1. A Strategy DocumentA Strategy Document
onon
The New Marketing ParadigmThe New Marketing Paradigm
Holistic Marketing ● Lateral Marketing ● High-tech MarketingHolistic Marketing ● Lateral Marketing ● High-tech Marketing
byby
PHILIP KOTLERPHILIP KOTLER
Documentation Sponsored byDocumentation Sponsored by
CanonCanon

2. logo unitlogo unit

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Kotler On MarketingKotler On Marketing
How To Create, Win, and Dominate MarketsHow To Create, Win, and Dominate Markets
 Philip Kotler, Ph.DPhilip Kotler, Ph.D
 Kellogg School ofKellogg School of
ManagementManagement
 NorthwesternNorthwestern
UniversityUniversity
 Indiatimes MindscapeIndiatimes Mindscape
 Mumbai and DelhiMumbai and Delhi
 October 11, 12, 2004October 11, 12, 2004

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Two Challenges FacingTwo Challenges Facing
Indian CompaniesIndian Companies
1.1. Will Indian companies be able to defend theirWill Indian companies be able to defend their
market against the growing invasion of foreignmarket against the growing invasion of foreign
global brands?global brands?
2.2. Can Indian companies develop strong globalCan Indian companies develop strong global
brands?brands?

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Can Indian CompaniesCan Indian Companies
Defend the Domestic Market?Defend the Domestic Market?
 Foreign competitors will not only go after theForeign competitors will not only go after the
high end market in India. They will target thehigh end market in India. They will target the
middle and eventually the low end.middle and eventually the low end.
 The main defense for India will be developingThe main defense for India will be developing
stronger skills in innovation, differentiation,stronger skills in innovation, differentiation,
branding, and service. In a word,branding, and service. In a word,
MARKETING!MARKETING!

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But India NeedsBut India Needs
Stronger MarketingStronger Marketing
 Confusing marketing with advertising.Confusing marketing with advertising.
 Advertising is hard sell.Advertising is hard sell.
 Sometimes ads appear before the product is in distribution.Sometimes ads appear before the product is in distribution.
 Some companies over-spend on advertising and go broke.Some companies over-spend on advertising and go broke.
 Little use of marketing research; can’t trust.Little use of marketing research; can’t trust.
 Therefore little segmentation of market and poor targeting.Therefore little segmentation of market and poor targeting.
 Over focus on winning through low price; neglectingOver focus on winning through low price; neglecting
differentiation.differentiation.
 Retailers carry the same goods and their service is poor.Retailers carry the same goods and their service is poor.

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Marketing is More ImportantMarketing is More Important
than Production!than Production!
 The Indian manufacturer of a Hugo Boss shirt gets only $12, orThe Indian manufacturer of a Hugo Boss shirt gets only $12, or
10% of the final price of $120 that is paid by a customer of Saks10% of the final price of $120 that is paid by a customer of Saks
Fifth Avenue.Fifth Avenue.
 The retailer gets 60% ($72) and the Brand company getsThe retailer gets 60% ($72) and the Brand company gets
30%, or $36.30%, or $36.
 Would you rather be the manufacturer, Brand owner, orWould you rather be the manufacturer, Brand owner, or
retailer?retailer?
 The Indian manufacturer has no defense if the Brand OwnerThe Indian manufacturer has no defense if the Brand Owner
wants to switch to another manufacturer to whom he will paywants to switch to another manufacturer to whom he will pay
$8 and keep $2 or pass it to the retailer to get more retail$8 and keep $2 or pass it to the retailer to get more retail
support.support.
 Yet India pays more attention to the product engineer than theYet India pays more attention to the product engineer than the
marketing “engineer.” But India’s future success will requiremarketing “engineer.” But India’s future success will require
investing in marketing and branding.investing in marketing and branding.

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The Strategic TrajectoryThe Strategic Trajectory
for Indiafor India
 Low cost, average quality domestic products.Low cost, average quality domestic products.
 Low cost, good quality domestic products.Low cost, good quality domestic products.
 Indian high-end products made for other companies.Indian high-end products made for other companies.
 Indian branded products (regional).Indian branded products (regional).
 Indian branded products (global).Indian branded products (global).
 Indian dominant brands (global).Indian dominant brands (global).

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Ranbaxy Pharmaceuticals (India)Ranbaxy Pharmaceuticals (India)
 Originally sold bulk substances to unsophisticatedOriginally sold bulk substances to unsophisticated
markets but gross margins were too low to covermarkets but gross margins were too low to cover
export costs.export costs.
 New CEO, Parvinder Singh, challenged Ranbaxy toNew CEO, Parvinder Singh, challenged Ranbaxy to
become a truly global company. He said: “Ranbaxybecome a truly global company. He said: “Ranbaxy
cannot change India. What it can do is to create acannot change India. What it can do is to create a
pocket of excellence. Ranbaxy must be an islandpocket of excellence. Ranbaxy must be an island
within India.”within India.”
 The company moved into higher-margin businessesThe company moved into higher-margin businesses
like selling branded generics in large volumelike selling branded generics in large volume
markets like China and Russia.markets like China and Russia.
 Ranbaxy then entered the U.S. and Western Europe.Ranbaxy then entered the U.S. and Western Europe.
In just five years, more than half of its US$ 250In just five years, more than half of its US$ 250
million revenues now come from outside of India.million revenues now come from outside of India.

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The Case of HaierThe Case of Haier
Haier developed through three stages.Haier developed through three stages.
1.1. Fix qualityFix quality
(Zhang Ruimin smashed 76 refrigerators).(Zhang Ruimin smashed 76 refrigerators).
2.2. DiversifyDiversify
(Microwaves, toasters, air conditioners,(Microwaves, toasters, air conditioners,
dishwasher, vacuum cleaners, etc.)dishwasher, vacuum cleaners, etc.)
3.3. GlobalizeGlobalize
(Asia Region, U.S., Europe)(Asia Region, U.S., Europe)
 Haier entered with a U.S. partner and isHaier entered with a U.S. partner and is
challenging Whirlpool and GE.challenging Whirlpool and GE.
 Haier’s brand name products are sold in Wal-Mart,Haier’s brand name products are sold in Wal-Mart,
Best Buy, Sears, Lowe’s, Home Depot and Target.Best Buy, Sears, Lowe’s, Home Depot and Target.
 Haier is promoted as a global brand, not a ChineseHaier is promoted as a global brand, not a Chinese
one. (Many people think it is German).one. (Many people think it is German).
 Puts lower price models in price-only stores andPuts lower price models in price-only stores and
higher price models in top stores.higher price models in top stores.

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Five C’s Favoring IndiaFive C’s Favoring India
 Capital: India has and can attract capital.Capital: India has and can attract capital.
 Cost: Another 50 years of low cost productionCost: Another 50 years of low cost production
 Capability: Large number of trained workers,Capability: Large number of trained workers,
engineers, scientists, and business peopleengineers, scientists, and business people
 Consumers: Immense domestic marketConsumers: Immense domestic market
 Calm and stability: in a world of turmoil andCalm and stability: in a world of turmoil and
uncertaintyuncertainty

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A Quiz: Who Said This?A Quiz: Who Said This?
 ““The purpose of a company is ‘to create a customer…The onlyThe purpose of a company is ‘to create a customer…The only
profit center is the customer.’”profit center is the customer.’”
 ““A business has two—and only two—basic functions:A business has two—and only two—basic functions:
marketingmarketing andand innovation.innovation. Marketing and innovation produceMarketing and innovation produce
results: all the rest are costs.”results: all the rest are costs.”
 ““The aim of marketing is to make selling unnecessary.”The aim of marketing is to make selling unnecessary.”
 ““While great devices are invented in the Laboratory, greatWhile great devices are invented in the Laboratory, great
products are invented in the Marketing department.”products are invented in the Marketing department.”
 ““Marketing is too important to be left to the marketingMarketing is too important to be left to the marketing
department.”department.”

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My MessageMy Message
 Marketing’s performance has beenMarketing’s performance has been
disappointing.disappointing.
 You must replace your Old Marketing withYou must replace your Old Marketing with
New Marketing that is:New Marketing that is:
 holistic,holistic,
 technology-enabled,technology-enabled,
 and strategic.and strategic.

