New – AMA 2008 Marketing is the activity, set of instructions, and process for creating, communicating, delivering,

and exchanging offerings that have value for consumers, clients, partners and society at large.Marketing 3.0 is marketing that puts cultural issues at the heart of a company’s business model.

Four P’s – Product, Price, Place, PromotionSTP – Segmenting, Targeting, Positioning

The Human Moment – An authentic psychological encounter that can happen only when two people share the same physical space. (Physical, emotional, and mental).

Relationship Building Requires1. Willing Participation2. Reciprocity - balance of giving and getting

Marketing 3.0: Chapter 5 – Marketing the Values to the Channel Partners Channel Partner as Collaborator: Select the fit—must mirror...

o Purpose --- overall key objective of partnero Identity --- character of partnero Value --- share beliefs w/in partner’s organization -- the first step to introducing your values to

a channel partner is to understand their values1. Good partnerships create horizontal relationships, not vertical ones2. Both groups must share the same high standards3. Unique values of each must fit the others

Channel Partners as Creative Ally—Company/Channel Integrationo Company should understand margins, inventory turns, ect.o Concern and active mgmt. regarding “selling out”o Care and understanding about partners general impressions and satisfaction o MUST BE INTENTIONAL ABOUT THIS

Building Deep Supplier Relationships What is a Keiretsu?

o Close-knit network of vendors that continuously learn, improve and prosper along with their parent company.

How did Toyota and Honda Accomplish this relationship:o Understand how their suppliers work!!!o Turn supplier rivalry into opportunityo They supervise their vendorso They develop suppliers’ technical capabilities o They share information intensively but selectively

o Conduct joint improvement activities

Develop Compatible Technical Capabilitieso Value of wage savings vs. value of innovationo INVEST IN RELATIONSHIPS

Ritz-Carlton Question What is meant by ladies and gentlemen serving ladies and gentlemen?

o Horizontal nature of business, everyone knows what they/you are doing.

The Mismanagement of Customer Loyalty Is loyalty profitable?

o It costs less to serve profitable customers. They expect something in return for their loyalty. Do you put less effort into your most important relationships? – no

o Loyal customers pay higher prices – why would anyone think this? Customers resent companies trying to profit from loyalty…relationships cannot be based on price! (starbucks)

o Loyal customers market the company -- behavioral and attitudinal deed and thought Should not require this but it is nice.

o Author found that the relationship between loyalty and profitability is much weaker and more subtle than the proponents of loyalty claim.

o What drives loyalty (reduction of customer effort)o Instead of focusing on loyalty alone companies need to focus on the relationship between

loyalty and profitability so they can understand which customers to target and which to ignoreo Commercial intent is O.K.

Loyalty requires companies to…o Provide reciprocity – provide more helpo Reduce customer efforto Provide unique serviceo Become part of a routineo Develop cause connectiono “It’s just plain impossible these days to get away with price differentiation for any length of

time.”

Know when to lose a customero Event history model _ Math vs. Relationships

Is Your Company Ready for 1-to-1 Marketing? One to One Marketing means being WILLING and ABLE to change your behavior towards an

individual customer based on what they customer tells you and what else you know about that customer.o Requires Preparation

Relationship marketing is grounded in the idea of establishing a learning relationship with EACH customer starting with your most valuable ones.o Think of a learning relationship as one that gets smarter with each interaction

Four Key Steps – in order of increasing complexity and benefit for the company

Identify Your Customers --- Internal (apple, Starbucks) Differentiating Among Them --- Internal

o Different values and needso Focus on most valuable

Interacting With Them --- External/Actiono Every interaction should take place in the context of all previous interactions

Customize Your Product or Service --- External/Actiono Company must adopt some aspect of its behavior to meet customers’ individual needso Production/service delivery end of business must be able to treat a customer differently –

Major point of most breakdowns

Start Smallo Take responsibility for developing a customer relationship across the organization

(company’s responsibility) Assess your situation -- involves all levels of the organization (customers as well) Set Priorities

o What is the variance in your customer base— steep vs. shallow CRM works better with Steep Skew (more tightly clustered people)

The Dark Side of Customer Analytics Why are customer analytics so important to CRM?

o You have to be able to use the data you collect, CRM is almost worthless without customer analytics.

