The New Role of Marketing in a Networked World

Ashok LeylandChennai

March 11, 2013

Philip KotlerKellogg School of ManagementNorthwestern University

Kevin Roberts Warning!!!

• The End of Strategy

• The End of Management

• The End of Marketing

Growth

• In a recent survey, the Conference Board asked CEOs to rank various business priorities and found that the top priority was business growth.

• P&G CEO Bob McDonald highlighted the point by saying “We’ve got to grow; that’s the main thing.”

High Performing Firms

• Here are two significant differences between the high performing and low performing firms:– High-performing firms were distinguished by a

greater level of commitment to marketing strategy.

– High-performing firms had a stronger marketing culture than low-performing firms.

• Source: 2011 Kotler Marketing Group Research Report: Marketing in Difficult Times: Best Practices of Companies that Found Ways to Prosper During the Great Recession.

Marketing started because Sales departments needed others to:

Job Positions in Today’s Marketing Organization

• Chief Marketing Officer (CMO) or Marketing Vice President

• Brand managers• Category managers• Market segment managers• Distribution channel managers• Pricing managers• Marketing communication managers• Database managers• Direct marketers• Internet and social media managers

Four CEO Views of Marketing

The size and type of department depends on the type of industry, size of company, nature of buying, and other factors.

Much depends on the CEO’s view of marketing.

•1P CEO•4P CEO•STP CEO•ME CEO

What are the 6 Tasks of the CMO?

1. Represent the voice of the customer (VOC).

2. Monitor the evolving business landscape.

3. Be the steward of the corporate brand and brand-building practice.

4. Upgrade marketing technology and skills in the company.

5. Bring insight into the corporate portfolio and synergies.

6. Measure and account for marketing financial performance.

If You Are Appointed CMO, You Prefer That Your Office Be Located Next To:

1. CEO office

2. CFO office

3. CTO office

4. CIO office

5. VPS office

??

There are those who believe that marketing should be a specialized department whose resources are drawn upon as

needed by the sales and other departments.

Is Marketing Only A Department?

– This means that marketing is a cost center whose costs should be charged to each internal client.

– Ideally marketing should measure the incremental revenue created by their activities to see if these activities were profitable.

There are others who believe that marketing should be a leading player in developing the future growth plan of the

company.

Can Marketing Help Engineer the Company’s Future

– Marketing is in the best position to detect business opportunities, calibrate their size and estimate their likely profitability.

– Marketing manages important intangible assets (brands, customer relationship, networks, market position, market information)

Five shifts

Driving business Impact

Galvanizing your network

Pervasive innovation

Inspiring marketing excellence

Relentless customer focus

Marketing’s Change in Focus

1950s – 1960s1950s – 1960s 1970s – 1980s1970s – 1980s 1990s – 2000s1990s – 2000s 2010s – 2020s2010s – 2020s

INDIVIDUAL

COM

PANY

Mind Heart Spirit

DeliverSATISFACTION

RealizeASPIRATION

PractiseCOMPASSION

Profit Ability Return Ability Sustain Ability

Be BETTER DIFFERENTIATEMake a

DIFFERENCE

MIS

SIO

N(W

hy)

VISI

ON

(Wha

t)VA

LUES

(How

)

Values-Based Model

Companies Americans Love

Amazon, Apple, Best Buy, BMW, CarMax, Caterpillar, Commerce Bank, Container Store, Costco, eBay, Google, Harley-Davidson, Honda, IDEO, IKEA, JetBlue Johnson & Johnson, Jordan's Furniture, L L Bean, New Balance, Patagonia, Progressive Insurance, REI, Southwest, Starbucks, Timberland, Toyota, Trader Joe's, UPS, Wegmans, Whole Foods.

These “firms of endearment” were highly profitable. They outperformed the market by a 9-to-1 ratio over a ten-year period. More fulfilled employees, happy and loyal customers, innovative and profitable suppliers, environmentally healthy communities.

Characteristics of “Firms of Endearment”

• They align the interests of all stakeholder groups • Their executive salaries are relatively modest• They operate an open door policy to reach top management• Their employee compensation and benefits are high for the

category; their employee training is longer; and their employee turnover is lower

• They hire people who are passionate about customers• They view suppliers as true partners who collaborate in improving

productivity and quality and lowering costs• They believe that their corporate culture is their greatest asset and

primary source of competitive advantage.• Their marketing costs are much lower than their peers while

customer satisfaction and retention is much higher.

Characteristics of Firms of Endearment

Your Brand Needs to Own a Word

• Mercedes – engineering

• BMW – driving

• Volvo - safety

Develop a Memorable Brand Mantra, Slogan and Logo

• Nike: Its brand mantra is “authentic athletic excellence.” Its brand slogan is “Just Do It.” Its logo is a “swoosh.”

• GE: Its brand mantra is “better living.” Its new brand slogan is “Imagination at Work.” Its logo is

LEADING B2B BRANDING COMPANIES

•DuPont•Siemens•Bosch•General Electric•Saint-Gobain•UPS•FedEx•Microsoft•Caterpillar•IBM•Daimler•Michelin•Tata Steel•Morgan Stanley•Volvo

Leading Ingredient Brands

Clothing: Gore-Tex, LycraCarpets: StainmasterDiet soft drinks (NutraSweet)Cooking utensils (Teflon)Bicycle gears (Shimano)Sound systems (Dolby)Computer chips (Intel)Crystal components (Swarovski)

What Makes a Strong Brand?

