LSU MKT701 Module Six

Strategy & Implementation

- Chronologically, strategy development precedes implementation. - Conceptually, both should occur simultaneously. - strategy, when it is conceived should be thought through to the point of implementation.

Loyalty Marketing and the Internet

- Higher level of CRM and one-to-one marketing can be employed in Internet shopping - total purchasing behaviour can be observed with web usage mining - Amazon, shows how individualised product recommendations are derived from connecting the profile of an individual customer to the profiles of other customers - Demand interrelationships are detected systematically. - web 2.0 -- loyalty is developed by stimulating the interaction between customers -- negative side is, obviously, that electronic word-of-mouth which is stimulated by these instruments is not fully under the control of the company, CR in MultiChannel Systems - "converged retailing" refers to a strategy in which these multi-consumer interactions are structured and organised in a way that allows the consumer to easily communicate with the retailer via the channels of their choosing

Loyalty Schemes and Customer Clubs

- In retailing, CRM is closely connected to the loyalty schemes - usually based on loyalty cards - delayed, accumulated economic benefits to consumers based on repeat purchases - discount value of points generally ranges between 1 % and 4 % of sales - points / savings primary but emotional bonding and psychological relationship awards might also be important - Self-actualisation is considered a basic human need, and loyalty programmes can provide recognition - some loyalty programmes, the sense of being a member of a community is considered more important - two basic reward accumulation functions -- relative rewards remain constant even though cumulative spending increases this function might lead a consumer distributing his or her spending between different retailers - Only if the relative rewards increase with cumulative spending (e.g. one point per EUR when spending is below 100 EUR, three points per EUR when spending is above 100 EUR) does the programme become more attractive for customers who spend more with one retailer

Conclusion and Outlook - Loyalty / CRM / Retail

- Over the past decade, many retailers have shifted their focus to CRM and introduced loyalty card programmes as a tool. - costs are often substantial --regarding rewards -- IT systems -- administration - some researchers are critical - loyalty programmes have to be monitored closely - loyalty cards alone are not enough to establish loyalty - loyalty marketing campaigns can usually be measured more accurately than can those of traditional marketing campaigns - Overall, the potential gains of analysing detailed customer data and targeting consumers, especially with new media that lower the communication costs of tailored marketing communication, still seems enormous

Best Practices - Relationship Marketing

- Regularly researching the customer base to measure customer satisfaction (and to understand the market's needs) - LISTENING to and integrating customer feedback when improving products and services - Using any all social media touch points that make sense to engage consumers - Having effective customer and social media monitoring systems in place - Developing clear policies that guide employee's behavior when interacting with customers for both positive and negative situations - Conducting regular training sessions for employees - Actively pursue warm leads (potential customers who already expressed an interest in the company) - Having a comprehensive CRM strategy - Staying on the cutting edge of product offerings but . . . Not sacrificing quality for innovativeness - Maintaining high customer satisfaction in all areas of the company - Embracing high-tech but always maintaining high-touch by reaching out to customers, prospects, vendors, and partners and telling them how much they are appreciated

The Ultimate Guide to Relationship Marketing

- Relationship marketing is ultimately about offering both new and existing customers valuable content - regardless of where they are in your buyer's journey - should appeal to the random viewer as powerfully as it appeals to your long-term customers ______________ Steps Provide personalized, customer-focused service. Engage with the customer where they are. Offer incentive and rewards for customer loyalty. Create valuable content that tells a compelling story. Collect feedback regularly

CRM

- Technology plays a growing role in relationship marketing and customer relationship management - basic tenet of relationship marketing states that profitable customers should be separated from unprofitable customers - unprofitable should be "fired" by the firm -CRM software is helpful in that regard.

