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June 17, 2003 ©Santa Clara Group Pty Ltd scg
Tony Surtees
Founding VP and GM, Yahoo! Commerce Group
CEO, Santa Clara Group
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Shoot your Marketing Manager…Shoot your Marketing Manager…
RMIT BUSINESS DEAN’S LECTURE SERIESJune 17 2003
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Lessons from
• User experience drives everything
• Technology creates new opportunities
• Led by the market
• Human face to technology
• Power of a global brand & local relevance
• eBay!
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Market changed forever
Brands win, Experience Delivers, Ads?
Networks are everywhere
Marketing led by CFO, CIO & CEO
Marketing+Finance+Technology
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Coca ColaCoca Cola
“Here at Coca-Cola we're thinking about marketing in a radically different way”
Steven J. Heyer COO, Coca Cola Co.
June 17, 2003 ©Santa Clara Group Pty Ltd scg
“While we recognize great advertising and great marketing,this year one of the biggest awards we gave out was for marketing ROI…”
“We are going to learn how to leverage more knowledge, scale and drive the efficiency and the effectiveness of our marketing investment.”
P&G CEO A.G.P&G CEO A.G. LafeyLafey
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Trends
• Fragmentation & proliferation of media
• Erosion of mass markets
• Global market for talent, capital
• Next leap in productivity?
• Marketing is the target!
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Market changed forever
Brands win, Experience Delivers, Ads?
Networks are everywhere
Marketing led by CFO, CIO & CEO
Marketing+Finance+Technology
June 17, 2003 ©Santa Clara Group Pty Ltd scg
“CFOs used to see the brand as ‘soft’… Du Pont is turning the softness of brand valuations into hard numbers.”
Carol Gee, Du Pont Global Director of Brands for Apparel and Textile SciencesCFO Magazine, November 2001, p99
June 17, 2003 ©Santa Clara Group Pty Ltd scg
“The common ground around companies that have built great brands
is not performance. They recognize that consumers live in an emotional
world. Emotions drive most, if not all, our decisions”
Scott Bedbury, Starbucks
Brand leaders deliver experiences
These companies have outperformed the stock market for the last fifteen years and secured the greatest share of wallet
Citibank-Interbrand study 1998
June 17, 2003 ©Santa Clara Group Pty Ltd scg
“This is the end of the pure product era. We are a platform for delivering services that drive the customer experience.”
Carly Fiorina, CEO - HP
June 17, 2003 ©Santa Clara Group Pty Ltd scg
“What British Airways does is to go beyond the function and compete
on the basis of providing an experience.”
Sir Colin Marshall, British AirwaysSir Colin Marshall, British Airways
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Expectations affects experienceExpectations affects experience
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Effectiveness of advertisingEffectiveness of advertising
• 30% of media had major positive effects
• 20% of media had minor positive effects
• 50% of media had NO positive effects
Marder, Eric. “The Laws of Choice: Predicting Customer Behavior.” ( in Professional Investor, Feb. 2003, p25)
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Intel had better than an 80% market share in microprocessors …
…before it ran its first "Intel Inside" ad
June 17, 2003 ©Santa Clara Group Pty Ltd scg
“rests on the assumption that a repeated message can change people’s opinions and behavior and that it can keep them coming back as long as they hear or see the message often enough”
“Bob Coen’s Insiders Report”Universal McCann, McCann Erickson
June 17, 2003 ©Santa Clara Group Pty Ltd scg
• ANA• American Express • BBDO • Bayer • Beringer-Blass • Bristol-Myers
Squibb • British Airways • Brown-Forman • Campbell Soup • Carat • Citigroup • Coca-Cola • Compaq • DAS • DDB • DaimlerChrysler • D’Arcy
• Johnson & Johnson
• KFC• Kellogg • Leo Burnett • Levi Strauss • McCann-Erickson • Mars • Merrill Lynch • Microsoft • Mindshare • M-real • Nestle • Ogilvy & Mather • Omnicom • Orange • Pfizer • Procter & Gamble
• Dell • Diageo • Dow • DuPont • Eli Lilly • Ernst & Young • ExxonMobil • FutureBrand • FCB • FedEx • General Motors • Grey • Hakuhodo • Hewlett Packard • H&R Block • IBM • J Walter
Thomson
• Reckitt Benckiser • Saatchi & Saatchi • Sonera • Sony • Springpoint • TBWA • Unilever • Universal McCann • UPS • USPostal Service • United Airlines• Verizon • Volkswagen
survey by: –Nick Bishop & The O Partnership (Paris)
–Through The Loop (London)
–Bellwether Leadership Research (Detroit).
New research New research
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Agencies said …Agencies said …
• Clients provoke dislocation through a lack of clarity on what constitutes success
• No integration between clients & agencies
• Clients not (technically) structured to handle integration
• No real negotiation on remuneration
• Downward pressure on agency margins has a significant effect on client/agency relationships
• Challenged by increasingly limited talent pool
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Marketers saidMarketers said
• 70% agencies fired by new managers first 12 months
• Agencies just mirroring (their) marketing problems
• Agencies need a better understanding of client needs
• Lost the strategic partner role through cost-cutting
• Big agency groups mean big inefficiencies for clients
• Distance between expectation and delivery in the area of brand communications integration is significant
• Lack of quality resources on the agency side
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Market changed forever
Brands win, Experience Delivers, Ads?
