North Arctic
Federal University
Marketing
Building a
Customer-Driven Business
© professor colin egan, 2012
Marketing
Session
Introduction
© professor colin egan, 2012
Slide 2
Marketing Theory & Practice:
Corporate Experience
• Royal Philips International
– Philips Marketing Academy
• IBM
– IBM Marketing University
• BP & Castrol
– BP Sales & Marketing Academy
• YKK
– Marketing Excellence Programme
• Coca-Cola
– Coca-Cola Chair in Marketing,
IEDC – Bled School of Management, Slovenia
© professor colin egan, 2012
Slide 3
Marketing Theory & Practice:
UK Higher Education Experience
• University of Bradford Management Centre
– Research, MBA & Executive Education
• University of Warwick: Warwick Business School
– Research, MBA & Executive Education
• Leicester Business School: De Montfort University
– Professor of Strategic Management; Director of Research, Department of
Corporate Strategy; Advisor to Senate on New University Strategy
• Universities of:
Strathclyde; Lancaster; Aston; St. Andrews
– External Examiner
© professor colin egan, 2012
Slide 4
Marketing
The
Central Principles
of
Marketing
© professor colin egan, 2012
Slide 5
Marketing
A Themed Approach
Delivered
Stakeholder
Value
Strategic
Clarity
Operational
Excellence
Organizational
Design
© professor colin egan, 2012
Slide 6
A Tall Order:
Defining Marketing
A number of processes designed to analyze,
anticipate and create customer needs &
preferences. To create a compelling value
proposition to meet these needs & preferences fully
and better than rivals. To capture the imagination of
customers and to secure their loyalty. To organize
all the firm’s assets and resources to maximize the
customer experience and the company’s profitability
along with that of selected business partners.
© professor colin egan, 2012
Slide 7
The Central Principles
of Marketing Management
Customer
Value
© professor colin egan, 2012
Slide 8
The Many Dimensions of
Customer Value
Customer
Value
© professor colin egan, 2012
Slide 9
Driving Customer
Satisfaction: Delivering Value
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Economic (EVC)
Psychological (PVC)
Customisation
Product functions
Product durability
Product reliability
Delivery reliability
Delivery time
Pre-sale service
Post-sale service
Price
Financial terms
Etc.
• Relationship image
© professor colin egan, 2012
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Slide 10
Previous relationship
Trust
Helpfulness
Contactability
Help in crises
Order responsiveness
Advice & information
Complaints processing
Harmonious dealings
Etc.
Delivering
Value in B2B Markets
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Customisation
Forward linkages
Lending equipment
Lending staff
Joint R&D
Dual selling
Help in crises
Free trials
After-sales service
Pre-sales advice
© professor colin egan, 2012
Slide 11
Free installation
Returns service
Electronic linkages
Keep in touch service
JIT delivery
Any order size ok
Consultancy
Countertrade
Satisfaction studies
Etc.
The Central Principles
of Marketing Management
Customer
Value
© professor colin egan, 2012
Slide 12
Dimensions of Strategic
Marketing Management
Market
Environments
Opportunities
Threats, KSFs
Strategy
Capabilities
Objectives, Markets,
Differential Advantage
Processes, Systems,
Skills, Culture, etc.
