Thriving with Marketing 3.0
Jeddah, Saudi Arabia,
October 10, 2010
Winning in Hard Times
Session One. How to meet today’s and tomorrow’s challenges
with Marketing 3.0.
Session Two. How to increase your brand power.
Session Three. How to manage sales and marketing.
Using Marketing 3.0 to Meet the New Challenges
On a scale of 1 to 3 (3 = highest),
How much is this a challenge to your company?
• Distrust of business
• Economic recession and turbulence
• Technological advances and disruptions
• Environmentalism and climate change
• The new social media
• Political and regulatory changes
Is Your Company Going to Fail?
Signs to Watch for
• James Collins wrote in How the Mighty Fall :
– Stage 1. Successful companies get arrogant and
think they can do many things.
– Stage 2. They pursue aggressively wild growth.
– Stage 3. They ignore early warning signs of failure
– Stage 4. Their failure becomes very public.
– Stage 5. If they don’t reform, they finally go
• Consider General Motors.
Economic Recession and Turbulence
• Distinguish between:
• Risk reduction strategies
– Larger reserves
– Shared investments
– Early warning systems
– Scenario planning
– Corporate social responsibility
• Photographic film
• Wired telephones
• Store retailing
• Classroom education
• Offset printing
• General hospitals
• Open surgery
• Cardiac bypass surgery
• Manned fighters
• Full service stock brokerage
• Digital photography
• Mobile telephones
• On-line retailing
• Distance education
• Digital printing
• Outpatient clinics
• Endoscopic surgery
• Unmanned aircraft
• On-line stock brokerage
Source: Clayton M. Christensen, The Innovator’s Dilemma, p. xxix.
Tomorrow Will Be Different
Yesterday Today Tomorrow
Ford Toyota Cherry
Department stores Wal-Mart Internet retail
Digital Equipment Dell RIM Blackberry
Delta Southwest, Ryan Air SkyWest, Air taxis
IBM Microsoft Linux
At&T Cingular Skype
Sony DiskMan Apple iPod Cell Phones
Source: Clayton Christensen
Consider How Marketing
• Old definition of marketing
– “Act or practice of advertising and selling a product” (Random
House Webster Dictionary of American English 1997)
• New definition of marketing
– “Marketing is the activity, set of institutions, and processes for
creating, communicating, delivering, and exchanging offerings
that have value for consumers, clients, partners, and society at
large.” (American Marketing Association, 2008)
• Offerings include products, services, experiences, places,
persons, ideas, and causes
Sales Precedes Marketing
• In the beginning there was sales.
• Marketing appeared later to help sales people:
– By using marketing research to size and segment the
– By using communications to build the brand and
develop collateral materials
– By finding leads through direct marketing and trade
• Marketing was originally located in the sales department.
• Then marketing grew as a separate department responsible
for the marketing plan (4Ps) and brand-building.
Stages in the Development
of the Marketing Discipline
1. Selling stage. (the idea of setting up selling systems
involving distribution, sales people and advertising).
2. 4P stage. (the idea of integrating the marketing tools).
3. STP stage. (the idea of refining the market targets and
4. Customer Relationship stage. (the idea of building a loyal
5. Co-creation stage. (the idea of involving customers in
developing products and communications).
Marketing Objective, Process,
• R -> STP -> MM -> I -> C
MARKETING’S RECENT LOSS OF EFFECTIVENESS
MARKETING will be less
effective in the next few
Marketing budgets will be
Companies will want
marketers to do more with
demand more TRADE
PROMOTION. This will
leave less money for
advertising and consumer
promotion for brand
building and ultimately
reduce brand equity.
Investors will then
downgrade the stock.
This will leave the
company with fewer
resources to prop up
This is a VICIOUS
Traditional media such
as TV 30-second spots,
newspapers, etc., are
Categories are so
heavy price cutting
will be UNAVOIDABLE
The public, in its wish
to spend less, will be
less inclined to pay
higher prices for top
brands where the
quality differences are
minimal. There is a
strong shift to store
brands and sub-
brands. This means
that top brands are
overvalued and there
may be a brand
Social media networks
will play an
role in shaping brand
STRATEGIC vs TACTICAL MARKETING
Most marketing departments are engaged in brand-maintenance instead of brand-
Company marketers spend only 15-30% of their time doing true marketing activities.
The rest of the time is spent on forecasting volume, securing approvals on label
artwork, checking manufacturing schedules, and doing routine analysis.
Strategic marketing is missing in many marketing departments. Strategic marketing
requires taking a 3-5 year view of the business.
Markets TODAY’s Product Create TOMORROW’s Product
The Age of Social Media.
