Philip Kotler Presentation on Marketing

Philip Kotler Presentation on Marketing - Transcript

The New Marketing and Sales Strategies and Tactics Strategies




Philip Kotler Ph D Kellogg School of Kellogg Management Management Northwestern Northwestern University University



Kiev Ukraine May 19 2006

My Message My


Marketing s performance has been Marketing s disappointing disappointing You must replace your Old Marketing with You New Marketing that is New holistic strategic strategic technology enabled financially oriented financially oriented



The New Marketplace The


Commoditization Commoditization Competition of cheaper brands from China Rising selling and promotion costs Rising Proliferation of distribution and media channels Power shifting to giant retailers Power Power shifting to increasingly informed customers Shrinking margins Mergers bankruptcies

Marketing s Results Are Embarrassing Are


TV advertising has lost much of TV its former efficiency its Sales promotions are mostly Sales wasted wasted Direct marketing mailings have Direct poor response poor Too many sales calls done by Too the numbers the High rate of new product failure Marketing focuses too much on Marketing the short run the Marketing has become a one P Marketing function function











How Do CEOs See Marketing How


Marketing is Advertising and Selling Marketing is 4Ps Marketing is STP and 4Ps





Overview Overview


Part 1 Improving the Relationship Between Part Marketing Sales and Service Marketing Part 2 Applying Holistic Marketing Part 3 Developing A Winning Strategy Part Developing Part 4 Developing New Product Ideas Part 5 Improving Communications Part 6 Moving to High Tech Marketing



Sales Precedes Marketing Sales


In the beginning there was sales Marketing appeared later to help sales people Marketing By using marketing research to size and segment the By market market By using communications to build the brand and By develop collateral materials develop By finding leads through direct marketing and trade By shows shows Marketing was originally located in the sales department Then marketing grew as a separate department responsible Then for the marketing plan 4Ps and brand building for







Differences in Mindset and Style Differences


Marketing Profit oriented Data oriented Analytical Likes planning Team oriented MBA educated Focused on whole Focused market and market segments segments



Sales Volume oriented Action oriented Intuitive Prefers doing Individualistic Undergraduate and Undergraduate street smart street Focused on each Focused customer customer







Identify the Existing Level of Relationship
Hypothesis The integration of sales and marketing tends to progress through four distinct stages or levels of complexity distinct

Undefined

Defined

Aligned

Integrated

Caution The most appropriate stage for a company will depend on many factors The More integrated will not always mean more effective More

Buying Funnel Buying

Customer Awareness

Brand Awareness

Brand Consideration

Brand Preference

Purchase Intention

Purchase

Loyalty

Customer Advocacy

Marketing

Handoff

Sales

Integrating Marketing Into the Sales Funnel Into
Purchase Intention Purchase Loyalty Customer Advocacy

Prospecting

Qualifying

Defining Needs

Developing Solutions

Proposal Preparation Presentation

Revision Issue Resolution

Contract Negotiation

Implementation

Marketing Can Help in the Sales Process in


Prospecting and qualifying


Marketing develops high quality leads for the sales force Marketing works with sales to develop value propositions for customer Marketing segments sub segments and even individual accounts Marketing provides solution collateral organized templates and Marketing customizing guides so that salespeople can develop solutions at lower cost without constantly reinventing the wheel without Marketing organizes proposal collateral and libraries to help salespeople Marketing produce faster more responsive and more persuasive proposals produce Marketing prepares case study material success stories and site visits to Marketing help resolve customer concerns about moving ahead with the purchase help Marketing acts as an advisor to sales teams in negotiation planning and Marketing pricing pricing

Defining needs Defining




Developing solutions Developing




Proposal preparation Proposal




Issue resolution Issue




Contract negotiation Contract


Involve the Sales Force in Marketing Planning in








SF is a key member of the cross functional SF team team SF contributes to voice of customer SF research research SF contributes to offer development SF reviews creative SF contributes to database development SF defines lead criteria and helps designs SF lead management systems lead SF contributes to metrics

Eight Ways to Improve Marketing Sales Alignment


Hold regularly scheduled meetings between marketing and Hold sales sales Make it easier for marketing and sales people to communicate Make with each other with Arrange for more joint work assignments and job rotation Arrange between marketing and sales people Appoint a liason person from marketing to live with the sales Appoint force and help marketers understand sales problems better force Locate the marketing and sales people in the same building or Locate location to maximize their encounters location Set shared revenue objectives and reward systems Define more carefully the steps in the marketing sales funnel Improve sales force feedback Improve

