804. Focus on Delivering Outcomes, Not Products.
Company Product focus Solutions focus
Akzo Nobel Gallons of paint Painted cars
BP Nutrition-Hendrix Animal feed Animal weight gain
Cummings Diesel engines Uninterruptible power
ICI Explosives Explosives Broken rock
Scania Trucks Guaranteed uptime
WW Grainger MRO items Indirect materials mgt.
Source Kumar
81Visualize a Larger Market
- Nike now defines itself in the sports market
rather than the shoe and clothing market. - The late Roberto Goizueta told his company that
while Coca Cola had a 35 percent share of the
soft drink market, it had only a 3 percent share
of the total beverage market. - Armstrong World Industries moved from floor
coverings to ceilings to total interior surface
decoration. - Citicorp realized that it only had a small share
of the total financial market which includes much
more than banking. - Taco Bell went from selling food in stores to
feeding people everywhere including kiosks,
convenience stores, airports, and high schools. - Jack Welch asked product managers to redefine
their market so that they only had a 10 share.
825. Draw in the Customer to Co-create Value Two
Approaches
- Offer a wide product line so the customer can
choose something closer to the customers
desires. - MM allows customers to special order MMs in 21
colors. - Branches Hockey lets players pick from 26
options length of a stick, blade patterns, etc. - Stand ready to customize according to the
customers wishes. - Dell computers are designed by customers
- Lands End sells tailor-made chinos.
- PG on its reflect.com site lets shoppers design
everything from eye moisturize to liquid
foundation makeup. - Yankee Candle Company will mix colors and scents
to make the candles you want. - Other examples golf clubs, breakfast cereals,
credit card companies
83Examples of Collaborative Marketing
- PGs site has a Were Listening section and
Share Your Thoughts section and Advisory Feedback
sessions. - GM offers an AutoChoiceAdvisory on its website
- Cisco runs Customer Forums to improve its
offerings. - A motorcycle in Italy is being designed by
customers.
846. Use Newer Ways to Reach the Customer with
Relevant Messages
- Make your ads more precise as to who they reach
and more relevant. - Let consumers indicate if they have an interest
or not. Stop pestering them. - Deliver valuable content with each ad, such as
useful information or entertainment. - Reach consumers in newer ways.
85Newer Ways to Reach Customers
- Sponsorships
- Mentions on talk shows
- Product placement
- Street-level promotion
- Festivals
- Celebrity endorsements
- Mobile billboards
86Creating Buzz on the Streets
- Chryslers PT Landcruiser appeared in fashionable
areas and college tailgate parties. 250,000
prospects requested information before official
ad campaign began in April 2000. - Models drove around Los Angeles on Vespa scooters
and chatted with customers in cafes and bars. - Ford identified 120 people in six key markets and
gave them a Focus to drive for 6 months and
promotional material. - Vans builds skateboard parks at malls and
sponsors Vans Triple Crown. - Hasbro enlisted cool pre-teens to play the POX
game and tell their friends about it. - Tourist goes into lounge and her telephone rings
and picture of the caller appears on the phone.
877. Develop Metrics and ROI Measurement
Products Brands Channels Customer Segments Markets
Relative product quality Brand awareness Channel penetration Customer satisfaction Market penetration
Perceived product quality Brand esteem Channel trust Average transaction size Market share
Percentage of sales from new products Brand loyalty Channel efficiency Customer complaints Sales growth
Product profitability Brand profitability Market share in each channel Customer acquisition costs Market profitability
Channel profitability Customer retention rate
Source Kumar Customer profitability
888. Develop High-Tech Marketing
- Predictive analytics
- Sales automation
- Marketing automation
- Marketing models
- Process dashboards
- Performance dashboards
- Campaign management
- Project management
- New product management
899. Focus on Building Long-Run Marketing Assets.
- Brands and brand equity
- Customers and customer equity
- Service quality
- Stakeholder relationships
- Intellectual knowledge
- Corporate reputation
9010. View Marketing Holistically
- Marketing must become strategic and drive
business strategy. - A company needs to take a more holistic view of
- the target customers activities, lifestyle, and
social space. - the companys channels and supply chain.
- the companys communications.
- the companys stakeholders interests.
91Two Models of Management
- Profit-based management
- Reduce costs
- Reduce compensation
- Replace people with technology
- Price to extract maximum value
- Sell more products
- Acquire lots of customers
- Loyalty-based management
- Invest in marketing assets
- Give superior compensation
- Leverage people with technology
- Price to reward customers
- Deepen customer value
- Acquire customers selectively
Source Frederick Reichheld, The Loyalty Effect
92Conclusions
- Marketing is definitely not filling its
potential. - Marketing must become the driver of business
strategy. - Companies need to adopt a more holistic view of
the marketing challenge. - Companies need lateral marketing thinking to
conceive of new product and service ideas. - Companies need to choose from five major
strategic paths. - Companies need to move from a product focused to
a market and customer focused organization. - Companies need to build, measure and manage brand
equity and customer equity. - Companies need to move to technology-enabled
marketing to achieve precision marketing and
develop better measures of ROI impact.
93This time like all times is a good one, if we
but know what to do with it. Ralph Waldo Emerson
THANK YOU!