TRENDS IN MARKETING PROGRAMMING - 1

Trends in offer management – from Brand Dashboards and Searchtastic to the Global Brain and Innovation Bazaars

Professor Luiz Moutinho

Foundation Chair in Marketing

University of Glasgow Business School

SCOTLAND

“ The value decade is upon us. If you cannot sell a top quality product at the world’s lowest price, you are going to be out of the game”.

(Jack Welch)

2

• Technology allows us to flatten the scale economics.

• The power of data networks changes this economics.

3

EVOLUTION OF PRODUCT MANAGEMENT

Predictive Product Management – to predict market problems, customer values, business opportunities, competitive advantages and technical solutions.

Product Configuration Planning – is the process of creating demand plans for product combinations and configured product overall. Parent items and attach rates. Multidimensionality . Statistical Bill of Materials (SBOM)

Product Commitment Management

Resources and Channel Synergies – parallel cost and differentiation advantages. Re-use R&D / C&D costs.

Product Flow Optimizer (PFO) (i.e., IBM)

4

PRODUCT PLATFORM STRATEGY

• Platform is an architecture of the common elements implemented across a range of products

• Key elements in the platform represent defining technology

–Dictates life cycle, capabilities, limitations

–Based on core competence

–Difficult to copy by competitors

–The choice if defining technology is perhaps the most critical strategic decision that a high tech company makes.

5

LEVERAGED EXPANSIONMarket Leverage

Low/None

New Diversification

Market Leveraged Expansion Strategies

Related Moderate

Market New Segments

Current Existing Platform Management

Market High Moderate Low/None

Product/Technology Leverage

Existing Core Current New

Product Platform Technology Skills Skills

6

PRODUCT DESIGN SIMPLICITY

• The new design consciousness is a result of many factors including the commodization of quality manufacturing ,proliferation of channels, over saturation of brands and products, and rapidly changing consumer expectations.

• Demand for aesthetic experience and usability given the increasingly complex interfaces for technology products.

• “Artistic acting” companies (i.e., Italy’s Alessi, Virgin and Apple). An applied arts research laboratory. “Artistic thinking” companies.

• “D(I)ESIGN”… “to-die-for design”. 7

FUNCTIONALL

Why simple, small and cheap appeals to all. Captures the phenomenon of simple, small and/or cheap products and services designed for low(er) income consumers in emerging markets, with cross-over appeal to consumers in mature consumer societies (i.e., TATA Housing – Mumbai, miniature apartments, TATA NANO Europa car).

8

InSourcing is IN.

Companies are brining back home key functions (e.g. customer service). Companies like Dell and Capital One have been hurt by outsourcing. Great customer service is far easier said than done. Many companies talk the talk, but do not walk the walk… Management must put Customer Service in the forefront of the company’s Core Story. Staff empowerment, open communication, transparency and authenticity….

How many companies actually do this?

The dehumanisation of Customer Service…

9

Trends in the Branding Landscape

• Value is the new black…. Reason-to-buy. Trouble for brands with no authentic meaning. Post-recession shoppers will transform into “value hunters”. Look for true value and meaning rather than just discounts….

• “Because I said so” is over. Old tricks don’t and won’t work anymore. Consumers are on to brands trying to play their emotions for profit.

• Brands are barely keeping up with consumer expectations now.

10

Trends in the Branding Landscape (continued)

• It is not just buzz: conversation and community is increasingly important. Consumers talk to each other before talking with brands.

• Engagement is not a fad. It is the way today’s consumers do business. Brand engagement will become impossible using out-dated attitudinal models.

• Internal Brand Definition is a sorely overlooked step in business growth.

11

Value-Based Marketing

• The value of brands no longer lies just in their ability to deliver superior margins, but in their ability to forge business relationships which deliver the assets and resources that make the difference between perishing and prospering.

• So, mind the (brand) GAP

12

Branding the Future

• The total brand experience

• Value-led marketing will create stronger brand relationships

• Brand spirit (caused-related marketing), Brand STORM (consumer power) and Brand essence and VISION.

• Brand Equity is what people carry round in their heads…!

• Global co-branding

• Elastic brands (innovative pop + creative field marketing techniques)

• + NO BRANDING13

The Corporate brand will be the main marketing mode of the future

The total brand experience

14

Key Trends

• Brand management is interface management. The organisation has to manage every link with its customers – personnel, financial, operational, via media – express its brand values. Responsibility for the brand moves beyond the marketing department.

