Presentation is loading. Please wait.

Presentation is loading. Please wait.

A Strategy Document on The New Marketing Paradigm Holistic Marketing Lateral Marketing High-tech Marketing by PHILIP KOTLER Documentation Sponsored by.

Similar presentations


Presentation on theme: "A Strategy Document on The New Marketing Paradigm Holistic Marketing Lateral Marketing High-tech Marketing by PHILIP KOTLER Documentation Sponsored by."— Presentation transcript:

1 A Strategy Document on The New Marketing Paradigm Holistic Marketing Lateral Marketing High-tech Marketing by PHILIP KOTLER Documentation Sponsored by Canon

2 logo unit

3 Printed on CANON Kotler On Marketing How To Create, Win, and Dominate Markets Philip Kotler, Ph.D Philip Kotler, Ph.D Kellogg School of Management Kellogg School of Management Northwestern University Northwestern University Indiatimes Mindscape Indiatimes Mindscape Mumbai and Delhi Mumbai and Delhi October 11, 12, 2004 October 11, 12, 2004

4 Printed on CANON Two Challenges Facing Indian Companies 1. Will Indian companies be able to defend their market against the growing invasion of foreign global brands? 2. Can Indian companies develop strong global brands?

5 Printed on CANON Can 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. 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! The main defense for India will be developing stronger skills in innovation, differentiation, branding, and service. In a word, MARKETING!

6 Printed on CANON But India Needs Stronger Marketing Confusing marketing with advertising. Confusing marketing with advertising. Advertising is hard sell. Advertising is hard sell. Sometimes ads appear before the product is in distribution. Sometimes ads appear before the product is in distribution. Some companies over-spend on advertising and go broke. Some companies over-spend on advertising and go broke. Little use of marketing research; cant trust. Little use of marketing research; cant trust. Therefore little segmentation of market and poor targeting. Therefore little segmentation of market and poor targeting. Over focus on winning through low price; neglecting differentiation. Over focus on winning through low price; neglecting differentiation. Retailers carry the same goods and their service is poor. Retailers carry the same goods and their service is poor.

7 Printed on CANON Marketing 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 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. The retailer gets 60% ($72) and the Brand company gets 30%, or $36. Would you rather be the manufacturer, Brand owner, or retailer? 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. 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. Yet India pays more attention to the product engineer than the marketing engineer. But Indias future success will require investing in marketing and branding.

8 Printed on CANON The Strategic Trajectory for India Low cost, average quality domestic products. Low cost, average quality domestic products. Low cost, good quality domestic products. Low cost, good quality domestic products. Indian high-end products made for other companies. Indian high-end products made for other companies. Indian branded products (regional). Indian branded products (regional). Indian branded products (global). Indian branded products (global). Indian dominant brands (global). Indian dominant brands (global).

9 Printed on CANON Ranbaxy Pharmaceuticals (India) Originally sold bulk substances to unsophisticated markets but gross margins were too low to cover export costs. 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. 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. 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. 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.

10 Printed on CANON The 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. 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. 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). 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. Puts lower price models in price-only stores and higher price models in top stores.

11 Printed on CANON Five Cs Favoring India Capital: India has and can attract capital. Capital: India has and can attract capital. Cost: Another 50 years of low cost production Cost: Another 50 years of low cost production Capability: Large number of trained workers, engineers, scientists, and business people Capability: Large number of trained workers, engineers, scientists, and business people Consumers: Immense domestic market Consumers: Immense domestic market Calm and stability: in a world of turmoil and uncertainty Calm and stability: in a world of turmoil and uncertainty

12 Printed on CANON A Quiz: Who Said This? The purpose of a company is to create a customer…The only profit center is the customer. The purpose of a company is to create a customer…The 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. 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. 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. 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. Marketing is too important to be left to the marketing department.

13 Printed on CANON My Message Marketings performance has been disappointing. Marketings performance has been disappointing. You must replace your Old Marketing with New Marketing that is: You must replace your Old Marketing with New Marketing that is: holistic, holistic, technology-enabled, technology-enabled, and strategic. and strategic.

14 Printed on CANON Facing the Increasing Pressure for Marketing Accountability Marketing has become a one P discipline = selling. Marketing has become a one P discipline = selling. Marketing involves a great deal of waste. Marketing involves a great deal of waste. $2 million for 30 seconds on the Superbowl. $2 million for 30 seconds on the Superbowl. Direct mail campaigns with a 1% response rate. Direct mail campaigns with a 1% response rate. Cold sales calls which play the numbers. Cold sales calls which play the numbers. High rate of new product failure. High rate of new product failure. Marketing costs are high and rising. Marketing costs are high and rising. Marketing lacks accountability. Marketing lacks accountability. Marketing does not create major new ideas. Marketing does not create major new ideas. Marketing is too involved in short-term thinking. Marketing is too involved in short-term thinking. Marketing doesnt focus on its real assets. Marketing doesnt focus on its real assets. Brands, customers, service quality, stakeholder relationships, intellectual capital, corporate reputation Brands, customers, service quality, stakeholder relationships, intellectual capital, corporate reputation

