marketing building a customer-driven business © professor colin egan, 2012 north arctic federal...

Marketing Building a Customer-Driven Business professor colin egan, 2012 North Arctic Federal University

Marketing Session Introduction professor colin egan, 2012 Slide 2

Royal Philips International Philips Marketing Academy IBM IBM Marketing University BP & Castrol BP Sales & Marketing Academy YKK Marketing Excellence Programme Coca-Cola Coca-Cola Chair in Marketing, IEDC Bled School of Management, Slovenia Marketing Theory & Practice: Corporate Experience professor colin egan, 2012 Slide 3

University of Bradford Management Centre Research, MBA & Executive Education University of Warwick: Warwick Business School Research, MBA & Executive Education Leicester Business School: De Montfort University Professor of Strategic Management; Director of Research, Department of Corporate Strategy; Advisor to Senate on New University Strategy Universities of: Strathclyde; Lancaster; Aston; St. Andrews External Examiner Marketing Theory & Practice: UK Higher Education Experience professor colin egan, 2012 Slide 4

The Central Principles of Marketing professor colin egan, 2012 Slide 5 Marketing

Delivered Stakeholder Value Strategic Clarity Organizational Design Operational Excellence Marketing A Themed Approach professor colin egan, 2012 Slide 6

A Tall Order: Defining Marketing A number of processes designed to analyze, anticipate and create customer needs & preferences. To create a compelling value proposition to meet these needs & preferences fully and better than rivals. To capture the imagination of customers and to secure their loyalty. To organize all the firms assets and resources to maximize the customer experience and the companys profitability along with that of selected business partners. professor colin egan, 2012 Slide 7

Customer Value Environment Sensitivity Market Segmentation Strategic Marketing Mix Differential Advantage The Central Principles of Marketing Management professor colin egan, 2012 Slide 8

Customer Value Economic Value Psychological Value Service Value Experiential Value The Many Dimensions of Customer Value professor colin egan, 2012 Slide 9

Economic (EVC) Customisation Product functions Product durability Product reliability Delivery reliability Delivery time Pre-sale service Post-sale service Price Financial terms Etc. Relationship image Previous relationship Trust Helpfulness Contactability Help in crises Order responsiveness Advice & information Complaints processing Harmonious dealings Etc. Psychological (PVC) Driving Customer Satisfaction: Delivering Value professor colin egan, 2012 Slide 10

Delivering Value in B2B Markets Customisation Forward linkages Lending equipment Lending staff Joint R&D Dual selling Help in crises Free trials After-sales service Pre-sales advice Free installation Returns service Electronic linkages Keep in touch service JIT delivery Any order size ok Consultancy Countertrade Satisfaction studies Etc. professor colin egan, 2012 Slide 11

Market Environments Opportunities Threats, KSFs Strategy Objectives, Markets, Differential Advantage Capabilities Processes, Systems, Skills, Culture, etc. Process Leadership Functions & Finance Networks Dimensions of Strategic Marketing Management professor colin egan, 2012 Slide 13

1 Analyse Environment 3 Deduce Key Success Factors 2 Identify Threats & Opportunities 4 Analyse Organization 6 Identify Distinctive Capabilities 5 Identify Strengths & Weaknesses 7 Fit Leads to Superior Competitiveness & Performance in Marketing Strategy A Logical TOWS (SWOT) Analysis Sequence for Marketing Success professor colin egan, 2012 Slide 14

Economic Cultural Physical Social Political Demographic Technological Legal Customers The FirmShareholders Publics Suppliers Competitors Regulators Intermediaries Marketing Strategy Internal & Immediate Environment (Micro) External Environment (Macro) Scanning & Sensing: Analysing The Marketing Environment professor colin egan, 2012 Slide 15

General Environment Changes & Organizational Implications I Service expectations Tailored offerings Micro markets Customisation Fashionisation Speed to market Consolidating competition Acquisitions, alliances, networks & partnerships Acquisitions, alliances, networks & partnerships Affluence & quality expectations Affluence & quality expectations Quality offerings ChangesImplications professor colin egan, 2012 Slide 16

Commoditisation Innovation & branding Erosion of brands Partnerships & strong branding Partnerships & strong branding New channels Selective adoption Technology First and/or fast Intensive competition Differential advantage ChangesImplications General Environment Changes & Organizational Implications II professor colin egan, 2012 Slide 17

