managing marketing performance

*MANAGING MARKETING PERFORMANCEINTRODUCTIONS

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*about David KilburnHead of Business Development, Associate Professor and DSGi Marketing Fellow, formerly Barclays FellowDipM, MCIM, Chartered MarketerMarketing management experience in retail industry- home

improvements, food, and consumer electronicsWorked part time for CMC for 5 yearsMarketing Director for BSM ElectronicsStore Director WHSmith Do-It-All Online marketing tutor/ Dissertation advisor for worldwide MBA programme - Liverpool University External Examiner for Marketing/Business University of Wales in Spain and ItalyMarketing Tutor for ISTUD in Milan, Italy each summer

*Member CIM since 1990Member CMI since 1990Lecture on MRI, MMiPPassionate about the theatre of events since age 5!Ran Foodex Meatex at NEC and ExCeLPoacher turned gamekeeper turned poacher again!Created online interactive exhibitor training modules including self tests book plannedI have done Launches including PRAwardsSeminarsBusiness breakfastsConferencesHospitality eventsBuilding openingsTeam building events!Etc.

*ABOUT YOU!Tell us something about yourselfWho you are?Where you work?What your role is? Your marketing experience?Academic path?Your involvement with strategic marketing management issues?

*What have you visited recently?What 3 things would you like to take away from the day?

*SETTING THE SCENEAssignment or exam?Dates, requirements and deadlinesUse College Web facilitiesCIM Learning Zone and EBSCOReadingStudy Guide text bookPrevious papers and answersExaminers commentsTutor Forum February 2009WebinarsRevision session assignment sessionContact me

[email protected]

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*The 5 elementsCreating organisational context for effective implementation of strategyManaging change and internal marketingImplementing strategy through marketing activitiesManagement techniques for managing the marketing functionMeasurement, evaluation and control

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*Fit with overall pg syllabi

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*Scope of the syllabusHow to do the job of marketingrelates to marketing practiceTests application rather than knowledge:extend knowledge into thinkingfrom what to why and howDraws on a wide range of resourcesCONTEXT

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*FocusThe How of marketing rather than the whatDelivery emphasis is on Listen and ChallengeShift from analysis to critical evaluation

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*MMP AUDITDiscussion with examinerKey pointsTutor forumLast diet

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*MMP Focus Meeting FeedbackKey issues resulting from the first set of markingReferencing is important but there is recognition of the work based nature of the assignments and the increase thereby in Internet based referencing.Looking for sound theoretical underpinningLooking for Trail of evidence - linkage between audit, selection of options and recommendationsStudents need to define the boundaries of the project clearly e.g. 1 or 2 products in 1 or 2 markets is enough

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*MMP Focus Meeting FeedbackGood practiceTrail of evidenceSupport in audit findingsA good audit is: -Relevant to the topicsLinked to the reportNOT cut and pasted!Numbered report and good structureGood index KEYDo mind maps to sort ideas prior to writing the report

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*MMP Focus Meeting FeedbackGood practice more..Evaluation (acid test is so what?)Depth not breadth is critical

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*MMP Focus Meeting FeedbackPoor practiceUnapplied models (Senior examiners bete noir) vital to apply in contextToo much description not evaluation looking for ability to use data to discriminate in decisionsPoor referencing misspelling of authors names!Poor use of appendices this is a business report

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Grade DescriptorsExample assignment from last assessment

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*MY ASSUMPTIONS!You have prior knowledge and some experience of using the theories that apply to this syllabusIf you are unsure at any stage SHOUT!

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*CIM PROFESSIONAL PG DIPLOMAMANAGING MARKETING PERFORMANCESession 1

The role and practice of leadership

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*CIM Definition of MarketingMarketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.

