branding philip kotler

8/2/2019 Branding Philip Kotler

1/93

A Strategy DocumentonThe New Marketing Paradigm

Holistic Marketing

Lateral Marketing

High-tech Marketingby

PHILIP KOTLER

Documentation Sponsored by

Canon


2/93

logo unit


3/93

Printed on CANON

Kotler On MarketingHow To Create, Win, and Dominate Markets

Philip Kotler, Ph.D

Kellogg School of

Management Northwestern

University

Indiatimes Mindscape Mumbai and Delhi

October 11, 12, 2004


4/93

Printed on CANON

Two Challenges FacingIndian Companies

1. Will Indian companies be able to defend theirmarket against the growing invasion of foreignglobal brands?

2. Can Indian companies develop strong globalbrands?


5/93

Printed on CANON

Can Indian CompaniesDefend the Domestic Market?

Foreign competitors will not only go after thehigh end market in India. They will target the

middle and eventually the low end.

The main defense for India will be developingstronger skills in innovation, differentiation,

branding, and service. In a word,MARKETING!


6/93

Printed on CANON

But India NeedsStronger Marketing

Confusing marketing with advertising.

Advertising is hard sell.

Sometimes ads appear before the product is in distribution.

Some companies over-spend on advertising and go broke.

Little use of marketing research; cant trust.

Therefore little segmentation of market and poor targeting.

Over focus on winning through low price; neglectingdifferentiation.

Retailers carry the same goods and their service is poor.


7/93

Printed on CANON

Marketing is More Importantthan Production!

The Indian manufacturer of a Hugo Boss shirt gets only $12, or10% of the final price of $120 that is paid by a customer of SaksFifth Avenue. The retailer gets 60% ($72) and the Brand company gets

30%, or $36.

Would you rather be the manufacturer, Brand owner, orretailer?

The Indian manufacturer has no defense if the Brand Ownerwants to switch to another manufacturer to whom he will pay$8 and keep $2 or pass it to the retailer to get more retailsupport.

Yet India pays more attention to the product engineer than themarketing engineer. But Indias future success will requireinvesting in marketing and branding.


8/93

Printed on CANON

The Strategic Trajectoryfor India

Low cost, average quality domestic products.

Low cost, good quality domestic products.

Indian high-end products made for other companies.

Indian branded products (regional).

Indian branded products (global).

Indian dominant brands (global).


9/93

Printed on CANON

Ranbaxy Pharmaceuticals (India)

Originally sold bulk substances to unsophisticatedmarkets but gross margins were too low to coverexport costs.

New CEO, Parvinder Singh, challenged Ranbaxy tobecome a truly global company. He said: Ranbaxycannot change India. What it can do is to create apocket of excellence. Ranbaxy must be an islandwithin India.

The company moved into higher-margin businesseslike 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$ 250million revenues now come from outside of India.


10/93

Printed on CANON

The Case of HaierHaier 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 ischallenging Whirlpool and GE.

Haiers brand name products are sold in Wal-Mart,Best Buy, Sears, Lowes, Home Depot and Target.

Haier is promoted as a global brand, not a Chineseone. (Many people think it is German).

Puts lower price models in price-only stores andhigher price models in top stores.


11/93

Printed on CANON

Five Cs Favoring India

Capital: India has and can attract capital.

Cost: Another 50 years of low cost production

Capability: Large number of trained workers,engineers, scientists, and business people

Consumers: Immense domestic market

Calm and stability: in a world of turmoil anduncertainty


12/93

Printed on CANON

A Quiz: Who Said This?

The purpose of a company is to create a customerThe onlyprofit center is the customer.

A business has twoand only twobasic functions:marketingand innovation. Marketing and innovation produceresults: all the rest are costs.

The aim of marketing is to make selling unnecessary.

While great devices are invented in the Laboratory, great

products are invented in the Marketing department.

Marketing is too important to be left to the marketingdepartment.


13/93

Printed on CANON

My Message

Marketings performance has beendisappointing.

You must replace your Old Marketing withNew Marketing that is:

holistic,

technology-enabled, and strategic.


14/93

Printed on CANON

Facing the Increasing Pressure forMarketing Accountability

Marketing has become a one P discipline = selling. Marketing involves a great deal of waste.

$2 million for 30 seconds on the Superbowl. Direct mail campaigns with a 1% response rate. Cold sales calls which play the numbers. High rate of new product failure.

Marketing costs are high and rising.

Marketing lacks accountability.

Marketing does not create major new ideas.

Marketing is too involved in short-term thinking.

