Kiev Business 5/19/06 docx

The New Marketing and Sales
The New Marketing and Sales
Strategies and Tactics
Strategies and Tactics

Philip Kotler, Ph.D
Philip Kotler, Ph.D

Kellogg School of
Kellogg School of
Management
Management

Northwestern University
Northwestern University

Kiev, Ukraine
Kiev, Ukraine

May 19, 2006
May 19, 2006
My Message
My Message

Marketing’s performance has been disappointing.
Marketing’s performance has been disappointing.

You must replace your Old Marketing with New Marketing that is:
You must replace your Old Marketing with New Marketing that is:

Holistic

Holistic

strategic
strategic

technology-enabled
technology-enabled

financially-oriented
financially-oriented
The New Marketplace
The New Marketplace

Commoditization.
Commoditization.

Competition of cheaper brands from China.
Competition of cheaper brands from China.

Rising selling and promotion costs.
Rising selling and promotion costs.

Proliferation of distribution and media channels.
Proliferation of distribution and media channels.

Power shifting to giant retailers.
Power shifting to giant retailers.

Power shifting to increasingly informed customers.
Power shifting to increasingly informed customers.


Shrinking margins.
Shrinking margins.

Mergers, bankruptcies.
Mergers, bankruptcies.
Marketing’s Results
Marketing’s Results
Are Embarrassing
Are Embarrassing

TV advertising has lost much of its
TV advertising has lost much of its
former efficiency.
former efficiency.

Sales promotions are mostly
Sales promotions are mostly
wasted.
wasted.

Direct marketing mailings have
Direct marketing mailings have
poor response.
poor response.

Too many sales calls done by the
Too many sales calls done by the
numbers.
numbers.


High rate of new product failure.
High rate of new product failure.

Marketing focuses too much on
Marketing focuses too much on
the short run.
the short run.

Marketing has become a one P
Marketing has become a one P
function.
function.
How Do CEOs See Marketing?
How Do CEOs See Marketing?

Marketing is Advertising and Selling.
Marketing is Advertising and Selling.

Marketing is 4Ps.
Marketing is 4Ps.

Marketing is STP and 4Ps.
Marketing is STP and 4Ps.
(STP: Segmentation, Targeting, Positioning)
(STP: Segmentation, Targeting, Positioning)
Overview
Overview

Part 1.

Part 1.
Improving the Relationship Between Marketing, Sales and Service
Improving the Relationship Between Marketing, Sales and Service

Part 2
Part 2
. Applying Holistic Marketing
. Applying Holistic Marketing

Part 3.
Part 3.
Developing A Winning Strategy
Developing A Winning Strategy

Part 4.
Part 4.
Developing New Product Ideas
Developing New Product Ideas

Part 5
Part 5
. Improving Communications
. Improving Communications

Part 6
Part 6
. Moving to High-Tech Marketing
. Moving to High-Tech Marketing
Sales Precedes Marketing
Sales Precedes Marketing


In the beginning there was sales.
In the beginning there was sales.

Marketing appeared later to help sales people:
Marketing appeared later to help sales people:

By using marketing research to size and segment the
By using marketing research to size and segment the
market
market

By using communications to build the brand and
By using communications to build the brand and
develop collateral materials
develop collateral materials

By finding leads through direct marketing and trade
By finding leads through direct marketing and trade
shows
shows

Marketing was originally located in the sales department.
Marketing was originally located in the sales department.

Then marketing grew as a separate department responsible for
Then marketing grew as a separate department responsible for
the marketing plan (4Ps) and brand-building.
the marketing plan (4Ps) and brand-building.
Differences in Mindset and Style

Differences in Mindset and Style

Marketing
Marketing

Profit oriented
Profit oriented

Data oriented
Data oriented

Analytical
Analytical

Likes planning
Likes planning

Team-oriented
Team-oriented

MBA educated
MBA educated

Focused on whole market
Focused on whole market
and market segments
and market segments

Sales
Sales


Volume oriented
Volume oriented

Action oriented
Action oriented

Intuitive
Intuitive

Prefers doing
Prefers doing

Individualistic
Individualistic

Undergraduate and “street
Undergraduate and “street
smart”
smart”

Focused on each customer
Focused on each customer
Hypothesis:
Hypothesis:
The integration of sales and marketing tends to progress through four
The integration of sales and marketing tends to progress through four
distinct stages or levels of complexity.
distinct stages or levels of complexity.
Caution!

