Marketing Panel Calm Seas or Troubled Waters?

1. Marketing PanelCalm Seas or Troubled Waters? Presented by: Dana Baker Date: August 15, 2006

2. The Rest of the Story “The Future buyer and how to sell to them” • North Carolina Companies • Network, Network, Network • Psychology of New-product/service adoption • Making Mistakes

3. North Carolina Companies Mission ATMC is dedicated to excellence in customer service and providing communications services that add value to the lives of our customers and the communities we share.

4. North Carolina Companies Since 1921, Citizens Telephone has provided the communications needs for Brevard and Transylvania County. From your local telephone line to voice mail and high speed data access, our goal is to continue serving our customers with the latest in technology.

5. North Carolina Companies CT Communications Customer Pledge We are ethical, honest, and respectful in all our relationships. We guarantee quality telecommunications services. We are flexible, knowledgeable, and dedicated to exceeding customer expectations. We take ownership of customer problems. We develop and deliver creative, diversified services that are competitive and dependable.

6. North Carolina Companies EMBARQ Corporation (NYSE: EQ) provides a suite of communications services to its customers in its serving areas. EMBARQ, which is expected to rank among the Fortune 500, brings common-sense ideas, reliable service and a renewed commitment to the communities it serves. EMBARQ focuses on offering its customers practical, innovative products and competitive pricing. The company has 20,000 employees and operates in 18 states offering local and long distance voice, data, high speed internet, wireless and entertainment services.

7. North Carolina Companies

8. North Carolina Companies Philosophy • At Lexcom, the connections that matter go beyond a clear, static-free line. It's the person-to-person connection when you drop by our office; it's fast repairs and technicians who listen and respond; it's investing in new technologies that make your life safer, simpler, and more secure; and it's giving back to our community.  • That's why Lexcom lives by the motto:  every connection matters

9. North Carolina Companies MebTel is the area's leading provider of advanced communications services. People here choose us for broadband Internet and for local and long distance calling. We're here for you, right here in our community. With innovative services, packaged in ways to help you save time and money. With customer care that let's you know our customers are real people who really matter to us.

10. North Carolina Companies Randolph Telephone Company Mission Statement We will identify the needs of our subscribers and the communities we serve through personal communication with them, and we will focus our resources and energies on meeting those needs in the most technologically advanced and economical way possible. We will measure our actions by standards of honesty, trust, and fairness, responding promptly to the needs of our subscribers. We will provide products and services that are equal to or better than those of any competitors, and we will treat our customers with courtesy, respect, ongoing personal involvement, and attention to the overall well-being of their families and communities. We will be ever mindful of our obligation to empower our employees with training, support, and a working environment that maintains a focus on meeting the needs of customers with a positive attitude.

11. North Carolina Companies To be a telecommunications company focused on offering our members the best innovative services available.  We are a member based company with the members' wants, needs and expectations in mind.

12. North Carolina Companies Mission Statement Our vision, goals, values and beliefs are essential to all other business issues. Our Vision:To be a telecommunications provider that is focused on its members and customers, always striving to earn their respect and loyalty. Our desires are to create an environment of trust and appreciation. Our Core Business: To build INFO structure in our communities to the complete satisfaction of our members and customers. To provide them with value that exceeds expectations. Our Goals:To provide services at a quality, price and reliability second to none. To provide all telecommunications services needed or desired by our members/customers that can be offered in a resourceful, competitive, and cost-effective method.

13. North Carolina Companies Mission Statement Our Vision: We want to be considered the premier telecommunications and information provider in the areas we serve and by those we serve. Our Fundamental Mission: To offer telecommunications services and information to our customers, which meets their needs and expectations. Our Goal: To build an information network to the complete satisfaction of our customers, and provide services in a professional and courteous manner.

14. North Carolina Companies our vision & mission We will provide exceptional voice, data and video services throughout rural America. We will execute with excellence in all that we do.

15. North Carolina Companies Our values Customers First - We are relentless and passionate in creating raving fans both internally and externally. We value exceptional customer experiences and are easy to do business with. Individual Responsibility - We are responsible for developing ourselves, our employees, celebrating wins, rewarding performance and providing an engaging environment where we thrive. When "I own it" I take initiative and deliver results. Execution Excellence - We are disciplined and laser focused in our planning and execution with a bias towards action. We make informed decisions and manage with facts. Amazing Teamwork - We rely on each other and are committed to succeed together. We act as ONE team, because we are. We embrace change in order to improve. We value having fun. Dynamic Communications - We communicate with our customers and with each other directly, concisely, openly and intentionally. We respectfully "push back." Accountability Always - We are highly accountable to our customers, communities, shareholders and each other. We listen and respond with a sense of urgency. Continuous Commitment - We are committed to delivering on our promises. We do what we say, fostering a risk-taking environment in support of the company's success. Foundation of Integrity - We do the right thing. Strong integrity and ethics guide our actions and behaviors. We are fair, honest and trustworthy.

