Jetblue said is the best time for them, they get more market share since their competitors are weak.
When there are disruptions, that’s the time some firms get better chances.
Many books speak about great companies, I think it started with Tom Peters. But some companies turned out disasters.My friend Jim Collins wrote the book “Good to great”, and identified about 15 phenomenal companies in ROI and sales, that led Jim to find out… why a great company falls.
His new book is “How the mighty fall”. He had to write it!
How does a company like GM fall apart?
According to Jim there is a cycle. It starts with success, then success becomes the cause for failure. Success is the beginning of the end.
2nd stage is called undisciplined growth. They think they can do anything. Cisco, run by John Chambers, is about to enter 15 new markets, I don’t remember anyone announcing such a massive move.
3rd stage starts when there are problems, but the company denies them.
4th stage is when it becomes very public that the company has problems.
At this stage they will try anything. If they’re lucky they find… salvation. If they don’t find salvation, it’s 5th stage: GM.
Its gonna be happening more and more.
Now, let’s distinguish recession from turbulence.
Recession is a business cyle, economy goes down and slowly comes back up.
Turbulence is different. It means there will be a large number of surprise and disturbances, more than before. But there’s no curve, like the business cycle. It’s shakiness.
My thesis is that we are entering a New Normality.
The New Normality is: Turbulence.
The norm is change. Change is the norm.
There will be a lot of shakiness, like in an airplane…
The norm is change. Change is the norm.
There will be a lot of shakiness, like in an airplane…
So, I believe companies need new systems and processes to handle turbulence.
My new book “Chaotics” will be out in Italy in september, and holds this subtitle: the business of handling marketing in the age of turbulence.
My new book “Chaotics” will be out in Italy in september, and holds this subtitle: the business of handling marketing in the age of turbulence.
Turbulence is here for two big reasons: globalization and digitalization.
Globalization means that we’re so interconnected with other countries that if US sneezes, everybody gets a cold.
Globalization is the best thing we can hope for, because it brings down the cost of living.
One of the good things is that it locks us in a state of fragility.
Then, the news travel fast. Customer empowerment is the result. Entirely different from 15 years ago.
One person can take down a company.
One persone can open up a site and command a company to respond.
Companies have to be not only transparent, but have to have good quality. It’s not acceptable not to deliver quality.
That is why companies will get better.
If I need a car I don’t go to a dealer, I go to the web.
And see what the people said abut that car. Not only now, by 6 months before.
Then I go to the dealer and I know what the price will be. Not his price, my price, the price I know from the web.
We cannot get away get away with old marketing and promotion.
Marketing has more conversation than promotion.
Your company must be able to open up. You have missed an opportunity to actually co-create your product with your consumer.
It happens with Lego, Harley-Davidson… customers want to help out! They wanna tell you how to do it.
Whole new set of things.
Now let’s move on… here are the concerns of customers:
- recession
- sustainability
(Mostra dei marchi spoof – Fail invece di Ford, Nokia disconnecting people, Sorry invece di Sony ecc.
This is recession.
Dalai Lama said:
Easy times are the enemy, they put us to sleep.
Adversity is our friend. It wakes us up.
Old chinese proverb:
When the wind storms,
some build walls,
some build windmills.
What is the best strategy? Is there one? No.
Then, the news travel fast. Customer empowerment is the result. Entirely different from 15 years ago.
One person can take down a company.
One persone can open up a site and command a company to respond.
Companies have to be not only transparent, but have to have good quality. It’s not acceptable not to deliver quality.
That is why companies will get better.
If I need a car I don’t go to a dealer, I go to the web.
And see what the people said abut that car. Not only now, by 6 months before.
Then I go to the dealer and I know what the price will be. Not his price, my price, the price I know from the web.
We cannot get away get away with old marketing and promotion.
Marketing has more conversation than promotion.
Your company must be able to open up. You have missed an opportunity to actually co-create your product with your consumer.
It happens with Lego, Harley-Davidson… customers want to help out! They wanna tell you how to do it.
Whole new set of things.
Now let’s move on… here are the concerns of customers:
- recession
- sustainability
(Mostra dei marchi spoof – Fail invece di Ford, Nokia disconnecting people, Sorry invece di Sony ecc.
This is recession.