15 Printed on CANON Needed: Holistic Marketing Marketing must become strategic and drive business strategy. Marketing must become strategic and drive business strategy. A company needs to take a more holistic view of: A company needs to take a more holistic view of: the target customers activities, lifestyle, and social space. the target customers activities, lifestyle, and social space. the companys channels and supply chain. the companys channels and supply chain. the companys communications. the companys communications. the companys stakeholders interests. the companys stakeholders interests. Holistic marketing will require strong software support. Holistic marketing will require strong software support.

16 Printed on CANON HOLISTIC RELATIONSHIP MARKETING FRAMEWORK MARKET SPACE POTENTIAL OPPORTUNITIES BUSINESS INVESTMENT CUSTOMERS CORPORATIONCOLLABORATORS CUSTOMERFOCUSCORECOMPETENCIES COLLABORATIVENETWORK 2) How can we define relevant market space? 3) What are the potential opportunities emerging from the market space? 4) What business capabilities and infrastructure required? 1) Who is involved?

17 Printed on CANON 4 COMPETITIVE PLATFORMS Market Offerings COGNITIVE SPACE CUSTOMER VALUE BUSINESS DOMAIN COMPETENCY SPACE Business Architecture BUSINESS PARTNERS CRMERP RESOURCE SPACE SCM Marketing Activities Operational System ExploringValue CreatingValue DeliveringValue CustomerFocusCoreCompetencies CollaborativeNetwork

18 Printed on CANON Responding to Low Margins and the Economic Slowdown Commoditization and rapid imitation leading to shorter product life cycles. Commoditization and rapid imitation leading to shorter product life cycles. Competition of cheaper brands from China and elsewhere. Competition of cheaper brands from China and elsewhere. Rising selling and promotion costs and decreasing sales effectiveness. Rising selling and promotion costs and decreasing sales effectiveness. Shrinking margins. Shrinking margins. Proliferation of sales and media channels. Proliferation of sales and media channels. Power shifting to giant retailers who are demanding lower prices. Power shifting to giant retailers who are demanding lower prices. Recession: lower incomes and purchasing power. Recession: lower incomes and purchasing power. Mergers, large company bankruptcies. Mergers, large company bankruptcies.

19 Printed on CANON Improving Marketing Efficiency and Effectiveness Improving marketing efficiency Improving marketing efficiency buying inputs more efficiently buying inputs more efficiently hunting down excessive communication and sales travel expenses hunting down excessive communication and sales travel expenses closing unproductive sales offices closing unproductive sales offices cutting back on unproven promotion programs and tactics cutting back on unproven promotion programs and tactics putting advertising agencies on a pay-for-performance basis putting advertising agencies on a pay-for-performance basis Improving marketing effectiveness Improving marketing effectiveness replacing higher cost channels with lower cost channels replacing higher cost channels with lower cost channels shifting advertising money into better uses shifting advertising money into better uses reducing the number of brands or skus reducing the number of brands or skus Improving supply chain responsiveness Improving supply chain responsiveness

20 Printed on CANON Responding to the Economic Slowdown Reevaluate your current resource allocations. Reevaluate your current resource allocations. Geographical mix Geographical mix Market segment mix Market segment mix Customer mix Customer mix Product mix Product mix Channel mix Channel mix Promotion mix Promotion mix Decide whether to attack to gain market share rather than retrench. Decide whether to attack to gain market share rather than retrench. Be sure to maintain the value proposition promised by your brand. Be sure to maintain the value proposition promised by your brand. Try to add value instead of cutting the price. Try to add value instead of cutting the price.

21 Printed on CANON Marketing Strategies Are Showing Diminishing Returns Product differentiation is harder to achieve. Product differentiation is harder to achieve. Acquisitions and mergers have as many failures as successes. 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. 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. New products unfortunately fail more times than they succeed. Price cutting doesnt work because competitors will match. Price cutting doesnt work because competitors will match. Pricing raising doesnt work since there isnt enough differentiation to support it. 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. Cost cutting has eliminated much of the fat but is now risking cutting the muscles.