• The customer, not the brand manager, is the key specifier.

• A brand is not a product but an invitation. Nowadays, marketers want to extend their contact with customers through time. The brand promise is about the quality of a relationship.

15

Key Trends

The price of a product is not what customers pay for it. The price of a product includes everything the customers have to do to realise its value: time and money spent searching for the right product and sales outlet, travelling to the shop, paying, transporting, unpacking, preparing for use, disposing of it. Taking a broader view of what constitutes value is transforming the marketing agenda.

16

Key Trends

• The brand is an experience, not a product. In a time-pressured world, customers want value for time as well as value for money.

• They are either “outsourcing” unsatisfying, time-consuming tasks, or expect the time they spend to be as fulfilling as possible. Increasingly, the way to win a greater share of purse is to win a greater share of customer time.

• Brands are spilling across corporate boundaries. The corporate is only a halfway house. Increasingly, brands represent not just the activities of one company but the combined activities of many companies.

17

Branding is not just about how companies present themselves to customers. Rather, brands are becoming a sort of supply or value chain “Superglue” – something that can forge better connections between each player in the supply chain, thereby unleasing bigger, better and more fruitful flows of economic energy between them.

18

The whole brand management thing has moved on…..

• A few years ago, people were running internal marketing programmes to script the whole thing, but recently, people have begun to understand that coaching people to recite brand values parrot-fashion is not the way forward.

• It is about much more fundamental things such as, so we understand how our customers need to be treated, what the nature of our business is, and how we can translate the promises we make into real products and services. The staff have to be party of the brand definition process rather than the unwilling back-end of it…!

19

• Paradoxically, although brands will become more important, their influence over individuals may weaken…

• Ultimately, the most successful brands will be those that most effectively serve the customer.

• At present, a service ethos is widely promoted, but frequently it is “skin-deep”…. The future is likely to bring more strenuous attempts to serve the customer in ways that invite she/he to take ownership of a brand.

20

Often, the most enthusiastic proponents of “brand experience” are victims of marketing's most prevalent occupational hazard: rampant brand narcissism, where everything the marketer does is for the glory of his or her brand – not for the benefit of the consumer….

Not for much longer. How a brand goes to market can either add extra value for its customers or snatch value from them… that is why competing along this dimension of “go-to-market” value is hotting up so fast.

21

In the old days, brands wanted everybody to pay attention to them. Now brands need to pay attention to everybody else.

22

Sometimes it is better and more credible to be

BRAND ANONYMOUS

than

BRAND HYPER-VENTILATED!

23

Brand makeover not enough…..

The key is to explore the brand space between the company and the customer.

24

Youniversal Branding

• Master of the Youniverse.MTV Avatar Fashion Show.

• IKEA Furniture-virtual pieces of furniture.

• Planned spontaneity (25 hours Hotel, Hamburg)

• Coke studios V-egos

• Being spaces and brand spaces

• Yahoo avatars (7M visitors)

• GoGo tours.Gran Turismo4,NISSAN

• Meta verses (meta universe)

• Multiverse.24/7 NIKE ID.PUMA.

• Avalon brand space25

• The content of branding will also change! Under the old paradigm, brands stand for quality, consistency, ubiquity and affordability.

• Under the new paradigm, brands will increasingly stand for inconsistency (i.e. customised offers), variable distribution and variable pricing.

26

• Branding will increasingly be about “living the brand” – bringing the brand experience inside so that it becomes real to the employees who deliver the brand promise.

• Brand strategy needs a new perspective, where both the customer and employee experience are explicitly linked!

27

• With consumers even more in the driving seat, the most successful brands will be those that abandon the traditional top-down approach – “we market to you” – in favour of bottom-up strategies.

Brands’ Role Reversal

• Currently, and up to now, brands (and marketing) are all about helping sellers to sell. Brands are the producer’s agent. Many of tomorrow’s megabrands will be the consumer’s agent… and that changes everything!

28

• The days of mindless marketing are over… It is the time to transform brands from trademarks into trust marks!

TRUST-BASED MARKETING

• From open source software to open source branding.

