Flipping the Marketing
Models
Don Schultz, Ph.D.
Professor Emeritus-in-Service
Medill Integrated Marketing Communications Dept.
Northwestern University
AMA Western Michigan
11 November, 2015
Everything We Ever Learned
About Marketing and
Branding Is Now Obsolete!
A Rather Strong Statement
But, One I Believe Can Be
Supported
And,
Even If It Can’t,
I Already Have a
Return Ticket to Chicago
So,
Let’s Press On!
The World of Marketing and
Marketing Communication Is
in Turmoil…..
What We’ve Always Done
Before Doesn’t Seem to Work






Use of supply chain models
Focus on economies-of-scale
Continuous product improvement
Bigger marketer spend
More “feet-on-the-street” sales models
“Good enough” competitors
Our Conundrum:
We Continue to Spend More
With Unknown or
Unmeasurable Returns
I Guess That’s Why I’m Here!
 I’m a radical thinker
 A futurist
 An explorer
 A data-weenie
 And, I’m a Tenured Professor in a Private
University – about as much security as
professors ever get
Today,
At NU, We Find We’re in the
Same Boat as You
My Current NU Assignment:
What Should We Be Teaching
Students in 2020?
What We Teach Now
Marketing
Mgmt
Content
Mgmt
Data
Analytics
Brands/
Branding
Financial
Analysis
Core IMC
Concepts
Internal
Mkt. Comm.
Media
Mgmt
Consumer
Insights
Market
Research
Comm
Strategy
Other Units in Our Program

Applied Neuromarketing Consortium –
interdisciplinary research center

Retail Analytics Council – research on
intersection of online and offline retailing

Omni-Channel Initiative – using software to
identify, understand and communicate with
consumers

Spiegel Research Center – cooperative
research with industry to improve marketing
results
One Over-riding Theme:
Everything Starts With the
Customer!
Because They Are the Only
Ones with Money…..
Everything Else Is a Cost!
Here’s Our Current Model
1. Customer Identification
From Behavioral Data
5. Budgeting,
Allocation,
Evaluation &
Recycling
IMC
4. Estimating Returnon-Customer- Investment
2. Valuation of
Customers/
Prospects
3. Creating & Delivering
Messages & Incentives
It Assumes Marketers
Decide What to Say, When to
Say It, the Volume Level It
Should be Said…..
Although Circular, It’s Still
All Linear and Outbound!
What Should We Do?
We’ve Identified Four Global
Challenges to Current
Marketing Methods
1. Digitalization
2. Financial planning models
3. Business models
4. Organizational and structural challenges
1. Digitalization Is -- and
Isn’t -- an Issue
Isn’t an Issue:

For consumers, users, viewers,
buyers, etc. it isn’t an issue
 It just happens – if I like it and
it’s fun, I use it

They adapt and adjust easily
and quickly

Digitalization is now part of the landscape
Is an Issue:

It’s the marketers who have digitalization
problems
 It doesn’t fit the current structural or management
sets, suites or planning models

Digitalization requires substantial
organizational change
 That’s the most difficult task for any manager
Marketers No Longer Lead
Customers ……..
We Follow Them
And, in Too Many Cases They Are
Much More Agile and Adaptive
The Challenge?
How Can Marketers
Keep Up?
One Way……
Listen to Them!
Less Talking,
More Listening!
2. Financial Planning Models


Stop looking backward……accounting ROI
Start looking forward…..forecasting actuarial
returns
Think of Customers as
Income Flows to the Firm


Build customer risk and value models

Build based on Internal Rates of Return –
invest to meet IRR, not control spending
Measure and manage customer income
flows…..those are the “lifeblood” of the firm
Determining Customer Financial
Value Share of
Total
Customers
Annual Demand
per Customer
Brand X
Our
Brand
Consumers
X
Contribution
to Brand
Purchases
(%)
Units/
X
Revenue/
Gross Margin
X
Brand Y
Penetration
$ C-BV = P
Buying
Rate
x
BR
Share
x
SOP
Margin
x
M
If We Know the Value of a
Customer,
We Can Invest Appropriately
More Forecasting,
Less ROI
3. Most Companies Have the
Wrong Business Model
Marketers Have Inherited a
Mass of Often Irrelevant
Planning Concepts and
Approaches