22 Printed on CANON Strategies for Firms in Different Market Positions Jagdish Sheth, Singapore Marketer, 2002

23 Printed on CANON Five Winning Strategies Cost reduction: (IKEA, Southwest Airlines, Wal-Mart, Enterprise Rent-a-Car). Cost reduction: (IKEA, Southwest Airlines, Wal-Mart, Enterprise Rent-a-Car). Improved customer experience (Starbucks, Harley Davidson) Improved customer experience (Starbucks, Harley Davidson) Innovative business model (Barnes & Noble, Charles Schwab, FedEx, Sony). Innovative business model (Barnes & Noble, Charles Schwab, FedEx, Sony). Improved product quality (P&G, Toyota). Improved product quality (P&G, Toyota). Niching: (Progressive Insurance, Tetra) Niching: (Progressive Insurance, Tetra)

24 Printed on CANON Dual Strategies Planning for today Planning for today Defining the business. Defining the business. Shaping the business to meet needs of todays customers Shaping the business to meet needs of todays customers Improving alignment between functional activities and business definition Improving alignment between functional activities and business definition Organization mirrors current business activities Organization mirrors current business activities Optimizing current operations to achieve excellence. 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

25 Printed on CANON In many markets, the growing number of competitors in mature markets leads companies to target niches of low profitability. Market Size Number of competitor s Average profitability of all competitors or players Y O G U R T S M A R K E T Time

26 Printed on CANON Some Vertical Marketing Methods Modulation Modulation The juice manufacturer varies the sugar content, fruit concentrate, with or without vitamins… The juice manufacturer varies the sugar content, fruit concentrate, with or without vitamins… Sizing Sizing Potato chips are offered in sizes 35 grams, 50 grams, 75grams, 125 grams, 200 grams, multi-packs… Potato chips are offered in sizes 35 grams, 50 grams, 75grams, 125 grams, 200 grams, multi-packs… Packaging Packaging Nestles Red Box chocolates comes in different containers: cheap paper box for the grocery trade, premium metal box for the gift trade… Nestles Red Box chocolates comes in different containers: cheap paper box for the grocery trade, premium metal box for the gift trade… Design Design BMW designs cars with different styling and features... BMW designs cars with different styling and features... Complements Complements Biscuits with sugar spread on it, with cinnamon, with chocolate, with white chocolate, with black chocolate, filled biscuits… Biscuits with sugar spread on it, with cinnamon, with chocolate, with white chocolate, with black chocolate, filled biscuits… Efforts reduction Efforts reduction Charles Schwab offers different channels for transacting such as retail stores, telephone, internet…. Charles Schwab offers different channels for transacting such as retail stores, telephone, internet….

27 Printed on CANON into Cereals for breakfast market Cereal varieties New category STREETS = The case of Cereal Bars

28 Printed on CANON Baby dolls market Doll varieties New category To feel as... = Teenager The case of Barbie

29 Printed on CANON Other Examples of Lateral Marketing Kinder Surprise = candy + toy. Kinder Surprise = candy + toy. Seven Eleven = food + depot. Seven Eleven = food + depot. Actimel = yogurt + bacteria protection. Actimel = yogurt + bacteria protection. Gas station stores = gas station + food. Gas station stores = gas station + food. Cyber cafes = cafeteria + Internet. Cyber cafes = cafeteria + Internet. Be the godfather of a kid = Donation + adoption. Be the godfather of a kid = Donation + adoption. Huggies Pull-ups = diapers + 3 year olds. Huggies Pull-ups = diapers + 3 year olds. Walkman = audio + portable 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) Source: Philip Kotler and Fernando Trias de Bes, Lateral Marketing: A New Approach to Finding Product, Market and Marketing Mix Ideas (Wiley, 2004)

30 Printed on CANON Check Where You Stand Marketing does the marketing -> everyone does the marketing. Marketing does the marketing -> everyone does the marketing. Organizing by product units -> organizing by customer segments. Organizing by product units -> organizing by customer segments. Making everything -> outsourcing more goods and services. Making everything -> outsourcing more goods and services. Using many suppliers -> working with fewer suppliers. Using many suppliers -> working with fewer suppliers. Emphasizing tangible assets -> emphasizing intangible assets. Emphasizing tangible assets -> emphasizing intangible assets. Building brands through advertising -> building brands through integrated communications. Building brands through advertising -> building brands through integrated communications. Attracting customers to stores -> making products available on-line. Attracting customers to stores -> making products available on-line. Selling to everyone -> selling to target markets. Selling to everyone -> selling to target markets. Focusing on profitable transactions -> focusing on customer lifetime value. Focusing on profitable transactions -> focusing on customer lifetime value. Focusing on market share -> focusing on customer share. Focusing on market share -> focusing on customer share. Being local -> being glocal. Being local -> being glocal. Focusing on the financial scorecard -> focusing on the marketing scorecard. Focusing on the financial scorecard -> focusing on the marketing scorecard. Focusing on shareholders -> focusing on stakeholders Focusing on shareholders -> focusing on stakeholders

31 Printed on CANON MARKETING IS THE ART OF BRAND BUILDING 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! Building Brand Equity

32 Printed on CANON 1. How Important is Branding? The NUMMI plant in California produces two nearly identical models called the Toyota Corolla and the Chevrolet Prizm. 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. Toyota sold 230,000 Corollas compared to sales of 52,000 Prizms. And Toyotas net price is $650 higher! And Toyotas net price is $650 higher!