Marketing doesnt focus on its real assets.

Brands, customers, service quality, stakeholder

relationships, intellectual capital, corporate reputation


15/93

Printed on CANON

Needed:Holistic Marketing

Marketing must become strategic and drive business strategy.

A company needs to take a more holistic view of:

the target customers activities, lifestyle, and social space.

the companys channels and supply chain.

the companys communications.

the companys stakeholders interests.

Holistic marketing will require strong software support.


16/93

Printed on CANON

HOLISTIC RELATIONSHIP MARKETING FRAMEWORK

MARKET

SPACE

POTENTIAL

OPPORTUNITIES

BUSINESS

INVESTMENT

CUSTOMERS CORPORATION COLLABORATORS

CUSTOMER

FOCUS

CORE

COMPETENCIES

COLLABORATIVE

NETWORK

2) How can we define relevant market space?

3) What are the potential opportunities emergingfrom the market space?

4) What business capabilities and infrastructurerequired?

1) Who is involved?


17/93

Printed on CANON

4 COMPETITIVE PLATFORMS

MarketOfferings

COGNITIVESPACE

CUSTOMERVALUE

BUSINESSDOMAIN

COMPETENCYSPACE

BusinessArchitecture

BUSINESSPARTNERS

CRM ERP

RESOURCESPACE

SCM

Marketing

ActivitiesOperational

System

ExploringValue

CreatingValue

DeliveringValue

CustomerFocus

CoreCompetencies

CollaborativeNetwork


18/93

Printed on CANON

Responding to Low Margins and theEconomic Slowdown

Commoditization and rapid imitation leading to shorter productlife cycles.

Competition of cheaper brands from China and elsewhere.

Rising selling and promotion costs and decreasing sales

effectiveness.

Shrinking margins.

Proliferation of sales and media channels.

Power shifting to giant retailers who are demanding lower

prices. Recession: lower incomes and purchasing power.

Mergers, large company bankruptcies.


19/93

Printed on CANON

Improving Marketing

Efficiency and Effectiveness

Improving marketingefficiency buying inputs more efficiently

hunting down excessive communication and sales travelexpenses

closing unproductive sales offices

cutting back on unproven promotion programs and tactics

putting advertising agencies on a pay-for-performance basis

Improving marketing effectiveness

replacing higher cost channels with lower cost channels

shifting advertising money into better uses

reducing the number of brands or skus

Improving supply chain responsiveness


20/93

Printed on CANON

Responding to theEconomic Slowdown

Reevaluate your current resource allocations. Geographical mix Market segment mix Customer mix Product mix

Channel mix Promotion mix

Decide whether to attack to gain market share rather thanretrench.

Be sure to maintain the value proposition promised by yourbrand.

Try to add value instead of cutting the price.


21/93

Printed on CANON

Marketing Strategies Are ShowingDiminishing Returns

Product differentiationis harder toachieve.

Acquisitions and mergershave asmany failures as successes.

Internationalizationis offering lessopportunities because either the good

markets are overcrowded or the poormarkets have no money. New productsunfortunately fail more

times than they succeed. Price cuttingdoesnt work because

competitors will match. Pricing raisingdoesnt work since

there isnt enough differentiation tosupport it.

Cost cuttinghas eliminated much ofthe fat but is now risking cutting themuscles.


22/93

Printed on CANON

Strategies for Firms in Different Market Positions

Jagdish Sheth, Singapore Marketer, 2002


23/93

Printed on CANON

Five Winning Strategies

Cost reduction: (IKEA, Southwest Airlines,Wal-Mart, Enterprise Rent-a-Car).

Improved customer experience(Starbucks,

Harley Davidson)

Innovative business model(Barnes & Noble,Charles Schwab, FedEx, Sony).

Improved product quality(P&G, Toyota).

Niching:(Progressive Insurance, Tetra)


24/93

Printed on CANON

Dual Strategies

Planning for today

Defining the business. Shaping the business to

meet needs of todayscustomers

Improving alignment

between functionalactivities and businessdefinition

Organization mirrorscurrent business

activities

Optimizing currentoperations to achieveexcellence.

Planning for tomorrow

Redefining the business

Reshaping the businessto compete for futurecustomers and markets

Making bold moves awayfrom the existing ways ofdoing business

Reorganizing for future

business challenges Managing change to

create future operationsand processes

I k t th i b f


25/93

Printed on CANON

In many markets, the growing number ofcompetitors in mature markets leadscompanies to target niches of low

profitability.