29

• Make life simple for your brand and your customer. “Simplify, Simplify”. Consumers are searching for, demanding, in fact, simplification.

• Brand – Consonant touchpoints (like mobile marketing) will play a major role in meeting and managing consumer expectations.

• Sensory Branding & tactile logos. Pictograms are the backbone of non-verbal communication.

• Brand Dashboards (Conversations Map Prism). Consumer Attention Dashboards – bringing the Conversation Economy to life (e.g. blogger relations, brand ambassadors, community relations, developer relations). In social media, we are all Brand Managers. Social Media Metrics – TweetDeck, Seesmic, Wordle (conversations in one cloud), Searchtastic, Sentiment Analysis, SRM workflow.

30

Micro-Marketing and Smart Packaging

• Talking package, chatty packages, self-destructing packages and shrinking packages.

• Planting information specific to individual consumers in each pack via electronic home shopping.

• The smart packs will “get the product to think”.

31

• It is realistic to expect packs whose graphics can be changed remotely by communication technologies either on the shelf or a point-of-sale.

• Dynamic messages within the graphics are another step.

• Consumers will be able to interrogate the brand directly… and the can of beans will be able to answer back!

32

A

Innovation Process

Technology change

Market change

33

Technology Assessment

and Forecasting

Market Assessment

and Forecasting

R&D Standardisation Productization Marketing

Some – Innovation Strategy Thoughts

• Assault industry assumptions

• Disrupt Schemata

• Innovation no longer just happens in R&D

• Strategic Patience

• Impact is not created by big budgets, it is created by innovative marketing and management approaches

• Marketing Innovation is created by inspiration

• “If you don’t get better, you get worse”

34

Some – Innovation Strategy Thoughts

• Innovation means doing what no one else would dare doing. Intuitive bets.

• It’s such a fine line between stupid and clever.

• We do not have an innovation process. We hire good people. (Steve Jobs – Apple)

• The Global Brain

• Copy-Worthy innovations

• The crowd express. Crowd clout and crowd mining.

35

Some – Innovation Strategy Thoughts

• “ITGREDIENTS” ….. The next it-ism. Experimentation

• OFF = ON phenomenon (fluidity) (innovative off-online ventures)

• INNOVATION Jubilation – how innovation is one of the ways out of the recession.

• Intention Economy – intent and clout

• MAPMANIA

• Innovation in an Expectation Economy

36

Blogs and Wikis to Build and Share collective Intelligence.

Blogs Collective Intelligence

+

Wikis

“Intellipedia”

37

Single-author

insights

Multi-author “agreed-

upon” knowledge

User-generated, Interlinked and

rapidly adaptable bodies of

knowledge open to everyone

Intelligent Cities

…Is a new planning paradigm which corresponds to the type of innovation shaped by innovation networks and leveraging web-based collaboration intelligence ecosystems (Bangalore, Stockholm, Coventry, Manchester).

• Pilot Innovation Community Bazaars

• Innovation on Steroids (speed and time-based innovation).

38

Innovation does not start with idea generation

A Fallacy. Idea generation is at best the “mid point” of an innovation process, because by the time you start generating ideas you need to have:• a good sense of the strategic goals and direction of the organisation.

• a good sense of trends and the unfolding future.

• an understanding of unmet or unarticulated needs.

IDEATING in Context QL Exercises – VOC, observation, in-situ research, shadowing,

lead users, ethnographic research, etc. Innovation is both a process and an ecosystem.

39

Innovation Insanity – Innovation Overload – Innovation Avalanche

• The amount of talent, of creativity, of innovations out there remains staggering. Invent, improve,…. or perish.

• If you want to be original, start from a different box.

• Rather than following history, start from your goals and work backwards, questioning everything else.

40

Can Large Companies Innovate?

Game-changing innovations that produce a competitive advantage or drive new business models are unusual for large corporations. Myths about innovation:

- let’s spend more on R&D

- we should de better at market forecasting

Strategy is not a product.

Customer Experience Innovation is now the “tool” for disruption. Experience design is the “soul” of customer value. Convergence of Infortech and Sociotech from video hauls, lifeblogs, sense cams, lifelogs, lifestories – systems for auto-archiving and auto-indexing all life experience.

