1 the changing nature of marketing: implications for research, teaching and practice yoram (jerry)...

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The Changing Nature of Marketing:Implications for Research, Teaching

and Practice

Yoram (Jerry) WindThe Lauder ProfessorProfessor of MarketingDirector, SEI Center for

Advanced Studies in Management Academic Director,

Wharton Fellows ProgramThe Wharton School

Elsevier Science Distinguished Scholar Award LectureSociety for Marketing Advances

New Orleans, November 6, 2003

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AGENDA

I. The Changing Business Environment

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AGENDA


II. The Changing Nature of Marketing

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AGENDA



III. Implications for Research

IV. Implications for Teaching/ Learning

V. Implications for Practice

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AGENDA



VI. Personal Implications and Next Steps

III. Implications for Research


V. Implications for Practice

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• Globalization; The 86% Opportunities…

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• Globalization; The 86% Opportunities

• The Turbulent Economy

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• Globalization; The 86% Opportunities; Outsourcing


• Terrorist Threats; Wars; Anti US Feelings

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• Globalization; The 86% Opportunities; Outsourcing


• Terrorist Threats; Wars; Anti US Feelings

• The Internet..

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• Globalization; The 86% Opportunities; Outsourcing• The Turbulent Economy • Terrorist Threats; Wars; Anti US Feelings• The Internet..• Science and Technology

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• Globalization; The 86% Opportunities; Outsourcing• The Turbulent Economy • Terrorist Threats; Wars; Anti US Feelings• The Internet..• Science and Technology• Demographics; Migration…

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• Globalization; The 86% Opportunities; Outsourcing• The Turbulent Economy • Terrorist Threats; Wars; Anti US Feelings• The Internet..• Science and Technology• Demographics; Migration…• Consumers Life Styles, Expectations & Behavior…

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• Globalization; The 86% Opportunities; Outsourcing• The Turbulent Economy • Terrorist Threats; Wars; Anti US Feelings• The Internet..• Science and Technology• Demographics; Migration…• Consumers Life Styles, Expectations & Behavior…• The Pressure of Wall St. Expectations..

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• Globalization; The 86% Opportunities; Outsourcing• The Turbulent Economy • Terrorist Threats; Wars; Anti US Feelings• The Internet..• Science and Technology• Demographics• Consumers Life Styles, Expectations & Behavior…• The Pressure of Wall St. Expectations..• Business Models and Practices

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• Globalization; The 86% Opportunities; Outsourcing• The Turbulent Economy • Terrorist Threats; Wars; Anti US Feelings• The Internet..• Science and Technology• Demographics• Consumers Life Styles, Expectations & Behavior• The Pressure of Wall St. Expectations..• Business Models and Practices• Increased Commoditization; Innovations•

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• Globalization; The 86% Opportunities; Outsourcing• The Turbulent Economy • Terrorist Threats; Wars; Anti US Feelings• The Internet..• Science and Technology• Demographics• Consumers Life Styles, Expectations & Behavior• The Pressure of Wall St. Expectations..• Business Models and Practices• Innovations•

Uncertainty, change, complexity…Need to Reexamine our Mental Models

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Mental Models

• The 4 Minute Mile

• The Gorilla and the Ball

• The Ticketing Agent and the Counter

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•

• Inner City vs. Emerging Domestic Markets

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•

Source: Wind & Crook with Gunther; Making Sense: What You See is What You Think and What You Think is What You See; Wharton School Press 2004

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Challenge your Mental Models

It’s all about Mental Models – but which one?

• What if People really are an asset & not an expense?

Source: Wind, Crook and Gunther, Making Sense: What You See is What you Think, Wharton School Press, 2004

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• What if inventory really is a liability & not an asset?


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• What if technology is expensed & not capitalized?


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• What if technology is expensed & not capitalized?

• What if financial reporting is in real time & not quarterly & yearly?