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*Learning outcomesAt the end of the session you will be able to:Explain the role of the strategic leader in managing marketing performanceExplain the role of the strategic leader in achieving marketing orientationExplain the role of the strategic leader in building shareholder value through marketing activitiesExplain the role of the strategic leader in ensuring marketing effectiveness

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*What is leadership?Leadership is the process of influencing others to work willingly towards the achievement of organisational goals.Leadership can be characterised in terms of traits or characteristics (of leaders) and styles (which are to be adopted).Leadership skills can be learnt and improved

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*Manager or leader - differences? (John Kotter)

ManagersLeadersCope withcomplexitychangeAddressthe present and the short termthe future and the longer termPerformancemeets expectationsexceeds expectationsFocuscontrollingunlocking potential

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*Models of leadership styleHuneryager and Heckman; LikertDictatorial, autocratic, democratic, laissez-faireAshridge Management CollegeAutocratic, persuasive, consultative, democratic (omits the extremes at each end)Tells, sells, consults, joinsMcGregorTheory X and theory Y Hersey and Blanchard: situational leadershipMatch the style to the development level of the subordinate

http://changingminds.org/disciplines/leadership/styles/situational_leadership_hersey_blanchard.htm

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Mini Case -Autoglass:- Leadership success factors

Customer drivenEnergy, drive and changeAnalytical thinkerCommercial ideas and actionPlanner and implementerOpen communicatorLeading and motivating teamsPartnership builder

(see handouts)

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Mini Case -Autoglass:- Leadership success factors Question one Think of two successful leaders that you have known, preferably selecting examples that display different approaches. Assess each of them in relation to the various Autoglass success factors.

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Mini Case -Autoglass:- Leadership success factors Question two Now consider a less effective leader. To what extent did he or she demonstrate the various success factors?

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*What guides the organisation?

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*Leadership skills (Belbin)VersatilityFeedbackCharismaIntegrityAltruism

Decision makingProblem solvingInitiating actionFostering linkagesAssisting in evolution and change

*Each of these bullets requires assessment in different contexts.

It might be worth reinforcing that bullet lists such as these are NOT acceptable in the examination in lieu of thought development.

*What does the leader do? Adair identifies 8 leadership activities Defining the taskPlanningBriefingControllingEvaluationMotivatingOrganisingSetting an example

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*Leaders determine how organisations developStrategic choice theory (Stacey, 2003)Formulation and implementation of strategy are differentIt is the role of leaders to formulate strategy and to direct its implementation

Theory of the learning organisation (Senge, 1990)Organisations evolve as a result of high levels of learning by individuals and teams

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Marketing Managements Role*

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Life cycle of marketing*

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Relationship marketing implications for marketing practice*

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*Useful web-siteswww.shapetheagenda.com Go to past agendas then select hard edged marketing.The most recent paper on managing marketing people is also worth a lookwww.wnim.comWhats new in marketinghttp://www.thewisemarketer.com/VERY GOOD!www.cim.co.ukwww.excellencenorthwest.co.uk/Resources/Steve_Kempster_19th_July.pptA useful overview

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*Minicase - LeadershipConsider a small manufacturing company, t/over circa 25m p/a, marketing team of 3 Manager (you), executive and assistant. The corporate objective is to increase sales by 25% over the next 3 years and the marketing objectives are to increase brand awareness by 50% & the number of new prospects by 50%.You need to increase your team by one, what are the leadership issues to consider?

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*CIM PROFESSIONAL PG DIPLOMA

MANAGING MARKETING PERFORMANCESession 2

Planning the team

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*Learning outcomesAt the end of the session, you will be able to:Appraise the requirements of a given set of tasks and their context, and assess the impact of relevant factors on the creation or development of a team to perform those tasks.Determine the skills, characteristics and roles required within a team to carry out specific tasks effectively.Prepare a plan showing how the team should be structured, selected, formed and developed to ensure effective performance.

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*A group is a collection of people . who perceive themselves to be a group!In Understanding Organisations Charles Handy differentiates a group from a random collection of individuals. Members of a group:have a common sense of identity and belongingare loyal to the group and conform to its standards

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*A group is not a team: teams have synergyA team is a small number of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable

Katzenbach and Smith, The Wisdom of Teams, 1994

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*Groups become teams when they have a sense of purposeNeeds are complex and multi-layered and need to be managed as such (Adair)Their members play particular roles (Belbin)They are likely to pass through stages of development (Tuckman)Their effectiveness depends on their terms of reference and their conduct (Handy)Leadership is key (Ashridge; Belasco & Stayer)

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*6 differences between a team and a group (Belbin)

