Marketing Decisions Taken By Whom

LONG TERM DECISIONS TAKEN AT CORPORATE LEVEL

which become an input to creating expensive, long term and irreversible decisions  regarding the type of assets that need to be created which can affect 

earnings and competitiveness for a long time to come

• Which  customers  to  serve
• Which  need / application to target
• Which intangible assets to build
• What VFM band to operate in (work on what GOM)
• Brand Architecture and Positioning  
• Which  Channels to build
• How to prospect,  present, close, transact
• Norms for customer Operations / Servicing

DECISIONS THAT ARE TAKEN AT THE MARKETING LEVEL

 which impact the P&L of the year under consideration

• Promotions : timing and extent   
• Communications : messages, materials, media   
• Channel operations   
• Manpower operations  
• Customer contact operations  
• Revenue operations  
• Service operations

What is expected from Head of Marketing

Heads of the company, finance, operations and HR are interested in the following. Ideally the CMO should give all this but in practice some of it is picked from the sales department too.

1. Budget / Forecast of sales volumes - product wise
2. Budget / Forecast of selling prices - product wise
3. Calender of sales volumes for each product - month or week wise
4. If and when some existing products will get dropped   
5. When new products will be introduced and their specs
6. Whether / when some existing products will be modified : from what to what
7. What changes in the marketing, selling and servicing organization and infrastructure
8. Whether our partners, processes, policies will change - from when and how

If a CMO gives these and delivers what he said he will, the internal customers will be happy.

In addition to this, 10 expectations of the CEO from marketing is that

1. Marketing should help improve profit through more customers, better realization, lesser cost, improved asset utilization, reduced waste
2. The market share should improve - at least in strategic markets
3. Strategic assets like brand equity and networks should get built up in the course of business
4. Contribution of revenue from strategic parts ( new products, sunrise ) should increase
5. The loyalty of customers should improve - at least of strategic customers
6. The leadership pipeline in the marketing, selling and servicing organization should be full
7. Marketing should help improve organizations's market intelligence, customer focus and proactivity
8. Marketing should leverage financial, operating and other strengths of the organization
9. Marketing should spot opportunities / trends ahead of others and guide the organization what to do
10. Marketing should spot threats / problems and help address them when they are beginning ( better still, not make them start )

Symptoms of lack of Marketing ...

A good way of conducting a marketing audit

How well are the 5 vital marketing processes established ?

Check if these 5 vital processes of marketing are existing in your company & also how well are they established ? The symptoms of absence of these processes are given later.

1.    MARKET SENSING PROCESS : Process of observing the reality and learning from it so that a sound plan can be formulated depending on it. This process tracks, analyzes and interprets what the  environment  and  competitive developments and thus provides a foundation of reality to all actions. 

2.   STRATEGY FORMULATION PROCESS : This process helps the marketing company decide what value it plans to create, for whom, and how will it compete sustainably.
 

3.   CUSTOMER FULFILLMENT PROCESS : This is a process of coordinating with internal departments so that the strategy gets implemented, the product portfolio gets developed and supported in line with the market needs, the stock gets produced and distributed to the right locations and supply chain works properly end to end. 

4.   GO TO MARKET PROCESS : This process consists of locating, prospecting, contacting, promoting, advising, closing, transacting - and thus acquiring customers - in order to generate revenues for the company. 

5.   CUSTOMER FEEDBACK PROCESS : This process gives frequent customer feedback on existing operations / marketing mix . It consists of  managing complaints, customer recovery, learning from mistakes. It also consists of what gives rise to customer satisfaction from existing ways of the business.

Symptoms (What happens) if these 5 processes are absent ?

1. WHAT HAPPENS IF MARKET SENSING PROCESS IS ABSENT ? The “alignment” between the markets and the company is never measured (except by the very obvious and post-facto measure of sales – “if we are selling well, we must be aligned to the market”). If you do not sense the market at the time of market entry you will fail because you may not be able to give what the market wants – and which is better than what the competition is offering. Even if you start with a good alignment and hence success in sales, the market and the company may drift in different directions without continuous market sending and thus the "fit with the market" may goes down progressively till the company finds itself  hopelessly out of date.
    
