Kiev Business 5 19 06

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Information about Kiev Business 5 19 06

Published on March 16, 2008

Author: Davide


The New Marketing and Sales Strategies and Tactics:  The New Marketing and Sales Strategies and Tactics Philip Kotler, Ph.D Kellogg School of Management Northwestern University Kiev, Ukraine May 19, 2006 My Message:  My Message Marketing’s performance has been disappointing. You must replace your Old Marketing with New Marketing that is: holistic strategic technology-enabled financially-oriented The New Marketplace:  The New Marketplace Commoditization. Competition of cheaper brands from China. Rising selling and promotion costs. Proliferation of distribution and media channels. Power shifting to giant retailers. Power shifting to increasingly informed customers. Shrinking margins. Mergers, bankruptcies. Marketing’s Results Are Embarrassing :  Marketing’s Results Are Embarrassing TV advertising has lost much of its former efficiency. Sales promotions are mostly wasted. Direct marketing mailings have poor response. Too many sales calls done by the numbers. High rate of new product failure. Marketing focuses too much on the short run. Marketing has become a one P function. How Do CEOs See Marketing?:  How Do CEOs See Marketing? Marketing is Advertising and Selling. Marketing is 4Ps. Marketing is STP and 4Ps. Overview:  Overview Part 1. Improving the Relationship Between Marketing, Sales and Service Part 2. Applying Holistic Marketing Part 3. Developing A Winning Strategy Part 4. Developing New Product Ideas Part 5. Improving Communications Part 6. Moving to High-Tech Marketing Sales Precedes Marketing:  Sales Precedes Marketing In the beginning there was sales. Marketing appeared later to help sales people: By using marketing research to size and segment the market By using communications to build the brand and develop collateral materials By finding leads through direct marketing and trade shows Marketing was originally located in the sales department. Then marketing grew as a separate department responsible for the marketing plan (4Ps) and brand-building. Differences in Mindset and Style:  Differences in Mindset and Style Marketing Profit oriented Data oriented Analytical Likes planning Team-oriented MBA educated Focused on whole market and market segments Sales Volume oriented Action oriented Intuitive Prefers doing Individualistic Undergraduate and “street smart” Focused on each customer Identify the Existing Level of Relationship:  Hypothesis: The integration of sales and marketing tends to progress through four distinct stages or levels of complexity. Caution! The most appropriate stage for a company will depend on many factors. More integrated will not always mean more effective. Identify the Existing Level of Relationship Undefined Defined Aligned Integrated Buying Funnel:  Buying Funnel Purchase Intention Customer Awareness Brand Awareness Brand Consider- ation Brand Preference Purchase Loyalty Customer Advocacy Marketing Sales Handoff Integrating Marketing Into the Sales Funnel:  Integrating Marketing Into the Sales Funnel Prospecting Qualifying Defining Needs Contract Negotiation Developing Solutions Proposal Preparation/ Presentation Revision & Issue Resolution Implemen-tation Purchase Intention Purchase Loyalty Customer Advocacy Marketing Can Help in the Sales Process:  Marketing Can Help in the Sales Process Prospecting and qualifying Marketing develops high quality leads for the sales force. Defining needs Marketing works with sales to develop value propositions for customer segments, sub-segments and even individual accounts. Developing solutions Marketing provides “solution collateral” – organized templates and customizing guides so that salespeople can develop solutions at lower cost without constantly reinventing the wheel. Proposal preparation Marketing organizes proposal collateral and libraries to help salespeople produce faster, more responsive and more persuasive proposals. Issue resolution Marketing prepares case study material, success stories and site visits to help resolve customer concerns about moving ahead with the purchase. Contract negotiation Marketing acts as an advisor to sales teams in negotiation planning and pricing. Involve the Sales Force in Marketing Planning:  Involve the Sales Force in Marketing Planning SF is a key member of the cross-functional team. SF contributes to voice-of-customer research. SF contributes to offer development. SF reviews creative. SF contributes to database development. SF defines lead criteria and helps designs lead management systems. SF contributes to metrics. Eight Ways to Improve Marketing/Sales Alignment :  Eight Ways to Improve Marketing/Sales Alignment Hold regularly scheduled meetings between marketing and