Omnichannel experiences are critical but must drive tangible business benefits to be successful

- a superior omnichannel experience positively impacts revenue - an inferior omnichannel experience has the opposite effect - do a better job is facilitating these transitions between channels key differentiators of top performing companies in omnichannel CX - 60% more likely to utilize customer data to maintain the context of prior interactions - 29% more likely to regularly train their reps to effectively use customer data to ensure consistency of messages delivered across channels - Optimize each and every channel -- but tie any channel optimization action you take to business results - different service situations result in different channel communication preferences - Don't neglect power of human interaction

Systems

- accounting and budgeting systems information systems - measurement and reward systems _____________________ system most directly involved in the implementation of marketing plans is the project planning system - program evaluation review technique (PERT) - critical path method (CPM). 1. Specific activities and sequences must be identified 2. Specific dates for completion and review points for progress are identified. 3. Specific individuals are assigned responsibility for completion of each task - competitive advantage can be obtained in certain markets by reducing the time it takes to implement a marketing strategy.

Marketing Audit

- an examination or snapshot of the state of a company's marketing strategies as they are actually implemented - primary purpose being to identify problems that may exist so that the firm can plan corrective action. Fidelity - degree to which the plan is being implemented as it is supposed to be - Usually, the problem is that the plan is not executed properly.

Input Controls

- capital outlays - R&D expenditures - financial resource allocations - employee recruitment - hiring and training - other actions that must occur before the marketing strategy is implemented - input control actions must occur before strategy implementation

Customer Relationship Life-cycle

- clear beginning, a growth stage and a maturity stage, after which a decline and potential termination could occur - model is not deterministic, i.e. not all stages have to occur in a relationship - durations of the stages differ, and a retailer can influence the shape of the curve - after customers have been lost, it may be possible to reactivate them - Through data analysis, defection behaviour can be predicted

Customer Experience

- consumers can engage with firms on their own terms - "omnichannel experiences"

Integrating a Societal Marketing Orientation throughout the Organization

- degree to which its philosophical tenets are held by people outside the marketing function - it is critically important to inculcate everyone within the organization, as well as the external agencies with which the company works, into having customer orientation in the execution of their jobs. Integrated marketing - must be a coordination of efforts among the various marketing functions - marketing efforts must be well coordinated between marketing and the other departments within the organization.

Functional

- development of several products and markets - resulting in structural change - greater specialization in functional business areas - tend to be effective when key tasks revolve around well-defined skills and areas of specialization - such functional structures might appear as: -- business firms: R&D, production, marketing, finance, personnel; - municipal governments: fire, public safety, health, water and sewer, parks and recreation, education - universities: academic affairs, student services, alumni relations, athletics, buildings and grounds Organization Structure · CEO o R&D o Production o Marketing o Finance o Personnel disadvantages - obtaining good strategic coordination across the functional units - tunnel vision can penalize a general manager seeking to resolve cross-functional differences, joint cooperation, and open communication lines - not usually conducive to entrepreneurial creativity, rapid adjustments to market or technology change, and radical departures from conventional business boundaries

Output Controls

- evaluate goal and objective achievement - using key performance indicators (KPIs) during implementation and after the strategy implementation has finished - performance standards are developed - broad KPIa - a number of different marketing activities impact their achievement, not just one or two. - Other KPIs are far more more specific, especially those that are related to specific forms of IMC such as search engine marketing, digital advertising, social media advertising, direct mail or marketing, etc. - typically an on-going process that takes place monthly or even weekly for some elements within the marketing campaign - contingency plans - thinking through the portion of their strategy that seems to be most at risk of going wrong and planning alternative actions - marketing audit either internally, or by hiring an independent third party, as a mean's of assessing the firm's strategy, objectives and performance. Marketing goals - are meant to be accomplished by the marketing plan as a whole - increasing unit sales for {product item/product line} by 8% on December 31st, 2019, Marketing objectives - achievements that contribute to the accomplishment of a marketing goal - increase the customer retention rate from 56% to 60% by the end of the campaign, as retaining more customers would help increase sales. - goals and objectives should be SMART (specific, measurable, achievable, realistic, timed - set to be accomplished by some date). Metrics - numbers (measurements) you want to track over time to see if they will improve or decline - they aren't KEY performance indicators - metrics are tracked because negative changes often indicate problems that the marketing mix needs to address Key performance indicators - performance indicators most important to evaluating your marketing plan's success or failure