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Neuroscience – New Developments

• We make sense of things, to a large degree, by what is already in our heads – “what we think is what we see, what we see is what we think”


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• Most of the optical input is discarded & replaced by our internal “mental models” (Walter Freeman University of California, Berkeley)


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• Most of the optical input is discarded & replaced by our internal “mental models” (Walter Freeman University of California, Berkeley)

• Mental models are “reality” and are developed over time through experience, education & training.


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The Process of Making Sense

4. Transform your world by acting

quickly and effectively upon the

new models

4. Transform your world by acting

quickly and effectively upon the

new models

1. Understand the power and limits of

mental models

1. Understand the power and limits of

mental models

2. Keep your models relevant

2. Keep your models relevant

3. Overcome inhibitors to change

by reshaping infrastructure and

the thinking of others

3. Overcome inhibitors to change

by reshaping infrastructure and

the thinking of others

Source: Wind & Crook with Gunther; Making Sense: What You See is What You Think and What You Think is What You See; Wharton School Press 2004

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II. Illlustrative Changes in the Nature of Marketing

1. Market Driven Vision, Value Proposition and Objectives

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The Key Premise of Market Driven Vision

Customers Needs & Wants

Products & Service Offerings

Required Infrastructure, Processes…

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Required Infrastructure, Processes…AND

• Expanding the Role of the Customer from Passive Audience to “Co- Producer”

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• Expanding the Focus of Marketing Strategy to Creating, Delivering and Sustaining Value

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• Expanding the Focus of Marketing Strategy to Creating, Delivering and Sustaining Value

• Expanding the Focus from Customers to all Stakeholders

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Marketing Driven Vision, Value Proposition and Objectives

Total Financial/Business Solution

Price per Pill/Discount

Pills

Total Integrated Wellness Solution

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Establish corporate objectives focused on share of wallet (and maximizing life time value of customers) vs. Market Share. Or Coca Cola’s share of all beverages vs. share of colas or Crest from toothpaste to “Happy Smiles for life”.



Pills


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Consider corporate objectives focused on share of wallet (and maximizing life time value of customers) vs. Market Share. Or Coca Cola’s share of all beverages vs. share of colas or Crest from toothpaste to “Happy Smiles for Life”.

Establish measures of desired customer outcomes such as: Attraction, Retention, Share of Wallet, Up Price Tolerance, Down Price Impact…



Pills


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Establish corporate objectives focused on share of wallet (and maximizing life time value of customers) vs. Market Share. Or Coca Cola’s share of all beverages vs. share of colas or Crest from toothpaste to “Happy Smiles for Life”.

Establish measures of desired customer outcomes such as: Attraction, Retention, Share of Wallet, Up Price Tolerance, Down Price Impact…

Focus on ROMI and Market Driven Dashboards



Pills


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2. Marketing Innovations…

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Illustrative Marketing Innovations…

• Segments of one…• Emotional based positioning• “Guerilla Marketing” / “Buzz Marketing” - Red Bull• New Business Models – RyanAir• Dynamic Pricing – Priceline.com• The rise of the auctions – e-Bay• Marketing built into the product experience – Seth Godin “Purple Cow” and “99 Cows”• Innovative distribution – Costco, Amazon, Home Depot…• Creating WOM - BuzzAgent• •

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Illustrative DASHBOARD of a High Tech Company

Shareholder Value

Financial Performance

Brand Equity

Corporate Reputation Brand Perception

Marketing Relationship

Employee Satisfaction

Customer Experience

Brand Promise

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3. Technology, Marketing and the Power of Convergence.

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Mastering the 5 C’s of Convergence Marketing

The Power of Convergence

Source: Wind, Mahajan & Gunther, Convergence Marketing, Financial Times Prentice Hall, 2001

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Converging on Customerization and Personalization: Make it mine



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Converging on Communities: Let me be a part of it



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Converging on Channels:I want to call, click and visit



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Converging onCompetitive Value:

Give me more for my money



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Converging onCompetitive Value:

Give me more for my money

Converging on Choice:Give me tools to make

better decisions



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3. Technology, Marketing and the Power of Convergence

4. Marketing Science – Data Mining, Experiments…

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Marketing Science – Data Mining, Experiments…

