The New Role of Marketing in a Networked World

1. The New Role of Marketing in a Networked World Ashok Leyland Chennai March 11, 2013 Philip Kotler Kellogg School of Management Northwestern University

2. Kevin Roberts Warning!!! • The End of Strategy • The End of Management • The End of Marketing

3. Growth • In a recent survey, the Conference Board asked CEOs to rank various business priorities and found that the top priority was business growth. • P&G CEO Bob McDonald highlighted the point by saying “We’ve got to grow; that’s the main thing.”

4. High Performing Firms • Here are two significant differences between the high performing and low performing firms: • High-performing firms were distinguished by a greater level of commitment to marketing strategy. • High-performing firms had a stronger marketing culture than low-performing firms. • Source: 2011 Kotler Marketing Group Research Report: Marketing in Difficult Times: Best Practices of Companies that Found Ways to Prosper During the Great Recession.

5. Marketing started because Sales departments needed others to:

6. Job Positions in Today’s Marketing Organization • Chief Marketing Officer (CMO) or Marketing Vice President • Brand managers • Category managers • Market segment managers • Distribution channel managers • Pricing managers • Marketing communication managers • Database managers • Direct marketers • Internet and social media managers

7. Four CEO Views of Marketing The size and type of department depends on the type of industry, size of company, nature of buying, and other factors. Much depends on the CEO’s view of marketing. • 1P CEO • 4P CEO • STP CEO • ME CEO

8. What are the 6 Tasks of the CMO? • Represent the voice of the customer (VOC). • Monitor the evolving business landscape. • Be the steward of the corporate brand and brand-building practice. • Upgrade marketing technology and skills in the company. • Bring insight into the corporate portfolio and synergies. • Measure and account for marketing financial performance.

9. If You Are Appointed CMO, You Prefer That Your Office Be Located Next To: • CEO office • CFO office • CTO office • CIO office • VPS office ? ?

10. Is Marketing Only A Department? There are those who believe that marketing should be a specialized department whose resources are drawn upon as needed by the sales and other departments. • This means that marketing is a cost center whose costs should be charged to each internal client. • Ideally marketing should measure the incremental revenue created by their activities to see if these activities were profitable.

11. Can Marketing Help Engineer the Company’s Future There are others who believe that marketing should be a leading player in developing the future growth plan of the company. • Marketing is in the best position to detect business opportunities, calibrate their size and estimate their likely profitability. • Marketing manages important intangible assets (brands, customer relationship, networks, market position, market information)

12. Five shifts Driving business Impact Galvanizing your network Pervasive innovation Inspiring marketing excellence Relentless customer focus

13. Marketing’s Change in Focus Product Management Customer Management Brand Management Value Management 1950s – 1960s 1970s – 1980s 1990s – 2000s 2010s – 2020s

14. Values-Based Model

15. Companies Americans Love Amazon, Apple, Best Buy, BMW, CarMax, Caterpillar, Commerce Bank, Container Store, Costco, eBay, Google, Harley-Davidson, Honda, IDEO, IKEA, JetBlue Johnson & Johnson, Jordan's Furniture, L L Bean, New Balance, Patagonia, Progressive Insurance, REI, Southwest, Starbucks, Timberland, Toyota, Trader Joe's, UPS, Wegmans, Whole Foods. These “firms of endearment” were highly profitable. They outperformed the market by a 9-to-1 ratio over a ten-year period. More fulfilled employees, happy and loyal customers, innovative and profitable suppliers, environmentally healthy communities.

16. Characteristics of “Firms of Endearment” Characteristics of Firms of Endearment • They align the interests of all stakeholder groups • Their executive salaries are relatively modest • They operate an open door policy to reach top management • Their employee compensation and benefits are high for the category; their employee training is longer; and their employee turnover is lower • They hire people who are passionate about customers • They view suppliers as true partners who collaborate in improving productivity and quality and lowering costs • They believe that their corporate culture is their greatest asset and primary source of competitive advantage. • Their marketing costs are much lower than their peers while customer satisfaction and retention is much higher.

