Retail Marketing - Spotting buying patterns and maintaining a consistent trafficflow all year round

SPOTTING BUYING PATTERNS
AND MAINTAINING A
CONSISTENT TRAFFIC FLOW
ALL YEAR ROUND
Case Study, Concepts, and Debatable
Ideas

Kenny Ong
CNI Holdings Berhad

www.myCNI.com.my www.OOBEY.com

Intro: CNI

1. 22 years old
2. Core Business: MLM
3. Others: Contract Manufacturing, F&B Retail,
Export/Trading, eCommerce, Shared Services
4. Malaysia, Singapore, Brunei, Indonesia, India,
China, Hong Kong, Philippines, Italy, Taiwan,
Oman, United States, Vietnam
5. Staff force: ± 500
6. Distributors: 150,000
7. Products: Consumer Goods and Services


Types of Buying Pattern
Strategy

• Macro •Strategic

• Micro •Tactical


The World Today


The World Today

13th April 2009
•Two Domino’s employees
•YouTube
•Apology from Domino’s after
48 hours
•1 million hits
•Twitter: questions on silence
•LinkedIn: suggestions by users
in forum

BusinessWeek, May 4, 2009

Buying Pattern: What and
Why?
1. Study of when, why, how, and where
people do or do not buy
2. Multi-discipline: psychology, sociology,
social anthropology and economics
3. Used for retail mix: nature of merchandise
and service offered, pricing policy,
advertising and promotion program,
approach to store design and visual
merchandising, typical location

1. Wrong Business Model

• How to fail without trying


The Roadmap to Failure
Performance Fred Wiersema and Mike Treacy

Today’s
performance

Doom
Projections

Clear Sailing Denial & Defense

Time

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


Fred Wiersema and Mike Treacy

Downpresure of
Unclear Strategy
Performance

Today’s
performance

Doom
Projections

Clear Sailing Denial & Defense

Time

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
• Introduce Balanced Scorecards and Performance
Management Systems

Fred Wiersema and Mike Treacy

The Moment of
Downpresure of
Truth
Unclear Strategy

X
Performance

Performance
Freefall
Today’s
performance

Doom Tomorrow’s
Projections actual
performance

Clear Sailing Denial & Defense Overdue Failure

Time

“What is the moral of
the story?”


Alignment: 4-Wheels Model

Business
P Model
P Growth
Strategy
Customer

P
P

Business Model and Strategic
Marketing
The biggest impact


The McPlaybook*

Make it easy to eat Make it easy to prepare
• 50% drive-thru • High Turnover
• Meals held in one • Tasks simple to learn
hand & repeat

Make it quick Make what customers want
• “Fast Food” • Prowls market for new
• Tests new products products
for Cooking Times • Monitored field tests
*Adapted from: Businessweek , Februrary 5th 2007


What is the Business
Model?

•Google
•Tata Nano USP

Market
Profit Model
Discipline


What is the Business
Model?

USP

Market
Profit Model
Discipline


Business Model: USP

Unique Selling Proposition (USP)
=
Targeted Customer
=
Core Buying Purpose/ Customer Value
Proposition/ Job To Be Done (JBTD)


Business Model: USP

Obstacles to JBTD:
1. Insufficient WEALTH
2. Insufficient ACCESS
3. Insufficient SKILL
4. Insufficient TIME


Business Model: Profit
Model

Revenue

Assets Cost

Cash
Margin
Flow

Market Discipline

Product "They are the most innovative" •LV
Leadership "Constantly renewing and creative"
"Always on the leading edge"

•Air Asia Operational
•Ramly Customer
Intimacy
Excellence "Exactly what I need"
"A great deal!"
Customized products
Excellent/attractive price
Personalized communications
Minimal acquisition cost and "They're very responsive"
hassle
Preferential service and
Lowest overall cost of flexibility
ownership Recommends what I need
"A no-hassles firm" "I'm very loyal to them"
Convenience and speed Helps us to be a success
Reliable product and
service

Market Disciplines

Product Leadership
(best product)

Operational Excellence Customer Intimacy
(low cost producer) (best total solution)

Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

Market Discipline: Disciplines,
Priorities, and KPIs

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

Alignment & Consistency

Product Leadership
(best product)



