MANAGING AND MAXIMIZING YOUR PR AND COMMUNICATIONS BUDGET CNI’s Journey, Mistakes, and Lessons Learned Kenny Ong CNI Holdings Berhad

Way back in 2004… Thomas Cup, Indonesia

Thomas Cup, Indonesia

Now in 2007… CNI ‘Beemax’ Factory Visit, China Top Leaders Product Development Media

CNI ‘Beemax’ Factory Visit, China

Top Leaders

Product Development

Media

Problems from the start No money Split Objectives: Sales? Share Price? Image? Difficult to hire Independent entity Charity center MLM image nightmare Multi-cultural & Multi-lingual Close Regulatory scrutiny (food act, health act, Jakim, KPDN) Public Listed

No money

Split Objectives: Sales? Share Price? Image?

Difficult to hire

Independent entity

Charity center

MLM image nightmare

Multi-cultural & Multi-lingual

Close Regulatory scrutiny (food act, health act, Jakim, KPDN)

Public Listed

How to fail without trying

The Roadmap to Failure Fred Wiersema and Mike Treacy Performance Time Clear Sailing Today’s performance Ad-hoc Tactics Denial & Defense Doom Projections Overdue Failure The Moment of Truth X Performance Freefall Tomorrow’s actual performance Downpresure of Unclear Strategy

Denial and Defense “ It’s not really good value our competitor is offering, because it doesn’t include a lot of our features.” - ABC vs Air Asia “ It’s good value but not in our preferred customer market.” - ABC vs Toyota “ Sure they’re hurting us, but with their unfair advantage, what can we do?” – ABC vs MILO “ The rules we are playing by have always worked before” – AMEX vs VISA

“ It’s not really good value our competitor is offering, because it doesn’t include a lot of our features.” - ABC vs Air Asia

“ It’s good value but not in our preferred customer market.” - ABC vs Toyota

“ Sure they’re hurting us, but with their unfair advantage, what can we do?” – ABC vs MILO

“ The rules we are playing by have always worked before” – AMEX vs VISA

The Roadmap to Failure Fred Wiersema and Mike Treacy Performance Time Clear Sailing Today’s performance Ad-hoc Tactics Denial & Defense Doom Projections Overdue Failure The Moment of Truth X Performance Freefall Tomorrow’s actual performance Downpresure of Unclear Strategy

Ad Hoc Tactics Selectively hold discounts to hold business that has started to go elsewhere Introduce new promotions, terms, conditions, and offers to confuse and cloud the market Beef up customer service by adding people to fix mess-ups and quicken delayed shipments Delay capital investments and adjust accounting methods to portray quarterly financial results more favorably Introduce “new and improved” products that are new in form, but not in substantive ways that are of consequence to purchasers

Selectively hold discounts to hold business that has started to go elsewhere

Introduce new promotions, terms, conditions, and offers to confuse and cloud the market

Beef up customer service by adding people to fix mess-ups and quicken delayed shipments

Delay capital investments and adjust accounting methods to portray quarterly financial results more favorably

Introduce “new and improved” products that are new in form, but not in substantive ways that are of consequence to purchasers

The Roadmap to Failure Fred Wiersema and Mike Treacy Performance Time Clear Sailing Today’s performance Ad-hoc Tactics Denial & Defense Doom Projections Overdue Failure The Moment of Truth X Performance Freefall Tomorrow’s actual performance Downpresure of Unclear Strategy

Before moving on… How is PR budget not maximized? Because I can - Competency problem Poor business value – Ignorance problem No Budget lah - Alignment problem Not exciting lah – Glamour problem

How is PR budget not maximized?

Because I can - Competency problem

Poor business value – Ignorance problem

No Budget lah - Alignment problem

Not exciting lah – Glamour problem

Contents: How can PR budget be maximized: Linking Comm to the real world of Business Driving WOM as ‘do-or-die’ mission Comm as Integrated affair Virtuous Cycle for full $$ Impact Continuous Networking vs. Fancy Campaigns

How can PR budget be maximized:

Linking Comm to the real world of Business

Driving WOM as ‘do-or-die’ mission

Comm as Integrated affair

Virtuous Cycle for full $$ Impact

Continuous Networking vs. Fancy Campaigns

A. Linking Comm to the real world of Business The anchor for all PR decisions

About: CNI 18 years old Core Business: MLM Others: Contract Manufacturing, Export/Trading, eCommerce Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan Staff force: ± 500 Distributors: 250,000 Products: Consumer Goods and Services

18 years old

Core Business: MLM

Others: Contract Manufacturing, Export/Trading, eCommerce

Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan

Staff force: ± 500

Distributors: 250,000

Products: Consumer Goods and Services

Intro: MLM Sell through people Buyers = Members (most of the time) Members = Sponsoring Product Integrity R&D Training Functions & Events Tight regulations

Sell through people

Buyers = Members (most of the time)

Members = Sponsoring

Product

Integrity

R&D

Training

Functions & Events

Tight regulations

Intro: CNI CNI’s Business Model background Factory CNIE DC SP Leaders Customers R&D

CNI’s Business Model background

COMM Market Research Internal External Leaders Distributors Suppliers Associations Universities NGOs Investors Media Government Public Authorities Proactive Reactive Proactive Reactive COMM Tools COMM Tools

What is the purpose of COMM? Ultimate Objective of Marketing: “ Get more people, to buy more things, more frequently, at higher prices.” Sergio Zyman “ Retention and Loyalty are useless if No Conversion is happening.”