   
2. WHAT HAPPENS IF STRATEGY FORMULATION PROCESS IS ABSENT ? the company will try and go after multiple types of customers - and for each it will try to create value – and in multiple ways. Ultimately the company does not create a superior focus on any of these markets (customers) and does not become a leader (among top 3) in any of the markets it operates. In each market it becomes a "follower" and is subject to the pricing and other rules set by the leaders and hence operates with its margins under pressure. Being not a leader it also does not enjoy warm patronage of the users, buyers, trade and vendors. No one's life depends much on such a company but the company is at the mercy of a lot of people. 
   
   
3. WHAT HAPPENS IF CUSTOMER FULFILLMENT PROCESS IS ABSENT ? the right products, with right product specifications, may not come to market at the right time.  Or the right products may not get produced and distributed such that the right product is available at the right time.  
   
4. WHAT HAPPENS IF GO TO MARKET PROCESS IS ABSENT ? The revenue generation and customer relationship creation suffers. Even if you make the right product, revenue will not get generated unless you reach out to them, talk to them, convince them, demonstrate to them, persuade them and make them buy.
   
5. WHAT HAPPENS IF CUSTOMER FEEDBACK PROCESS IS ABSENT ? you lose out on chances to learn by doing. Since the customers do not connect back to you, you never learn what they think and want, and you do not come to know where are the areas of opportunity. The customer relationship suffers because there is no connect. The customer loyalty suffers and you lose a part of the "total lifetime value" of the customer base - created by you - to your com

4 Checks for your value proposition - will you succeed?

The books say that you need to define your value proposition in order to brief the ad agency and the creative people and salespersons so that they can communicate with your customers. I say that value proposition is a story you need to first tell yourself internally before you start - rather than telling it when the time comes to communicate and sell the product. You need to answer the following questions before you start the business / product ...

What is your insight ? 

what makes you enter the market in the first place? I hope its is not because you have the money - or because of everybody is doing it - or because loans are available for the planned activity ! Ideally your insight should be based on any or all of the following four things

• MARKET : unfulfilled needs or partially fulfilled needs of customers
• COSTS : ways for reducing costs without diluting the benefits for existing players
• BUILD ASSETS EFFICIENTLY : efficient ways to acquire assets (financial - structural - relational - human) which will grow well with the passage of time.
• YOUR EXISTING COMPETENCIES : can be used in a better fashion than that by your competitors.       

Market Knowledge 

Without a clear visibility of the following, you will not know what "marketing mix" you must offer to them. This knowledge enables you to decide what value must be created, for whom and how it needs to be taken to them so that they can buy it. In order to take these decisions you need to acquire market knowledge about the following 7 things : 

1. TA PROFILE : Target Customers - who are they? how many? where are they ?
2. INWARD ACCESS : can they access you ? 
3. HOW DO THEY COME TO MARKET : current buying stages / behavior ?
4. CURRENT CHOICES MADE BY TA : what category, channels selling now?
5. TA SEARCH : to what extent are they searching for you? how ?
6. TA READINESS : how far away from budget, organization, intent ?
7. YOUR ACCESS  : how will your people recognize and access them?

What value will you offer and how is it better  

WHAT VALUE WILL YOU OFFER : You cannot craft your value proposition without clearly understanding and deciding "what matters to the customer" and how much of it will you give vis-a-vis the current choices made by the TA. It will be good to remember that what matters to the customer is not the product alone but its availability, terms and condition, price, delivery, installation, training, repair etc. There are many different models for thinking this through. I suggest you use two models : 8Ps and PFSR

1. 8Ps :Product, Packaging, Price, Place, Promotion, People, Processes, Physical Evidence.
2. PFSR model : value is driven by Product, Facility, Service and Reputation

HOW IS IT BETTER : It should be ideally better than the "current choices made by TA" and also be focused on the targeted needs of the customers. Example : your car is "better than SX4 in fuel efficiency" and "meets the need of boot space for a family of 5 going for a week long trip"

How feasible is it to create and sell such an offer

1. Can you adjust the price to handle the costs you have planned?
2. Can you adjust the costs to handle the pricing you have planned ?
3. Do you have the competence to create what you have planned ?
4. Do you have the resources for what you have planned?