sales. Make it easier for marketing and sales people to communicate with each other. Arrange for more joint work assignments and job rotation between marketing and sales people. Appoint a liason person from marketing to live with the sales force and help marketers understand sales problems better. Locate the marketing and sales people in the same building or location to maximize their encounters. Set shared revenue objectives and reward systems. Define more carefully the steps in the marketing/sales funnel. Improve sales force feedback. USE APPROPRIATE CHANNELS FOR DIFFERENT CUSTOMER SEGMENTS AND TASKS:  USE APPROPRIATE CHANNELS FOR DIFFERENT CUSTOMER SEGMENTS AND TASKS MARKETING CHANNEL CUSTOMER National Acct. Management Direct Sales Tele- marketing Direct mail Retail Stores Distributors Dealers and Value-added Resellers Advertising Lead Qualifying Presales Close of Postsales Account Generation Sales Sales Service Manage- ment All Customers Source: R.T. Moriarty and Ursula Moran. “Managing Hybrid Marketing Systems”,Harvard Business Review, Nov-Dec 1990, pp. 146-147 Slide16:  CUSTOMER ACTIVITY CYCLE : IBM BANK CUSTOMER (SIMPLIFIED) Update Take Strategic Decision Pre Review Maintain Repair Train Install + Set Up Post During Understand IT Options Develop Systems Integration Purchase deciding what to do keeping it going doing it Customer Activity Cycle (CAC) Source : Sandra Vandermerwe, From Tin Soldiers to Russian Dolls : Creating Added Value thorugh Services Slide17:  CUSTOMER ACTIVITY CYCLE : IBM BANK CUSTOMER (SIMPLIFIED) Planned Maintenance Preventative maintenance Expand Renew Review plan needs + system Repair Replace Renovate Training getting people online globally Pilot Install Remove old Machine Feasibility + IT advice + expertise Sourcing Buying Distributing Consulting Update Take Strategic Decision Pre Review Maintain Repair Train Install + Set Up Post During Understand IT Options Develop Systems Integration Purchase deciding what to do keeping it going doing it Customer Activity Cycle (CAC) System +software integration Three Types of Customers:  Three Types of Customers Price-oriented customers (transactional selling) They want value through lowering cost. They know the product and care only about the price. They don’t want to see a salesperson. Solution-oriented customers (consultative selling) They want value through more benefits and advice. Strategic-value customers (enterprise selling) They want value through higher benefits and lower costs. They want the supplier to co-invest and participate in the customer’s business Source: Neil Rackham Part 2. Applying Holistic Marketing:  Part 2. Applying 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 company’s channels and supply chain. the company’s communications. the company’s stakeholders’ interests. Source: Philip Kotler, Dipak Jain, and Suvit Maesincee, Marketing Moves: A New Approach to Profits, Growth, and Renewal (Harvard Business School Press, 2002) Holistic Marketing:  Holistic Marketing HOLISTIC RELATIONSHIP MARKETING FRAMEWORK:  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 emerging from the market space? 4) What business capabilities and infrastructure required? 1) Who is involved? 4 COMPETITIVE PLATFORMS:  4 COMPETITIVE PLATFORMS Market Offerings Business Architecture Marketing Activities Operational System Creating Value Delivering Value Customer Focus Core Competencies Collaborative Network Part 3. Developing An Overall Strategy: Marketing Strategies Are Showing Diminishing Returns:  Part 3. Developing An Overall Strategy: Marketing Strategies Are Showing Diminishing Returns Product differentiation is harder to achieve. 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. New products unfortunately fail more times than they succeed. Price cutting doesn’t work because competitors will match. Pricing raising doesn’t work since there isn’t enough differentiation to support it. Cost cutting has eliminated much of the fat but is now risking cutting the muscles. Strategies for Firms in Different Market Positions:  Strategies for Firms in Different Market Positions Jagdish Sheth, Singapore Marketer, 2002 Seven Winning Strategies:  Seven Winning Strategies Cost reduction (IKEA, Southwest Airlines, Wal-Mart, Enterprise Rent-a-Car). Improved customer experience (Starbucks, Harley Davidson) Highest product quality (P&G, Toyota). Niching (Progressive Insurance, Tetra) Innovative business model (Barnes & Noble, Charles Schwab, FedEx) Product Innovation (IPOD, Swatch watch) Design (Bang & Olufsen) Market Visionaries:  Market Visionaries Anita Roddick Body Shop Fred Smith Federal Express Steve Jobs Apple Bill Gates Microsoft Michael Dell Dell Computer Ray Kroc McDonald’s Walt Disney Disneyworld Sam Walton Wal-Mart Moynihan Domino’s Pizza Akio Morita Sony Thomke/Sprecher