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Facing the Increasing Pressure forFacing the Increasing Pressure for
Marketing AccountabilityMarketing Accountability
 Marketing has become a one P discipline = selling.Marketing has become a one P discipline = selling.
 Marketing involves a great deal of waste.Marketing involves a great deal of waste.
 $2 million for 30 seconds on the Superbowl.$2 million for 30 seconds on the Superbowl.
 Direct mail campaigns with a 1% response rate.Direct mail campaigns with a 1% response rate.
 Cold sales calls which play the numbers.Cold sales calls which play the numbers.
 High rate of new product failure.High rate of new product failure.
 Marketing costs are high and rising.Marketing costs are high and rising.
 Marketing lacks accountability.Marketing lacks accountability.
 Marketing does not create major new ideas.Marketing does not create major new ideas.
 Marketing is too involved in short-term thinking.Marketing is too involved in short-term thinking.
 Marketing doesn’t focus on its real assets.Marketing doesn’t focus on its real assets.
 Brands, customers, service quality, stakeholderBrands, customers, service quality, stakeholder
relationships, intellectual capital, corporate reputationrelationships, intellectual capital, corporate reputation

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Needed:Needed:
Holistic MarketingHolistic Marketing
 Marketing must become strategic and drive business strategy.Marketing must become strategic and drive business strategy.
 A company needs to take a more holistic view of:A company needs to take a more holistic view of:
 the target customers’ activities, lifestyle, and social space.the target customers’ activities, lifestyle, and social space.
 the company’s channels and supply chain.the company’s channels and supply chain.
 the company’s communications.the company’s communications.
 the company’s stakeholders’ interests.the company’s stakeholders’ interests.
 Holistic marketing will require strong software support.Holistic marketing will require strong software support.

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HOLISTIC RELATIONSHIP MARKETING FRAMEWORKHOLISTIC RELATIONSHIP MARKETING FRAMEWORK
MARKET
SPACE
POTENTIAL
OPPORTUNITIES
BUSINESS
INVESTMENT
CUSTOMERS CORPORATIO
N
COLLABORATOR
S
CUSTOMERCUSTOMER
FOCUSFOCUS
CORECORE
COMPETENCIESCOMPETENCIES
COLLABORATIVECOLLABORATIVE
NETWORKNETWORK
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?

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4 COMPETITIVE PLATFORMS4 COMPETITIVE PLATFORMS
Market
Offerings
COGNITIVE
SPACE
CUSTOMER
VALUE
BUSINESS
DOMAIN
COMPETENCY
SPACE
Business
Architecture
BUSINESS
PARTNERS
CRM ERP
RESOURCE
SPACE
SCM
Marketing
Activities
Operational
System
ExploringExploring
ValueValue
CreatingCreating
ValueValue
DeliveringDelivering
ValueValue
CustomerCustomer
FocusFocus
CoreCore
CompetenciesCompetencies
CollaborativeCollaborative
NetworkNetwork

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Responding to Low Margins and theResponding to Low Margins and the
Economic SlowdownEconomic Slowdown
 Commoditization and rapid imitation leading to shorter productCommoditization and rapid imitation leading to shorter product
life cycles.life cycles.
 Competition of cheaper brands from China and elsewhere.Competition of cheaper brands from China and elsewhere.
 Rising selling and promotion costs and decreasing salesRising selling and promotion costs and decreasing sales
effectiveness.effectiveness.
 Shrinking margins.Shrinking margins.
 Proliferation of sales and media channels.Proliferation of sales and media channels.
 Power shifting to giant retailers who are demanding lowerPower shifting to giant retailers who are demanding lower
prices.prices.
 Recession: lower incomes and purchasing power.Recession: lower incomes and purchasing power.
 Mergers, large company bankruptcies.Mergers, large company bankruptcies.

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Improving MarketingImproving Marketing
Efficiency and EffectivenessEfficiency and Effectiveness
 ImprovingImproving marketingmarketing efficiencyefficiency
 buying inputs more efficientlybuying inputs more efficiently
 hunting down excessive communication and sales travelhunting down excessive communication and sales travel
expensesexpenses
 closing unproductive sales officesclosing unproductive sales offices
 cutting back on unproven promotion programs and tacticscutting back on unproven promotion programs and tactics
 putting advertising agencies on a pay-for-performance basisputting advertising agencies on a pay-for-performance basis
 ImprovingImproving marketing effectivenessmarketing effectiveness
 replacing higher cost channels with lower cost channelsreplacing higher cost channels with lower cost channels
 shifting advertising money into better usesshifting advertising money into better uses
 reducing the number of brands or sku’sreducing the number of brands or sku’s
 Improving supply chain responsivenessImproving supply chain responsiveness

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Responding to theResponding to the
Economic SlowdownEconomic Slowdown
 Reevaluate your current resource allocations.Reevaluate your current resource allocations.
 Geographical mixGeographical mix
 Market segment mixMarket segment mix
 Customer mixCustomer mix
 Product mixProduct mix
 Channel mixChannel mix
 Promotion mixPromotion mix
 Decide whether to attack to gain market share rather thanDecide whether to attack to gain market share rather than
retrench.retrench.
 Be sure to maintain the value proposition promised by yourBe sure to maintain the value proposition promised by your
brand.brand.
 Try to add value instead of cutting the price.Try to add value instead of cutting the price.

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Marketing Strategies Are ShowingMarketing Strategies Are Showing
Diminishing ReturnsDiminishing Returns
 Product differentiationProduct differentiation is harder tois harder to
achieve.achieve.
 Acquisitions and mergersAcquisitions and mergers have ashave as
many failures as successes.many failures as successes.
 InternationalizationInternationalization is offering lessis offering less
opportunities because either the goodopportunities because either the good
markets are overcrowded or the poormarkets are overcrowded or the poor
markets have no money.markets have no money.
 New productsNew products unfortunately fail moreunfortunately fail more
times than they succeed.times than they succeed.
 Price cuttingPrice cutting doesn’t work becausedoesn’t work because
competitors will match.competitors will match.
 Pricing raisingPricing raising doesn’t work sincedoesn’t work since
there isn’t enough differentiation tothere isn’t enough differentiation to
support it.support it.
 Cost cuttingCost cutting has eliminated much ofhas eliminated much of
the fat but is now risking cutting thethe fat but is now risking cutting the
muscles.muscles.

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Strategies for Firms in Different Market PositionsStrategies for Firms in Different Market Positions
Jagdish Sheth, Singapore Marketer, 2002

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Five Winning StrategiesFive Winning Strategies
 Cost reductionCost reduction: (IKEA, Southwest Airlines,: (IKEA, Southwest Airlines,
Wal-Mart, Enterprise Rent-a-Car).Wal-Mart, Enterprise Rent-a-Car).
 Improved customer experienceImproved customer experience (Starbucks,(Starbucks,
Harley Davidson)Harley Davidson)
 Innovative business modelInnovative business model (Barnes & Noble,(Barnes & Noble,
Charles Schwab, FedEx, Sony).Charles Schwab, FedEx, Sony).
 Improved product qualityImproved product quality (P&G, Toyota).(P&G, Toyota).
 Niching:Niching: (Progressive Insurance, Tetra)(Progressive Insurance, Tetra)

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Dual StrategiesDual Strategies
 Planning for todayPlanning for today
 Defining the business.Defining the business.
 Shaping the business toShaping the business to
meet needs of today’smeet needs of today’s
customerscustomers
 Improving alignmentImproving alignment
between functionalbetween functional
activities and businessactivities and business
definitiondefinition
 Organization mirrorsOrganization mirrors
current businesscurrent business
activitiesactivities
 Optimizing currentOptimizing current
operations to achieveoperations to achieve
excellence.excellence.
 Planning for tomorrowPlanning for tomorrow
 Redefining the businessRedefining the business
 Reshaping the businessReshaping the business
to compete for futureto compete for future
customers and marketscustomers and markets
 Making bold moves awayMaking bold moves away
from the existing ways offrom the existing ways of
doing businessdoing business
 Reorganizing for futureReorganizing for future
business challengesbusiness challenges
 Managing change toManaging change to
create future operationscreate future operations
and processesand processes

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In many markets, the growing number ofIn many markets, the growing number of
competitors in mature markets leads companiescompetitors in mature markets leads companies
to target niches of low profitability.to target niches of low profitability.
Market
Size
Number of
competitors
Average
profitability
of all
competitors
or players
Y O G U R T S M A R K E T
Time

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Some Vertical Marketing MethodsSome Vertical Marketing Methods
 ModulationModulation
 TheThe juicejuice manufacturer varies the sugar content, fruitmanufacturer varies the sugar content, fruit
concentrate, with or without vitamins…concentrate, with or without vitamins…
 SizingSizing
 Potato chipsPotato chips are offered in sizes 35 grams, 50 grams, 75grams,are offered in sizes 35 grams, 50 grams, 75grams,
125 grams, 200 grams, multi-packs…125 grams, 200 grams, multi-packs…
 PackagingPackaging
 Nestle’s Red Box chocolatesNestle’s Red Box chocolates comes in different containers:comes in different containers:
cheap paper box for the grocery trade, premium metal box forcheap paper box for the grocery trade, premium metal box for
the gift trade…the gift trade…
 DesignDesign
 BMWBMW designs cars with different styling and features...designs cars with different styling and features...
 ComplementsComplements
 BiscuitsBiscuits with sugar spread on it, with cinnamon, withwith sugar spread on it, with cinnamon, with
chocolate, with white chocolate, with black chocolate, filledchocolate, with white chocolate, with black chocolate, filled
biscuits…biscuits…
 Efforts reductionEfforts reduction
 Charles SchwabCharles Schwab offers different channels for transacting suchoffers different channels for transacting such
as retail stores, telephone, internet….as retail stores, telephone, internet….

