3Action-Oriented Knowledge Session One. How to deal with your company’s major business challenges and opportunities.Session Two. How to search for powerful new ideas and innovate successfully.Session Three. How to improve your branding power.Session Four. How to develop a superior company reputation through sustainability-driven thinking.
4Action-Oriented Knowledge Session One. How to deal with your company’s major business challenges and opportunities.Session Two. How to search for powerful new ideas.Session Three. How to improve your branding power.Session Four. How to develop a superior company reputation through sustainability thinking.
5On a scale of 1 to 3 (3 = highest), How much is this a challenge to your company? Distrust of businessGlobalizationEconomic recession and turbulenceTechnological advances and disruptionsEnvironmentalism and climate changeCustomer empowerment and the new social mediaPolitical conflict and regulatory changes
7Times Are BadCEO’s are now playing miniature golf. Obama met with small businesses - Chrysler, Citigroup and GM, to discuss the Stimulus Package. People in Africa are donating money to Americans. The Mafia is laying off judges.
8An optimist is a person who sees an opportunity in every calamity. A pessimist is a person who sees a calamity in every opportunity.Winston Churchill
9Distrust of BusinessIn a 2009 survey, only 16% of respondents respect the integrity of business executives. And car salesmen and advertising executives were the least admired by the public.CausesBusiness scandals: Enron, World Com, Tyco, Madoff, Goldman SachsHigh pay to the few: CEO paid 350 times average workers salaryAnti-capitalist forcesRecession and falling behindSolutionsMore transparencyBetter boards and managementInvesting in corporate social responsibility
10Is Your Company Going to Fail? Signs to Watch for James Collins wrote in How the Mighty Fall :Stage 1. Successful companies get arrogant and think they can do many things.Stage 2. They pursue growth too aggressively.Stage 3. They ignore early warning signs of failureStage 4. Their failure becomes very public.Stage 5. If they don’t reform, they finally go bankrupt.Companies are often blind-sighted by their eagerness to build short-term growth and ignore the risks.Most companies are short-lived.
11Globalization Causes Downside Upside Advances in information, communication, and transportation now connect the whole worldLowering of trade barriersDownsideGlobalization hurts as many nations as it helpsGlobalization increases country inequalityGlobalization provokes nationalism and protectionismGlobalization threatens cultural traditions and valuesUpsideNew market opportunities if we can offer something betterQuestion: Is your company sufficiently globalized?
12Economic Recession and Turbulence Not all companies were hurt by the fiscal meltdown.Distinguish between:RecessionDisruptionTurbulenceRisk reduction strategiesLarger reservesShared investmentsEarly warning systemsScenario planningCorporate social responsibility
13Technological Advances and Disruptions Scientific advances and inventionsWhat is the impact of the birth control pill, Genome project , digitalization, cell phones, social media, robotics, nanotechnology, biotech, bioenergy…Creative destructionCan you avoid the fate of the music industry, publishing industry (newpapers , magazines, books), high cost airlines…Theory of disruptive innovationWhat can happen to your industry or company?
14Disruptive Technologies OLDPhotographic filmWired telephonesStore retailingClassroom educationOffset printingGeneral hospitalsOpen surgeryCardiac bypass surgeryManned fightersFull service stock brokerageNEWDigital photographyMobile telephonesOn-line retailingDistance educationDigital printingOutpatient clinicsEndoscopic surgeryAngioplastyUnmanned aircraftOn-line stock brokerageSource: Clayton M. Christensen, The Innovator’s Dilemma, p. xxix.
15Tomorrow Will Be Different YesterdayTodayTomorrowFordToyotaCherryDepartment storesWal-MartInternet retailDigital EquipmentDellRIM BlackberryDeltaSouthwest, Ryan AirSkyWest, Air taxisIBMMicrosoftLinuxAt&TCingularSkypeSony DiskManApple iPodCell PhonesSource: Clayton Christensen
16Environmentalism and Climate Change Companies need to go “green” to reduce waste, pollution, and water shortage.Those companies that go “green” early will establish a strong reputation and following. They will also save money in the long run.