Alignment & Consistency

Apple powerful Product Leadership
products, premium (best product)
pricing, limited range

Still Doing
well in HP well-balanced
Acer super lean
2009/2010 portfolio, mass
cost structure,
aggressive pricing customization



Alignment & Consistency:
Business Model

USP

Market
Profit Model
Discipline


Growth Strategy

“Double-Digit Growth”, Michael Treacy

1.Base Retention

5.New Business 2.Share Gain

GROWTH

4.Adjacent Market 3.Positioning


Growth Strategy

“Double-Digit Growth”, Michael Treacy •Increase switching cost
•Customize products
1. Base Retention •Preempt Defections
•Brand

5. New Business 2. Share Gain
•Neutralize Competitor
GROWTH advantages
•Superior Value
•Promising Market? •Buy market share
•Make or Buy?

4. Adjacent Market 3. Positioning
•Spot growth opportunities
•Organized search

How Markets determine
Growth Strategies (1)
• Growth Rate
Growth Strategy Why?
Rate
Fast 1. Market •Maintain market share in strategic
Positioning segments
2. Share Gain •Prepare for market decline
3. Base •Competitors focus too much on
Retention getting new customers
Flat 1. Base •Lose customers slower than
Retention competitors
2. Share Gain •Create scale economics, squeeze
(Acquisitions) costs

• Churn Rate
Churn Strategy Why?
Rate
Low 1. Share Gain •Buying customer base is
(Acquisitions) cheaper than own efforts
2. Adjacent •New products, old customers
Markets strategy

High 1. Base •Lose customers slower than
Retention competitors
2. Share Gain •Customers are always open to
3. Adjacent the best value and offer
Market •Desperate to gain revenue


•Example: XYZ Sector

Fast Growth, 1.Market Positioning
Low Churn 2.Share Gain
3.Base Retention
4.Adjacent Markets


Business Strategy vs. Consumer

Post Recession Trends and
Implications
Industry Convergence/
Extinction

Social Networking
What do these
Increased Regulations mean to us?

Green & CSR

Non-Profit/NGO
increase


Global Trends

Back-sourcing Power re-balancing

Bottom-up Mergers, Acquisitions
Innovation/Disruptions & Divestment

Mobile Devices Lower Middle Class rule

Nationalism and Extreme Emerging
Protectionism Countries

Currency Wars BRIC and PIIGS


Retail Trends?

Cutting back In-store Ads

Let consumers help RFID technology
themselves

Smaller stores Niche private labels

Ready-made Eco-friendly stores
products

Ethnic stores In-store restaurants


Most Popular Question

“When will we return to the
last time?”

Wrong Question


Marketing Today


Retail Adaptation:
McDonald’s Menu
Product Variation:
– 80% Global, 20% Local
– home-style meals (Boston Market) 
– burritos (Chipotle) 
– coffee (McCafé)
– DVD rentals (Redbox) 
– Premium menu items (snack wraps, sweet tea
Frappes)


Retail Adaptation:
McDonald’s Design

$2.4 billion to:
•redo at least 400 domestic outposts,
•refurbish 1,600 restaurants abroad,
and
•build another 1,000


Retail Adaptation:
McDonald’s Design
1. Corporate design leader for each
operating regions; that person contracts
with a regional designer who can figure
out what other local design elements
might make a space feel individual and
authentic
2. Solicits ideas from leading design firms
such as Ideo, Rockwell Strategic, and
boutique firms around the globe.


Grocery Store of the
Future
“Supermarket Strategies: What's New at the Grocer”,
Bloomberg Businessweek, June 8, 2009


The Grocery Store of the Future

By Damian Joseph
Going Small
Who's Doing It: Wal-Mart, Safeway, Super Value, Tesco
What's New: Companies known for vast supermarkets are opening
up small-format stores. Wal-Mart's Marketside (WMT), Safeway's
The Market (SWY), Super Value's Urban Fresh (SVU), and Tesco's
Fresh & Easy all focus on selling fresh produce, ready-made meals,
and organic or natural products. The idea is to penetrate densely
populated neighborhoods and inspire daily shopping visits.