Networks are everywhere
Marketing led by CFO, CIO & CEO
Marketing+Finance+Technology
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Networks are everywhereNetworks are everywhereTalking to individual customers
Mass customization (My Yahoo!, Amazon)PersonalizationCustomer care
Talking to each otherMarket networked (IM, email & SMS)Selling each other (viral marketing, eBay)
Business networks buying groups, user groups, lobby groups, etc.Competitors – Ford & GM co-investing building common car power train
June 17, 2003 ©Santa Clara Group Pty Ltd scg
How networked are we?How networked are we?
• June 6, 2003 - In less than 24 hours, Bugbear.B has infected more computers than anything else.
23% of computers infected in 24 hrs!
June 17, 2003 ©Santa Clara Group Pty Ltd scg
technologytechnologyfinancefinance
marketingmarketing%
ROI
$
ERP CRM
24X7integrationIRR
like wow
tools
more relevant & accountable practice…
…the new CMO…
June 17, 2003 ©Santa Clara Group Pty Ltd scg
New CMONew CMO
• Owns the customer experience
• No longer “best creative marketer”
• Critical support to CEO
• Driver of shareholder value, ROIC
• Realities of market & capabilities of new tools
• Product management skills
• Performance culture with process & metrics
June 17, 2003 ©Santa Clara Group Pty Ltd scg
SuccessfulSuccessfulMarketersMarketers
AreAreBehaviouralBehavioural
PsychologistsPsychologists
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Market changed forever
Brands win, Experience Delivers, Ads?
Networks are everywhere
Marketing led by CFO, CIO & CEO
Marketing+Finance+Technology
June 17, 2003 ©Santa Clara Group Pty Ltd scg
MF Culture ClashMF Culture Clash
• Marketing is optimism, fun & event driven
• Financial analysis is hard• Same terms to mean
different things• Boards controlled by
accounting/finance• Justify relevant financial
returns
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Brand Valuation QuestionsBrand Valuation Questions• Value of my brand; how has it changed over time?
• How strong is my brand and why?
• What will maximize my brand’s strength and value?
• How to reverse the erosion of my weakening brand?
• Is my brand suitable for expansion into other categories and countries?
• Does my brand need a partner to enter a certain market and, if so, which one?
June 17, 2003 ©Santa Clara Group Pty Ltd scg
BrandEconomicsBrandEconomics
• Relative brand strength
• Brand essence & imagery
•EVA® financial management
•Industry economic analysis
•definitive, financially grounded answers to key branding questions
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Market Value AddedMarket Value AddedMVA measures how much more a business is worththan the capital invested in it
Net Net Operating Operating Profit After Profit After
TaxTax
Total Total market market valuevalue Charge for Charge for
CapitalCapital
EVA
Equity and Equity and Debt Debt
capitalcapital
MVAShareholderValue Added
Total Shareholder
ValueShareholderInvestment
Gap between intrinsic value and market value is an investor opportunity
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Brand strengthBrand strength
Differentiation + Relevance
Brand statureBrand statureEsteem + Knowledge
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Differentiation (uniqueness)Differentiation (uniqueness)• First stage of brand relationship – leads to trial• More advanced the market, more crucial
Differentiation is• Yahoo & Starbucks ranked high early on• Establishes the price premium
Relevance (size of market)Relevance (size of market)• Intuitively, relevance would seem to come first• Builds the brand relationship & staying power• Fads have low relevance
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Market changed forever
Brands win, Experience Delivers, Ads?
Networks are everywhere
Marketing led by CFO, CIO & CEO
Marketing+Finance+Technology
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Why is technology relevant?Why is technology relevant?
• Web has 90 million channels
• 40% of US productivity growth in 10 years –largest single private industry contributor & $US373 billion in cost savings by 2005
• OL’s & Network effect
• Expectations changed forever
• Lessons from Intel, Yahoo!, Microsoft
• We’re all in the valley
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Technologies to watchTechnologies to watch
• Database & Analytics
• Addressable Media
• Instant communications
• Collaborative workflow tools
• Integration with ERP, Supply Chain Management, Financial Management, SFA
• Transaction tagging
June 17, 2003 ©Santa Clara Group Pty Ltd scg
The US MarketThe US Market• At least six different markets (north-east, south-east,
mid-west, south-west, California and north-west)
• Able to support many companies competing within each market and across the whole country
• A vast and complex economy
• Supports (demands) a high degree of specialization
• Often highly parochial (ex California & North East)
• The worlds pre-eminent Product Managers
• Success could be measured by achieving market entry in any of the six markets
June 17, 2003 ©Santa Clara Group Pty Ltd scg
ConclusionsConclusions
Market changed forever
Brands win, Experience Delivers
Networks are everywhere
Marketing+Finance+Technology = NM
June 17, 2003 ©Santa Clara Group Pty Ltd scg
Contact Tony SurteesSanta Clara [email protected]: 0410465929o: (02) 9555 4777
www.scgroup.biz