Vital Few Profit Improvement Techniques

Most CEOs unleash too many profit-improvement initiatives. I recommend a simple exercise to gain perspective and create a sharper focus. Look at your current P&L and classify costs into the following four costs.

1. Costs embedded in the materials - Material cost as % of sales ( Techniques : waste reduction, vendor development, negotiations, value engineering and segmentation ) ( Segmentation is probably the best technique as it enables you to incur only those costs that are valued by the target customer and hence possible to become compensated by better prices ).
2. Time costs - Fixed Costs of facilities (1) rents and running costs of  offices /spaces (2) depreciation and running of the cost of the equipment for facilities ( Techniques : productivity improvement, scheduling, more throughput, peak-weak demand adjustment )
3. Fixed Costs of people : salaries, perks and travel ( Techniques : Motivation, Aligning, Competency development, organization roles and structure planning, selection, recruitment and on-boarding, career path planning, compensation, incentives, PMS, continuous education etc)
4. Interest costs on your working capital (inventories and debtors)( Techniques : Supply chain management, range planning, channel management)

what adds value ?

For the purposes of this list, "value" is equated with WTP (Willingness to pay)

1. Product-embedded features
2. Location-embedded features ( Outlet, Site, Service Centers, Call Centers)
3. Membership-embedded features ( society membership that comes with the product )
4. Facility ( space, equipment, cash ) helps in PCS ( Product Consumption Cycle)
5. Image ( as a signal of pride, status, quality )
6. Platform ( you can extract value from yourself ) a swimming pool
7. Social Platform (Facebook type) you get value out of other members 

Basic Questions To Ask in Strategic Market Audit

• Type of customer going after and how 

• Category non-users to think of the category (development communications)
• Users thinking of coming to category to try the category (category recruitment)
• Influencing new comers to the category to come to the company ( promotion)
• Influencing a particular competitors' heavy / reg/ light / lapsed users to come
• Trying to get customers to put our company into the consideration set
• Trying to get from consideration set to trial ( conversion)
• Trying to get from customers to loyal and heavy customers

• Trying to accomplish this
• By emphasis on GTM - influencing the external world to buy more
• By emphasis on VP - influencing internally to transform itself
  
• By push or pull

• How are the customers coming to market 
• Not coming to market - Need unfelt - not open to product ideas
• Need felt - but not begun looking for products
• Need felt - begun searching - unclear idea of what / where the solutions are
• Need felt - found solutions - but still a niche market
• Need felt - found solutions - experience built up - + and - are known
• Segments appear in solutions

• Readiness to consider : how many people in the population - are at what stage of coming to market
• How many have you in their consideration set
• How many hot prospects - urgent need + budget + plans + authority
  

• What are  we selling : capability ? Products ? Service ? Solution ?

• X axis = Extent of customization.
  Y Axis = Extent of order size
  Z Axis = Number of customers
  
  FMCG : Low customization, low order size, many customers
  Niche FMCG : Low customization, low order size, few customers
  B2B "Supplier" : Big order size, low customization, response-credit-delivery
  B2B "Vendor" : Big order size, high customization
   

•  

Ways of being competitive over the long term

HABIT FORMING AND EXPENSIVE ACTIONS FOR INCREASING SHARE / SALES

• Reducing price
• Giving discounts
• Giving premiums and gifts
• Promotion campaigns 

These are internecine ways and can neutralize each other and reduce industry profitability without benefiting anyone except of course the customers.

Lasting Marketing Strategies 

Being  first / follower / top-3 in a market segment. 