What role should company values play in this case? (use the front page test)o Front Page test --- Never try to hide something you would not want to see on the front

page of the paper (how we should make decisions)o Values should drive the decision

How important is transparency in customer data programs? Give and Get? Who has the most to lose?o Transparency is everywhere. You do not have to separate having a good business and

doing what is right. They are not mutually exclusive.

Customer Data: Designing For Transparency and Trust Three Categories of Data Type:

1. Self-reported Data: information people volunteer about themselves, such as their email addresses, work and educational history, and age and gender.

2. Digital Exhaust: location data and browsing history, which is created when using mobile devices, web services, or other connected technologies (digital footprint)

3. Profiling Data: personal profiles used to make predictions about individuals’ interests and behaviors, which are derived by combining self-reported, digital exhaust, and other data.

Three Categories of Data Use:1. Making a product or service better, for example, by allowing a map application to

recommend a route based on a user’s location.2. Facilitation targeted marketing or advertising, such as ads based on a user’s browsing

history.

3. Generating revenues through resale, by selling credit card purchase data to third parties.

Enlightened Data Principles:1. Teach Your Customers: Users can’t trust you if they don’t understand what you’re up

to. 2. Give Them Control: Milano study using ECG monitors -- the patients see all their own

data and control how much data goes to whom, using a browser and an app. This patient-directed approach is a radical departure from the tradition of paternalistic medicine that carries over many medical devices even today, with which the patient doesn’t own his data or even have access to it.

3. Deliver In-Kind Value: In designing its service, Pandora understood that customers are most willing to share data when they know what value they’ll receive in return.

There is an opportunity for companies in this defining moment. They can abide by local rules only as required, or they can help lead the change under way. Grudging and minimal compliance may keep a firm out of trouble but will do little to gain consumer trust --- and may even undermine consumer trust. o FIRMS MUST LEAD THE WAY!

Marketing 3.0: Chapter 6 – Marketing the Values to the Shareholders Shareholders: owns part of the company through stock ownership. (stock-holders) Stakeholders: interested in the performance/actions of the company for reasons other than

just stock appreciation. (Employees, consumers, suppliers…) Smart companies will focus on all stakeholders (consumers, employees, channel partners,

government, non-profits, etc...)o A successful company is never successful by itself. It is successful because it has built a

superior network of stakeholders.

How Great Companies Think Differently Institutional Logic: holds that companies are more than just instruments for generating

money _ they are also vehicles for accomplishing societal purposes and for providing meaningful livelihoods for those who work in them. According to this school of thought, the value that a company creates should be measured not just in terms of short-term profits or paychecks but also in terms of how it sustains the conditions that allow it to flourish over time. These corporate leaders deliver more than just financial returns _ they also build enduring institutions.o Institutional Logic cannot be captured by cost-benefit equations or reduced to the

language of economics, and yet it turns out to be a powerful driver of financial performance.

o Rather than viewing organizational processes as a way of extracting more economic value, great companies create frameworks that use societal values and human values as a

decision making criteria. They believe that corporations have a purpose and meet stakeholders’ needs in many ways: By producing goods and services that improve the lives of users By providing jobs and enhancing workers’ quality of life By developing a strong network of suppliers and business partners By ensuring financial viability which provides resources for improvements, innovations,

and returns to investors

Institutional Logic – Internalize values and purpose … act to produce societal value _ weather or not these are tied to core functions of making and selling goods.

Financial Logic – Aim is to maximize return on capital… increase shareholder value. Institutional logic should be aligned with economic logic but need not be subordinated to it.

At great companies profit is not the sole end; rather it is a way of ensuring returns will continue. This institutional view is no more idealized than the profit maximizing one.

If companies are to serve a purpose beyond their business portfolios, CEO’s must expand their investments to include employee empowerment, emotional engagement, value based leadership, and related societal contributions.

SIX WAYS GREAT COMPANIES USE INSTITUTIONAL LOGIC1. The Common Purpose: establishing clear institutional values…leaders can compensate for

business uncertainty through institutional grounding…build organizational culture…must intentionally build culture…a sense of purpose infuses meaning into the organization… ROLE OF LEADER IS TO INSPIRE!!! Affirming purpose and values through service is a regular part of how great companies

express their identities. 2. Long-Term Focus: thinking of the firm as a social institution generates a long-term

perspective that can justify any short-term financial sacrifices required to achieve the corporate purpose and to ensure over time.

