1. Value-based marketing strategy

2. New marketing meets old marketing: New marketing wins

3. Agenda Problems with traditional strategic marketing planning process
Products, brands and innovation
Price and value
Distribution channels and value chains
Marketing communications
The “new marketing” challenge
Marketing is strategy

4. Problems with traditional strategic marketing planning process

5. Ten steps of the strategic marketing planning process (McDonald 2007)
1 Mission
Phase One
Goal Setting
2 Corporate Objectives
3 Marketing Audit
4 Market overview
Phase Two
Situation Review
5 SWOT analysis
6 Assumptions
7 Marketing objectives and strategies
Phase Three
Strategy Formulation
8 Estimate expected results and identify
alternative plans and mixes
9 Budget
Phase Four
Resource allocation
and Monitoring
Measurement
and review
10 First year detailed
implementation programme

6. PLANNING PROCESS
4 MAIN STAGES - A. ANALYSIS – data driven/market-place/company position within it/relative to competition B. OBJECTIVES – link to corporate strategy/ use ‘SMART’ technique C. STRATEGY – consistent with corporate strategy/general direction which will deliver the objectives D. TACTICS – the detailed action plans underpinning the strategy

7. Strategic Marketing Planning process
Requires one year to complete all stages
Needs hard data from detailed and in-depth analysis of market before company can make decisions
Undertaken by marketers/strategists without involvement of other people in organisation

8. Strategic Marketing Planning process
Requires one year to complete all stages
Nope not necessarily
Needs hard data from detailed and in-depth analysis of market before company can make decisions
Should be ongoing
Undertaken by marketers/strategists without involvement of other people in organisation
insane

9. Problems with strategic planning process
Based on ideas of “Planning School”
Machine assumption
produce each of the component parts as specified, assemble them according to the blueprint, and the end product (strategy) will result!
Often reduced to a numbers game of performance control that had little to do with strategy
Source: Mintzberg et al (1998) Strategy safari, Hemel Hempstead, Prentice hall

10. Fallacies of Strategic Planning
Predetermination
Organisation must be able to predict the course of its environment, to control it, or simply to assume its stability
Impossible to predict discontinuities (e.g. technological breakthroughs or price increases)
Requires stability during strategy making
Source: Mintzberg et al (1998) Strategy safari, Hemel Hempstead, Prentice hall

11. Fallacies of Strategic Planning
Detachment
It is through administrative systems that planning and policy are made possible, because the systems capture knowledge about the task… true management by exception, and true policy directions are now possible, because management is no longer wholly immersed in the details of the task itself.
Effective strategists .. immerse themselves in daily detail while being able to abstract the strategic messages
Source: Mintzberg et al (1998) Strategy safari, Hemel Hempstead, Prentice hall

12. Fallacies of Strategic Planning
Failure of formalisation
Failure of:
forecasting to predict discontinuities
institutionalisation to provide innovation
Hard data to substitute for soft
Fixed schedules to respond to dynamic factors
Source: Mintzberg et al (1998) Strategy safari, Hemel Hempstead, Prentice hall

13. Problem Companies don’t have time to wait for plan to be developed
Rejected marketing and strategy (strategy departments closed in 1980’s)
Customers not accept being dictated to by companies and changed relationship – Customer is King

14. Old marketing has not kept up…
Old marketing is about marketing programmes
structured/planned around traditional model
operations/tactical
New marketing is concerned with the underlying process of going to market and strategic choices
Traditional model not kept up with way markets have changed
Model – based on four Ps

15. The “new marketing” challenge
Confronting revolution in markets
Identifying renewal opportunities
Developing new ways of doing business/new business models or reinvention
Revolution – radical market and customer changes does provide disruptive pressures on the established players in the market. Challenge for them is to understand the specific changes unfolding and where they are going and to respond with coping and adaptation mechanisms
Renewal – same market changes identify new opportunities to create superior value for customers by designing new business models, i.e. to develop new ways of doing business which are aligned with market change
Reinvention – tracking the specifics of fundamental market changes and the disruptions created is the basis for developing effective responses and evolving new business models.

16. The “new marketing” challenge
Is it real?
Are markets revolutionised (since when?)
The need for renewal –is it new?
Is reinvention/revolution necessary or irresponsible?
Or is this a message for incompetent 2nd raters?
How did your firm get where it is?
What are its problems and opportunities?

