sirsi-april06
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PresentationTRANSCRIPT
Helping Clients Capture The Value Of Research: The Role Of Marketing
And Sales In Their Business
Ajay K. Sirsi, [email protected]
www.sirsimarketingsales.com
Professional Work• Schulich School of Business, Marketing professor
– I am not a marketing researcher– I am a marketing consultant
• Research, writing, teaching (Exec, MBA, BBA)– Marketing Led - Sales Driven (Trafford)– Marketing: Real People, Real Decisions (Prentice Hall)
• Consulting– Royal Bank– Bayer– International Paper– Glaxo Smithkline– Imperial Oil– Manulife Financial– TELUS– Farm Credit Canada– Schneider Electric
A Recent Client Experience
• Firm hired marketing research firm to segment customer base
• End result: Ten customer groups– Sales volume– Cost to serve
• Next steps– Profile customers
• Customer needs
Helping The Client Think “Business Transformation”
• What may appear to be a marketing research problem, is not
• Market segmentation will have profound impact on the entire organization– Customers you keep– Customers you “fire”– Volume versus profitability discussions– Sales force hiring, training, measurement,
compensation
State Of The Marketing Research Industry
• Marketing research industry facing the worst industry slump since the early ’90s– Marketing News
• Flat or declining revenues reported by two-thirds of firms– Inside Research
• CEO’s put less faith in marketing research than other sources– ARF
• In most companies funding on marketing research is considered an expense, not an investment
As individual suppliers we may have prospered, but as a function
we have failed
Source: Initial thought proposed by Lawrence Gibson in Marketing Research
What Is Wrong With Marketing Research?
• Speed• Bad research • Failure to communicate value• Failure to think strategy
– Data providers v. strategy advisors– Not helping marketing function play a pivotal role in
organization• Not recognizing cross-functional impact of research
“Systematic gathering, recording, and analyzing of data about
problems relating to the marketing of goods and services”
American Marketing Association
Value Marketing Research Provides To Clients
• Avoiding failures– Pontiac Aztek
• Enabling success– U&A studies– Premium vitamin example
Where Does Marketing Research Fail?
• Helping clients discover opportunities in the marketplace
• Helping clients in transforming the organization
Source: Modified from Huppertz
You Have To Understand Your Clients’ Reality
• Declining market share• Mature industries• Low-cost competitors• Price sensitive customers• Declining brand loyalties• High failure rate of new products• Consolidating supply chains• Lack of internal customer focus
– Cross-functional alignment to understand-create-deliver-manage customer value
End State Possibilities
• Applying new approaches in sales and marketing can make a dramatic impact on the bottom line
• Unexploited pricing and marketing opportunities exist on the order of 5 –10 percent return on sales– These opportunities can be captured
quickly– What is the key requirement?
Key Requirements• A Focus on the fundamentals
– Strong strategies• Marketing Plans• Customer value propositions
– Solid execution• Customer-focused Sales Plans
Source: Nohria (2003), Sirsi (2005)
Value Elements•Effective management of uncertainty &•volatility•Anticipates change/ innovations•Creates customer solutions/value•Helps customer build a brand
•Adopts best practices•Responds to failures &•emergencies quickly •Flexible culture
•On time deliveries•Quality product•Competitive on cost
Customer Value Pyramid
Basic Care
MarketplaceAgility
Differentiate
Financial & MarketShare Impact
Parity
Decay
Gain
Source: R. Spradley
Transformation from a sales driven company toward a business system innovator
Sales Driven
Functional Excellence
Value Proposition Leader
Business System InnovatorImprove Capabilities
Stage 1 Stage 2 Stage 3 Stage 4
• Volume focused
• Sell what we make
• Feed the machine
• Functional excellence in Marketing & Sales• Profit focused• Manage customer and product portfolios for optimal profit
• Intimate knowledge of customer segments/needs
• Focus on valueproposition and value prop delivery systems
• Efforts to better meetcustomer needs, reducecost to serve and beat competition
• Innovation of new business systems to meet specific segment/customer needs
• Partnerships• Industry-shaping marketing initiatives
Profit Potential
Characteristics
Business Strategy•3-5 Year Horizon•High-level strategy
Resource Allocation•Capital Allocation•Budgets
Marketing PlanSales Plan
Manufacturing PlanHR PlanIT Plan
Performance Measurement•KPM (key performance measures)
Source: Sirsi, Marketing Led - Sales Driven (Trafford Publishing)
Marketing Plan Template • External analysis
– markets– segments and customers– competitors
• Internal analysis: key issues to address• Key objectives to be achieved• Key strategies in place• Key tactics• Key outcomes• Control
A Good Marketing Plan Should...