33 Printed on CANON A Strong Brand Improves Demand and Supply On the demand side: On the demand side: higher price higher price increased sales volume increased sales volume lower churn lower churn more brand stretching more brand stretching On the supply side: On the supply side: greater trade acceptance, more favorable supplier terms, lower rejection greater trade acceptance, more favorable supplier terms, lower rejection lower staff acquisition and retention costs lower staff acquisition and retention costs lower cost of capital lower cost of capital better scale economics through higher volume better scale economics through higher volume

34 Printed on CANON Names are Important in Branding Donald Trumps family name is Drumpf. But he cant call it Drumpf Towers. Donald Trumps family name is Drumpf. But he cant call it Drumpf Towers. Alan Aldas name was Alphonso DAbruzzo. Alan Aldas name was Alphonso DAbruzzo. Chinese gooseberry was renamed kiwifruit. Chinese gooseberry was renamed kiwifruit. Paradise Island in the Bahamas used to be Hog Island. Paradise Island in the Bahamas used to be Hog Island.

35 Printed on CANON A Brand Must be More Than a Name A brand must trigger words or associations (features and benefits). A brand must trigger words or associations (features and benefits). A brand should depict a process (McDonalds, Amazon). A brand should depict a process (McDonalds, Amazon). A great brand triggers emotions (Harley-Davidson). A great brand triggers emotions (Harley-Davidson). A great brand represents a promise of value (Sony). 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. The ultimate brand builders are your employees and operations, i.e., your performance, not your marketing communications.

36 Printed on CANON Your Companys Brand 1. 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

37 Printed on CANON 2. 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 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) 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)

38 Printed on CANON Branding Components Name Name Short, suggestive, memorable, unique, pronounceable Short, suggestive, memorable, unique, pronounceable Slogan Slogan Logo and typeface Logo and typeface Colors Colors Music Music Themelines (Got Milk!) Themelines (Got Milk!) Stationery and business cards Stationery and business cards Offices Offices Trucks Trucks Dress code Dress code

39 Printed on CANON Brand Slogans BA, The Worlds Favorite Airline BA, The Worlds Favorite Airline American Express, The Natural Choice American Express, The Natural Choice AT&T, The Right Choice AT&T, The Right Choice Budweiser, King of Beers Budweiser, King of Beers Ford, Quality is #1 Job Ford, Quality is #1 Job Holiday Inn, No Surprises Holiday Inn, No Surprises Lloyds Bank, The Bank that Likes to Say Yes Lloyds Bank, The Bank that Likes to Say Yes Philips, Philips, From Sand to Chips From Sand to Chips Philips Invents for You Philips Invents for You Lets Make Things Better Lets Make Things Better

40 Printed on CANON There is No Such Thing as a Commodity: Differentiate by Segments Mobil conducted a study of 2,000 gasoline buyers and identified five segments: Mobil conducted a study of 2,000 gasoline buyers and identified five segments: Road Warriors (always driving) Road Warriors (always driving) True Blues (brand or dealer loyal) True Blues (brand or dealer loyal) Generation F3 (liked convenience store aspect) Generation F3 (liked convenience store aspect) Homebodies (fills up at nearest station) Homebodies (fills up at nearest station) Price Shoppers (20% of all the buyers) Price Shoppers (20% of all the buyers) Mobil rolled out Friendly Serve: cleaner property, bathrooms, better lighting, well-stocked stores, and friendlier personnel. Mobil rolled out Friendly Serve: cleaner property, bathrooms, better lighting, well-stocked stores, and friendlier personnel. Mobil charged $.02 more and sales increased by percent. Mobil charged $.02 more and sales increased by percent.

41 Printed on CANON 3. 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. 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. Brands are built by performance, not advertising.

42 Printed on CANON Dont Overuse Advertising to Build a Brand People dont pay that much attention to ads anymore (wallpaper). People dont pay that much attention to ads anymore (wallpaper). Some exceptional TV ads grab attention but do not provide motivation. Some exceptional TV ads grab attention but do not provide motivation. Advertising doesnt have much credibility or believability. Advertising doesnt have much credibility or believability. The existence of so much advertising makes advertising less effective. Yet the cost of advertising keeps rising. The existence of so much advertising makes advertising less effective. Yet the cost of advertising keeps rising.

