Upload
damien-barkell
View
214
Download
1
Tags:
Embed Size (px)
Citation preview
© 2007-2009 IMD International. Not to be used or reproduced without permission.
Strategic Marketing in ActionWhat tough markets demand from Marketers
Professor Kamran Kashani
Zurich, March 31 2010
GfM Marketing 2Professor Kamran Kashani
What does business worry about today?
Not marketing…..but markets!
Globalizing markets: Shifting buying power
Hyper-competitive markets: Smart new players
Commoditized markets: Disappearing differentiation
Buyers’ markets: Choice, negotiating power, less loyal
Tough markets: Hard to make money!
GfM Marketing 3Professor Kamran Kashani
Challenges
The challenges of surviving and prospering in today’s markets are many
Reinvent the Customer Value Proposition Identify and exploit hidden growth opportunities Avoid the ‘commoditization hell’ Innovate beyond the core product or service– the business model Create customer value, extract value…and make money!
GfM Marketing 4Professor Kamran Kashani
How prepared is traditional marketing in dealing with today’s challenges?
Reinvent the Customer Value Proposition Identify and exploit hidden growth opportunities Avoid the ‘commoditization hell’ Innovate beyond the core product or service– the business model Create customer value, extract value…and make money!
How adequate are the old marketing skills and the new tools:
the 4-P’s, marketing research, advertising, promotions, PR, CRM, loyalty programs, key account selling…?
Challenges
GfM Marketing 5Professor Kamran Kashani
What Marketing could be: Two illustrations
Case studies in winning in tough markets
GfM Marketing 6Professor Kamran Kashani
-700
-600
-500
-400
-300
-200
-100
0
100
200
300
1995 1996 1997 1998 1999 2000 2001
2350
2400
2450
2500
2550
2600
2650
2700
2750
2800
1995 1996 1997 1998 1999 2000 2001
SALES
NET INCOME($million)
How would you assess this business performance?
GfM Marketing 7Professor Kamran Kashani
Dow Corning : Global leader in silicone products (40% market share)
Silicone applications : Aerospace: Automobiles: Electronics: Construction: Healthcare: Personal care: Textiles
25000 customers in 80+ countries
Dow Corning : Background
GfM Marketing 8Professor Kamran Kashani
R+D : 6% of sales: innovation leader in silicones: new applications
Innovative products : premium prices Value added services :customized applications
: co-development of new products
Corporate vision :
“We will advance the chemistry and related sciences… to contribute to our customers’ success and differentiate Dow Corning from our competitors.”
Dow Corning’s 60-year old strategy: Product Leadership
GfM Marketing 9Professor Kamran Kashani
Mass market CommoditiesBuyers
SpecialtiesBuyers
Demand
Value
Demand
Value
Market Polarization
Dow Corning: Customer shifts challenge market leadership
GfM Marketing 10Professor Kamran Kashani
Mass market CommoditiesBuyers
SpecialtiesBuyers
Demand
Value
Demand
Value
Market Polarization
DC
!
Dow Corning: Customer shifts challenge market leadership
DC
GfM Marketing 11Professor Kamran Kashani
Confronting market change: The denial phase
Scott Fuson : Chief Marketing Officer
“We had the same business model for 60 years. We were trying to get premium prices for our products because we felt we had premium service and we were a premium company. We said to our customers: “Hold on, you can’t compare our silicones to these cheap imitators. They don’t offer comparable new product development assistance, quality assurance, commitment to safety and reliable deliveries.”
GfM Marketing 12Professor Kamran Kashani
Realization: The past success blinded the management from seeing the future.
Chief Marketing Officer:
“We were performing at sub-standard levels. All of us felt that our jobs were at stake. People knew that if [things] didn’t change, then Dow Corning as it existed was not going to continue… the mood was pretty grim.”
“We reached a tipping point… We fundamentally changed the company strategy as there was nowhere else to turn to.”