17Customer Empowerment and the New Social Media Who has the most market power?WholesalersManufacturersRetailersCustomersWhat are the best new ways to communicate?BlogsFacebook,TwitterLinkedinYouTubeChat roomsRating systems (Edwards, J. D. Power, Rotten Tomatoes, Craig’s List)Wikipedia
18Political and Regulatory Change Growth of social movementsUnionizationAnti-capitalist groupsEnvironmental groupsReligious groupsGay rights groupsPolitical party shiftsRegulatory interventionsFinancial regulationAnticompetitive regulationSafety and health regulation
19MARKETING’S LOSS OF EFFECTIVENESS MARKETING will be less effective in the next few yearsMarketing budgets will be lowerCompanies will want marketers to do more with lessDISTRIBUTORSTRADITIONAL MEDIACOMPETITIONPUBLICSOCIAL MEDIA NETWORKSDISTRIBUTORS will demand more TRADE PROMOTION. This will leave less money for marketing research, advertising and consumer promotion for brand building and ultimately reduce brand equity.Investors will then downgrade the stock. This will leave the company with fewer resources to prop up demand.This is a VICIOUS CIRCLETraditional media such as TV 30-second spots, newspapers, etc., are growing LESS EFFECTIVECategories are so crowded with competitors that heavy price cutting will be UNAVOIDABLEThe public, in its wish to spend less, will be less inclined to pay higher prices for top brands where the quality differences are minimal. There is a strong shift to store brands and sub-brands. This means that top brands are overvalued and there may be a brand bubble.Social media networks will play an increasingly influential role in shaping brand evaluations
20You Need to Build Stronger Marketing into Your Company Old definition of marketing“Act or practice of adverting and selling a product” (Random House Webster Dictionary of American English 1997)New definition of marketing“Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for consumers, clients, partners, and society at large.” (American Marketing Association, 2008)Offerings include products, services, experiences, places, persons, ideas, and causes.
21RE-INVENT MARKETING MUST MARKETING BE RE-INVENTED? MARKETERS are prisoners of an OLD PARADIGMMARKETERS are operating in a TIME WARPCompanies aim to maximize profitsDon’t acknowledge the growing power of the customersCompany investors are more important than other stakeholdersDon’t acknowledge the growing power of the channels and other stakeholdersCustomers buy rationally to maximize valueDon’t acknowledge the new social media world and their growing social responsibilitiesCustomers get most of their information from sellers and don’t talk to each other about productsWE NEED TO….RE-INVENT MARKETING
22You Need Two Marketing Departments!! Most marketing departments are engaged in tactical brand-maintenance instead of brand-building.Strategic marketing is missing in many marketing departments. Strategic marketing requires taking a 3-5 year view of the business.SOLUTIONTWO MARKETING DEPARTMENT…!!!Downstream MarketingUpstream MarketingMarkets TODAY’s ProductCreate TOMORROW’s Product
23Five shifts:1st Shift - from creating marketing strategies to driving business impact.2nd Shift - from controlling the message to galvanizing your network.3rd Shift - from incremental improvements to pervasive innovation.4th Shift - from managing marketing investments to inspiring marketing excellence.5th Shift - from an operational focus to a relentless customer focus.Company examples:GE, Wal-Mart, Charles Schwab, Procter & Gamble, Burger King, Zappos, Best Buy and Dell
25Involve Your Customers In Your Planning Four ways to view customers:Purchasers of our productPersons from whom we gain insight and with whom we can test our planned productsPersons who Influence others to buy our product (net promotion score NPS)Persons who co-create product and communication ideasCompany examples of co-creation:Lexus invites customers to build their own Lexus by going to and drawing from a complete package of available colors and options packages.Lego and Harley Davidson have welcomed their respective enthusiasts to participate in improving their market offerings.Doritos ran an online promotion urging fans to create 30-second spots for Doritos and post them for on-line voting to be picked to air in one of the three Super Bowl slots. The user-generated ad won the top spot at the 21st USA Today Super Bowl Ad Meter defeating ads made by professional agencies.