43 Printed on CANON Tools for Building Brands Advertising (e.g.,Absolut Vodka) Advertising (e.g.,Absolut Vodka) Sponsorships (e.g., Kodak and Olympics) Sponsorships (e.g., Kodak and Olympics) Clubs (e.g. Nestles Casa Buitoni Club) Clubs (e.g. Nestles Casa Buitoni Club) Company visits (e.g., Cadburys theme park, Hallmarks Museum) Company visits (e.g., Cadburys theme park, Hallmarks Museum) Trade shows Trade shows Traveling exhibits Traveling exhibits Worldwide web casts of presentations, roundtables, entertainment Worldwide web casts of presentations, roundtables, entertainment Distribution outlets (e.g., Haagen-Dazs) Distribution outlets (e.g., Haagen-Dazs) Public facilities (e.g., Nestle Nestops) Public facilities (e.g., Nestle Nestops) Social causes (e.g., American Express) Social causes (e.g., American Express) High value for the money (e.g. buzz created by Ikea, etc.) High value for the money (e.g. buzz created by Ikea, etc.) User community building (e.g., Harley-Davidson) User community building (e.g., Harley-Davidson) Founders personality (e.g., Colonel Saunders) Founders personality (e.g., Colonel Saunders) Celebrity spokespersons Celebrity spokespersons

44 Printed on CANON 4. What Makes a Strong Brand? Strong brand = Product Benefits x Distinct Identity x Emotional Values Strong brand = Product Benefits x Distinct Identity x Emotional Values Peter Doyle, Marketing Management & Strategy, 1997 Peter Doyle, Marketing Management & Strategy, 1997

45 Printed on CANON THE Y&R 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. 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.

46 Printed on CANON Characteristics of Strong Brands Provides superior delivery of desired benefits. Provides superior delivery of desired benefits. (Starbucks, FedEx, Amazon) (Starbucks, FedEx, Amazon) Maintain innovation and relevance for the brand. Maintain innovation and relevance for the brand. (Gillette, Charles Schwab) (Gillette, Charles Schwab) Establish credibility and create appropriate brand personality and imagery. Establish credibility and create appropriate brand personality and imagery. (Apple, Virgin) (Apple, Virgin) Communicate with a consistent voice. Communicate with a consistent voice. (Coca-Cola, Accenture) (Coca-Cola, Accenture) Strategically design and implement a brand hierarchy and portfolio. Strategically design and implement a brand hierarchy and portfolio. (BMW, The Gap) (BMW, The Gap)

47 Printed on CANON Strong Brands Supply Use Value as Well as Purchase Value Nestle: Sells baby food Sells baby food Provides free dietitian phone line Provides free dietitian phone line Nestops along the highway Nestops along the highway Home Depot: Sells home improvement products, such as paint, electrical supplies, plumbing Sells home improvement products, such as paint, electrical supplies, plumbing Offers free kitchen remodeling design service Offers free kitchen remodeling design service Offers free workshops on how to paint, fix faucets, etc. Offers free workshops on how to paint, fix faucets, etc.Volvo Teaches safe driving, Teaches safe driving, Supports lower insurance rates for safe drivers Supports lower insurance rates for safe drivers

48 Printed on CANON When Do You Stretch a Brand Name? Mercedes is putting its name on large, medium and small cars. 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. Gap decided to invent Old Navy in going down and buying Banana Republic in going up.

49 Printed on CANON How 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. 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: Two general approaches: Marketing mix modification Marketing mix modification Improve the product, distribution, price, or promotion Improve the product, distribution, price, or promotion Market modification Market modification Find new segments, new usage benefits or occasions, more frequent usage, etc. Find new segments, new usage benefits or occasions, more frequent usage, etc. Find out to whom the dowager brand is losing share: Find out to whom the dowager brand is losing share: Old peer brands Old peer brands New peer brands New peer brands Retail store brands Retail store brands Generic brands Generic brands Elite brands Elite brands Find out to whom the dowager brand is losing sales. Find out to whom the dowager brand is losing sales. Interview people who defected to each competitive class and their dissenting rationales. 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. 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. Source: Dennis W. Rook and Sidney J. Levy, Defending the Dowager: Communication Strategies for Declining Main Brands.

50 Printed on CANON How Do You Rationalize Your Product Line? Unilever found that the largest 50 brands accounted for 63% of its revenues. 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 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. 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. 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. 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. 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. The weak brands would be milked, sold, delisted, or their attribute would be migrated to another brand.

51 Printed on CANON What Are the Most Frequent Causes of Brand Failure? Failure to live up to the brand promise. Failure to live up to the brand promise. Failure to adequately support the brand. Failure to adequately support the brand. Failure to adequately control the brand. Failure to adequately control the brand. Failure to properly balance consistency and change with the brand. Failure to properly balance consistency and change with the brand. Failure to do brand equity measurement and management. Failure to do brand equity measurement and management.

52 Printed on CANON Building Customer Equity How customer-centered is your company? How do you measure this? 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? 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 can you go about becoming more customer- centered? How much would this cost you in new technology and training? How much would this cost you in new technology and training? How much would you gain as a result of becoming more customer-centered? How much would you gain as a result of becoming more customer-centered?