16. North Carolina Companies

17. North Carolina Companies

18. NETWORK, NETWORK, NETWORK • Network Building • Internal • Marketing • Financial • Customer service • Engineering • CO & OSP • Board

19. NETWORK, NETWORK, NETWORK • Network Building • External • City • County • State Association • National • Not just a CEO/Manager network anymore

20. NETWORK, NETWORK, NETWORK • Learn from the Network • Don’t adopt • Test • Modify to meet your specific needs

21. NETWORK, NETWORK, NETWORK • Learn from the Network • Recent samples • Marketing on a shoestring budget by Kay Dunn @ Yadkin Valley • Networking • Engaging in target marketing • Cost effective methods • Complimentary and trial services • Evaluate publications and advertising costs • Monitor return on Marketing investment • Use your resources

22. NETWORK, NETWORK, NETWORK • Learn from the Network • Recent samples • Savvy marketing tips to gain competitive edge by Kurt Gruendling@ Waitsfield-Champlain Valley Telecom in VT. • Listen to customers • Get to know your business customers • Utilize bundling • Employ direct marketing • Don’t forget public relations • Brand definition and marketing • Play the local card • Enhance customer experience • Manage churn • Use the internet as an effective marketing tool

23. NETWORK, NETWORK, NETWORK • Learn from the Network • Recent samples • The Battle of the Bundle by Dave Nieuwstraten @ Pivot Group, LLC. • The value of benchmarking • Steps top consider when developing bundles • Data collection • Situation analysis

24. NETWORK, NETWORK, NETWORK • Learn from the Network • Recent samples • Angry and Bored? You must be a customer @ CFO Magazine • Any and all forms of surveys can result in bad data driving poor decisions. • In drafting questions, one must understand the original problem that drove the need for the survey. If the right question is asked, the answer to the problem is there.

25. NETWORK, NETWORK, NETWORK • Learn from the Network • Recent samples • Angry and Bored? You must be a customer @ CFO Magazine • Most traditional satisfaction surveys have lulled firms into believing that the majority of customers are happy. • Bain research indicates that 80 percent of the companies are convinced that they provide superior customer experience, yet on 8 percent of their customers agree. • More than two-thirds of the customers are either passive or detractors. Develop ways to turn detractors into promoters. Are your customers willing to promote you?

26. NETWORK, NETWORK, NETWORK • Learn from the Network • Recent samples • Paul McMurray @ Insight Management Consulting at NTCA Regional -Myrtle Beach • Consumer demand meets customer service

27. NETWORK, NETWORK, NETWORK • Learn from the Network • Recent samples • Paul McMurray @ Insight Management Consulting at NTCA Regional -Myrtle Beach • Great marketing source book: ESRI source book • http://store.esri.com • http://www.esribis.com/books/sourcebookamerica.html • Paul sells it for $100 per zip code, the module cost $1,000 and $500 for the next • Where do you stand on penetrations? See PEW/Internet. • www.pewinternet.org

28. NETWORK, NETWORK, NETWORK • Learn from the Network • Recent samples • Paul McMurray @ Insight Management Consulting at NTCA Regional -Myrtle Beach • You are not like your customers! Most companies assume they are. • You are in the computer business whether you believe it or not. • Chesney Tel south of Charlotte- Banners at local football and record games for later viewing. This drives value in community and the service.

29. NETWORK, NETWORK, NETWORK • Learn from the Network • Recent samples (con’t.) • NRTC does churn analysis. • You are a niche market, use it to your advantage. • Customer service is key • All resources available

30. NETWORK, NETWORK, NETWORK

31. Learn from the Network • Recent samples • TNS Telecoms is the world's largest telecom market information company.

32. Understanding the psychology of new product/service adoption • New products often require consumers to change their behavior. Behavior changes entail economic cost. • Activation fees to switch cellular service providers • Learning cost – • PBX to VOIP PBX • Text Messaging • Obsolescence cost • VCR to DVD • Analog to video phones

33. Understanding the psychology of new product/service adoption • Need to include psychological cost associated with behavior change. • People irrationally overvalue benefits they currently possess relative to those they don’t. The bias leads consumers to value the advantages of products they own more than the benefits of new ones. • Leads executives to value the benefits of innovations they’ve developed over the advantages of incumbent products. (Move toll business over to new VOIP solution when reduction in toll rates will give same effect.)