US E APPROPRIATE CHANNELS FOR DIFFERENT CUS TOMER S EGMENTS AND TAS KS TAS
Le ad Ge ne ration National Acct Manage me nt M A R K E T I N G C H A N N E L Dire ct S ale s Te le marke ting Dire ct mail Re tail S tore s Dis tributors De ale rs and Value adde d Re s e lle rs Adve rtis ing
Source R T Moriarty and Ursula Moran Managing Hybrid Marketing Systems Harvard Business Review Nov Dec 1990 pp 146 147

Qualifying S ale s

Pre s ale s

Clos e of S ale s

P os ts ale s S e rvice

Account Manage me nt

All Customers

C U S T O M E R

CUSTOMER ACTIVITY CYCLE IBM BANK CUSTOMER SIMPLIFIED

Pre
Update deciding what to do Review

Take Strategic Decision

Understand IT Options

Maintain

Customer Activity Cycle CAC
keeping it going doing it

Develop Systems Integration Purchase

Repair

Post
Train

During

Install Set Up

ource Sandra Vandermerwe From Tin Soldiers to Russian Dolls Creating Added Value thorugh Services

CUSTOMER ACTIVITY CYCLE IBM BANK CUSTOMER SIMPLIFIED
Expand Renew

Pre
Update deciding what to do

Consulting

Take Strategic Decision
Feasibility IT advice expertise

Review plan needs system

Review

Understand IT Options

Maintain
Planned Maintenance Preventative maintenance

Customer Activity Cycle CAC
keeping it going doing it

Develop Systems Integration
System software integration

Repair
Repair Replace Renovate

Purchase

Post
Train

During

Sourcing Buying Distributing

Install Set Up

Training getting people online globally

Pilot Install Remove old Machine

Three Types of Customers Three


Price oriented customers transactional selling They want value through lowering cost They They know the product and care only about the price They don t want to see a salesperson Solution oriented customers consultative Solution oriented selling selling They want value through more benefits and They advice advice Strategic value customers enterprise selling They want value through higher benefits and They lower costs They want the supplier to colower invest and participate in the customer s invest business business





Part 2 Applying Holistic Marketing Marketing


Marketing must become strategic and drive business strategy Marketing A company needs to take a more holistic view of the target customers activities lifestyle and social space the company s channels and supply chain the company s communications the company s stakeholders interests





Source Philip Kotler Dipak Jain and Suvit Maesincee Marketing Moves A Source New Approach to Profits Growth and Renewal Harvard Business School New Press 2002

Holistic Marketing Holistic

HOLISTIC RELATIONSHIP MARKETING FRAMEWORK HOLISTIC

1 Who is involved
CUSTOMERS CORPORATION COLLABORATORS

MARKET SPACE

2 How can we define relevant market space

POTENTIAL OPPORTUNITIES

3 What are the potential opportunities emerging from the market space

BUSINESS INVESTMENT

4 What business capabilities and infrastructure required
CUSTOMER CUSTOMER FOCUS FOCUS CORE CORE COMPETENCIES COMPETENCIES COLLABORATIVE COLLABORATIVE NETWORK NETWORK

4 COMPETITIVE PLATFORMS COMPETITIVE
Customer Customer Focus Focus Core Core Competencies Competencies Collaborative Collaborative Network Network

Exploring Exploring Value Value

CUSTOMER MIND SPACE

COMPETENCY SPACE

RESOURCE SPACE

Market Offerings Creating Creating Value Value
VALUE PROPOSITION BUSINESS MODEL

Business Architecture
BUSINESS PARTNERS

Marketing Activities Delivering Value
CRM ERP

Operational System
SCM

Part 3 Developing An Overall Strategy Part Marketing Strategies Are Showing Diminishing Marketing Returns Returns






Product differentiation is harder to achieve achieve Acquisitions and mergers have as many failures as successes many Internationalization is offering less Internationalization opportunities because either the good markets are overcrowded or the poor markets have no money markets New products unfortunately fail more times than they succeed times Price cutting doesn t work because competitors will match competitors Pricing raising doesn t work since Pricing there isn t enough differentiation to support it support Cost cutting has eliminated much of Cost the fat but is now risking cutting the muscles muscles

Strategies for Firms in Different Market Positions Strategies

Jagdish Sheth Singapore Marketer 2002

Seven Winning Strategies Seven
1

Cost reduction IKEA Southwest Airlines Wal Mart Enterprise Rent a Car Enterprise Improved customer experience Starbucks Harley Davidson Davidson Highest product quality P G Toyota Niching Progressive Insurance Tetra Niching Progressive Innovative business model Barnes Noble Charles Schwab FedEx Charles Product Innovation IPOD Swatch watch Design Bang Olufsen Design Bang

2

3 4 5

6 7

Market Visionaries Market


Anita Roddick Fred Smith Steve Jobs Bill Gates Michael Dell Ray Kroc Walt Disney Sam Walton Moynihan Akio Morita Thomke Sprecher Gilbert Trigano Ted Turner Frank Purdue Richard Branson Honda Simon Marks Luciano Bennetton Charles Lazarus Les Wexner Colonel Saunder Ingvard Kampard Howard Schultz Charles Schwab

