Originally sold bulk substances to unsophisticated markets but gross margins were too low to cover export costs.
New CEO, Parvinder Singh, challenged Ranbaxy to become a truly global company. He said: “Ranbaxy cannot change India. What it can do is to create a pocket of excellence. Ranbaxy must be an island within India.”
The company moved into higher-margin businesses like selling branded generics in large volume markets like China and Russia.
Ranbaxy then entered the U.S. and Western Europe. In just five years, more than half of its US$ 250 million revenues now come from outside of India.
Marketing must become strategic and drive business strategy.
A company needs to take a more holistic view of:
the target customers’ activities, lifestyle, and social space.
the company’s channels and supply chain.
the company’s communications.
the company’s stakeholders’ interests.
Holistic marketing will require strong software support.
HOLISTIC RELATIONSHIP MARKETING FRAMEWORK MARKET SPACE POTENTIAL OPPORTUNITIES BUSINESS INVESTMENT CUSTOMERS CORPORATION COLLABORATORS CUSTOMER FOCUS CORE COMPETENCIES COLLABORATIVE NETWORK 2) How can we define relevant market space? 3) What are the potential opportunities emerging from the market space? 4) What business capabilities and infrastructure required? 1) Who is involved?
4 COMPETITIVE PLATFORMS Market Offerings COGNITIVE SPACE CUSTOMER VALUE BUSINESS DOMAIN COMPETENCY SPACE Business Architecture BUSINESS PARTNERS CRM ERP RESOURCE SPACE SCM Marketing Activities Operational System Creating Value Delivering Value Customer Focus Core Competencies Collaborative Network Exploring Value
Responding to Low Margins and the Economic Slowdown
Commoditization and rapid imitation leading to shorter product life cycles.
Competition of cheaper brands from China and elsewhere.
Rising selling and promotion costs and decreasing sales effectiveness.
Proliferation of sales and media channels.
Power shifting to giant retailers who are demanding lower prices.
Recession: lower incomes and purchasing power.
Mergers, large company bankruptcies.
Improving Marketing Efficiency and Effectiveness
Improving marketing efficiency
buying inputs more efficiently
hunting down excessive communication and sales travel expenses
closing unproductive sales offices
cutting back on unproven promotion programs and tactics
putting advertising agencies on a pay-for-performance basis
Improving marketing effectiveness
replacing higher cost channels with lower cost channels
Shaping the business to meet needs of today’s customers
Improving alignment between functional activities and business definition
Organization mirrors current business activities
Optimizing current operations to achieve excellence.
Planning for tomorrow
Redefining the business
Reshaping the business to compete for future customers and markets
Making bold moves away from the existing ways of doing business
Reorganizing for future business challenges
Managing change to create future operations and processes
In many markets, the growing number of competitors in mature markets leads companies to target niches of low profitability. Market Size Number of competitors Average profitability of all competitors or players Y O G U R T S M A R K E T Time
“ The brand must be an essence, an ideal, an emotion. ” It must be supported by beautiful logos, clever tag lines, creative turns, edgy names, rave launch parties, big ticket giveaway promotions, and publicity buzz-making. (Advertising agency view)
“ The brand should have a target group in mind and be positioned to solve one of their problems better than competitive offerings.” Furthermore the brand’s reputation is ultimately based on product quality, customer satisfaction, employee communications, social responsibility, etc. (Kevin Clancy, CEO of Copernicus)
Companies must decide which driver(s) underlie each equity.
Source: Roland T. Rust, Valerie A. Zeithaml, and Katherine A. Lemon, Driving Customer Equity (New York Free Press 2000).
Transaction Marketing vs. Customer Relationship Marketing
Customer Relationship Marketing (CRM) represents a paradigm shift from Transaction Marketing (TM).
TM companies focus on products and making a sale. CRM companies focus on building a long-term relationship that produces satisfaction for the customer and profitability for the company.
TM companies promote everywhere in search of customers. CRM companies promote to a defined customer group and aim to make the right offer at the right time using the right channel to the right customer.
All companies must practice a mix of TM and RM. TM will be stronger in companies facing a large number of customers; RM will be stronger in companies facing a small number of customers.
Technology-enabled marketing (TEM) combines information technology, analytical capacities, marketing data , and marketing knowledge , made available to one or more marketing decision makers to improve the quality of marketing management.
Precision marketing is achieved through looking at large quantities of historic data with the help of data mining tools that search for meaningful patterns, and then creating mathematical equations that represent the underlying relationships within the data.
