Rethinking Marketing

Rethinking Marketing

Rethinking MarketingGROUP 8SimonLester Tatiana KatieSARACompanies can now interact directly with customers, soThey must radically reorganize To put cultivating relationships ahead of building brandsPushing individual products

Marketing departmentChief marketing officerProduct & brand manager

Product profitability

Building long-term customer relationships

Customer departmentChief customer officerSubservient to customer manageroversees customer-focused functions(CMR, market research, R&D, customer service..)

Customer profitabilitymeasured by CLV, customer equityOUTLINECultivating CustomersReinventing MarketingThe CCOCustomer ManagersCustomer-facing functionsCRMMarket researchResearch and developmentCustomer serviceA New Focus on Customer Metrics

ForewordBeforeAn era of mass markets, mass media, and impersonal transactionsDeveloping a marketing strategy Identify market segments, set prices and promotions, plan mass media communicationsMeasuring performance by aggregate sales and profitabilityAfterCompanies have powerful technologies for interacting directly with customers, collecting and mining information, and tailoring their offerings accordinglyCustomers interact with companies deeply to shape the products and services they useNo amount of technology can really improve the situation as long as companies are set up to market products rather than cultivate customersThenMust shift focus from driving transactions to maximizing customer lifetime value4Cultivating CustomersBuilding relationshipsDepend onproduct managers and one-waymass marketing to push a productto many customersOrganized to push products and brandsProduct-Manager DrivenCustomer managers engage individual customers or narrow segments in two-way communicationsand build long-term relationships Designed to serve customers and customer segments

Customer-Manager Driven

5Cultivating CustomersB2B companies use key account managers and global account directors to focus on meeting customers evolving needs, rather than selling specific productsExample: IBMs Insurance Process Acceleration FrameworkB2C companies view customer relationships as evolving over time increasingly and they may hand off customers to different parts of the organization selling different brands as their needs changeExamples: Tescos Clubcard, American Express, one insurance and financial services company

Reinventing Marketingstrategy shift from transactions to relationships and create the culture, structure, and incentives necessary to execute the strategyDirectors and management are in charge of changing from transactions to relationships ; create the culture, structure and incentivesA variety of companies are making the transition.

7CEOCCOCustomer managersProduct managersCRMMarket ResearchR&DCustomer serviceReinventing MarketingNow, please, look at this structure. As already said CCO reporting to the CEO, besides this executive is responsible for designing and executing the firms customer relationship strategy and overseeing all customer-facing functions, such as Market Research, R&D and Customer service. A product managers and customer-focused departments report to CCO, and support the strategies of customer managers.8Reinventing MarketingThe CCO (Chief Customers Officers)A powerful operational position, reporting to the CEODesign and execute customer relationship strategy, Oversee customer-facing functionsPromote a customer-centric culture, remove barriers to the flow of customer informationInteract with their customers, in order to understand customers demand and show employees customer interactions importanceCustomer information becomes more important. So the blocking information structure must be torn downCCO is responsible for increasing the profitability of the customer through CLV (customer lifetime value), customer equity and word of mouth (or mouse)

Increasing from 30 (2003) to more than 300 todayDifferent companies in different industries now have CCOs:Cars and minivans : ChryslerChocolate products : HersheysTelephones : Samsung

reporting to the CEO, designing and executing the firms customer relationship strategy and overseeing all customer-facing functions

9Customer ManagersUltimate expression of marketing - Identify customers product needs and fulfill them T-shaped people (combining deep customer knowledge with broad organizational or product knowledge)Approach customers as behavioral scientists rather than marketing specialistBrand Managers, under the customer managers direction, supply the products that fulfill customers needs

Reinventing MarketingSo, Customer managers will be most effective when they are T-shaped, combining deep customer knowledge with broad organizational or product knowledge. They had approach customers as behavioral scientists, observing and collecting information about them, interacting with and learning from them. In the new customer department, customers needs must be identified, and Brand Managers, under the customer managers direction, supply the products that fulfill those needs. Recently, this has become a common trend in the B2B world. In this way, managers encourage customers to move from less-profitable Brand A to more-profitable Brand B, whereas traditionally, brand manager would encourage customers to stay for their own brand profit.10Customer-facing functionsMarket researchCRMA tool for gauging customer needs & behaviors to execute customer cultivation strategyCRM are taking 42% by IT group, 31% by sales, and only 9% by marketing. Internal users of marketing research extend beyond the marketing department to all areas that touch customers.The scope of analysis shifts from an aggregate view to an individual view of the customer activities and value.Put attention on what improves customers-focused metrics.Reinventing MarketingCRM is a tool for gauging customer needs & behaviors to execute customer cultivation strategy. Now some customer facing functions, which the customer department usually deals with, are being handled by the marketing department. Based on survey CRM are taking 42% by IT group, 31% by sales, and only 9% by marketing. The customer department should take CRM, therefore this means the department also needs to bring IT and analytic skills as well.As marketing concerns are shifted to the customers, market research should also be adjusted as well.1. Users of marketing research extend beyond the marketing department to all areas that touch customers.2. The scope of analysis shifts to an individual view of the customer.3. And need to put attention on what improves customers-focused metrics.11Customer-facing functionsCustomer ServiceR&DIntegrating R&D and marketing is a good way to bring customers into the design process to make sure that product decisions reflect real-world needsThe old R&D-driven models for new product development are giving way to creative collaborations, R&D must report to the CCOShould be handled in-house, under the customer departments wing to ensure that the quality of service is high and help cultivate long-term relationshipsIf customer service must be outsourced, the function should report in to a high-level internal customer manager, and its IT infrastructure and customer data must be seamlessly integrated with the companys customer databasesReinventing MarketingCRM is a tool for gauging customer needs & behaviors to execute customer cultivation strategy. Now some customer facing functions, which the customer department usually deals with, are being handled by the marketing department. Based on survey CRM are taking 42% by IT group, 31% by sales, and only 9% by marketing. The customer department should take CRM, therefore this means the department also needs to bring IT and analytic skills as well.As marketing concerns are shifted to the customers, market research should also be adjusted as well.1. Users of marketing research extend beyond the marketing department to all areas that touch customers.2. The scope of analysis shifts to an individual view of the customer.3. And need to put attention on what improves customers-focused metrics.12A New Focus on Customer MetricsFocus less on product profitability and more on customer profitabilitypay less attention to current sales and more to CLVshift focus from brand equity to customer equitypay less attention to current market share and more attention to customer equity shareCustomer level informationDifferent strategic decisions require different levels of informationKey metricMarketing activitiesKey sources of informationIndividual customercustomer lifetime valuedirect marketing activitiescustomer databasesSegmentlifetime value of the segmentmarketing efforts targeted at specific customer segmentscustomer panels and survey dataAggregatecustomer equitymass marketing effortsaggregate sales data and survey dataA New Focus on Customer MetricsMaking a product-focused company fully customer centric will be difficult, cause the change requires overcoming entrenched interests.But however daunting, the shift is inevitable.It will soon be the only competitive way to serve customers.

