marketing with prof tat chan 11-29-10
DESCRIPTION
informal discussion at Olin Business SchoolTRANSCRIPT
Marketing Strategy
Dr. Tat Y. Chan, Professor of Marketing
11-29-10
Quick Exercise
Problem: high-end shampoo is being stolen from our fancy health club showers
Challenge: eliminate theft, at zero cost, without upsetting the members
Exercise Leap to the solution: physicians diagnose (on average) in 18
seconds
Make false assumptions: it’s the staff, it’s only the women, it’s only the infrequent members
Complicate it: buy dispensers
Compromise: put cheap shampoo in expensive looking bottles
(how about just removing the caps?)
about me context & credibility
Who Am I?
my number!
+$5B
my number
.0000051%
two things
#1: companies and brands that do marketing well have a significant competitive advantage and create significantly more value… across industries, channels, geographies, demographics
two things
#1: companies and brands that do marketing well have a significant competitive advantage and create significantly more value
#2: doing marketing well is a real bitch today
valuable x hard = opportunity
my assignment
“the scope is to share with students the details regarding how you formulate and implement marketing strategies”
why?
why?
to get people to do what you want them to do….
h"p://www.youtube.com/watch?v=iYhCn0jf46U
current situation
According to eMarketer forecasts: - US online ad spending will grow 8.4%—to
$27.2 billion. - US online ad spending will account for
16.2% of total media dollars. - US internet users will number 230 million
—73% of the population. - US social network users will climb to
140.2 million. - US online video viewers will surpass 160
million. - US mobile phone users will top 250
million—80% of the population. These trends are not just limited to the US.
Aggregate value of brands has been falling steadily (brand value accounts for about one-third of the total stock market value of corporations):
• Trust: -50% (down to 22%) • Quality: -24% • Awareness: -20% • Esteem/regard: -12%
people are leaving businesses and brands behind
strategy
Business ObjecBves
Key MarkeBng IniBaBves
Make a list of these two areas for your business
Business ObjecBves
Key MarkeBng IniBaBves
Execute? Improve? Innovate?
#1. Are these clear and explicit?
#2. How do they translate to marke;ng?
#3. What’s the plan?
#4. Is it geBng beDer?
Business ObjecBves
Key MarkeBng IniBaBves
Execute? Improve? Innovate?
#1. Are these clear and explicit?
#2. How do they translate to marke;ng?
#3. What’s the plan?
#4. Is it geBng beDer?
What’s your plan to help clarify, drive understanding,
get alignment, connect the dots…???
• Opportunities: • Objectives: • Strategies:
• Initiatives: Do you have these clearly arBculated anywhere?
Plan on a Page
From Virgil’s The Aeneid
Situation: Paris took Helena from her husband, Menelaus, King of Sparta, back to Troy. Agamemnon, brother of Menelaus, led an expedition to retrieve Helena
Problem: Troy was a heavily fortified city, and the Trojan War raged for 10 years Great warriors Achilles and Ajax (and others) died in battle
Objective:
Insight:
Strategy:
Plan:
Measure:
From Virgil’s The Aeneid
Situation: Paris took Helena from her husband, Menelaus, King of Sparta, back to Troy Agamemnon, brother of Menelaus, led an expedition to retrieve Helena
Problem: Troy was a heavily fortified city, and the Trojan War raged for 10 years Great warriors Achilles and Ajax (and others) died in battle
Objective: Retrieve Helena
Insight: Odysseus said to appeal to the Trojans’ vanity somehow as a way to trick them
Strategy: Give the Trojans a “gift” to appeal to their vanity
Tactic: The horse, with troops inside
Measure:
two cases
The new MillerCoors division focuses on the small but fast‐growing craT segment where complex ingredients and storytelling mean more to consumers than a celebrity spokesman or catchy tagline. ”In the craT and import business it is a lot more about educaBon being the new promoBon," Tenth and Blake President‐CEO Tom Cardella said in an interview discussing the division's strategy.
Launched in August, the division is a move by the brewer to capture some of the momentum in the craT segment, a space more associated with mom‐and‐pop brewers than behemoths such as MillerCoors. The division will push a more than 20‐beer por\olio of craTs and imports that includes Blue Moon, Leinenkugel's, Pilsner Urquell and Peroni.
The investment "is a recogniBon that they have to get more serious and take things to the next level in the high‐end beer market," said Benj Steinman, president of Beer Marketer's Insights, a leading beer trade publicaBon. "The challenge is for a big company to think small.”