53 Printed on CANON Achieving Outcomes in Market Space Achieving a deep customer focus is not done simply by building a customer database or customizing your product offerings. 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. 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. 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. 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. A company then examines the customer activity cycle and the value gaps. The company then invests in filling the major 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. 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 Source: Sandra Vandermerwe, Achieving Deep Customer Focus, MIT Sloan Management Review, Spring 2004, pp

54 Printed on CANON Achieving Deep Customer Focus 1. Create strategic excitement. 2. Enlist points of light. 3. Articulate the new market space focused on customer outcomes. 4. Identify the value opportunities through using the customer activity cycle. 5. Build a compelling case (not through a plan but a story). 6. Size the prize. 7. Modeling the concept with a few chosen customers. 8. Get people working together. 9. Get critical mass. 10. Gather momentum. Source: Sandra Vandermerwe, Achieving Deep Customer Focus, MIT Sloan Management Review, Spring 2004, pp Source: Sandra Vandermerwe, Achieving Deep Customer Focus, MIT Sloan Management Review, Spring 2004, pp

55 Printed on CANON Building Customer Equity Reduce the rate of defection. Reduce the rate of defection. Increase the longevity of the relationship. Increase the longevity of the relationship. Enhance the growth potential of each customer through cross-selling and up- selling. Enhance the growth potential of each customer through cross-selling and up- selling. Make low-profit customers more profitable or terminate them. Make low-profit customers more profitable or terminate them. Focus disproportionate effort on high value customers. Focus disproportionate effort on high value customers.

56 Printed on CANON Components of Customer Equity Customer equity is driven by: Customer equity is driven by: Value equity Value equity Brand equity Brand equity Relationship equity. Relationship equity. Companies must decide which driver(s) underlie each 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). Source: Roland T. Rust, Valerie A. Zeithaml, and Katherine A. Lemon, Driving Customer Equity (New York Free Press 2000).

57 Printed on CANON Transaction Marketing vs. Customer Relationship Marketing Customer Relationship Marketing (CRM) represents a paradigm shift from Transaction Marketing (TM). 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 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. 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. 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.

58 Printed on CANON Treat Different Customers Differently Most profitable customers Most profitable customers Most unprofitable customers Most unprofitable customers Most growable customers Most growable customers Most vulnerable customers Most vulnerable customers

59 Printed on CANON Needed: Technology-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. 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.

60 Printed on CANON A 5 Step Model for Database Marketing 1. Gather useful data on customers. 2. Classify customers by their needs and by their value to the firm. 3. Prepare business rules that select the best prospects. 4. Customize marketing treatments for each prospect in terms of product offers, service mix, media, and channel. 5. Set up accountability procedures.

61 Printed on CANON Database Marketing is Expensive! Requires a tremendous investment in information gathering about individual customers and prospects. Requires a tremendous investment in information gathering about individual customers and prospects. Requires constant updating of information. Requires constant updating of information. Some critical information may not be available. Some critical information may not be available. Requires a high investment in hardware and software. Requires a high investment in hardware and software. Requires integrating individual customer information from a variety of sources. Requires integrating individual customer information from a variety of sources. Requires people skilled at data mining. Requires people skilled at data mining. Requires managing and training employees, dealers, and suppliers. Requires managing and training employees, dealers, and suppliers.

62 Printed on CANON Does Every Business Need CRM? No. The following businesses may not benefit from CRM: No. The following businesses may not benefit from CRM: Businesses where the CLV is low. Businesses where the CLV is low. Businesses with high churn. Businesses with high churn. Businesses where there is no direct contact between the seller and ultimate buyer. 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 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 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 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. Companies whose customers have highly differentiated needs and are of highly differentiated value to the company.

63 Printed on CANON IntroductionGrowthMatureDecline Database Management & Warehousing Historical Database Analytics Database-Driven Marketing Performance Dashboards Marketing Mix Modeling / Marketing Management Work-Flow Solutions Marketing Resource Management Campaign Management Yield-Based Pricing Optimum Tools Marketing Technology Platforms on the Market Development Curve Source: Gary Morris, Adapted from Marketing Advocate, Inc. Predictive analytics

64 Printed on CANON Precision 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. 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. 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. Many tactical marketer tasks will be automated and free up marketers to focus on more strategic decision making.

65 Printed on CANON SALES 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. 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.