Process
Leadership
Functions & Finance
Networks
© professor colin egan, 2012
Slide 13
A Logical TOWS (SWOT) Analysis
Sequence for Marketing Success
1
Analyse
Environment
4
Analyse
Organization
2
Identify Threats
& Opportunities
5
Identify Strengths
& Weaknesses
3
Deduce Key
Success Factors
6
Identify Distinctive
Capabilities
7
‘Fit’ Leads to Superior
Competitiveness &
Performance in
Marketing Strategy
© professor colin egan, 2012
Slide 14
Scanning & Sensing: Analysing
The Marketing Environment
Demographic
Cultural
Physical
Customers
The Firm
Social
Publics
Shareholders
Marketing
Strategy
Competitors
Internal &
Immediate
Environment
(Micro)
© professor colin egan, 2012
Economic
Suppliers
Regulators
Intermediaries
Technological
Slide 15
Political
Legal
External
Environment
(Macro)
General Environment Changes &
Organizational Implications I
Changes
Implications
Affluence & quality
expectations
Quality offerings
Service expectations
Tailored offerings
Micro markets
Customisation
Fashionisation
Speed to market
Consolidating competition
Acquisitions, alliances,
networks & partnerships
© professor colin egan, 2012
Slide 16
General Environment Changes &
Organizational Implications II
Changes
Implications
Intensive competition
Differential advantage
Commoditisation
Innovation & branding
Erosion of brands
Partnerships & strong
branding
New channels
Selective adoption
Technology
First and/or fast
© professor colin egan, 2012
Slide 17
General Environment Changes &
Organizational Implications III
Changes
Implications
Legislation
Conform / exploit
Green concern
Conform / exploit
Demography
Selective targeting
Globalisation
Standardisation with
adaptation
Economic
Strategic fit
© professor colin egan, 2012
Slide 18
The Central Principles
of Marketing Management
Customer
Value
© professor colin egan, 2012
Slide 19
The Market
Segmentation Process
Segment
Markets
Select Target
Markets
Group markets
with similar
needs
and separate
them
from others
with
different needs
& preferences
Select the most
attractive
markets
given key
success factors,
organizational
capabilities, risk
assessment and
long term profit
potential
Decide how many
markets to target
and with how
much marketing
strategy
standardisation
(for efficiency) and
adaptation (for
effectiveness)
where
© professor colin egan, 2012
Establish
Competitive
Positioning
Standardise
Or Adapt
Ensure that
customers in
each
market perceive
that we can
satisfy their
needs better
than rival
offerings
how
Slide 20
Categories & Significance of
Market Segmentation Criteria
Macro Background
Significance
- Geography
- Demographics
- etc.
Informs the supplier about
who the customer is
Benefits
BenefitsSought
Sought
Significance
- Needs & Preferences
- Supplier selection criteria
Guides the supplier’s Value
Proposition design
Behavioural
Significance
- Psychographics - Channels
- Buy Class
- Loyalty
- DMU
- Usage
© professor colin egan, 2012
Slide 21
Guides the supplier’s
Marketing Plan design
Market Segmentation for
Organizational Markets
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Demographic
Geography
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Industry
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Retailing
Financial services
Manufacturing
Etc.
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• Lifestyle characteristics of
employees
• Health & Safety
• Diversity & Inclusion
Customer Size
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Country
Region
City
Climate
Topography
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Large, Medium, Small
Key Account Profile
•
Strategic, A+, B+, served through
distributors etc.
© professor colin egan, 2012
Behavioural
Usage Rates
Adopter Groups
Distribution versus Direct
Decision Making Unit (DMU)
Influences
Loyalty Status
Psychographic
• Demanding versus Tolerant
• BENEFITS SOUGHT
Slide 22
The Central Principles
of Marketing Management
Customer
Value
© professor colin egan, 2012
Slide 23
Differential Advantage
• Definition:
– Being superior to rivals and/or unique at supplying the
mixture of benefits valued by customers in a specific
market segment
• Can be the product, the availability, the price, the service,
the brand associations, strong relationships etc.
• Can be one, but preferably many, competitive factors
• Should be sustainable
• Should be improved on an ongoing basis
• Should be profitable in the short and/or long term, i.e.,
differentiation investments (technology, brand etc.) should
be covered by better market positioning and/or stronger
prices to reflect the enhanced customer value delivered
© professor colin egan, 2012
Slide 24
Differential Advantage Factors
Knowledge
Advantage
Features
& Performance
Service
Support
Intensity
(Advertising /
Sales Force)
Information
Processes
Power!
Superior
Technology
Content
Human Resource
Competencies
Personnel Rules
& Procedures
© professor colin egan, 2012
Inputs
Quality
Slide 25
Technology
Support
The Central Principles
of Marketing Management
Customer
Value
© professor colin egan, 2012
Slide 26
The
Strategic Marketing Mix
Definition:
The mixture of controllable variables
that the organization blends to
provide customer benefits and
differential advantage in the
target market segment
Combines:
• Value Proposition
• Communications
(marcomms)
© professor colin egan, 2012
Quality
Features
Options
Packaging
Etc.