Swatch Watch Company Gilbert Trigano Club Mediterranee Ted Turner CNN Frank Purdue Purdue Chicken Richard Branson Virgin Honda Honda Simon Marks Marks & Spencer Luciano Bennetton Benetton Charles Lazarus Toys R Us Les Wexner The Limited Colonel Saunder Kentucky Fried Chicken Ingvard Kampard IKEA Howard Schultz Starbucks Charles Schwab Charles Schwab Disruptive Technologies:  Disruptive Technologies OLD Photographic film Wired telephones Store retailing Classroom education Offset printing General hospitals Open surgery Cardiac bypass surgery Manned fighters Full service stock brokerage NEW Digital photography Mobile telephones On-line retailing Distance education Digital printing Outpatient clinics Endoscopic surgery Angioplasty Unmanned aircraft On-line stock brokerage Source: Clayton M. Christensen, The Innovator’s Dilemma, p. xxix. Why Leaders Ignore Disruptive Innovations:  Why Leaders Ignore Disruptive Innovations Leading companies prefer to keep producing sustaining innovations that will allow them to charge higher prices. They are responsive to their existing customers wishes but they ignore potential customers who want lower cost solutions. They miss the weak signals that a potential challenger is emerging. Even if some employees see the signal, it doesn’t reach top management and if it does, top management chooses to ignore it or responds half-heartedly. Strategies for National Brands Facing Store Brands:  Strategies for National Brands Facing Store Brands Reduce your prices. Keep improving your quality. Innovate new features. Strengthen your brand image. Develop better designed and aesthetic packaging. Show the retailer that he makes more money with your brand than his store brand. Produce the store brand for the retailer. Buy the retailer. Sell your brand. Strategies for Meeting Chinese Competition:  Strategies for Meeting Chinese Competition Reduce your costs to a minimum. Reduce your prices. Shift your production to China. Add new features and improved quality. Strengthen the brand image. Part 4. Developing New Product Ideas:  Part 4. Developing New Product Ideas Slide32:  In mature markets, the growing number of competitors leads companies to target niches of low profitability. Market Size Number of competitors Average profitability of all competitors Y O G U R T S M A R K E T Time Slide33:  The case of Cereal Bars Slide34:  Baby dolls market Doll varieties New category To feel as... = Teenager The case of Barbie Other Examples of Lateral Marketing:  Other Examples of Lateral Marketing Kinder Surprise = candy + toy. Seven Eleven = food + depot. Gas station stores = gas station + food. Cyber cafes = cafeteria + Internet. “Be the godfather of a kid” = Donation + adoption. Walkman = audio + portable MBA = train + classroom Source: Philip Kotler and Fernando Trias de Bes, Lateral Marketing: A New Approach to Finding Product, Market and Marketing Mix Ideas (Wiley, 2004) Part 5. Improving Communication:  Part 5. Improving Communication Advertising Sponsorships Mentions on talk shows Product placement Street-level promotion Festivals Celebrity endorsements Mobile billboards Ad Agencies Search for New Media:  Ad Agencies Search for New Media Blimps (MetLife). Sports teams (FedEx pays to name Memphis Express). Racing cars carry as much as 20 logotypes of its sponsors. Vehicle wrapping of a colorful vinyl advertisement around an ordinary car. In-flight advertising and in-movie advertising. Video ads in elevators and at gas pumps. Print ads in bathrooms. Books: Bulgari commissioned Fay Weldon to write a novel called “The Bulgari Connection” with an extravagant Bulgari necklace on cover. Mobile marketing THE Y&R MODEL OF BRAND STRENGTH:  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. 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 brand’s differentiation and relevance start slipping, esteem will slip next, and then familiarity will decline. Slide39:  Building Strong Associations Utilize all levels of brand meaning - McDonalds: Attributes: clean restaurant; consistent food Benefits: quick service; value price Values: children’s charity; fun (playground, toys); I’m Lovin’ It Culture: service culture; where young people enter the workforce Personality: Ronald McDonald; Golden Arches; McEverything User: families; young people Part 6. Moving to Technology-Enabled Marketing:  Part 6. Moving to Technology-Enabled Marketing Direct marketing and predictive analytics Marketing metrics Marketing models Sales automation and marketing automation systems Marketing dashboards Needed: Metrics for Measuring Different Marketing Expenditure Categories:  Needed: Metrics for Measuring Different Marketing Expenditure Categories Mail campaigns Telemarketing campaigns Sales promotions Managed events Trade shows Sponsorships TV ad campaigns Corporate image