Friday morning Part 2

1. Part 2

3. “The purpose of a
business is to
create. and then
keep its customers”

4. What happened since
“Marketing Myopia”
was written in 1960?

5. “…In every case the reason growth is
threatened, slowed or stopped is not
because the market is saturated…
It is because there has been
a failure of management”

6. "If only minds were as easy to change as
machines. I'll wager that it's easier to invent a
new generation of microchips than to get a
generation of people to alter the routes they
drive to work everyday" - Ricardo Semler,
Maverick

7. “The best swordsman in the world
doesn’t need to fear the second
best swordsman in the world; no,
the person for him to be afraid of
is some ignorant antagonist who
has never had a sword in his
hand before; he doesn’t do the
thing he ought to do, and so the
expert isn’t prepared for him; he
does the thing he ought not to do
and often it catches the expert out
and ends him on the spot”
Mark Twain

8. “In category after category, companies have gotten so
locked into a particular cadence of competition that
they appear to have lost sight of their mandate--which
is to create meaningful grooves of separation from one
another. Consequently, the harder they compete, the
less differentiated they become ... Products are no
longer competing against each other; they are
collapsing into each other in the minds of anyone who
consumes them”
Prof Youngme Moon, Professor, HBS
(Teaches most popular course - on Consumer Marketing)

9. McKinsey followed over 1,000 US companies over
an 18-year period, including during the last two
recessions, and found that companies that came out
in the top-quartile after the previous recessions were
over significantly increased their spending on
innovation, marketing and sales during the recession
- in innovation’s case, by 22% more than less
successful companies. The payoff from this and
related investments was a 25% higher market-to-
book ratio in the post-recession period

10. As market space gets more crowded, prospects for profit
and growth are reduced…
•Supply exceeds demand, and markets decrease
•Prices drop more and more as products become
commoditised, and there is nothing more left to compete
on
•Globalisation compounds the situation
•Ability to differentiate brands becomes harder
•Niches (and “monopolies”) disappear
•Red oceans become increasingly more bloody

11. Examples
• Telephony (voice services)
• Fitness
• Some retailers – e.g. books
• Air travel, tourism and hotel accommodation
• Managed services
• Insurance and investments
• Who is going to you?

13. Blue Oceans…
•Represent companies, industries and/or offerings
that don’t yet exist in an untapped market space
•Where new “rules of the game” are waiting to be set
as existing industry boundaries are expanded
•Where competitors become irrelevant because
customers get a massive leap in value
•And where the impact on profit is immense

14. 62% 38%Revenue Impact
39% 61%Profit Impact
86% 14%Business Launches
Value Innovation
Imitators & Incremental Value
Improvements
The Sources of Profitable Growth
Originally 158
Companies

15. In Blue Oceans…
•Challenge all industry assumptions, rather than
accept status quo
•Create a huge leap in value for all customers and
embrace their common problems or desires
•Look at total solutions even if that transcends
normal industry boundaries
•Abandon benchmarking against rivals: Make them
irrelevant

16. In Blue Oceans…
•Don’t force customers to compromise between low
cost or differentiated
•Create and capture new demand by offering both
low cost and differentiated
•Think free from existing assets and capabilities: Ask
“What if we could start from scratch?”
•The tools: Value Innovation

17. Red Ocean Strategy Blue Ocean Strategy
Compete in existing market
place
Create uncontested market
space
Beat the competition Make the competition irrelevant
Exploit existing demand Create and capture new
demand, & new customers
Make the value-cost trade-off Break the value-cost trade-off
Firm’s activities aligned with
choice: differentiation or cost
Use current assets &
capabilities
Activities aligned with choice:
differentiation and cost
Ask “What if we could start from
scratch?”