Caution!
The most appropriate stage for a company will depend on many factors.
The most appropriate stage for a company will depend on many factors.
More integrated will not always mean more effective.
More integrated will not always mean more effective.
Identify the Existing Level of Relationship
Identify the Existing Level of Relationship
Undefined
Defined Aligned Integrated
Buying Funnel
Buying Funnel
Purchase
Intention
Customer
Awareness
Brand
Awareness
Brand
Consider-
ation
Brand
Preference
Purchase
Loyalty Customer
Advocacy
Marketing
Sales
Handoff

Integrating Marketing

Integrating Marketing
Into the Sales Funnel
Into the Sales Funnel
Prospecting Qualifying Defining
Needs
Contract
Negotiation
Developing
Solutions
Proposal
Preparation/
Presentation
Revision &
Issue
Resolution
Implemen-
tation
Purchase
Intention
Purchase Loyalty Customer
Advocacy
Marketing Can Help
Marketing Can Help
in the Sales Process
in the Sales Process

Prospecting and qualifying
Prospecting and qualifying

Marketing develops high quality leads for the sales force.

Marketing develops high quality leads for the sales force.

Defining needs
Defining needs

Marketing works with sales to develop value propositions for customer
Marketing works with sales to develop value propositions for customer
segments, sub-segments and even individual accounts.
segments, sub-segments and even individual accounts.

Developing solutions
Developing solutions

Marketing provides “solution collateral” – organized templates and
Marketing provides “solution collateral” – organized templates and
customizing guides so that salespeople can develop solutions at lower cost
customizing guides so that salespeople can develop solutions at lower cost
without constantly reinventing the wheel.
without constantly reinventing the wheel.

Proposal preparation
Proposal preparation

Marketing organizes proposal collateral and libraries to help salespeople
Marketing organizes proposal collateral and libraries to help salespeople
produce faster, more responsive and more persuasive proposals.
produce faster, more responsive and more persuasive proposals.

Issue resolution
Issue resolution


Marketing prepares case study material, success stories and site visits to
Marketing prepares case study material, success stories and site visits to
help resolve customer concerns about moving ahead with the purchase.
help resolve customer concerns about moving ahead with the purchase.

Contract negotiation
Contract negotiation

Marketing acts as an advisor to sales teams in negotiation planning and
Marketing acts as an advisor to sales teams in negotiation planning and
pricing.
pricing.
Involve the Sales Force
Involve the Sales Force
in Marketing Planning
in Marketing Planning

SF is a key member of the cross-functional team.
SF is a key member of the cross-functional team.

SF contributes to voice-of-customer research.
SF contributes to voice-of-customer research.

SF contributes to offer development.
SF contributes to offer development.

SF reviews creative.
SF reviews creative.


SF contributes to database development.
SF contributes to database development.

SF defines lead criteria and helps designs lead management systems.
SF defines lead criteria and helps designs lead management systems.

SF contributes to metrics.
SF contributes to metrics.
Eight Ways to Improve
Eight Ways to Improve
Marketing/Sales Alignment
Marketing/Sales Alignment

Hold regularly scheduled meetings between marketing and sales.
Hold regularly scheduled meetings between marketing and sales.



Make it easier for marketing and sales people to communicate with
Make it easier for marketing and sales people to communicate with
each other.
each other.

Arrange for more joint work assignments and job rotation between
Arrange for more joint work assignments and job rotation between
marketing and sales people.
marketing and sales people.

