Peter Krieg, Copernicus Marketing

This report is solely for the use of client personnel No part of it may be circulated quoted or reproduced for distribution outside the client organization without prior written approval from Copernicus Marketing Consulting and Research Copyright 2010 COPERNICUS all rights reserved

Digital Age Sales amp Marketing Strategy

October 30 2010

Peter Krieg President and CEOCopernicus Marketing Consulting amp Research

The Obligatory Statistics

The change has been rapid and the numbers are staggeringhellip

In 1994 there were about 5000 websites Today there are at least 200 million

There are approximately 19 billion internet users 15 years old and older worldwide

Almost half of the US on-line population uses social media on a weekly basis

In fact social media has overtaken porn as the 1 activity on the web

Facebook now has 500 million membershelliphalf of which log on every day

Amazon sold $1 billion in goods through mobile phones from June 2009-June 2010

Over 450 million episodes of TV shows have been downloaded from iTunes

690 million Valentinersquos Day gifts were given this yearhellipon FarmVille

Are You Ready for the ldquoDigitalrdquo World

Get Ready for the Digital World

By better understandingmdashand leveraging to your advantagemdashconsumersrsquo consumption of media

By taking some relatively simple steps when developing your strategyhellipseven to be exact

A Better Understanding

bullbullbullbullbull

bullbullbullbull

bullbullbull

bullbullbullbull

Video Consumer Mapping Study

ComputerScreen

WebEmailIMSoftwareComputer Video

MobileScreen

TalkTextWeb

Mobile Other(eg camera)Mobile Video

Message

EnvironmentalGPS NavigationIn-Cinema Movie

All OtherScreens

TVScreenLive TV

DVDVCRDVR PlaybackGame Console

The Council for Research ExcellenceThe Nielsen Company

4 Screen Categorization

Role of Media in Consumer Purchase JourneyPresented to ARF Shopper Council 10262010

lsquoPre‐tailingrsquo Retailing lsquoPost‐tailingrsquo

Research

Purchase

Post Purchase

Need State

After‐purchase Behaviors

Discussed purchase with friendsfamily 36

Discussed retail experience with friendsfamily 13

Post‐Purchase

Good INFORMATIONsource online

Retailer websites 42Customer reviews 36Brand websites 35Shopping websites 34Search engines 30

Purchase

Pre‐determined FactorsHow much to spend 72Which brand to buy 45Where to buy 35ModelSpecs 33Products 32

Pre‐Purchase

Source Mobilization

Internet 68WOM 43Advice fr friendsfamily 32Something seen while shopping 28Ads amp sponsorship 28

Research amp Shopping Around

Source Shopper Journeys USA 2010 Home Electronics n=1072

Initial Touchpoints Ads 32Something seen while shopping 23WOM 22Something readseen 22Speaking to friendsfamily 19

Consumer Purchase Path in Home Electronics

Good INSPIRATIONsource online

Customer reviews 28 Online shopping sites 23 Price comparison sites 23Retailer websites 23Brand websites 17

Factors on Final Decision

Price 86Avail of productbrand 72Brands 62Technical specs 61StyleDesignColor 57

Digital is Core to the JourneyMobile Is Especially Influential

So What Do I Do

1 Better Targeting to Find New Customers

2 Better Info on the Targetrsquos Media Habits

3 Activate ldquoBrand Advocatesrdquo within Current Customers

4 Understanding How Your Target Tries to Find You

5 Ongoing ldquoConversationsrdquo with Customers

6 Deeper Understanding of ConsumerCustomer Needs Wants Problems

7 Clear-eyed Assessment of Your Brandrsquos Competitive Strengths amp Weaknesses

How to Make Better Decisions

Your Basic ldquoStrategy Studyrdquo

An ample but not overly-large sample

Consumers 500-800B2B 300-500

ndash Conducted on-line

ndash Use one of the many consumer panels

ndash B2B may require telephone recruit

ndash A 25 minute questionnaire

ldquoThe most important strategic decision is targetingmdashnail this and everything else falls into placerdquo