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into
Cereals for breakfast market
Cereal varieties
New category
STREETS
=
The case of Cereal Bars

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Baby dolls market
Doll varieties
New category
To
feel
as...
=
Teenager
The case of Barbie

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Other Examples of Lateral MarketingOther Examples of Lateral Marketing
 Kinder Surprise = candy + toy.Kinder Surprise = candy + toy.
 Seven Eleven = food + depot.Seven Eleven = food + depot.
 Actimel = yogurt + bacteria protection.Actimel = yogurt + bacteria protection.
 Gas station stores = gas station + food.Gas station stores = gas station + food.
 Cyber cafes = cafeteria + Internet.Cyber cafes = cafeteria + Internet.
 ““Be the godfather of a kid” = Donation + adoption.Be the godfather of a kid” = Donation + adoption.
 Huggies Pull-ups = diapers + 3 year olds.Huggies Pull-ups = diapers + 3 year olds.
 Walkman = audio + portableWalkman = audio + portable
 Source: Philip Kotler and Fernando Trias de Bes,Source: Philip Kotler and Fernando Trias de Bes, Lateral Marketing: A NewLateral Marketing: A New
Approach to Finding Product, Market and Marketing Mix IdeasApproach to Finding Product, Market and Marketing Mix Ideas (Wiley, 2004)(Wiley, 2004)

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Check Where You StandCheck Where You Stand
 Marketing does the marketing -> everyone does theMarketing does the marketing -> everyone does the
marketing.marketing.
 Organizing by product units -> organizing by customerOrganizing by product units -> organizing by customer
segments.segments.
 Making everything -> outsourcing more goods andMaking everything -> outsourcing more goods and
services.services.
 Using many suppliers -> working with fewer suppliers.Using many suppliers -> working with fewer suppliers.
 Emphasizing tangible assets -> emphasizing intangibleEmphasizing tangible assets -> emphasizing intangible
assets.assets.
 Building brands through advertising -> building brandsBuilding brands through advertising -> building brands
through integrated communications.through integrated communications.
 Attracting customers to stores -> making productsAttracting customers to stores -> making products
available on-line.available on-line.
 Selling to everyone -> selling to target markets.Selling to everyone -> selling to target markets.
 Focusing on profitable transactions -> focusing onFocusing on profitable transactions -> focusing on
customer lifetime value.customer lifetime value.
 Focusing on market share -> focusing on customer share.Focusing on market share -> focusing on customer share.
 Being local -> being “glocal.Being local -> being “glocal.
 Focusing on the financial scorecard -> focusing on theFocusing on the financial scorecard -> focusing on the
marketing scorecard.marketing scorecard.
 Focusing on shareholders -> focusing on stakeholdersFocusing on shareholders -> focusing on stakeholders

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MARKETING IS THE ART OFMARKETING IS THE ART OF BRAND BUILDINGBRAND BUILDING
**
IF YOU ARE NOT A BRAND,IF YOU ARE NOT A BRAND,
YOU ARE AYOU ARE A COMMODITYCOMMODITY..
**
THENTHEN PRICEPRICE IS EVERYTHINGIS EVERYTHING
AND THEAND THE LOW-COST PRODUCERLOW-COST PRODUCER
IS THE ONLY WINNER!IS THE ONLY WINNER!
Building Brand EquityBuilding Brand Equity

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1. How Important is Branding?1. How Important is Branding?
 The NUMMI plant in California produces twoThe NUMMI plant in California produces two
nearly identical models called the Toyotanearly identical models called the Toyota
Corolla and the Chevrolet Prizm.Corolla and the Chevrolet Prizm.
 Toyota sold 230,000 Corollas compared toToyota sold 230,000 Corollas compared to
sales of 52,000 Prizms.sales of 52,000 Prizms.
 And Toyota’s net price is $650 higher!And Toyota’s net price is $650 higher!

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A Strong Brand ImprovesA Strong Brand Improves
Demand and SupplyDemand and Supply
 On the demand side:On the demand side:
 higher pricehigher price
 increased sales volumeincreased sales volume
 lower churnlower churn
 more brand stretchingmore brand stretching
 On the supply side:On the supply side:
 greater trade acceptance, more favorable supplier terms,greater trade acceptance, more favorable supplier terms,
lower rejectionlower rejection
 lower staff acquisition and retention costslower staff acquisition and retention costs
 lower cost of capitallower cost of capital
 better scale economics through higher volumebetter scale economics through higher volume

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Names are Important in BrandingNames are Important in Branding
• Donald Trump’s family name is Drumpf.Donald Trump’s family name is Drumpf.
But he can’t call it Drumpf Towers.But he can’t call it Drumpf Towers.
• Alan Alda’s name was AlphonsoAlan Alda’s name was Alphonso
D’Abruzzo.D’Abruzzo.
• Chinese gooseberry was renamedChinese gooseberry was renamed
kiwifruit.kiwifruit.
• Paradise Island in the Bahamas used to beParadise Island in the Bahamas used to be
Hog Island.Hog Island.

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A Brand Must be MoreA Brand Must be More
Than a NameThan a Name
 A brand must trigger words or associations (features andA brand must trigger words or associations (features and
benefits).benefits).
 A brand should depict a process (McDonald’s, Amazon).A brand should depict a process (McDonald’s, Amazon).
 A great brand triggers emotions (Harley-Davidson).A great brand triggers emotions (Harley-Davidson).
 A great brand represents aA great brand represents a promise of valuepromise of value (Sony).(Sony).
 The ultimate brand builders are yourThe ultimate brand builders are your employeesemployees andand
operationsoperations, i.e., your performance, not your marketing, i.e., your performance, not your marketing
communications.communications.

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Your Company’s BrandYour Company’s Brand
1.1. What word does your brand own?What word does your brand own?
2.2. Write down other words triggered by your brand name?Write down other words triggered by your brand name?
A. Circle the favorable words; square the unfavorable words.A. Circle the favorable words; square the unfavorable words.
B. Underline the words that are favorable but not widely known.B. Underline the words that are favorable but not widely known.
C. Double underline the words that are unique to your company.C. Double underline the words that are unique to your company.
3.3. Are any of the following a source for strengthening your brand’sAre any of the following a source for strengthening your brand’s
personality?personality?
A. FoundersA. Founders
B. SpokespersonsB. Spokespersons
C. CharactersC. Characters
D. ObjectsD. Objects
E. Stories and mythologiesE. Stories and mythologies

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2. How Do You Develop2. How Do You Develop
a Brand Concept?a Brand Concept?
 ““The brand must be an essence, an ideal, anThe brand must be an essence, an ideal, an
emotion. ” It must be supported by beautiful logos,emotion. ” It must be supported by beautiful logos,
clever tag lines, creative turns, edgy names, raveclever tag lines, creative turns, edgy names, rave
launch parties, big ticket giveaway promotions, andlaunch parties, big ticket giveaway promotions, and
publicity buzz-making. (Advertising agency view)publicity buzz-making. (Advertising agency view)
 ““The brand should have a target group in mind andThe brand should have a target group in mind and
be positioned to solve one of their problems betterbe positioned to solve one of their problems better
than competitive offerings.” Furthermore the brand’sthan competitive offerings.” Furthermore the brand’s
reputation is ultimately based on product quality,reputation is ultimately based on product quality,
customer satisfaction, employee communications,customer satisfaction, employee communications,
social responsibility, etc. (Kevin Clancy, CEO ofsocial responsibility, etc. (Kevin Clancy, CEO of
Copernicus)Copernicus)

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Branding ComponentsBranding Components
 NameName
 Short, suggestive, memorable, unique, pronounceableShort, suggestive, memorable, unique, pronounceable
 SloganSlogan
 Logo and typefaceLogo and typeface
 ColorsColors
 MusicMusic
 Themelines (Got Milk!)Themelines (Got Milk!)
 Stationery and business cardsStationery and business cards
 OfficesOffices
 TrucksTrucks
 Dress codeDress code

