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Finding the Right Marketing Strategy
And the Person to Lead It…
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4M Scorecard
Chief Outsiders (Austin team)
Pete Hayes
Rex Bull
Kirk Brand Coburn
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Objectives
• Provide you with additional skills to aid
the TEAM in making optimal business decisions
• Provide you with a fundamental knowledge base of Marketing Strategy 101
• Help you determine the ROLE your CMO should play
• Help you evaluate the effectiveness of your CMO
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What do you want to Learn?
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Out of Alignment
Source: Peppers and Rogers Group
“Only 13% of C-Level believe their vision is
aligned with the CMO’s.”
"We're 50% short."
“We're halfway there.”
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Without Alignment, Progress Can Be Dangerous
When marketing is properly aligned with finance and operations, there is a powerful combination to spur growth and profitability.
But if they are not aligned, disaster could be looming…are you experiencing?
• Sales Issues = Churn/No Sales (Wrong Target)• Ops Issues = Shipping Delays (Bad Planning)• Finance Issues = Less Profit (Wrong Products)• Cust Svc Issues = Complaints (Different KPI’s)
= MARKETING ISSUE
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PART II: The Role of the Marketing Lead
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What are the Marketing Lead’s responsibilities? • Marketing shares the responsibility for the creation, maintenance, and growth of the value of the
company• Marketing should position the company strategically in the market and in customers’ minds• Marketing should deliver a marketing strategy that makes customers believe the company is different
and better than the competition
When this works, companies prosper.
Source and Copyright: Interbrand Corporation 2008
Top 100 Marketing Focused Companies vs. MSCI World Index and S&P 500 Performance Interbrand
200
180
160
140
120
100
80
60
40
20
0
20 00
Interband Top 100 PortfolioMSCI World IndexS&P 500 IndexAnnual Avg. Retu rn
Standard Deviation Sharpe Ratio
BGB Portfolio MSCI World S&P 500
20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08
4.73%14.76%
.07
.05%18.02%
.00
-.92%15.36%
-.06%
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What exactly does a good Marketer do?Marketing is more than Fancy Creative:
A good marketer:• Serves as the market-focused voice to the CEO
• Understands the market from the viewpoint of the customer
• Translates the CEO's vision/value proposition into actionable, measurable plan
• Understands the operational and financial implications of marketing and growth programs
• Understands “the business” and knows what drives profitability
• Aligns the company around the value proposition
• Leads the dialogue that keeps the organization focused and working together
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Strategic Marketing in Three Phases
I.Market Research
The activities needed to decide if the value is truly valuable, worth pursuing.
• Financial Modeling and Analysis
• Market Analysis• Industry & Market Trends• Competitive Analysis• Research
II.Business Planning
The activities to take the value from good idea to real creation.
• Integrating the market focus
with the operational and financial strategies of the company
• Product/Service definition• Supporting system and
structure• Development of Alliances and
Channel Partners
Long before a creative campaign or marketing program is developed, a foundation in market research and business planning must be laid.
III.Launch & Execution
The activities that execute and implement the plan
• Pricing and Promotion• Channel Partnerships• Communication• Measurement and Analysis• Key Leading Indicators
• Understand the company• Understand the customer• Understand the competition
• Align the organization• Prepare the company for implementation • Budgeting
• Go-To-Market• Communication• Measure
Step 1: Continual Refinement Step 2: Measure & Alignment Step 3: Function of Steps 1 & 2
How much budget for each phase?How much time spent on each phase?
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Phase I: Find Your Inner Hedgehog
Marketing strategy is simple:PHASE I - Research• Find your hedgehog
– What drives your economic engine?– What is the Company passionate about?– What is the Company the best at doing?
• Identify your target customer• Identify your customer's needs (not wants)
Can your management team identify:• Your most profitable products, segments,
channels and customers?• Activities or situations would have the biggest
positive and negative impact on profitability? • The thing your company does better than
anyone in the industry?• The things your company needs to become really
good at in order to be seen as different by your customers?
• What customers value most about the way your company interacts with them?
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Phase II: Align the Organization
Once a direction has been set, the organization needs to align behind the vision.
• Every department needs to understand its role in the market-based go-to-market strategy
• Operational, systems or procedural changes can be the biggest part of a marketing strategy
• Often the best marketing strategies are based on changing how products, services, or information are delivered to a customer
• If Sales & Marketing charge off promising one thing to customers, and Operations is focused, measured, and bonused on something different, and if Finance is not a partner that helps to develop, measure and evaluate the profit impact, nobody wins.
