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  • Prof. Mohan Sawhney J.L. Kellogg Graduate School of Management
  • Prof. Mohan Sawhney J.L. Kellogg Graduate School of Management
  • Prof. Mohan Sawhney J.L. Kellogg Graduate School of Management
  • Prof. Mohan Sawhney J.L. Kellogg Graduate School of Management
  • Prof. Mohan Sawhney J.L. Kellogg Graduate School of Management
  • Prof. Mohan Sawhney J.L. Kellogg Graduate School of Management Notes _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ ________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________
  • Transcript

    • 1. © 2001 Mohan Sawhney Kellogg School of Management Northwestern University The Future of Marketing and the Marketing Organization
    • 2. The new marketing Session 1 Rethinking the marketing process Rethinking marketing activities Rethinking the marketing organization Rethinking the role of marketers
    • 3. Marketing’s mid-life crisis
      • Disintermediation problem : The marketing department has traditionally served as the mediator between customers and the firm. But the Internet allows R&D, operations, sales, logistics, and support organizations to connect directly with customers, marginalizing the role of marketing in the process.
      • Measurement problem : The marketing function has traditionally been unable to measure the ROI of spending on marketing programs, so marketing budgets tend to be treated as avoidable expenses in difficult economic times.
      • Alignment problem : Marketing organizations are traditionally designed around marketing mix silos (product, price, promotion, place). These silos create disconnects between audience marketing, channel marketing, product marketing, and licensing/pricing activities.
      • Automation problem : Marketing has traditionally been a manual and intuitive process. But technologies like customer relationship management (CRM), partner relationship management (PRM), enterprise marketing automation (EMA), product lifecycle management (PLM) and marketing analytics are taking over the operational and analytical role of marketers.
      Marketing needs to reinvent itself, with the changing times
    • 4. Where marketing is going
      • Marketing today
      • Profiting from transactions
      • Delivering value to customers
      • Firm to firm competition
      • Reacting to customer needs
      • Competing for market share
      • Designing superior products
      • Intuitive decision making
      • Episodic, batch processes
      • Marketing in the Future
      • Profiting from relationships
      • Creating value with customers
      • Ecosystem to ecosystem competition
      • Anticipating customer needs
      • Competing for mind share
      • Designing superior experiences
      • Fact-based decision making
      • Continual, adaptive processes
    • 5. What is marketing, anyway?
      • Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that
      • satisfy individual and organizational goals.
      • - American Marketing Association
      What’s lacking in this definition?
    • 6. The changing nature of exchanges
      • From information asymmetry ...
        • Information was scarce
        • Customers were ill-informed
        • Exchanges were monologues
        • Marketing was “command-and-control”
      • To information democracy
        • Information is ubiquitous
        • Customers are well-informed
        • Exchanges are conversations
        • Marketing is “connect-and-collaborate”
    • 7. The rise of reverse marketing!
      • Reverse segmentation
        • Customers can self-select into segments, configure offerings to suit their preferences and needs, and customize products themselves
      • Reverse advertising
        • Customers can get objective information on products and brands without relying on manufacturers or retailers, and can initiate requests for information and advertising from manufacturers
      • Reverse channels
        • Customers can work with infomediaries and buying agents to negotiate and buy products on their behalf
      • Reverse pricing
        • Customers can conduct reverse auctions and quote prices they are willing to pay to manufacturers
      • Reverse support
        • Customers can serve themselves through self-service channels, and communicate with peers and experts for support
    • 8. Metaphors we market by: Marketing as hunting
      • Market as jungle
      • Customers as targets
      • Marketers as hunters
      • Segmentation as rifle versus shotgun approach
      • Products as mousetraps
      • Salespeople as baiters-and-switchers
      • Promotions as campaigns
      • Relationships as conquests and acquisitions
      • Customer visits as eyeballs and traffic
    • 9. Towards a new marketing metaphor: Marketing as gardening
      • Customer relationships as garden to be tended
      • Marketer as gardener
      • Partners as players in the ecosystem
      • Customer loyalty as roots
      • Lifetime profits as harvest
      • Marketing as seed, feed, yield, and weed
    • 10. The evolving information power balance Customer information power Marketer information power High Low High Low 2 1 4 3 Information famine Personal marketing Information Democracy Relationship marketing Information Asymmetry Mass marketing Information Integration Collaborative marketing
    • 11. Towards a new definition of marketing
      • Marketing is the adaptive process by which firms collaborate with customers and partners to create and sustain value for all stakeholders.
