Kotlerat - Marketin 3.0

8/8/2019 Kotlerat - Marketin 3.0

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Thriving with Marketing 3.0

Philip Kotler

Jeddah, Saudi Arabia,

October 10, 2010


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Winning in Hard Times

Session One. How to meet todays and tomorrows challengeswith Marketing 3.0.

Session Two. How to increase your brand power.

Session Three. How to manage sales and marketing.


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Session 1.

Using Marketing 3.0 to Meet the New Challenges


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On a scale of 1 to 3 (3 = highest),

How much is this a challenge to your company?

Distrust of business

Globalization

Economic recession and turbulence

Technological advances and disruptions

Environmentalism and climate change

The new social media

Political and regulatory changes


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Is Your Company Going to Fail?

Signs to Watch for

James Collins wrote in How the Mighty Fall:

Stage 1. Successful companies get arrogant andthink they can do many things.

Stage 2. They pursue aggressively wild growth. Stage 3. They ignore early warning signs of failure

Stage 4. Their failure becomes very public.

Stage 5. If they dont reform, they finally go

bankrupt.

Consider General Motors.


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Economic Recession and Turbulence

Distinguish between:

Recession

Disruption

Turbulence Risk reduction strategies

Larger reserves

Shared investments

Early warning systems

Scenario planning

Corporate social responsibility


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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 Innovators Dilemma, p. xxix.


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Tomorrow Will Be Different

Yesterday Today Tomorrow

Ford Toyota Cherry

Department stores Wal-Mart Internet retail

Digital Equipment Dell RIM Blackberry

Delta Southwest, Ryan Air SkyWest, Air taxis

IBM Microsoft Linux

At&T Cingular Skype

Sony DiskMan Apple iPod Cell Phones

Source: Clayton Christensen


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Consider How Marketing

Has Changed

Old definition of marketing Act or practice of advertising 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 offeringsthat have value for consumers, clients, partners, and society atlarge. (American Marketing Association, 2008)

Offerings include products, services, experiences, places,persons, ideas, and causes


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Sales Precedes Marketing

In the beginning there was sales.

Marketing appeared later to help sales people:

By using marketing research to size and segment themarket

By using communications to build the brand anddevelop collateral materials

By finding leads through direct marketing and tradeshows

Marketing was originally located in the sales department.

Then marketing grew as a separate department responsiblefor the marketing plan (4Ps) and brand-building.


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Stages in the Development

of the Marketing Discipline

1. Selling stage. (the idea of setting up selling systemsinvolving distribution, sales people and advertising).

2. 4P stage. (the idea of integrating the marketing tools).

3. STP stage. (the idea of refining the market targets andbranding).

4. Customer Relationship stage. (the idea of building a loyalcustomer base).

5. Co-creation stage. (the idea of involving customers in

developing products and communications).


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Marketing Objective, Process,

and Philosophy

CCDVTP

R -> STP -> MM -> I -> C

CIB


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MARKETINGS RECENT LOSS OF EFFECTIVENESS

MARKETING will be less

effective in the next few

years

Marketing budgets will be

lower

Companies will want

marketers to do more with

less

DISTRIBUTORSTRADITIONAL

MEDIACOMPETITION

SOCIAL MEDIA

NETWORKSPUBLIC

DISTRIBUTORS will

demand more TRADE

PROMOTION. This will

leave less money for

marketing research,

advertising and consumer

promotion for brand

building and ultimatelyreduce brand equity.

Investors will then

downgrade the stock.

This will leave the

company with fewer

resources to prop up

demand.

This is a VICIOUS

CIRCLE

Traditional media such

as TV 30-second spots,

newspapers, etc., are

growing LESS

EFFECTIVE

Categories are so

crowded with

competitors that

heavy price cutting

will be UNAVOIDABLE

The 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 storebrands 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


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STRATEGIC vs TACTICAL MARKETING

Most marketing departments are engaged in brand-maintenance instead ofbrand-

building.