Going Ethnic
Who's Doing It: Wal-Mart, Publix
What's New: In an effort to serve the growing Hispanic
population, companies are opening up stores dedicated to
them. Wal-Mart's Supermercado and Publix's Sabor sell
Latino-style bakery products and ingredients, prepared foods,
fresh tortillas, and the stores have bilingual staffs.

Meal Assembly
Who's Doing It: Super Suppers, Dream Dinners
What's New: Somewhere between takeout and a grocery store,
meal assemblers sell entire dinners that have yet to be cooked.
The meals follow restaurant-style recipes and come with fresh
ingredients that are pre-cut or proportioned. The customer takes
the food home, puts it together, and cooks for an immediate meal
or to freeze for later. Dinners that serve six people are popular for
entertaining.

Smart Packaging
Who's Doing It: Sira Technologies, University of Rhode Island,
Manchester University
What's New: Researchers are developing packaging that senses
when food spoils. Working with the University of Rhode Island, Sira
Technologies created bar codes that turn red, and therefore cannot
be scanned, when a special ink detects temperature increases,
which can breed contaminates like E coli or salmonella. Scientists at
Manchester University are working on refrigerators that will text or
e-mail an alert when packaging senses fresh meats have gone bad.

Shopping Cart Wash
Who's Doing It: PureCart Systems
What's New: Anything that people put their hands on becomes a
surface that can spread germs. To keep that from happening,
PureCart is selling a car wash for carts. Employees run shopping
baskets through a machine that looks like a metal detector and
sprays them with a mixture of water, peroxide, and vinegar to kill
bacteria. Though the device costs $10,000, each wash takes only a
few seconds and is cheaper over time than sanitizing carts with
disinfectant wipes

Grocerants
Who's Doing It: Whole Foods, Wegman's, Roche Bros.
What's New: What started as a deli counter or hot food section
has become an entire restaurant. To keep up with competition
from local eateries and ramp up store traffic, grocerants—a play
on grocer and restaurant—are doing the cooking. Whole Foods
(WFMI) and Wegman's are among chains adding sit-down areas
with tables and chairs.

Niche Labels
Who's Doing It: Safeway, Trader Joe's, Target, SuperValu
What's New: Private labels are finding their own niches. Safeway
now has Bright Green natural cleaning and laundry products
made from biodegradable ingredients and Organics foods, like
cereals, sauces, and cookies. These products successfully
compete with name brands and typically bring bigger returns to
grocers. Other examples include Wild Harvest at SuperValu's
Jewel, Archer Farms at Target (TGT), and Trader Joe's eponymous
products.

Smart Shopping Carts
Who's Doing It: Stop & Shop, IBM, Springboard Networks
What's New: Wireless-enabled shopping carts with mini-
computers on board—like IBM's Shopping Buddy (IBM) and
Springboard Network's Concierge—allow customers to keep a
running tab by scanning products as they shop, see what's on
sale in the aisle they're in, search for products, pay, and leave
without waiting in line. Grocers can save on labor costs and
advertisers can connect with highly specific target audiences.

Mobile Coupons
Who's Doing It: Kroger, Cellfire, Zavers
What's New: Companies are offering coupons on cell phones and
online. Customers can save the coupons to their store's "loyalty
cards" or simply show their phones to the cashier. For customers,
the service makes saving money easier. It cuts costs for grocers,
too, since they don't have to hassle with paper coupons. In
addition, e-coupons provide real-time market data and boost
customer use of loyalty cards.

Mobile Scanners
Who's Doing It: Metro Group, Big in Japan, Occipital
What's New: Customers can now use cell phones to scan product
bar codes to comparison shop or read reviews about a particular
item. Big in Japan's ShopSavvy and Occipital's RedLaser relay
product info to consumers after they scan items via the built-in
cameras on their phones. Metro Group's Real hypermarkets in
Germany are testing a system in which customers would register
their cell phones to use as a payment/checkout device.

Advanced In-Store TV Networks
Who's Doing It: Wal-Mart, Premier Retail Networks, Studio 2, DS-
IQ, Kroger, In-Store Broadcasting Network
What's New: Individually programmable video monitors display
advertising and product information. The in-store networks let
advertisers target ads by day, time, and aisle, and provide them
with proof of performance and sales reports. Two years and $10
million in the making, Wal-Mart's Smart Network is powered by
internet protocol television.