Phil Kotler Northwestern University

ldquoIf yoursquore on the wrong train every stop is the wrong stoprdquo

David VerklinCEO Canoe Ventures LLC

59 of senior executives in large companies have done a ldquosegmentation studyrdquo in the past 2 years

Only 14 of those senior execs involved in a segmentation study derived any real value

The Segmentation approaches that are commonly used are one-dimensional and flawed

ACTIONABILITY CRITERIA

Common Approaches

Provides Provocative Insights into

Segments are Differentially

Reachable in terms of Media and Channel

Strategies

Identifies a Target Segment that is Clearly the Most

Profitable for Your Brand

Needs-Based Segmentation YES NO RARELY

Demographic-Based Segmentation SOMETIMES YES RARELYUsageBehavior-Based Segmentation (eg Heavy Users) RARELY NO RARELY

Primary Research among 200-400 Decision-Makers

Purchase Volume

Channel(s)

Decision-Process

Product NeedsWants

Price Sensitivity

CRM-Related Needs

Perceptions of Client amp Competitors

Probability of Buying Buying More from Client

Database Knowledge on each Customer and Prospect

DampB list dataAccounttransaction data

Analyze

Which characteristics predicts openness to your brand

Which predict profitability for you

Which predict purchase of several of your products

Create Segments from these Key ldquoPredictorrdquo Variables

Recent Findings

How people shop has recently emerged as a key segmentation dimension

That is how you shop is often a predictor of what brandsproducts you will want

This kind of behavior and segmentation favors the newer ldquochallengerrdquo brands

The ldquoinvolvedrdquo buyer doesnrsquot revert to the bigsafe brand (nor necessarily the cheapest)

Survey of 400 factory locations interviewed decision-makers for lubricants 30 minute telephone interviewndash We appended DampB data on company and the location

Created and tested 200+ variables Found two variables that worked

Case History Industrial Lubricants Company

Number of Employees at Location(surrogate for oil volume)

HIGH LOW

Sales Growth for Past 2

Years(surrogate for

Price Insensitivity)

HIGHHigh Opennessbull Buys high margin oilbull Buys services too

High Opennessbull Buys high margin oilbull Will buy services

Average Opennessbull Step down offering amp

servicesbull Low price oil program

Low Opennessbull Low valuebull Walk away if necessary

Big Location(High Volume)

Small Location(Low Volume)

High Sales Growth

(Low Price Sensitivity)

Low Sales Growth

(High Price Sensitivity)

bull Key growth target

2 Better Info on the Targetrsquos Media Habits and ldquoReceptivityrdquo

bull Algorithms to identify segments inMRI Simmons ComScore Plan etc

bull Algorithms to classify each of your customers using transaction data

Customer Databases

Algorithms to identify high density zipcodescensus blocks to direct agency marketing and sales efforts

Neighborhoods

bull Easy-to-use classification tools (and ldquoscriptsrdquo) for sales people to use

Sales Prospecting

bull Algorithms to identify segments in DampB Experian etc

SalesMarketing Databases

With just a little forethought and the right ldquolinkingrdquo questions your targets can be found accurately in actionable databases

Actionability

Telecommunications Company

ldquoMust be DampB variables with at most 3 questions that need to be answered And anybody at account could answer reliablyrdquo

Financial Services ldquoMust be totally based on DampB datardquo

Industrial GasesldquoWe will retain a third party company to call every account and prospect and ask them 10 questionsrdquo

Construction Products Supplier

ldquoOur salesmen will be used to classify accountsprospectsrdquo

Brand advocates are a small but highly engaged and influential group of customers

Typically representing 5-10 of the customer baseTypically heavy users ndash but not necessarily much heavier users than some othersEmotionally attached to your brand Consider it theirs

They have always been valuable because they are influential and can be influenced but are much more so today because of their reach the speed with which they can influence and the tools at their disposal to influence