TeamsGroupsSizeLimitedMedium/largeSelectionCriticalLimitedLeadershipShared/rotatingSoloPerceptionMutual knowledgeFocus on leaderStyleRole spreadConformismSpiritDynamic interactionTogetherness

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*John Adair identified 3 overlapping needs

Task needsGroup needsIndividual needsTask RolesInitiatingInformation SeekingStrategic planningEvaluatingDecision-makingIndividual maintenance rolesObjective settingFeedbackRecognitionTrainingEmpowermentCounsellingGroup maintenance rolesEncouragingClarifying visionStandard settingPeace-keepingwww.johnadair.co.uk

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*Team skills, characteristics and rolesNeed for key competences across the teamNeed to achieve a balance of personalities and skillsNeed to consider the tasks to be undertaken, the individuals who make up the team, and the cohesiveness of that team

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*Designing a teamMeredith Belbin identified 9 distinct management rolesChairman - presides and has a co-ordinating styleShaper- team leader with a directive stylePlant- introvert but intellectually dominant/ imaginativeMonitor/ Evaluator - analytically intelligent/ criticalResource Investigator - source of contacts.Company Worker / Implementer - getting the job doneTeam Worker - handles personal relationships in the teamCompleter/ Finisher - keeping the team to

its deadlines(Specialist)

www.belbin.co.uk

*C- (also called co-ordinator)- is balanced, disciplined and good at working through othersS- highly strung, dominant, extrovert, passionate about the task itself and a spur to actionP- a source of ideas and proposals, but with the disadvantage of introversionM- often aloof and tactless, but necessaryR- popular, sociable, extrovert and relaxedI- practical organiser, turning ideas into tasks. Trustworthy and efficient but not excited (or exciting, often) and is not a leader, but an administratorT- most concerned with team maintenance- supportive, understanding, diplomatic, popular, but uncompetitive, noticed only in absenceF- chivvies team to meet deadlines, attend to details, urgency and follow-through- important, but not usually popular

Most people are a mixture of at least two roles.

*TEAM DEVELOPMENT (TUCKMAN AND JENSEN) STAGE 1 - Forming STAGE 2 - Storming STAGE 3 - Norming STAGE 4 - Performing

Tuckman (1965) STAGE 5 - Dorming

Tuckman and Jensen (1977)234

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*Choosing the right people is not always straightforward

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*Forming and developing (marketing) teamsTeams dont just happenThere is a processLeader needs to nurture the team through these stages of developmentRecruit for attitude, train for skillConsider motivational and morale issuesConsider the personal and skill development needs

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*Handy: team effectiveness

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*Planning and control is a disciplinePlan, do, check and adjust (PDCA)Plan what is to be doneDo itCheck that it has been done rightAdjust: make any changes necessary

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*Types of TeamsMulti-disciplinaryMulti-skilledProjectVirtualManagers role prioritisation, planning, control, decision making & problem solvingLeadership

*RR proposal teams

Eurofighter/Airbus different teams, different countries and cultures the result years late and way over budget! Group decision making in teams can be problematic responsibility shared/blurred; consensus; own agenda; longer to reach decisions.

*Virtual teamsNo manager: this makes them very democraticNo meetings: this is enabled by modern technologyNo organisation or structure: members are typically multi-skilled

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Case Studies

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*Finally: Elton Mayo and the Hawthorne studiesPerformance responds to attentionPeople perform better if they perceive that they are a group singled out for attentionTom Peters.Relationships within work are important to employeesGroups develop spontaneously and can set their own rules, attitudes and standards

www.accel-team.com/human_relations/hrels_01_mayo.html

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*Useful web-siteswww.belbin.comA basic introduction to Belbin ideaswww.teamtechnology.co.ukLeadership, management, teamwork and businesswww.buildingyourteam.comFree articles and tips for team buildingwww.greatplacetowork.comDoes what it says on the tinwww.johnadair.co.ukLeadership and management

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Developing and managing teams

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*Learning outcomesAt the end of the session, you will be able to:Demonstrate an ability to manage the work of teams and individuals to achieve objectives and create effective working relationships within the team and with other teamsCritically evaluate the productivity, satisfaction and effectiveness of teams against their objectives using appropriate techniques.Analyse the causes of any sub-optimal performance and recommend how to improve the teams performance, including plans to improve motivation, commitment and loyalty.