Appoint a liason person from marketing to live with the sales force
Appoint a liason person from marketing to live with the sales force

and help marketers understand sales problems better.
and help marketers understand sales problems better.

Locate the marketing and sales people in the same building or
Locate the marketing and sales people in the same building or
location to maximize their encounters.
location to maximize their encounters.

Set shared revenue objectives and reward systems.
Set shared revenue objectives and reward systems.

Define more carefully the steps in the marketing/sales funnel.
Define more carefully the steps in the marketing/sales funnel.

Improve sales force feedback.
Improve sales force feedback.


USE APPROPRIATE CHANNELS FOR DIFFERENT CUSTOMER
USE APPROPRIATE CHANNELS FOR DIFFERENT CUSTOMER
SEGMENTS AND TASKS
SEGMENTS AND TASKS
M
A
R
K
E
T
I
N

G

C
H
A
N
N
E
L
C
U
S
T
O
M
E
R
National
Acct.
Managemen
t
Direct Sales
Tele-
marketing
Direct mail
Retail
Stores
Distributors
Dealers and
Value-added

Resellers
Advertising
Lead Qualifying Presales Close of Postsales Account
Generation Sales Sales Service Manage-
ment
All Customers
Source: R.T. Moriarty and Ursula Moran. “Managing Hybrid Marketing Systems”,Harvard Business Review, Nov-Dec 1990, pp. 146-147
CUSTOMER ACTIVITY CYCLE : IBM BANK CUSTOMER (SIMPLIFIED)
Update
Take Strategic
Decision
Pre
Review
Maintain
Repair
Train
Install
+
Set Up
Post During
Understand
IT Options
Develop
Systems
Integration
Purchase
deciding
what to do
keeping it
going

doing it
Customer
Activity Cycle
(CAC)
Source : Sandra Vandermerwe, From Tin Soldiers to Russian Dolls : Creating Added Value thorugh Services
CUSTOMER ACTIVITY CYCLE : IBM BANK CUSTOMER (SIMPLIFIED)
Planned Maintenance
Preventative
maintenance
Expand
Renew
Review plan
needs +
system
Repair
Replace
Renovate
Training getting
people online
globally
Pilot Install
Remove old Machine
Feasibility +
IT advice +
expertise
Sourcing
Buying
Distributing
Consulting
Update

Take Strategic
Decision
Pre
Review
Maintain
Repair
Train
Install
+
Set Up
Post During
Understand
IT Options
Develop
Systems
Integration
Purchase
deciding
what to do
keeping it
going
doing it
Customer
Activity Cycle
(CAC)
System +software
integration
Three Types of Customers
Three Types of Customers


Price-oriented customers (transactional selling)
Price-oriented customers (transactional selling)

They want value through lowering cost. They know the
They want value through lowering cost. They know the
product and care only about the price. They don’t want to see
product and care only about the price. They don’t want to see
a salesperson.
a salesperson.

Solution-oriented customers (consultative selling)
Solution-oriented customers (consultative selling)

They want value through more benefits and advice.
They want value through more benefits and advice.



Strategic-value customers (enterprise selling)
Strategic-value customers (enterprise selling)

They want value through higher benefits and lower costs.
They want value through higher benefits and lower costs.
They want the supplier to co-invest and participate in the
They want the supplier to co-invest and participate in the
customer’s business
customer’s business

Source: Neil Rackham
Source: Neil Rackham

Part 2. Applying Holistic
Part 2. Applying Holistic
Marketing
Marketing

Marketing must become strategic and drive business strategy.
Marketing must become strategic and drive business strategy.

A company needs to take a more holistic view of:
A company needs to take a more holistic view of:

the target customers’ activities, lifestyle, and social space.
the target customers’ activities, lifestyle, and social space.

the company’s channels and supply chain.
the company’s channels and supply chain.

the company’s communications.
the company’s communications.

the company’s stakeholders’ interests.
the company’s stakeholders’ interests.