Future of marketing? Future of marketing is not about doing and saying things to people it is about doing things with and for people and a customer centric culture. So :Future of marketing is collaborative let your customers participate in your decisionsFuture of marketing is personal let your customers chose and designFuture of marketing is helpful, playful & generous make your customers feel touched, moved and inspiredFuture of marketing is honest never lose integrity

17How to become?Five Big Ideas for Becoming a Customer Centric Organization

https://blogs.oracle.com/socialspotlight/entry/five_big_ideas_for_becoming18Calculate Customer Lifetime Value Historic CLV Simply the sum of the gross profit from all historic purchases for an individual customer.CLV (Historic) = (Transaction1+Transaction2+Transaction3...+TransactionN) x AGMAGM = Average Gross MarginPredictive CLV A predictive analysis of previous transaction history and various behavioural indicators which forecasts the lifetime value of an individual.CLV=(( T x AOV )AGM)ACTT = Average monthly transactionsAOV = Average order valueALT = Average Customer Lifespan (in months)AGM =Gross margin

Product-Centric CompanyCustomer-Centric CompanyStrategyGoalBest product for customerBest solution to customerMain OfferingNew productsPersonalized packages of products, service, support, education, consultingValue Creation RouteCutting-edge products, useful features, new applications Customizing for best total solutionMost Important CustomerMost advanced customer Most profitable, loyal customer Priority-Setting BasisPortfolio of productsPortfolio of customers customer profitability PricingPrice to marketPrice for value, riskStructureOrganizational ConceptProduct profit centers, product reviews, product teamsCustomer segments, customer teams, customer P&L (profit-and-loss) ProcessesMost Important ProcessNew product development CRM and solutions developmentRewardsMeasuresNumber of new productsPercentage of revenue from products less than two years oldMarket shareCustomer share of most valuable customerCustomer satisfaction Lifetime value of a customerCustomer retentionPeopleApproach to PersonnelPower to people who develop productsPower to people with in-depth knowledge of customers businessMental ProcessDivergent thinking: How many possible uses of this product? Convergent thinking: What combination of products is best for this customer?Sales BiasOn the side of the seller in a transactionOn the side of the buyer in a transactionCultureNew product culture: open to new ideas, experimentationRelationship management culture: searching for more customer needs to satisfySource: This table is a composite of points describing product- and customer-centric companies taken from Peppers and Rogers (1993, 1997, 2001), Treacy and Wiersema (1995), Seybold (1998, 2001).20Sherlock Holmes said,one tends to twist facts to suit theories instead of theories to suit facts.By reading this article, It must be realized that the best marketing in the world now is to put your customers at the center of everything you do instead of focuing on the company or the brand. And the most important is that you need to put it into action. The facts make us must to do so. The value of customer service is becoming more and more popular today but only few companies give up thier old routine.It's still an idea need to be promoted.Reinventing MarketingCustomer ManagersUltimate expression of marketing - Identify customers product needs. Brand Managers, under the customer managers direction, supply the productsProduct managers Customer managersT-shaped people (combining deep customer knowledge with broad organizational or product knowledge)Approach customers as behavioral scientists rather than marketing specialistExamples:B2BProcter&Gamble

Reinventing MarketingCustomer- facing functionsCRMA tool for gauging customer needs & behaviors to execute customer cultivation strategyIT and analytic skillsMarket researchUsers of marketing research extend beyond the marketing department to all areas that touch customers.The scope of analysis shifts from an aggregate view to an individual view of the customer.Put attention on what improves customers-focused metrics.

Future of marketing? Future of marketing is not about doing and saying things to people it is about doing things with and for peopleFuture of marketing? Future of marketing is collaborative let your customers participate in your decisionsFuture of marketing? Future of marketing is personal let your customers chose and designFuture of marketing? Future of marketing is helpful, playful & generous make your customers feel touched, moved and inspiredFuture of marketing? Future of marketing is honest never lose integrity