UnderArmour
• $850 million revenues • Sales have tripled in the past five years • CEO Kevin Plank wants the brand to be
“the biggest, baddest brand on the planet”
• Launched cross-training shoes
Disappointing sales results 1% market share
So what do you do?
Do you launch new Micro G basketball shoes? - Declining segment - Nike has a 90% share - Nike’s marketing budget is 20x UnderArmour’s
approach
marketing operating model
• articulated business goals that are actionable and measurable
• a clear brand position that is •relevant •beneficial •likable •valuable
• one integrated demand-side agenda that links: •architecture •actions •feedback
• disciplined process, team leader, communications
• marketing from the wide mouth of the funnel.
• Awareness assumed to be mostly spend driven
• ad spend timed for retail distribution
• The role of retail to create availability
The Funnel… The Accelerator
markeBng compresses the customer buying life cycle
Customers
the Demand Chain
Demand Vision
Creative Content Brand
Strategy
Resource Optimization
Demand Performance
Customer Engagement
Warehousing & Inventory
Purchasing
Manufacturing
Product Availability
Sales & Distribution
Product Development
Planning Model
Familiarity Consideration Purchase Usage Loyalty
Marketing Framework
Aided and unaided Recall
Brand Awareness Campaign
Awareness Benefit Ratings Preference Ratings
Response rates Click-t through rates DM/Promotional
Response Rates Web site Interaction Conversion rates
Revenue growth Share growth
velocity Non discounted sell
through ROI by Channel Profit margins
Cross sell Upsell Repeat buying Share of Household Lifetime value
Segments
WOW.
Want it. Check it out.
Share it.
Get something else.
Individuals
Get it.
Consumer Experience
Communications
Measure and Refine
Marketing Planning Process
Team-Based Capabilities:
One Integrated
Team
branded enter-
tainment
PR
web design
editing
sponsor- ships
channel marketing
identity
promotion events
packaging
sports marketing
consulting
Platf
orm
Team Extended Team Team Leader
Objectives & Briefing
Brand Immersion
Consumer Immersion Idea
Generation Idea
Selection
Play Session
Project Management/Timing
Budget/Media Mix
Internal Support
Resources Engaged
Approvals/Milestones
Tactical Plan
Planning Controls Scenario Planning/Forecasts
Research/Testing
…what’s your approach?
are you compelling?
Marketers say: “Our initiative generates the branding and strong creative we need to differentiate ourselves in the marketplace. Consumer feedback has been positive and affinity scores are rising.”
The CEO/CFO wants to hear: “Our analysis shows us that our $3 million program generated an incremental +$22.3 million in revenue…. and…
We can continue to generate positive results up to a $4.5 million investment level, generating an additional +$10.6 million in incremental revenue, at which point we begin to lose positive impact on the business.”
brand
the brand
what people say, think, feel about your product/service
creating brand strength
53
Relevance X Differen1a1on
unique important
to me
= brand strength
• 90% awareness • 90% indifference
How does this happen?
It comes from a fascinating article in the New Yorker, by Chandler Burr; about the creation of a new scent for Hermes.
This a French perfume executive describing the typical brief that marketing give to the perfumiers:
“Basically, it’s ‘We want something for women.’
OK, which women? ‘Women! All women! It should make them feel more feminine, but strong and competent, but not too much, and should work well in Europe and the US and especially in the Asian market, and it should be new, but it should be classic, and young women should love it, but older women should love it, too.’ If it’s a French house, the brief will also say, ‘And it should smell like that Armani thing two years ago that did four million dollars in the first two months in Europe but also like the Givenchy that sold so well in China.’”
typical assignment format • Campaign Name • Campaign Manager • Campaign Launch Date • Estimated Budget • Overview/Background • Goal • Targeted Audiences • (Retail Target) • Volume • Single Minded Idea • Support • Call to Action • Media • Tone & Manner • Executional Mandatories • Key Stakeholder Signatures
where’s the insight?
Mmmm mmmm good
Soup is good food
It fills you up right
Soup that eats like a meal
… year over year declines
So what do you do? ‐ new agency ‐ new flavors ‐ new package
… year over year declines
what’s the problem???
before
after
Journey to Purchase….
