finding the right marketing strategy

Proprietary & Confidential

Finding the Right Marketing Strategy

And the Person to Lead It…


4M Scorecard

Chief Outsiders (Austin team)

Kirk Brand Coburn


Objectives

• Provide you with additional skills to aid

the TEAM in making optimal business decisions

• Provide you with a fundamental knowledge base of Marketing Strategy 101

• Help you determine the ROLE your CMO should play

• Help you evaluate the effectiveness of your CMO


What do you want to Learn?


Out of Alignment

Source: Peppers and Rogers Group

“Only 13% of C-Level believe their vision is

aligned with the CMO’s.”

"We're 50% short."

“We're halfway there.”


Without Alignment, Progress Can Be Dangerous

When marketing is properly aligned with finance and operations, there is a powerful combination to spur growth and profitability.

But if they are not aligned, disaster could be looming…are you experiencing?

• Sales Issues = Churn/No Sales (Wrong Target)• Ops Issues = Shipping Delays (Bad Planning)• Finance Issues = Less Profit (Wrong Products)• Cust Svc Issues = Complaints (Different KPI’s)

= MARKETING ISSUE


PART II: The Role of the Marketing Lead


What are the Marketing Lead’s responsibilities? • Marketing shares the responsibility for the creation, maintenance, and growth of the value of the

company• Marketing should position the company strategically in the market and in customers’ minds• Marketing should deliver a marketing strategy that makes customers believe the company is different

and better than the competition

When this works, companies prosper.

Source and Copyright: Interbrand Corporation 2008

Top 100 Marketing Focused Companies vs. MSCI World Index and S&P 500 Performance Interbrand

200

180

160

140

120

100

80

60

40

20

0

20 00

Interband Top 100 PortfolioMSCI World IndexS&P 500 IndexAnnual Avg. Retu rn

Standard Deviation Sharpe Ratio

BGB Portfolio MSCI World S&P 500

20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08

4.73%14.76%

.07

.05%18.02%

.00

-.92%15.36%

-.06%


What exactly does a good Marketer do?Marketing is more than Fancy Creative:

A good marketer:• Serves as the market-focused voice to the CEO

• Understands the market from the viewpoint of the customer

• Translates the CEO's vision/value proposition into actionable, measurable plan

• Understands the operational and financial implications of marketing and growth programs

• Understands “the business” and knows what drives profitability

• Aligns the company around the value proposition

• Leads the dialogue that keeps the organization focused and working together


Strategic Marketing in Three Phases

I.Market Research

The activities needed to decide if the value is truly valuable, worth pursuing.

• Financial Modeling and Analysis

• Market Analysis• Industry & Market Trends• Competitive Analysis• Research

II.Business Planning

The activities to take the value from good idea to real creation.

• Integrating the market focus

with the operational and financial strategies of the company

• Product/Service definition• Supporting system and

structure• Development of Alliances and

Channel Partners

Long before a creative campaign or marketing program is developed, a foundation in market research and business planning must be laid.

III.Launch & Execution

The activities that execute and implement the plan

• Pricing and Promotion• Channel Partnerships• Communication• Measurement and Analysis• Key Leading Indicators

• Understand the company• Understand the customer• Understand the competition

• Align the organization• Prepare the company for implementation • Budgeting

• Go-To-Market• Communication• Measure

Step 1: Continual Refinement Step 2: Measure & Alignment Step 3: Function of Steps 1 & 2

How much budget for each phase?How much time spent on each phase?


Phase I: Find Your Inner Hedgehog

Marketing strategy is simple:PHASE I - Research• Find your hedgehog

– What drives your economic engine?– What is the Company passionate about?– What is the Company the best at doing?

• Identify your target customer• Identify your customer's needs (not wants)

Can your management team identify:• Your most profitable products, segments,

channels and customers?• Activities or situations would have the biggest

positive and negative impact on profitability? • The thing your company does better than

anyone in the industry?• The things your company needs to become really

good at in order to be seen as different by your customers?

• What customers value most about the way your company interacts with them?


Phase II: Align the Organization

Once a direction has been set, the organization needs to align behind the vision.

• Every department needs to understand its role in the market-based go-to-market strategy

• Operational, systems or procedural changes can be the biggest part of a marketing strategy

• Often the best marketing strategies are based on changing how products, services, or information are delivered to a customer

• If Sales & Marketing charge off promising one thing to customers, and Operations is focused, measured, and bonused on something different, and if Finance is not a partner that helps to develop, measure and evaluate the profit impact, nobody wins.


