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Beyond the Crisis, Back to Basics DMS – Association for Marketing of Slovenia Ljubljana, 22nd October 2010 IEDC - Bled School of Management Professor Colin Egan Professor of Marketing and General Management Program Director IEDC – Bled School of Management Slovenia The Marketing Landscape • Not Only... – – – – Procter & Gillette / Nestle / Danone / Coca-Cola / . . . IBM / GE / Microsoft / Siemens / Erickson / Hitachi / Samsung / . . . McDonalds / Starbucks / Gap / Sogo / FCUK / . . . E-Bay / YouTube / Amazon / Gooooooooooooooogle / InYourFace / . . . • But Also... – – – – Service / Organisational / Consumer Sectors Big Firms / Medium Size Firms / Little Firms / Very Little Firms / Not-for-Profit etc. Supply Chain / Information Systems / Manufacturing / Human Resource Management etc. Finance! • Plus! – – – – Governments Health Services Charities Not-for-Profit Organizations Praxis ”philosophers have only interpreted the world in various ways; the point is to change it ” Marketing Management: Theory & Practice • Royal Philips International – Philips Marketing Academy • IBM – IBM Marketing University • BP & Castrol – BP Sales & Marketing Academy • YKK – Marketing Excellence Programme • Chartered Institute of Marketing Strategic Marketing: A Themed Approach Delivered Customer Value Innovation Strategic Clarity Total Brand Management Beyond the Crisis, Back to Basics Strategic Clarity Contrasting Business ‘Philosophies’ Production Orientation Product Orientation Selling Orientation Marketing Orientation Low-Cost Capacity Quality-Creation Capacity Standard Capacity Research Market Needs & Conditions Make Low-Price Products Make Best Quality Products Use Heavy marcomms & Selling Plan Solutions & Strategies Assume Customers Will Buy Assume Customers Will Buy Assume Customers Will Buy Supply Solutions & Strategies Strategic Clarity Effectiveness & Efficiency Efficient Inefficient Ineffective Effective Die Slowly Market Ruler Die Quickly Survive If Fixed Effectiveness: ‘Doing the right things’. Long-term, strategic, customer-focused, competitively differentiated Efficiency: ‘Doing the right things’. Short/medium term, operational excellence The Central Principles of Strategic Marketing Management Customer Value Beyond the Crisis, Back to Basics Customer Value Customer Value: Multiple Dimensions Customer Value Driving Customer Satisfaction: Delivering Value • • • • • • • • • • • Economic (EVC) Psychological (PVC) Customisation Product functions Product durability Product reliability Delivery reliability Delivery time Pre-sale service Post-sale service Price Financial terms Etc. • • • • • • • • • • • Relationship image Previous relationship Trust Helpfulness Contactability Help in crises Order responsiveness Advice & information Complaints processing Harmonious dealings Etc. And More Value… • • • • • • • • • • Customisation Forward linkages Lending equipment Lending staff Joint R&D Dual selling Help in crises Free trials After-sales service Pre-sales advice • • • • • • • • • • Free installation Returns service Electronic linkages Keep in touch service JIT delivery Any order size ok Consultancy Countertrade Satisfaction studies Etc. Market Segmentation & Positioning Select Target Segments Segment the Market Group customers with similar needs & preferences and separate them from others with different needs & preferences Select the most attractive segments given key success factors, segment profit potential, risk assessment & company capability analysis where Decide Marketing Mix Standardisation Establish Segment Positioning (Brand) Decide how many segments to target and with how much marketing mix standardisation Ensure that customers in each segment perceive that we can satisfy their needs & preferences better than rival offerings how The Customer Relationship Management Process •Customers •Competitors •Capabilities REVIEW Customer Sat Loyalty Trust •Substantial •Profitable •Growing •Loyal Customers’ • Strategy • SWOT • Value Chain Select Generic Strategy Select Potential Customer Targets Analyse Customers In Depth Consolidate to Partnership Develop the Relationship Customise the Offerings •Ongoing Satisfaction •Value Innovation •Trust Drivers •Team Linking •Commitment •Cooperation •Buy Criteria •Value Driving •Customer Share Driving Beyond the Crisis, Back to Basics Innovation Long Term Profit Drivers Profit = Revenues - Costs Relative Market Share Price + Productivity (JVs/SAs/Outsourcing Price/Portfolio Mgt etc.) Innovation (Growth Strategies) Organization Innovation Strategies for Long Term Profitable Growth Copy Rivals Beat Rivals (First & Fast) Respond to Changing Needs & Preferences Long-Term Growth Market Complementary Products Spread Risk Build a Balanced Portfolio Leverage Core Capabilities Exploit Strategic Windows Stakeholder Image Enhancement Off-set Disruptive Technologies The Innovation Process Environmental Scanning Generating Ideas for Profitable Growth First Phase Ideas Screening Concept Formulation and Evaluation Advanced Screening