What is the purpose of COMM? “ Retention and Loyalty are useless if No Conversion is happening.” “ Comm (PR) is useless if No Conversion is happening.”

Problem… “ In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied .” HBR March/April 1996

“ In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied .”

What are they really buying? "Exactly what I need" Customized products Personalized communications "They're very responsive" Preferential service and flexibility Recommends what I need "I'm very loyal to them" Helps us to be a success "They are the most innovative" "Constantly renewing and creative" "Always on the leading edge" "A great deal!" Excellent/attractive price Minimal acquisition cost and hassle Lowest overall cost of ownership "A no-hassles firm" Convenience and speed Reliable product and service Product Leadership Operational Excellence Customer Intimacy

"Exactly what I need"

Customized products

Personalized communications

"They're very responsive"

Preferential service and flexibility

Recommends what I need

"I'm very loyal to them"

Helps us to be a success

Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)

Product Leadership New, state of the art products or services Risk takers Meet volatile customer needs Fast concept-to- counter Never satisfied - obsolete own and competitors' products Learning organization Strategy: Value Disciplines Operational Excellence Competitive price Error free, reliable Fast (on demand) Simple Responsive Consistent information for all Transactional 'Once and Done' Customer Intimacy Management by Fact Easy to do business with Have it your way (customization) Market segments of one Proactive, flexible Relationship and consultative selling Cross selling

Product Leadership

New, state of the art products or services

Risk takers

Meet volatile customer needs

Fast concept-to- counter

Never satisfied - obsolete own and competitors' products

Learning organization

Operational Excellence

Competitive price

Error free, reliable

Fast (on demand)

Simple

Responsive

Consistent information for all

Transactional

'Once and Done'

Customer Intimacy

Management by Fact

Easy to do business with

Have it your way (customization)

Market segments of one

Proactive, flexible

Relationship and consultative selling

Cross selling

Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)

Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)

The McPlaybook* Make it easy to eat 50% drive-thru Meals held in one hand Make it easy to prepare High Turnover Tasks simple to learn & repeat Make it quick “ Fast Food” Tests new products for Cooking Times Make what customers want Prowls market for new products Monitored field tests *Adapted from: Businessweek , Februrary 5 th 2007

Make it easy to eat

50% drive-thru

Meals held in one hand

Make it easy to prepare

High Turnover

Tasks simple to learn & repeat

Make it quick

“ Fast Food”

Tests new products for Cooking Times

Make what customers want

Prowls market for new products

Monitored field tests

How does that impact PR? Philosophy COMM Strategy Corp Comm Strategy Structure Resources Leadership Person

Our Philosophy “ We are more than just a business. We strongly believe that every individual has the opportunity to attain a better quality of life and health through CNI.”

“ We are more than just a business. We strongly believe that every individual has the opportunity to attain a better quality of life and health through CNI.”

B. Driving WOM as ‘do-or-die’ mission Big picture, Small picture. PR’s role in both pictures.

What is the Objective? Ultimate Objective of Marketing: “ Get more people, to buy more things, more frequently, at higher prices.” Sergio Zyman “ Retention and Loyalty useless if No Conversion is happening.”

What is the Objective? Loyalty is Useless… Virtual Consumption vs. Real Consumption

Loyalty is Useless…

Virtual Consumption vs. Real Consumption

What is the Objective? Loyalty is misleading… Heavy Consumption ≠ Loyalty Loyalty ≠ Heavy Consumption

Loyalty is misleading…

Heavy Consumption ≠ Loyalty

Loyalty ≠ Heavy Consumption

What is the Objective? Comm = Relationship (something like Dating) Comm ≠ Media glitz Comm ≠ ATL/BTL/BwTL/ArTL/FTL Comm ≠ CSR Comm = Get more people, to buy more, more frequently, at higher prices

Comm = Relationship (something like Dating)

Comm ≠ Media glitz

Comm ≠ ATL/BTL/BwTL/ArTL/FTL

Comm ≠ CSR

Comm = Get more people, to buy more, more frequently, at higher prices

What is the Objective? ‘ Do-or-Die’ KPIs for CNI Revenue ARPU Sponsoring Retention Commission Plan (BDP) Product Corporate Image

‘ Do-or-Die’ KPIs for CNI

Revenue

ARPU

Sponsoring

Retention

Commission Plan (BDP)

Product

Corporate Image

What is the Objective? Sponsoring BDP Why should I join? Credibility Product Corporate Comm

What is the Objective? So…the ultimate objective of Corporate Comm is to drive W ord- O f- M outh. That’s it. Now, it’s easy to maximize the budget.