17. Your Brand Needs to Own a Word • Mercedes – engineering • BMW – driving • Volvo - safety

18. Develop a Memorable Brand Mantra, Slogan and Logo • Nike: Its brand mantra is “authentic athletic excellence.” Its brand slogan is “Just Do It.” Its logo is a “swoosh.” • GE: Its brand mantra is “better living.” Its new brand slogan is “Imagination at Work.” Its logo is

19. LEADING B2B BRANDING COMPANIES • DuPont • Siemens • Bosch • General Electric • Saint-Gobain • UPS • FedEx • Microsoft • Caterpillar • IBM • Daimler • Michelin • Tata Steel • Morgan Stanley • Volvo

20. Leading Ingredient Brands Clothing: Gore-Tex, Lycra Carpets: Stainmaster Diet soft drinks (NutraSweet) Cooking utensils (Teflon) Bicycle gears (Shimano) Sound systems (Dolby) Computer chips (Intel) Crystal components (Swarovski)

21. What Makes a Strong Brand? • Strong brand = Product Benefits x Distinct Identity x Emotional Values

22. Types of Innovation Product and service incremental innovation Marketing innovation Business model innovation New to the world innovation Source: http://2.bp.blogspot.com/_qD9Y8Ncd3I4/Sb6hKKOJkJI/AAAAAAAACDo/fHZHCQbvRe4/s400/BornToInnovate2009.jpg

23. Roles in a Company’s Innovation Process Browsers Activators Creators Executors Developers Financiers Source: Philip Kotler and Fernando Trias de Bes, Winning at Innovation, 2011.

24. Offer Variety and Customization • Variety: Offer a wide product line so the customer can choose something closer to the customer’s desires. • Customization: Stand ready to customize according to the customer’s wishes.

25. Involve Your Customers in Co-Creating Your Products “We have moved beyond the Information Age to the Age of Participation.” GM ASKS CONSUMERS TO MAKE VEHICLE ADS'Apprentice' Task Turns Creation of Commercials into Popular Entertainment BUILD YOUR OWN LEXUS AT WWW.LEXUS.COM Build your Lexus, complete with available colors and options

26. Four Ways to Bring In Innovative Thinking • Train an internal staff in creative techniques • Whirlpool • Set up creative product groups • Samsung • Give employees a periodic opportunity to deliver ideas to senior management • Shell Oil • Outsource creativity to other organizations • Apple and Ideo

27. Actions That Produce More Loyal Customers 1. Extraordinary service 2. Extraordinary guarantees 3. Customer training and consulting 4. Supplying software/hardware 5. Offering entertainment/gifts • Managing the customer’s complexity • Align your marketing and sales groups

28. Marketing Challenges • How to successfully link marketing, branding, production, customers, and operations with sales, profitability and innovation? • A new era in marketing – an era of staggering proliferation

29. Marketing Challenges – Proliferation Sales & service channels Media Customer segments Brands Find growth opportunities Design & manage winning brand portfolios Marketing & Sales Integration Transform sales & service Marketing & sales transformation Boost returns on marketing investment Leading change Pricing

30. Is there really an issue between Marketing and Sales? The Buying Funnel Customer Awareness Brand Awareness Brand Consideration Brand Preference Customer Advocacy Purchase Intention Purchase Loyalty Marketing Sales Handoff

31. How do Sales and Marketing work together? Undefined

32. How do Sales and Marketing work together? Defined Undefined

33. How do Sales and Marketing work together? Defined Aligned Undefined

34. How do Sales and Marketing work together? Integrated Undefined Defined Aligned

35. What happens when the Sales and Marketing relationship works? Integrated Undefined Defined Aligned

36. Levels of Sales-Marketing Integration

37. Linking Marketing and Sales for Customer Value Management Relevant Value Identification Relevant Value Creation Relevant Value Articulation Buying Scenarios / Playbook Analytics Driven Prospecting Qualifying Defining Needs Developing Solutions Value Articulation Proposal Preparation/ Presentation Revision & Issue Resolution Overcoming Objections Contract Negotiation Implemen- tation Value Communication

38. Value Management Evaluation-Internal vs Customer View( Slideshow Version)(interpretation from interviews) (Scale of 1-7 where 7 is highest) Technical Vendor Innovation Partner N: Technical=12, Sales=15, Marketing=17

39. Brand Scenarios Determine required roles and brand moves Integrate brand moves to transform portfolio Understand where current brands play

40. Avoiding Disconnected Views Market Research Brand Teams Profusion of data Regional Sales Channel Partners

41. Sales and Marketing Integration Checklist • Bullet box

42. Feedback from Luxury Marketing CouncilSelf-Classified Integrated Undefined Aligned Defined

43. Feedback from Luxury Marketing Council Sales and marketing manage their activities using jointly developed business funnels, processes or pipelines that seamlessly span the whole business chain from initial market sensing to customer service There is a strong and shared ‘we rise or fall’ culture between sales and marketing

44. Feedback from Luxury Marketing Council Marketing people often meet with key customers during the sales process The sales force willingly cooperates in supplying feedback requested by marketing