66 Printed on CANON Marketing Automation Areas Ripe for Marketing Automation: Areas Ripe for Marketing Automation: Selecting names for a direct mail campaign Selecting names for a direct mail campaign Deciding who should receive loans or credit extensions Deciding who should receive loans or credit extensions Allocating product lines to shelf space Allocating product lines to shelf space Selecting media Selecting media Customizing letters to individual customers Customizing letters to individual customers Targeting coupons and samples Targeting coupons and samples Pricing airline seats and hotel reservations Pricing airline seats and hotel reservations

67 Printed on CANON Marketing Decision Models and Marketing Mix Response Models BRANDAID BRANDAID CALLPLAN CALLPLAN DETAILER DETAILER MEDIAC MEDIAC PROMOTER PROMOTER ADCAD ADCAD See Kotler, Marketing Models See Kotler, Marketing Models

68 Printed on CANON Marketing Dashboards Tools dashboard Tools dashboard Processes dashboard Processes dashboard Performance dashboard Performance dashboard

69 Printed on CANON Marketing Work-Flow Process Tools Project management Project management Product management Product management New product development New product development Campaign management Campaign management

70 Printed on CANON Exploit the Internet! Research a new product on the Internet (panel research, chat rooms). 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 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 a category (Colgate on dental problems). Create a site that consults on the customers profile (Elizabeth Arden). Create a site that consults on the customers profile (Elizabeth Arden). Sponsor a chat room around your product category. Sponsor a chat room around your product category. Answer questions instantly (Nestle baby care questions). Answer questions instantly (Nestle baby care questions). Send free samples of new products (freesample.com). Send free samples of new products (freesample.com). Send coupons of new products (coolsavings.com). Send coupons of new products (coolsavings.com). Customize your product (Acumin vitamins). Customize your product (Acumin vitamins). Offer to sell very large orders direct. Offer to sell very large orders direct. Offer valuable information to people who will register on the site. Offer valuable information to people who will register on the site.

71 Printed on CANON Is New Technology Enough? NT + OO = EOO NT + OO = EOO New Technology + Old Organization = Expensive Old Organization New Technology + Old Organization = Expensive Old Organization

72 Printed on CANON Technology-Enabled Marketing: Examples Royal Bank of Canada Royal Bank of Canada Decision to purchase CRM Decision to purchase CRM Halifax Bank Halifax Bank Teller suggests financial products Teller suggests financial products Capital One Capital One A credit card for everyone, but with different interest rates, credit lines, and cash advances. A credit card for everyone, but with different interest rates, credit lines, and cash advances. Tesco supermarkets 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 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 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. 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.

73 Printed on CANON 10 Earmarks of the New Marketing 1. Recognize growing customer empowerment. 2. Develop a focused offering to the target market 3. Design the marketing from the customer-back. 4. Focus on delivering outcomes, not products. 5. Draw in the customer to co-create value. 6. Use newer ways to reach the customer with a message. 7. Develop metrics and ROI measurement. 8. Develop high-tech marketing. 9. Focus on building long run assets. 10. View marketing holistically to regain influence in the company.

74 Printed on CANON 1. P&G Recognizes the New Consumer Consumers want a conversation, to dialogue, to participate, to be more in control…Were going from one-dimensional, product-myopic marketing to three-dimensional marketing – that offers better solutions…more delightful experiences… and the opportunity for on- going relationships. Consumers want a conversation, to dialogue, to participate, to be more in control…Were going from one-dimensional, product-myopic marketing to three-dimensional marketing – that offers better solutions…more delightful experiences… and the opportunity for on- going relationships. Alan Lafley, CEO, P&G

75 Printed on CANON Do-It-Yourself Marketing Self-Inform: Customers can research products and issues without relying on experts (e.g., WebMD, MedlinePlus.com) 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-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-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-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., Self-support: Customer can resolve problems by searching knowledgeable bases and discussion forums (e.g., Self-program: Customer can define their own media programming (e.g., TiVo, MyYahoo!) 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-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-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) Self-police: Customers can monitor reputations of manufacturers (e.g., eBay, BizRate.com) Source: Mohan Sawhney lecture Source: Mohan Sawhney lecture

76 Printed on CANON The Evolution of Marketing Transactional Marketing Relationship Marketing Collaborative Marketing Time frame 1950s1980s 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

77 Printed on CANON 2. Develop a Focused Offering to the Target Market Value customers: Which customer segment(s) do we want to serve? 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 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? 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

78 Printed on CANON Choose 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 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 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. 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)

79 Printed on CANON 3. 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. 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. The 4As are buyer oriented. Awareness (A1) Awareness (A1) Acceptability (A2) Acceptability (A2) Affordability (A3) Affordability (A3) Accessibility (A4) Accessibility (A4) Market value potential = A1 x A2 x A3 x A4 Market value potential = A1 x A2 x A3 x A4 If A1=100%, A2=100%, A3=50%, A4=50%, Then MV=25% If A1=100%, A2=100%, A3=50%, A4=50%, Then MV=25% Source: Jagdish Sheth

80 Printed on CANON 4. 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 ScaniaTrucks Guaranteed uptime WW Grainger MRO items Indirect materials mgt. Source: Kumar

81 Printed on CANON Visualize a Larger Market Nike now defines itself in the sports market rather than the shoe and clothing 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. 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. 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. 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. 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. Jack Welch asked product managers to redefine their market so that they only had a 10% share.