MarketSize

Number ofcompetitor

s

Averageprofitability

of all

competitorsor players

Y O G U R T S M A R K E T

Time


26/93

Printed on CANON

Some Vertical Marketing Methods

Modulation The juice manufacturer varies the sugar content, fruit

concentrate, with or without vitamins Sizing

Potato chips are offered in sizes 35 grams, 50 grams, 75grams,125 grams, 200 grams, multi-packs

Packaging Nestles Red Box chocolates comes in different containers:

cheap paper box for the grocery trade, premium metal box forthe gift trade Design

BMW designs cars with different styling and features... Complements

Biscuits with sugar spread on it, with cinnamon, with

chocolate, with white chocolate, with black chocolate, filledbiscuits Efforts reduction

Charles Schwab offers different channels for transacting suchas retail stores, telephone, internet.


27/93

Printed on CANON

into

Cereals for breakfast market

Cereal varieties

New category

STREETS =

The case of Cereal Bars


28/93

Printed on CANON

Baby dolls market

Doll varieties

New category

Tofeel

as...

=

Teenager

The case of Barbie


29/93

Printed on CANON

Other Examples of Lateral Marketing

Kinder Surprise = candy + toy.

Seven Eleven = food + depot.

Actimel = yogurt + bacteria protection.

Gas station stores = gas station + food.

Cyber cafes = cafeteria + Internet. Be the godfather of a kid = Donation + adoption.

Huggies Pull-ups = diapers + 3 year olds.

Walkman = audio + portable

Source: Philip Kotler and Fernando Trias de Bes, Lateral Marketing: A NewApproach to Finding Product, Market and Marketing Mix Ideas(Wiley, 2004)


30/93

Printed on CANON

Check Where You Stand Marketing does the marketing -> everyone does the

marketing.

Organizing by product units -> organizing by customersegments. Making everything -> outsourcing more goods and

services. Using many suppliers -> working with fewer suppliers. Emphasizing tangible assets -> emphasizing intangible

assets. Building brands through advertising -> building brands

through integrated communications. Attracting customers to stores -> making products

available on-line. Selling to everyone -> selling to target markets.

Focusing on profitable transactions -> focusing oncustomer lifetime value.

Focusing on market share -> focusing on customer share. Being local -> being glocal. Focusing on the financial scorecard -> focusing on the

marketing scorecard. Focusing on shareholders -> focusing on stakeholders


31/93

Printed on CANON

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


32/93

Printed on CANON

1. How Important is Branding?

The NUMMI plant in California produces twonearly identical models called the ToyotaCorolla and the Chevrolet Prizm.

Toyota sold 230,000 Corollas compared tosales of 52,000 Prizms.

And Toyotas net price is $650 higher!


33/93

Printed on CANON

A Strong Brand ImprovesDemand and Supply

On the demand side:

higher price

increased sales volume

lower churn

more brand stretching

On the supply side:

greater trade acceptance, more favorable supplier terms,

lower rejection lower staff acquisition and retention costs

lower cost of capital

better scale economics through higher volume


34/93

Printed on CANON

Names are Important in Branding

Donald Trumps family name is Drumpf.But he cant call it Drumpf Towers.

Alan Aldas name was Alphonso

DAbruzzo.

Chinese gooseberry was renamed

kiwifruit.

Paradise Island in the Bahamas used to beHog Island.


35/93

Printed on CANON

A Brand Must be MoreThan a Name

A brand must trigger words or associations (features and

benefits).

A brand should depict a process (McDonalds, Amazon).

A great brand triggers emotions (Harley-Davidson).

A great brand represents a promise of value(Sony).

The ultimate brand builders are your employeesandoperations, i.e., your performance, not your marketing

communications.


36/93

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 brandspersonality?

A. Founders

B. SpokespersonsC. CharactersD. ObjectsE. Stories and mythologies


37/93

Printed on CANON

2. How Do You Developa Brand Concept?

The brand must be an essence, an ideal, anemotion. It must be supported by beautiful logos,clever tag lines, creative turns, edgy names, ravelaunch parties, big ticket giveaway promotions, andpublicity buzz-making. (Advertising agency view)

The brand should have a target group in mind andbe positioned to solve one of their problems betterthan competitive offerings. Furthermore the brandsreputation is ultimately based on product quality,

customer satisfaction, employee communications,social responsibility, etc. (Kevin Clancy, CEO ofCopernicus)


38/93

Printed on CANON

Branding Components

Name Short, suggestive, memorable, unique, pronounceable

Slogan

Logo and typeface

Colors Music

Themelines (Got Milk!)

