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Rethinking marketing

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rohtashmal
rohtashmal

1) The document discusses the need for marketing to shift from a product-driven model to a customer-driven model focused on long-term customer relationships and lifetime value. 2) It outlines metrics that should shift from short-term sales and profitability to long-term customer metrics like customer lifetime value, customer equity, and customer equity share. 3) The document argues that companies must reinvent themselves to be truly customer-centric by changing organizational culture, metrics, functions, and how they view customers in order to build long-term competitive advantage.

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MARKETING REDEFINED ……………… .
CONTENTS WHERE are we today? WHY – need for change The TRANSITION The New Transition METRICS Shifting PARADIGM REINVENTION
WHERE are we today? A Product driven culture Depend on one – way mass marketing to push a product to many customers. Maintain a transactional relationship, thus expecting the customers to accept what we have to offer. Driving Transactions
To make our brands subservient to long term customer relationship. To drive decisions based on customer information. Focus on long term health of the organization. To attain sustainable competitive advantage. NEED for change
The TRANSITION Product Driven Customer Driven
The New METRICS CURRENT SALES BRAND EQUITY MARKET SHARE CUSTOMER LIFETIME VALUE CUSTOMER EQUITY CUSTOMER EQUITY SHARE PRODUCT PROFITABILITY CUSTOMER PROFITABILITY
Shift from Measuring Profitability in terms of Gross Profit, Contribution Margin or Throughput to revenues and costs associated with the customer relationship in a specified period. A Shift from Marketing Products to cultivating customers. Approach the market through a structured Customer Relationship Program. Rewarding for brand transition to build Customer value rather than product/ brand based performance. PRODUCT PROFITABILITY CUSTOMER PROFITABILITY
CURRENT SALES CUSTOMER LIFETIME VALUE CLV is the present value of future cash flows attributed to customer relationship A company with strong current sales but poor prospect base will decline gradually. Evaluate long term health of the organization based on lifetime value of the customer rather than profits generated in short run. Use of future oriented customer metrics, like customer retention rate, customer value, or brand assets. Rewarding and reflecting customer metrics in financial statements.
Shift from measuring value of the brand to sum of lifetime values of all of a company’s customers. Brand equity is more like facilitator to the customer equity. Synergy between brand and customer equity makes marketing more relevant to shareholder value. Marketing activities to be tracked more closely using niche media for specific customer segment. BRAND EQUITY CUSTOMER EQUITY
MARKET SHARE CUSTOMER EQUITY SHARE Customer Equity Share is the value of the company’s customer base vis-à-vis total value of customer in the market Market share reflects company’s current competitive sales position. CSE reflects long term competitiveness w.r.t. profitability. Need to be adept at tracking customer information at several levels – Individual / Segment / Aggregate.
Cultivating Customers: Creating an Organization culture designed to serve customers & customer segments. Build relationship with more individualized two-way communication. Using technologies to interact, and mine information gathered to tailor offerings, rather than just analyzing only aggregate sales statistics. E.g: AmEx capitalizes on customer lifetime value by tracking usage through Membership Rewards, Gold Card or Platinum card. Shifting PARADIGM
Customer Facing Functions: CRM: Create an interface to gauge customer needs & behaviors to execute customer cultivation strategy. Market Research: Shift the scope of research from aggregate to individual customer base, analyzing more customer upon customer metrics. Make the MR info available to all, from marketing to finance & distribution. R & D: Make product reflect real world needs. Creative collaboration with users in the design process, e.g: Nokia Beta Labs, a virtual developer community. Customer Service : In-house function to ensure not only quality service but also long term relationship building. Shifting PARADIGM
Shift in organizational structure from marketing driven to customer driven. Approach customers as behavioral scientists rather than marketing specialist. Align deep customer knowledge with broad organizational or product knowledge. Shifting PARADIGM Product Managers Customer Managers
REINVENTION Build a Customer Centric Organization. Cultural transition - from selling a product to Building Relationship with customers across the organization. Evolve and adapt new metrics of transition to encourage Customer Value and profitability. A paradigm shift in focus as: Brand exist to serve customers, not the other way around. Capturing more customer information at several levels and from all sources, to keep evolving in long run. The shift is inevitable This may be the only competitive way to serve the customer.

