Marketing with Prof Tat Chan 11-29-10
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informal discussion at Olin Business School
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Marketing with Prof Tat Chan 11-29-10
- 1. Marketing Strategy Dr. Tat Y. Chan, Professor of Marketing 11-29-10
- 2. 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
- 3. 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?)
- 4. about mecontext & credibility
- 5. Who Am I?
- 8. 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
- 9. 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
- 10. valuable x hard = opportunity
- 11. my assignment “the scope is to share with students the details regarding how you formulate and implement marketing strategies” why?
- 12. why? to get people to do what you want them to do….
- 19. 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.
- 20. 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%
- 21. people are leaving businesses and brands behind
- 22. strategy
- 27. Plan on a Page
- 31. 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:
- 32. 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:
- 33. two cases
- 36. 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
- 38. Disappointing sales results 1% market share So what do you do?
- 39. Do you launch new Micro G basketball shoes? - Declining segment - Nike has a 90% share - Nike’s marketing budget is 20x UnderArmour’s
- 40. approach
- 41. 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
- 42. • 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
- 43. The Funnel… The Accelerator markeBng compresses the customer buying life cycle Customers
- 44. the Demand Chain Demand Vision Creative ContentBrand Strategy Resource Optimization Demand Performance Customer Engagement Warehousing & Inventory Purchasing Manufacturing Product Availability Sales & Distribution Product Development
- 45. 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
- 48. Platform 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
- 50. 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.”
- 51. brand
- 52. the brand what people say, think, feel about your product/ service
- 54. • 90% awareness • 90% indifference
- 55. How does this happen?
- 56. 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.’”
- 57. 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?
- 61. before after
- 63. 2.2 million weddings per year, and declining
- 64. 64
- 66. positioning
- 69. 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
- 71. “we’re not in the coffee business serving people… we’re in the people business serving coffee” - Howard Schultz
- 72. “We Bring Good Things To Life.” Why change a winning campaign?
- 73. “We Bring Good Things To Life.” Why change a winning campaign? “Imagination At Work” To re-energize a brand, a company and its culture
- 74. 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
- 75. 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
- 76. • 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
- 77. 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
- 78. 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
- 80. Disneyland • lots of rides • fun for the whole family • great value • new stuff • better than Legoland • rated “best” • from Mickey
- 81. magical!
- 83. is this firewood? “no, it’s the stored up heat of the sun”
- 85. how to be different • by Degree - - superior in some way: better, faster, cheaper • by Distinction - - separate and unrelated
- 86. 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
- 90. Is your positioning compelling enough to attract choices from your audience? And is your brand unique enough to preclude other competitive choices?
- 91. case
- 92. 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.
- 93. 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
- 94. upscale mustard
- 95. upscale mustard What to do?
- 96. 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
- 98. 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?
- 101. 101
- 103. If you don’t define your brand, your competition will…
- 104. of consumers don’t believe that companies tell the truth in advertisements 76% Yankelovich
- 108. top 10 reasons why a marketing program succeeds?
- 109. 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
- 111. 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*?
- 113. Non‐linear Engagement‐focused Consumer‐centered Return on investment MulB‐plaorm targeted Growth agenda innovaBve networked Social networked Consumer‐created User‐generated MulB‐format partnerships segmented customized On‐demand Influence behavior Promote interacBon Measure outcomes insighul Two‐way
- 114. 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 marketingLoyalty 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
- 115. “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
- 116. The real question is this - - how do you spend as little as possible to achieve your objective?
- 117. roi
- 118. 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
- 119. 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)
- 120. 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
- 121. 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
- 122. 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
- 123. recap
- 125. Is your positioning compelling enough to attract choices from your audience? And is your brand unique enough to preclude other competitive choices?
- 127. The Way Forward 127 Old Way New Way Ad Hoc Discipline process InformaBon Insight Improvement InnovaBon Interview InvesBgaBon IdenBfy Imagine Incremental Impact