Stationery and business cards

Offices Trucks

Dress code


39/93

Printed on CANON

Brand Slogans

BA, The Worlds Favorite Airline American Express, The Natural Choice

AT&T, The Right Choice

Budweiser, King of Beers

Ford, Quality is #1 Job Holiday Inn, No Surprises

Lloyds Bank,The Bank that Likes to Say Yes

Philips,

From Sand to Chips

Philips Invents for You

Lets Make Things Better


40/93

Printed on CANON

There is No Such Thing as a Commodity:Differentiate by Segments

Mobil conducted a study of 2,000 gasoline buyers andidentified five segments:

Road Warriors (always driving)

True Blues (brand or dealer loyal)

Generation F3 (liked convenience store aspect)

Homebodies (fills up at nearest station)

Price Shoppers (20% of all the buyers)

Mobil rolled out Friendly Serve: cleaner property,bathrooms, better lighting, well-stocked stores, and

friendlier personnel. Mobil charged $.02 more and sales increased by 20-25

percent.


41/93

Printed on CANON

3. How Do You Promote a Brand?

How do I justify spending millions oncreating an image. Thats millions mycustomers have to spend when they buy

from us. Tom Parker, CEO of Clarksshoes.

Brands are built by performance, not

advertising.


42/93

Printed on CANON

Dont Overuse Advertisingto Build a Brand

People dont pay that much attention to ads anymore(wallpaper).

Some exceptional TV ads grab attention but do not

provide motivation.

Advertising doesnt have much credibility orbelievability.

The existence of so much advertising makesadvertising less effective. Yet the cost of advertisingkeeps rising.

T l f B ildi B d


43/93

Printed on CANON

Tools for Building Brands

Advertising (e.g.,Absolut Vodka)

Sponsorships (e.g., Kodak and Olympics)

Clubs (e.g. Nestles Casa Buitoni Club)

Company visits (e.g., Cadburys theme park, Hallmarks Museum)

Trade shows

Traveling exhibits

Worldwide web casts of presentations, roundtables, entertainment

Distribution outlets (e.g., Haagen-Dazs)

Public facilities (e.g., Nestle Nestops)

Social causes (e.g., American Express)

High value for the money (e.g. buzz created by Ikea, etc.)

User community building (e.g., Harley-Davidson)

Founders personality (e.g., Colonel Saunders)

Celebrity spokespersons


44/93

Printed on CANON

4. What Makes a Strong Brand?

Strong brand = Product Benefits x DistinctIdentity x Emotional Values

Peter Doyle, Marketing Management & Strategy, 1997

THE Y&R MODEL OF BRAND STRENGTH


45/93

Printed on CANON

THE Y&R MODEL OF BRAND STRENGTH

A successful brand has brand vitalityand brand stature.

Brand vitalityconsists of:

1. Differentiation, the brand is distinct

2. Relevance, the brand is meaningful and personally

appropriate.

Brand statureconsists 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.


46/93

Printed on CANON

Characteristics of Strong Brands

Provides superior delivery of desired benefits.

(Starbucks, FedEx, Amazon)

Maintain innovation and relevance for the brand.

(Gillette, Charles Schwab)

Establish credibility and create appropriate brandpersonality and imagery.

(Apple, Virgin)

Communicate with a consistent voice.

(Coca-Cola, Accenture)

Strategically design and implement a brandhierarchy and portfolio.

(BMW, The Gap)


47/93

Printed on CANON

Strong Brands Supply Use Valueas Well as Purchase Value

Nestle: Sells baby food Provides free dietitian phone line Nestops along the highway

Home Depot: Sells home improvement products, such as paint, electrical

supplies, plumbing Offers free kitchen remodeling design service Offers free workshops on how to paint, fix faucets, etc.

Volvo Teaches safe driving,

Supports lower insurance rates for safe drivers


48/93

Printed on CANON

When Do You Stretcha Brand Name?

Mercedes is putting its name on large, medium andsmall cars.

Gap decided to invent Old Navy in going down andbuying Banana Republic in going up.


49/93

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 declinecan be slowed down.

Two general approaches: Marketing mix modification

Improve the product, distribution, price, or promotion Market modification

Find new segments, new usage benefits or occasions,more frequent usage, etc.

Find out to whom the dowager brand is losing share: Old peer brands New peer brands Retail store brands Generic brands Elite brands

Find out to whom the dowager brand is losing sales. Interview people who defected to each competitive class and their

dissenting rationales. Determine a counterlogic for each group and direct them to the

groups that can most easily be won back. Source: Dennis W. Rook and Sidney J. Levy, Defending the Dowager:

Communication Strategies for Declining Main Brands.