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*Motivation: what is it and whats the theory?Motivation is simply reason(s) for behaviourThere are two types of theories:Content theories eg Maslow (hierarchy of needs) and Herzberg (two-factor theory)Process theories eg Vroom (expectancy theory) and Handy (motivation calculus)

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*Maslows hierarchy of needs

Physiological NeedsSafety NeedsLove/Social NeedsEsteemSelf-actualisationFulfilment of potentialIndependenceRelationships, affection, belongingSecurity, order, predictability, freedomFood, shelter

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*Maslow

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*HerzbergHerzberg identifies two factors which affect motivation at work:

Hygiene factors elements which cause job dissatisfaction

The motivators elements which cause job satisfaction

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*Handys motivational calculusEach individual has a motivation calculus which is concerned with:Energising behaviour;Direction of behaviour; andSustaining behaviourMotivation is based on strength of needE= effort, energy, enthusiasm and expenditure of time, resources and passion

http://www.businessballs.com/charleshandy.htm

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*Schein (1965) says that different people are motivated in different waysRational economic: scientific managementSocial man: human relationsSelf-actualising man: Maslow/HerzbergComplex man: all of the above

Schein, E.H. (1965) Organisational Psychology. Prentice-Hall Inc, New Jersey

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*Schein also talks of a psychological contractThis exists between individuals and their employer:Coercive: employee feels he/she is being forced to contributeCalculative: employee accepts a reward/effort relationshipCo-operative: employee identifies with the organisationMotivation exists when both the individual and the employer view the contract in the same way.

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*Then the accepted motivators are well knownJob design, enrichment, enlargement and rotationParticipation in decision making and empowermentPay and incentive schemesIndividual and groupGood people management

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*Creating effective working relationshipsNine strategies for creating trust (Robbins & Finley)Have clear, consistent goalsBe open, fair and willing to listenBe decisive and how to be decisiveSupport all other team membersTake responsibility for team actionsGive credit to team membersBe sensitive to the needs of team membersRespect the opinions of othersEmpower team members to act

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*Evaluating team performancePerformance management/performance appraisal systemsReview achievement to objectivesDiscuss progress of the team and of individualsLook forward dont slip into a blame culture approachLearn lessons from mistakes and move onReview regularlyGive recognition and praise where dueCelebrate team success

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*Be sure about 4 key factorsGoalsmust be established at the forming stageRolesShould be established before the norming stageProcessesOften get developed during stormingRelationshipsCritical for performing

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*Management of Peripheral WorkersWhat sort of working?BenefitsChallengesManagement ChallengesTrustCommunicationMeasurement & achievementInvolvement

*Managing Remote teams at Chameleon

Managing remote sales people at AVT.

*SummaryForming and developing marketing teamsTeams dont just happenForming, storming, norming and performingLeader needs to nurture the team through these stages of developmentRecruit for attitude, train for skillConsider motivational and morale issuesConsider the personal and skill development

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*Minicase Motivation & Team ManagementIn your small marketing team of 5 there is a manager, 2 executives and 2 assistants. One of the executives is not performing to full strength and complains a lot!Taking the role of manager, discuss how you would try to motivate this executive and how you would manage this situation going forward?Which theories might assist in your management strategy?

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*LUNCH

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MANAGING MARKETING PERFORMANCE Managing ChangeSession 4

Strategic marketing, culture and change

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*Learning outcomesAt the end of the session, you will be able to:Recommend how an organisation should become more strongly market oriented, taking into account the nature of its environment and culture.Assess the main pressures on an organisation to change and the initiatives available or being used to respond.Critically evaluate the role and content of an internal marketing communications plan and its contribution to managing change in an organisation.