Company marketers spend only 15-30% of their time doing true marketing activities.

The rest of the time is spent on forecasting volume, securing approvals on label

artwork, checking manufacturing schedules, and doing routine analysis.

Strategic marketing is missing in many marketing departments. Strategic marketing

requires taking a 3-5 year view of the business.

Downstream

Marketing

Upstream

Marketing

Markets TODAYs Product Create TOMORROWs Product


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The Age of Social Media.

Marketers have Lessening Influence

in Shaping Their Brand Image

Managers listened to the

consumers voices to understand

their minds and capture market

insights

Consumers play the key role of

creating the value through co-

creation of product and service

Person-to-person conversations

about many products can exceed the

amount of communication under the

companys control.

Thus a brand can be hijacked.see Alex Wipperfrth, Brand Hijack: Marketing

without Marketing, New York: Portfolio, 2005

FOUR POSSIBILITIESEveryone is talking negatively about

the company

There is no talk about the company

The talk is a mix of good and badcomments

Virtually all the talk is favorable


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EVOLUTION OF MANAGEMENT THINKING

1950s 1960s 1970s 1980s 1990s 2000s 2010s 2020s


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THE FUTURE OF MARKETING

TODAYS MARKETINGCONCEPT FUTURE MARKETINGCONCEPTS

PRODUCT

MANAGEMENT

CUSTOMER

MANAGEMENT

BRAND

MANAGEMENT

The Four Ps(Product, Price, Place,

Promotion)

The STP(Segmentation, Targeting,

and Positioning)

Brand Building

CO-CREATION

COMMUNITIZATION

CHARACTER

BUILDING

THE DISCIPLINESOF MARKETING


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CO-CREATION

Evolution of a companys relationship to its customers:

Make a ProductRefine the

Product

Invite

Customers

with minimal

customer testing

with extensive

customer input and

testing

to provide ideas and

co-create

The new ways of creating product and experience through collaboration of companies,consumers, suppliers, and channel partners interconnected in a global network of

innovation

C.K. Prahalad and M.S. Krishnan, The New Age of Innovation: Driving Co-created Value Through Global Networks, New York:

McGraw-Hill, 2008

Three key processes of :

1 2 3 Ask for consumer feedback and

enrich the platform by

incorporating all the

customization efforts made by

the network of consumers.

Individual consumers

customize the platform

to match their own

unique identity.

A company creates a

platform.


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MARKETING 1.0 vs MARKETING 2.0 vs MARKETING 3.0

Product-centric

Marketing

Customer-oriented

Marketing

Value-driven

Marketing

Objective

Enabling Forces

How companies see

the market

Key marketing

concept

Company marketingguidelines

Value propositions

Interaction with

consumers

MARKETING 1.0 MARKETING 2.0 MARKETING 3.0

Sell productsSatisfy and retain the

consumers

Make the world a better

place

Industrial Revolution Information Technology Social Media

Mass Buyers with

Physical Needs

Smarter Consumer with

Mind and Heart

Whole Human with

Mind, Heart, and Spirit

Product development Differentiation Values

Product specification Corporate and ProductPositioning

Corporate , Vision,Values

FunctionalFunctional and

Emotional

Functional, Emotional,

and Spiritual

One-to-Many

Transaction

One-to-One

Relationship

Many-to-Many

Collaboration


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Deliver

SATISFACTIONRealize

ASPIRATIONPractice

COMPASSION

ProfitAbility ReturnAbility SustainAbility

Be BETTER DIFFERENTIATEMake a

DIFFERENCE

Mind Heart Spirit

Mission(Why)

Vision(What)

Values(How)

INDIVIDUAL

COMPANY

Values-Based Matrix Model

Deliver

SATISFACTIONRealize

ASPIRATIONPractice

COMPASSION

ProfitAbility ReturnAbility SustainAbility

Be BETTER DIFFERENTIATEMake a

DIFFERENCE

Mind Heart Spirit

Mission(Why)

Vision(What)

Values(How)

INDIVIDUAL

COMPANY


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For SC Johnson, creatingsustainable economicvalue means helping

communities prosper whileachieving profitable growth

for the company.