50/93

Printed on CANON

How Do You RationalizeYour Product Line?

Unilever found that the largest 50 brands accounted for 63% ofits revenues.

Unilever decided to emphasize 400 core brands and dispose,delete or consolidate 1,200 of its marginal brands.

Unilever selected its 400 core brands based on brand scale,brand power (#1or 2), and brand growth potential.

40 brands were designated as core global brands (e.g., Dove,Knorr, Lipton), and 360 as regional core brands.

The core brands would get disproportionate investments inadvertising and promotion, innovation, marketing competenceand management time. The core brands would be extended.

Weak brands had small market shares; poor profitability;negative cash flow; weak channel support; disproportionateconsumption of management time.

The weak brands would be milked, sold, delisted, or theirattribute would be migrated to another brand.

Wh A h M F C


51/93

Printed on CANON

What Are the Most Frequent Causesof Brand Failure?

Failure to live up to the brand promise.

Failure to adequately support the brand.

Failure to adequately control the brand. Failure to properly balance consistency and

change with the brand.

Failure to do brand equity measurement andmanagement.


52/93

Printed on CANON

Building Customer Equity

How customer-centered is your company? Howdo you measure this?

Does your company need to be more customer-centered? To all customers or only the more

important customers? How can you go about becoming more customer-

centered?

How much would this cost you in new technology

and training?

How much would you gain as a result ofbecoming more customer-centered?


53/93

Printed on CANON

Achieving Outcomes in Market Space

Achieving a deep customer focus is not done simply by building acustomer database or customizing your product offerings.

A company must define its marketspace not in terms of products butin terms of customer outcomes. Baxter Healthcare supplies home-recovery enhancement, not just

nursing care or wheelchairs. IHI, a health insurance company, operates in the lifetime health and

personal safety marketspace.

A company then examines the customer activity cycle and the valuegaps.

The company then invests in filling the major value gaps.

The company ends up being favored and grows through doing morethings better for their customers.

Source: Sandra Vandermerwe, Achieving Deep Customer Focus, MIT Sloan ManagementReview, Spring 2004, pp. 26-34


54/93

Printed on CANON

Achieving Deep Customer Focus1. Create strategic excitement.

2. Enlist points of light.

3. Articulate the new market space focused on customer outcomes.

4. Identify the valueopportunities through using the customer activity cycle.

5. Build acompelling 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, MITSloan Management Review, Spring 2004, pp. 26-34.


55/93

Printed on CANON

Building Customer Equity

Reduce the rate of defection.

Increase the longevity of the relationship.

Enhance the growth potential of eachcustomer through cross-selling and up-

selling.

Make low-profit customers more profitableor terminate them.

Focus disproportionate effort on highvalue customers.

C t f C t E it


56/93

Printed on CANON

Components of Customer Equity

Customer equity is driven by:

Value equity Brand equity

Relationship equity.

Companies must decide which driver(s) underlieeach equity.

Source: Roland T. Rust, Valerie A. Zeithaml, and Katherine A. Lemon,Driving Customer Equity(New York Free Press 2000).

Transaction Marketing vs.


57/93

Printed on CANON

Transaction Marketing vs.Customer Relationship Marketing

Customer Relationship Marketing (CRM) represents aparadigm shift from Transaction Marketing (TM).

TM companies focus on products and making a sale. CRMcompanies focus on building a long-term relationship thatproduces satisfaction for the customer and profitability forthe company.

TM companies promote everywhere in search of customers.CRM companies promote to a defined customer group andaim to make the right offerat the right timeusing the rightchanneltothe right customer.

All companies must practice a mix of TM and RM. TM will bestronger in companies facing a large number of customers;RM will be stronger in companies facing a small number ofcustomers.


58/93

Printed on CANON

Treat Different Customers Differently

Most profitable customers

Most unprofitable customers

Most growable customers

Most vulnerable customers


59/93

Printed on CANON

Needed:

Technology-Enabled Marketing Technology-enabled marketing (TEM)

combines information technology, analytical

capacities, marketing data, and marketingknowledge, made available to one or moremarketing decision makers to improve thequality of marketing management.

A 5 St M d l f


60/93

Printed on CANON

A 5 Step Model forDatabase 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 bestprospects.

4. Customize marketing treatments for each prospect

in terms of product offers, service mix, media, and

channel.

5. Set up accountability procedures.

Database Marketing is Expensive!


61/93

Printed on CANON

Database Marketing is Expensive!