• Advances in Marketing Research and Modeling

• The proliferation of DATA Mining

• DSS & Corporate Dashboards

• Dynamic Resource Allocation

• Experiments, Adaptive Experimentation, and the creation of a “sense and respond” organization

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4. Marketing Science – Data Mining, Experiments…

5. The Focus on Customer Experience

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The Focus on Customer Experience

Products

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Products

Product and Service

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Products

Product and Service

Product and Service Solution

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Products

Product and Service

Product and Service Solution

Total interactive experience…

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1. Market Driven Vision, Value Proposition and Objectives Marketing Innovations…


3. Marketing Science – Data Mining, Experiments…4. The Focus on Customer Experience5. Marketing and the Impact of X-Functional Integration

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Marketing and the Impact of X-Functional Integration

There are no Marketing problems, only business problems involving Marketing, Operations, Finance, Human Resources,…

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Illustrative forces:

• ERP, CRM, Integrated Supply Chain…

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• New Product, Market and Business Development…

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• The importance of service quality and response time throughout the life of the “product”..

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• The importance of service quality and response time throughout the life of the “product”..

• Turning customer service into a profitable sales engine…

The Wharton X-Functional Integration Initiatives…

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The Wharton X-Functional Integration Initiatives

• CEO Panel…• Natural Points of Linkages• Creating New Interdisciplinary Offerings

– Marketing & STAT– Marketing & Operations– Marketing & Accounting–

• Projects• Curriculum Navigator• •

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2. Marketing Innovations…3. Technology, Marketing and the Power of

Convergence4. Marketing Science – Data Mining, Experiments…5. The Focus on Customer Experience6. Marketing and the Impact of X-Functional Integration7. From Passive Consumers and Stakeholders to

Advocates…

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From Passive Consumers and Stakeholders to Advocates…

• From Passive to Active Audiences…From CRM to CMR

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• In search of “partners” (in development…)

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• From customers satisfaction to customer reference-ability and advocacy

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• From customers satisfaction to customer reference-ability and advocacy

• From narrow focus on customers to stakeholders

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II. Illlustrative Changes in the Nature of Marketing1. Market Driven Vision, Value Proposition and

Objectives Marketing Innovations…2. Technology, Marketing and the Power of

Convergence3. Marketing Science – Data Mining, Experiments…4. The Focus on Customer Experience5. Marketing and the Impact of X-Functional Integration6. From Passive Consumers and Stakeholders to

Advocates…7. Marketing as the Engine of Growth

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Marketing as the Engine of Growth

Increasingly the Role of Marketing is Viewed as:

• Driving the creation of value through the development of relationship with customers and with those whose decisions influence and shape the environment in which we work (BP Amaco).

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• Growing profitability, building brand equity, creating customer centric culture (PNC)

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• Driving Growth (ARAMARK)

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• Creating and building leadership brands consumers love (P&G)

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• Creating and building leadership brands consumers love (P&G)

• Leading the continued transformation of the company (Samsung)

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III. Implications1. Market Driven Vision, Value

Proposition and Objectives2. Marketing Innovations…3. Technology, Marketing and

the Power of Convergence4. Marketing Science – Data

Mining, Experiments…5. The Focus on Customer

Experience6. Marketing and the Impact of

X-Functional Integration7. From Passive Consumers

and Stakeholders to Advocates…

8. Marketing as the Engine of Growth

• For Research

• For Teaching/Learning

• For Practice

Research Implications and Next Steps…

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III. Implications for Research1. Market Driven Vision, Value

Proposition and Objectives2. Marketing Innovations…3. Technology, Marketing and

the Power of Convergence4. Marketing Science – Data


Experience6. Marketing and the Impact of

X-Functional Integration7. From Passive Consumers


8. Marketing as the Engine of Growth

1. Objective2. Scope3. Application

Bridging the Silos of:• Secondary and Primary Research• Qualitative and Quantitative• Research and Modeling• Customers and Intermediaries• Individuals and the Unit of Analysis• Brand/Marketing and Top

Management• Marketing decisions and Business

decisions• Static measures & data and

Dynamic Reality•

Research Implications and Next Steps…

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Toward a New Learning Paradigm