Green concern Conform / exploit Demography Selective targeting Globalisation Standardisation with adaptation Standardisation with adaptation Economic Strategic fit Legislation Conform / exploit Changes Implications General Environment Changes & Organizational Implications III professor colin egan, 2012 Slide 18

The Market Segmentation Process Segment Markets Group markets with similar needs and separate them from others with different needs & preferences Select Target Markets Select the most attractive markets given key success factors, organizational capabilities, risk assessment and long term profit potential Standardise Or Adapt Decide how many markets to target and with how much marketing strategy standardisation (for efficiency) and adaptation (for effectiveness) Establish Competitive Positioning Ensure that customers in each market perceive that we can satisfy their needs better than rival offerings wherehow professor colin egan, 2012 Slide 20

Categories & Significance of Market Segmentation Criteria Benefits Sought Significance Guides the suppliers Value Proposition design - Needs & Preferences - Supplier selection criteria - Geography - Demographics - etc. Informs the supplier about who the customer is Behavioural Significance Guides the suppliers Marketing Plan design - Psychographics - Buy Class - DMU - Channels - Loyalty - Usage Macro BackgroundSignificance Benefits Sought professor colin egan, 2012 Slide 21

Market Segmentation for Organizational Markets Demographic Geography Country Region City Climate Topography Industry Retailing Financial services Manufacturing Etc. Customer Size Large, Medium, Small Key Account Profile Strategic, A+, B+, served through distributors etc. Behavioural Usage Rates Adopter Groups Distribution versus Direct Decision Making Unit (DMU) Influences Loyalty Status Psychographic Lifestyle characteristics of employees Health & Safety Diversity & Inclusion Demanding versus Tolerant BENEFITS SOUGHT professor colin egan, 2012 Slide 22

Differential Advantage Definition: Being superior to rivals and/or unique at supplying the mixture of benefits valued by customers in a specific market segment Can be the product, the availability, the price, the service, the brand associations, strong relationships etc. Can be one, but preferably many, competitive factors Should be sustainable Should be improved on an ongoing basis Should be profitable in the short and/or long term, i.e., differentiation investments (technology, brand etc.) should be covered by better market positioning and/or stronger prices to reflect the enhanced customer value delivered professor colin egan, 2012 Slide 24

Differential Advantage Factors Features & Performance Intensity (Advertising / Sales Force) Superior Technology Content Technology Support Personnel Rules & Procedures Human Resource Competencies Knowledge Advantage Information Processes Inputs Quality Service Support Power! professor colin egan, 2012 Slide 25

Definition: The mixture of controllable variables that the organization blends to provide customer benefits and differential advantage in the target market segment Combines: Value Proposition Communications (marcomms) Distribution Service Product Price Marcomms Selling Advertising Sales Promo. Internet Etc. Quality Features Options Packaging Etc. After Sales Installation Training Supports Etc. Channels Locations Logistics Internet Etc. Cost/Price Value Terms Internet Etc. Segment The Strategic Marketing Mix professor colin egan, 2012 Slide 27

Organizational Analysis professor colin egan, 2012 Slide 28 Marketing

1 Analyse Environment 3 Deduce Key Success Factors 2 Identify Threats & Opportunities 4 Analyse Organization 6 Identify Distinctive Capabilities 5 Identify Strengths & Weaknesses 7 Fit Leads to Superior Competitiveness & Performance in Marketing Strategy The Logical TOWS (SWOT) Analysis Sequence for Marketing Success professor colin egan, 2012 Slide 29

Organizational Capability Analysis Strategic Capabilities - Awareness of KSFs - Distinctive capabilities - Effective objectives - Segment selection - Differential advantages - Innovation - Marketing assets - Generic strategy - Balanced portfolio professor colin egan, 2012 Slide 30 Organization for Marketing - Marketing orientation - Functional integration - Adequate budgets - Marketing info, planning & control systems - R&D, production & distribution processes - Marketing skills levels & training

Organizational Distinctive Capability Factors Market share Customer share Customer loyalty Market knowledge Image Innovation Flexibility Technology Internet savvy Networks Financial strength Costs Prices Quality Services Customisation Channels Product range Etc. professor colin egan, 2012 Slide 31

Customer-Based Marketing Assets (Liabilities) Superior Image Tied-in Clients Thought Leadership Quality Fit Satisfied Clients Superior Products Superior Price / Value Superior Service Customer Based Assets professor colin egan, 2012 Slide 32