18. The Three Tiers of Non-Customers
• The “soon to be non-customers” who are at the
edge of your market, and are just waiting to jump
ship
• The “refusing non-customers” who consciously
choose against your market
• The “unexplored non-customers” who are in
markets distant from yours
Reach Beyond Existing Demand

19. Value Innovation vs. Technological Innovation
 Very successful new
company with 14000+
stores
 YES
 Est. emotional bond to
coffee (“European”)
NO
 Leading European
fashion company
 Globally recognized brand
 YES
 Transformed functional
product into fashion
accessory
•NOSwatch
 Negative reception
 Environmental backlash
 Sale of company
 NO
 Consumers suspicious of
artificial tampering
 YES
 Genetically modified
vegetable, fruit production
 Multi-billion dollar failure
 Bankruptcy
 NO
 Too expensive
 No buildings, cars
 YES
 First satellite-based mobile
phone service
Iridium
ResultValue Innovation
Technological
Innovation
Company

20. Commodities and “Goods”
Differentiated Products
Delivery & Services
Experiences
?

21. “Don’t get me wrong: I have nothing against customers.
Some of my best friends are customers…. My problem is
with the problem of – and I shudder to write the term –
“customer centricity.” Everyone in business today seems to
take it as a God-given truth that companies were put on
this earth for one reason alone: to pander to customers…
The truth is, customers don’t know what they want. They
never have. They never will. The wretches don’t even know
what they don’t want, as the success of countless rejected-
by-focus-groups products, such as the Chrysler Minivan to
the Sony Walkman readily attests.”
Stephen Brown, HBR, October 2001

22. of South
Africa
The meek shall inherit
the earth, but they will
never increase market
share!

23. Ten Broad Principles
Principle # 1: Your customers aren’t listening to
you
Principle # 2: Everybody else is shouting at your
customers too
Principle # 3: The rest of your company thinks
that you are crazy
Principle # 4: You can’t execute your programme
without the rest of your company
Principle # 5: If you don’t succeed, you are dead
meat (but so is the rest of the company)

24. Ten Broad Principles
Principle # 6: The more you give, the more you
get
Principle # 7: Being good is not enough – you
have to be better
Principle # 8: Marketing should be the most
creative and innovative part of your business,
(but it probably isn’t)
Principle # 9: Marketing should be the most
logical part of your business, (but probably isn’t)
Principle # 10: Everything is marketing

25. • Companies are more complex
• Competition is fierce
Challenges Facing Marketers Today - 1

26. • Companies are more complex
• Competition is fierce
• Fragile customer loyalty
• Want to be involved in pricing, (don’t want to pay for what they don’t
want)
• Time, urgency, effort and complexity: Old pace is outpaced and in
overdrive
Challenges Facing Marketers Today - 1

27. Yeah…. Whatever

28. Alienated, alone,
frustrated, not valued…
And surrounded
by morons!

29. Short of money

30. Demand for more information about what you do, how
you operate, how you determine prices, & how much you’re paid
But also demand that you get to know them better, who
they are, how they operate, and what’s important to them

31. Time Poor

32. Bored: We have a surplus of…
Similar companies, employing similar people, with similar
education backgrounds, working in similar jobs, coming
up with similar ideas, producing similar things, with similar
prices and similar quality
We also have a surplus of similar brands, with similar brand
attributes, similar marketing messages, making similar
brand claims
The result? Nostalgia for
something – anything -
that’s different

33. …with
endless
choices

35. We are
living in
the age
of the
never-
satisfied
customer

36. • Companies are more complex
• Competition is fierce
• Fragile customer loyalty
• Want to be involved in pricing, (don’t want to pay for what they don’t
want)
• Time, urgency, effort and complexity: Old pace is outpaced and in
overdrive
• Shift from transactional sales to relationships and partnerships
• Market segmentation – as it was
• Want to be involved in product quality and service design
• Market research limitations
Challenges Facing Marketers Today - 1

37. • The failure of marketing communications and promotions
• Word of mouth trumps advertising – always
Challenges Facing Marketers Today - 2