Requires a tremendous investment in information gathering

about individual customers and prospects.

Requires constant updating of information.

Some critical information may not be available.

Requires a high investment in hardware and software.

Requires integrating individual customer information from a

variety of sources.

Requires people skilled at data mining.

Requires managing and training employees, dealers, and

suppliers.


62/93

Printed on CANON

Does Every Business Need CRM? No. The following businesses may not benefit from CRM:

Businesses where the CLV is low. Businesses with high churn.

Businesses where there is no direct contact between theseller and ultimate buyer.

Companies that are in the best position to invest in CRM.

Companies that collect a lot of data (banks, insurancecompanies, credit card companies, telephonecompanies).

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 thecompany.


63/93

Printed on CANON

Introduction Growth Mature Decline

Database Management &Warehousing

Historical DatabaseAnalytics

Database-Driven MarketingPerformance Dashboards

Marketing Mix Modeling /

Marketing Management Work-Flow Solutions

Marketing Resource Management

CampaignManagement

Yield-Based PricingOptimum Tools

Marketing Technology Platformson the Market Development Curve

Source: Gary Morris, Adapted from Marketing Advocate, Inc.

Predictive analytics

Precision Marketing


64/93

Printed on CANON

Precision Marketing

Precision marketing is achieved through looking at large

quantities of historic data with the help of data mining toolsthat search for meaningful patterns, and then creatingmathematical equations that represent the underlyingrelationships within the data.

Predictive analytics are used to identify the right offers and

right messages to beam through different channels to narrowcustomer segments, based on the propensity to respond. Theexpected profit of a campaign can be estimated.

Many tactical marketer tasks will be automated and free upmarketers to focus on more strategic decision making.


65/93

Printed on CANON

SALES AUTOMATION

The objective is to empower the salesperson to bean informed salespersonwho virtually has the wholecompanys knowledge at his or her command andcan provide total sales quality.

Marketing Automation


66/93

Printed on CANON

Marketing Automation

Areas Ripe for Marketing Automation:

Selecting names for a direct mail campaign

Deciding who should receive loans or creditextensions

Allocating product lines to shelf space

Selecting media

Customizing letters to individual customers

Targeting coupons and samples

Pricing airline seats and hotel reservations

Marketing Decision Models


67/93

Printed on CANON

Marketing Decision Modelsand Marketing Mix Response Models

BRANDAID

CALLPLAN

DETAILER MEDIAC

PROMOTER

ADCAD

See Kotler, Marketing Models


68/93

Printed on CANON

Marketing Dashboards

Tools dashboard

Processes dashboard

Performance dashboard


69/93

Printed on CANON

Marketing Work-Flow Process Tools

Project management

Product management

New product development

Campaign management

Exploit the Internet!


70/93

Printed on CANON

p

Research a new product on the Internet (panel research, chatrooms).

Create a site to explain how an existing or new product works (ex.,

Tide).

Create a site that consults on a category (Colgate on dentalproblems).

Create a site that consults on the customers profile (ElizabethArden).

Sponsor a chat room around your product category. Answer email questions instantly (Nestle baby care questions).

Send free samples of new products (freesample.com).

Send coupons of new products (coolsavings.com).

Customize your product (Acumin vitamins).

Offer to sell very large orders direct.

Offer valuable information to people who will register on the site.


71/93

Printed on CANON

Is New Technology Enough?

NT + OO = EOO

New Technology + Old Organization =Expensive Old Organization

Technology-Enabled Marketing: Examples


72/93

Printed on CANON

Technology Enabled Marketing: Examples

Royal Bank of Canada

Decision to purchase CRM

Halifax Bank

Teller suggests financial products

Capital One

A credit card for everyone, but with different interest rates, creditlines, and cash advances.

Tesco supermarkets Tesco has identified 5,000 customer needs segments. It sends

out some 300,000 variations of any given offer with redemptionrates of 90%. It has formed clubs such as Baby Club, A World ofWine Club, My Time Club

Kraft

Kraft has the names of 110 million customers and 20 thousandfacts for each household. Kraft launched print magazine, Food &Family, that is delivered to the homes of 2.1 million Kraftcustomers in 32 versions tailored to 32 segments.

10 Earmarks of the New


73/93

Printed on CANON

10 Earmarks of the NewMarketing

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.

1 P&G Recognizes


74/93

Printed on CANON

1. P&G Recognizesthe New Consumer

Consumers want a conversation, to dialogue,to participate, to be more in controlWeregoing from one-dimensional, product-myopicmarketing to three-dimensional marketingthat offers better solutionsmore delightfulexperiences and the opportunity for on-going relationships.

