Leading Worlds

“Reconsidering The Advertising Industry is a 60-page conversation starter which focuses on the disconnect between what agencies offer, and what their clients are looking for.

In the report you will find practical insights and recommendations which can prepare your agency for the new marketing realities.  In specific, you will read about the:

• 14 areas where agencies get it wrong
• 12 remedies to set things right
• 10 agency models which still offer a future”

Free slideware can be seen on Futurelab! Enjoy

Laurent Bouty I have loved Advertising, Agencies, Report

Laurent Bouty Some thoughts 2009 Marketing

I have received the following question on Slideshare: “Can you tell me in detail what a controllable and flexible marketing plan is and how it has an impact on the following:
1- obtaining resources
2- designing the marketing organization
3- developing schedules
4- executing the marketing program”

My answer:

A Marketing Plan is a shared vision of what and how the business should operate for achieving its goals. These goals are usually financial however for some entities (like government of NGOs) it might be different. Anyway, at the end, Marketing Plan should bring clarification about different elements like Brand Promise, Hierarchy of Value Propositions (features, prices, experiences), Customer Journey, Go To Market (Promotion, Communication, Channel) and Enablers (People, Processes, Systems).

Even if we could argue that it can be read from left to right, the construction and its update can start from any of these elements depending of the history of the company and natural preferences of the Marketing responsible. At the end, all these elements should be aligned (congruent). It is important to note that:

• Marketing plans are not a one person exercise but a company wide exercise driven by marketing leaders;
• Marketing plan should be continuously reviewed and updated (flexibility) but major shifts/changes should be well planned for avoiding execution chaos;
• Marketing plan execution should be controllable (Key Performance Indicator).

Let’s assume this shared vision has been built, let’s see how it will have impacts on:

1. Resources: As the Marketing plan is containing an enablers section where impacts on people, processes and systems needed for supporting the other elements are described, the consequence on resources could be easily computed for managing the current business (in life management) and the future business. It is therefore an implicit output of this exercise
2. Marketing organization: Organization should be designed for facilitating the execution of the plan. Therefore the plan is an input for Organization design as structure in place should amplify brand promise, Value Proposition and Customer Journey. Example: if my approach is per out of pocket for the customer (price of 10, 20, 30), my market management should preferably be per out of pocket (segment owner for 10, one for 20 and on for 30).
3. Schedules: the Marketing plan as described above is containing 2 schedules: one for Go to Market (monthly plan for promotions, communications and channels) and one for enablers (monthly plan for people, processes and systems). These plans in addition with the general forecast (users, transactions, prices) are “normally” the references for all company schedules
4. Execution: Finally, as said before, the plan is a shared vision. Then execution should deliver this vision and control the compliancy of of it with the vision. If elements of your vision are not measurable, how are you sure you have executed them (if you cant’ measure it, kill it).

Each of these points can be detailed, but at least it already gives you a high-level understanding of the exercise. Finally, the discussion around a plan is already the plan but 90% of the complexity is in the execution. Nevertheless the first 10% is where you can make difference.

Laurent Bouty Some thoughts Marketing Plan

Economic downturn, credit crunch, bankruptcy, … I guess everybody on earth (even further) is aware that we are entering difficult times (recession, deflation, …). Human reactions when we face a danger are: Freeze, Fight or Flight. What should we do as Marketeers?

Some venture capitalists or strategic consultants will give you the advise: cut costs!

I would say that you don’t have to cut your costs but you have to manage it in a smarter way. Indeed, the ultimate dream might be costs closed to 0 but that dream is only reached when you have … no company. For me, the no company option is not an option and therefore instead of cutting cost, I would advise to smarter allocate your costs. On what? on what makes a real difference in your business, on what drives your customers to your products, on what amplifies the most your commercial story, on what creates word of mouth and respects from your customer, on what makes you meaningful and different, …

Therefore, cutting your Marketing budget is a nightmare! Why?

Let’s assume before the crisis you have a Marketing ROI of x and a budget of y. Then you cut your budget y’ (<100% of y) but there is no reason that your ROI changes (cutting cost is not doing better). Conclusion, your effectiveness on the market is less (y’*x<y*x), your sales will decrease (the consequence of y’*x), which will force you to reduce again your budget, and so on so on up to the end (sales=0).

The other way around is to increase x by being more effective (do the right thing), which will increase your sales (y*x’>y*x), which will reduce the pressure on your cost and will bring you more business.

How do you do that? By systematically analysing your Marketing activities, by removing all customer toxic practices you have created, by focusing on the vital few products and services (the ones that match customer insights), by being clear on your strategy: the cheapest or the best! This strategic polarization is even more reinforced in crisis period (Aldi and Porsche will survive, we can even imagine to go shopping in Porsche to Aldi).

