In this lesson given to international business students, I challenge Kotler's legendary 4P's -marketing mix theory with my own 4+3 E's theory.

1. Challenging Kotler’s 4 P’s with 4 (+3) E’s
The New Marketing Paradigm
Jussi Hirvelä, Luja Group
Director of Marketing and Communications
8.4.2013
Haaga-Helia

3. Third Generation Family Enterprise
- 60 Years of Experience
• Founder of Luja, Feliks Isotalo, came from
Alahärmä. With his Ostrobothnian ‘sisu’ –
guts and perseverance – this former
farmer, policeman and agricultural dealer
made Lujabetoni he established in 1953
grow into a successful business.
• Feliks Isotalo tried out courageous new
ideas and developed himself new products
1909-1988
and machinery. With his hard work and
example he created the Luja values,
abiding by which the next generation has
expanded Luja, making it one of the
biggest Finnish construction groups, a
highly competent Finnish family
enterprise.
3

4. One of the Biggest
Construction Groups in Finland
Turnover 313 M€ Turnover 126 M€
- New building - Frames
- Reconstruction - Slabs
- Housing - Façades
- Business premises - Agricultural elements
- Precast concrete
- Poles
Dother comp. - Railway sleepers
- Luja stone houses
- Other concrete products
- Building company in Lahti
- Precast concrete in Sweden
Affiliate
Turnover MEUR 18
- Dry construction materials - Precast concrete in Russia
Turnover MEUR 457
Staff 1512
43 places of business
31 locations
4

5. Luja Brand Hierarchy
It is nowadays very
difficult and expensive
to build brands. So, we
use one common Luja
umbrella brand
whenever it is
possible.

6. Brand

7. The Construction of
Luja Brand
How we Product
look Experience
What we Service
say Experience
”Promise” ”Delivery”

8. Luja Promises
Environment
Employees Customers
Society

9. Brand is Luja’s Management Tool:
Company interacts with stakeholders
through brand
Strategy
Communications
Quality Stake
Holders
Staff
Service Delivering the
Production promise
“To do BRANDING is not the goal — to use BRANDING to create
breakthroughs for the organization and the people it serves is the goal.”

10. Leading Business Through Brand
= Brand Directing
Strategy
nd
Th rate
gy ta
st
e gy
te rs
cu h
ra de
st as cu
st un
om t st
th to
er o b om
pt ve
va e c ers
e
ce ha
lu om
e
ac ees
ca mu
ps ni
an loy
Brand
ul c a
p
d
ed te
em
to d to
e
Directing
Th
th
e
Staff Customers
If the brand is the promise, employees
are the promise keepers.

11. Summa summarum:
Brand in B2B -Business
A brand embodies the organization’s promise
to consistently deliver a specific set of
features, benefits and services to the buyer. If
the brand cannot influence choice and bring
differentiated experience, it is not a brand; it is
just a corporate identity.
BRAND =
BRAND =
PROMISE + DELIVERY =
PROMISE + DELIVERY =
TRUST & EXPERIENCE
TRUST & EXPERIENCE

12. “The Customer Experience is
the next competitive
battleground”
Jerry Gregoire, Dell Computers

13. The Marketing Mix Paradigm Shift
4P -> 4E
Product Experience

14. The Definition of Customer
Experience
“Customer experience is the sum of all
interactions between a customer and an
organization .
It is a blend of the organization’s physical
performance, the senses stimulated and emotions
evoked, each measured against customer
expectations across all customer touchpoints.
All this is lead by brand promises”

15. How a better than average service
experience is affecting to customer
satisfaction and brand value
Increases Particularly Priceless
customer Good service
good service service
satisfaction experience
experience experience
& brand value
No effect Normal level
barely Not
Destroys acceptable acceptable Intolerable
customer service service service
satisfaction experience experience experience
& brand value
Source: Experiential Marketing, Bernd H. Schmitt