and Business Case Development Budget Allocation and Project Development Market Evaluation and Project Review Market Commercialisation Market Evaluation, Project Review and Control Actions Beyond the Crisis, Back to Basics Total Brand Management™ Brand Equity: The Boomerang Principle Brand Equity + Customer Loyalty = Customer Profitability Brand Personality, Essence & Positioning Improves Brand Memorability Gives a Reason to Believe Guides & Enhances Brand Strategy Brand Essence The Bottom Line Provides a Value Proposition, Credibility & a Foundation for Long Term Stakeholder Relationships Provides Meaning & Focus to the Organization Total Brand Management™: Positioning for Competitive Success 1. Brand Foundations: The Value Proposition 2. Route to Mind: Integrated Marketing Communications & Brand Reputation 3. Route to Market: The Channel Management Process & Brand Delivery 4. Route to ‘Stakeholder’ Value: Price 5. Route to Success: Effective Implementation Building the Value Proposition Knowledge Advantage Information Processes Features & Performance Brand Power! Human Resource Competencies Personnel Rules & Procedures Inputs Quality Service Support Intensity (Advertising / Sales Force) Superior Technology Content Technology Support The Benefits of Brands for Suppliers Enable Segmentation & Positioning Underpin Strategic Defence (Buy Time) Drive Offensive Marketing (Stretch/Extend) Create & Maintain Intangible Image Sustainable Strategic Advantage Intellectual Property Give an Identity to Products Transcend Technologies Build Loyalty, Share & Profitability The Benefits of Brands for Consumers Recognition & Familiarity Buying Effectiveness Identification Assurance Buying Efficiency Easier Choice Risk Avoidance The Benefits of Brands for Channel Partners Raises Stockturn & Margins Enhances their Stores Buying Effectiveness Strategy & Profits Reinforces their Positioning Buying Efficiency Builds Store Traffic Strategic Brand Analysis Customer Analysis - Competitor Analysis Trends Motivations Segments Unmet needs - Brand image/position - Strengths/vulnerabilities External & Internal Analysis Self-Analysis - Existing brand image Brand heritage Strengths/weaknesses The brand’s ‘essence’ & personality What’s in a Name? The Brand Management Process Brand Process Inputs Value Creators R&D Services Engineering Etc. Customer Focus Intangible Marketing Asset Management Reputation Distribution Service People Know-how Patents Partnerships Feedback Outputs Objective Realised Value (+ve image) Loyalty Creation Beyond the Crisis, Back to Basics Conclusions Leading A Marketing Organization Verifying a Marketing Strategy • Validity: Reliability of information and assumptions • Distinctive: Differentiated from competition, industry breakout • Suitability: Given corporate strategy, objectives, etc. • Feasibility: Given resources/competences • Acceptability: Given company culture, ethics and values • Consistency: Are the marketing elements balanced? • Vulnerability: Given risks and contingency plans • Flexibility: Can we adapt fast enough? • Rewardability: Payoff versus risk Assessing Marketing Strategy Investments • • • • Discounted Net Present Value (NPV) Required Internal Rate of Return (IRR) Payback Period Etc. • Risk Assessment • • • • • Opportunity Cost Analysis Market Dynamics (Zero-Sum?) Diminishing Returns Analysis Assessing the Cost of Failure Consider the Risk of NOT Making the Investment Barriers to Implementing the Marketing Philosophy • Bounded (Constrained) Rationality • Bounded Discretion • Bounded Sensitivity • Organizational Design (Structure & Culture) • Inter-Functional Conflict • Inter-Divisional Competition • Science of Muddling Through! And Finally: The Evidence Explaining Superior Marketing Performance Internal marketing A long term perspective Understanding buyer behaviour Marketing Excellence Balanced portfolio Innovation Environmental sensitivity Asset-based marketing philosophy Striving for competitive advantage Total Brand Management™ Customer-Based Assets & Liabilities Tied-in Clients Product Surety Superior Image Customer Based Assets Market Leadership Quality Fit Superior Products Superior Price / Value Superior Service Total Brand Management™ Channel-Based Assets & Liabilities Tied-in End-Users Partnership / Relationship Widest Coverage Distribution Based Assets Focused Coverage Superior Intermediaries Hybrid Channels Vertical Integration Forward Linkages (eg, EDI) Total Brand Management™ Company-Based Assets & Liabilities Planning & Systems Deep Pockets Marketing Culture Internal Based Assets Managerial Know-How Employee Know-How Advanced Technology Driven Costs Flexible Operations The Role of Culture in Organizational Success (McKinsey 7s framework) Strategy Skills (Competencies) Staff Shared Values Style (Leadership) Systems Structure Shared Values: The Vector Metaphor Desired Direction 1 Resultant Force Shared Values: The Vector Metaphor Desired Direction 1 Resultant Force Desired Direction 2 Resultant Force all materials © professor colin egan, 2010 www.colinegan.eu