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Case Study: VanguardAligning an organization behind customer insights
• Vanguard learned customer service is not a one-size-fits-all proposition. (Phase I)
• Vanguard aligned the way it did business with the market learning. (Phase II)
• Vanguard's market segmentation approach drives customer loyalty, a key driver of future revenues.
• Working media and advertising (Phase III) were a small part of this marketing effort.
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• From 1998 to 2003 as Ronald McDonald's image wore thin and fast food purveyors were being linked to obesity, McDonald's market capitalization fell $12.2 billion.
(Source: BusinessWeek)
• In 2004 McDonald's began revitalizing the brand by modernizing its image and adding salads, fruit slices, and grilled chicken to the menu.
• The change at McDonald’s was marketing led, starting with changing the product, then the message.
Copyright/Trademark McDonald's
Market Capitalization
1998 2004 2005
$50
$48
$46
$44
$42
$40
$38
$36
Billion
$48.0
$36.6
$39.4
Case Study: McDonald’sMcDonald’s turnaround was based on: •Understanding changes in customer’s needs (Phase I)•Changing product and store operations (Phase II)•Telling consumers about the changes (Phase III)
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Dell Retail was out of alignment• Target growth unattainable with
current marketing plan• New retail channels reduced profit
margin percentages• New channel products created
internal and external confusion• No systems in place to track results,
sales, or customers
Case Study: Dell Retail (New Channel)
Tier 1
Tier 2
Tier 3
Computer savvy, middle-aged, high disposable income
Need to touch-and-feel before purchase
Non-computer savvy, technology-averse
Dell Core Market
•Dell did understand that the Retail Channel attracted New Customer Type (Phase I) BUT•They did NOT adequately align the internal team and plan around the new channel (Phase II)•The Retail Decision still remains to be seen as to whether it is accretive … (Phase III)
Moving into Phase III without understanding Phase I & II can be
dangerous
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Phase III: Marketing Minefields
Measuring the effect of short-term decisions
on long-term objectives.
• Net effect of advertising budget cuts• Diminished customer experience• Lower grade materials• Product pipeline cuts
Here is where things can get “touchy feely” or hard to measure.
Rule of thumb – A well-qualified marketing lead who understands Phases I and II, and works with finance to develop and implement marketing strategy, can likely be trusted in Phase III as well.
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Intangible Doesn’t Mean Immeasurable
Leading IndicatorsCritical business drivers that
are:
Measurable
Manipulable
Customer Centric (at least 2)
Lagging Indicators
Revenues
Profits
Economic Value (Add 4 score)
Net Promoter Score
While elements of the marketing “spend” may be immeasurable, the results they are intended to drive should be
measureable.
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Driving Analysis Around
Marketing Activities to Ensure
Accountability and Transparency
Sample Dashboard
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Awareness Consideration Decision Support Refer Upgrade
Social Marketing/BLOGS
Major Events
Web Refresh
Online & Print
Advertising
Search EngineOptimization
Video Demos(Web & Syndication)
Case Studies/Testimonials
Reseller Event?
New Booth?
Giveaways
Collateral
Reseller Relationships
CooperativePartner Mktg
Product 3.0 Launch
Product Satisfaction
Survey
Each marketing activity is intended to drive toward a specific result. Look for ways to measure results at multiple levels.
Comprehensive Approach – Investment Strategy
Press/Analyst
relations
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Case Study – Harrah’s Casino: Target Practice, Marketing Style
Phase I: Research• Harrah's Casinos identified customers that
were– Passionate about– Good at serving– Could distinguish themselves from the competition with
Phase II: Business Planning• Harrah's targeted:
– Gamblers (not spa-goers or show-seekers)– Gamblers who spent >$100/day but <$500 per day
• Harrah's created:– Rewards program to track behaviors and measure key indicators– Operations and IT Systems– New financial reporting– Plan to align entire company around new focus
Phase III: Launch and Execution• Harrah's tracked:
– Share of wallet– Loyalty program upgrades
Result: Leading indicator• The number of customers visiting cross-properties predicted future revenues
Marketing helps identify the most profitable customers, then aligns the organization to develop and execute strategies to win them over.
