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  

jim@dobe"ermarkeBng.com 

Jim.holbrook@emak.com 

jimholbrook