Sustaining Values:SC Johnson Public

Report

We believe ourfundamental

strength lies in ourpeople.

MIND HEART SPIRIT

Promoting reusable

shopping bags Base of the Pyramid

MissionContributing to the community

wellbeing as well as sustaining

and protecting the environment

VisionTo be a world leader in delivering

innovative solutions to meet

human needs through

sustainability principles

ValuesSustainability

We create economic value

We strive for environmental

health

We advance social progress

S. C. JOHNSON VALUE-BASED MATRIX


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Companies 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.


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Characteristics of Firms of Endearment

They align the interests of all stakeholder groups

Their executive salaries are relatively modest

They operate an open door policy to reach top management

Their employee compensation and benefits are high for thecategory; their employee training is longer; and their employeeturnover is lower

They hire people who are passionate about customers

They view suppliers as true partners who collaborate inimproving productivity and quality and lowering costs

They believe that their corporate culture is their greatest assetand primary source of competitive advantage.

Their marketing costs are much lower than their peers whilecustomer satisfaction and retention is much higher.


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Consumers

Employees

Channel Partners

Shareholders

Marketing the Mission to


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Marketing 1.0 Marketing 2.0 Marketing 3.0MIND HEART SPIRIT

PRODUCT-

CENTERED

CUSTOMER-

ORIENTED

VALUES-DRIVEN

ECONOMIC- VALUE PEOPLE-VALUE ENVIRONMENT-

VALUEPROFITS SOCIAL PROGRESS SUSTAINABILITY

MOVING TOWARD MARKETING 3.0

Where is your company now?Where do you want it to be?

Why?

What would steps would you take?


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The Challenge

Re-moralize the market

Re-localize the economy

Re-capitalize the poor

S i 2 I i Y


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Session 2. Increasing Your

Branding Power


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The 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 itsintangibles, 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

mortarand I would fare better than you.


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Whats In a Name? Everything!

Donald Trumps family name is

Dumpf. Drumpf Towers?

Alphonso DAbruzzo renamed

Alan Alda.

Chinese gooseberry renamed kiwifruit.

Hog Island in the Bahamas renamed ParadiseIsland.


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Your Brand Needs to

Own a Word

Mercedes - engineering BMW- driving

Disney- family fun entertainment

Saturn - no hassle car buying

FedEx- overnight Wal-Mart- low prices/good values

Hallmark- caring

Nike - performance

3M - innovation

Volvo - safety

Starbuck- best coffee experience


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A Brand Must be More Than 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 apromise of value (Sony).

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

communications.


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Brand Asset Valuator Model

ENERGIZED

DIFFERENTIATION

The brands pointof difference

Relates to marginsand cultural currency

ESTEEMHow you regard thebrand

Relates to perceptionsof quality and loyalty

KNOWLEDGE

An intimateunderstandingof the brand

Relates to awareness andconsumer experience

RELEVANCE

How appropriate thebrand is to you

Relates to considerationand trial

Leading IndicatorFuture Growth Value

Current IndicatorCurrent Operating Value

BRAND STRENGTH BRAND STATURE

Figure 2: BrandAsset Valuator Model


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LEADING B2B BRANDING

COMPANIES

DuPont

Siemens

Bosch

General Electric

Saint-GobainUPS

FedEx

Tentra Pak

Microsoft

Caterpillar

IBM

Daimler

Michelin

Tata Steel

Morgan Stanley


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Find a Way to Brand These Commodities

Chicken

Cement

Bricks

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?


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Creating genuine customer value: Progressive Insurance

Name Your Price lets

customers customize theirpolicy to fit their budget.

I want an easier way to see how I can

meet my insurance needs at a great

price.