Dalai Lama said:
Easy times are the enemy, they put us to sleep.
Adversity is our friend. It wakes us up.
Old chinese proverb:
When the wind storms,
some build walls,
some build windmills.
What is the best strategy? Is there one? No.
There are 4, depending on your company.
- Suppose you are strong company (good finance, strong marketing, competitive position)… what is your strategy?
It’s: buy the competitors who are weak, or their assets.
- Suppose you are a stable company (good finance, weak on the market). Your strategy: build some good marketing and buy out some brands.
- Suppose you are a struggling company (weak finance, strong marketing). Your strategy: rinegotiate with suppliers, make process improvements.
- Suppose you are weak on both: close down, your company is out (failing company).
Another point, your company decision-making should be in three stages:
1 Decide what to do now in the emergency of the recession, maybe cut everything unprofitable, but before you do this housecleaning, ask yourself what the impact will be in 4 years.
2 Work on new products that are ready, move into opportunities.
3 Remember that you had a big dream at the beginning, something significant for people. Think in that direction.
What business are we? What do we believe in ? Don’t ever forget that.
Some consumer adjustments:
- Consumers will move lo lower prices.
Some companies are in a good position, when they are designed to produce a lot for little money. MacDonalds, Dollar stores. When consumer want to save money they go to them. They prosper now. Two examples. Frozen food is in a strong position. People are not going to restaurants too much anymore, and they don’t have time to cook.Sleeping pills. They go very well now.
Private brands, as opposed to normal brands, are doing extremely well.
In a recession, big brands are in trouble.
Subbrands of big brands are growing.
- Consumers will postpone whatever is not necessary.
Bad news for furniture, autos, major appliances and expensive vacations.
- Consumers change their behaviour because of fuel prices
High prices will lead to home-centerness, less driving, people stay near where they live, won’t go to restaruants.
Some business adjustments:
- Reduce production, buy factories.
- Cut rate of capital investments.
- Marketing will be cut
- Suspend new product development
What should you do?
Some will assume the recession will cure itself.
Don’t panic, don’t make across the board cuts. Like: cut 20% of everything.
Suppose a company is preferred because of service, if you cut 20 % of service you’ll loose everything.
Let me show you what P&G did.
All global companies know that they really are local.
Shampoo packaging changes in different countries.
They noticed that maybe they were “over”localizing, so one way to save was to stantardize a little bit, then reduce some flavours, and then leave or sell some weaker brands.
Another case: MacDonalds.
Brands get tired. They made new business plan. They did something that impressed me.
Renovation, Innovation, Marketing.
Continuous improvement is the only alternative to continuous decay.
Stores had to look better and have more contemporary look.
Innovation: new things in the menu. Mothers wanted a good, fresh salade. They improved their quality in that direction, opening the menu. They even introduced something that cannibalized the hamburger: the taco, which cost half the price of the hamburger.
And then marketing talked about “the new MacDonalds”.
And also, they recognized that they can learn a lot opening up to internationalization. They learned food from all over the world.
Strategic responses, not tactical.
1 Track changes.
2 Examine local competitor weaknesses.
3 Decide in which markets to build market share.
4 Offer lower value and add value.
Marketing: there are several things you should do.
Many companies don’t know the cost of rebates, discounts… they don’t know if they make money or loose money, when it comes to marketing.
Account analysis on marketing is lacking.
Marketing steps to take:
1 Take an inventory of marketing initiatives and costs.
2 Shed unfprofitable segnents.
3 Delete poor selling products.
4 Weed out underperforming distributors.
5 Reposition pricing.
6 Shift to a more efficient media mix: go to social media.
7 Focus on getting more spending by existing customers, and less on attracting new ones.
8 Build stronger relationships with high-potential customers.
Define the mktg budget.
Some part of the budget must be kept: to test, to reach key customers, to change prodcuct features, and to message why to continue buy your product, for trade/consumer promotion (in a recession everybody is looking for a deal).
Advertising?
Does it still pay?
Yes if your company…
…has a value brand
…is about to launch a subbrand
…has an exciting new offering
…has a strong finance
…has a product that demonstrates its value
Now, to overcome purchase resistance.
Problem 1: Customers decide to buy later, cause the price may go down.
Response: buy now, if the price goes down we’ll give you the difference
Problem 2: I’m worried that I might loose my job.