Confronting market change : The “Tipping Point” (2001)
GfM Marketing 13Professor Kamran Kashani
Top management embanks on a major strategic change process Appoints task force: Marketing and other functions “Provocateurs” to stir & challenge Mandate: Come up with “Big & Hairy” ideas
Self-Audit : Review of 5 years “Voice of Customer” data
Confronting market change: A fresh start
GfM Marketing 14Professor Kamran Kashani
Discovering new customer segments with different needs
Customer needs based segmentation
Solutions customers : innovative solutions: proven solutions: cost-effective solution
Price-seekers : large volume, commodity buyers: have experience in-house services: don’t need services
Chief Marketing Officer:
“There was a whole sector [of customers] across many diverse industries that we were overserving and not getting the growth from… They viewed our products as commodities when making purchase decisions, and didn’t want to pay for all the additional services that we bundle with our product sales.”
GfM Marketing 15Professor Kamran Kashani
Task Force proposals : A web-based business model to lower “cost-to-serve” – never tried before!
: Offer price seekers a “no frills” value proposition
: “No frills” – product only (no services) at low market prices
: Take out all low/no value adding activities
: Develop a new brand – Xiameter: Rejuvenate DC’s core business
through even more innovation and paid-for new services
New strategy: A game changer in the chemicals industry
GfM Marketing 16Professor Kamran Kashani
Task Force proposals : A web-based business model to lower “cost-to-serve” – never tried before!
: Offer price seekers a “no frills” value proposition
: “No frills” – product only (no services) at low market prices
: Take out all low/no value adding activities
: Develop a new brand – Xiameter: Rejuvenate DC’s core business
through even more innovation and paid-for new services
Playing a different game to win: A “disruptive innovation”
DualBrandStrategy
New strategy: A game changer in the chemicals industry
GfM Marketing 17Professor Kamran Kashani
New strategy motto: “Meet customer needs, exactly”
Dow Corning
Product only
Cost-effective Solutions
Proven Solutions
Innovative Solutions
Price Seekers
Product only
Xiameter ®Brand
Product only
Dow Corning ®Brand
Materials + service packages
Dow Corning
Materials delivered in all sizes and quantities Extensive services and solutions Innovative, proven & cost-effective solutions Technology and R&D Personalized customer service Flexible ship dates 7,500 products
Web-enabled business model Large volume orders only No technical service Lead times: average 7-20 days Standard silicones Market-driven prices Dedicated Traders 350 products (initially)
GfM Marketing 19Professor Kamran Kashani
-700
-600
-500
-400
-300
-200
-100
0
100
200
300
1995 1996 1997 1998 1999 2000 2001
2350
2400
2450
2500
2550
2600
2650
2700
2750
2800
1995 1996 1997 1998 1999 2000 2001
SALES
NET INCOME($million)
Poor performance…
GfM Marketing 20Professor Kamran Kashani
2250
2650
3050
3450
3850
4250
4650
5050
5450
5850
2001 2002 2003 2004 2005 2006 2007 2008 2009
-100
0
100
200
300
400
500
600
700
800
2001 2002 2003 2004 2005 2006 2007 2008 2009
SALES
NET INCOME($million)
Xiameter: A success story… A contributor to Dow Corning’s turnaround
GfM Marketing 21Professor Kamran Kashani
Xiameter: A success story re-told by the media and customers
CMO Magazine : Xiameter responsible for Dow Corning’s “metamorphosis”
Marketing News : Xiameter has had a noticeable effect on morale among company’s many “whiz-bangscientists”
Harvard Business Review : Xiameter is a clear winner; it paid back original investment in just 3 months
Customer surveys : The system is convenient, the deliveries are on time and we are happy with the prices and product quality. We don’t need any service support and don’t want to waste time talking to sales reps that most other suppliers have.
We have become more competitive, increased our sales by more than 30%, saved time and have better control over our cash flow.
Quotes
GfM MarketingProfessor Kamran Kashani
1974Patent
acquired
Sales
1980RestaurantsTest Market
1982Office
Test Market
1986New company
established
1988Marketing takes the
lead
1990First club
1995Break-even
The Nespresso story: The marketing impact
2010
Average growth30% +
CHF2.8 billion
GfM MarketingProfessor Kamran Kashani
1974Patent
acquired
Sales
1980RestaurantsTest Market
1982Office
Test Market
1986New company
established
1988Marketing takes the
lead
1990First club
1995Break-even
The Nespresso story: The marketing impact
2010
Revised Strategy
→Re-position: Households
→Create Nespresso Club→24-hour service→New channel: direct pals→48-hour home delivery→Machine partnerships
→In-stone demos→No ads
Average growth30% +
CHF2.8 billion
Revised Strategy
→Re-position: Households→Exclusive Nespresso Club→24-hour service→New channel: direct sales→48-hour home delivery→Machine partnerships→In-store demos→No ads
GfM Marketing 24Professor Kamran Kashani
What do Xiameter and Nespresso success stories have in common?