MyRate rewards lower risk

drivers with lower rates. I dont drive a lot of miles, Im a safe

driver, and Im not usually on the road

late at night when accidents are most

likely to happen. Since Im less likely to

be in an accident, shouldnt I pay less for

car insurance?


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Build a Brand Community!

Examples: Harley Davidson, Saturn, Porsche,BMW, Apple user groups, Lexus owners, Barnesand Noble bookstores, The Body Shop, Ikea.

Harleys Owner Groups:

HOGs have 250,000 members divided into 800

chapters: VietNam vets, lesbians, born againChristians, Ladies on Harleys.

Tools include: Rallies, anniversaries, lectures onmaintenance and safety, competitions, shows,internet sites.

The researchers describe Harley as a religious iconaround which an entire ideology of consumption isarticulated.


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Develop a Memorable Brand Slogan

BA, The Worlds Favorite Airline

American Express, The Natural Choice

AT&T, The Right Choice

Budweiser, King of Beers

WHAT DO YOU THINK OF THESE SLOGANS 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


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BRAND JOURNALISM

Brand Positioning = Brand Journalism

Marketers should communicate different messages to different marketsegments at different times, as long as they broadly fit within the basic

brand image.-Larry Light, former McDonalds CMO-

McDonalds is positioned differently in the minds ofkids, teens, youngadults,

parentsand seniors. It is positioned differently at breakfast, lunch, dinner,

snack, weekday, weekend, withkidsor on a businesstrip.


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Responsible,

Locally involved

Fairly

Priced

Brand

MantraRich, Rewarding

Coffee Experience

Relaxing,

Rewarding

moments

Reach sensory

consumption

experience

Convenience,

Friendly

service

Varied, exotic

coffee drinks

Fresh, high

quality coffee

Totally

integrated

system

24 hour

training of

baristas

Caring

Green &Earth Colors

Triple

Filtrated

water

Sirenlogo

Stock option/

health benefits

or baristas

Thoughtful

Contemporary

CONSUMERTARGETDiscerning Coffee

Drinker

CONSUMER

INSIGHTCoffee and the

drinking experience

is often unsatisfying

CONSUMER

NEED STATEDesire for better

coffee and a betterconsumption

experience

CONSUMER

INSIGHTLocal cafes, Fast

food & convenience

shops

CONSUMER

TAKEAWAYStarbucks gives

me the richest

possible

sensory

experiencedrinking coffee

HYPOTHETICAL STARBUCKS BRAND POSITIONING BULLSEYE


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40

The Mercedes-Benz Enduring Passion

The brand Mercedes-Benzis a brand icon, from its founding day till today.


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Measure Your Brand Effectiveness

Customer perceived value

Customer satisfaction

Customer repeat purchase

Customer advocacy

Customer co-creation


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The GOOD Outdoor-

inspired Footwear

and ApparelCompany

Engaged Citizenship

Environmental

Stewardship

Global HumanRights

The 3i Model of Branding


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SUSTAINABILITY AND SHAREHOLDER VALUE

There is a link between corporate sustainability and strong shareprice performance.

Companies that put more emphasis on social and environmental impacts

reported annual profit growthof16% 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 growthof only

12%. (Economist Intelligence, 2008)

More executives believe that the concept of sustainability is good for

corporations in attracting consumers and employees and improving

shareholdervalue.


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TRACKING SUSTAINABILITY

Needed: indices that 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.

Company Approach

FTSE4Good Index Good companies work toward environmental sustainability, have

positive relationship with all stakeholders, protect universal human

rights, possess good supply chain labor standards, and counter

bribery practices

Dow Jones

Sustainability Index

Corporate 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 Sachs Introduce the GS Sustain Focus List, which includes the list of

companies with sustainable practices


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Selling Sustainability to Investors

To convince shareholders, the company needs to provide tangible evidence

that the practice of sustainability will improve shareholder value by creatinga competitive advantage.

?