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Rethinking marketing

  • 2. CONTENTS WHERE are we today? WHY – need for change The TRANSITION The New Transition METRICS Shifting PARADIGM REINVENTION
  • 3. WHERE are we today? A Product driven culture Depend on one – way mass marketing to push a product to many customers. Maintain a transactional relationship, thus expecting the customers to accept what we have to offer. Driving Transactions
  • 4. To make our brands subservient to long term customer relationship. To drive decisions based on customer information. Focus on long term health of the organization. To attain sustainable competitive advantage. NEED for change
  • 5. The TRANSITION Product Driven Customer Driven
  • 6. The New METRICS CURRENT SALES BRAND EQUITY MARKET SHARE CUSTOMER LIFETIME VALUE CUSTOMER EQUITY CUSTOMER EQUITY SHARE PRODUCT PROFITABILITY CUSTOMER PROFITABILITY
  • 7. Shift from Measuring Profitability in terms of Gross Profit, Contribution Margin or Throughput to revenues and costs associated with the customer relationship in a specified period. A Shift from Marketing Products to cultivating customers. Approach the market through a structured Customer Relationship Program. Rewarding for brand transition to build Customer value rather than product/ brand based performance. PRODUCT PROFITABILITY CUSTOMER PROFITABILITY
  • 8. CURRENT SALES CUSTOMER LIFETIME VALUE CLV is the present value of future cash flows attributed to customer relationship A company with strong current sales but poor prospect base will decline gradually. Evaluate long term health of the organization based on lifetime value of the customer rather than profits generated in short run. Use of future oriented customer metrics, like customer retention rate, customer value, or brand assets. Rewarding and reflecting customer metrics in financial statements.
  • 9. Shift from measuring value of the brand to sum of lifetime values of all of a company’s customers. Brand equity is more like facilitator to the customer equity. Synergy between brand and customer equity makes marketing more relevant to shareholder value. Marketing activities to be tracked more closely using niche media for specific customer segment. BRAND EQUITY CUSTOMER EQUITY
  • 10. MARKET SHARE CUSTOMER EQUITY SHARE Customer Equity Share is the value of the company’s customer base vis-à-vis total value of customer in the market Market share reflects company’s current competitive sales position. CSE reflects long term competitiveness w.r.t. profitability. Need to be adept at tracking customer information at several levels – Individual / Segment / Aggregate.
  • 11. Cultivating Customers: Creating an Organization culture designed to serve customers & customer segments. Build relationship with more individualized two-way communication. Using technologies to interact, and mine information gathered to tailor offerings, rather than just analyzing only aggregate sales statistics. E.g: AmEx capitalizes on customer lifetime value by tracking usage through Membership Rewards, Gold Card or Platinum card. Shifting PARADIGM
  • 12. Customer Facing Functions: CRM: Create an interface to gauge customer needs & behaviors to execute customer cultivation strategy. Market Research: Shift the scope of research from aggregate to individual customer base, analyzing more customer upon customer metrics. Make the MR info available to all, from marketing to finance & distribution. R & D: Make product reflect real world needs. Creative collaboration with users in the design process, e.g: Nokia Beta Labs, a virtual developer community. Customer Service : In-house function to ensure not only quality service but also long term relationship building. Shifting PARADIGM
  • 13. Shift in organizational structure from marketing driven to customer driven. Approach customers as behavioral scientists rather than marketing specialist. Align deep customer knowledge with broad organizational or product knowledge. Shifting PARADIGM Product Managers Customer Managers
  • 14. REINVENTION Build a Customer Centric Organization. Cultural transition - from selling a product to Building Relationship with customers across the organization. Evolve and adapt new metrics of transition to encourage Customer Value and profitability. A paradigm shift in focus as: Brand exist to serve customers, not the other way around. Capturing more customer information at several levels and from all sources, to keep evolving in long run. The shift is inevitable This may be the only competitive way to serve the customer.