      • Key aspects
        • Process, not function
        • Ongoing, not one-time
        • Relationships, not transactions
        • All stakeholders, not just customers
    • 12. Customers as collaborators
      • Collaborative ideation
        • Hallmark’s Idea Exchange
        • Eli Lilly’s Innocentive Innovation network
      • Collaborative design
        • Ducati’s virtual design team
        • Texas Instruments TI-92 and high-school teachers
      • Collaborative configuration
        • Premier pages from Dell
        • GE Plastics resin design tools
      • Collaborative pricing
        • Partition pricing from HP for servers
        • Usage-based auto insurance from Progressive Insurance
      • Collaborative support
        • Cisco Networking Professionals Connection
    • 13. Collaborative segmentation - GM’s AutoChoiceAdvisor tool
    • 14. The functional view of marketing Segmentation, Targeting, Positioning Product Strategy Pricing Strategy Promotion Strategy Place Strategy Opportunity assessment Implementation, Monitoring, and Control
    • 15. The adaptive process view of marketing
      • Redefine markets
      • Sense market trends
      • Understand customers
      • Identify opportunities
      • Segment customers
      • Choose target segments
      • Craft value propositions
      • Validate/adapt value propositions
      • Define offerings
      • Design offerings
      • Develop offerings
      • Adapt offerings
      • Expand channels
      • Reallocate functions
      • Synchronize channels
      • Customize channels
      • Adapt channel mix
      • Price to maximize yield
      • Bundle/unbundle offerings
      • Design new revenue models
      • Adapt pricing strategy
      • Expand touch points
      • Manage brand equity
      • Optimize communications mix
      • Integrate communications
      • Monitor customer experience
      • Build platforms
      • Create externalities
      • Expand ecosystem
      • Maximize value share
      • Improve retention
      • Increase share of wallet
      • Increase cross-sell
      • Increase up-sell
      • Personalize relationships
      Sustain value Augment value Communicate value Capture value Deliver value Realize value Define value Sense value Customer Relationship Repository Adapt
    • 16. Traditional Marketing Transitional Marketing Collaborative Marketing Sense value Define value Realize value Deliver value Capture value Sustain Value Products Services Experiences Physical Hybrid Integrated Channels Channels Channels Persuasion, Permission, Contextual, Broadcast dialogue facilitation Vertical Horizontal Integrated Alliances Partnerships Value Network Communicate value Episodic Batch Active CRM CRM CRM Evolution of marketing activities Augment value Listen Observe Co-create Segmentation Customization Customerization Transactional Value-based Relationship Pricing Pricing Pricing
    • 17. Towards the decoupled organization Human Resources Purchasing Marketing Finance & Administration Research & Development Product Manufacturing Information Technology Partner management Customer Customer Customer Customer organization (segment 2) Customer Customer Customer Customer organization (front-end) Product organization (back-end) Shared services (back-end) Product development Technical Sales Corporate Core
    • 18. Citibank’s decoupled organization CEO Automotive Oil & Gas Retailing Cash Management Telecom Foreign Exchange Derivatives Mergers & Acquisitions Legal HR Controller Risk Mgmt. Operations IT Marketing Ford GM BMW Global Product Organization (Back-end) Global Customer Organization (Front-end) Local account managers Corporate Core Source: Designing the Global Corporation, Galbraith (2000)
    • 19. The “P&L cube” – single target, multiple metrics for incentives N. America S . America EMEA APAC SBU 1 SBU 2 SBU 3
      • Revenue
      • Profit
      • Penetration
      • Share
      Market 3 Market 2 Market 1
    • 20. Implementing the front-back design
      • Make each dimension profit-measurable
      • Negotiate revenue and profit targets across dimensions
      • Record profits and revenues only once
      • Define power balance across dimensions
      • Base rewards on profits as well as cooperation
      • Create responsibility chart to clarify roles
      • Match coordination level to strategic priority of dimension
      • Dynamically adapt power balance
      • Create linking mechanisms between dimensions
        • Direct links between dimensions through “coordinators” (Tetra Pak)
        • Coordination meetings for planning and budgeting (Xerox)
        • Rotation of personnel across dimensions (Citicorp)
        • Market mechanisms - Transfer pricing between CBU, SBU, RBU (Acer)
    • 21. The new roles for marketers
      • Integrators
        • Integrators are the key to the front-end of the marketing organization. They are responsible for serving each distinct consumer, channel, or partner segment. They will have deep understanding of their segment, will be good at working across boundaries, and leading cross-functional teams.
      • Specialists
        • Specialists are the key to the back-end of the marketing organization. They help the company to build and maintain world-class skills in functional areas of marketing like branding, marketing research, marketing decision support, business intelligence, and product design.
      • Linking through processes
        • Integrators and specialists will be linked through processes and teams.
    • 22. Managing linkages at Kraft Foods Process teams (category-specific) Category teams (category-specific) Customer teams (key accounts) Source: Reinventing the Marketing Organization, McKinsey Quarterly Finance Operations Materials manager Plant manager Engineering Quality Process Team Leader Marketing information Finance Brand manager Consumer promotion Category Sales director R&D Category Business Director Category planners Retail Sales manager Sales information specialist Space management specialis Supply chain specialist Customer Category managers Customer Business Manager
    • 23. Summary: The future of marketing
      • The exchange – from asymmetry to democracy
      • The metaphor – from hunting to gardening
      • The definition – from controlling to collaborating
      • The process – from functional silos to connected processes
      • The organization – from product-centric to customer-centric
      • The roles – from sales/product to integrators and linkers