Body Shop Federal Express Apple Microsoft Dell Computer McDonald s Disneyworld Wal Mart Domino s Pizza Sony Swatch Watch Company Club Mediterranee CNN Purdue Chicken Virgin Honda Marks Spencer Benetton Toys R Us The Limited Kentucky Fried Chicken IKEA Starbucks Charles Schwab

Disruptive Technologies Disruptive


OLD Photographic film Wired telephones Store retailing Classroom education Offset printing General hospitals Open surgery Cardiac bypass surgery Manned fighters Full service stock brokerage



NEW Digital photography Mobile telephones On line retailing Distance education Digital printing Outpatient clinics Endoscopic surgery Angioplasty Unmanned aircraft On line stock brokerage





Source Clayton M Christensen The Innovator s Dilemma p xxix

Why Leaders Ignore Disruptive Innovations Disruptive






Leading companies prefer to keep producing Leading sustaining innovations that will allow them to charge higher prices They are responsive to their existing customers They wishes but they ignore potential customers who want lower cost solutions They miss the weak signals that a potential They challenger is emerging challenger Even if some employees see the signal it doesn t Even reach top management and if it does top management chooses to ignore it or responds halfmanagement heartedly

Strategies for National Brands Facing Store Brands Store
1 2 3 4 5 6

7 8 9

Reduce your prices Keep improving your quality Innovate new features Strengthen your brand image Develop better designed and aesthetic packaging Show the retailer that he makes more money with Show your brand than his store brand your Produce the store brand for the retailer Buy the retailer Sell your brand

Strategies for Meeting Chinese Competition Competition
1 2 3 4 5

Reduce your costs to a minimum Reduce your prices Shift your production to China Add new features and improved quality Strengthen the brand image

Part 4 Developing New Product Ideas Ideas

In mature markets the growing number of competitors In mature markets the growing number of competitors leads companies to target niches of low profitability

Y O G U R T S M A R K E T

Number of competitors

Market Size

Time Average profitability of all competitors

The case of Cereal Bars

Cereals for breakfast market

New category

into
Cereal varieties

STREETS



The case of Barbie
Baby dolls market Teenager New category

To feel as



Doll varieties

Other Examples of Lateral Marketing Other


Kinder Surprise candy toy Kinder Seven Eleven food depot Seven Gas station stores gas station food Cyber cafes cafeteria Internet Be the godfather of a kid Donation adoption Be Walkman audio portable MBA train classroom
Source Philip Kotler and Fernando Trias de Bes Lateral Marketing A Source New Approach to Finding Product Market and Marketing Mix Ideas Wiley 2004 Wiley



Part 5 Improving Communication Improving


Advertising Sponsorships Mentions on talk shows Product placement Street level promotion Festivals Festivals Celebrity endorsements Mobile billboards















Ad Agencies Search for New Media New




Blimps MetLife Sports teams FedEx pays to name Memphis Express Racing cars carry as much as 20 logotypes of its sponsors Vehicle wrapping of a colorful vinyl advertisement around an ordinary car In flight advertising and in movie advertising Video ads in elevators and at gas pumps Print ads in bathrooms Books Bulgari commissioned Fay Weldon to write a novel called The Bulgari Connection with an extravagant Bulgari necklace on cover Mobile marketing

THE Y R MODEL OF BRAND STRENGTH THE
A successful brand has brand vitality and brand stature successful brand brand Brand vitality consists of 1 Differentiation the brand is distinct 1 Differentiation 2 Relevance the brand is meaningful and personally 2 Relevance appropriate appropriate Brand stature consists of 1 Esteem the brand is seen to have quality and momentum 1 Esteem 2 Familiarity the brand is known and understood by many people 2 Familiarity Some conclusions 1 A brand that has high familiarity but low likeability is a troubled brand 2 A brand that has high likeability but low familiarity has high advertising brand potential potential 3 A brand with high vitality but low stature has excellent potential 4 When a brand s differentiation and relevance start slipping esteem will slip When next and then familiarity will decline next

Building Strong Associations
Utilize all levels of brand meaning McDonalds
Attributes clean restaurant consistent food
Benefits quick service value price Values children s charity fun playground toys I m Lovin It Culture service culture where young people enter the workforce Personality Ronald McDonald Golden Arches McEverything User families young people

Part 6 Moving to Part Moving Technology Enabled Marketing Technology Enabled


Direct marketing and Direct predictive analytics predictive Marketing metrics Marketing models Sales automation and Sales marketing automation systems systems Marketing dashboards





Needed Metrics for Measuring Different Marketing Expenditure Categories Marketing