Marketing Culture Planning & Systems Managerial Knowledge Employee Knowledge Deep Pockets Advanced Technology Operational Excellence Flexible Operations Organization Based Assets Organization-Based Marketing Assets (Liabilities) professor colin egan, 2012 Slide 33

The TOWS (SWOT) Summary Threats Market KSFs Company DCs Weaknesses Opportunities Strengths professor colin egan, 2012 Slide 34

Organization & Implementation of Marketing Strategies professor colin egan, 2012 Slide 35 Marketing

Evaluating a Marketing Strategy Validity: Reliability of information and assumptions Distinctive: Differentiated from competition, industry breakout Suitability: Given corporate strategy, objectives, etc. Feasibility: Given resources/competences Acceptability: Given company culture, ethics and values Consistency: Are the marketing elements balanced? Vulnerability: Given risks and contingency plans Flexibility: Can we adapt fast enough? Rewardability: Payoff versus risk professor colin egan, 2012 Slide 36

And Finally Explaining Superior Marketing Performance Understanding buyer behaviour Employee Engagement Market environment sensitivity Striving for competitive advantage A long term perspective Asset-based marketing philosophy Innovation Balanced portfolio Marketing Excellence professor colin egan, 2012 Slide 37

The Role of Employee Engagement in Organizational Success (McKinsey) Strategy Style (Leadership) Staff Skills (Competencies) Structure Systems Shared Values professor colin egan, 2012 Slide 38

Desired Direction Resultant Force 1 Shared Values: The Vector Metaphor professor colin egan, 2012 Slide 39

Desired Direction Resultant Force Desired Direction Resultant Force 1 2 professor colin egan, 2012 Slide 40 Shared Values: The Vector Metaphor

North Arctic Federal University Workshop Activities professor colin egan, 2012 Slide 41 Marketing

ObjectiveTo evaluate NAFU Strengths / Weaknesses / Distinctive Capabilities from a Customer Assets & Liabilities Perspective. TeamMixed teams. MediaFlip Chart. PreparationUsing the template which follows, note the assets from the next slide, discarding those which you think lack direct relevance and adding those which you believe are more pertinent to NAFU. Feel free to add additional sector-specific categories. ExecutionFor each item rate NAFU performance on an eleven point scale (-5 thru 0 to +5). Negatives are liabilities (weaknesses); positives are assets (strengths). The magnitude of the score reflects strengths, distinctive capabilities, weaknesses, big weaknesses. List the high scoring distinctive capabilities and big weaknesses. FeedbackNAFU customer-based capabilities insights and performance improvement actions. Workshop Activity I: NAFU Customer-based Assets & Liabilities Analysis professor colin egan, 2012 Slide 42

NAFU Customer-Based Marketing Assets (Liabilities) Superior Image Tied-in Clients Thought Leadership Quality Fit Satisfied Clients Superior Products Superior Price / Value Superior Service Customer Based Assets professor colin egan, 2012 Slide 43

NAFU Assets (Liabilities) Analysis: Customer-based Strengths/Weaknesses/DCs Use 11 point Scale -5 (W) thru 0 (N) to +5 (S) NAFU Improvement Proposals Customer Based Superior Image Thought Leadership Quality Fit Superior Products Superior Service Superior Price / Value Satisfied Clients Tied-in Clients Etc professor colin egan, 2012 Slide 44

ObjectiveTo evaluate NAFUs Strengths / Weaknesses / Distinctive Capabilities from an Organization Assets & Liabilities Perspective. TeamMixed teams. MediaFlip Chart. PreparationUsing the template which follows, note the assets from the next slide, discarding those which you think lack direct relevance and adding those which you believe are more pertinent to NAFU. Feel free to add additional sector-specific categories. ExecutionFor each item rate NAFUs performance on an eleven point scale (-5 thru 0 to +5). Negatives are liabilities (weaknesses); positives are assets (strengths). The magnitude of the score reflects strengths, distinctive capabilities, weaknesses, big weaknesses. List the high scoring distinctive capabilities and big weaknesses. FeedbackNAFU Organization-based capabilities insights and performance improvement actions. Workshop Activity II: NAFU Organization-based Assets & Liabilities Analysis professor colin egan, 2012 Slide 45

Marketing Culture Planning & Systems Managerial Knowledge Employee Knowledge Deep Pockets Advanced Technology Operational Excellence Flexible Operations Organization Based Assets NAFU Organization-Based Marketing Assets (Liabilities) professor colin egan, 2012 Slide 46