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Market OrientationDefinition 1..entails one of more departments engaging in activities geared towards developing an understanding of customers current and future needs and the factors affecting them, sharing of this understanding across departments and the various departments engaging in activities designed to meet select customer needs

(Kohli and Jaworski, 1990)*

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*Market orientationAn organisational culture where beating the competition through the creation of superior customer value is the paramount objective throughout the business.Oriented towards customerAlert to competitive situationCo-operation between functionsEmphasis on profit, not turnoverResponsiveness to changes

(Piercy, Market Led Strategic Change, 2001)

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*Market Led Strategic ManagementMarket orientationbeating the competition through the creation of superior customer value (Piercy)ComponentsCustomers, Competition, Inter-functional, Culture, Long-term profit focusChallenges New: Customers, Competitors, types of organisation, ways of doing business

*Customers close to the customer (warm armpit marketing DEC), salesman first line customer problem solver. Inter-functional (whole company working together)

*Organisational CultureThe sum total of the beliefs, knowledge, attitudes of mind and customs to which people are exposed during their interaction with the organisation.

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*Culture The way we do things around here Dealand Kennedy 1982

Collective programming of the mind Distinguishes one group from another Hofstede (1991)

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Corporate Cultures*

Speed of feedbackSlowFastAttitude to riskHigh riskLow riskSource: Deal and Kennedy (2000)Bet your company cultureHard macho cultureProcess cultureWork hard/play hard culture

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*Changing philosophies and orientations

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A model of market orientation*

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*Elements of a market orientation

Culture Norms Values Mindsets Behaviour

Capabilities Sensing what customers

want Linking customer needs to

company capabilities Building relationships

Strategic Thinking Processes Abilities

Organisation Structure Systems Control

Customers Understand Satisfy Retain

Knowledge generationKnowledge use

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*Customers: know them well enough to give superior valueCompetition: what are their short and long-term capabilities?Inter-functional: mobilise the entire company to create superior customer valueCulture: employee behaviour should be managed to ensure customer satisfactionLong term profit focus: have a strategic but realistic vision

Hooley, Sounders and Piercey; 2003

Key components of achieving marketing orientation

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*Role of marketing in strategic managementIdentify and monitor customer needs and market situationLink customer needs to organisations capabilities Contribute to determining competitive positioningImplement marketing programmes to deliver value and retain customersMeasure the effectiveness of marketing activities

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*Whats driving all this? Changes outside

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Environmental analysis*

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External analysis*

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*If everyone in the company does marketing what does marketing do?It orchestrates the marketing that everyone else doesIt is the font of all knowledgeAbout customers;About competitors; andAbout the company and its products/servicesIt is the engine of growth

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*Marketing and change

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Nothing is permanent except changeHeraclitus*

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*Organisation & Change Model All of these could change!Effective internal marketingcan help!McKinsey 7S model

*Model of stakeholders and change management leads to effective internal management & marketing.

*Kenichi Ohmae got there first; the strategic triangle

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Key drivers of change?ICTEg Music marketingGlobalisationWal-Mart?Ethical concernsFair TradeCause related marketing

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*The world is changingExternal issues (PESTER)PoliticalEconomicSociologicalTechnologicalEnvironmentalRegulatory

andCompetitive

Internal issues -Retention or gain of competitive advantageCost-savingsNew senior managementNew owners and other stakeholders

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*Internal marketingDeals with internal customers - an important stakeholder groupEssential in effecting marketing oriented cultureMarketing techniques can help to motivate staff and increase level of involvement

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*Kotler sums it up as a marketing triangle(1999)

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*Internal marketingProvides communication to help employees identify with corporate objectives - the common goalBreaks down them and us cultureCompetitive advantage can be achieved through employee knowledgeProduct/service innovation can come from employee ideasGood customer service needs constant reinforcement

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Internal marketing - 3 phasesEmployee motivation and satisfactionCustomer orientationStrategy implementation and change management

Source : Ahmed and Rafiq (2002)*

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*First segment the marketSegmentationDifferent levels of managementDifferent functionsDifferent locations, culturesSupporters, opposers, neutrals (Jobber 2001)Its not single dimensional

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Mendelows power/interest matrixSTAKEHOLDERS

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*Then use the marketing mix internallyProductStrategy and process of changeJob or function may be internal product

PricePsychological price - loss of status, uncertainty, loss of productivity

PromotionClear communication essentialNoticeboards, meetings, intranet, newsletters, etc

PlaceInformation, training etc - channel providing services to the internal customer

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*Discussion pointWhy do so many organisations fail in their efforts to be truly marketing oriented?