2.2 million weddings per year, and declining
64
marketing without insight
is clutter
positioning
DiGiorno is the exciBng and surprising guest who not only comes to dinner but makes it bringing the freshest of ingredients, filling your kitchen with fresh‐bakes smells and delighBng your eyes with a rising crust. DiGiorno dazzles you by uniBng two worlds in one and doing it brilliantly. It’s frozen. It’s fresh. It’s unique because it’s both. DiGiorno is a new age enigma, classically trained but strikingly modern in spirit, immensely popular, richly saBsfying, remarkably successful, and totally original. It’s a fresh new outlook for a frozen world.
DiGiorno’s posi1oning s1ll
relevant?
69
The high‐level emoBonal need to feel confident.
Good Value
Taste
Cavity Protection
Whitening Fresh breath, healthy teeth
Radiant self confidence
in a bright smile
hierarchy of needs for oral care
FuncBonal
EmoBonal
“we’re not in the coffee business serving people… we’re in the people business serving coffee”
- Howard Schultz
“We Bring Good Things To Life.” Why change a winning
campaign?
“We Bring Good Things To Life.” Why change a winning
campaign?
“Imagination At Work”
To re-energize a brand, a company and its culture
GE’s quest of simplicity, speed, agility
• If our brand is how we express ourselves, it should also define our aspirations
• Students of history – constant state of change • 30’s Live better electrically
• 50’s Progress for people
• 80’s We bring good things to life
GE’s quest of simplicity, speed, agility • 11 very different businesses
Healthcare, transportation, security, financial solutions, energy, locomotives, media/ entertainment
Issue - customers see company that used to be vs. company we want them to see
Result – time to change, marketing needed to be agent for change
New CEO objective – be a growth company like never before Grow organically, marketing to be lever for
growth
• Learning – Customers knew us well, we’d
built trust, but they expected more
• tried to stretch current tag line – “We bring good things to life”
• Insight – old positioning tied company to past and products; GE now more people focused, about benefits, solutions – Employees identified with spirit of
Thomas Edison - genius 1% inspiration/99% perspiration
– Focused in on imagination – creates magic, magic creates miracles
New Direction Simplify GE, make more approachable Needed strong, broad based consumer
campaign despite B2B Corporate campaign with zeroed in divisional
efforts Print – showed product from esthetic point of
view, mixed technology with consumer benefits
Brought technology alive by showing benefit, future potential
Partnered with Olympics – important especially in China
Update brand architecture – divisions going to market as more solutions-oriented
Framework yet flexibility for global interpretations
New Direction – Results • Objective – top line, marketing led growth
• Really comes down to culture – Imagination a breakthrough effort – Each business – 5 new ideas that generate
$50 –100 million incremental revenue (have to be lead by marketing)
– Idea incubator levers - Brand, Market development, understanding what customers want
– Return = 80 projects generating $25 billion in revenue from $7 million investment
– Powerful formula – taking imagination, putting marketing skills to work
– Measuring leaders – how imaginative they are
Disneyland
• lots of rides • fun for the whole
family • great value
• new stuff • better than Legoland
• rated “best” • from Mickey
magical!
is this firewood?
is this firewood?
“no, it’s the stored up heat of the sun”
DIFFERENT
RELEVANT
novelty
staple
must-have
expendable
how to be different
• by Degree - - superior in some way: better, faster, cheaper
• by Distinction - - separate and unrelated
positioning/ad study
• examined a week’s worth of tv ads • 7% communicated anything “remotely
resembling a positioning”, as judged by a panel of experts
Is your positioning compelling enough to attract choices from your audience?
And is your brand unique enough to preclude other competitive choices?
case
upscale mustard
to connoisseurs who wouldn’t dare use plain yellow mustard on anything, this brand shows/proves that they are a cut above in what they eat and how they live.
upscale mustard
Emotional Benefit How the consumer feels
Serious taste enjoyment
Consumer Benefit What the consumer gets
Great sandwich!
Product Benefit What the product does
More flavorful
Product Attribute Functional/physical Spicy, tangy
upscale mustard
upscale mustard
What to do?
upscale mustard
What to do?
Reposition Change the message Change the product Find alternative uses Focus on the 50+ audience Line extend to younger families Cut the price Advertise more Sample Sponsor Expand distribution
upscale mustard
• Problem: younger families don’t buy this brand
• Real Problem #1: younger families don’t make sandwiches So what?