Case Study: VanguardAligning an organization behind customer insights

• Vanguard learned customer service is not a one-size-fits-all proposition. (Phase I)

• Vanguard aligned the way it did business with the market learning. (Phase II)

• Vanguard's market segmentation approach drives customer loyalty, a key driver of future revenues.

• Working media and advertising (Phase III) were a small part of this marketing effort.


• From 1998 to 2003 as Ronald McDonald's image wore thin and fast food purveyors were being linked to obesity, McDonald's market capitalization fell $12.2 billion.

(Source: BusinessWeek)

• In 2004 McDonald's began revitalizing the brand by modernizing its image and adding salads, fruit slices, and grilled chicken to the menu.

• The change at McDonald’s was marketing led, starting with changing the product, then the message.

Copyright/Trademark McDonald's

Market Capitalization

1998 2004 2005

$50

$48

$46

$44

$42

$40

$38

$36

Billion

$48.0

$36.6

$39.4

Case Study: McDonald’sMcDonald’s turnaround was based on: •Understanding changes in customer’s needs (Phase I)•Changing product and store operations (Phase II)•Telling consumers about the changes (Phase III)


Dell Retail was out of alignment• Target growth unattainable with

current marketing plan• New retail channels reduced profit

margin percentages• New channel products created

internal and external confusion• No systems in place to track results,

sales, or customers

Case Study: Dell Retail (New Channel)

Tier 1

Tier 2

Tier 3

Computer savvy, middle-aged, high disposable income

Need to touch-and-feel before purchase

Non-computer savvy, technology-averse

Dell Core Market

•Dell did understand that the Retail Channel attracted New Customer Type (Phase I) BUT•They did NOT adequately align the internal team and plan around the new channel (Phase II)•The Retail Decision still remains to be seen as to whether it is accretive … (Phase III)

Moving into Phase III without understanding Phase I & II can be

dangerous


Phase III: Marketing Minefields

Measuring the effect of short-term decisions

on long-term objectives.

• Net effect of advertising budget cuts• Diminished customer experience• Lower grade materials• Product pipeline cuts

Here is where things can get “touchy feely” or hard to measure.

Rule of thumb – A well-qualified marketing lead who understands Phases I and II, and works with finance to develop and implement marketing strategy, can likely be trusted in Phase III as well.


Intangible Doesn’t Mean Immeasurable

Leading IndicatorsCritical business drivers that

are:

Measurable

Manipulable

Customer Centric (at least 2)

Lagging Indicators

Revenues

Profits

Economic Value (Add 4 score)

Net Promoter Score

While elements of the marketing “spend” may be immeasurable, the results they are intended to drive should be

measureable.


Driving Analysis Around

Marketing Activities to Ensure

Accountability and Transparency

Sample Dashboard


Awareness Consideration Decision Support Refer Upgrade

Social Marketing/BLOGS

Major Events

Web Refresh

Online & Print

Advertising

Search EngineOptimization

Video Demos(Web & Syndication)

Case Studies/Testimonials

Reseller Event?

New Booth?

Giveaways

Collateral

Reseller Relationships

CooperativePartner Mktg

Product 3.0 Launch

Product Satisfaction

Survey

Each marketing activity is intended to drive toward a specific result. Look for ways to measure results at multiple levels.

Comprehensive Approach – Investment Strategy

Press/Analyst

relations


Case Study – Harrah’s Casino: Target Practice, Marketing Style

Phase I: Research• Harrah's Casinos identified customers that

were– Passionate about– Good at serving– Could distinguish themselves from the competition with

Phase II: Business Planning• Harrah's targeted:

– Gamblers (not spa-goers or show-seekers)– Gamblers who spent >$100/day but <$500 per day

• Harrah's created:– Rewards program to track behaviors and measure key indicators– Operations and IT Systems– New financial reporting– Plan to align entire company around new focus

Phase III: Launch and Execution• Harrah's tracked:

– Share of wallet– Loyalty program upgrades

Result: Leading indicator• The number of customers visiting cross-properties predicted future revenues

Marketing helps identify the most profitable customers, then aligns the organization to develop and execute strategies to win them over.