List the internal cultural barriers that may be frustrating their ambitions and provide suggestions as to ways in which these barriers might be overcome.What theories might assist?

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*Useful referenceswww.valuebasedmarketingmanagement.net a useful reference about just about everything marketingwww.organisationalchange.co.uk a consultancy in organisational changewww.mad.co.uk delivering business insight

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Change management

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*Learning outcomesAt the end of the session, you will be able to:Identify and evaluate the sources of and the techniques for overcoming resistance to change.Assess the impact of change in a marketing department.Prepare a plan to deal with change in the marketing department, including the development of appropriate skills and capabilities to meet the objectives.

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*Managing Strategic Change StylesEducation/comms, collaboration/partic, intervention, direction (coercion).RolesLeadership/change agent, middle mgt., outsidersLeversOrganisational routinesSymbolic processesPolitics/AlliancesCommunications

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*What kind of change?The Johnson and Scholes model

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*Change and the individual: people dont like changeThey resist it because of:FearUncertaintyLack of confidenceDissonanceIt changes themPhysiologicallyCircumstantiallyPsychologically

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*People respond to change in different waysAcceptanceEnthusiastic or otherwiseIndifferencePassive resistanceActive resistance

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*Change is a process: it can be managed1: determine need for change2: plan the change3: analyse possible reactions4: consider alternatives5: develop final plan6: communicate the plan7: implement, review and evaluate, modify as appropriate

Put it all into the hands of a change agent but make sure that he gets visible top management support.

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*Force Field Analysis the three step modelDriving forces(for change)Current StateRestraining forces(resistance)Ideal PositionA requirement ofNew legislation.Professional CommitmentTo controlling the organisation.Requirement to reportTo external agenciesA concern for qualityCynicism about changeanother fadExisting systemsare sufficientTrade Union concernOver effects on jobWorking conditionsComplexity of producingSuch reviewsCost of carryingout such reviews

Kurt Lewin

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Emergent approach*Stable/ predictable environmentTurbulent/ unpredictable environmentPlanned changeEmergentchangeThe change continuumSource:Adapted from Burnes (1996)

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*John Hunt (Managing People at Work)Unlearning is as important as learningUnfreezing requires:A trigger eg a crisis or eventA champion to challenge inherited thinkingBuy-in from colleaguesRestructuring

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*Creating major change (Kotter 1996)1. Establish sense of urgency2. Create the guiding coalition3. Develop a vision and strategy4. Communicate the change vision5. Empower broad-based action6. Generate short term wins7. Consolidate gains and produce more change8. Anchor new approaches in the culture

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Making time for changeGlobal changeOrganisational changePersonal change

Source: Robbins and Finley (1998)*

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*The Change CurveOriginally developed by Kubler-RossAnd adapted by Wilson 1993

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*Think about 3 phases in change(Conner and Patterson)PreparationContactAwarenessAcceptanceUnderstandingPositive perceptionCommitmentInstallationAdoptionInstitutionalisationInternalisation

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*Get preparedHampden TurnerFind the dangersBring conflicts into the openPlay out corporate dramasReinterpret the corporate mythsLook at symbols, images, ritualsCreate a new learning systemTake it through the entire organisationWait 3 (or even 8) years!

Cultural change is the most difficult

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*Dont forget HR implicationsThere may be redundancies. These need to be carried out legally and meet the companys social responsibility policies;Recruitment policy and practice may need to be reviewed; andTraining is probably going to be a major need to bring everyone up to speed

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*Group discussion pointOvercoming resistance to change through internal marketing. Consider (one of):A small B2B machinery supplier looking to become a more market led organisation following recent acquisitionA national charity looking to change its strategy for attracting donations from local charity shops to national advertisingA local supermarket chain looking to build alliances with retailers elsewhere

How would you do it?

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*Mini Case Managing ChangeA new marketing director has come in to the business and is making changes in the strategy of the marketing team. This will result in job losses and changes in the structure of the team. To make matters worse their style is very dictatorial.What obstacles do you think this person will come up against, and how should they overcome them?