3. Emotional Engagement: the transmission of institutional values can evoke positive emotions, stimulate motivation, and propel self-regulation. Moods are important. Value statements – the point is not the words themselves but the process of nurturing

a dialogue that would keep social purpose at the forefront of everyone’s mind and ensure that employees use the organizational values as a guide for business decisions.

4. Partnering With The Public: create a concern for public issues beyond the boundaries of the firm, requiring the formation of public-private partnerships in which executives consider societal interests along with their business interests. One paradox of globalization is that it can increase the need for the local connections.

5. Innovation: articulate a purpose broader than making money can guide strategies and actions, open new sources for innovation, and help people express corporate and personal values in their everyday work.

6. Self-Organization: great companies assume they can trust people and can rely on relationships, not just rules and structures…they are more likely to treat employees as

self-determining professionals who coordinate and integrate activities by self-organizing and generating new ideas.

Understanding New Power Old Power -- works like a currency. It is held by few. Once gained, it is jealously guarded,

and the powerful have a substantial store of it to spend. It is closed, inaccessible, and leader-driven. It downloads and it captures.

New Power -- operates like a current. It is made by many. It is open, participatory, and peer-driven. It uploads, and it distributes. Like water or electricity, it’s most forceful when it surges. The goal with new power is not to hoard it but to channel it.

Producing: consume and produce Co-ownership: peer mutualism

New Power Values --- power is not just flowing differently; people are feeling and thinking differently about it. A Lyft user experiences consumption as a kind of sharing and subtly shifts his view of asset ownership. _ When consumers give feedback they strengthen norms around collaboration and make the case that we can do just fine without the old power middlemen that dominate the 20th century _ We all have an inalienable right to participate. Today, people increasingly expect to actively shape or create many aspects of their lives.

New Values:o Governance – informal network approach -- new power is more flash mob and less

general assembly Old → Rely on Gov’t _ New → Rely on Self

o Collaboration – new power models, at their best, reinforce the human instinct to cooperate (rather than compete) by rewarding those who share their own ideas spread those of other, or build on existing ideas to make them better. Sharing…Community Ownership

o DIO – the heroes in new power are “makers” who produce their own content, grow their own food, or build their own gadgets.

o Transparency – new power proponents believe that the more light we shine, the better. New power of conversation

o Affiliation – new power loves to affiliate, but affiliation in this new world is much less enduring…new power is fast but it is also fickle.

Models and Values:o Castles -- old models—old values (apple, NSA)o Connectors -- old values—new model (Uber, FB)o Cheerleaders -- new values—old model (Patagonia, Zappos)o Crowds -- new values—new model (Etsy, Lyft)

Cultivating New Power -- having a Facebook page is not the same as having a new power strategy. Traditional organizations but engage in the following:1. Audit Your Power --- to understand how your organization is deploying new power,

consider which participation behaviors you are enabling. Assess your organizations place in the shifting power environment

2. Occupy Yourself --- deep introspection _ do you have an engagement culture? Today, the wisest organizations will be those engaging in the most painfully honest conversations, inside and outside, about their impact. HIGHER EDUCATION? Channel harshest critic

3. Develop A Movement Mindset --- old power organizations need to think differently about how they reach out _ to succeed, a movement needs much more than ad campaigns or “astroturfing.” Leaders must be able to actually mobilize true believers, not just talk at them. A key new power question for all organizations is “who will really show up for you?” Develop a mobilization strategy

The Challenge of New Powero Respect Your Communities --- don’t become the mano Go Bilingual --- for all of new power’s progress, it is not yet making much of a dent in

society’s old power superstructure. Develop both new values and new power capacities.o Get structural --- new power models will always have limited influence and impact unless

they are operating within a superstructure designed to play to their strengths. The battle ahead, whether you favor old or new power values, will be about who can control and shape society’s essential systems and structures.

“For all of its democratizing power, the Internet, in its current form, has simply replaced the old boss with a new boss,” warns Fed Wilson, a partner at Union Square Ventures. “And these new bosses have market power that, in time, will be vastly larger than that of the old boss.”