26Market to All Your Stakeholders Our thinking has shifted from maximizing shareholder value to maximizing stakeholder value.Stakeholders include customers, employees, channel members, and investors.Customers: They need a feeling of gaining superior value from your offering.Employees: They need to believe in their company’s mission, vision and values.Channel members: They must believe that they are receiving equitable reward for their contributions.Investors: They need assurance that the company has a viable long run plan for growth and continued profitability
27MARKETING 1.0 vs 2.0 vs 3.0 MARKETING 1.0 MARKETING 2.0 MARKETING 3.0 Product-centric MarketingCustomer-oriented MarketingValue-driven MarketingObjectiveSatisfy and retain the consumersMake the world a better placeSell productsEnabling ForcesIndustrial RevolutionInformation TechnologyNew Wave TechnologyHow companies see the marketMass Buyers with Physical NeedsSmarter Consumer with Mind and HeartWhole Human with Mind, Heart, and SpiritKey marketing conceptProduct developmentDifferentiationValuesCompany marketing guidelinesCorporate and Product PositioningCorporate , Vision, ValuesProduct specificationValue propositionsFunctional and EmotionalFunctional, Emotional, and SpiritualFunctionalInteraction with consumersOne-to-Many TransactionOne-to-One RelationshipMany-to-Many Collaboration
29Promoting reusable shopping bags S. C. JOHNSON VALUE-BASED MATRIXFor SC Johnson, creating sustainable economic value means helping communities prosper while achieving profitable growth for the company.Sustaining Values:SC Johnson Public ReportWe believe our fundamental strength lies in our people.MINDHEARTSPIRITPromoting reusable shopping bagsBase of the PyramidMissionContributing to the community well –being as well as sustaining and protecting the environmentVisionTo be a world leader in delivering innovative solutions to meet human needs through sustainability principlesValuesSustainabilityWe create economic valueWe strive for environmental healthWe advance social progress
30Station Break!Are there any companies that you love or would deeply miss if they went out of business?
31Companies Americans Love Amazon, Best Buy, BMW, CarMax, Caterpillar, Commerce Bank, Container Store, Costco, eBay, Google, Harley-Davidson, Honda, IDEO, IKEA, JetBlue Johnson & Johnson, Jordan's Furniture, L L Bean, New Balance, Patagonia, Progressive Insurance, REI, Southwest, Starbucks, Timberland, Toyota, Trader Joe's, UPS, Wegmans, Whole Foods.The researchers found these “firms of endearment” to be highly profitable.They also found eight characteristics common to these firms.
32Characteristics of “Firms of Endearment” They align the interests of all stakeholder groupsTheir executive salaries are relatively modestThey operate an open door policy to reach top managementTheir employee compensation and benefits are high for the category; their employee training is longer; and their employee turnover is lowerThey hire people who are passionate about customersThey view suppliers as true partners who collaborate in improving productivity and quality and lowering costsThey believe that their corporate culture is their greatest asset and primary source of competitive advantage.Their marketing costs are much lower than their peers while customer satisfaction and retention is much higher.
33Action-Oriented Knowledge Session One. How to deal with your company’s major business challenges and opportunities.Session Two. How to search for powerful new ideas and innovate successfully.Session Three. How to improve your branding power.Session Four. How to develop a superior company reputation through sustainability-driven thinking.
34How Are You Planning to Grow Profitable Revenue? EfficiencyFinance and cost control become important (time and motion studies)AcquisitionFinance becomes importantOrganic growthMarketing and sales become importantInnovationR&D and technology become important
35Innovativeness is a Capability Innovativeness is a capability; consider Sony and 3M.Innovation requires organizing three markets within the firm:An idea marketA capital marketA talent marketThe best innovations provide solutions to customer problems, not to the company’s product problems.Strong market-creating innovations have a long life and create market leadership.
36Companies Need an Innovation Strategy There are four major types of innovation in business:Product innovationService innovationMarketing innovationBusiness model innovationA company first needs to choose an innovation strategy.The decision should include building an innovation culture and providing funds for training, incentivizing, and rewarding.Each approved innovation project must have an innovation plan, budget, time line, and deadline.A high level executive manages the innovation projects portfolio, updates their status, shares with the CEO, and they make further decisions on extending or terminating.
37Business Model Innovations Amazon and KindleApple and iTunesBarnes and Nobles bookstoresDell computerIkeaStarbucks
38Marketing Innovations Incentive innovationsCredit cardsRebatesZero-interest financingGift certificatesCouponsGuarantees and warrantiesLoyalty awardsSubscription selling (Book of the Month Club)Retailing innovationsSelf-service storesSelf-checkoutCoupon feedsHypermarketsCategory killer storesDifferentiated stores with same chain (Best Buy)Exclusive lines of merchandise (Target: Michael Graves, Martha Stewart)Selling on TV (Home Shopping Network)Selling on the InternetProducer innovationsBrand as a platform (Virgin, iTunes)Customization
40Station Break!How does your company go about getting new product and service ideas? What are the best sources of new ideas? Who is responsible for collecting new ideas?