• You were there first. 
• You identified the segment as a long term bet displaced the competitors
• You created a segment which others did not know existed
• You caught the market in its early growth phase (when many others were not looking)
• You jumped on the right platform ahead of others
• You jumped in when many collaborators were looking for potential collaborators

• IMPACT
• helps in price comparison
• helps in being in the consideration set
• helps in getting a better price
• helps in cost efficient material acquisition
• helps in cost efficient customer acquisition
• helps in being helped by collaborators.

Being in a suitable / sunrise market (now or later) 

• large
• fast-growing
• profitable
• less competitive
• suited to develop your competencies

Inimitable and unique VP / GTM strategy 

• Locating an un-served or under-served need / market - for new launches
• Locating over-served need / market - for cost reduction
• Locating a weak competitor who can be overpowered
• Based on an unknown insight
• Based on a unique offering
• Based on customization not possible earlier
• Developing an access and contact which was not possible earlier
• Developing an engagement mechanism not possible earlier
• Developing a transaction mechanism not possible earlier
• Developing a batch size for purchasing, production, distribution, marketing not possible earlier
• Developing a delivery mechanism not possible earlier
• Developing a satisfaction mechanism not possible earlier
• Developing a market sensing mechanism not possible earlier
• Developing a customer acquisition mechanism not possible earlier
• Developing a fulfillment mechanism not possible earlier

Lasting Business Strategies 

Experience Curve of you & your partners

• Repeating batch / work improves operational efficiency and productivity
• Procurement costs come down as volumes increase 
• Vendors identify you as a key account - improved service / development
• Relationship with vendors becomes deeper and improves costs
• Defectives / Rejections reduce with experience 
• You can perform value engineering with volume improvement

Knowledge of market dynamics helps in

• better supply chain / inventory planning
• planning to service the market
• targeting customers 
• planning messaging
• planning promotions

Better Leveraging current resources / assets

• Current relationships : with customers and influencers and channel
• Current brands 
• Current locations and associated taxes, interest rates, labor, real estate costs
• Current patents, contracts, quotes, memberships, approvals, MOUs, tie-ups
• Current people and experience and costs 

Current position in the industry

• Bargaining power with customers 
• Bargaining power with suppliers
• Clout with the channel, with the vendors, with the unions, with the banks
• Importance in the industry bodies and clout with the government

Symptoms of poor go-to-market effort

Many of your target customers are

1. not aware of the existence of your company / your offer / your availability
2. not aware of where and how can they access you for enquiry / request / complaint
3. not engaged by your effort compared to your competitors
4. not paying attention to your outbound communication / efforts
5. not getting a complete solution / service from - you (includes your network) 
6. not finding from you / your network what they expect when they "come to market"

Your outbound marketing effort to attract attention and interest in your offer

1. covers only a small portion of your total target audience

9 Symptoms of a poor value proposition

1. Your product is “me too” as seen by your customers
2. Customers not clear why should they choose you
3. Customers not clear where they can apply your product
4. You cannot get better price than the competition
5. Your profit margin is less than your competition
6. Your promotion effort does not seem efficient
7. Your sales force can convert less calls into sales
8. Your sales force cannot convince your customers
9. Your competitors spend less but sell more

10 commandments for self audit to be used by businessmen

1. Is the sea of customers big and attractive for you ? Rising or dying ?
2. Can you connect with these customers attractively ?
3. How severe is the competition for the customers? Rising or dying ?
4. What resources / assets enable you to compete / profit ?
5. What processes / experience enable you to compete / profit ?
6. What focus enables you to compete well ?
7. Will your value network be an advantage in your journey ?
8. Will your staff  and their skills be an advantage in your journey ?
9. Will your structure and systems be an advantage in your journey ?
10. Will your culture be an advantage in your journey ?

Profound Definitions

BUSINESS MODEL is "The predominant way a business creates value for its customers and captures some of it for itself". 

5 things to improve revenue quality through customer retention

You can fail - In spite of best segmentation, targeting, positioning, creative messaging, promotions and flawless execution - if there is no value proposition to the customer.  