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*SummaryChange is inevitable, but it is not always welcomed, and often resisted.Success with change programmes can be improved by taking peoples fears into accountMay be necessary to have a Change AgentYou cant change too much too often cynicism sets in and that is the most difficult to overcomeCultural change is difficult

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Building shareholder value through marketing activities

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*Learning outcomesAt the end of the session, you will be able to:Explain the link between marketing activities and shareholder value.Explain the measurement of economic value addedDetermine the contribution to shareholder value of marketing activities undertaken.Critically appraise methods available for valuing brands.Explain how brand equity can be built and brands can be valued.Recommend an appropriate approach for the organisation.

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*Strategic decisions are concerned with The long term direction of the organisationAchieving some advantageScope of an organisations activitiesMatching the activities of the organisation to the environment in which it operates

Source: Johnson & Scholes

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*ImplementationShareholder Value AnalysisComputing ValueEconomic profit = NOPAT (CE x cost of capital)Discounting Cash flowsValue based managementMarketing assets

*CE = Capital employed.

*Firstly a useful referenceSVA: shareholder value analysisEVA: economic value addedNOPAT: net operating profit after taxROCE: return on capital employedDCF: discounted cash flowNPV: net present value

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*Economic profit versus accounting profitAccounting profit is what is reported in a companys results and what is reported is strictly controlled by the principle of prudence (tell that to Enron!)Many expenditures which are in fact investments and will pay off in the future are treated as expensesEconomic profit may treat such expenditures as investments

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Investors are most interested in what will generate cash in futureInvestors focus 80% of their decision on cash beyond 4 years

Today

+10 years

Total shareholder return (TSR)TSR = dividends + share price growth

Source : Valueline and PA Consulting Group 2002www.cim.co.uk/mediastore/PA_unlockingrealvalue.pdfShareholder value and total shareholder return

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*Value driversRead Doyle!Value based marketing

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*Key to enhancing value is to understand the driversFinancialVolumeTimingRiskSustainabilityMarketingChoice of marketsTarget customersPositioningOrganisationalInternal and external

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*Product leadershipOperational excellenceBrand superiorityCustomer intimacy

There are often examples of all four positions taken in an industry

Positioning for differential advantage is a little more complex

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*Marketing strategies to create valueMarketing assetsMarketing knowledgeBrandsCustomer loyaltyStrategic channel relationships

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*Marketing and shareholder value

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Strategies to develop SVEconomies of scaleEconomies of scopeCost advantagesProduct differentiationAccess to distribution channelGovernment policy

Source: Peterson (2004)*

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Boston matrix and shareholder value*A selected fewCompetitive positionRemainder divestedLiquidated

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*Limitations of SVAForecastingCost of CapitalEstimating terminal valueBaseline business valueOptions for the futureMarket valuation

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*Brands

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*Strong brands can increase cashflowStrong brands can increase cashflow by Obtaining higher prices; andHigher volume growth; resulting inLower costs; andHigher asset utilisation

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*But whats a brand?Its an entity with a collection of attributes that strongly influence purchase (Hugh Davidson)It comprises an effective product, a distinctive identity and added values.

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*BrandingWhat is a brand?A name, sign, symbol, design or combination of them, intended to identify goods or services of one seller or group of sellers and to differentiate them from those of competitors (Kotler)What makes up a brand?Benefits of brandingCustomers, Marketers, Shareholders

*Makes up = effective product + distinctive identity + added values supported by visible (advertising, packaging etc.) & invisible (r&D, sales, assets, ethics etc.)

Benefits -

*Brand building process

ProductNameQualityLogosPackFeaturesDesignBasicbrandServicesDeliveryTechnical supportExtrasTrainingGuaranteesInstallationsAugmentedbrandPotentialbrand

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*Attribute brands image conveys confidence in its functional attributes e.g. Volvo (safety), Persil (washes whiter)Aspirational brands image conveys a lifestyle to which people aspire e.g. Martini (sophisticated jet-setter), Rolex (top professional)Experience brands conveys an image of shared associations and emotions e.g. Nike (just-do-it), Marlboro (rugged masculine values)

Doyle Value-Based Marketing, 2000Types of brand/brand image

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CORE VALUESEXPRESSIVE VALUESCENTRAL VALUES

What the brand and the consumer share at a fundamental level

What the brand says about the consumer

What the brand does for the consumerFrom Commodity Brand to Power BrandComponents of a brand

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*Brands are used in different ways: brand architectureCompany brands eg MercedesSource brands eg Kelloggs Corn FlakesRange brands eg SharwoodsProduct brands eg RonsealUmbrella brands eg Philips

Whats the difference between a range brand and an umbrella brand?