Time andPlace


2. Marketing Innovations…3. Technology, Marketing and the

Power of Convergence4. Marketing Science – Data


Experience6. Marketing and the Impact of X-

Functional Integration7. From Passive Consumers and

Stakeholders to Advocates…8. Marketing as the Engine of

Growth

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The New Management Education ParadigmFacilitated by the Advances in Information Technology

Mode of Learning

EducationalContent

Time andPlace

Interactive Learning Involving

Real World Task

MostlyPassive

Standard-ized

Custom-ized

DiscreteTime and

Place

AnyTime and

Place

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V. Implications for Management Practice


2. Marketing Innovations…3. Technology, Marketing and the

Power of Convergence4. Marketing Science – Data


Experience6. Marketing and the Impact of X-

Functional Integration7. From Passive Consumers and

Stakeholders to Advocates…8. Marketing as the Engine of

Growth

• Are you focused on blockbuster brands?

• Do you have an integrated total marketing strategy?

• Do you have an integrated stakeholder strategy?

• Is your marketing investments necessary for long term growth?

• In hard times, do you cut your marketing budget?

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The Power of Integration…

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• Product Design • Packaging• ADV• DM• Web• Collateral• Sales force• Trade Show• PR• Sponsorship• POS• Cause Related

Marketing• WOM…• •

Toward an Integrated Marketing Strategy: Leveraging the Power of Synergy An Illustrative Pharmaceutical Example

• Bridging the Brand Silos

• Bridging Products, Service & Information

• •

• Physicians• Patients• Payers• Hospitals• Pharmacists• Influencials/O.L.• Media• •

Toward Integrated

Brand Promise

Toward Integrated Customer

Experience

Toward Integrated Stakeholder

Solutions

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V. Implications for Management Practice

Scenarios

[Market Driven] Organizational Architecture

[Market Driven] Vision

[Market Driven] Business Paradigm and Value Proposition

[Market Driven] Objectives

[Marketing Driven] Strategy

Implementation

• Market Driven Vision, Value Proposition and Objectives

• Marketing Innovations…• Technology, Marketing and

the Power of Convergence• Marketing Science – Data

Mining, Experiments…• The Focus on Customer

Experience• Marketing and the Impact of

X-Functional Integration• From Passive Consumers


• Marketing as the Engine of Growth

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Organizational Cultureand Value

Location andFacilities

Performance measures and incentives

Technology

ResourcesProcesses

Structure

•Vision• Business model and

value proposition• Objectives• Strategies

The OrganizationalStakeholders:

CustomersEmployees

ShareholdersPartnersSuppliers

CommunitiesGovernment

Other

People andCompetencies

Organizational Architecture

• The Emergence of the CMO

• The decline of the marketing function and the emergence of a Marketing Driven Organization

• The Emergence of Marketing Networks

• The Emergence of Outsourcing

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VI. Personal Implications and Next Steps

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And Framing the Next Steps in the Context of MSI’s Priorities

• Return on Marketing

• Branding

• Growth, Innovation, and New Products

• Understanding Customers

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1. Challenge your Mental Models

Next Steps: My Recommendations

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2. Search for Balance of the old & the new…the quantitative and the qualitative


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3. Focus on Metrics


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3. Focus on Metrics

4. Focus on Integration and on Bridging the Silos


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3. Focus on Metrics


5. Experiment, Experiment, Experiment


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3. Focus on Metrics


5. Experiment, Experiment, Experiment

6. Develop the Needed New Capabilities


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1. Challenge your Mental Models2. Search for Balance of the old & the

new…the quantitative and the qualitative3. Focus on Metrics4. Focus on Integration and on Bridging the

Silos5. Experiment, Experiment, Experiment6. Develop the Needed New Capabilities7. Have Passion, Energize and Have Fun


1 the changing nature of marketing: implications for research, teaching and practice yoram (jerry)...

Documents

business models

changing nature of marketing

expectations behaviori

wind crook

mental modelsits

wharton fellows program

marketing advancesnew

wharton school press