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4Ps and product management
Supply-chains
Internal KPIs
Hierarchy of Effects and funnels
Customer attitudinal models of success
Traditional 4Ps
Supply-Chain Model
Final Packaging
Assembly
Batch/line/Continuous
process
Raw material
Suppliers
Distributors
Agents &
Brokers
Retailers
Manufacturer
Customers/End Users
We Put “Value” Into the
Product….
Assuming Customers Would
Extract It……
With a Profit for Us!
But,
We Don’t Know If What We
Put In Is the “Value”
Customers Want
That’s Why Supply Chains
Are All
“Sales Based Models”….
Sell What We Have Made!
What We Really Need …
Wants/
Needs/
Desires
Recognized/
Unrecognized
Appropriateness
of Solution
Knowledge of
Solution
Value/Sacrifice
to Obtain
Access to
Solution
Market Planning
Solution
Seeking:
Considerations
Customer-Driven
Demand-Chain Model
Marketing/
Marketing/
Sales Sales
Production
R&D
Admin
Customers/End Users
Intermediaries
Based on What Customers
Want and Need…..
Relying on What They Are
“Saying” and “Doing”
Using Data Customers and
the Marketplace Have
Created
The Data Flood
Network #1:
Customers
Network #5:
Communication Delivery
Network #2:
Data
Network #3:
Analytics
Network #4:
Marketing Planning
Creating Customer Focus
With a “SIVA” Model

Solutions – what problems, issues, wants
and needs customers have?

Information – what knowledge, experience,
background, details customers need?

Value – what value will customers receive
and what will the have to give up?

Access – where do customers want to buy,
how do they want to learn, how do they
want to acquire
Recognizing Marketing Must
Be Networked, Dynamic and
Non-Linear
Recognizing Customer
Patterns as the Critical
Ingredients
We Must Become
Collaborative Marketers and
Communicators and
Share That Value With
Customers
More on Research and
Understanding,
Less on Campaigns and
Short-Term Incentives
4. A Major Internal
Challenge:
Organizational Structures
Most Organizations Are Still
Based on
“Command and Control”
Lines and Boxes
We Still Look Like This
CEO
Marketing
Marketing
Sales
Sales
Source: Adapted from Cranfield School of Management
Human
Country C
Resources
IT/Digital
Region
X
Operations
Where Are the Customers?
We Must Put Customers at
the Center of the
Organization?
We May Have to Change the
Content of All the Bubbles
Customer
Centric
Model
Needed: Horizontal Planning
Processes That Focus on Customers
CEO
Marketing
Finance
Sales
Information
Technology
Value Creation Process
Channel Management Process
Information Management Process
Performance Management Process
Source: Adapted from Cranfield University
Customers
Strategy Development Process
Operations
Final Thought
If We “Flip the Marketing
Models”,
Will Companies be Ready for
Our Students When They
Graduate?
Our Goal…
A Data-Driven, Real-Time Business Model
Network #1:
Customers
Network #5:
Communication Delivery
Network #2:
Data
Network #3:
Analytics
Network #4:
Marketing Planning
Based on a Customer-Focused
Response Model
S

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
I
V
A
Solution(s) – Customer Pain Relief
Information – Sorted and Supplied
Values – Input and Outcomes
Access – Client’s Where and When
Can We Reach Our Goals?
I’m Betting We Can Adapt
and Adjust
If We Don’t, I’m Out of a Job!
If you want to discuss, contact me at
Don E. Schultz Ph.D.
dschultz@northwestern.edu