A few years ago Today

A Restaurant Chain Example

VisitsMonth

IntroductionsMonth

Value of Advocates

Primary Target -Includes 72 of

Advocates

Segments

Awareness

Consideration

Loyalty

Advocacy

New GoalsIntensifyIntegrateBond

Consumers still need to go through the same mental ldquocheckpointsrdquo to become buyers

It is hard to buy without being aware

We have ldquoextendedrdquo the funnel to capture advocacy

With new communications goals

All with the understanding that the tools used to influence movement through the funnel have obviously changed

It is not all ldquoeyeballs to awarenessrdquo anymore

Where do they searchldquoTraditionalrdquo search enginesYouTubeSocial MediaAre they on their computer or phone

What keywords do they use when searching the category and your brandIt is not the same for all segments in the market

What sources of information do they like to use when learning about your brandYour websiteSocial mediaBlogsMessage boardsExpert reviews

Primary Target

Secondary Target

Non-Target

Uninvolved

Distribution of Segments

of Searches for ldquoTire Sizesrdquo

A tire manufacturer has optimized their website for key search terms and drives significant efficiencies with paid search strategies

High Technology Example

Neither create nor consume social media

Read blogs watch

videos listen to

podcasts

Use social networks share amp manage

photos amp videos

Take part in online

discussion forums

Write own blogs or

web pages

InactivesSpectators

ConnectorsCommentators

Authors

Low levels of digital social

behavior

High levels of digital social

behavior

What do you do on-line on your mobile device etc

The digital behavioral composition of your target will guide what digital tools website functionality etc your agencies need to provide

34httpwwwfacebookcomcocacolav=app_161193133389

35httptwittercomtwelpforces_kwcid=TC|9005|twelpforce||S|b|4447510185

36httpwwwcommunitieshpcomonline

ldquoMarketing is solving peoplersquos problemshellip at a profitrdquondash Somebody at Procter amp Gamble

6 Insight from Dynamic Understanding of Customersrsquo Needs and Problems

Who is in the Community

Ask (target) customers to rate your brand and competitors

Identify those attributesbenefits which

ndash Are motivating

ndash Are pre-emptible no competition

ndash Aremdashor could bemdashcredible for your brand

7 Clear-eyed Assessment of Your Brandrsquos Strengths

Seize your USPhellip or go to the White Space to find one

Perceptions of Your BrandCompany versus Competitor

The Two Brands are Perceived Similarlythe same

Your Brand Superior

Excellent Could not Be

Better

Acceptable But Could Be

Better UnacceptableYour Brand

Inferior

Motivating Power of Attribute Benefit

High Key Positioning Opportunity

Price of EntrymdashMaintain

Possible Opportunity

Major Opportunity

Serious Weaknessmdash

Try to Fix

Mod Secondary Opportunity

Secondary Price of Entry

Secondary Opportunity

Secondary Weakness

LowPotential

OpportunitymdashIncrease

Importance

Cut Costs No Action No Action No Action

BrandStrategyMatrixtrade

Potential Value of Strategy Ranked from highest to lowest

From textdslreportcom

Re fios vs xfinity

Note that FiOS sustains the rated Internet speed Comcast PowerBoost gives you the high speed for a short period then drops down to a fraction of that

My colleague did sustained throughput tests on Comcast amp FiOS when he switched over Amazing difference in the graphs FiOS was ruler straight slightly above his committed speed Comcast looked like a cheap roller-coaster - it climbed to a peak then just as quickly dived down to a low speed and maintained that

The web has dramatically increased the need for transparency Overstate your capabilities at your own peril

These words are truer today than they were in 2001

Do Your Homeworkhellip

7 Clear-eye Assessment of Your Brandrsquos Strengths Weaknesses and Opportunities

hellipAnd Take Advantage of the Digital

Thank You

CopernicusMarketing Consulting

and Research

Norwalk CT (203) 8312370Peter Krieg President amp CEO

copernicusmarketingcom

Slide Number 1

Slide Number 9

Hierarchy of Shoppersrsquo New Behaviors

From Paths to Journeys The New Shopper Paradigm

Slide Number 13

So What Do I Do

Slide Number 39

Slide Number 48