My conclusion for this presentation is not Get Real or Go Home but Get Meaningful (slide 54). And the only way to achieve this is to reinforce your consumer/client centricity as you would do in a one man business. In downturn, your sales & marketing departments (I am not speaking agency neither advertising) are even more crucial! Don’t cut them! Boost them, Challenge them, Coach them, Drive them! Love them!

Laurent Bouty Some thoughts cost cutting, financial crisis, Marketing

Even if this blog is primarily concentrated on Marketing topics, this week has been fully focused on the worldwide financial situation: sub-prime crisis, financial crisis, credit crunch, bank crunch, depression,…

As mentioned in a previous post, the global economic situation couldn’t be ignored by Marketeers as it has short and long term impacts on their daily job. This week in the news, we could read:

• If families are back to their classical family budget (no more credit), Marketing will have to refocus on mainstream offers (Echo-Belgian Financial Newspaper in French-article).
• In a recession period, culture and habits are changing. Faith Popcorn’s brainsreserve ( NewYork cultural tracking firm) has published a new survey on the impact of recession on consumers’ habits (more on Toops Scoops or Faith’s Popcorn’s web site).
• Financial crisis has also a direct impact on on-line advertising (on-line ads slowdown looms on e-commerce news).
• How to market in a recession? John Quelch is proposing 8 factors to bear in mind when building a Marketing Plan (article on Harvard Business Publishing).

Laurent Bouty Weekly review

As Marketeer, do we have to care about the macroeconomic situation or leave it to financial and corporate strategy people? As I was digging into the financial theories the last days (due to the market meltdown), I was wondering how money supply is managed.

There is a simple formula (I sometimes wonder why I studied 3rd degree differential equation at university?) called the monetary exchange formula:

PQ=MV where M is the total dollars in the nation’s money supply, V is the number of times per year each dollar is spent (further on referred as velocity), P is the average price of all the goods and services sold during the year and Q is the quantity of goods and services sold during the year.

PQ can also be compared at micro-level to our Marketing formula where Q=#USER * #TRANSACTION (period). Therefore, at micro-level:

MV=P*#USER *#TRANSACTION for a defined period (let’s say one year).

If the market is less liquid (M decreases), you will have potentially less user, less transaction (short term) and probably lower price (mid-term and called depression). The current risk of a credit crunch is pushing M and V downwards (less money available and less propensity of people to spend what they have currently) will probably drive customer attrition (I leave because it is less important for me, example could be theatre, fitness, vacations this year), less transactions (I buy less because I can’t afford it, example could be clothes, food, energy, financial transactions,…). On the long term, if the situation remains, P will go down which is for the moment the worst scenario for the US governments.

Conclusion, the market crisis cannot be ignored by Marketeers because all the forecasting process (short term) will have to be adapted with the new market conditions and in the long run, a more fundamental question might be asked if we enter a recession: Will my products still be needed by people?

Laurent Bouty Some thoughts financial crisis, forecasting, Marketing Formula

When developing a Marketing Offer, generally you build a Value Proposition. This Value Proposition (or VP) is what the customer gets for what he pays. In the context of Marketing strategy, the value proposition is fundamental because it is the building block where you define your position on the market (what you offer). Let’s ask us 3 fundamental questions when reviewing/building a value proposition:

Q1 - Do you have a real promise?

The value proposition has to be placed in a market context (existing, new) where similar offers might already exist. When building a value proposition, you should always start from customer insights (what do they need, do they have problems that you can solve, are they unsatisfied with existing offers…). Based and only based on these research (yes it costs money, yes it could take time but without it you start from your point of view), you can identify unmatched choice drivers (reason for buying something) or empty market space. Is the value proposition you are analyzing based on insights? is it matching any choice driver? Is it unique? (from a price perspective or feature perspective)? If it is not the best price (cost driven) or unique and meaningful features that match choice drivers, drop it and go to the next one. Tata cars are unique in price while Mini is unique in design/fashion attributes but VW polo is average (today but years ago polo was unique as high quality small car).

Q2 - Does it match brand values?

The brand is you and you are the brand? Selling design microwave oven can be a good business, but it is maybe not in line with your brand (do you think Apple should do it?). The value proposition should be consistent with what you are, what you are claiming with your brand (if you claim something, otherwise I would advice you to start thinking about your brand). If not, this value proposition should be dropped unless it is so unique that you can think about creating a new brand (enlarging your brand portfolio like Procter & Gamble). An example of failure I have seen is a premium brand mobile operator launching a cost driven value proposition as a reaction to a low cost operator. They did it under the same premium brand with the same teams and it failed totally (you can’t be schizophrenic in business).

Q3 - Are you capable to execute it?