campaigns Subscription campaigns Customer win-back campaigns New product launch campaigns Major Metrics:  Major Metrics Sales Metrics Sales growth Market share Sales from new products Customer Readiness to Buy Metrics Awareness Preference Purchase intention Trial rate Repurchase rate Customer Metrics Customer complaints Customer satisfaction Customer sacrifice Number of promoters to detractors Customer acquisition costs New customer gains Customer loses Customer churn Retention rate Customer lifetime value Customer equity Customer profitability Return on customer Brand Metrics Brand strength (perceived relative brand value) Brand equity *Compiled by Philip Kotler from various sources Distribution Metrics Number of outlets Share in shops handling Weighted distribution Distribution gains Average stocks volume (value) Stocks cover in days Out of stock frequency Share of shelf Average sales per point of sale Communication Metrics Spontaneous (unaided) brand awareness Top of mind brand awareness Prompted (aided) brand awareness Spontaneous (unaided) advertising awareness Prompted (aided) advertising awareness Effective reach Effective frequency Gross rating points (GRP) Response rate Sales force metrics Quality of lead stream Average lead to proposal Average close ratio Cost per inquiry Cost per lead Cost per sale Cost per sales dollar Price and Profitability Metrics Price sensitivity Average price change Contribution margin ROI DCF Comments on Some Metrics:  Comments on Some Metrics Market share Customer satisfaction Customer sacrifice Number of promoters to detractors Retention rate Customer lifetime value Customer equity Return on customer Brand strength (perceived relative brand value) Brand equity ROI DCF Slide44:  Brand familiarity Purchase consideration Purchase intention Media effectiveness Marcom Adjacent category awareness Purchase Brand beliefs and perception PR Message effectiveness In-store activity Pricing Promotion Revenue Margin Use and satisfaction Reviews Brand familiarity Purchase consideration Purchase intention Purchase Build Models of How Your Market Works and Use New Tools Marketing Decision Models and Marketing Mix Response Models :  Marketing Decision Models and Marketing Mix Response Models BRANDAID CALLPLAN DETAILER MEDIAC PROMOTER ADCAD See Gary Lillien and Philip Kotler, Marketing Models (Prentice-Hall). SALES AUTOMATION:  SALES AUTOMATION The objective is to empower the salesperson to be an informed salesperson who virtually has the whole company’s knowledge at his command and can provide total sales quality. Marketing Automation:  Marketing Automation Selecting names for a direct mail campaign Deciding who should receive loans or credit extensions Allocating product lines to shelf space Selecting media Customizing letters to individual customers Targeting coupons and samples Pricing airline seats and hotel reservations Marketing Dashboards:  Marketing Dashboards Tools dashboard Processes dashboard Performance dashboard Exploit the Internet!:  Exploit the Internet! Create a web site that brilliantly communicates about your history, products, brands, beliefs and values (BMW). Create a site that consults on a category (Colgate on dental problems). Create a site that consults on the individual customer’s profile (Elizabeth Arden) and sells customized products (Acumin vitamins). Run focus groups with prospects, customers and dealers or send questionnaires. Send ads or information to prospects who show an interest. Send free samples of new products ( Send coupons of new products ( Invite customers to send e-mails about problems, ideas, etc. Use the Internet to research your competitors. Facilitate internal communications among employees on a private intranet. Use the Internet to improve purchasing, recruiting, and training. Use the Internet to compare sellers’ prices and to purchase materials by posting the company’s terms. Technology-Enabled Marketing: Examples :  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, credit lines, 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 redemption rates of 90%. It has formed clubs such as Baby Club, A World of Wine Club, My Time Club 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. Conclusions:  Conclusions Marketing is not filling its potential. Marketing must show more ROI accountability. Marketing must become the driver of business strategy. Marketing and sales must be more tightly integrated. 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 to find new ways to reach customers; the old ways are failing. Companies need to move to technology-enabled marketing to achieve precision marketing. Slide52:  “This time like all times is a good one, if we but know what to do with it.” Ralph Waldo Emerson THANK YOU!

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