16. 5 steps to a ‘Branded Customer Experience’
G Achieve a superior understanding of what your
targeted customers value
G Apply that understanding to shape a truly
differentiated customer experience that will eclipse
the competition
G Make everyone a brand manager
G Make promises that you are sure your processes
can exceed
G Measure and monitor. Anticipate what customers
will value to sustain consistency of delivery in the
future

17. Factors influencing on customer satisfaction..
And where the focus is in construction industry
Customer
Emotional factors The quality of
relationship
Interaction
Technical performance Functional
quality
Support
Core Products Technical
and Services quality
Constructor
Source::sami.karna@tkk.fi

18. Customer Facings are
Critical Experience Factors
Smile Greeting
Education for
Customer
Facing
Situations
Conversation Asking

20. Adding Experience Factor Means More
Profit
Commodity Brand Service Experience
Porvoon
Pirkka Coffee Paulig Frezza Hesburger
paahtimo
25 snt 4.90 €

21. Experience Economy
Kahvipaketin ja kahvilassa ostetun kahvikupin reaalihintakehitys, 1994=100

22. The Marketing Mix Paradigm Shift
4P -> 4E
Product
Experience
Price Earnings model

23. Making Money
You can’t make good profit with
commodities anymore in this transparent
economy. But by adding some differentiated
service or experience to the product.
Sometimes you have to give your products
or services for free. But then you have to
figure out some other way to earn the
money. Think: Is there some hidden value in
your business that you can liquidate

24. Some examples of the new earnings model
Luja concrete
bricks -
profit-% : --
”Turn key” Luja
Brick House -
profit-% : ++

25. Some examples of the new earnings model
Luja ready mix
concrete -
profit-% : -
Luja ready mix
concrete in some
exact time frame -
profit-% : +

26. Some examples of the new earnings model
Not selling Luja-bricks,
but speed and easiness

27. Some examples of the new earnings model
Not selling concrete
piles, but piling (with a
patented method)

28. Some examples of the new earnings model
Google search
engine and other
Google-software
are free for the users
Google gets the profit
by selling contacts
and customer profiles
to companies

29. Digital media vs.. ”traditional” media

31. A Typical Finnish consumer
receives more than 3000 separate
commercial messages every day
People are nowadays more or
less immune to advertising

33. The Marketing Mix Paradigm Shift
4P -> 4E
Product
Experience
Price Earnings model
Place Easy to find

34. Easy to Find - Good Findability
• How easily a particular product, brand or person has
been found by chance or through the application
process (in web mainly)
• Product and the information should be found in the
correct places at the right time - right press, stores and
other media, and more and more real shopping places
online.
• We have to know what kind of information our
customers are seeking to support their buying process?

35. Awareness
Ad / wom /www 66%
Not only easy to find - but easy
to buy as well
Customer Experience
additional information CC
Browsing 54%
56%
purchase 79%
voice retail internet

36. Developing the Visibility and
Foundability of Luja in Web
SEARCH PAID WITH
ENGINE MONEY
OPTIMATED Google AdWords
Banners
OWN PAGES
Google
PAID WITH EARNED BY
DOROSAL SKIN ACTION
Blogs
Videos, Pictures World is transparent
Social Media Activity

37. Luja WWW-pages
www.luja.fi
www.lujatalo.fi
www.lujakoti.fi
www.lujabetoni.fi
www.lujakivitalo.fi
www.lujabetong.se
Developing the search
www.lujabeton.ru engine optimisation is a
www.fescon.fi continuous process!!