17. Market revolution drives renewal and reinvention
Coping/
adaptation
mechanisms
Disruptive pressures
on existing business
models
REVOLUTION
Radical market
and customer
change/trends
Value-creating
opportunities for
new business models
REINVENTION
Designing new
ways of doing
business

18. Marketing is strategy “the fate of marketing hinges on elevating
the role of marketing executives from promotions- focused tacticians to customer-focused leaders of transformational initiatives that are strategic, cross-functional and bottom-line oriented”
Nirmalya Kumar, 2004
Recognise that marketing is strategy
Kumar – argues that the way for marketing to get back on the CEO’s agenda is to address the issues that matter to the CEO

19. Marketing is strategy “the fate of marketing hinges on elevating
the role of marketing executives from promotions- focused tacticians to customer-focused leaders of (transformational) initiatives that are strategic, cross-functional and bottom-line oriented”
Nirmalya Kumar, 2004
Recognise that marketing is strategy
Kumar – argues that the way for marketing to get back on the CEO’s agenda is to address the issues that matter to the CEO

20. Value-based marketing strategy20

21. Agenda Brand marketing Relationship marketing Value-driven strategy
The search for customer value

22. Three themes in marketing
Branding
Relationship marketing
Value

23. Brand marketing
Branding is central to conventional marketing thinking – brand the product/service, company, person, country, etc.
Brands bring important benefits to customers (reduced search time) and companies (brand equity or value)

24. Brand marketing Branding can transform markets Cool brands often win
BUT – brands do not make you unbeatable
Coca-Cola
Levi-Strauss
Marlboro
Cool brands often win – Aston Martin; Apple - ipad; Jimmy Choe; Agent Provoceteur

25. Coca-cola Most valuable brand in world
1999 had 50% market share of world soft drinks market
Problem – world fell out of love with carbonated soft drinks
Tried to keep up with fragmenting soft drinks market
Introduced bottled water, flavoured water, juice-based drinks, flavoured iced tea and coffee drinks and energy drinks
Use local brands
Products not always branded with Coca-cola name
Lost market share to Pepsi

26. Dazani
UK customers assume bottled water from natural sources ie springs
Coca- Cola purified water from tap water in London
Origin came to light when a complaint was made to the British Food Standards Agency over Coke's use of the word "pure" in its Dasani marketing - implies that tap water is 'impure'.
Like Nestle, McDonald's and Cadbury Schweppes, Coke makes a gratifying target for journalists, in that all those companies trade heavily on their brand.
Source: Guardian March 4, 2004

27. Brand marketing Issues that go wrong with branding blind branding
private brand competition
brands which are liabilities
counterfeit brands
wrong brand trajectory, e.g., Stella Artois “wife beater”
Blind branding – believe brand will create superior customer value – challenge focussed branding create customer vale in customer terms
brands which are liabilities – remind customer how much they hate them e.g. Skoda
Wrong brand trajectory, e.g., Stella Artois “wife beater” – marketing triumph drinkers – minimum drinking, maximum aggregation

28. Brand marketing
Strategic brand management is the priority not creativity
Does the brand create customer value and how?
Strategic brand management is the priority not creativity - Must make strategy real
Does the brand create customer value and how? - Exist to serve customer must focus on customer perception of the value in the buying transaction

29. Relationship marketing
Customer relationship provides the basis for market segmentation
Contrast the relationship the customer wants (long-term vs short-term) with the closeness wanted in the supplier relationship (close vs distant)

30. Value-driven strategy
Value has become the central focus of strategy (because there is no choice)
The key issue is now value innovation (in the customer’s terms)
But value does not have a single meaning
e.g., operational excellence vs. customer intimacy vs. product leadership (Treacy and Wiersema, 1995)
operational excellence – e.g. Federal Express
Product leadership – Johnson and Johnson disposable contact lenses

31. Treacy and Wiersema- Value Disciplines
Operational Excellence
Providing customers with reliable products or services at competitive prices and delivered with minimal difficulty or inconvenience
Customer intimacy
Segmenting and targeting markets precisely and then tailoring offerings to match exactly the demands of those niches
Companies combine detailed customer knowledge with operational flexibility – can respond quickly to almost any need and creates customer loyalty
Product Leadership
Offering leading-edge products and services that enhance the customer’s use or application of the product
Make rivals goods obsolete
Source: Treacy, M. and Wiersema, F., 1993, Customer Intimacy and Other Value Disciplines
Harvard Business Review January- February

32. Choice of strategic value pathway
Operational excellence
Product leadership
Customer intimacy
Strategic value pathway (value proposition)
Best total cost
Best product
Best total solution
Golden rule
Variety kills efficiency
Cannibalising your success with breakthroughs
Solve the client’s broader problem
Core processes
End-to-end product delivery
Invention
Commercialization
Market exploitation
Client acquisition & development
Solution development
Improvement levers
Process redesign
Continuous improvement
Product technology
R&D cycle time
Problem experience
Service customization
Major improvement challenges
Shift to new asset base
Jump to new technology
Total change in solution paradigm
Source: Barnes et al (2009) Creating and Delivering your Value Proposition, Kogan Page p 46

33. The search for customer value
The danger of making assumptions
“we know what our customers want”
“bung in some customer service”
“just make it cheaper”
or, perhaps, take customer value seriously?
Challenge stereotypes and assumptions about what matters
Search for value creating opportunities

34. The search for customer value
Value as rational cost/benefit analysis
Value migration
value migrates from one attribute feature to another
different people buy different value
Customer value is complex, multi-dimensional, unstable and idiosyncratic, but it is what matters
Assumptions
Value as rational cost/benefit analysis – often not measurable
Value migration – not stable