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Brand SlogansBrand Slogans
 BA,BA, “The World’s Favorite Airline”“The World’s Favorite Airline”
 American Express,American Express, “The Natural Choice”“The Natural Choice”
 AT&T,AT&T, “The Right Choice”“The Right Choice”
 BudweiserBudweiser, “King of Beers”, “King of Beers”
 Ford,Ford, “Quality is #1 Job”“Quality is #1 Job”
 Holiday Inn,Holiday Inn, “No Surprises”“No Surprises”
 Lloyds Bank,Lloyds Bank, “The Bank that Likes to Say Yes”“The Bank that Likes to Say Yes”
 Philips,Philips,
 ““From Sand to Chips”From Sand to Chips”
 ““Philips Invents for You”Philips Invents for You”
 ““Let’s Make Things Better”Let’s Make Things Better”

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There is No Such Thing as a Commodity:There is No Such Thing as a Commodity:
Differentiate by SegmentsDifferentiate by Segments
 Mobil conducted a study of 2,000 gasoline buyers andMobil conducted a study of 2,000 gasoline buyers and
identified five segments:identified five segments:
 Road Warriors (always driving)Road Warriors (always driving)
 True Blues (brand or dealer loyal)True Blues (brand or dealer loyal)
 Generation F3 (liked convenience store aspect)Generation F3 (liked convenience store aspect)
 Homebodies (fills up at nearest station)Homebodies (fills up at nearest station)
 Price Shoppers (20% of all the buyers)Price Shoppers (20% of all the buyers)
 Mobil rolled outMobil rolled out Friendly ServeFriendly Serve: cleaner property,: cleaner property,
bathrooms, better lighting, well-stocked stores, andbathrooms, better lighting, well-stocked stores, and
friendlier personnel.friendlier personnel.
 Mobil charged $.02 more and sales increased by 20-25Mobil charged $.02 more and sales increased by 20-25
percent.percent.

41. Printed on CANON
3. How Do You Promote a Brand?3. How Do You Promote a Brand?
 ““How do I justify spending millions onHow do I justify spending millions on
creating an image. That’s millions mycreating an image. That’s millions my
customers have to spend when they buycustomers have to spend when they buy
from us.” Tom Parker, CEO of Clark’sfrom us.” Tom Parker, CEO of Clark’s
shoesshoes..
 Brands are built by performance, notBrands are built by performance, not
advertising.advertising.

42. Printed on CANON
Don’t Overuse AdvertisingDon’t Overuse Advertising
to Build a Brandto Build a Brand
• People don’t pay that much attention to ads anymorePeople don’t pay that much attention to ads anymore
(wallpaper).(wallpaper).
• Some exceptional TV ads grab attention but do notSome exceptional TV ads grab attention but do not
provide motivation.provide motivation.
• Advertising doesn’t have much credibility orAdvertising doesn’t have much credibility or
believability.believability.
• The existence of so much advertising makesThe existence of so much advertising makes
advertising less effective. Yet the cost of advertisingadvertising less effective. Yet the cost of advertising
keeps rising.keeps rising.

43. Printed on CANON
Tools for Building BrandsTools for Building Brands
 AdvertisingAdvertising (e.g.,Absolut Vodka)(e.g.,Absolut Vodka)
 SponsorshipsSponsorships (e.g., Kodak and Olympics)(e.g., Kodak and Olympics)
 ClubsClubs (e.g. Nestle’s Casa Buitoni Club)(e.g. Nestle’s Casa Buitoni Club)
 Company visitsCompany visits (e.g., Cadbury’s theme park, Hallmark’s Museum)(e.g., Cadbury’s theme park, Hallmark’s Museum)
 Trade showsTrade shows
 Traveling exhibitsTraveling exhibits
 Worldwide web casts of presentations, roundtables, entertainmentWorldwide web casts of presentations, roundtables, entertainment
 Distribution outletsDistribution outlets (e.g., Haagen-Dazs)(e.g., Haagen-Dazs)
 Public facilitiesPublic facilities (e.g., Nestle Nestops)(e.g., Nestle Nestops)
 Social causesSocial causes (e.g., American Express)(e.g., American Express)
 High value for the moneyHigh value for the money (e.g. buzz created by Ikea, etc.)(e.g. buzz created by Ikea, etc.)
 User community buildingUser community building (e.g., Harley-Davidson)(e.g., Harley-Davidson)
 Founder’s personalityFounder’s personality (e.g., Colonel Saunders)(e.g., Colonel Saunders)
 Celebrity spokespersonsCelebrity spokespersons

44. Printed on CANON
4. What Makes a Strong Brand?4. What Makes a Strong Brand?
 Strong brand = Product Benefits x DistinctStrong brand = Product Benefits x Distinct
Identity x Emotional ValuesIdentity x Emotional Values
 Peter Doyle,Peter Doyle, Marketing Management & StrategyMarketing Management & Strategy, 1997, 1997

45. Printed on CANON
THE Y&R MODEL OF BRAND STRENGTHTHE Y&R MODEL OF BRAND STRENGTH
A successful brand hasA successful brand has brand vitalitybrand vitality andand brand staturebrand stature..
Brand vitalityBrand vitality consists of:consists of:
1.1. DifferentiationDifferentiation, the brand is distinct, the brand is distinct
2.2. Relevance,Relevance, the brand is meaningful and personallythe brand is meaningful and personally
appropriate.appropriate.
Brand statureBrand stature consists of:consists of:
1.1. EsteemEsteem, the brand is seen to have quality and momentum., the brand is seen to have quality and momentum.
2.2. FamiliarityFamiliarity, the brand is known and understood by many people., the brand is known and understood by many people.
Some conclusions:Some conclusions:
1. A brand that has high familiarity but low likeability is a troubled brand.1. A brand that has high familiarity but low likeability is a troubled brand.
2.2. A brand that has high likeability but low familiarity has high advertisingA brand that has high likeability but low familiarity has high advertising
potential.potential.
3.3. A brand with high vitality but low stature has excellent potential.A brand with high vitality but low stature has excellent potential.
4.4. When a brand’s differentiation and relevance start slipping, esteem will slipWhen a brand’s differentiation and relevance start slipping, esteem will slip
next, and then familiarity will decline.next, and then familiarity will decline.

46. Printed on CANON
Characteristics of Strong BrandsCharacteristics of Strong Brands
 Provides superior delivery of desired benefits.Provides superior delivery of desired benefits.
 (Starbucks, FedEx, Amazon)(Starbucks, FedEx, Amazon)
 Maintain innovation and relevance for the brand.Maintain innovation and relevance for the brand.
 (Gillette, Charles Schwab)(Gillette, Charles Schwab)
 Establish credibility and create appropriate brandEstablish credibility and create appropriate brand
personality and imagery.personality and imagery.
 (Apple, Virgin)(Apple, Virgin)
 Communicate with a consistent voice.Communicate with a consistent voice.
 (Coca-Cola, Accenture)(Coca-Cola, Accenture)
 Strategically design and implement a brandStrategically design and implement a brand
hierarchy and portfolio.hierarchy and portfolio.
 (BMW, The Gap)(BMW, The Gap)

47. Printed on CANON
Strong Brands Supply Use ValueStrong Brands Supply Use Value
as Well as Purchase Valueas Well as Purchase Value
Nestle:Nestle:
 Sells baby foodSells baby food
 Provides free dietitian phone lineProvides free dietitian phone line
 Nestops along the highwayNestops along the highway
Home Depot:Home Depot:
 Sells home improvement products, such as paint, electricalSells home improvement products, such as paint, electrical
supplies, plumbingsupplies, plumbing
 Offers free kitchen remodeling design serviceOffers free kitchen remodeling design service
 Offers free workshops on how to paint, fix faucets, etc.Offers free workshops on how to paint, fix faucets, etc.
VolvoVolvo
 Teaches safe driving,Teaches safe driving,
 Supports lower insurance rates for safe driversSupports lower insurance rates for safe drivers

48. Printed on CANON
When Do You StretchWhen Do You Stretch
a Brand Name?a Brand Name?
 Mercedes is putting its name on large, medium andMercedes is putting its name on large, medium and
small cars.small cars.
 Gap decided to invent Old Navy in going down andGap decided to invent Old Navy in going down and
buying Banana Republic in going up.buying Banana Republic in going up.