38. In a hyper transparent world, you are
what you contributed… and Google
filters it for everyone

39. The most effective media today

40. The importance of recommendations has
increased as a set for purchase decision
95%
67%
1977 2007
The number of consumers (%) who think that the
recommendation of friends, relatives and opinion
leaders as a key factor in selecting a product
Source:: Roper Trend Research 2008

41. The Architecture of Social Media @ Luja
Own
pages
Youtube Slide-
share
Flickr Google+
Wordpress Facebook

43. Searching ready
mixes by
googling
AdWords
Social media
The optimazion
of own pages

44. Liikenteen lähteenä Google / valmisbetoni

45. Companies are medias of own their own
Red Bull is turning from a energy drink
brand into a media brand

46. Content marketing is one of the hottest
trends in marketing at the moment
• Content marketing means the generation and
targeted distribution of unique content that is
relevant and valuable to the audience
• Quite often the value to the audience is
entertainment
• By leveraging social media, marketers can
distribute this content where they know their
customers spend time online, driving results
for SEO, brand awareness, and the bottom line

47. The architecture of Lujakoti campaign
Film was embedded to www.lujakoti.fi
Radio advertising promoting campaign site
Viral
functionality
Banners at housing portals
Facebook

48. Visits at Lujakoti-web site in the
beginning of the campaign

49. The viral effect
in Lujakoti-campaign
During the first 11 days
Recommending the campaign site
Came to site because of recommendations
The ”return-%” of recommendations

50. Engaging customers is effective marketing
Effectiveness
Action Impact factor
Reading text 1x
Watching video 3x
Clicking forward 4x
Thumping up 4x
Sharing a video 10 x
Embedding a video 20 x
Making a video 100 x
Source:: Randall Rothenberg, Now Media

51. The Marketing Mix Paradigm Shift
4P -> 4E
Product
Experience
Price Earnings model
Place Easy to find
Promotion Engagement

52. The (or one of the..) new definition of
marketing
Marketing is the adaptive
process by which firms
engage their customers and
partners to jointly create,
deliver, and sustain value for
all stakeholders.

53. Marketing Rules are Changing
It was It’s now
Promotion for immediate action Engaging to build relationships
Pushing message to client Pulling client to the message
One way message Interactive conversation
Many-to-one One-to-many
Return on marketing investment Return on involvement
Interruption Engagement
Charging for entry – block entry Giving for free

54. Engaging by Customer
Relationship Management
Clearing Co-innovating Needs
needs satisfaction
Customer
Relationship Ensuring
development Opinions satisfaction
influencing

55. Customer co-innovation: Engaging Customers
by Using them to Generate New Ideas
• As customers are more likely than ever to be
“engineers” within a service process, it is essential to
involve them in the innovation process.
• One example is a recent study by Per Kristensson
and Jonas Matthing from Telia. The purpose was to
examine whether ordinary customers, lead users, or
“experts” are better at identifying and expressing
needs and developing new service ideas.
• Result: Ordinary customers are the best service
developers.

56. Benefiting the Digital Environment in Designing,
Launching and Marketing New Residential Area
Input Digital Communities and Channels Output
• Direct mail www.youtube.com www.facebook.com • Articles
• Ads • Discussions
• Community
• Busses
• Engagement
• Articles www.espoonvetovoimaisinasuinalue.fi • Opinions
• Jokakoti-map • Idea testing
• Oikotie, • Viral
Etuovi • Marketing
www.myspace.com www.blogger.com

57. New neighbourhood in Espoo. Engaging future
residents by involving them into the planning .
83
107

58. The Marketing Mix Paradigm Shift
4P -> 7E
Product
Experience
Price Earnings model
Place Easy to find
Promotion Engagement
Employees,
Ethics & Environment

59. “To win in the marketplace
you must first win in the
workplace.”
Former Campbell’s Soup CEO, Doug Conant

60. Employee Engagement
– Employee engagement does not mean employee
happiness or satisfaction.
– Employee engagement is the emotional
commitment the employee has to the organization
and it’s goals.
– This emotional commitment means engaged
employees actually care about their work and their
company
– They work on behalf of the organization’s goals
– They do marketing on the behalf of the company

61. When employees care—when they are
engaged—they use discretionary effort
• The can be even 50-100 times more productive
• Give 110%
• Go the extra mile
• Take personal responsibility/accountability
• Hold themselves to a higher standard
• Take pride in the quality of their work
• Feel that what they contribute matters to the
success of the organization