Cost/Price
Value
Terms
Internet
Etc.
After Sales
Installation
Training
Supports
Etc.
Segment
Channels
Locations
Logistics
Internet
Etc.
Slide 27
Selling
Advertising
Sales Promo.
Internet
Etc.
Marketing
Organizational
Analysis
© professor colin egan, 2012
Slide 28
The Logical TOWS (SWOT) Analysis
Sequence for Marketing Success
1
Analyse
Environment
4
Analyse
Organization
2
Identify Threats
& Opportunities
5
Identify Strengths
& Weaknesses
3
Deduce Key
Success Factors
6
Identify Distinctive
Capabilities
7
‘Fit’ Leads to Superior
Competitiveness &
Performance in
Marketing Strategy
© professor colin egan, 2012
Slide 29
Organizational
Capability Analysis
Organization for
Marketing
Strategic
Capabilities
-
Marketing orientation
Functional integration
Adequate budgets
Marketing info, planning
& control systems
- R&D, production &
distribution processes
- Marketing skills levels
& training
- Awareness of KSFs
- Distinctive capabilities
- Effective objectives
- Segment selection
- Differential advantages
- Innovation
- Marketing assets
- Generic strategy
- Balanced portfolio
© professor colin egan, 2012
Slide 30
Organizational
Distinctive Capability Factors
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Market share
Customer share
Customer loyalty
Market knowledge
Image
Innovation
Flexibility
Technology
Internet savvy
© professor colin egan, 2012
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Slide 31
Networks
Financial strength
Costs
Prices
Quality
Services
Customisation
Channels
Product range
Etc.
Customer-Based
Marketing Assets (Liabilities)
Tied-in
Clients
Satisfied
Clients
Superior
Image
Customer
Based
Assets
Superior
Price / Value
Quality
Fit
Superior
Products
Superior
Service
© professor colin egan, 2012
‘Thought’
Leadership
Slide 32
Organization-Based
Marketing Assets (Liabilities)
Planning
& Systems
Deep
Pockets
Marketing
Culture
Organization
Based
Assets
Operational
Excellence
Employee
Knowledge
Advanced
Technology
Flexible
Operations
© professor colin egan, 2012
Managerial
Knowledge
Slide 33
The TOWS (SWOT) Summary
Threats
Market
KSFs
Opportunities
Weaknesses
Company
DCs
Strengths
© professor colin egan, 2012
Slide 34
Marketing
Organization &
Implementation of
Marketing Strategies
© professor colin egan, 2012
Slide 35
Evaluating
a Marketing Strategy
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Validity: Reliability of information and assumptions
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Distinctive: Differentiated from competition, industry breakout
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Suitability: Given corporate strategy, objectives, etc.
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Feasibility: Given resources/competences
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Acceptability: Given company culture, ethics and values
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Consistency: Are the marketing elements balanced?
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Vulnerability: Given risks and contingency plans
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Flexibility: Can we adapt fast enough?
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Rewardability: Payoff versus risk
© professor colin egan, 2012
Slide 36
And Finally…
Explaining Superior Marketing Performance
Employee
Engagement
A
long term
perspective
Understanding
buyer
behaviour
Marketing
Excellence
Balanced
portfolio
Innovation
© professor colin egan, 2012
Slide 37
Market
environment
sensitivity
Asset-based
marketing
philosophy
Striving
for
competitive
advantage
The Role of Employee Engagement in
Organizational Success (McKinsey)
Strategy
Skills
(Competencies)
Staff
Shared
Values
Style
(Leadership)
Systems
Structure
© professor colin egan, 2012
Slide 38
Shared Values:
The Vector Metaphor
Desired Direction
1
Resultant Force
© professor colin egan, 2012
Slide 39
Shared Values:
The Vector Metaphor
Desired Direction
1
Resultant Force
Desired Direction
2
Resultant Force
© professor colin egan, 2012
Slide 40
Marketing
North Arctic
Federal University
Workshop Activities
© professor colin egan, 2012
Slide 41
Workshop Activity I:
NAFU Customer-based
Assets & Liabilities Analysis
Objective
To evaluate NAFU Strengths / Weaknesses / Distinctive Capabilities
from a Customer Assets & Liabilities Perspective.