Customer Engagement

- frequency and duration of your customer's interactions with your marketing efforts

Using Customer Darta

- general customer data are used to change the macro-variables of retail marketing -- merchandise mix -- pricing -- promotion or location decisions - CRM, by contrast, -- emphasises micro-marketing (or one-to-one-marketing), -- which targets specific consumers or consumer segments based on the knowledge of their individual behaviour -- CRM often does not take place in the store offer -- through marketing communication with specific customers - Addressed direct mailings - E-mail marketing - Instore multimedia kiosks - Mobile marketing - Personal shopping assistants

Analyzing Customer Data

- learning system can be created that studies the specific behaviour of each customer - can also detect changes in behaviour over time - advantage of CRM is that the success and profitability of marketing measures can be evaluated in an experimental approach - has thus far resulted in inadequate usage because IT capacity and methods of data analysis have developed at a slower pace than data availability Customer Segmentation - a core task of data analysis - in practice, the number of segments used is generally limited to between 10 and 30 (theory individual) - simple segmentation criteria -- ABC analysis is used to categorise customers by their annual purchases -- 20/80 rule is assumed that argues that 20 % of the customers ("A customers") account for about 80 % of retail sales volume --- rarely so extreme - total customer lifetime value can serve as a sophisticated basis for segmentation -- shows which customer groups a retailer should focus on -- based on such consumer behaviour as shopping motives or attitudes are better suited to developing tailored marketing campaigns

Customer Value

- loyal customers can be seen as an enduring asset for the retailer - spend for the rest of their lives - purchasing relationship might extend over many years - the future revenue stream should be discounted to arrive at the net present value of future cash flow Customer lifetime value (CLV) - the difference between what it costs to acquire, service and retain a customer and the revenue generated by that customer over the total duration of the relationship with him - same formula can be used to either calculate an average CLV of the existing customer base or the potential CLV if the relationship duration can be extended - most challenging aspect of estimating CLV projecting future revenues and costs - it has since become a more manageable task because historical purchasing data is avail

Customer Clubs

- loyalty programmes are sometimes simply called "clubs - focus of customer clubs is more on the emotional bond

Marketing Evaluation & Control

- minimize differences between intended and actual outcomes of the marketing strategy - to determine why the results of the strategy implementation differed from the intended outcomes - to correct any of the four problem areas listed above when necessary

Divisional

- new products in different industries and markets - lines might be made on the basis of -- product lines -- markets (industrial, consumer) -- channel of distribution - divisional mangers are given authority to formulate and implement strategy for their divisions - may be difficult to coordinate strategies and turf battles may erupt

Customer Loyalty

- no universally agreed definition of loyalty Two basic approaches Behavioural loyalty -- is measured in terms of repeat patronage, -- a pattern of purchases -- percentage of budget allocation in a category to a store -- amount of switching or purchase likelihood Attitudinal loyalty - an emotional or psychological attachment to a company - Trust - Strong Commitment 302 Customer Relationship Management loyalty now include both dimensions, i.e. behavioural loyalty corresponding with attitudinal loyalty.

Process Controls

- occurs during the implementation of the strategy - primary function of process controls are to influence employee behavior positively - employee evaluation and compensation systems - empowering employees on the front lines to make decisions that satisfy customers - internal marketing efforts and internal communication - development of, or changes in, lines of authority or the organizational structure itself - most important process control most closely linked to the marketing plan's success or failure is management's commitment to the marketing plan - marketing employees should also be compensated and rewarded based on the marketing activities with which they are involved and regarding what they are expected to achieve