62. Engaging Luja-employees by going to funny
and extraordinary happenings with our own
spectacular team

63. Luja Dreamteam Tour 2013 LUJA
TOUR 2
01
3
• Snow Sculpturing Finnish
Championship, Kemi, 11. - 13.1.
• Extreme Run, Tahko, 13.4.
• Helsinki City Run, 4.5.
• Wife Carrying World
Championship (sonkajärvi, July)
• Swamp Football World
Championship, Hyrynsalmi, 19.-
20.7
• Church Boat Championship, July
• Red Bull -hill carting, Helsinki,
July

64. The mission of every family
business is continuity. In order
to ensure the continuity, Luja
implements sustainable
business principles.

65. Ethics
• In this modern transparent world, it is increasingly
important for companies to deal with ethics as a
corporate strategy that, if uniquely implemented,
could achieve competitive advantage for the
company rather than waiting to react to possible
ethical issues of importance to the targeted
stakeholders.
• It is the necessity of being ethically proactive
company rather than being ethically reactive
company.
• Ethics is part of Luja’s business model

66. Ethics
• High business ethics generates brand value
and reputation by high standards of business
integrity and company social responsibility
(CSR)
• Ethics in business is no longer an option. It is a
MUST.
• 92% of consumers surveyed said ethical issues
would influence on buying decisions

67. Luja Corporate Responsibility
• Luja ensures with continuous renewal and
development the sustainable competitiveness and
profitability
• Yearly investment of around 14 man-years on
development, focusing on sustainable
construction:
• Reduction of energy consumption, emissions
and waste volumes
• New products, projects and systems for
energy-efficient construction
• Luja has an active role in fighting against black
economy in the construction industry
• The safest working site in Finland 2012
• Luja supports ”The Children of the Station”-charity
association with quite a big sum every year

68. Environmental responsibility
• The need to succeed in "green race" forces
companies to invent new products, services,
earnings and business models in an
unprecedented way (Ecomagination)
• Greenery is also profitable in a business sense
(more efficient, with fewer raw materials and
energy - with more demand)
• Standards and green certificates shape the
competitive environment - without them one can
not succeed.

69. Taking care of environment is part of Luja’s
ethical business model
SUSTAINABLE CONSTRUCTION
• Safety
• Accessibility
ECO EFFICIENCY • Functionality
• Adaptability
• Use of materials • Consumption of
• Waste and emissions natural resources?
• Other environmental • The value
ENERGY effects produced to
EFFICIENCY •companies
•consumers
•society

70. The Levels of Sustainable
Business
Competitive
advantage
The fulfilment of the
requirements of laws
and regulations?
Avoiding risks

71. The first zero-energy high rise
in Finland
In Kuopio
Piloting site with VTT and Tekes
For student accommodation
Lots of new kind of technology

72. Sustainable brand is strenghtening
when the words and deeds match
e
ntag
dva
ea
tiv
peti
Much Com
Green Sustainable
washing brand building
The volume of
responsibility
communi-
cations
Being a follower Silent working doesn’t
weakens the brand increase the brand value
Little
Little Much
The volume of
responsibility actions

73. Sustainable
Capitalism
means Good
Business

74. The Luja-framework for leading
sustainability with brand
VALUES
& ETHICS
ECONOMICAL STAKEHOLDER
L
RE
BRAND DIRECTING
TA
RESPONSIBILITY DIALOG
ORGANISATION
LA
RESPONSIBLE
PI
PRODUCTS &
OFFERINGS
TI
PEOPLE &
CA
ON
ENVIRONMENTAL
AL
STRATEGY ACTION &
SH
RESPONSIBILITY
UR
BEHAVIOUR
IP
CT
BRAND &
CA
RU
REPUTATION
PI
VERBAL &
ST
SOCIAL
T
VISUAL
AL
RESPONSIBILITY HISTORY & HUMAN
IDENTITY
CULTURE
CAPITAL
Responsibility as Corporate Responsible The Effect on
a starting point identity Brand Directing intellectual capital

75. Questions and
Answers