Marketers have Lessening Influence
in Shaping Their Brand Image
Managers listened to the
consumers’ voices to understand
their minds and capture market
Consumers play the key role of
creating the value through co-
creation of product and service
about many products can exceed the
amount of communication under the
Thus a brand can be hijacked.
see Alex Wipperfürth, Brand Hijack: Marketing
without Marketing, New York: Portfolio, 2005
Everyone is talking negatively about
There is no talk about the company
The talk is a mix of good and bad
Virtually all the talk is favorable
THE FUTURE OF MARKETING
The Four Ps
(Product, Price, Place,
Evolution of a company’s relationship to its customers:
Make a Product
customer input and
to provide ideas and
The new ways of creating product and experience through collaboration of companies,
consumers, suppliers, and channel partners interconnected in a global network of
C.K. Prahalad and M.S. Krishnan, The New Age of Innovation: Driving Co-created Value Through Global Networks, New York:
Three key processes of :
1 2 3 Ask for consumer feedback and
enrich the platform by
incorporating all the
customization efforts made by
the network of consumers.
customize the platform
to match their own
A company creates a
MARKETING 1.0 vs MARKETING 2.0 vs MARKETING 3.0
How companies see
MARKETING 1.0 MARKETING 2.0 MARKETING 3.0
Satisfy and retain the
Make the world a better
Industrial Revolution Information Technology Social Media
Mass Buyers with
Smarter Consumer with
Mind and Heart
Whole Human with
Mind, Heart, and Spirit
Product development Differentiation Values
Corporate and Product
Corporate , Vision,
ProfitAbility ReturnAbility SustainAbility
Be BETTER DIFFERENTIATE
Mind Heart Spirit
Values-Based Matrix Model
ProfitAbility ReturnAbility SustainAbility
Be BETTER DIFFERENTIATE
Mind Heart Spirit
For SC Johnson, creating
value means helping
communities prosper while
achieving profitable growth
for the company.
SC Johnson Public
We believe our
strength lies in our
MIND HEART SPIRIT
shopping bags Base of the Pyramid
Contributing to the community
well –being as well as sustaining
and protecting the environment
To be a world leader in delivering
innovative solutions to meet
human needs through
We create economic value
We strive for environmental
We advance social progress
S. C. JOHNSON VALUE-BASED MATRIX
Companies Americans Love
Amazon, 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.
The researchers found these “firms of
endearment” to be highly profitable.
They also found eight characteristics
common to these firms.
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.
Marketing the Mission to…
Marketing 1.0 Marketing 2.0 Marketing 3.0
MIND HEART SPIRIT
ECONOMIC- VALUE PEOPLE-VALUE ENVIRONMENT-
PROFITS SOCIAL PROGRESS SUSTAINABILITY
MOVING TOWARD MARKETING 3.0
•Where is your company now?
•Where do you want it to be?
•What would steps would you take?
• Re-moralize the market
• Re-localize the economy
• Re-capitalize the poor
The brand name may account for more than half
of the brand value on the balance sheet.
Almost 70% of the market capitalization of such brands as Nike and Prada lie in its
intangibles, especially the brand.
The former chairman of Quaker Oats said: “If the business were split up, I would
take the brands, trademarks, and goodwill, and you could have all the bricks and
mortar—and I would fare better than you.”
What’s In a Name? Everything!
Donald Trump’s family name is
Dumpf. Drumpf Towers?
Alphonso D’Abruzzo renamed
Chinese gooseberry renamed kiwifruit.
Hog Island in the Bahamas renamed Paradise
Your Brand Needs to
Own a Word
• Mercedes - engineering
• BMW - driving
• Disney - family fun entertainment
• Saturn - no hassle car buying
• FedEx - overnight
• Wal-Mart - low prices/good values
• Hallmark - caring
• Nike - performance
• 3M - innovation
• Volvo - safety
• Starbuck - best coffee experience
A Brand Must be More Than a Name
• A brand must trigger words or associations (features and
• A brand should depict a process (McDonald’s, Amazon).
• A great brand triggers emotions (Harley-Davidson).
• A great brand represents a promise of value (Sony).
• The ultimate brand builders are your employees and
operations, i.e., your performance, not your marketing
Brand Asset Valuator Model
The brand’s point
Relates to margins
and cultural currency
How you regard the
Relates to perceptions
of quality and loyalty
of the brand
Relates to awareness and
How appropriate the
brand is to you
Relates to consideration
Future Growth Value
Current Operating Value
BRAND STRENGTH BRAND STATURE
Figure 2: BrandAsset ®Valuator Model
LEADING B2B BRANDING
Find a Way to Brand These Commodities
“It is possible to brand sand, wheat, beef, bricks, metals, concrete, chemicals,
corn grits, bananas, apples, aspirin, …”(Sam Hill, How to Brand Sand).
CAN YOU DESIGN NEW FEATURES FOR AN AUTO INSURANCE POLICY?
Creating genuine customer value: Progressive Insurance
Name Your Price lets
customers customize their
policy to fit their budget.