41Sources of New Ideas Scientists and Engineers Employees Customers Motorola and PhilipsEmployeesWhirlpool,ShellSamsungCustomersProblems in present productsDream productsEnthusiastsOther partners in the company network
42Focus Groups/ Consumer Panels CUSTOMER RESEARCHEthnographic StudiesIn-store ObservationQuantitative SurveysFocus Groups/ Consumer PanelsNeuroScienceand ZMETIn home & shopping tripsOrientation & EnvironmentAwareness, Attitudes, & BehaviorListening for insights & trendsWhy do you buy?Customer Research
43Action-Oriented Knowledge Session One. How to deal with your company’s major business challenges and opportunities.Session Two. How to search for powerful new ideas and innovate successfully.Session Three. How to improve your branding power.Session Four. How to develop a superior company reputation through sustainability-driven thinking.
44There are so many brands in some categories that it is difficult to stand out.
45The brand name may account for more than half of the brand value on the balance sheet. Almost 70% of the market capitalization of such brands as Nike and Prada lie in its intangibles, especially the brand.The former chairman of Quaker Oats said: “If the business were split up, I would take the brands, trademarks, and goodwill, and you could have all the bricks and mortar—and I would fare better than you.”
46Marketers Have Lessening Influence in Shaping Their Brand Image Person-to-person conversations about many products can exceed the amount of communication under the company’s control.Thus a brand can be hijacked (see Alex Wipperfürth, Brand Hijack: Marketing without Marketing, New York: Portfolio, 2005).Four possibilitiesEveryone is talking negatively about the company.There is no talk about the companyThe talk is a mix of good and bad commentsVirtually all the talk is favorableMarketing 2.0 managers listened to the consumers’ voices to understand their minds and capture market insights.Marketing 3.0 is when consumers play the key role of creating the value through co-creation of product and service.
47Your Brand Needs to Own a Word Mercedes - engineeringBMW - drivingDisney - family fun entertainmentSaturn - no hassle car buyingFedEx - overnightWal-Mart - low prices/good valuesHallmark - caringNike - performance3M - innovationVolvo - safetyStarbuck - best coffee experience
48A Brand Must be More Than a Name A brand must trigger words or associations (features and benefits).A brand should depict a process (McDonald’s, 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.
54Find a Way to Brand These Commodities ChickenCementBricks“It is possible to brand sand, wheat, beef, bricks, metals, concrete, chemicals, corn grits, bananas, apples, aspirin, …”(Sam Hill, How to Brand Sand).CAN YOU DESIGN NEW FEATURES FOR AN AUTO INSURANCE POLICY?
55Creating genuine customer value: Progressive Insurance MyRate rewards lower risk drivers with lower rates.“ I don’t drive a lot of miles, I’m a safe driver, and I’m not usually on the road late at night when accidents are most likely to happen. Since I’m less likely to be in an accident, shouldn’t I pay less for car insurance?”Name Your Price lets customers customize their policy to fit their budget.“ I want an easier way to see how I can meet my insurance needs at a great price.”
56Develop a Memorable Brand Slogan BA, “The World’s Favorite Airline”American Express, “The Natural Choice”AT&T, “The Right Choice”Budweiser, “King of Beers”WHAT DO YOU THINK OF THESE SLOGANSFord, “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”“Let’s Make Things Better”
58What Should Your Measure About Your Brand’s Standing? Customer perceived valueCustomer satisfactionCustomer loyaltyCustomer advocacyCustomer co-creation
59Action-Oriented Knowledge Session One. How to deal with your company’s major business challenges and opportunities.Session Two. How to search for powerful new ideas and innovate successfully.Session Three. How to improve your branding power.Session Four. How to develop a superior company reputation through sustainability-driven thinking.