Predictive analytics are used to identify the right offers and right messages to beam through different channels to narrow customer segments, based on the propensity to respond. The expected profit of a campaign can be estimated.
Many tactical marketer tasks will be automated and free up marketers to focus on more strategic decision making.
A credit card for everyone, but with different interest rates, credit lines, and cash advances.
Tesco has identified 5,000 customer “needs” segments. It sends out some 300,000 variations of any given offer with redemption rates of 90%. It has formed clubs such as Baby Club, A World of Wine Club, My Time Club
Kraft has the names of 110 million customers and 20 thousand facts for each household. Kraft launched print magazine, Food & Family, that is delivered to the homes of 2.1 million Kraft customers in 32 versions tailored to 32 segments.
Consumers want a conversation, to dialogue, to participate, to be more in control…We’re going from one-dimensional, product-myopic marketing to three-dimensional marketing – that offers better solutions…more delightful experiences… and the opportunity for on-going relationships.
Self-Inform : Customers can research products and issues without relying on experts (e.g., WebMD, MedlinePlus.com)
Self-evaluate : Customers can compare product features and prices with a few clicks of a mouse (e.g., PriceGrabber.com, DealTime.com)
Self-segment : Customers can design and configure products (e.g., Dell, Reflect.com)
Self-price : Customers can propose prices to sellers (e.g., eBay, PriceLine.com, Free Markets)
Self-support : Customer can resolve problems by searching knowledgeable bases and discussion forums (e.g., www.remotecentral.com, www.treocentral.com )
Self-program : Customer can define their own media programming (e.g., TiVo, MyYahoo!)
Self-organize : Customers can join communities of interest to discuss products and issues (e.g., Meetup.org., IVillage)
Self-advertise : Customers can create feedback for their peers (e.g., Amazon.com, Planet Feeeback, BlogSpot.com)
Self-police : Customers can monitor reputations of manufacturers (e.g., eBay, BizRate.com)
Source: Mohan Sawhney lecture
The Evolution of Marketing Adapted from Prahalad and Ramaswamy 2004 Active dialogue with customers and communities Observe customers and learn adaptively Survey customers to elicit needs and solicit feedback Nature of customer interaction Engage customers in defining and co-creating unique value Attract, develop and retain profitable customers Define and create value for consumers Role of firm Prosumers-active participants in value co-creation Portfolio of relationships to be cultivated Passive buyers to be targeted with offerings Role of customer Market is a forum where value is co-created through dialogue Market is where various offerings appear Place where value is exchanged View of market Co-created experiences The customer relationship in the long run The company offering in an exchange View of value Beyond 2000 1980s 1950s Time frame Collaborative Marketing Relationship Marketing Transactional Marketing
2. Develop a Focused Offering to the Target Market
Value customers : Which customer segment(s) do we want to serve?
Value proposition : Can we create a value proposition that delivers superior value through dramatically higher benefits or lower costs?
Value network : Can we run a better network or radically redefine the value delivery system for the industry such as Dell and IKEA have done?
3Vs framework of Nirmalya Kumar
Choose to Serve a Unique Set of Customer Values
1. Identify the value expectations of potential customers.
2. Select the values on which to compete.
Nike values: Winning, roar of the crowd, extreme effort, the smell of sweat, physical development
New Balance values: Self-improvement, inner harmony, balanced, the smell of nature, spiritual development
3. Analyze the ability of the organization to deliver those values.
4. Communicate and sell the value message.
5. Deliver the value promised and continuously improve the company's value model.
See J. Nicholas Debonnis, et. al, Value-Based Marketing for Bottom Line Success: 5 Steps to Creating Competitive Value (McGraw-Hill, 2004)
3. Design the Marketing From the Customer-Back
Marketing must be run as a set of value finding, creation, and delivery processes, not 4P functions. The four Ps are seller oriented.
The 4As are buyer oriented.
Market value potential = A1 x A2 x A3 x A4
If A1=100%, A2=100%, A3=50%, A4=50%, Then MV=25%
Source: Jagdish Sheth
4. Focus on Delivering Outcomes, Not Products. Source: Kumar Indirect materials mgt. MRO items WW Grainger Guaranteed uptime Trucks Scania Broken rock Explosives ICI Explosives Uninterruptible power Diesel engines Cummings Animal weight gain Animal feed BP Nutrition-Hendrix Painted cars Gallons of paint Akzo Nobel Solutions focus Product focus Company