49. Printed on CANON
How Do You Revitalize a Brand?How Do You Revitalize a Brand?
 A dowager brand pioneered the market but now is declining. It willA dowager brand pioneered the market but now is declining. It will
be hard to reverse the decline and give it new life but the declinebe hard to reverse the decline and give it new life but the decline
can be slowed down.can be slowed down.
 Two general approaches:Two general approaches:
 Marketing mix modificationMarketing mix modification
 Improve the product, distribution, price, or promotionImprove the product, distribution, price, or promotion
 Market modificationMarket modification
 Find new segments, new usage benefits or occasions,Find new segments, new usage benefits or occasions,
more frequent usage, etc.more frequent usage, etc.
 Find out to whom the dowager brand is losing share:Find out to whom the dowager brand is losing share:
 Old peer brandsOld peer brands
 New peer brandsNew peer brands
 Retail store brandsRetail store brands
 Generic brandsGeneric brands
 Elite brandsElite brands
 Find out to whom the dowager brand is losing sales.Find out to whom the dowager brand is losing sales.
 Interview people who defected to each competitive class and theirInterview people who defected to each competitive class and their
dissenting rationales.dissenting rationales.
 Determine a counterlogic for each group and direct them to theDetermine a counterlogic for each group and direct them to the
groups that can most easily be won back.groups that can most easily be won back.
 Source: Dennis W. Rook and Sidney J. Levy, “Defending the Dowager:Source: Dennis W. Rook and Sidney J. Levy, “Defending the Dowager:
Communication Strategies for Declining Main Brands.”Communication Strategies for Declining Main Brands.”

50. Printed on CANON
How Do You RationalizeHow Do You Rationalize
Your Product Line?Your Product Line?
 Unilever found that the largest 50 brands accounted for 63% ofUnilever found that the largest 50 brands accounted for 63% of
its revenues.its revenues.
 Unilever decided to emphasize 400 core brands and dispose,Unilever decided to emphasize 400 core brands and dispose,
delete or consolidate 1,200 of its marginal brands.delete or consolidate 1,200 of its marginal brands.
 Unilever selected its 400 core brands based on brand scale,Unilever selected its 400 core brands based on brand scale,
brand power (#1or 2), and brand growth potential.brand power (#1or 2), and brand growth potential.
 40 brands were designated as core global brands (e.g., Dove,40 brands were designated as core global brands (e.g., Dove,
Knorr, Lipton), and 360 as regional core brands.Knorr, Lipton), and 360 as regional core brands.
 The core brands would get disproportionate investments inThe core brands would get disproportionate investments in
advertising and promotion, innovation, marketing competenceadvertising and promotion, innovation, marketing competence
and management time. The core brands would be extended.and management time. The core brands would be extended.
 Weak brands had small market shares; poor profitability;Weak brands had small market shares; poor profitability;
negative cash flow; weak channel support; disproportionatenegative cash flow; weak channel support; disproportionate
consumption of management time.consumption of management time.
 The weak brands would be milked, sold, delisted, or theirThe weak brands would be milked, sold, delisted, or their
attribute would be migrated to another brand.attribute would be migrated to another brand.

51. Printed on CANON
What Are the Most Frequent CausesWhat Are the Most Frequent Causes
of Brand Failure?of Brand Failure?
 Failure to live up to the brand promise.Failure to live up to the brand promise.
 Failure to adequately support the brand.Failure to adequately support the brand.
 Failure to adequately control the brand.Failure to adequately control the brand.
 Failure to properly balance consistency andFailure to properly balance consistency and
change with the brand.change with the brand.
 Failure to do brand equity measurement andFailure to do brand equity measurement and
management.management.

52. Printed on CANON
Building Customer EquityBuilding Customer Equity
 How customer-centered is your company? HowHow customer-centered is your company? How
do you measure this?do you measure this?
 Does your company need to be more customer-Does your company need to be more customer-
centered? To all customers or only the morecentered? To all customers or only the more
important customers?important customers?
 How can you go about becoming more customer-How can you go about becoming more customer-
centered?centered?
 How much would this cost you in new technologyHow much would this cost you in new technology
and training?and training?
 How much would you gain as a result ofHow much would you gain as a result of
becoming more customer-centered?becoming more customer-centered?

53. Printed on CANON
Achieving Outcomes in Market SpaceAchieving Outcomes in Market Space
 Achieving a deep customer focus is not done simply by building aAchieving a deep customer focus is not done simply by building a
customer database or customizing your product offerings.customer database or customizing your product offerings.
 A company must define its marketspace not in terms of products butA company must define its marketspace not in terms of products but
in terms of customer outcomes.in terms of customer outcomes.
 Baxter Healthcare supplies “home-recovery enhancement,” not justBaxter Healthcare supplies “home-recovery enhancement,” not just
nursing care or wheelchairs.nursing care or wheelchairs.
 IHI, a health insurance company, operates in the “lifetime health andIHI, a health insurance company, operates in the “lifetime health and
personal safety” marketspace.personal safety” marketspace.
 A company then examines the customer activity cycle and the valueA company then examines the customer activity cycle and the value
gaps.gaps.
 The company then invests in filling the major value gaps.The company then invests in filling the major value gaps.
 The company ends up being favored and grows through doing moreThe company ends up being favored and grows through doing more
things better for their customers.things better for their customers.
 Source: Sandra Vandermerwe, “Achieving Deep Customer Focus,” MIT SloanSource: Sandra Vandermerwe, “Achieving Deep Customer Focus,” MIT Sloan
Management Review, Spring 2004, pp. 26-34Management Review, Spring 2004, pp. 26-34

54. Printed on CANON
Achieving Deep Customer FocusAchieving Deep Customer Focus
1.1. Create strategic excitement.Create strategic excitement.
2.2. Enlist “points of light.”Enlist “points of light.”
3.3. Articulate the new market space focused on customerArticulate the new market space focused on customer outcomesoutcomes..
4.4. Identify theIdentify the valuevalue opportunities through using theopportunities through using the customer activity cycle.customer activity cycle.
5.5. Build aBuild a compelling case (not through a plan but a story).compelling case (not through a plan but a story).
6.6. Size the prize.Size the prize.
7.7. Modeling the concept with a few chosen customers.Modeling the concept with a few chosen customers.
8.8. Get people working together.Get people working together.
9.9. Get critical mass.Get critical mass.
10.10. Gather momentum.Gather momentum.
 Source: Sandra Vandermerwe, “Achieving Deep Customer Focus,” MITSource: Sandra Vandermerwe, “Achieving Deep Customer Focus,” MIT
Sloan Management Review, Spring 2004, pp. 26-34.Sloan Management Review, Spring 2004, pp. 26-34.

55. Printed on CANON
Building Customer EquityBuilding Customer Equity
 Reduce the rate of defection.Reduce the rate of defection.
 Increase the longevity of the relationship.Increase the longevity of the relationship.
 Enhance the growth potential of eachEnhance the growth potential of each
customer through cross-selling and up-customer through cross-selling and up-
selling.selling.
 Make low-profit customers more profitableMake low-profit customers more profitable
or terminate them.or terminate them.
 Focus disproportionate effort on highFocus disproportionate effort on high
value customers.value customers.

56. Printed on CANON
Components of Customer EquityComponents of Customer Equity
 Customer equity is driven by:Customer equity is driven by:
 Value equityValue equity
 Brand equityBrand equity
 Relationship equity.Relationship equity.
 Companies must decide which driver(s) underlieCompanies must decide which driver(s) underlie
each equity.each equity.
 Source: Roland T. Rust, Valerie A. Zeithaml, and Katherine A. Lemon,Source: Roland T. Rust, Valerie A. Zeithaml, and Katherine A. Lemon,
Driving Customer EquityDriving Customer Equity (New York Free Press 2000).(New York Free Press 2000).

57. Printed on CANON
Transaction Marketing vs.Transaction Marketing vs.
Customer Relationship MarketingCustomer Relationship Marketing
 Customer Relationship Marketing (CRM) represents aCustomer Relationship Marketing (CRM) represents a
paradigm shift from Transaction Marketing (TM).paradigm shift from Transaction Marketing (TM).
 TM companies focus on products and making a sale. CRMTM companies focus on products and making a sale. CRM
companies focus on building a long-term relationship thatcompanies focus on building a long-term relationship that
produces satisfaction for the customer and profitability forproduces satisfaction for the customer and profitability for
the company.the company.
 TM companies promote everywhere in search ofTM companies promote everywhere in search of
customers. CRM companies promote to a definedcustomers. CRM companies promote to a defined
customer group and aim to make thecustomer group and aim to make the right offerright offer at theat the rightright
timetime using theusing the right channelright channel toto thethe right customer.right customer.
 All companies must practice a mix of TM and RM. TM willAll companies must practice a mix of TM and RM. TM will
be stronger in companies facing a large number ofbe stronger in companies facing a large number of
customers; RM will be stronger in companies facing a smallcustomers; RM will be stronger in companies facing a small
number of customers.number of customers.

58. Printed on CANON
Treat Different Customers DifferentlyTreat Different Customers Differently
 Most profitable customersMost profitable customers
 Most unprofitable customersMost unprofitable customers
 Most growable customersMost growable customers
 Most vulnerable customersMost vulnerable customers

59. Printed on CANON
Needed:Needed:
Technology-Enabled MarketingTechnology-Enabled Marketing
 Technology-enabled marketing (TEM)Technology-enabled marketing (TEM)
combinescombines information technology, analyticalinformation technology, analytical
capacities, marketing datacapacities, marketing data, and, and marketingmarketing
knowledgeknowledge, made available to one or more, made available to one or more
marketing decision makers to improve themarketing decision makers to improve the
quality of marketing management.quality of marketing management.