• Be a page turner• Make money• Give firm a competitive edge in the marketplace• Provide common direction to all functions • Provide the business with a play book to
approach its markets in a disciplined manner • Provide the foundation for true organization-
wide change
But, This Has Not Happened• Marketing Plans are encyclopedic
– Gather dust on someone’s shelf• Focus on data, but not on the “So What” of
data• Do a SWOT analysis, not OTSW analysis • Mainly focus on marketing communications • Managers mistake tactics for strategies
– “Attend more tradeshows”– Business efficiency
• My grade for marketing plans: B minus
What is the cause of this problem?
Poor understanding of customers, marketplace and competitors
Segmentation: End State
Manufacturing
Software
Entertainment
ValuePerformancePremium
Segmentation: End State
Manufacturing
Software
Entertainment
ValuePerformancePremium •Needs•Value Drivers
Customer Needs And Value Drivers
•Diversified product line•Competitive on price
•Consistent product quality•Very willing to consider price premiums if case is made
•High grade quality•Willing to pay price premiums
Manufacturing
•Basic quality•Will not consider price premiums
•Quick turnaround•May consider price premium if case is made
•Proactive technical support•Willing to pay price premiums
Software
•Product consistency•Will not consider price premiums
•User-friendly products•May consider price premium if case made
•High impact product•Willing to pay price premiums
Entertainment
ValuePerformancePremium
Pivotal Matrix For Marketing –Sales Alignment
Manufacturing
Software
Entertainment
ValuePerformancePremium•Value Propositions
Pivot Matrix: Customer Value Propositions
•Diversified product line•Competitive on price
•Cost containment•Security of supply
•Grade A product•Custom solutions team
Manufacturing
•Grade BB product•Sales materials
•Quick turnaround•Ability to do short runs
•Grade AA product•Inventory management
Software
•Grade B product•Charge for TS
•Product quality guarantee•Dedicated TS team
•Grade A product•Dedicated TS team
Entertainment
ValuePerformancePremium
Strategic Marketing
Plan
Sales And Customer
Plans
SalesImplementation
SalesReview
How Do Marketing Plans Get Implemented?
Sales Plan
• Look and feel similar to marketing plan– Sections lifted from marketing plan
• Marketing language translated into– Sales opportunities– Sales objectives– Sales resources required
Key Account Plan
• Has two sections– Key Account profile– Key Account Sales Plan
• Both sections updated yearly (or as required)
“We Must Engage the Entire Organization”
Marketing:Understand customer
value and use in targeting and pricing
Marketing:Understand customer
value and use in targeting and pricing
Sales:Communicateand capture
customer value
Sales:Communicateand capture
customer value
Finance:Understand cost to serve
and opportunity
cost
Finance:Understand cost to serve
and opportunity
cost
Operations:Deliver
customer value
Operations:Deliver
customer value
R&D:Create
differentiated value
R&D:Create
differentiated value
Customer focus leads to a comprehensivebusiness strategy and value-based culture
What Does This Mean To Us?
• Focus on targeting and positioning• Out-of-the-box thinking• Take time to get it right• Drop the jargon• Quantify the ROI of research• Focus on innovations that truly save time,
not just cut corners
Source: Klancy and Krieg (2001)
What Does This Mean To Us?
• The problem is NOT one of better communication
• The problem is structural• Encourage students to take courses in
– Business strategy– Organizational behavior– Management of strategic change
• Industry needs to evaluate proper role
What Does This Mean To You?• What business are you in?• Myopic: “We are in the business of providing
solid marketing research data”• Strategic: “We help you think about your go-to-
market-strategies”– Cross-functional execution– Need to involve all functions in research design and
data collection• Rhetoric v. reality
– Are you really structured to be strategic?
“You have to move on to the next project. There is no time even to check your work. You just hope nothing fell through the cracks.”
Marketing researcher’s comments to Ajay
Resources
• AMA web seminar– www.marketingpower.com/AMA
webcasts/marketing strategy
Ajay Contact Information
• Website: www.sirsimarketingsales.com• Email: [email protected]• Phone: (416) 486 – 8490• Work: Schulich School of Business at York
University, Toronto, Canada