Mail campaigns Telemarketing campaigns Sales promotions Managed events Trade shows Sponsorships TV ad campaigns Corporate image campaigns Subscription campaigns Customer win back campaigns New product launch campaigns

Major Metrics Major
Sales Metrics Sales growth Market share Sales from new products Customer Readiness to Buy Metrics Awareness Preference Purchase intention Trial rate Repurchase rate Customer Metrics Customer complaints Customer satisfaction Customer sacrifice Number of promoters to detractors Customer acquisition costs New customer gains Customer loses Customer churn Retention rate Customer lifetime value Customer equity Customer profitability Customer Return on customer Brand Metrics Brand strength perceived relative brand value Brand equity Brand Distribution Metrics Number of outlets Share in shops handling Weighted distribution Distribution gains Average stocks volume value Average Stocks cover in days Out of stock frequency Share of shelf Share Average sales per point of sale Communication Metrics Spontaneous unaided brand awareness Top of mind brand Spontaneous awareness Prompted aided brand awareness Spontaneous unaided advertising awareness Prompted aided advertising awareness Effective reach Effective Effective frequency Effective Gross rating points GRP Response rate Response Sales force metrics Sales Quality of lead stream Average lead to proposal Average close ratio Average Cost per inquiry Cost per lead Cost per sale Cost per sales dollar Price and Profitability Metrics Price sensitivity Average price change Contribution margin ROI DCF

Compiled by Philip Kotler from various sources Compiled

Comments on Some Metrics Comments


Market share Customer satisfaction Customer sacrifice Number of promoters to detractors





Retention rate Customer lifetime value Customer equity Customer Return on customer Brand strength perceived relative brand value Brand equity ROI DCF





Media effectiveness Marcom Brand Brand familiarity familiarity Purchase Purchase consideration consideration

PR

Message effectiveness In store activity

Pricing Promotion

Brand beliefs and perception Purchase Purchase intention intention Use and satisfaction

Purchase Purchase

Adjacent category awareness

Reviews

Revenue Margin

Build Models of How Your Market Works and Use New Tools

Marketing Decision Models and Marketing Mix Response Models


BRANDAID CALLPLAN DETAILER MEDIAC PROMOTER ADCAD



See Gary Lillien and Philip Kotler See Marketing Models Prentice Hall Prentice Hall

SALES AUTOMATION SALES


The objective is to empower the salesperson to be The an informed salesperson who virtually has the whole informed company s knowledge at his command and can provide total sales quality total

Marketing Automation Marketing




Selecting names for a direct mail campaign Deciding who should receive loans or credit Deciding extensions extensions Allocating product lines to shelf space Selecting media Customizing letters to individual customers Targeting coupons and samples Pricing airline seats and hotel reservations

Marketing Dashboards Marketing


Tools dashboard Processes dashboard Performance dashboard





Exploit the Internet Exploit




Create a web site that brilliantly communicates about your history Create products brands beliefs and values BMW BMW Create a site that consults on a category Colgate on dental Colgate problems problems Create a site that consults on the individual customer s profile Create Elizabeth Arden and sells customized products Acumin Elizabeth vitamins vitamins Run focus groups with prospects customers and dealers or send Run questionnaires questionnaires Send ads or information to prospects who show an interest Send free samples of new products freesample com Send coupons of new products coolsavings com Invite customers to send e mails about problems ideas etc Invite Use the Internet to research your competitors Facilitate internal communications among employees on a private Facilitate intranet intranet Use the Internet to improve purchasing recruiting and training Use the Internet to compare sellers prices and to purchase Use materials by posting the company s terms

Technology Enabled Marketing Examples Technology Enabled










Royal Bank of Canada Decision to purchase CRM Halifax Bank Teller suggests financial products Capital One A credit card for everyone but with different interest rates credit credit lines and cash advances lines Tesco supermarkets Tesco has identified 5 000 customer needs segments It sends Tesco out some 300 000 variations of any given offer with redemption rates of 90 It has formed clubs such as Baby Club A World of Wine Club My Time Club Wine Kraft Kraft has the names of 110 million customers and 20 thousand Kraft facts for each household Kraft launched print magazine Food Family that is delivered to the homes of 2 1 million Kraft customers in 32 versions tailored to 32 segments customers

Conclusions Conclusions


Marketing is not filling its potential Marketing must show more ROI accountability Marketing must become the driver of business Marketing strategy strategy Marketing and sales must be more tightly integrated Companies need to adopt a more holistic view of the Companies marketing challenge marketing Companies need lateral marketing thinking to Companies conceive of new product and service ideas conceive Companies need to find new ways to reach Companies customers the old ways are failing customers Companies need to move to technology enabled Companies marketing to achieve precision marketing

This time like all times is a good one if we but know what to do with it Ralph Waldo Emerson
THANK YOU