34. Understanding the psychology of new product/service adoption • Need to include psychological cost associated with behavior change. • Consumers will reject new products that would make them better off and executives are at a loss to anticipate failure. “The curse of innovation” Companies have long assumed that people will adopt new products that deliver more value or utility than existing ones. Everett Rogers, communications scholar called the concept “relative advantage” and identified it as the most critical drive of new-product adoption.

35. Understanding the psychology of new product/service adoption • How individuals value choices in the market place • People evaluate the attractiveness of an alternative based not on its objective, or actual value but on its subjective or perceived value. • Consumers evaluate new products or investments relative to a reference point, usually the products they already own.

36. Understanding the psychology of new product/service adoption • How individuals value choices in the market place • People view any improvements relative to this reference point as gains and treat all shortcomings as losses. • Most important- losses have a far greater impact on people than similarly sized gains “loss aversion”. Most people will not accept a bet in which there is a 50/50 change of winning or losing. The gain must be 2 or 3 times to be attractive.

37. Understanding the psychology of new product/service adoption

38. Understanding the psychology of new product/service adoption • The “endowment effect” consumers value what they own, but may have to give up, more than they value what they don’t own but could obtain. • The experiment • They gave coffee mugs to a group of people (sellers) and asked at what price point from 25 cents to $9.25 the sellers would be willing to part with those mugs.

39. Understanding the psychology of new product/service adoption • They asked another group (choosers) to whom they give the coffee mugs, to indicate whether they would choose the mug or the money at each price point. (Mug or money) in two trials, • Results • The sellers priced the mug at $7.12 & $7.00 on average and the choosers were willing to pay on $3.12 & $3.50. Similar experiments with goods as diverse as lottery tickets, hunting licenses, fine wines have show people demand two to four times more compensation to give up products that they already posses

40. Understanding the psychology of new product/service adoption • Status quo bias: • 1989 Experiment: Coffee mug VS chocolate bar • One test group got a choice of nice coffee mug or swiss chocolate (56/44 per cent split) • Second test group he gave them a mug and in a short time later gave them option to trade for a chocolate bar (11 percent opted to change)

41. Understanding the psychology of new product/service adoption • Status quo bias: • 1989 Experiment: Coffee mug VS chocolate bar • Third test group he gave them the chocolate and much later gave them the choice to switch for a coffee mug. (10 percent opted to change) • Results • Static quo intensifies over time – to a factor of 4. • General rule is factor of 2

42. Understanding the psychology of new product/service adoption • Building a behavioral framework • The new product or service • Gain vs loss syndrome • The consumer that has to adopt • Consumer use of existing products is part of an endowment and they compare the new product with existing on a gain or loss. • Gas vs electric cars • Paper vs e-books

43. Understanding the psychology of new product/service adoption • Building a behavioral framework • The company that developed • There is a mismatch of 9 to 1 on what the company sees the customer what and what the customer truly desires • Bias to the product/service • They fall to endowment effect just like consumers • Due to the (curse of knowledge), companies expect consumers to see the same value • Left unchecked the 3x3-9 mismatch is recipe for disaster

44. Understanding the psychology of new product/service adoption • Building a behavioral framework

45. Understanding the psychology of new product/service adoption • Balancing product and behavior changes Degree of behavior change required LOW Degree of product change involved HIGH LOW HIGH

46. Understanding the psychology of new product/service adoption • Balancing product and behavior changes • Accept resistance • Strive for 10X improvements

47. Making Mistakes • Two types of mistakes • Non-deliberate mistakes • Deliberate mistakes

48. Making Mistakes • Non-deliberate mistakes • Most managers recognize value of experimentation but usually designed to confirm initial assumptions. • Advertising companies may try different approaches to see which tactics work best but won’t run an ad that it presumes will fail.

49. Making Mistakes • Deliberate mistakes • Have a negative expected value but if such a mistake unexpectedly succeeds, then it has undermined at least one current assumption. Companies need to carefully analyze the trade-off between the potential expense of a mistake and the potential benefits of learning. • The potential gain greatly outweighs the cost of the mistake. • Cost of running ads maybe small considering the potential benefit of learning about what worked.

50. Making Mistakes • Deliberate mistakes • Decisions/assumptions that are made repeatedly. Valuable in environments where core assumptions drive large numbers of routine decisions: • Hiring • Running ads • Devising promotional tactics • Assessing credit