Alan Lafley, CEO, P&G

Do-It-Yourself Marketing


75/93

Printed on CANON

Do It Yourself Marketing

Self-Inform: Customers can research products and issues without relying onexperts (e.g., WebMD, MedlinePlus.com)

Self-evaluate: Customers can compare product features and prices with a fewclicks of a mouse (e.g., PriceGrabber.com, DealTime.com) Self-segment: Customers can design and configure products (e.g., Dell,

Reflect.com) Self-price: Customers can propose prices to sellers (e.g., eBay, PriceLine.com,

Free Markets) Self-support: Customer can resolve problems by searching knowledgeable

bases and discussion forums (e.g., www.remotecentral.com,www.treocentral.com)

Self-program: Customer can define their own media programming (e.g., TiVo,MyYahoo!)

Self-organize: Customers can join communities of interest to discuss productsand issues (e.g., Meetup.org., IVillage)

Self-advertise: Customers can create feedback for their peers (e.g.,Amazon.com, Planet Feeeback, BlogSpot.com)

Self-police: Customers can monitor reputations of manufacturers (e.g., eBay,BizRate.com)

Source: Mohan Sawhney lecture

The Evolution of Marketing
http://www.treocentral.com/http://www.treocentral.com/http://www.treocentral.com/


76/93

Printed on CANON

TransactionalMarketing

RelationshipMarketing

CollaborativeMarketing

Time frame 1950s 1980s Beyond 2000

View of value The company offeringin an exchange

The customerrelationship in thelong run

Co-createdexperiences

View of market Place where value isexchanged

Market is wherevarious offeringsappear

Market is a forumwhere value is co-created throughdialogue

Role of customer Passive buyers to betargeted withofferings

Portfolio ofrelationships to becultivated

Prosumers-activeparticipants in valueco-creation

Role of firm Define and create

value for consumers

Attract, develop and

retain profitablecustomers

Engage customers in

defining and co-creating unique value

Nature of customerinteraction

Survey customers toelicit needs andsolicit feedback

Observe customersand learn adaptively

Active dialogue withcustomers andcommunities

Adapted from Prahalad and Ramaswamy 2004

2 Develop a Focused Offering


77/93

Printed on CANON

2. Develop a Focused Offeringto the Target Market

Value customers: Which customer segment(s) do wewant to serve?

Value proposition: Can we create a value proposition

that delivers superior value through dramaticallyhigher benefits or lower costs?

Value network: Can we run a better network orradically redefine the value delivery system for theindustry such as Dell and IKEA have done?

3Vs framework of Nirmalya Kumar

Choose to Serve a Unique Set of


78/93

Printed on CANON

Choose to Serve a Unique Set ofCustomer Values

1. Identify the value expectations of potentialcustomers.

2. Select the values on which to compete. Nike values: Winning, roar of the crowd,

extreme effort, the smell of sweat, physicaldevelopment

New Balance values: Self-improvement, innerharmony, balanced, the smell of nature, spiritualdevelopment

3. Analyze the ability of the organization to deliverthose values.

4. Communicate and sell the value message.

3. Design the Marketing


79/93

Printed on CANON

3. Design the MarketingFrom the Customer-Back

Marketing must be run as a set of value finding,creation, and delivery processes, not 4P functions.The four Ps are seller oriented.

The 4As are buyer oriented. Awareness (A1)

Acceptability (A2)

Affordability (A3)

Accessibility (A4)

Market value potential = A1 x A2 x A3 x A4

If A1=100%, A2=100%, A3=50%, A4=50%, Then

MV=25%

4. Focus on Delivering Outcomes,N t P d t


80/93

Printed on CANON

Not Products.Company Product focus Solutions focus

Akzo Nobel Gallons of paint Painted cars

BP Nutrition-Hendrix

Animal feed Animal weight gain

Cummings Diesel engines Uninterruptible

power

ICI Explosives Explosives Broken rock

Scania Trucks Guaranteed uptime

WW Grainger MRO items Indirect materialsmgt.

Source: Kumar

Visualize a Larger Market


81/93

Printed on CANON

g Nike now defines itself in the sports market rather

than the shoe and clothing market.

The late Roberto Goizueta told his company thatwhile Coca Cola had a 35 percent share of thesoft drink market, it had only a 3 percent share ofthe total beverage market.

Armstrong World Industries moved from floor

coverings to ceilings to total interior surfacedecoration.

Citicorp realized that it only had a small share ofthe total financial market which includes muchmore than banking.