Marinade on Demand
Who's Doing It: Sealed Air
What's New: Eliminating the mess, excess packaging, and hassle
of marinating raw meat, Sealed Air's (SEE) Marinade on Demand
system puts meat and marinade in separate compartments in the
same package. When consumers get home, they squeeze the
marinade pocket to break the seal between the two and leave the
meat to marinate as long as they like.

Whole Canned Chicken
Who's Doing It: Sweet Sue
What's New: Sales of canned meats such as Hormel's Spam have
increased in the recession. Now Sweet Sue, a unit of San Diego-
based Castleberry's offers a precooked, whole chicken that can
be eaten right out of the can. The listed ingredients on the 50-oz.
tin are only chicken, water, and salt.

Instant Coffee Wars
Who's Doing It: Starbucks, Nestlé
What's New: It was only a few years back that Nestlé (NESN)
introduced "stick packs," one-serving instant coffee packages of its
Taster's Choice brand. Starbucks (SBUX) jumped in this year its own
version, Via, which garnered a lot of attention due to the
company's barista roots. Nestlé has since fired back with a lower
price per stick and an array of flavors.

Social Grocery Shopping
Who's Doing It: Zeer.com, Most Grocery Stores
What's New: Grocery stores are building networks of followers
on Twitter, Facebook, blogs, and other social media sites.
Shoppers can join Zeer.com, an online social shopping site that
lets users scan reviews on more than 110,000 products, join
communities of customers with similar tastes, and create
shopping lists with favorite items automatically added. Zeer has
an application for iPhones, too.

Natural Pet Products
Who's Doing It: Purina, Rachael Ray, Eukanuba, Nature's Recipe
What's New: For years, pets munched on indistinguishable
processed food, with only a few brands offering high-quality
products for dogs and cats. Today, natural and organic pet food is
all the rage, with lines from Nature's Recipe (DLM), Procter &
Gamble's Eukanuba, and Nestlé's Purina. Rachael Ray has a
signature line of natural dog food. Canada's Medi-cal sells a vegan
version, and for dessert, TBD Brand of Exeter, N.H., offers Yöghund
organic frozen yogurt.

New Recyclables
Who's Doing It: Frito-Lay, Primo Water, Biota Brands
What's New: With the push for green products, companies are
upgrading packaging. Frito-Lay's (PEP) Sun Chips soon will come
in compostable bags made from a plant-based plastic called PLA.
Similar eco-plastics made from corn or sugar cane are being used
for beverages, such as Primo and Biota bottled waters. Another
company, Boxed Water is Better, sells water in cartons made from
85% recycled waste that are re-recyclable.

Conveyor Belt Ads
Who's Doing It: Kroger, EnVision Marketing
What's New: Those revolving black belts that groceries ride to the
cashier's waiting hands are now valuable marketing space. Little
Rock (Ark.)-based EnVision Marketing patented a process to print
ads directly onto the belts, which are nearly impossible for
customers to miss. Kroger (KR) is trying out the system in some of
its stores.

Home Delivery 2.0
Who's Doing It: Amazon
What's New: The world's biggest online retailer is testing the
viability of grocery delivery to homes in parts of Seattle. The
concept isn't brand new—PeaPod and Webvan arose almost a
decade ago—but Amazon's (AMZN) shipping operations are
second-to-none. If Amazon finds big profits where others couldn't,
it probably won't be long before the service expands to other
markets.

Made in Transit Produce
Who's Doing It: Wageningen University, Agata Jaworska
What's New: Instead of growing produce in a field or hothouse
and then shipping it, scientists from Wageningen University are
experimenting with mushrooms that grow as they're shipped. The
school is working with Agata Jaworska, who invented the method
as a graduate student at the Design Academy Eindhoven in the
Netherlands. They think the process could be adapted for micro-
vegetables or baked goods, too.

Three-Tiered Private Labels
Who's Doing It: Kroger, Food Lion, Winn Dixie
What's New: Introducing a "good," "better," and "best" approach
to food sales, grocers are using tiered labels to reach different
strata of consumers. At Kroger, Kroger Value products are the
cheapest; Kroger is the mid-level, and Private Selection is the most
expensive. Similar approaches have boosted sales at Food Lion and
Winn Dixie (WINN), while providing the chance for higher markups.