Response: We’ll take the car back, with small adjustments.
Problem 3: I feel poor.
Response: you feel poor, but if you buy it later price may go up.
You need to build systems for the new normal: turbulence.
1
Early morning system.
More than business intelligence, it’s a formalization to identify weak signals, an early morning system will formalize this.
You better know everything in advance.
2
Scenario planning.
More than a business plan.
Ability to imagine 2 or 3 scenarios, like militaries do.
What’s the worst thing that can happen to us, and what would you do.
We are not in a world where risk is measurable.
3
Flexible budgets.
I want every department able to tell me what to cut, in case, overnight.
Tell me what 20% can be cut from, overnight.
And the opposite.
What every dep.t would do with an extra 20%, in case.
Flexible budgeting, it gives an advantage in time.
------------------------------------------------------------------------------------------------
Discussion
------------------------------------------------------------------------------------------------
Morbello
I have in mind the blind test Coke vs. Pepsi.
I work for Acer, a company with a lot opportunities in driving the crisis, but we think we do have to create value. What’s your opinion?
Kotler
Value is the center value, and brand is key.
Image of Absolute vodka is what makes people choose it.
Just putting a name or some brand type on an item, makes a difference in the mind.
But the real question is: how do we build value.
Old answer: brand is built in the mind.
Tide detergent kept saying “it cleans best”. We got to believe it. Notice that it appeals to the head not the heart.
New stage: emotion.
Connection between brand and heart.
How do you emotionalize a brand?
The key idea is develop a story, by the way.
Marketing 1.0 = mind
2.0 = heart
3.0 = spirit
The spirit comes up when some company say: our product is good for the environment.
It’s the spirit we want as human beings.
Value is very basic.
Morbello
Thank you. Multiple approach. Laptop has become more and more a commodity. What do you think about starting investing in strong rational parts?
Kotler
In the computer area, you’re quite right.
The net book I think is the convergence of PDA and laptop.
Someone is coming out with the right form of it. People give a mental reasons, they travel a lot, they want something light, but also for your children… appealing, friendly…
There maybe some more fetures that will catch us as crucial. Movie machine, internet machine, TV set…
Questions from the audience?
Gabriele Cortella, Politecnico
Co-creation, it includes the customer. How do you think the business model of a company may change according to this?
Kotler
You’re absolutely right.
I think that you should have some customers that love you so much that they want to sit down with you and talk about your product.
On a volunteer base, they hang around, you don’t pay them.
A company is a workshop. In Chicago there’s a picture frame place, where you don’t just choose your frame, you actually make it.
Co-creation means having people around you and being a good reference for ideas.
It’s very different to say “every idea you see it comes from the company”, and say “this is made by you”.
Get a prize, or a year supply, is a good idea to involve customers.
Persona della società Future People
Regarding the social implications of business activities (mktg 3.0)… Looking at the impact advertising has had in influencing consumer, do you think that modern marekting has some responsability, and to what extent?
Kotler
Americans bought more than they really could.
We would allow someone to buy a home, a car, with nothing down. Difference from the rest of the world, we were buying more than we were exporting.
So the Chinese basically have been paying for Italian goods Americans buy.
Marketing is the responsible.
Marketers are judged by the ability to sell something… the mantra is “go out and sell, no matter what”.
We have to change that.
There’s a big debate on it. Lower growth. There’s no alternative.
In Asia they say that the US is not part of the new world. The new world is Asia.
In my hotel in Bejin they had an orchestra in the hall. That was only done in Europe, once. But Europe and US cannot afford it anymore. We hav to change our geographical targets.
And lower growth.
…
Social adverts: is it better to build a social network, or to be part of a third party social network?
Kotler
Facebook, or Myspace. What is it all about, in the beginning… Twitter, I haven’t tried it but I think Obama does it.
Those are very popular.
We don’t know yet how to use them commercially.
Best marketing is when you reach the customer in the market you need him to be.
I have an idea. Basically, your website is the basis of your network, and your own social network is where you somehow build a community, and they can talk to each other.
The word “community” is becoming more and more important in marketing.
Think about developing a community about you.
When you achieve a community they want to participate. Co-creation.
In the end, to answer your question, I would say: use both.
0 comments:
Post a Comment