Being truly committed to the customer retention is hard work Truly committing to customer retention is hard work. It affects every aspect of your organization and must be top-down, company wide initiative. But it is worth the effort - the payback in sustainable growth and profitability. The path to customer retention involves six key steps.

1. Ask the customers what they want / like / dislike - on website, at point of sale, and in the package inserts. You may not get statistically valid feedback because majority customers are mildly satisfied and they do not speak up. Hence realize that the feedback is likely to be "extreme" : love or hate. So ask only if you can deal with the answers. Use the feedback as OFI and not as measurement.
2. Do the detail and discover who are your "best customers" - seems obvious but is not done. Likely (1) You never did this before and hence do not know how to define who is your Best Customer (2) You do not know who your best customers are (3) You do not know the trends in the cohort of best customers. Dont focus only on transactions : high-spenders on credit cards may be less attractive customers than moderate spenders who avail of credit. Just see who your reward program is really rewarding. 
3. The first few days and weeks of a new business relationship are critical. Send direct mail and email reminders and thank them for their business and make the "honeymoon" special. Dont assume that they will fend for themselves and figure out all the great things about doing business with you. In the long run, if they're not using your product or service, they're likely to bail when a better deal comes along.
4. Reward customers. They are weary of "me too" loyalty programs. Give something unexpected.
5. customers are busy and looking for ways to make their lives easier. Offer customers one-stop shopping, consolidated billing, free postage etc. Take the relationship to a new level.

A great product and great customer service are the foundation for customer retention. And positive word-of-mouth is by far the best marketing tool in your arsenal.

It may seem purely tactical but it is in the realm of strategic market planning and is a required strength of any successful organization. It costs about five times as much to acquire a new customer as it does to keep a current customer. That's why it pays to pay attention to your best customers. In the end, they'll buy more, stick with you longer, and tell their friends how great it is doing business with your company.  

3 Layers of Strategic Marketing

MARKET KNOWLEDGE  : To run the whole organization as if  its life depends on the customer is called “Customer Focus”. 

THE FIRST LAYER consists of  actions of  deciding on the marketing mix in terms of 4Ps. This is the visible,  front-end of the business where the basic principle is creating a good “Product x Market” engagement for mutual benefit. This is the traditional and text book role of marketing. 

THE SECOND LAYER consists of actions that take place at the back-end of the business but strongly impact the front end marketing. The basic principle here is that the COO structures the assets, people,  processes within the company ( in short, creates core competencies) which enable the front end to become better at serving the customers. This is the role of the COO / SBU Head. Here the role of marketing is to help the COO make the right investments and decisions. 
 
THE THIRD LAYER exists only in multi-business companies – is to create a corporate center such that it can add value to the COO or Marketing Head. The principle followed here is developing and applying these common resources from one business to another to produce value. Such common resources may be value networks, factories, centers of excellence etc. Sharing common costs is also an objective many times.

Macro (Broad) Factors which affect the business

Not an exhaustive list but only indicative ..

Social, cultural, demographic, and environmental factors

Aging population -  % race -  Per-capita income -  Number and type of special interest groups - Widening gap between rich & poor -  Number of marriages and/or divorces - Ethnic or racial minorities - Education - - Trends in housing, shopping, careers, business - Number of births and/or deaths -  Immigration & emigration rates

Economic factors

Growth of the economy -  Level of savings, investments, and capital spending -  Inflation - Foreign exchange rates -  Stock market trends -  Level of disposable income -  Import and export factors and barriers -  Product life cycle - Government spending
- Industry properties -  Economies of scale - Barriers to market entry - Product differentiation -  Level of competitiveness 

Political, government, business trends & legal factors...