60. Printed on CANON
A 5 Step Model forA 5 Step Model for
Database MarketingDatabase Marketing
1.1. Gather useful data on customers.Gather useful data on customers.
2.2. Classify customers by their needs and by theirClassify customers by their needs and by their
value to the firm.value to the firm.
3.3. Prepare business rules that select the bestPrepare business rules that select the best
prospects.prospects.
4.4. Customize marketing treatments for each prospectCustomize marketing treatments for each prospect
in terms of product offers, service mix, media, andin terms of product offers, service mix, media, and
channel.channel.
5.5. Set up accountability procedures.Set up accountability procedures.

61. Printed on CANON
Database Marketing is Expensive!Database Marketing is Expensive!
 Requires a tremendous investment in information gatheringRequires a tremendous investment in information gathering
about individual customers and prospects.about individual customers and prospects.
 Requires constant updating of information.Requires constant updating of information.
 Some critical information may not be available.Some critical information may not be available.
 Requires a high investment in hardware and software.Requires a high investment in hardware and software.
 Requires integrating individual customer information fromRequires integrating individual customer information from
a variety of sources.a variety of sources.
 Requires people skilled at data mining.Requires people skilled at data mining.
 Requires managing and training employees, dealers, andRequires managing and training employees, dealers, and
suppliers.suppliers.

62. Printed on CANON
Does Every Business Need CRM?Does Every Business Need CRM?
 No. The following businesses may not benefit from CRM:No. The following businesses may not benefit from CRM:
 Businesses where the CLV is low.Businesses where the CLV is low.
 Businesses with high churn.Businesses with high churn.
 Businesses where there is no direct contact betweenBusinesses where there is no direct contact between
the seller and ultimate buyer.the seller and ultimate buyer.
 Companies that are in the best position to invest in CRM.Companies that are in the best position to invest in CRM.
 Companies that collect a lot of data (banks, insuranceCompanies that collect a lot of data (banks, insurance
companies, credit card companies, telephonecompanies, credit card companies, telephone
companies).companies).
 Companies that can do a lot of cross-selling and up-Companies that can do a lot of cross-selling and up-
selling (GE, Amazon, etc.).selling (GE, Amazon, etc.).
 Companies whose customers have highly differentiatedCompanies whose customers have highly differentiated
needs and are of highly differentiated value to theneeds and are of highly differentiated value to the
company.company.

63. Printed on CANON
Introduction Growth Mature Decline
Database Management &
Warehousing
Historical Database
Analytics
Database-Driven Marketing
Performance Dashboards
Marketing Mix Modeling /
Marketing Management Work-Flow Solutions
Marketing Resource Management
Campaign
Management
Yield-Based Pricing
Optimum Tools
Marketing Technology Platforms
on the Market Development Curve
Source: Gary Morris, Adapted from Marketing Advocate,
Predictive analytics

64. Printed on CANON
Precision MarketingPrecision Marketing
 Precision marketing is achieved through looking at largePrecision marketing is achieved through looking at large
quantities of historic data with the help of data mining toolsquantities of historic data with the help of data mining tools
that search for meaningful patterns, and then creatingthat search for meaningful patterns, and then creating
mathematical equations that represent the underlyingmathematical equations that represent the underlying
relationships within the data.relationships within the data.
 Predictive analytics are used to identify the right offers andPredictive analytics are used to identify the right offers and
right messages to beam through different channels to narrowright messages to beam through different channels to narrow
customer segments, based on the propensity to respond. Thecustomer segments, based on the propensity to respond. The
expected profit of a campaign can be estimated.expected profit of a campaign can be estimated.
 Many tactical marketer tasks will be automated and free upMany tactical marketer tasks will be automated and free up
marketers to focus on more strategic decision making.marketers to focus on more strategic decision making.

65. Printed on CANON
SALES AUTOMATIONSALES AUTOMATION
 The objective is to empower the salesperson to beThe objective is to empower the salesperson to be
anan informed salespersoninformed salesperson who virtually has the wholewho virtually has the whole
company’s knowledge at his or her command andcompany’s knowledge at his or her command and
can providecan provide total sales qualitytotal sales quality..

66. Printed on CANON
Marketing AutomationMarketing Automation
 Areas Ripe for Marketing Automation:Areas Ripe for Marketing Automation:
 Selecting names for a direct mail campaignSelecting names for a direct mail campaign
 Deciding who should receive loans or creditDeciding who should receive loans or credit
extensionsextensions
 Allocating product lines to shelf spaceAllocating product lines to shelf space
 Selecting mediaSelecting media
 Customizing letters to individual customersCustomizing letters to individual customers
 Targeting coupons and samplesTargeting coupons and samples
 Pricing airline seats and hotel reservationsPricing airline seats and hotel reservations

67. Printed on CANON
Marketing Decision ModelsMarketing Decision Models
and Marketing Mix Response Modelsand Marketing Mix Response Models
 BRANDAIDBRANDAID
 CALLPLANCALLPLAN
 DETAILERDETAILER
 MEDIACMEDIAC
 PROMOTERPROMOTER
 ADCADADCAD
 See Kotler, Marketing ModelsSee Kotler, Marketing Models

68. Printed on CANON
Marketing DashboardsMarketing Dashboards
 Tools dashboardTools dashboard
 Processes dashboardProcesses dashboard
 Performance dashboardPerformance dashboard

69. Printed on CANON
Marketing Work-Flow Process ToolsMarketing Work-Flow Process Tools
 Project managementProject management
 Product managementProduct management
 New product developmentNew product development
 Campaign managementCampaign management

70. Printed on CANON
Exploit the Internet!Exploit the Internet!
 Research a new product on the Internet (panel research, chatResearch a new product on the Internet (panel research, chat
rooms).rooms).
 Create a site to explain how an existing or new product worksCreate a site to explain how an existing or new product works
((ex., Tideex., Tide).).
 Create a site that consults on a category (Create a site that consults on a category (Colgate on dentalColgate on dental
problemsproblems).).
 Create a site that consults on the customer’s profile (Create a site that consults on the customer’s profile (ElizabethElizabeth
Arden).Arden).
 Sponsor a chat room around your product category.Sponsor a chat room around your product category.
 Answer email questions instantly (Nestle baby care questions).Answer email questions instantly (Nestle baby care questions).
 Send free samples of new products (Send free samples of new products (freesample.comfreesample.com).).
 Send coupons of new products (Send coupons of new products (coolsavings.comcoolsavings.com).).
 Customize your product (Customize your product (Acumin vitamins).Acumin vitamins).
 Offer to sell very large orders direct.Offer to sell very large orders direct.
 Offer valuable information to people who will register on the site.Offer valuable information to people who will register on the site.

71. Printed on CANON
Is New Technology Enough?Is New Technology Enough?
 NT + OO = EOONT + OO = EOO
 New Technology + Old Organization =New Technology + Old Organization =
Expensive Old OrganizationExpensive Old Organization

72. Printed on CANON
Technology-Enabled Marketing: ExamplesTechnology-Enabled Marketing: Examples
 Royal Bank of CanadaRoyal Bank of Canada
 Decision to purchase CRMDecision to purchase CRM
 Halifax BankHalifax Bank
 Teller suggests financial productsTeller suggests financial products
 Capital OneCapital One
 A credit card for everyone, but with different interest rates, creditA credit card for everyone, but with different interest rates, credit
lines, and cash advances.lines, and cash advances.
 Tesco supermarketsTesco supermarkets
 Tesco has identified 5,000 customer “needs” segments. It sendsTesco has identified 5,000 customer “needs” segments. It sends
out some 300,000 variations of any given offer with redemptionout some 300,000 variations of any given offer with redemption
rates of 90%. It has formed clubs such as Baby Club, A World ofrates of 90%. It has formed clubs such as Baby Club, A World of
Wine Club, My Time ClubWine Club, My Time Club
 KraftKraft
 Kraft has the names of 110 million customers and 20 thousandKraft has the names of 110 million customers and 20 thousand
facts for each household. Kraft launched print magazine, Food &facts for each household. Kraft launched print magazine, Food &
Family, that is delivered to the homes of 2.1 million KraftFamily, that is delivered to the homes of 2.1 million Kraft
customers in 32 versions tailored to 32 segments.customers in 32 versions tailored to 32 segments.