• Real Problem #2: ‘snob appeal’ isn’t relevant/motivating anymore So what?
when to reposition?
rele
van
t
different
101
If you don’t define your brand, your competition will…
of consumers don’t believe that companies tell the truth in advertisements
76%
Yankelovich
top 10 reasons why a marketing program succeeds?
1. it’s compelling, motivating 2. it has sufficient support 3. your entire organization is aligned and
supportive 4. It’s based on deep consumer insight 5. The creative is clear 6. your customer is predisposed and reached 7. your effort is better than the competition’s 8. Your brand is healthy 9. The brand positioning is relevant and
unique 10. It comes from the right business objective
& strategy
is your brand marketing- worthy?
Can marketing be a fully sequential engineered system in which deliverables result from planning, designing, building, testing, reworking, retesting, and finalizing?
Or is it better to just MSU*?
Brand value
awareness
trust
purpose
regard
admiraBon
aktude
excitement
dynamism
innovaBon
a"ributes
benefits
relevance
esteem
equity
quality
inspiring
reputaBon emoBon
advocacy
stature
strength
consideraBon preference
loyalty
differenBated
meaning
disBncBve
interesBng
responsive
conduct
service
affinity
community
usage
irresistable
fit a"racBve
Non‐linear Engagement‐focused
Consumer‐centered Return on investment
MulB‐pla\orm
targeted Growth agenda
innovaBve
networked
Social networked
Consumer‐created User‐generated
MulB‐format
partnerships
segmented customized
On‐demand
Influence behavior
Promote interacBon Measure outcomes
insigh\ul
Two‐way
Shopper marketing Direct marketing
CRM marketing
b2b marketing Neuro-marketing
Behavioral marketing Mass marketing
1 to 1 marketing
Social marketing Internal marketing
Multi-level marketing Integrated marketing
Public relations
Cause marketing Word of mouth marketing
Database marketing
Digital marketing
Target marketing
Global marketing
Local marketing Loyalty marketing
Marketing communications Relationship marketing
Event marketing
Experiential marketing
Mobile marketing
Entertainment marketing
Corporate marketing
Influencer marketing
Guerrilla marketing
Grassroots marketing
Buzz marketing
Stealth marketing
Trade marketing
Brand marketing
Email marketing
Outbound marketing
Inbound marketing
Niche marketing
Promotional marketing
Affiliate marketing
Viral marketing b2c marketing
“the most highly engaged brands saw company revenues grow by +18% over the last 12 months. The least engaged companies saw revenues decline by -6%” – Interbrand study ….
engagement equals financial returns
The real question is this - - how do you spend as little as possible to achieve your objective?
roi
118
Some Numbers‐ Liquor • $1 million to run a sampling program • Visible by 400k people = $2500 cpm • Sampled 50k people = $20/sample • 80% fit the target = $25/quality sample • 75% say they’ll buy = $33/intended purchaser • 60% actually bought = $42/purchaser • 66% repeated = $62.50/loyal purchaser
• 24k x 1x x $8 = $200k • 16k x 4x x $8 = $500k $700k profit ‐ $1 million = ‐$300k loss
Cellular Service
Which one would you choose?
1. 3,000 free minutes (weekends)
2. Free phone ($70 value)
3. “Do Your Friends a Favor” (Free inbound call from specified #’s)
Cellular Service
Now which one? 3000 Free Friends’ Minutes Phone Favor
Reach 80% 70% 70% Comprehension 60% 70% 50% Appeal 50% 40% 70% Conversion 30% 20% 20% Revenue Δ +8 +3 +4
Brand value -2 0 +10
Cellular Service
Now which one?
3000 Free Friends’
Minutes Phone Favor
Cost of program $2.7M $500K $2M Revenue Gain +$8M +$3M +$4M $ Net Profit Gain (1.1M) $100K ($1.2M) Brand Value -2 0 +10
Cellular Service
Observations
• Sometimes you need to buy share • Sometimes you need to build brand value • Sometimes you need a positive ROI • Sometimes there are other definitions of success:
• Reach a new target audience •‘Real estate’ gains • Pre-empt competition • Sales force motivation • New channels of distribution • Spend the budget
recap
strategy matters
execution counts
Is your positioning compelling enough to attract choices from your audience?
And is your brand unique enough to preclude other competitive choices?
is your brand marketing- worthy?
The Way Forward
127
Old Way New Way Ad Hoc Discipline process
InformaBon Insight
Improvement InnovaBon
Interview InvesBgaBon
IdenBfy Imagine
Incremental Impact