NAFU Assets Analysis: Organization-based Strengths/Weaknesses/DCs Use 11 point Scale -5 (W) thru 0 (N) to +5 (S) NAFU Improvement Proposals Organization- Based Marketing Culture Managerial Knowledge Employee Knowledge Advanced Technology Flexible Operations Operational Excellence Deep Pockets Planning & Systems Etc. professor colin egan, 2012 Slide 47

Workshop Activity III: Competitive Positioning / Marketing Actions Analysis The final activity leads to the creation of a customer-based marketing mix Prepare a differential advantage profile (Value Proposition/Communications Gaps) for one key segment List Specific Marketing Mix Actions arising from this analysis Use the following guidelines and framework for guiding your discussion and preparing your presentation professor colin egan, 2012 Slide 48

Differential Advantage/ Marketing Actions Analysis This process identifies Value Proposition Gaps and Communications Gaps in a business units marketing programme Start by identifying a target market segment and evaluate its needs in terms of a ranked list of benefits. Identify a best-in-class rival who is currently or potentially competing in this segment Undertake an objective evaluation of how the business unit thinks it performs in meeting these benefits versus the named best-in-class rival. Assume an external independent analysis The aim of the process is to benchmark against a best-in-class rival and all other competitors in the segment from: (i) A Value Proposition perspective; (ii) A Customer Perception perspective. professor colin egan, 2012 Slide 49

This exercise has six stages Stage 1 Name a clearly defined target market segment Stage 2 Name a best-in-class rival who competes in this segment Stage 3 Identify eight key benefits sought by customers in the target market segment. Rank them in order of stated customer priority professor colin egan, 2012 Slide 50

Exercise stages cont Stage 4 Rate how well your business performs in meeting these customer benefits As a benchmark, use the best-in-class rival Use a seven point measurement scale ranging from 3 through zero to +3 A score of zero states that you are no better or worse than the named rival on each customer benefit A negative score suggests you are worse, while a positive score indicates superior performance professor colin egan, 2012 Slide 51

Exercise stages cont Stage 4 (cont.) Use the full seven point scale and measure for each customer benefit identified in Stage 3 The magnitude of a positive score is a measure of the sustainability of the advantage The magnitude of a negative score shows how difficult and/or costly it would be to close the gap with the rival Assume that the exercise would be undertaken every six months professor colin egan, 2012 Slide 52

Exercise stages cont Stage 5 Rate how well customers perceive that your business performs in meeting the benefits they seek Use the same seven point scale and benchmark against the same rival A score of zero means that you are perceived as no better or worse than your rivals in meeting the customer benefits sought A negative score indicates that you are perceived to be worse in meeting the customer benefits sought A positive score indicates that you are perceived to be superior in meeting the customer benefits sought Measure for each customer benefit identified in Stage 3 professor colin egan, 2012 Slide 53

Exercise stages cont Stage 6 Evaluate the gaps between the companys objective evaluation of its own performance and the perception of its customers in how well their sought benefits are met, in both cases versus the same best-in-class rival The output of the exercise will be in the form of a matrix as shown in the next slide professor colin egan, 2012 Slide 54

Exercise Output: Competitive Positioning Matrix professor colin egan, 2012 Slide 55

Competitive Positioning Value Proposition & Integrated Marcomms Customer Needs & Preferences Cost of Ownership Convenience & Lifestyle MARKETING MIX Quality Features Options Style Brand Name Packaging Sizes Services Warranties Returns Internet Sticker Price Economic Value Psychological Value Discounts Allowances Payment Types Payment Period Credit Terms Internet Channels Intensity Locations Logistics Mode Internet Service Pre-sales Installation After Sales Tech Support Training Consultancy Internet Communications (passive/interactive) Advertising Personal Selling Sales Promotion Sponsorship Publicity Public Relations Exhibitions Direct Mail W.O.M. Internet Value PropositionMarcomms professor colin egan, 2012 Slide 56

Communications Objectives: Low scores in Column 3 Create Awareness Inform Persuade Demonstrate Educate Generate Publicity W.O.M Editorial Reference Endorsement Testimonial professor colin egan, 2012 Slide 57

Communications Objectives: High Scores in Column 3 Remind Reassure Re-inforce Relationship Management: Brand Communications in Consumer Markets Key Account Management in Organizational Markets Effective Combination in Business-to-Business-to- Consumer Markets Similar to New Market Segment Communications to Encourage Brand Switching professor colin egan, 2012 Slide 58

marketing building a customer-driven business © professor colin egan, 2012 north arctic federal...

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