41

• Faster access to knowledge and faster innovation

• Connect and develop (C&D replaces R&D)

• Shared innovation

• Most “real innovations” come from small, fast, hungry companies with few corporate overheads to feed.

42

Trends in Innovation Management

Unfortunately, most organisations suffer from “Chronic Sameness”

1. – The innovation – restricting disease in where commonality is valued above individuality.

2. Taking care of leap-frog innovations. Managing the innovation funnel. Stage gate processes. (e.g., BASF’s, Future Business Unit).

3. Networked and Borderless Innovation. Expertise tagging. “Facebook of Innovation”.

4. Intra-company crowdsourcing. Collective intelligence. Consumer co-creation. Open Innovation, outside in.

5. Measurement of the Innovation Growth Gap (i.e. Procter and Gamble).

43

Who Killed Big Corp Innovation?

The Product Manager – look no further, that’s the one, the main Big Corp innovation killer. Its not personal. If you’re a PM, it’s not your fault. You don’t even have to have that title, any “VP of something” often have responsibility for a specific product/product line/technology. Same thing, different wrapping. That’s how big organisations are built, around a core of guardians of existing products/technologies, perpetuating that status quo as it is.

44

Who Killed Big Corp Innovation?

Responsibility for a product line? That’s the whole shebang; full lifecycle, its growth, its profitability, its wellbeing, its existence.

The guardian of existing stuff, aka Product Manager.

The product/product-line/technology “owner” is measured by, and his/her bonus and future is dependent on how good they are at milking and keeping alive “what we’ve got”.

45

Nope, the responsibility lies with the strategies and top leadership.

Refocus from corporate viewpoint to customer viewpoint, from “our needs” to “customer needs”, from “our product” to “customer’s product”. Then the “Product Managers” could become “Customer Value Managers”, responsible for a set of customers and how to help them best, bugger the product really, that follows.

46

Financial Modelling and Project Appraisal

Methodologies / ToolsPROBE and PRA (Probabilistic Risk Analysis)

….risk assessment associated with occurrence of potential negative results. Financial and accounting risks. Quadrant Analysis. Technological and Production Risks. Magnitude and Similarity.

EVVICA for intellectual capital assets. Product (Estimated value via intellectual capital analysis) sustainability. The future value of competences and their transformative capacity. Analysis of competence gaps. Bayesian Analysis. Systematic Risk. Expert System. 4,500 questions.

VALUE at RISK (VAR) with Monte Carlo Simulation

• What is the maximum value accrued from this investment?

• Complementary method. Stochastic models and simulations (more than 10,000)

• Random samples. Probability intervals.47

New Product Design Methods based on:

• Virtual Reality – virtual shopping – high-tech kiosks – smart stations

• Gaming Principles

• Scenario Based Techniques (Kelloggs, Kimberley-Clark)

• 3D Animation

By letting stakeholders realistically interact with their personal creations.

Escaping to an alternative reality.48

Trends in Pricing

• Transformation of cost structures

• Downward price pressure and new lower price points

• New buyer psyche

• Target costing

• One-to-one pricing/individualised pricing

49

Price elasticity curves are changing. Consumers take more time searching for products and negotiate harder at the point of sale. They are more willing to postpone purchases, trade down or buy less. Conspicuous consumption becomes less prevalent. Much-have features of yesterday are today’s can-live-withouts.

50

Pricing/Profitability Optimization (PPO)

Sustainable Results with a Closed-Loop Approach (CLA)

• Smarter pricing drives higher net income than cost reductions

• To reduce pricing cycle times

• More market agility to respond faster to demand volatility and competitive threats.

• To price dynamically across PLCs to optimize yield.

• The avoidance of panic pricing decisions

• Sustainable pricing strategy

51

• CLA includes – strategy, analytics, price point setting and implementation. Key enabling areas:

Clear governance over pricing and a robust pricing-data infrastructure. Continuous Learning closes the loop.

• Pricing technology

• Business cycles and closed-loop pricing.

52

P VC(+), VO , TVC , Po

> GR

P FC(+), VO , UNC , Po

P VC(-), AC VO , Po

> P

P , VO ONLY IF VC

WHY?

TVC , VO , PO

P , PE-1 ONLY IF VC = Vo

CV= ->, P ,TVC , PO

WHY?

V053

Cool ideas are useless without

great needs!.....

54