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Marketing 3.0: Values-Driven Marketing

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Marketing 3.0: Values-Driven  Marketing

Philip Kotler Kuwait April 03 . 2011

Two Recent Books by Professor Kotler

Action-Oriented Knowledge Session One. How to deal with your company’ company ’s major business challenges and opportunities.

Session Two. Two. How to search for for powerful new new ideas and innovate successfully. Session Three. How to improve your branding power. Session Four. Four. How to develop a superior company reputation through sustainability-driven thinking.

Action-Oriented Knowledge Session One. How to deal with your company’s major business challenges and opportunities.

Session Two. How to search for powerful new ideas. Session Three. How to improve your branding power. Session Four. How to develop a superior company reputation through sustainability thinking.

On a scale of 1 to 3 (3 = highest), How much is this a challenge to your company? •

Distrust of business



Globalization



Economic recession and turbulence



Technological advances and disruptions



Environmentalism and climate change



Customer empowerment and the new social media



Political conflict and regulatory changes

Times Are Bad CEO’s are now playing miniature golf.

Obama met with small businesses - Chrysler, Citigroup and GM, to discuss the Stimulus Package. People in Africa are donating money to Americans. The Mafia is laying off judges.

 You Need Two Marketing Departments!! Most marketing departments are engaged in tactical brandmaintenance instead of brand-building. Strategic marketing is missing in many marketing departments. Strategic marketing requires taking a 3-5 year view of the business .

Downstream Marketing

Markets TODAY‘s Product

Upstream Marketing

Create TOMORROW‘s Product

Five shifts: •1st Shift - from creating marketing

strategies to driving business impact. •2nd Shift - from controlling the message to galvanizing your network. •3rd Shift - from incremental improvements to pervasive innovation. •4th Shift - from managing marketing investments to inspiring marketing excellence. •5th Shift - from an operational focus to a relentless customer focus. Company examples: •GE, Wal-Mart, Charles Schwab, Procter & Gamble, Burger King, Zappos, Best Buy and Dell

Involve Your Customers In Your Planning • Four ways to view customers:  – Purchasers of our product  – Persons from whom we gain insight and with whom we can test our planned products  – Persons who Influence others to buy our product (net promotion score NPS)  – Persons who co-create product and communication ideas

• Company examples of co-creation:  – Lexus invites customers to build their own Lexus by going to www.Lexus.com and drawing from a complete package of available colors and options packages.  – Lego and Harley Davidson have welcomed their respective enthusiasts to participate in improving their market offerings.  – Doritos ran an online promotion urging fans to create 30-second spots for Doritos and post them for on-line voting to be picked to air in one of the three Super Bowl slots. The user-generated ad won the top spot at the 21st USA Today Super Bowl Ad Meter defeating ads made by professional agencies.

Characteristics of ―Firms of Endearment‖ They align the interests of all stakeholder groups Their executive salaries are relatively modest They operate an open door policy to reach top management Their employee compensation and benefits are high for the category; their employee training is longer; and their employee turnover is lower • They hire people who are passionate about customers • They view suppliers as true partners who collaborate in improving productivity and quality and lowering costs • They believe that their corporate culture is their greatest asset and primary source of competitive advantage. • Their marketing costs are much lower than their peers while customer satisfaction and retention is much higher. • • • •

Action-Oriented Knowledge Session One. How to deal with your company’s major business challenges and opportunities.

Session Two. How to search for powerful new ideas and innovate successfully. Session Three. How to improve your branding power. Session Four. How to develop a superior company reputation through sustainability-driven thinking.

How Are You Planning to Grow Profitable Revenue? • Efficiency  – Finance and cost control become important (time and motion studies)

• Acquisition  – Finance becomes important

• Organic growth  – Marketing and sales become important

• Innovation  – R&D and technology become important

Innovativeness is a Capability •

Innovativeness is a capability; consider Sony and 3M.



Innovation requires organizing three markets within the firm:  –  An idea market  –  A capital market  –  A talent market



The best innovations provide solutions to customer problems, not to the company‘s product problems.



Strong market-creating innovations have a long life and create market leadership.

The Brand Within the Brand: ―Ingredient Branding― or InBranding

Logos of Ingredient Brands

Find a Way to Brand These Commodities

• Chicken

• Cement

• Bricks “It is possible to brand sand, wheat, beef, bricks, metals, concrete, chemicals, corn grits, bananas, apples, aspirin, …”(Sam Hill, H o w t o B r a n d S a n d ) . 