Green Grocers
Who's Doing It: Price Chopper, SuperValu, Kroger, PCC Natural
Markets, Giant Eagle, Target
What's New: Grocery stores used to burn electricity like Hummers
burned gasoline, but times have changed. Call it green-washing or
a way to cut costs, grocery stores have begun racking up eco-
certifications from the U.S. Green Building Council. From efficient
lighting to bamboo flooring, grocers are becoming lean, green,
energy-saving machines.

Super Discount Shops
Who's Doing It: Aldi, Local Surplus Stores
What's New: With a sinking economy, shoppers are straying from
expensive name brands and seeking the best deals available.
Though super-discounters like Aldi don't carry wide selections or
brand names, the prices are dirt cheap. Surplus stores are also
springing up that sell slightly older products at lower costs.

Dangers of Best Practice,
Benchmarking & Market Research
“Abraham Wald’s Work on
Aircraft Survivability”, M.
Where would Mangel and F.J.
Samaniego
you focus
reinforcement?



high

zero
Perfor
Company mance
Performance
Trend
line

low
low ‘Best Practice’ high
theories
“Selection Bias and the Perils of Benchmarking”, Jerker Denrell, Harvard Business Review 2005



Trend
high
line
zero
Perfor
Company mance
Performance

low
low ‘Best Practice’ high
theories
“Selection Bias and the Perils of Benchmarking”, Jerker Denrell, Harvard Business Review 2005



Selection Bias:
1. Success Traits = Failure Traits
2. Successful Cases + Failure Cases
3. Worst effects in ‘Old’ industries
4. Overvalue ‘best practice’ theories
5. Current accomplishments unfairly magnified by
past achievements
6. Reverse Causal



Also known as ‘Beware of Consultants’:
1. Selection Bias (availability, brand,
recency)
2. Big vs. Small company
3. Selective success stories
4. Correlation vs. Causal
5. Survey problems
6. Practical vs. Glamour-to-have

Correlation vs. Causal

1. 8 out of 10 rich people drive Mercedes in
Malaysia
2. 4 out of the top 5 supermarket chains have a
loyalty program
3. 4 out of the top 5 supermarket chains increased
sales after having a loyalty program
4. 4 out of the top 5 supermarket chains increased
sales after having a loyalty program and
adapting promotions


Geo-Marketing: Where?

1. Where do my customers live, and where do they buy?
2. Where are my competitors?
3. Where are my marketing efforts invested?
4. Where are my opportunities? i.e. Where should I put my
next Point of Sale?
5. Where are my sales representatives?
6. To what advertising medium do my customers respond?
Billboards? Mobile coupons? Where were they when
exposed to my campaign?
7. Are products sold better in particular zones? Where and
why?


Geo-Marketing & Consumer
Behavior

Some characteristics of consumer
behavior are closely related to the:
• place where they live,
• climate,
• location and
culture


The New World Order

•history
•race
•ethnicity
•religion
•culture
Newsweek, September 26, 2010

The New World Order

• Generous Welfare
systems
• 6 of the top 8 on Legatum
Prosperity Index
• some of the world’s
highest savings rates (25
% or more),
The New Hansa
• impressive levels of Denmark, Finland,
employment, education, Germany, Netherlands,
and technological Norway, Sweden
innovation.

The New World Order

• Poverty rates are almost
twice as high, labor
participation is 10 to 20
percent lower (vs. Hansa)
• Huge government debt
• Lowest birthrates
• Some of the world’s oldest The Olive Republics
population Bulgaria, Croatia, Greece,
Italy, Kosovo, Macedonia,
Montenegro, Portugal,
Slovenia, Spain

The New World Order

• Rich in minerals, fresh
water, rubber, and a
variety of foodstuffs
• Suffer varying degrees of
political instability.
• Trying to industrialize and
diversify economies.
The Rubber Belt
• Household incomes Cambodia, Indonesia, Laos,
remain relatively low, Malaysia, Philippines,
• Potential high-growth Thailand, Vietnam
region.