73. Printed on CANON
10 Earmarks of the New10 Earmarks of the New
MarketingMarketing
1.1. Recognize growing customer empowerment.Recognize growing customer empowerment.
2.2. Develop a focused offering to the target marketDevelop a focused offering to the target market
3.3. Design the marketing from the customer-back.Design the marketing from the customer-back.
4.4. Focus on delivering outcomes, not products.Focus on delivering outcomes, not products.
5.5. Draw in the customer to co-create value.Draw in the customer to co-create value.
6.6. Use newer ways to reach the customer with a message.Use newer ways to reach the customer with a message.
7.7. Develop metrics and ROI measurement.Develop metrics and ROI measurement.
8.8. Develop high-tech marketing.Develop high-tech marketing.
9.9. Focus on building long run assets.Focus on building long run assets.
10.10. View marketing holistically to regain influence in the company.View marketing holistically to regain influence in the company.

74. Printed on CANON
1. P&G Recognizes1. P&G Recognizes
the New Consumerthe New Consumer
 Consumers want a conversation, to dialogue,Consumers want a conversation, to dialogue,
to participate, to be more in control…We’reto participate, to be more in control…We’re
going from one-dimensional, product-myopicgoing from one-dimensional, product-myopic
marketing to three-dimensional marketing –marketing to three-dimensional marketing –
that offers better solutions…more delightfulthat offers better solutions…more delightful
experiences… and the opportunity for on-experiences… and the opportunity for on-
going relationships.going relationships.
Alan Lafley, CEO, P&GAlan Lafley, CEO, P&G

75. Printed on CANON
Do-It-Yourself MarketingDo-It-Yourself Marketing
 Self-InformSelf-Inform: Customers can research products and issues without relying on: Customers can research products and issues without relying on
experts (e.g., WebMD, MedlinePlus.com)experts (e.g., WebMD, MedlinePlus.com)
 Self-evaluateSelf-evaluate: Customers can compare product features and prices with a few: Customers can compare product features and prices with a few
clicks of a mouse (e.g., PriceGrabber.com, DealTime.com)clicks of a mouse (e.g., PriceGrabber.com, DealTime.com)
 Self-segmentSelf-segment: Customers can design and configure products (e.g., Dell,: Customers can design and configure products (e.g., Dell,
Reflect.com)Reflect.com)
 Self-priceSelf-price: Customers can propose prices to sellers (e.g., eBay, PriceLine.com,: Customers can propose prices to sellers (e.g., eBay, PriceLine.com,
Free Markets)Free Markets)
 Self-supportSelf-support: Customer can resolve problems by searching knowledgeable: Customer can resolve problems by searching knowledgeable
bases and discussion forums (e.g., www.remotecentral.com,bases and discussion forums (e.g., www.remotecentral.com,
www.treocentral.comwww.treocentral.com))
 Self-programSelf-program: Customer can define their own media programming (e.g., TiVo,: Customer can define their own media programming (e.g., TiVo,
MyYahoo!)MyYahoo!)
 Self-organizeSelf-organize: Customers can join communities of interest to discuss products: Customers can join communities of interest to discuss products
and issues (e.g., Meetup.org., IVillage)and issues (e.g., Meetup.org., IVillage)
 Self-advertiseSelf-advertise: Customers can create feedback for their peers (e.g.,: Customers can create feedback for their peers (e.g.,
Amazon.com, Planet Feeeback, BlogSpot.com)Amazon.com, Planet Feeeback, BlogSpot.com)
 Self-policeSelf-police: Customers can monitor reputations of manufacturers (e.g., eBay,: Customers can monitor reputations of manufacturers (e.g., eBay,
BizRate.com)BizRate.com)
 Source: Mohan Sawhney lectureSource: Mohan Sawhney lecture

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The Evolution of MarketingThe Evolution of Marketing
TransactionalTransactional
MarketingMarketing
RelationshipRelationship
MarketingMarketing
CollaborativeCollaborative
MarketingMarketing
Time frameTime frame 1950s1950s 1980s1980s Beyond 2000Beyond 2000
View of valueView of value The company offeringThe company offering
in an exchangein an exchange
The customerThe customer
relationship in therelationship in the
long runlong run
Co-createdCo-created
experiencesexperiences
View of marketView of market Place where value isPlace where value is
exchangedexchanged
Market is whereMarket is where
various offeringsvarious offerings
appearappear
Market is a forumMarket is a forum
where value is co-where value is co-
created throughcreated through
dialoguedialogue
Role of customerRole of customer Passive buyers to bePassive buyers to be
targeted withtargeted with
offeringsofferings
Portfolio ofPortfolio of
relationships to berelationships to be
cultivatedcultivated
Prosumers-activeProsumers-active
participants in valueparticipants in value
co-creationco-creation
Role of firmRole of firm Define and createDefine and create
value for consumersvalue for consumers
Attract, develop andAttract, develop and
retain profitableretain profitable
customerscustomers
Engage customers inEngage customers in
defining and co-defining and co-
creating unique valuecreating unique value
Nature of customerNature of customer
interactioninteraction
Survey customers toSurvey customers to
elicit needs andelicit needs and
solicit feedbacksolicit feedback
Observe customersObserve customers
and learn adaptivelyand learn adaptively
Active dialogue withActive dialogue with
customers andcustomers and
communitiescommunities
Adapted from Prahalad and Ramaswamy

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2. Develop a Focused Offering2. Develop a Focused Offering
to the Target Marketto the Target Market
 Value customersValue customers: Which customer segment(s) do we: Which customer segment(s) do we
want to serve?want to serve?
 Value propositionValue proposition: Can we create a value proposition: Can we create a value proposition
that delivers superior value through dramaticallythat delivers superior value through dramatically
higher benefits or lower costs?higher benefits or lower costs?
 Value networkValue network: Can we run a better network or: Can we run a better network or
radically redefine the value delivery system for theradically redefine the value delivery system for the
industry such as Dell and IKEA have done?industry such as Dell and IKEA have done?
3Vs framework of Nirmalya Kumar3Vs framework of Nirmalya Kumar

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Choose to Serve a Unique Set ofChoose to Serve a Unique Set of
Customer ValuesCustomer Values
1. Identify the value expectations of potential1. Identify the value expectations of potential
customers.customers.
2. Select the values on which to compete.2. Select the values on which to compete.
 Nike values: Winning, roar of the crowd,Nike values: Winning, roar of the crowd,
extreme effort, the smell of sweat, physicalextreme effort, the smell of sweat, physical
developmentdevelopment
 New Balance values: Self-improvement, innerNew Balance values: Self-improvement, inner
harmony, balanced, the smell of nature, spiritualharmony, balanced, the smell of nature, spiritual
developmentdevelopment
3. Analyze the ability of the organization to deliver3. Analyze the ability of the organization to deliver
those values.those values.
4. Communicate and sell the value message.4. Communicate and sell the value message.

79. Printed on CANON
3. Design the Marketing3. Design the Marketing
From the Customer-BackFrom the Customer-Back
 Marketing must be run as a set of value finding,Marketing must be run as a set of value finding,
creation, and delivery processes, not 4P functions.creation, and delivery processes, not 4P functions.
The four Ps are seller oriented.The four Ps are seller oriented.
 The 4As are buyer oriented.The 4As are buyer oriented.
 Awareness (A1)Awareness (A1)
 Acceptability (A2)Acceptability (A2)
 Affordability (A3)Affordability (A3)
 Accessibility (A4)Accessibility (A4)
 Market value potential = A1 x A2 x A3 x A4Market value potential = A1 x A2 x A3 x A4
 If A1=100%, A2=100%, A3=50%, A4=50%, ThenIf A1=100%, A2=100%, A3=50%, A4=50%, Then
MV=25%MV=25%

80. Printed on CANON
4. Focus on Delivering Outcomes,4. Focus on Delivering Outcomes,
Not Products.Not Products.
CompanyCompany Product focusProduct focus Solutions focusSolutions focus
Akzo NobelAkzo Nobel Gallons of paintGallons of paint Painted carsPainted cars
BP Nutrition-BP Nutrition-
HendrixHendrix
Animal feedAnimal feed Animal weight gainAnimal weight gain
CummingsCummings Diesel enginesDiesel engines UninterruptibleUninterruptible
powerpower
ICI ExplosivesICI Explosives ExplosivesExplosives Broken rockBroken rock
ScaniaScania TrucksTrucks Guaranteed uptimeGuaranteed uptime
WW GraingerWW Grainger MRO itemsMRO items Indirect materialsIndirect materials
mgt.mgt.
Source: KumarSource: Kumar

81. Printed on CANON
Visualize a Larger MarketVisualize a Larger Market
 Nike now defines itself in the sports market ratherNike now defines itself in the sports market rather
than the shoe and clothing market.than the shoe and clothing market.
 The late Roberto Goizueta told his company thatThe late Roberto Goizueta told his company that
while Coca Cola had a 35 percent share of thewhile Coca Cola had a 35 percent share of the
soft drink market, it had only a 3 percent share ofsoft drink market, it had only a 3 percent share of
the total beverage market.the total beverage market.
 Armstrong World IndustriesArmstrong World Industries moved from floormoved from floor
coverings to ceilings to total interior surfacecoverings to ceilings to total interior surface
decoration.decoration.
 Citicorp realized that it only had a small share ofCiticorp realized that it only had a small share of
the total financial market which includes muchthe total financial market which includes much
more than banking.more than banking.
 Taco Bell went from selling food in stores toTaco Bell went from selling food in stores to
“feeding people everywhere” including kiosks,“feeding people everywhere” including kiosks,
convenience stores, airports, and high schools.convenience stores, airports, and high schools.
 Jack Welch asked product managers to redefineJack Welch asked product managers to redefine
their market so that they only had a 10% share.their market so that they only had a 10% share.