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*Brand stretching: be carefulWhat is it?Using a brand name successful in one market to enter anotherWhy do it?Its cheap, uses an existing asset and is less risky than a new brandWhen to do itWhen the brand core values are applicable to the new market and when activity in the new market will not adversely affect themBut: it may damage the first brand and its not a substitute for real marketing

*Brand Planning & StrategiesBrand Planning Market AnalysisBrand Situation AnalysisTargeting future positionsTesting new offersPlanning & evaluating performanceBrand StrategiesBrand StretchingRevitalising brandsGlobal or local?

*Stretching = brand extension = developing brand name to encompass other productsRevitalising = increasing sales volume via new: markets (e.g. overseas), customer segments (e.g. family v business), new usage (e.g. cereal for lunch)

Think global, act local

*Valuing BrandsShould brands be valued?MethodsCostRoyaltiesMarket ValueEconomic Use ValueSVA Approach to brand ValuationDiscount rateFuture earnings

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Business Week/ Interbrand valuations 2007*

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*Young and Rubicams Brand Asset valuatorwww.yrbav.com

*Millward Browns BrandDynamicswww.millwardbrown.com

*Interbrands strength index

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*SummaryOrganisational value drivers McKinsey 7 S model identifies theseSVA approach is good but has limitationsNPV = Sum of the present values of all future cashflows.NPV can be used for project appraisalBrands are important differentiators and can be, perhaps inaccurately, valued & exploited.

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*CIM PROFESSIONAL PG DIPLOMAMANAGING MARKETING PERFORMANCE

Thats all for day 1!

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**Member CIM since 1990Member CMI since 1990Lecture on MRI, MMiPPassionate about the theatre of events since age 5!Ran Foodex Meatex at NEC and ExCeLPoacher turned gamekeeper turned poacher again!Created online interactive exhibitor training modules including self tests book plannedI have done Launches including PRAwardsSeminarsBusiness breakfastsConferencesHospitality eventsBuilding openingsTeam building events!Etc.

*What have you visited recently?What 3 things would you like to take away from the day?

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**Each of these bullets requires assessment in different contexts.

It might be worth reinforcing that bullet lists such as these are NOT acceptable in the examination in lieu of thought development.

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**C- (also called co-ordinator)- is balanced, disciplined and good at working through othersS- highly strung, dominant, extrovert, passionate about the task itself and a spur to actionP- a source of ideas and proposals, but with the disadvantage of introversionM- often aloof and tactless, but necessaryR- popular, sociable, extrovert and relaxedI- practical organiser, turning ideas into tasks. Trustworthy and efficient but not excited (or exciting, often) and is not a leader, but an administratorT- most concerned with team maintenance- supportive, understanding, diplomatic, popular, but uncompetitive, noticed only in absenceF- chivvies team to meet deadlines, attend to details, urgency and follow-through- important, but not usually popular

Most people are a mixture of at least two roles.*

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**RR proposal teams

Eurofighter/Airbus different teams, different countries and cultures the result years late and way over budget! Group decision making in teams can be problematic responsibility shared/blurred; consensus; own agenda; longer to reach decisions.

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**Managing Remote teams at Chameleon

Managing remote sales people at AVT.*

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*Customers close to the customer (warm armpit marketing DEC), salesman first line customer problem solver. Inter-functional (whole company working together)

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**Model of stakeholders and change management leads to effective internal management & marketing.

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**CE = Capital employed.

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**Makes up = effective product + distinctive identity + added values supported by visible (advertising, packaging etc.) & invisible (r&D, sales, assets, ethics etc.)

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**Stretching = brand extension = developing brand name to encompass other productsRevitalising = increasing sales volume via new: markets (e.g. overseas), customer segments (e.g. family v business), new usage (e.g. cereal for lunch)

Think global, act local*

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managing marketing performance

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