Too often, new power bosses dream only of a good “exit” from a hot business, but we need new power leaders to make a grand entrance into civil society. Those capable of channeling the power of the crowd must turn their energies to something more fundamental: redesigning society’s systems and structures to meaningfully include and empower more people. The greatest test for the conductors of new power will be their willingness to engage with the challenges of the least powerful.

The Algorithmic CEO Connection of Things – “the internet of things”

Stages in the evolution between business and consumers1. The first stage, before the industrial revolution, was the onto-to-one transactions

between artisans and their customers.2. Then came the era of mass production and mass markets

3. Followed by the segmenting of markets and semi-customization of the buying experience.

4. With companies such as Amazon able to collect and control information on the entire experience of a customer, the math house now can focus on each customer as an individual. In a manner of speaking, we are evolving back to the artisan model, where a market “segment” is comprised of one individual.

Marketing 3.0: Chapter 7 – Delivering Socio-Cultural Transformation Cause Marketing --- a strategy designed to promote the achievement of marketing objectives

via company support of social causes.

As CRM evolves companies must recognize that there are other stakeholders involved and impacted such as employees, investors, general public, etc.…o Consumers own the brand --- Marketing 3.0 → must engage the spirit

Mature Market -- challenge the marketerso Little or no growtho Knowledgeable customerso Customers view products as commodities

“Creative companies must differentiate themselves in this market with great service and exciting experience.”

Marketers need to deliver transformation Companies need to address the challenges in society and participate in finding a solution.

Two Forces Require Companies to Support Transformationo Future growth o Differentiation

From Philanthropy to Transformationo Philanthropy does not stimulate transformation in society. Transformation in society

drives philanthropy. You cannot address social issues with philanthropy as the impact will be short.

o Cause Marketing --- companies direct their energy, not just their money, to address the cause. They start to link the cause to their product. A practice where companies support a specific cause though their marketing.

Cooperate executive’s still see social causes as a responsibility instead of an opportunity to create growth and differentiation.

Creating transformation is the ultimate form of marketing to the mature market. (transformation is about alignment with values)

To win customers’ attention and trust, marketers must think LESS about what advertising says to its target and MORE about what it does for them….advertising new medium –Human Experience

THREE STEPS TO TRANSFORMATION1. Identify Socio-Cultural Challenges

i. Wellnessii. Education

iii. Social Justiceiv. Privacy

2. Select Target Constituents i. Gender and Age

ii. Middle Classiii. Minority Groups

3. Offer Transformational Solutioni. Jobs

ii. Breakthrough Innovation – idea, desirable, feasible, viable (hear, create, deliver)iii. Making products or services that provide solutions

The HBR Interview: Howard Schultz “I do not believe shareholder value is sustainable fi you are not creating value for the people

who are doing the work and then the value for the customers.” Leaders today must be both transparent and vulnerable → truthfulness and humility

Strong Coffee Article – Howard Schultz “We think of Starbucks not as a coffee company but as a media company” – impacts their

approach and their style of marketing. The emergence of bloggers and social media gave critics an instant platform

“The commoditization of our brand’ and “the watering down of the Starbucks experience”

o “I had to transform both the company as well as myself.”

The Case Against Corporate Social Responsibility “The idea that companies have a responsibility to act in the public interest and will profit

from doing so is fundamentally flawed.” This only works when the two are in sync Transformation vs. Philanthropy

Three Stages in the Development of a Relationship Between Marketing and Values1. Marketing and Values are polarized --- living up to higher values will erode profits2. Marketing and Values are balanced --- donate some profits to a cause3. Marketing and Values are integrated --- live out values which give the company

personality and purpose.

Marketing 3.0: Chapter 8 – Creating Emerging Marketing Entrepreneurs Eradicating poverty is arguably humankinds biggest challenge

“The pyramid must be reshaped into a diamond. In other words, more people at the bottom of the pyramid should have higher purchasing power and therefore move to the middle level. The bottom of the pyramid will shrink and the middle will flatten.”

The real solution has to be an investment and promotion of entrepreneurship. The poor should be empowered to be able to lift themselves to the middle of the pyramid. o Companies must be the big players in this movement. Companies need to be the ones to

empower poor people to lift themselves.