38. Selling by Persuasion
Marketer Customers
Advertising and Promotions

39. Interruption Marketing
1. Put on your best suit, shoes, tie, accessories and
after-shave, and go to a demographically correct
singles’ bar
2. March up to every woman and propose marriage
3. If turned down, repeat the process to everyone in
the bar
4. If you come away empty-handed, blame the suit,
shoes, tie and after-shave
“Spray and Pray”

40. Mass Advertising…
•Usually displays no real evidence that it is working
because very few notice it in the clutter
•Is one-way and doesn’t allow for participation
•Is not easily tested or measured
•Is unpredictable and expensive
•And is often used to generate fear amongst competitors
or improve the morale of employees
•Is not trusted/has poor credibility

41. Selling by Bombardment
Marketer Customers
Advertising and Promotions

43. Self Defence by Customers
Marketer Customers
Advertising and Promotions

44. Self Defence by Customers
Marketer Customers
Advertising and Promotions
Live search Web
search
Social networks
Word of mouth

45. Perhaps the Biggest Challenge of All?
The declining power of
traditional advertising &
promotion, and of traditional
media

46. But what replaces it?

47. Advertising is expensive!
“Half the money I spend
on advertising is wasted;
the trouble is, I don't
know which half.”
(John Wanamaker)
But that was then…
Now closer to 10%

48. Fact: There are too many brands
and companies - and too few
customers
Fact: Cost of advertising has almost
doubled – with less “views”
Fact: There are so many more
media that it’s impossible to reach
your target audience with just one
partner

49. Fact: Your message will not stick out above all the clutter
Fact: Your customers and prospects don’t believe the messages anyway:
• Only 18% (14%) of people believe adverts are true
(AdWeek, Dec 2009.) Even less 10-year olds
• Word of mouth trumps advertising – always,
always, always! (Even Social Media)
• An entertaining viral video can be watched by
millions

51. • The failure of marketing communications and promotions
• Word of mouth trumps advertising – always
• Therefore, they want communication that is relevant, anticipated,
timely, personalised and customised. (RAP)
• Demand for better customer service, more “experiences,” and for
better recovery from problems
• Poor internal processes to manage customers
Challenges Facing Marketers Today - 2

53. Nestle Example: How Not to Manage Your
Reputation
• Greenpeace campaign to stop Nestle
buying unsustainable palm oil for KitKat
• Used Nestle’s Facebook page to take
discussion directly to the company
• Nestle PR machine went into action to spin
it into a positive PR counter attack
• However, the Nestle moderator – an
employee - also tried to take control of the
discussion by defending the company from
“unfair” attacks

55. “We set the rules, it was ever thus… It’s like
stopping people at a dinner party talking about a
particular subject because you don’t like it. If he’d
stopped typing, the activists would get bored, it
could have been over in a day or so. Now it’s a
social media case study”
“I’m pretty sure you can’t stop the feed, Nestle, but
kudos for trying. And hey, good job on committing to
change in five years… I think we can meet them half
way and stop buying their products for the next five
years, and then commit to re-evaluating them again
as a company in 2015. Sound like a good plan?”

56. But the internet has made them
savvier…
• Know more about what you
sell & how it works
• Interact with many suppliers,
getting more quotes
• In many different channels
and media….

57. Customer Relationships. On whose terms?

58. Customer Relationships. On whose terms?

59. Twin-Sumers

61. “For a generation of customers used to doing their buying research by
search engine, a company’s brand is not what the company says it is, but
what Google says it is. Word of mouth is now a public conversation, carried
on in blog comments and customer reviews, exhaustively collated and
measured.
The ants have megaphones now.”
(Chris Anderson, Editor-in-Chief, Wired, from his book
The Long Tail: Why the future of business is selling less of more)

62. “SHAKESPEARE HOTEL is situated in a charming tree-lined
square, north of Hyde Park, with excellent access to all parts of the
capital, and prides itself on offering value for money and a good
service within the meaning of budget accommodation. Whether
you are visiting London with a group or by yourself, Shakespeare
Hotel will endeavour to make your stay a pleasant one”