So…the ultimate objective of Corporate Comm is to drive W ord- O f- M outh.

That’s it.

Now, it’s easy to maximize the budget.

C. Comm as Integrated affair Unity is worth more than the annual budget.

COMM Market Research Internal External Leaders Distributors Suppliers Proactive Reactive Proactive Reactive COMM Tools COMM Tools Associations Universities NGOs Investors Media Government Public Authorities

Integrated affair Conversion Comm S&M MBS CCD [Internal] [External] [Creative]

Example: What we needed The birth of Malaysia’s 1 st Tongkat Ali Ginseng Coffee

The birth of Malaysia’s 1 st Tongkat Ali Ginseng Coffee

Example: AGM and myCNI

Integrated affair - GROUP Group Media CCD CNIE Infuso QP [MLM] [Contract] [Café] CNIH [Invest n ] EM [Export] KESB [eCom]

D. Virtuous Cycle for full $$ Impact Feed you, Feed me.

COMM Market Research Internal External Leaders Distributors Suppliers Proactive Reactive Proactive Reactive COMM Tools COMM Tools Associations Universities NGOs Investors Media Government Public Authorities

Virtuous Cycle Internal External Feed Feed

Full $$ Impact Both Sides Internal Halal Committee Social Education (e.g. SCK) Umrah trip China Trip RBOS CFA/HFA Coffee Van External Sponsorship Donations News clippings Newspaper Ads MHI Awards Corporate Profile AGM Gov. Celebrity Analyst research

Internal

Halal Committee

Social Education (e.g. SCK)

Umrah trip

China Trip

RBOS

CFA/HFA

Coffee Van

External

Sponsorship

Donations

News clippings

Newspaper Ads

MHI

Awards

Corporate Profile

AGM

Gov. Celebrity

Analyst research

Full $$ Impact Both Sides Internal Entrepreneur Dev. Health products Health education “ Made in Malaysia” Events Media Celebrity External Website DSAM Yayasan Publish Book Social Education Crisis Comm Children Education National interest Analyst BD connections

Internal

Entrepreneur Dev.

Health products

Health education

“ Made in Malaysia”

Events

Media Celebrity

External

Website

DSAM

Yayasan

Publish Book

Social Education

Crisis Comm

Children Education

National interest

Analyst BD connections

E. Continuous Networking vs. Fancy Campaigns R&D in Totality

Remember… Comm = Relationship (something like Dating) Comm ≠ Media glitz Comm ≠ ATL/BTL/BwTL/ArTL/FTL Comm ≠ CSR Comm = Get more people, to buy more, more frequently, at higher prices

Comm = Relationship (something like Dating)

Comm ≠ Media glitz

Comm ≠ ATL/BTL/BwTL/ArTL/FTL

Comm ≠ CSR

Comm = Get more people, to buy more, more frequently, at higher prices

Example Networking activities Durian Party Wisma Tour Hampers Umrah China Factory Visit Large Events Donations to Media Jakim visit

Durian Party

Wisma Tour

Hampers

Umrah

China Factory Visit

Large Events

Donations to Media

Jakim visit

Issues and Challenges Problems, Problems, Problems

Sources of Image problems Industry Management Staff Frontline Suppliers/Vendors Retail/Distributor

Industry

Industry-inspired problems Get-Rich-Quick Schemes (Skim Cepat Kaya) Direct Selling myths Bad Hats Imposters Products on Shelves Hazardous products by other companies Increasing Regulations

Get-Rich-Quick Schemes (Skim Cepat Kaya)

Direct Selling myths

Bad Hats

Imposters

Products on Shelves

Hazardous products by other companies

Increasing Regulations

Don’t know how to use to maximum effect ATL Web Blogs (Web 2.0) Mobile Investor Relations

ATL

Web

Blogs (Web 2.0)

Mobile

Investor Relations

IR problems “ Good news for stockholders can be bad news for other stakeholders.” Gregory Miller, Assoc. Prof., Harvard Business School.

“ Good news for stockholders can be bad news for other stakeholders.”

Gregory Miller, Assoc. Prof., Harvard Business School.

Summary

Summary How to maximize budget? Focus on the right Priority – WOM Drive WOM by Integration and Virtuous Cycle Build Integration and Virtuous Cycle using Constant Networking (hardwork)

How to maximize budget?

Focus on the right Priority – WOM

Drive WOM by Integration and Virtuous Cycle

Build Integration and Virtuous Cycle using Constant Networking (hardwork)

Thank You. soft copy of slides: http://totallyunrelatedrandomanddebatable.blogspot.com/