Taco Bell went from selling food in stores tofeeding 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.

5. Draw in the Customer


82/93

Printed on CANON

to Co-create Value: Two

Approaches1. 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.

Branches Hockey lets players pick from 26 options: lengthof a stick, blade patterns, etc.

2. Stand ready to customize according to the customers wishes. Dell computers are designed by customers Lands End sells tailor-made chinos. 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. Other examples: golf clubs, breakfast cereals, credit card

companies

Examples of Collaborative


83/93

Printed on CANON

Examples of CollaborativeMarketing

P&Gs site has a Were Listening section and ShareYour Thoughtssection and Advisory Feedbacksessions.

GM offers an AutoChoiceAdvisory on its website

Cisco runs Customer Forums to improve itsofferings.

A motorcycle in Italy is being designed bycustomers.

6. Use Newer Ways to Reach the


84/93

Printed on CANON

6. Use Newer Ways to Reach theCustomer with Relevant Messages

Make your ads more precise as to who theyreach and more relevant.

Let consumers indicate if they have aninterest or not. Stop pestering them.

Deliver valuable content with each ad, such

as useful information or entertainment.

Reach consumers in newer ways.

Newer Ways to ReachC


85/93

Printed on CANON

Customers

Sponsorships

Mentions on talk shows

Product placement

Street-level promotion

Festivals

Celebrity endorsements

Mobile billboards

Creating Buzz on the Streets


86/93

Printed on CANON

g

Chryslers PT Landcruiser appeared in fashionable areas andcollege tailgate parties. 250,000 prospects requested information

before official ad campaign began in April 2000.

Models drove around Los Angeles on Vespa scooters and chattedwith customers in cafes and bars.

Ford identified 120 people in six key markets and gave them a

Focus to drive for 6 months and promotional material.

Vans builds skateboard parks at malls and sponsors Vans TripleCrown.

Hasbro enlisted cool pre-teens to play the POX game and telltheir friends about it.

Tourist goes into lounge and her telephone rings and picture ofthe caller appears on the phone.

7. Develop Metrics and ROIMeas rement


87/93

Printed on CANON

MeasurementProducts Brands Channels Customer

Segments

Markets

Relativeproductquality

Brandawareness

Channelpenetration

Customersatisfaction

Marketpenetration

Perceivedproductquality

Brandesteem

Channel trust Averagetransactionsize

Market share

Percentageof sales fromnew products

Brand loyalty Channelefficiency

Customercomplaints

Sales growth

Product

profitability

Brand

profitability

Market share

in eachchannel

Customer

acquisitioncosts

Market

profitability

Channelprofitability

Customerretention rate

Source:

Kumar

Customer

profitability

8 D l Hi h T h M k ti


88/93

Printed on CANON

8. Develop High-Tech Marketing

Predictive analytics Sales automation

Marketing automation

Marketing models Process dashboards

Performance dashboards

Campaign management

Project management

New product management

9. Focus on Building


89/93

Printed on CANON

9 ocus o u d gLong-Run Marketing Assets.

Brands and brand equity

Customers and customer equity

Service quality

Stakeholder relationships

Intellectual knowledge

Corporate reputation

10 Vi M k ti g H li ti ll


90/93

Printed on CANON

10. View Marketing Holistically

Marketing must become strategic and drivebusiness strategy.

A company needs to take a more holisticview of:

the target customers activities, lifestyle,and social space.

the companys channels and supply chain. the companys communications.

the companys stakeholders interests.

Two Models of Management


91/93

Printed on CANON

Two Models of Management

Profit-based management Reduce costs

Reduce compensation

Replace people with

technology

Price to extract maximum

value

Sell more products

Acquire lots of customers

Loyalty-based management Invest in marketing assets

Give superior compensation

Leverage people withtechnology

Price to reward customers

Deepen customer value

Acquire customers selectively

Source: Frederick Reichheld, The Loyalty Effect

Conclusions


92/93

Printed on CANON

Co c us o s

Marketing is definitely not filling its potential.

Marketing must become the driver of business strategy. Companies need to adopt a more holistic view of the marketing

challenge.

Companies need lateral marketing thinking to conceive of newproduct and service ideas.

Companies need to choose from five major strategic paths.

Companies need to move from a product focused to a marketand customer focused organization.

Companies need to build, measure and manage brand equityand customer equity.

Companies need to move to technology-enabled marketing to

achieve precision marketing and develop better measures ofROI impact.


93/93

This time like all times is a good one,if we but know what to do with it.

Ralph Waldo Emerson

branding philip kotler

Documents