64. “The usual London rip off”
Having booked a twin room over the phone I arrived to find that
all the twins had gone and only a double was available ! Having
explained that my teenage son moves a lot at night I was
UPGRADED LOL to a quad room. It was on the fourth floor (no
elevator) It smelled of urine. The TV had no channels or a
remote. the furniture looked as if had been recovered from a skip
and the water took 8 mins to get warm. I returned to reception to
comment on this and a very apathetic lady told me I could have a
double instead. Well I have slept in bigger cabins on sail boats
than the supposed double. Needless to say I had no sleep as i
kept falling of the bed and they managed to turn the heating off
all night. I was quoted 85 pounds but it turned out to be plus VAT.
I wouldn’t recommend this place to my worst enemy.

65. Crowdsourcing Power
•Crowd Mining: Extracting useful information or stats from the
global database. (e.g. Tescos knows that most diets are 18 days
long, Discovery Health knows “everything”)
•Crowd Sourcing: Outsourcing tasks to anyone in the world
(Idea Bounty and ForaFiver)
•Crowd Funding: Raising funds for anything using the power of
individuals all contributing (Zopa and Groupon)
•Crowd Sharing and Idle-Sourcing (Uber and ZipCar, and
also Waze and Pigspotter)

66. • 31,4 million references on
Google
• 103 million YouTube hits in first
9 days… and another 600+
million since then
• 8.3 million CDs pre-sold, 21
million in 24 months
• “7th most influential person in the
world in 2010” (Time)
• “She’s worth £14m!”
Easier to communicate with millions of others

67. Please review the
“Marketing Audit”.
(It will be used in
the Action
Assignment)
Activity – p24 - 28
Your Turn!

68. Case Study – p30

69. What do we market? (“Products”)
1. Goods
2. Services
3. Experiences
4. Events
5. Persons
6. Places
7. Properties
8. Organisation
s
9. Information
10.Ideas

70. Five Key Objectives of Any Marketing Strategy…
•Identify and find
•Win (& win back)
•Retain
•Grow
•Reduce cost to serve
Most resources
spent here.
Why?
But real
profits lie
here!

71. Offensive Marketing
Find and Win:
(Includes R&D, market
research, distribution
and location, launch,
sales commissions
advertising and
promotion)
And It’s Very
Expensive!
Thus, once they are inside, we
need to Defend! (Retain and Grow)

73. Many Definitions of
Marketing
“Marketing is a social and
managerial process by which
individuals and groups obtain what
they need and want through
creating, offering and exchanging
products of value with others”
(Philip Kotler)

74. Another Better Definition of Marketing:
•It is the continual, creative
anticipation and fulfilment of a
target customer’s needs and wants
and desires, such that the customer
repeatedly returns to that company
or brand throughout their lives, &
paying a price that is profitable for
the marketer, and enabling it to
succeed against competition
• John Dalla Costa & Alan Middleton, Advertising
Works

75. of South
Africa
A market consists of all the
potential customers who share a
particular need or want, and who
may be willing and able to engage
in exchange to satisfy that need or
want
The value that customers
get is important here!

76. “The aim of marketing is to make selling superfluous… Ideally,
marketing should result in a customer who is ready to buy. All that is
then needed is to make the product available.”
(Peter Drucker)
Therefore, marketing is preoccupied
with the needs of the customer in the
whole cluster of things associated with
creating, delivering and consuming our
products

77. The “Competitiveness Value Map”
Relative
Price
Low
High
High
Rel. Perceived Quality

78. Why do companies market?
•Decline of sales over time
•Growth to slow for
survival
•New opportunities to
grow
•Changing customer needs
and expectations
•Increased competition
•Marketing expenditures

79. Why is B-2-B
so different?
(See page 40, and indicate which
apply to your business)