Big radical strategic decisions were based on customer insights... …brought into focus primarily by marketers Key moves were not bound by marketing research
– Xiameter business idea never tested with consumers
– Early consumer tests of Nespresso concept were disappointing!
Marketers were comfortable with the risk factor in innovation… …and were in the lead, had their voices heard!
GfM Marketing 25Professor Kamran Kashani
To fulfill its strategic role marketing has to break out of its “support” silo…
Strategy Process
FinCEO
NBD
R&DHR
OP
IT
“support”MKTG
Strategic Decisions : What markets?: Which customers?: How to serve?: How to differentiate?: How to make money?
Strategy Process
GfM Marketing 26Professor Kamran Kashani
… and bring the customer’s voice and insights into the strategy process
Strategy Process
FinCEO
NBD
R&DHR
OP
IT
MKTG
Strategic Decisions : What markets?: Which customers?: How to serve?: How to differentiate?: How to make money?
Strategy Process
GfM Marketing 27Professor Kamran Kashani
When marketing’s voice is absent from Big decisions…
…customers’ interests take back seat to other priorities
“Whenever you ask a CEO about the importance of customers, you hear the requisite platitudes. But in fact customers have often lost out in the relentless push to maximize shareholder value…Bain & Company found while 80% of CEO’s think they are doing an excellent job of serving customers…only 8% of customers agree.”
Fortune Magazine, 2006
GfM Marketing 28Professor Kamran Kashani
0%
2001 2002 2003 2004 2005 2006
S&P Total 38.7%
American Customer Satisfaction Index Stock Portfolio 144.5%
Relative Price Change over Time
Source: Harvard Business Review, March 2007
Growing evidence: shareholder value is highly correlated with customer satisfaction
GfM Marketing 29Professor Kamran Kashani
Growing evidence: “…shareholders do better when firms put the customer first.”
GfM Marketing 30Professor Kamran Kashani
“…If more companies made customers the top priority, the quality of corporate decision making would improve because thinking about the customers forces you to focus on improving your operations and the products and services you provide, rather than on spinning lines to shareholders.”
Roger Martin, Harvard Business Review
January-February 2010
Growing evidence: “…shareholders do better when firms put the customer first.”
GfM Marketing 31Professor Kamran Kashani
Strategic point of view: – Spotting long term trends, identifying future scenarios
– identifying market gaps and opportunities
Value mapping: – Looking beyond the first level customers
– Seeing how “value” is created and captured upstream/downstream
Thinking and acting beyond the “researchable”– feel comfortable with uncertainty in innovation
– learn to experiment and take measured risks
– trust one’s well-developed and educated intuition
Skills set
Breaking out of the “support” silo: Are marketers ready for the demands of strategy in today’s tough markets?
GfM Marketing 32Professor Kamran Kashani
Converting customer insights into compelling business plans: – developing an integrative view of business and other functions– defining strategic priorities & initiatives– making a credible case: showing bottom line impact!
Driving implementation:– getting buy-in for market inspired change – learning to by-pass resisters or use them to advantage– mobilizing and energizing the troops!
Are marketers ready for the demands of strategy in tough markets?
Skills set
GfM Marketing 33Professor Kamran Kashani
Scan the market
Formulate the Winning Strategy
Articulate Customer
Value Proposition
Build the Brand
Assess Competition
Lead Implementation
Drill for Insights
Follow-up:Satisfy and Retain
customers
Implementation Planning
IMD’s Strategic Marketing in Action program: inspired by skills set marketers need in today’s tough markets
GfM Marketing 34Professor Kamran Kashani
To conclude: Let’s remember why our profession exists…
“The purpose of business is to create and keep a customer.”
Peter Drucker