Source: Philip Kotler, Dipak Jain, and Suvit Maesincee,
Source: Philip Kotler, Dipak Jain, and Suvit Maesincee,
Marketing Moves: A New
Marketing Moves: A New
Approach to Profits, Growth, and Renewal
Approach to Profits, Growth, and Renewal
(Harvard Business School Press, 2002)

(Harvard Business School Press, 2002)
Holistic Marketing
Holistic Marketing
HOLISTIC RELATIONSHIP MARKETING FRAMEWORK
HOLISTIC RELATIONSHIP MARKETING FRAMEWORK
MARKET
SPACE
POTENTIAL
OPPORTUNITIES
BUSINESS
INVESTMENT
CUSTOMERS
CORPORATIO
N
COLLABORATORS
CUSTOMER
CUSTOMER
FOCUS
FOCUS
CORE
CORE
COMPETENCIES
COMPETENCIES
COLLABORATIVE
COLLABORATIVE
NETWORK
NETWORK
2) How can we define relevant market space?
3) What are the potential opportunities emerging
from the market space?

4) What business capabilities and infrastructure
required?
1) Who is involved?
4 COMPETITIVE PLATFORMS
4 COMPETITIVE PLATFORMS
Market
Offerings
CUSTOMER
MIND SPACE
VALUE
PROPOSITION
BUSINESS
MODEL
COMPETENCY
SPACE
Business
Architecture
BUSINESS
PARTNERS
CRM ERP
RESOURCE
SPACE
SCM
Marketing
Activities
Operational
System
Exploring
Exploring
Value

Value
Creating
Creating
Value
Value
Delivering
Delivering
Value
Value
Customer
Customer
Focus
Focus
Core
Core
Competencies
Competencies
Collaborative
Collaborative
Network
Network
Part 3.
Part 3.
Developing An Overall Strategy:
Developing An Overall Strategy:
Marketing Strategies Are Showing Diminishing
Marketing Strategies Are Showing Diminishing
Returns
Returns


Product differentiation
Product differentiation
is harder to
is harder to
achieve.
achieve.

Acquisitions and mergers
Acquisitions and mergers
have as many
have as many
failures as successes.
failures as successes.

Internationalization
Internationalization
is offering less
is offering less
opportunities because either the good
opportunities because either the good
markets are overcrowded or the poor
markets are overcrowded or the poor
markets have no money.
markets have no money.

New products
New products
unfortunately fail more
unfortunately fail more
times than they succeed.

times than they succeed.

Price cutting
Price cutting
doesn’t work because
doesn’t work because
competitors will match.
competitors will match.

Pricing raising
Pricing raising
doesn’t work since there
doesn’t work since there
isn’t enough differentiation to support it.
isn’t enough differentiation to support it.

Cost cutting
Cost cutting
has eliminated much of the
has eliminated much of the
fat but is now risking cutting the
fat but is now risking cutting the
muscles.
muscles.
Strategies for Firms in Different Market Positions
Strategies for Firms in Different Market Positions
Jagdish Sheth, Singapore Marketer, 2002
Seven Winning Strategies
Seven Winning Strategies
1.

1.
Cost reduction
Cost reduction
(IKEA, Southwest Airlines, Wal-Mart,
(IKEA, Southwest Airlines, Wal-Mart,
Enterprise Rent-a-Car).
Enterprise Rent-a-Car).
2.
2.
Improved customer experience
Improved customer experience
(Starbucks, Harley
(Starbucks, Harley
Davidson)
Davidson)
3.
3.
Highest product quality
Highest product quality
(P&G, Toyota).
(P&G, Toyota).
4.
4.
Niching
Niching
(Progressive Insurance, Tetra)
(Progressive Insurance, Tetra)
5.
5.
Innovative business model

Innovative business model
(Barnes & Noble, Charles
(Barnes & Noble, Charles
Schwab, FedEx)
Schwab, FedEx)
6.
6.
Product Innovation
Product Innovation
(IPOD, Swatch watch)
(IPOD, Swatch watch)
7.
7.
Design
Design
(Bang & Olufsen)
(Bang & Olufsen)