Sustainability

Profitability Returnability

The issue is to find a

linkage of between

sustainability,

profitability, and

returnability

THREE important metrics that can be quantified financially:

Improved cost productivity

Higher revenue from new market opportunities

Higher corporate brand value

(For details, see Marketing 3.0).


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Session 3.

Ending the War Between

Sales and Marketing


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Sales and Marketing Complaints

An Oracle salesperson told us, Marketing sends us business cards they

collect at trade shows from people who dont need us and dont want to

see us. They call these things leads.

Marketing says We generate about 25,000 leads a year for sales. Most of

these leads arent followed up and go cold.

Marketing, a senior airline sales manager told us, are the people who

come up with these fancy value propositions that mean nothing to

customers but do tell us how out of touch they are with business reality.

The Head of Marketing had a different perspective. We have a value

proposition thats powerful if only our sales force knew how to sell it.


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The Six Key Responsibilities

of the CMO

1. Gather meaningful customer insights.

2. Strengthen the brands.

3. Drive new product development based on customer

needs.4. Utilize new marketing technology.

5. Measure marketing effectiveness.

6. Improve marketings working relation with the other

functions.

Source: Adapted from a McKinsey study


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The integration of sales and marketing tends to progress throughfour distinct stages or levels of complexity.

Define the Existing Level of Relationship

Undefined Defined Aligned Integrated


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Selling Funnel

Purchase

Intention

Marketing SalesHandoff

Customer

Awareness

Brand

Awareness

Brand

Consideration

Brand

Preference

Purchase Loyalty Customer

Advocacy


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Integrating Customer Management

Into the Sales Funnel

Purchase

Intention

Purchase Loyalty Customer

Advocacy

Prospecting Qualifying Defining

NeedsDeveloping

Solutions

Proposal

Preparation/

Presentation

Revision &

Issue Resolution

Contract

NegotiationImplementation


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Sales becomes value

creation, not value communication

So the role of sales is to addvalue to our mousetrap

Theres not enough value in the

mousetrap to differentiate us fromcompetition

Our mousetrap is one of many waysto kill mice

2009 Neil Rackham

The Alternative Business Model


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Two Customer Value Types

2010 Neil Rackham

Value= Benefits Cost

Consultative

Customers

Transactional

Customers

Know whatthey want

Treat you as a

commodity Buy on price

andconvenience

Have aproblem

Value your

time Buy on

expertiseand trust


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2010 Neil Rackham

Five years ago

TRANSACTIONAL CONSULTATIVE

Advice focus

Expertise decision Want meetings

10% were

transactional

10% were

consultative

Most customers would pay a

little extra for some advice

Cost focus

Convenience Decision Dont want to meet


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2010 Neil Rackham

Customers Today

TRANSACTIONAL CONSULTATIVE

Advice focus

Expertise decision Want meetings

More buytransactionally

The middle is going away.

Cost focus

Convenience Decision Dont want to meet

More want deeperconsultative

relationships


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Todays Value Propositions

2010 Neil Rackham

Today, depending on what they are buying, the

value propositions customers want are:

Well use our

expertise to

solve your

problems and

create custom

solutions, for

which wellcharge you a

premium.

Well offer you

cheap and

convenient

products, but dont

expect extras.

OR


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Competencies for Transactional Sales

2010 Neil Rackham

Transactional

Sales

Branding Advertising

Trade shows

Campaigns

Multi-customer

events

DirectMarketing

Internet

Call centers

Wh i M k i G i ?


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Where is Marketing Going?

More companies are adopting a market and customer

orientation

47% of Fortune 1000 firms have a CMO (80% have a CFO).

Your CMO should be an active participant in the companys

strategic planning group.

Decide if you want your company to become market-driven or

market-driving.

MESSAGE


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MESSAGE

Withi fi if


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Within five years, if you run your

business in the same way as you do

now, youre going to be out of

business.

Philip Kotler

Documents

Kotlerat - Marketin 3.0