The New World Order

• Newsweek, September 26, 2010
The Border Areas • Stand-Alones:
• City-States: • Brazil, France,
– London, Paris, Greater India, Japan,
Singapore, Tel Aviv South Korea,
• North American Switzerland
Alliance • Russian Empire
• Liberalistas • The Wild East
• Bolivarian Republics • Greater Arabia
• Iranistan • South African Empire
• The New Ottomans • Sub-Saharan Africa
• Maghrebian Belt • Lucky Countries
• Middle Kingdom

Recession Generation


Men vs. Women: Getting
Dressed

Basket Analysis


Basket Analysis

None of these
1,800 SKUs are
top sellers!


Basket Analysis

• Low-frequency/high-correlation SKUs
• These items
– sell rarely,
– sit on the shelf for along time,
– will only sell if the paired item is available
• Problem SKUs
• Capital hogs and always show up in
inventory issues.


Concrete vs Abstract
Mindset
Kelly Goldsmith, Jing Xu, Ravi Dhar,
MIT Sloan Review, Fall 2010

Abstract
Broad
and
general
Over-
arching
Purpose
Shared
Concrete Product
Attributes

Concrete vs Abstract
Mindset
Shared
Abstract Product
Attributes
Execution
or Usage
purpose
Lower
level
details
Concrete
Kelly Goldsmith, Jing Xu, Ravi Dhar,
MIT Sloan Review, Fall 2010


Color Psychology

Cultural Variations; white remind us of something
= marriage (western) = familiar
death (China). Purple = e.g. blue = calm
death (Brazil) Yellow = Children = Bright
sacred (Chinese) = Primary Colors e.g.
sadness (Greece) = toys, clothes and
jealousy (France) children's books
Red , Orange = Young = bold colors;
to eat quickly and older = subtle palettes.
leave
Carpeting to influence
patterns of travel

Target: Decision Chain

Again: different type,
Influencer different strategy

Buyer

User


Target: Customer Types

1. Don’t know you
2. Know you, Buy from you
3. Know you, don’t buy from you
4. Know you, Hate you


Target: Customer Types

Buy From you

Value Swing Former

Opposition


Downturn: Customer Types
vs. Branding
Customer
Types Your Products/Services

Hand brake

Expandables
Postponables
Essentials
Surviving

Treats
Well Off

Don’t Care


vs. Branding

Your Products/Services

Essentials Treats Post- Expan-
ponables dables
•Necessary •Indulgences •Needed or •Unnecessary
•Survival •Justifiable desired •Unjustifiable
•Well-being •Can be put
off


How should I Service Them?

Self Reliant Need Help

Seek
Searchers Collaborators
Change

Seek
Streamliners Delegators
Stability


The real goal of Marketing and
Branding
Understanding our role in the whole
scheme of things


What is the purpose of
Marketing & Branding?
Ultimate Objective of Marketing:
“Get more people, to buy more
things, more frequently, at higher
prices.”

“Retention and Loyalty are useless if
No Conversion is happening.”

Sergio Zyman

What is the purpose of
Marketing & Branding?

“Retention and Loyalty are useless if
No Conversion is happening.”

“Communication is useless if No
Conversion is happening.”


Which Company?

American Customer Satisfaction Index (ACSI)
• 64 out of100-point scale: lower than IRS (Tax)
• 2nd last among 30 companies surveyed
• Lowest 5% among 223 companies surveyed
• Bottom 5% of all measured private sector
companies

• 500 million customers

2010 American Customer Satisfaction Index
(ACSI) E-Business Report

Popularly Unpopular

Popularity
≠
Affection


Philosophy

Loyalty is Useless

• Virtual Consumption vs.
Real Consumption


Philosophy

Loyalty is misleading

• Heavy Consumption ≠ Loyalty
• Loyalty ≠ Heavy Consumption


What is the Objective?