82 Printed on CANON 5. Draw in the Customer to Co-create Value: Two Approaches 1. Offer a wide product line so the customer can choose something closer to the customers desires. M&M allows customers to special order M&Ms in 21 colors. M&M allows customers to special order M&Ms in 21 colors. Branches Hockey lets players pick from 26 options: length of a stick, blade patterns, etc. Branches Hockey lets players pick from 26 options: length of a stick, blade patterns, etc. 2. Stand ready to customize according to the customers wishes. Dell computers are designed by customers Dell computers are designed by customers Lands End sells tailor-made chinos. Lands End sells tailor-made chinos. P&G on its reflect.com site lets shoppers design everything from eye moisturize to liquid foundation makeup. P&G 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. Yankee Candle Company will mix colors and scents to make the candles you want. Other examples: golf clubs, breakfast cereals, credit card companies Other examples: golf clubs, breakfast cereals, credit card companies

83 Printed on CANON Examples of Collaborative Marketing P&Gs site has a Were Listening section and Share Your Thoughts section and Advisory Feedback sessions. P&Gs site has a Were Listening section and Share Your Thoughts section and Advisory Feedback sessions. GM offers an AutoChoiceAdvisory on its website GM offers an AutoChoiceAdvisory on its website Cisco runs Customer Forums to improve its offerings. Cisco runs Customer Forums to improve its offerings. A motorcycle in Italy is being designed by customers. A motorcycle in Italy is being designed by customers.

84 Printed on CANON 6. Use Newer Ways to Reach the Customer with Relevant Messages Make your ads more precise as to who they reach and more relevant. 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. 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. Deliver valuable content with each ad, such as useful information or entertainment. Reach consumers in newer ways. Reach consumers in newer ways.

85 Printed on CANON Newer Ways to Reach Customers Sponsorships Sponsorships Mentions on talk shows Mentions on talk shows Product placement Product placement Street-level promotion Street-level promotion Festivals Festivals Celebrity endorsements Celebrity endorsements Mobile billboards Mobile billboards

86 Printed on CANON Creating 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 Chryslers PT Landcruiser appeared in fashionable areas and college tailgate parties. 250,000 prospects requested information before official ad campaign began in April Models drove around Los Angeles on Vespa scooters and chatted with customers in cafes and bars. 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. 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. 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. 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. Tourist goes into lounge and her telephone rings and picture of the caller appears on the phone.

87 Printed on CANON 7. Develop Metrics and ROI Measurement ProductsBrandsChannelsCustomer Segments Markets Relative product quality Brand awareness Channel penetration Customer satisfaction Market penetration Perceived product quality Brand esteem Channel trustAverage transaction size Market share Percentage of sales from new products Brand loyaltyChannel 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

88 Printed on CANON 8. Develop High-Tech Marketing Predictive analytics Predictive analytics Sales automation Sales automation Marketing automation Marketing automation Marketing models Marketing models Process dashboards Process dashboards Performance dashboards Performance dashboards Campaign management Campaign management Project management Project management New product management New product management

89 Printed on CANON 9. Focus on Building Long-Run Marketing Assets. Brands and brand equity Brands and brand equity Customers and customer equity Customers and customer equity Service quality Service quality Stakeholder relationships Stakeholder relationships Intellectual knowledge Intellectual knowledge Corporate reputation Corporate reputation

90 Printed on CANON 10. View Marketing Holistically Marketing must become strategic and drive business strategy. Marketing must become strategic and drive business strategy. A company needs to take a more holistic view of: A company needs to take a more holistic view of: the target customers activities, lifestyle, and social space. the target customers activities, lifestyle, and social space. the companys channels and supply chain. the companys channels and supply chain. the companys communications. the companys communications. the companys stakeholders interests. the companys stakeholders interests.

91 Printed on CANON Two Models of Management Profit-based management Reduce costs Reduce costs Reduce compensation Reduce compensation Replace people with technology Replace people with technology Price to extract maximum value Price to extract maximum value Sell more products Sell more products Acquire lots of customers 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

92 Printed on CANON Conclusions Marketing is definitely not filling its potential. Marketing is definitely not filling its potential. Marketing must become the driver of business strategy. Marketing must become the driver of business strategy. Companies need to adopt a more holistic view of the marketing challenge. 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 lateral marketing thinking to conceive of new product and service ideas. Companies need to choose from five major strategic paths. 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 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 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. Companies need to move to technology-enabled marketing to achieve precision marketing and develop better measures of ROI impact.

93 Printed on CANON This time like all times is a good one, if we but know what to do with it. Ralph Waldo Emerson THANK YOU!


Download ppt "A Strategy Document on The New Marketing Paradigm Holistic Marketing Lateral Marketing High-tech Marketing by PHILIP KOTLER Documentation Sponsored by."

Similar presentations


Ads by Google