Globalization trends - Government regulations and policies - Worldwide trend toward similar consumption patterns -  Internet and communication technologies -  Protection of rights (patents, trade marks, antitrust legislation) -  Level of government subsidies -  International trade regulations -  Taxation - Terrorism -  Elections and political situation home and abroad

16 Ways to increase sales

1. Save your energy by defining / identifying prospects
   Those who are more likely to be your customers.
2. Qualify early in the sales process
   If the prospect has a budget /  need / good value for money proposition 
3. Have a strong sales message and positioning
   Why should the prospect buy from you
4. Periodically clean up your sales pipeline
   Identify "bad leads" and remove them
5. Contact the real decision makers
   Those owning problem /  budget  / authority
6. Focus on large prospects
   They are likely to have the kind of money to buy - without straining
7. For first-time appointments : Get an appointment any day the customer wants
   Then later you can re-schedule it the day you want
8. Get referrals
   Get existing customer /colleague to suggest your name to a prospect
9. Time is your biggest resource
   Optimize it
10. Have an outcome as an objective for each meeting
    Keep meetings short and sweet
11. Never Surface Objections Yourself
12. Sense the Right Time, Then Close
13. The reason why competition got the sale is they talked to the right people
    And you did not
14. Increase the Amount of Each Sale
15. Decrease Your Sales Cycle Time
16. Flexible Terms and Conditions

10 Offers that make you more attractive to your potential customers

1. Better Product features
2. Better facilities for knowing, choosing, paying, getting delivered, getting trained
3. More expertise leading to better diagnosis and better customization
4. More reputation
5. Better image of the seller / user
6. Lower Price
7. Lesser hassles in the customer's process of arriving at the market 
8. Lesser risk 
9. Better solution 
10. More / Better people of the kind the customer wants to meet / interact

4 ways to determine what "Business" are you in ?

A marketer MUST know all the 4 ways by which a "Business" is defined. 

1. what do you make in your factory ( "Industry" definition )
   vacuum cleaner
2. what use does the customer put it to ( "Use" definition )
   cleaning
3. where does the product excel ( "Application" definition )
   removing deeply embedded dust
4. what is the personal motivation ( "Payoff" definition )
   good impression on visitors

Remember there are 3 types of personal payoffs for customers for any purchase 

• want to achieve something
  Satisfaction that there is no dust in sofa
• want to fix something
  ( people sitting with white dress complained of dust ) 
• want to avoid something
  ( people getting a poor impression of housewife )

10 Ways to sell more -even if your product is the same ...

1. Make your product available to the customers where your competitors is not.
2. delivering it where, when and in quantities customers want 
3. provide easier financing to your customer 
4. Make people more aware of your product as compared to your competitor
5. Undertake effort to educate and  update the customer
6. help the customer in diagnosing the problem and suggesting a solution
7. help the customer to install, fit and commission it
8. Customize your product for the customer
9. Help customer in using, maintaining, upgrading, disposing the product 
10. Make it easier for the customer to compare, purchase, complain

12 Ways to tell if your company's marketing is good

1. Sales Volume
2. Price realization per unit of volume
3. Revenue growth over last year
4. Market share 
5. Reputation that attracts customers
6. Relationship that makes customers loyal
7. Strength and reach of marketing networks
8. Being pioneer or fast follower in "next" markets
9. Being early to get out of "sunset" markets
10. Stronger portfolio of products / markets
11. Innovation ( % revenue from products launched in last 5 years )
12. Barriers to the entry of strong competitors and to the exit of weak competitors

5 Levels of addressing service marketing problems

1. Event level : visible on Surface :  Pacification (Service Recovery) takes lot of time /energy but does little to fix the cause which may be under the surface.
2. Pattern Level :  visible when data is monitored : it is clear which problems continue to emerge regardless of how often you addresses them. Indeed, the same cause  may create multiple negative events.
3. Structural Level :  How systems, structure, staff and skills give rise to these patterns. Origin is in policies, procedures and rules created to run the organization : recruitment, induction, training, supervision, motivation.
4. Mental Assumptions of top management : The formulators of policies and procedures make assumptions regarding the impact on customers and employees.
5. Vision Level : Finally, organizational goals are developed at the “vision” level, which is at the root of the iceberg, where one examines the sense of the direction the organization is taking. At this level one considers what are the tradeoffs we need.