“ I want an easier way to see how I can
meet my insurance needs at a great
MyRate rewards lower risk
drivers with lower rates.
“ I don’t drive a lot of miles, I’m a safe
driver, and I’m not usually on the road
late at night when accidents are most
likely to happen. Since I’m less likely to
be in an accident, shouldn’t I pay less for
Build a Brand Community!
• Examples: Harley Davidson, Saturn, Porsche,
BMW, Apple user groups, Lexus owners, Barnes
and Noble bookstores, The Body Shop, Ikea.
• Harley’s Owner Groups:
– HOGs have 250,000 members divided into 800
chapters: VietNam vets, lesbians, born again
Christians, Ladies on Harleys.
– Tools include: Rallies, anniversaries, lectures on
maintenance and safety, competitions, shows,
– The researchers describe Harley as “a religious icon
around which an entire ideology of consumption is
Develop a Memorable Brand Slogan
• BA, “The World’s Favorite Airline”
• American Express, “The Natural Choice”
• AT&T, “The Right Choice”
• Budweiser, “King of Beers”
WHAT DO YOU THINK OF THESE SLOGANS
• Ford, “Quality is #1 Job”
• Holiday Inn, “No Surprises”
• Lloyds Bank, “The Bank that Likes to Say Yes”
• Philips, “From Sand to Chips”
» “Philips Invents for You”
» “Let’s Make Things Better”
Brand Positioning = Brand Journalism
“Marketers should communicate different messages to different market
segments at different times, as long as they broadly fit within the basic
-Larry Light, former McDonald’s CMO-
McDonalds is positioned differently in the minds of kids, teens, young adults,
parents and seniors. It is positioned differently at breakfast, lunch, dinner,
snack, weekday, weekend, with kids or on a business trip.
Coffee and the
is often unsatisfying
Desire for better
coffee and a better
Local cafes, Fast
food & convenience
me the richest
HYPOTHETICAL STARBUCKS BRAND POSITIONING BULLSEYE
The Mercedes-Benz “Enduring Passion”
“The brand Mercedes-Benz is a brand icon, from its founding day till today.”
The GOOD Outdoor-
• Engaged Citizenship
• Global Human
The 3i Model of Branding
SUSTAINABILITY AND SHAREHOLDER VALUE
There is a link between corporate sustainability and strong share
Companies that put more emphasis on social and environmental impacts
reported annual profit growth of 16% and share price growth of
45% while those from companies that did not put a lot of emphasis reported
annual profit growth of only 7% and share price growth of only
12%. (Economist Intelligence, 2008)
More executives believe that the concept of sustainability is good for
corporations in attracting consumers and employees and improving
Needed: indices that measure how well a company performs in the triple
bottom line: profit, planet, and people.
To encourage companies to improve their economic, environmental, and social
impact on the society.
FTSE4Good Index Good companies work toward environmental sustainability, have
positive relationship with all stakeholders, protect universal human
rights, possess good supply chain labor standards, and counter
Corporate sustainability as “a business approach that creates long-
term shareholder value by embracing opportunities and managing
risks deriving from economic, environmental and social
Goldman Sachs Introduce the GS Sustain Focus List, which includes the list of
companies with sustainable practices
Selling Sustainability to Investors
To convince shareholders, the company needs to provide tangible evidence
that the practice of sustainability will improve shareholder value by creating
a competitive advantage.
The issue is to find a
linkage of between
THREE important metrics that can be quantified financially:
Improved cost productivity
Higher revenue from new market opportunities
Higher corporate brand value
(For details, see Marketing 3.0).
Ending the War Between
Sales and Marketing
Sales and Marketing Complaints
• An Oracle salesperson told us, “Marketing sends us business cards they
collect at trade shows from people who don’t need us and don’t want to
see us. They call these things “leads”.”
• Marketing says “We generate about 25,000 leads a year for sales. Most of
these leads aren’t followed up and go cold.”
• “Marketing,” a senior airline sales manager told us, “are the people who
come up with these fancy value propositions that mean nothing to
customers but do tell us how out of touch they are with business reality.”
• The Head of Marketing had a different perspective. “We have a value
proposition that’s powerful – if only our sales force knew how to sell it.”
The Six Key Responsibilities
of the CMO
1. Gather meaningful customer insights.
2. Strengthen the brands.
3. Drive new product development based on customer
4. Utilize new marketing technology.
5. Measure marketing effectiveness.
6. Improve marketing’s working relation with the other
Source: Adapted from a McKinsey study
The integration of sales and marketing tends to progress through
four distinct stages or levels of complexity.
Define the Existing Level of Relationship
Undefined Defined Aligned Integrated
Where is Marketing Going?
• More companies are adopting a market and customer
• 47% of Fortune 1000 firms have a CMO (80% have a CFO).
• Your CMO should be an active participant in the company’s
strategic planning group.
• Decide if you want your company to become market-driven or