82. Printed on CANON
5. Draw in the Customer5. Draw in the Customer
to Co-create Value: Twoto Co-create Value: Two
ApproachesApproaches
1.1. Offer a wide product line so the customer can chooseOffer a wide product line so the customer can choose
something closer to the customer’s desires.something closer to the customer’s desires.
• M&M allows customers to special order M&Ms in 21 colors.M&M allows customers to special order M&Ms in 21 colors.
• Branches Hockey let’s players pick from 26 options: lengthBranches Hockey let’s players pick from 26 options: length
of a stick, blade patterns, etc.of a stick, blade patterns, etc.
2.2. Stand ready to customize according to the customer’s wishes.Stand ready to customize according to the customer’s wishes.
• Dell computers are designed by customersDell computers are designed by customers
• Lands’ End sells tailor-made chinos.Lands’ End sells tailor-made chinos.
• P&G on its reflect.com site lets shoppers design everythingP&G on its reflect.com site lets shoppers design everything
from eye moisturize to liquid foundation makeup.from eye moisturize to liquid foundation makeup.
• Yankee Candle Company will mix colors and scents toYankee Candle Company will mix colors and scents to
make the candles you want.make the candles you want.
• Other examples: golf clubs, breakfast cereals, credit cardOther examples: golf clubs, breakfast cereals, credit card
companiescompanies

83. Printed on CANON
Examples of CollaborativeExamples of Collaborative
MarketingMarketing
 P&G’s site has aP&G’s site has a We’re Listening sectionWe’re Listening section andand ShareShare
Your ThoughtsYour Thoughts section and Advisory Feedbacksection and Advisory Feedback
sessions.sessions.
 GM offers an AutoChoiceAdvisory on its websiteGM offers an AutoChoiceAdvisory on its website
 Cisco runs Customer Forums to improve itsCisco runs Customer Forums to improve its
offerings.offerings.
 A motorcycle in Italy is being designed byA motorcycle in Italy is being designed by
customers.customers.

84. Printed on CANON
6. Use Newer Ways to Reach the6. Use Newer Ways to Reach the
Customer with Relevant MessagesCustomer with Relevant Messages
 Make your ads more precise as to who theyMake your ads more precise as to who they
reach and more relevant.reach and more relevant.
 Let consumers indicate if they have anLet consumers indicate if they have an
interest or not. Stop pestering them.interest or not. Stop pestering them.
 Deliver valuable content with each ad, suchDeliver valuable content with each ad, such
as useful information or entertainment.as useful information or entertainment.
 Reach consumers in newer ways.Reach consumers in newer ways.

85. Printed on CANON
Newer Ways to ReachNewer Ways to Reach
CustomersCustomers
 SponsorshipsSponsorships
 Mentions on talk showsMentions on talk shows
 Product placementProduct placement
 Street-level promotionStreet-level promotion
 FestivalsFestivals
 Celebrity endorsementsCelebrity endorsements
 Mobile billboardsMobile billboards

86. Printed on CANON
Creating Buzz on the StreetsCreating Buzz on the Streets
 Chrysler’s PT Landcruiser appeared in fashionable areas andChrysler’s PT Landcruiser appeared in fashionable areas and
college tailgate parties. 250,000 prospects requested informationcollege tailgate parties. 250,000 prospects requested information
before official ad campaign began in April 2000.before official ad campaign began in April 2000.
 Models drove around Los Angeles on Vespa scooters and chattedModels drove around Los Angeles on Vespa scooters and chatted
with customers in cafes and bars.with customers in cafes and bars.
 Ford identified 120 people in six key markets and gave them aFord identified 120 people in six key markets and gave them a
Focus to drive for 6 months and promotional material.Focus to drive for 6 months and promotional material.
 Vans builds skateboard parks at malls and sponsors Vans TripleVans builds skateboard parks at malls and sponsors Vans Triple
Crown.Crown.
 Hasbro enlisted “cool” pre-teens to play the POX game and tellHasbro enlisted “cool” pre-teens to play the POX game and tell
their friends about it.their friends about it.
 Tourist goes into lounge and her telephone rings and picture ofTourist goes into lounge and her telephone rings and picture of
the caller appears on the phone.the caller appears on the phone.

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7. Develop Metrics and ROI7. Develop Metrics and ROI
MeasurementMeasurement
Products Brands Channels Customer
Segments
Markets
Relative
product
quality
Brand
awareness
Channel
penetration
Customer
satisfaction
Market
penetration
Perceived
product
quality
Brand
esteem
Channel trust Average
transaction
size
Market share
Percentage
of sales from
new products
Brand loyalty Channel
efficiency
Customer
complaints
Sales growth
Product
profitability
Brand
profitability
Market share
in each
channel
Customer
acquisition
costs
Market
profitability
Channel
profitability
Customer
retention rate
Source:
Kumar
Customer
profitability

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8. Develop High-Tech Marketing8. Develop High-Tech Marketing
 Predictive analyticsPredictive analytics
 Sales automationSales automation
 Marketing automationMarketing automation
 Marketing modelsMarketing models
 Process dashboardsProcess dashboards
 Performance dashboardsPerformance dashboards
 Campaign managementCampaign management
 Project managementProject management
 New product managementNew product management

89. Printed on CANON
9. Focus on Building9. Focus on Building
Long-Run Marketing Assets.Long-Run Marketing Assets.
 Brands and brand equityBrands and brand equity
 Customers and customer equityCustomers and customer equity
 Service qualityService quality
 Stakeholder relationshipsStakeholder relationships
 Intellectual knowledgeIntellectual knowledge
 Corporate reputationCorporate reputation

90. Printed on CANON
10. View Marketing Holistically10. View Marketing Holistically
 Marketing must become strategic and driveMarketing must become strategic and drive
business strategy.business strategy.
 A company needs to take a more holisticA company needs to take a more holistic
view of:view of:
 the target customers’ activities, lifestyle,the target customers’ activities, lifestyle,
and social space.and social space.
 the company’s channels and supply chain.the company’s channels and supply chain.
 the company’s communications.the company’s communications.
 the company’s stakeholders’ interests.the company’s stakeholders’ interests.

91. Printed on CANON
Two Models of ManagementTwo Models of Management
Profit-based managementProfit-based management
 Reduce costsReduce costs
 Reduce compensationReduce compensation
 Replace people withReplace people with
technologytechnology
 Price to extract maximumPrice to extract maximum
valuevalue
 Sell more productsSell more products
 Acquire lots of customersAcquire lots of customers
Loyalty-based managementLoyalty-based management
 Invest in marketing assetsInvest in marketing assets
 Give superior compensationGive superior compensation
 Leverage people withLeverage people with
technologytechnology
 Price to reward customersPrice to reward customers
 Deepen customer valueDeepen customer value
 Acquire customers selectivelyAcquire customers selectively
Source: Frederick Reichheld, The Loyalty Effect

92. Printed on CANON
ConclusionsConclusions
 Marketing is definitely not filling its potential.Marketing is definitely not filling its potential.
 Marketing must become the driver of business strategy.Marketing must become the driver of business strategy.
 Companies need to adopt a more holistic view of the marketingCompanies need to adopt a more holistic view of the marketing
challenge.challenge.
 Companies need lateral marketing thinking to conceive of newCompanies need lateral marketing thinking to conceive of new
product and service ideas.product and service ideas.
 Companies need to choose from five major strategic paths.Companies need to choose from five major strategic paths.
 Companies need to move from a product focused to a marketCompanies need to move from a product focused to a market
and customer focused organization.and customer focused organization.
 Companies need to build, measure and manage brand equityCompanies need to build, measure and manage brand equity
and customer equity.and customer equity.
 Companies need to move to technology-enabled marketing toCompanies need to move to technology-enabled marketing to
achieve precision marketing and develop better measures ofachieve precision marketing and develop better measures of
ROI impact.ROI impact.

93. Printed on CANON
“This time like all times is a good
one, if we but know what to do with
it.”
Ralph Waldo Emerson
THANK YOU!