1.Marketing = Relationship (something
like Dating)
2.Marketing ≠ Media glitz
3.Marketing ≠ ATL/BTL/BwTL/ArTL/FTL
4.Marketing ≠ CSR
5.Marketing = Get more people, to buy
more, more frequently, at higher
prices

Loyalty 1: Experience

Operational Excellence: Quality and selection in
key categories with unbeatable prices

Product/Service Attributes Relationship Image

Price Time √ Smart
Selection √ Shopper
Quality

* Treacy & Wiersema, The Discipline of Market Leaders, 1995



Product Leadership: Unique products and services
that push the standards


√ Time √ Best
Function √ Product
Brand



Customer Intimacy: Personal service tailored to
produce results for customer and build long-term
relationships


√ √ Service Trusted
√ Brand
√ Relations


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

Each Value Discipline Requires
A Different Emphasis
Operational Product Leadership Customer
Excellence • R&D, Legal Intimacy
Functional (Licenses),
emphasis • Production, • Marketing Sales,
Engineering
Logistics, Service
Process Finance • Product
Emphasis development, • Market
• Order fulfillment, Concept-to- mgmt, Customer
Resource Customer satisfaction
Information stewardship • Linkages, insight,
emphasis comm, groupware • Customers,
Key • Ideas-thru- funnel, analysis, linkages
• Transactions,
metrics patents, etc.
costs, time • Satisfaction,
cust. success,
Key • Costs, quality, • Tomorrow, Product
concerns share, anecdotes
speed Portfolio, Ideas and
Risks • Today, Relation-
• Trends (past),
ships, Employee
Transactions
empowerment
Employee
tools/tasks

Loyalty 2: Swing

Loyalty = Best alternative at the current
moment until I find another alternative

Solution Strategy: Base Retention


Loyalty 2: Swing

Swing Customers are “loyal” because:
• Individual Relationships
• Convenience (at that point in time)
• Tied-up
• Product Uniqueness
• Promotions
• No better alternative
• Downlines
• No known alternative
• Psychologically lazy

Sample Strategies for
‘Swing’
• Increase switching • Newsletters
costs • Personalized alerts
• Mega packages • Survey
• Community • Suggestion Box
• Reward programs • Switching Techniques
(Points) (e.g. Balance
• Membership Transfer of credit
Subscription cards)
• Email communication


vs. Branding
Customer
Types Essentials •Price
Hand brake
•Smaller Pack
•Private Labels
Surviving •Low-cost ‘Value’ products
•Fighter Brands
Well Off •Less Variety/Customization
•Immediate cash back
Don’t Care


vs. Branding
Customer
Types
Treats
Hand brake •Shrink sizes
•Hold down prices
Surviving
•“You Deserve It”
Well Off
•Less Variety/Customization
Don’t Care


vs. Branding
Customer
Types
Postponables
Hand brake
•Low-cost Financing
Surviving •Exceptional Deals
•“Danger of Postponing”
Well Off •Immediate cash back
Don’t Care


vs. Branding
Customer
Types
Expandables
Hand brake

Surviving •Offer D.I.Y. versions
•Awareness
Don’t Care


vs. Branding
Customer
Types
Essentials
Hand brake
•Lower Price options
Surviving •Bonus Packs (Stockpile)
•“Dependability”
Well Off •“Good enough”
Don’t Care


vs. Branding
Customer
Types
Treats
Hand brake
•Reward Loyalty
Surviving
•“Improve Morale”
Well Off
•Affordable vs. Luxury
Don’t Care


vs. Branding
Customer
Types
Postponables
Hand brake
•Simpler Models, Lower
Surviving Prices
•Lower TCO models
Well Off •Repair services
Don’t Care


vs. Branding
Customer
Types
Expandables
Hand brake

Surviving •Awareness
•R&D of Core Products
Don’t Care


vs. Branding
Customer
Types
Essentials
Hand brake

Surviving
•Awareness
Well Off

Don’t Care


vs. Branding
Customer
Types
Treats
Hand brake

Surviving
•“Outstanding Quality”
Well Off
•“You deserve it”

Don’t Care


vs. Branding
Customer
Types
Postponables
Hand brake

Surviving
•“Save from Buying Now”
Well Off
•“You are missing out”

Don’t Care


vs. Branding
Customer
Types
Expandables
Hand brake

Surviving •Discreet purchase (avoid
flaunting)
Well Off •“Impress Your friends”
Don’t Care


vs. Branding
Customer
Types
Essentials
Hand brake

Surviving
•Awareness
Well Off
•“You can’t live without it”

Don’t Care


vs. Branding
Customer
Types
Treats
Hand brake

Surviving •A.R.O.
•“Seize the moment”
Well Off

Don’t Care


vs. Branding
Customer
Types
Postponables
Hand brake

Surviving
•Monthly Payment Plans
Well Off •“Quality of Life”