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PART III: Evaluating the Effectiveness of your CMO
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Is Your Marketing Lead the Real Deal?
Research•Work with the CFO to understand profitability drivers, most profitable customers, and market segments•Can logically discuss the customer’s business and business drivers•Know the cost of customer acquisition•Can clearly define the market size, market position and market share of the company•Understanding how a large company can scale the value proposition to earn profits at higher volumes
Business Planning
•Align marketing strategy with financial and operational strategy•Forecast net income with +/-10% margin•Can lead the market focused portion of executive team discussions•Track and measure leading and lagging indicators to determine success of marketing programs and objectives•Ensure employees can clearly articulate the value proposition
Launch & Execution
•Ensure employees can clearly execute and deliver on the value proposition•Treat budgets seriously•Drive profitable growth via positioning and differentiation•Trend leading and lagging indicators higher, year over year•Only make promises the company can keep•Convince customers you are easier and faster to do business each cycle and vs. competitors•Demonstrate higher gross profit than the year before
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CMO = Chief Metrics Officer
Do you think you have the right metrics?
1. How many of your most profitable clients and products can you identify?
2. How much does it cost to acquire new clients? 3. How consistently can you define your value proposition? 4. What percentage of your management team is aligned toward the
same goals, measurements, and key leading indicators? 5. How quickly can your leadership team respond to change? 6. How large can you scale your value proposition to earn profits at
higher volumes? 7. How good are your financial forecasts (Hint: You should be aiming
for +/-10% of net income) 8. How much of the capital you need to fund future growth do you
have? 9. How much of your capital is invested effectively to maximize
profits?10.How complete is your plan to battle your greatest risk?
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EXPENDITURE SUCH AS BUDGETEDCapEx
Headcount
Employee Education
Programs/Tradeshows
Market Research/Business Intelligence
Marketing Projects
Public Relations
Advertising
Other Shipping
Solutions Marketing
Partner Levarage
Product Packaging
Field Marketing
Sales Programs
TOTAL
Tradeshow booth, visitor center
Courses, Marketing Assoc fees
Tradeshows, Excellence Awards
Website, Graphic Design, Customer ProfilingBacon's Monitoring Service, PR firm
Print, Internet
Global shipping
Pricing strategy
MDF
Documentation, Media, Getting Started
GuidesAPAC, EMEA, NAM, LAM
APAC, EMEA, NAM, LAM
250,000
565,000
100,000
225,000
75,000
182,000
93,000
340,000
101,000
42,000
(225,000)
65,000
300,000
355,000
2,468,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Here’s a sample marketing budget: How would you evaluate it?
It can’t be done.
Nothing on this page helps you determine how
good this marketing budget is.
Without a solid understanding of the market
(Phase I) and a marketing strategy (Phase II) a
marketing budget is useless.
It can’t be done.
Nothing on this page helps you determine how
good this marketing budget is.
Without a solid understanding of the market
(Phase I) and a marketing strategy (Phase II) a
marketing budget is useless.
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When to Pull the Trigger or the Plug
Q: How can the MGT TEAM be sure new initiatives will be successful?
Q: How much information or research is enough?
Q: How can customer demands and volume forecasts be confirmed?
A: You will never know. Get over it and start asking yourself and your team the best questions you can ask.
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The CMO’s Role in the Go/No-Go Decision
• Ask probing questions so the management team can understand the justifications and the risks
• Provide financial information to frame the investments, risks, and paybacks from the strategy
• Provide insight into breakeven volumes
Ask• What is the key driver that will determine if the
program will drive profit or not• When will we know if the program is working or not• What is the financial exposure at that time?• How do breakeven volumes compare to
marketing forecasts?• How big is the risk compared to the reward?• What's the total investment required for this to
succeed?• What financial commitments must be made, and
when?• What portion of the investment is a total loss, what can
be recouped if success is not achieved?
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Measure, then Align for SuccessChief Outsiders Scorecard
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Questions?
Fragen?
Spørgsmål?
Kysymykset?
Frågor?
Preguntas?
Vragen?
Kysymykset?
Preguntas?
Vragen?
Spørgsmål?
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Thank YouFor your FREE COPY of our CMO Scorecard, email [email protected]
Kirk Brand CoburnPrincipal Chief Marketing [email protected]
Pete HayesChief Marketing [email protected]
Rex Bull Chief Marketing [email protected]
www.ChiefOutsiders.com
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