“A key actor in this solution is not nonprofits and government. o It is corporations that generate the vast majority of the economic development and that

own the business network. Companies should help the poor even if only for the selfish reason of expanding the market. However, ultimately the three parties have to work together in collaboration to get the job done.”

The Three Enabling Forces:1. Increased access among the poor to information and communication technology

infrastructure2. The blend of excess supply, under consumption in mature markets, and hyper-

competition at the top and middle of the pyramid3. Government policy to discourage people from migrating to overcrowded urban area.

Social Business Enterprise (SBE)o A Social Business Enterprise (SBE) helps people to improve their lives by providing

affordable products and income-generating opportunities. To be successful, an SBE must:

1. Stretch Disposable Income --- provide goods at lower price 2. Expand Disposable Income --- provide goods previously not available 3. Increase Disposable Income --- providing new jobs and markets

To Ensure Success an SBE Musto Educate the underserved market continuously o Link with local communities and leaders – helps eliminate the cultural barriers o Partner with Gov’t and NGOs – reduce costs and add credibility

Marketing 3.0: Chapter 10 – Putting it All Together Millennium Development Goals

1. Eradicating extreme poverty and hunger2. Achieve universal primary education3. Promote gender equity and empower women

4. Reduce child mortality5. Improve maternal health6. Combat HIV/AIDS, malaria, and other diseases7. Ensure environmental sustainability 8. Develop a global partnership for development

10 Credos that integrate marketing & values 1. Love Your Customer --- Respect your competitor

Essential difference in emotion and reason is that emotion leads to action while reason leads to conclusions. Loyalty to a brand is greatly influenced by emotions

Respect your competitors _ they enlarge the market, learn our strengths and weaknesses.

2. Be Sensitive to Change Be ready to transform when times change, change with them

3. Guard Your Name --- Be clear about who you are In marketing, brand reputation is everything Make your values clear and don’t surrender them

4. Customers are Diverse Go first to those who can benefit most from you

5. Always Offer a Good Package at a Fair Price True marketing is fair marketing where product and price must match Set fair prices to reflect your quality

6. Always Make Yourself Available --- Spread Good News Help your would be customers to fine you (Zappos)

7. Get Your Customers ---- Keep and grow them Get to know them personally one by one Look upon your customers as customers for life

8. Whatever Your Business, It Is a Service Business Every product delivers a service…must have a spirit of service (internally as well as

externally)9. Always Refine Your Business Process In Terms of Quality, Cost, and Delivery

Everyday improve your business process in every way10. Gather Relevant Information, But Use Wisdom in Making Final Decisions

Learn, Learn, And Learn!!!!! Wise managers consider more than financial impact of a decision.

Reaching the Rich World’s Poorest Consumers: Poverty is Not Just an Emerging Market Problem “Social business” is a concept originally developed in the context of poor countries. Such a

business has three key characteristics:1. First, it seeks to alleviate social problems, including all forms of poverty2. Second, it must run sustainable – that is, it should not lose money3. Third, profits – when they exist – are reinvested in the business rather than funneled

back to shareholders. Investors eventually get back only the money they initially invested

Early results from these companies’ experiments suggest that the social business model is both an efficient way of fighting poverty and a productive source of new business ideas.

The Model:

o Customer Exclusivity – targeted o High Quality Products and Serviceso Carefully Designed Solutions – to solve a social problem

The Hidden Payoffs:o Breakthrough Innovation --- consumer focused innovationo Motivation For Employeeso Reputation --- not predators

Unilever Article Future Proofing the business (sustainable farming) “If you buy into this long-term model, which is equitable, which is shared, which is

sustainable, then come invest with us.” ‘If you don’t buy into this, I respect you as a human being, but don’t invest you money in our company.” o Shareholder return cannot and will not trump nobler aimso Our purpose is to have a sustainable business model that is put at the service of the

greater good.

Preventing the Premature Death of Relationship Marketing Relationship Marketing Requires:

o Seeing Marketing Through Customer’s Eyeso Regaining Customers Trusto Attaining True Intimacy

Relationship Building Requireso Willing Participationo Reciprocity – balance of giving and getting

Marketers serve as the boundary line between the consumer and the company. And in that capacity they are both representatives of the company and advocates for the customer’s point of view. Both roles are critical, and yet in recent years the balance has become selfishly skewed.