Don’t Care


vs. Branding
Customer
Types
Expandables
Hand brake

Surviving •New products
•“Must Have”
Well Off •“For exclusive people ”
Don’t Care




Seek
Change •touch and feel
•‘first’ to know
Seek •Talk to technicians/experts
•pros and cons, trends, lots
Stability of info
•Offer choices
•Online resource
•innovations, new stuff


•Minimize risk
•Standardization and
Seek consistency (routines)
•Wants systems to follow
Change their habit

Seek
Stability



•Treats Store Personnel as
Seek consultants
Searchers
•Pilot projects, process
Collaborators
Change
improvements
•Co-discover new
Seek
applications for existing
Streamliners
business/products Delegators
Stability
•Ongoing coaching and
value-added services




Seek
Change choices
•narrow
•Pre-package, pre-select
Seek (default)
Streamliners
•Make it easier to renew Delegators
Stability to cancel
than
•Focus on a specialty
(niche)
•Honesty, reliability, Trust

Tactical
STORE DESIGN & LAYOUT


Apple Store

• Apple tracks retail store revenues at four-minute
intervals, and Visitor traffic is tracked at 15-
minute intervals
• 5,800 visitors a week per store
• 100,000 persons come to Genius Bars per week
• each Apple retail stores averages $3,000 in
annual sales per square foot. (national average
for malls was $341)


Apple Store

• 5,800 visitors a week per store
• customer experience = design around the
customer's life + ownership experience
• Most expensive, highest-traffic locations: high-
end malls, hip streets and "lifestyle" and
"destination" centers.
• Store layout: simple, intuitive and logical; for new
and established customers
• Perceived as a public place: like a great library


Apple Store

• product zones, vs. solution zones: products are
paired with software and peripherals for specific
purposes.
• Genius Bar: face-to-face support in
neighborhood for high-technology for Free
• interactive front display windows
• Glass Staircase: designed to encourage people
to climb the stairs
• store employees not work on commission,


Tactical
PROMOTIONS & INCENTIVES


Mindset vs Basket Size

• Variety of Related but Different
Product Categories, Distant Future

Abstract

Mindset vs Basket Size

• Products Similar enough to
Substitute one another, Immediate Use

Concrete

Manipulating Mindset to
Basket Size

• Promotions
“Overarching Purpose”
: Oral Care

Abstract

• “Simple Purpose”:
Clean Teeth


Manipulating Mindset to
Basket Size

• Promotions: Individual
and Unique benefits

Concrete

• “Overall Purpose”:
Quench Thirst


Promotional Strategy Trends


What do Shoppers LIKE
about Promotions?


What do Shoppers DISLIKE
about Promotions?


Changing Promotional
Strategies (2007 vs 2009)

www.myCNI.com.my
Source: TNS Worldpanel 52 w/e July 15 2007 vs 52 w/e July 12 2009
www.OOBEY.com

In the eyes of the shopper

www.myCNI.com.my
Source: IGD Consumer Unit, 2009 www.OOBEY.com

Dangers of Direct Incentives

1. lessen internal motivation,
2. switch to mercenary mode,
3. do something and do not do something else,
4. easier for competitors to poach,
5. less and less impact for same value,
6. mockery of base pricing
7. rebellion from non-incentivised
products/groups,
8. end up incentivizing everyone for everything?,


CNI Traditional Retail


CNI – changes in Retail


CNI – “Retail Experience
Marketing”


CNI Retail: Products


End Notes


Asian Retail Trends

1. 100 Yen Stores (Dollar Stores)
2. 24-hour Retail
1. Tourists/Business Travellers
2. Shift Workers
3. Sleepless
4. Last minute shoppers
3. Retailer Banker


“ in the past 18 months, we have heard
that profit is more important than revenue,
quality is more important that profit,
people are more important than profit,
customers are more important than our
people, big customers are more important
than small customers, and that growth is
the key to our success. No wonder our
performance is inconsistent"
CEO, Anonymous

What is the purpose of Sales
& Marketing?

Ultimate Objective of Marketing:
“Get more people, to buy more
things, more frequently, at higher
prices.”
Sergio Zyman


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

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