CAN YOU DESIGN NEW FEATURES FOR AN AUTO INSURANCE POLICY?

Creating genuine customer value: Progressive Insurance MyRate rewards lower risk drivers with lower rates. “  I don’t drive a lot of miles, I’m a safe driver, and I’m not usually on the road late at night when accidents are most likely to happen. Since I’m less likely to be in an accident, shouldn’t I pay less for car insurance?” 

Name Your Price lets customers customize their policy to fit their budget. “  I want an easier way to see how I can meet my insurance needs at a great price.” 

Develop a Memorable Brand Slogan • BA, “The World’s Favorite Airline” •  American Express, “The Natural Choice” •  AT&T, “The Right Choice” • Budweiser , “King of Beers” WHAT DO YOU THINK OF THESE SLOGANS

• Ford, “Quality is #1 Job” • Holiday Inn, “No Surprises” • Lloyds Bank, “The Bank that Likes to Say Yes”

• Philips,

“From Sand to Chips” » “Philips Invents for You” » “Let’s Make Things Better”

Action-Oriented Knowledge Session One. How to deal deal with your company’ company’ss major business challenges and opportunities.

Session Two. Two. How to search search for for powerful new new ideas and innovate successfully. Session Sessio n Three. How to improve your branding power. power.

Session Session Four. Four. How to to develop a superior superio r company company reputation reputation through sustainability-driven sustainability-driven thinking.

How Will Your Company Be Measured? Indices now measure how well a company performs in the triple bottom line: pro fit, planet, and p e o p l e .  The AIM: To encourage companies to improve their economic, environmental, and social impact on the society . Company

Approach

FTSE4Good Index

Good companies work toward environmental sustainability, have positive relationship with all stakeholders, stakeholders, protect universal human rights, possess good supply chain labor standards, and counter bribery practices

Dow Jones Sustainability Index

Corporate Corporate sustainability as “a business approach that creates longterm shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.”

Goldman Sachs

Introduce the GS Sustain Focus List, which includes the list of companies with sustainable practices

SUSTAINABILITY SUSTAINABILITY AND SHAREHOLDER SHAREHOLDE R VALUE There is a link between corporate sustainability and strong share price performance . Companies that put more emphasis on social and environmental impacts reported annual profit growth of 16% and share price growth of 45% while those from companies that did not put a lot of emphasis reported annual profit growth of only 7% and share price growth of only 12%. (Economist Intelligence, 2008)

Moreover, executives believe that the concept of sustainability is good for corporations in attracting consumers and employees and improving shareholder value. shareholder value.

Selling Sustainability to Investors To convince shareholders, the company needs to provide tangible evidence that the practice of sustainability will improve shareholder value by creating a competitive advantage.

Sustainability

Profitability

?

Returnability

The issue is to find a linkage of between sustainability, profitability, and returnability

THREE important metrics that can be quantified financially: Im p r o v e d c o s t p r o d u c t i v i ty   H i g h e r r ev e n u e f r o m n e w m a rk e t o p p o r t u n i t i es   Higher corpo rate brand value (For d etails, see Marketin g 3.0).

Serving the Bottom Third Stretches disposable income by providing goods and services at lower  prices. Unilever‘s Annapurna provides low price affordable iodized salt that

is better than cheaper non-iodized salt. ‗House-for-Life‘ program offering low -cost housing solutions

Expands disposable income by providing goods and services not  previously available for the bottom of the pyramid

Nicholas Negroponte's XO and Nova netPC personal computers. GlaxoSmithKline and Novo Nordisk providing new essential medicines. Increases disposable income by growing the economic activity of the underserved society. Grameen Phone illustrates this. Hindustan Lever‘s Project Shakti which ―employs‖ thousands of

underprivileged women as its sales force to bring its products to rural consumers and provides them with significant disposable income

Wal-Mart Turns Green Wal-Mart announced in 2005 that it will be a “good steward to the environment” and will spend $500 million a year to increase fuel efficiency in Wal-Mart‘s truck fleet by

25%

over three years; reduce

greenhouse gases by 20% in seven years; reduce energy use at

stores by 30%; and cut solid waste from U.S. stores and Sam‘s Clubs by 25% in three years.

Critics see Wal-Mart‘s move being mainly done for economic purposes—to save energ y , s a v e c o s t s  , and inc rease revenu e from increasing demand for green products. This describes an ―Investor Orientation.‖

“Within five years, if you run your business in the same way as you do now, you’re going to be out of business.” Philip Kotler

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