PART III: Evaluating the Effectiveness of your CMO


Is Your Marketing Lead the Real Deal?

Research•Work with the CFO to understand profitability drivers, most profitable customers, and market segments•Can logically discuss the customer’s business and business drivers•Know the cost of customer acquisition•Can clearly define the market size, market position and market share of the company•Understanding how a large company can scale the value proposition to earn profits at higher volumes

Business Planning

•Align marketing strategy with financial and operational strategy•Forecast net income with +/-10% margin•Can lead the market focused portion of executive team discussions•Track and measure leading and lagging indicators to determine success of marketing programs and objectives•Ensure employees can clearly articulate the value proposition

Launch & Execution

•Ensure employees can clearly execute and deliver on the value proposition•Treat budgets seriously•Drive profitable growth via positioning and differentiation•Trend leading and lagging indicators higher, year over year•Only make promises the company can keep•Convince customers you are easier and faster to do business each cycle and vs. competitors•Demonstrate higher gross profit than the year before


CMO = Chief Metrics Officer

Do you think you have the right metrics?

1. How many of your most profitable clients and products can you identify?

2. How much does it cost to acquire new clients? 3. How consistently can you define your value proposition? 4. What percentage of your management team is aligned toward the

same goals, measurements, and key leading indicators? 5. How quickly can your leadership team respond to change? 6. How large can you scale your value proposition to earn profits at

higher volumes? 7. How good are your financial forecasts (Hint: You should be aiming

for +/-10% of net income) 8. How much of the capital you need to fund future growth do you

have? 9. How much of your capital is invested effectively to maximize

profits?10.How complete is your plan to battle your greatest risk?


EXPENDITURE SUCH AS BUDGETEDCapEx

Headcount

Employee Education

Programs/Tradeshows

Market Research/Business Intelligence

Marketing Projects

Public Relations

Advertising

Other Shipping

Solutions Marketing

Partner Levarage

Product Packaging

Field Marketing

Sales Programs

TOTAL

Tradeshow booth, visitor center

Courses, Marketing Assoc fees

Tradeshows, Excellence Awards

Website, Graphic Design, Customer ProfilingBacon's Monitoring Service, PR firm

Print, Internet

Global shipping

Pricing strategy

MDF

Documentation, Media, Getting Started

GuidesAPAC, EMEA, NAM, LAM

APAC, EMEA, NAM, LAM

250,000

565,000

100,000

225,000

75,000

182,000

93,000

340,000

101,000

42,000

(225,000)

65,000

300,000

355,000

2,468,000

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

Here’s a sample marketing budget: How would you evaluate it?

It can’t be done.

Nothing on this page helps you determine how

good this marketing budget is.

Without a solid understanding of the market

(Phase I) and a marketing strategy (Phase II) a

marketing budget is useless.

It can’t be done.

Nothing on this page helps you determine how

good this marketing budget is.

Without a solid understanding of the market

(Phase I) and a marketing strategy (Phase II) a

marketing budget is useless.


When to Pull the Trigger or the Plug

Q: How can the MGT TEAM be sure new initiatives will be successful?

Q: How much information or research is enough?

Q: How can customer demands and volume forecasts be confirmed?

A: You will never know. Get over it and start asking yourself and your team the best questions you can ask.


The CMO’s Role in the Go/No-Go Decision

• Ask probing questions so the management team can understand the justifications and the risks

• Provide financial information to frame the investments, risks, and paybacks from the strategy

• Provide insight into breakeven volumes

Ask• What is the key driver that will determine if the

program will drive profit or not• When will we know if the program is working or not• What is the financial exposure at that time?• How do breakeven volumes compare to

marketing forecasts?• How big is the risk compared to the reward?• What's the total investment required for this to

succeed?• What financial commitments must be made, and

when?• What portion of the investment is a total loss, what can

be recouped if success is not achieved?


Measure, then Align for SuccessChief Outsiders Scorecard


Questions?

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Thank You

For your FREE COPY of our CMO Scorecard, email [email protected]

Kirk Brand CoburnPrincipal Chief Marketing [email protected]

www.ChiefOutsiders.com

mailto:[email protected]

mailto:[email protected]

http://www.ChiefOutsiders.com/

http://www.ChiefOutsiders.com/

finding the right marketing strategy

Documents

andkey leading indicators

leadership team respond

fund future growth

market cmos miss

case study

management team

dell retail

term debt