Team
Mixed teams.
Media
Flip Chart.
Preparation
Using the template which follows, note the assets from the next slide,
discarding those which you think lack direct relevance and adding those
which you believe are more pertinent to NAFU. Feel free to add
additional sector-specific categories.
Execution
For each item rate NAFU performance on an eleven point scale (-5 thru
0 to +5). Negatives are liabilities (weaknesses); positives are assets
(strengths). The magnitude of the score reflects strengths, distinctive
capabilities, weaknesses, big weaknesses. List the high scoring
distinctive capabilities and big weaknesses.
Feedback
NAFU customer-based capabilities insights and performance
improvement actions.
© professor colin egan, 2012
Slide 42
NAFU Customer-Based
Marketing Assets (Liabilities)
Tied-in
Clients
Satisfied
Clients
Superior
Image
Customer
Based
Assets
Superior
Price / Value
Quality
Fit
Superior
Products
Superior
Service
© professor colin egan, 2012
‘Thought’
Leadership
Slide 43
NAFU Assets (Liabilities) Analysis:
Customer-based
Strengths/Weaknesses/DCs
Use 11 point Scale
-5 (W) thru 0 (N) to +5 (S)
Customer
Based
Superior Image
Thought Leadership
Quality Fit
Superior Products
Superior Service
Superior Price / Value
Satisfied Clients
Tied-in Clients
Etc…
© professor colin egan, 2012
Slide 44
NAFU
Improvement
Proposals
Workshop Activity II:
NAFU Organization-based
Assets & Liabilities Analysis
Objective
To evaluate NAFU’s Strengths / Weaknesses / Distinctive Capabilities
from an Organization Assets & Liabilities Perspective.
Team
Mixed teams.
Media
Flip Chart.
Preparation
Using the template which follows, note the assets from the next slide,
discarding those which you think lack direct relevance and adding those
which you believe are more pertinent to NAFU. Feel free to add
additional sector-specific categories.
Execution
For each item rate NAFU’s performance on an eleven point scale (-5 thru
0 to +5). Negatives are liabilities (weaknesses); positives are assets
(strengths). The magnitude of the score reflects strengths, distinctive
capabilities, weaknesses, big weaknesses. List the high scoring
distinctive capabilities and big weaknesses.
Feedback
NAFU Organization-based capabilities insights and performance
improvement actions.
© professor colin egan, 2012
Slide 45
NAFU Organization-Based
Marketing Assets (Liabilities)
Planning
& Systems
Deep
Pockets
Marketing
Culture
Organization
Based
Assets
Operational
Excellence
Employee
Knowledge
Advanced
Technology
Flexible
Operations
© professor colin egan, 2012
Managerial
Knowledge
Slide 46
NAFU Assets Analysis: Organization-based
Strengths/Weaknesses/DCs
Use 11 point Scale
-5 (W) thru 0 (N) to +5 (S)
OrganizationBased
Marketing Culture
Managerial Knowledge
Employee Knowledge
Advanced Technology
Flexible Operations
Operational Excellence
Deep Pockets
Planning & Systems
Etc.
© professor colin egan, 2012
Slide 47
NAFU
Improvement
Proposals
Workshop Activity III:
Competitive Positioning / Marketing
Actions Analysis
• The final activity leads to the creation of a
customer-based marketing mix
– Prepare a differential advantage profile (Value
Proposition/Communications Gaps) for one key
segment
– List Specific Marketing Mix Actions arising from
this analysis
• Use the following guidelines and framework
for guiding your discussion and preparing your
presentation
© professor colin egan, 2012
Slide 48
Differential Advantage/ Marketing
Actions Analysis
• This process identifies ‘Value Proposition Gaps’ and ‘Communications
Gaps’ in a business unit’s marketing programme
• Start by identifying a target market segment and evaluate its needs in
terms of a ranked list of benefits. Identify a ‘best-in-class’ rival who is
currently or potentially competing in this segment
• Undertake an objective evaluation of how the business unit thinks it
performs in meeting these benefits versus the named best-in-class
rival. Assume an external independent analysis
• The aim of the process is to benchmark against a ‘best-in-class’ rival
and all other competitors in the segment from: (i) A Value Proposition
perspective; (ii) A Customer Perception perspective.