• Strong brand = Product Benefits x Distinct Identity x Emotional Values

Types of Innovation

Product and service

incremental innovation

Product and service

incremental innovation

Business model innovation

Business model innovation

Marketing innovationMarketing innovation

New to the world innovation

New to the world innovation

Source: http://2.bp.blogspot.com/_qD9Y8Ncd3I4/Sb6hKKOJkJI/AAAAAAAACDo/fHZHCQbvRe4/s400/BornToInnovate2009.jpg

Roles in a Company’s Innovation Process

BrowsersBrowsersActivatorsActivators CreatorsCreators

ExecutorsExecutorsDevelopersDevelopers FinanciersFinanciers

Source: Philip Kotler and Fernando Trias de Bes, Winning at Innovation, 2011.

Offer Variety and Customization

1. Variety: Offer a wide product line so the customer can choose something closer to the customer’s desires.

2. Customization: Stand ready to customize according to the customer’s wishes.

“We have moved beyond the Information Age to the Age of Participation.”

GM ASKS CONSUMERS TO MAKE VEHICLE ADS

'Apprentice' Task Turns Creation of Commercials into Popular Entertainment

BUILD YOUR OWN LEXUS AT WWW.LEXUS.COM

Build your Lexus, complete with available colors and options

Involve Your Customers in Co-Creating Your Products

Four Ways to Bring In Innovative Thinking

• Train an internal staff in creative techniques– Whirlpool

• Set up creative product groups– Samsung

• Give employees a periodic opportunity to deliver ideas to senior management – Shell Oil

• Outsource creativity to other organizations– Apple and Ideo

Actions That Produce More Loyal Customers

1. Extraordinary service2. Extraordinary guarantees3. Customer training and consulting4. Supplying software/hardware5. Offering entertainment/gifts6. Managing the customer’s complexity7. Align your marketing and sales groups

Marketing Challenges

• How to successfully link marketing, branding, production, customers, and operations with sales, profitability and innovation?

• A new era in marketing – an era of staggering proliferation

Marketing & Sales

Integration

Customer segments

Sales & service channels Media

Brands

Design & manage winning brand

portfolios

Find growth opportunities

Transform sales & service

PricingBoost returns on

marketing investment

Marketing & sales transformation

Leading change

Marketing Challenges – Proliferation

Is there really an issue between Marketing and Sales?The Buying Funnel

Marketing

CustomerAwareness

BrandAwareness

BrandConsideration

BrandPreference

Sales

Handoff

PurchaseIntention

Purchase Loyalty CustomerAdvocacy

How do Sales and Marketing work together?

Undefined

How do Sales and Marketing work together?

Undefined Defined

How do Sales and Marketing work together?

Undefined Defined Aligned

How do Sales and Marketing work together?

Undefined Defined Aligned Integrated

What happens when the Sales and Marketing relationship works?

Undefined Defined Aligned Integrated

36

Levels of Sales-Marketing Integration

UNDEFINED Sales and marketing have given little or no systematic thought to the relationship between them

DEFINED

Sales and marketing have defined roles and handoffs and attempt to prevent conflicts, though some conflicts still arise

ALIGNED

The boundaries between sales and marketing are defined but flexible; there is some joint planning and interchange of people & resources

INTEGRATED

Marketing is so embedded into the sales process that sales’ and marketing’s traditional roles and identities are blurred

Page 37

Linking Marketing and Sales for Customer Value Management

Relevant ValueIdentification

Relevant Value Creation

Relevant Value Articulation

Buying Scenarios / Playbook

(Scale of 1-7 where 7 is highest)

N: Technical=12, Sales=15, Marketing=17

Value Management Evaluation-Internal vs Customer View( Slideshow Version)

(interpretation from interviews)

38

TechnicalVendor

InnovationPartner

Brand Scenarios

Understand where current brands play

Determine required roles

and brand moves

Integrate brand moves to transform

portfolio

Avoiding Disconnected Views

Brand TeamsMarket

Research

Regional Sales

Channel Partners

Profusion of data

Sales transaction data

Touchpoint data

Consumer data New techniques

• Bullet box

Sales and Marketing Integration Checklist

Integrate activities Integrate processes & systems

Enable the culture Integrate organizational structures

Jointly involve sales and marketing in:

Product planning and in setting sales targets

Generating value propositions for different market segments

Assessing customer needs

Signing off on advertising materials

Analyzing the top opportunities by segment

Implement systems to track and manage sales and marketing’s joint activities

Utilize and regularly update shared databases

Establish common metrics

Create reward systems

Mandate that sales and marketing meet to review and improve relations

Require sales and marketing heads to attend each other’s budget reviews with the CEO

Emphasize shared responsibility for results between the different divisions of the organization

Emphasize metrics

Tie rewards to results

Enforce divisions’ conformity to systems and processes

Split marketing into upstream and downstream teams

Hire a chief revenue officer

Feedback from Luxury Marketing CouncilSelf-Classified

42%

18%

15%24%

Undefined

Defined

Aligned

Integrated

Feedback from Luxury Marketing Council

6

11

60

22

80

17

20

28

17

20

39

20

44 11

6

0% 20% 40% 60% 80% 100%

SALES

MARKETING

SALES

MARKETING

Strongly agree Agree Neither Disagree Strongly disagree

Sales and marketing manage their activities using jointly developed business funnels, processes or pipelines that seamlessly span the whole business chain from initial market sensing to customer service

There is a strong and shared ‘we rise or fall’ culture between sales and marketing

Feedback from Luxury Marketing Council

22

20

11

60

80

44

20

33

11

20

39

28

6

6

0% 20% 40% 60% 80% 100%

SALES

MARKETING

SALES

MARKETING

Strongly agree Agree Neither Disagree Strongly disagree

Marketing people often meet with key customers during the sales process

The sales force willingly cooperates in supplying feedback requested by marketing