Congratulation, you have passed Q1 and Q2 which means that you have a real promise that corresponds to your values. You have done 10% of the job. The other 90% are the execution: ideas on slides are certainly a mandatory condition for success but not sufficient as you will have to turn these drawings into reality. Most of the failures I have seen are due to the progressive (sort of Darwinism in corporate) changes value proposition. Great idea from Marketing presented to other departments (IT, engineering, logistic, customer service) and then you start to specify in details the offer (detailed business requirements). These departments will tell you: “we can only do that if you want to have it on the market at that time”. Your value proposition does not look anymore to what you have screened at Q1. If you continue anyway, risks of failure are very high. Thus, when you screen a VP, this step is critical and should never be underestimated.

Finally, if you pass all this and you have succeeded to launch your offer, go back to Q1 because today, someone else will certainly do something better than you few days/weeks/month after you did it (move or disappear).

Laurent Bouty Some thoughts

My top 5 selection of news, posts or even blogs of this week.

Select. #1 - Nokia Brand Worth $40.6 Billion: Europe’s Most Valuable Brand
According to the first European brand value study, presented in Vienna by the European Brand Institute, Europe’s most valuable brand is Nokia, which the study estimates is worth $40.6 billion. Nokia came ahead of Euro-giants like LVMH, Unilever, Telefonica, Vodafone, Mercedes-Benz, Deutsche Telekom, BMW, France Telecom and inBEV (more on Wireless).

Select. #2 - Excellent post from Chris Anderson

If you don’t know Chris Anderson, he is the author of the Long Tail and also editor-in-chief of wired magazine. Chris Anderson’s blog is a must read and this week I have selected a post on “free business models”. Chris has defined 4 free business models (cross-subsidy, Ad-supported, Freemium, Gift economy). More on this taxonomy here.

Select. #3 - Video Advertising looks good

Video ads posted on Internet (YouTube of this world) starts to become important mass format as more than 67% of Internet users in 2008 have seen this format (source: emarketer). On average, the video CPM was approximately $43, or about three times higher than the $15 average CPM for display ads (source: emarketer).

Select. #4 - Cartoon from Tom Fishburne

I have discovered Tom Fishburne’s cartoons on Marketing and I would like to share it with you (Tom Fishburne’s brand camp blog).

Select. #5 - Google launched Android

Again, the marketing giant Google has been under the spotlights this week with the launch of his mobile phone operating system Android. Internet is everywhere and proprietary/closed systems will probably have to adapt or … disappeared (more on this at the economist)

Laurent Bouty Weekly review Weekly review

Do you think you can create meaningful differentiation between drugstores? I have experienced 2 totally different experiences provided by my local drugstores.

The first drugstore has a perfect location (closest) with easy access and parking. This drugstore is modern and has a full range of product. But, because there is a but front-line employees are not “friendly” and they are just delivering the drugs but without emotions.

The second drugstore is a slightly further and less accessible. The shop is smaller. But, because there is also a but, employees (all of them) are highly friendly. They always take time to understand your needs, to find the cheapest yet effective drug that matches your prescription and if they don’t find what you are looking for, they will investigate with their distributors. Guess what? All this is driving sales as I stopped to go at the other one and I have become an advocate of the second one. This simple but very illustrative example is summarizing some of the most important principles of Marketing performance:

• Customer experience aligned with brand value is a must (see the excellent book of Shaun Smith on Managing the customer experience)
• Product is not sufficient. It is the total product experience that matters now
• Front-line people are amongst the most important brand ambassadors
• Emotional bounding in service businesses is key

Laurent Bouty I have loved Brand Value, Customer Experience, Drugstore, I have loved, Marketing Performance, Services

H&M logo

I have always considered H&M amongst best practices for retail and Brand Management. Everything was aligned: from the above the line campaign to the tiny details in shops. So what? Yesterday, my wife went back from H&M (shopping for kids) and said: “You know what? H&M has stopped accepting goods in return! I was at the cashier, having already paid (for your information, not one shirt but shirts, shoes for 6 months) when I discover that one shirt was slightly damaged (pen on it). I asked the sales person if she could refund me but she said, sorry we have stopped to do so. I can give you a purchase coupon but that’s it.”. My wife argued that she was not yet out of the shop and that she does not need a coupon but simply be refunded on that one (we speak about 5€). No way even with shop manager.

Let’s examine the effect of this behavior:

• Brand perception impacted for 5€. Even if I can understand the cost effect of return, the negative impact of this behavior on Sales is 10 times more damaging.
• Value based Marketing. If you have in front of you a customer having bought a lot, you should treat that person with respect. Not doing so creates potentially attrition.
• Competitive positioning. Not accepting return anymore might be an okay decision but if all your direct competitors like Zara, Mexx, WE,… are still doing it in the same shopping mall, you might have a real competitive threat (an hygienic has disappeared).
• Up-Sell. As my wife told me, sometimes I bought more than I needed knowing that I can return it. But usually I keep it unless size is really not okay. The no return policy has therefore an effect on sales.

My question: was it a marketing decision? or was it a sales decision due to increase pressure on stock costs!

Laurent Bouty Customer toxicity Customer toxicity, H&M, Retail