© professor colin egan, 2012
Slide 49
This exercise has six stages
• Stage 1
– Name a clearly defined target market segment
• Stage 2
– Name a ‘best-in-class’ rival who competes in this
segment
• Stage 3
– Identify eight key benefits sought by customers
in the target market segment. Rank them in
order of stated customer priority
© professor colin egan, 2012
Slide 50
Exercise stages cont…
• Stage 4
– Rate how well your business performs in meeting
these customer benefits
– As a benchmark, use the ‘best-in-class’ rival
– Use a seven point measurement scale ranging from –
3 through zero to +3
– A score of zero states that you are no better or
worse than the named rival on each customer
benefit
– A negative score suggests you are worse, while a
positive score indicates superior performance
© professor colin egan, 2012
Slide 51
Exercise stages cont…
• Stage 4 (cont.)
– Use the full seven point scale and measure for
each customer benefit identified in Stage 3
– The magnitude of a positive score is a measure
of the sustainability of the advantage
– The magnitude of a negative score shows how
difficult and/or costly it would be to close the
gap with the rival
– Assume that the exercise would be undertaken
every six months
© professor colin egan, 2012
Slide 52
Exercise stages cont…
• Stage 5
– Rate how well customers perceive that your business performs in
meeting the benefits they seek
– Use the same seven point scale and benchmark against the same
rival
– A score of zero means that you are perceived as no better or
worse than your rivals in meeting the customer benefits sought
– A negative score indicates that you are perceived to be worse in
meeting the customer benefits sought
– A positive score indicates that you are perceived to be superior in
meeting the customer benefits sought
– Measure for each customer benefit identified in Stage 3
© professor colin egan, 2012
Slide 53
Exercise stages cont…
• Stage 6
– Evaluate the gaps between the company’s
objective evaluation of its own performance and
the perception of its customers in how well their
sought benefits are met, in both cases versus the
same best-in-class rival
– The output of the exercise will be in the form of a
matrix as shown in the next slide
© professor colin egan, 2012
Slide 54
Exercise Output:
Competitive Positioning Matrix
Target Market
Best-in-Class Rival
Customer Benefit (Ranked)
Column Totals
© professor colin egan, 2012
BU Value Proposition:
Customer Perception of
Performance in Meeting
BU's Performance
Customer Benefit
-3-2-1 0 +1+2+3
-3-2-1 0 +1+2+3
0
0
Slide 55
Action Analysis
Competitive Positioning
Value Proposition & Integrated Marcomms
MARKETING MIX
Customer
Needs
& Preferences
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Quality
Features
Options
Style
Brand Name
Packaging
Sizes
Services
Warranties
Returns
Internet
‘Cost’
of Ownership
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‘Sticker’ Price
Economic
Value
Psychological
Value
Discounts
Allowances
Payment
Types
Payment
Period
Credit Terms
Internet
Convenience
& Lifestyle
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•
Channels
Intensity
Locations
Logistics
Mode
Internet
Service
•
•
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•
•
Value Proposition
© professor colin egan, 2012
Slide 56
Pre-sales
Installation
After Sales
Tech Support
Training
Consultancy
Internet
Communications
(passive/interactive)
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•
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Advertising
Personal Selling
Sales Promotion
Sponsorship
Publicity
Public Relations
Exhibitions
Direct Mail
W.O.M.
Internet
Marcomms
Communications Objectives:
Low scores in Column 3
•
•
•
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•
•
•
Create Awareness
Inform
Persuade
Demonstrate
Educate
Generate Publicity
W.O.M
–
–
–
–
Editorial
Reference
Endorsement
Testimonial
© professor colin egan, 2012
Slide 57
Communications Objectives:
High Scores in Column 3
•
•
•
•
Remind
Reassure
Re-inforce
Relationship Management:
– Brand Communications in Consumer Markets
– Key Account Management in Organizational
Markets
– Effective Combination in Business-to-Business-toConsumer Markets
• Similar to New Market Segment
Communications to Encourage Brand
Switching
© professor colin egan, 2012
Slide 58