60Dow Jones Sustainability Index How Will Your Company Be Measured?Indices now measure how well a company performs in the triple bottom line: profit, planet, and people.The AIM:To encourage companies to improve their economic, environmental, and social impact on the society.CompanyApproachFTSE4Good IndexGood companies work toward environmental sustainability, have positive relationship with all stakeholders, protect universal human rights, possess good supply chain labor standards, and counter bribery practicesDow Jones Sustainability IndexCorporate sustainability as “a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.”Goldman SachsIntroduce the GS Sustain Focus List, which includes the list of companies with sustainable practices
61SUSTAINABILITY AND SHAREHOLDER VALUE There is a link between corporate sustainability and strong share price performance. Companies that put more emphasis on social and environmental impacts reported annual profit growth of 16% and share price growth of 45% while those from companies that did not put a lot of emphasis reported annual profit growth of only 7% and share price growth of only 12%. (Economist Intelligence, 2008)Moreover, executives believe that the concept of sustainability is good for corporations in attracting consumers and employees and improving shareholder value.
62? Selling Sustainability to Investors To convince shareholders, the company needs to provide tangible evidence that the practice of sustainability will improve shareholder value by creating a competitive advantage.?SustainabilityProfitabilityReturnabilityThe issue is to find a linkage of between sustainability, profitability, and returnabilityTHREE important metrics that can be quantified financially:Improved cost productivityHigher revenue from new market opportunitiesHigher corporate brand value(For details, see Marketing 3.0).
63Serving the Bottom Third Stretches disposable income by providing goods and services at lower prices.1Unilever’s Annapurna provides low price affordable iodized salt that is better than cheaper non-iodized salt.‘House-for-Life’ program offering low-cost housing solutionsExpands disposable income by providing goods and services not previously available for the bottom of the pyramid2Nicholas Negroponte's XO and Nova netPC personal computers.GlaxoSmithKline and Novo Nordisk providing new essential medicines.Increases disposable income by growing the economic activity of the underserved society. Grameen Phone illustrates this.3Hindustan Lever’s Project Shakti which “employs” thousands of underprivileged women as its sales force to bring its products to rural consumers and provides them with significant disposable income
64Wal-Mart Turns GreenWal-Mart announced in 2005 that it will be a “good steward to the environment” and will spend $500 million a year to increase fuel efficiency in Wal-Mart’s truck fleet by 25% over three years; reduce greenhouse gases by 20% in seven years; reduce energy use at stores by 30%; and cut solid waste from U.S. stores and Sam’s Clubs by 25% in three years.Critics see Wal-Mart’s move being mainly done for economic purposes—to save energy, save costs, and increase revenue from increasing demand for green products. This describes an “Investor Orientation.”
65Timberland has a Green DNA Timberland is a leader in the design, engineering and marketing of premium-quality footwear, apparel and accessories for outdoor consumers. It believes in “doing well by doing good.”In shoes, Timberland uses recycled materials, non-chemical substances as much as possible, made in energy-saving factories. The label gives consumers information “about the product they are purchasing, including where it was manufactured, how it was produced, and its effect on the environment”.Timberland gives back to communities. Under the Path of Service program, its employees have contributed over 200,000 total hours of service that benefited over 200 community organizations in 13 countries, 26 states and 73 cities.To commemorate Earth Day, Timberland plants a tree on behalf of each consumer who spends $150.Timberland has also done such things as offering $3,000 incentives to employees who purchase hybrid cars.Other companies in this category are Patagonia, Whole Foods Market, Fetzer Vineyards, and Herman Miller.
67Build a Strong Corporate Reputation: Why It’s Important Financial Community > Supports Stock ValueEmployees/Recruits > A Great Place to WorkCommunities > A Good NeighborPublic Opinion > Good WillPublic Policy Makers > Access/Credibility/Influence95% of CEOs from McKinsey-surveyed global companies believe that “society has greater expectations than it did five years ago that companies will assume public responsibilities.”
68The Marketing MindsetYour company and stakeholders need to embrace a market andcustomer-orientation.Your company needs a CMO who participates in formulating the company’s growth strategy.Your company needs to define its mission, vision and values as the starting point for its transformation to Marketing 3.0.Your offerings must touch the customer’s mind, heart, and human spirit if they are to win over the customer.Your company needs to practice the Triple Bottom-Line: Economic Value, Environmental Health, and Social Progress. This is the key to Profitability, Returnability, and Sustainability.
69“Within five years, if you run your business in the same way as you do now, you’re going to be out of business.”Philip Kotler