Corporate Culture

- pattern of role-related beliefs, values, and expectations that are shared by the members of an organization - a social control system with norms as behavioral guides - Rules and norms for behavior within an organization are derived from these beliefs, values, and expectations. - Norms of behavior can actually exert more control over employee behavior than a set of objectives or sanctions, which people can sometimes ignore, - because norms are based on a commitment to shared values. - Norms can also work to discourage sloppy work which would violate a set of shared values of excellence

Customer Satisfaction

- primary prerequisite for loyalty - loyalty is expected to rise with increasing levels of satisfaction - a consumer's post-purchase response to a product - the association between satisfaction and loyalty is moderated by a large number of variables -- variety seeker -- social pressure acts against purchasing - dissatisfaction usually leads to a substantial decline in loyalty - CRM, the post-sale stage is simultaneously a pre-sale stage - expectations change over time - constantly meeting or even exceeding customer expectations leads to increasing expectations over time.

Formal Marketing Controls

- processes and activities developed by the firm to help facilitate the successful implementation - influence the behavior of employees before and during implementation include input controls process controls output controls.

Relationship Marketing

- strategic process by which a firm builds and maintains long-term relationships with customers - (both channel members and ultimate consumers) - benefits both the firm and the customer four-step process - build connections with people, which with time and nurturing, develop into - engaging customers to earn their trust - ultimate goal is to create a loyal customer - Social media is often an integral _____________________ - used synonymously with CRM - retailing has tremendous advantages in CRM since it is in direct contact with the consumer

Matrix

- subordinates have dual assignments -- to the business/product line/project managers -- to their functional managers advantages - project managers cut across functional departmental lines - promotes efficient implementation of strategies - creates a new kind of organizational climate -- resolves conflict because strategic and operating priorities are negotiated -- resources are allocated based on what is best overall When at least two of several possible variables (products, customer types, technologies) have approximately the same strategic priorities, then a matrix organization can be an effective choice for organizational structure primary disadvantage - complexity -- people become confused over what to report to whom -- in the need to communicate simultaneously with multiple groups of people

Marketing Strategy Failure

- the marketing strategy was unrealistic or inappropriate - the implementation for achieving the marketing strategy was unrealistic or inappropriate - the implementation process was badly managed and executed - factors in the internal or external environment changed so quickly between strategy development and implementation that the strategy became out-of-date or obsolete

Strategic Business Units

- too many divisions to manage effectively - popular in large conglomerate firms - divisions grouped together based on such common strategic elements as (overlapping set of competitors, a closely related strategic mission, a common need to compete internationally etc.) advantages - reducing problems of integrating corporate-level and business-level strategies - in "cross-pollinating" the growth opportunities in different, but related, industries disadvantages - include a proliferation of staff functions - policy inconsistencies between divisions - problems in arriving at the proper balance between centralization and decentralization of authority

Implementation Skills

Allocating skills - used to assign resources (e.g., money, effort, personnel) Monitoring skills - used to evaluate the results of marketing activities. Organizing skills - used to develop the structures and coordination mechanisms needed to put marketing plans to work - informal dynamics as well as formal organization structure is needed here. Interacting skills - used to achieve goals by influencing the behavior of others

Scheduling of Marketing Tactics

Carefully identify the activities to be performed. activities to complete - before marketing implementation begins - while the marketing program is implemented - after the marketing program is implemented - financial or human resources should be identified and properly classified as activities required prior to implementation. Identify how much time is needed to complete activities. Identify the order in which activities must occur. Arrange activities in order and identify when each activity should occur. - Scheduling software is often helpful in creating a master schedule of activities. Assign responsibility for each task to the proper employee, manager, team, or even department.

Principles of CRM

Customer information companies must gather reliable and detailed information on their existing and potential customers, Profit Orientation - not all customers are treated equally - classified and prioritised in terms of their profit potential Customer Interaction & Integration - aim is to achieve bidirectional interaction with the customer, including a stronger integration in the value-added process

Fostering Ownership of Marketing Plan

Detailed action plans Champion and ownership Compensation Management involvement

To create a sense of belonging to something special

Hiring Training Reward Operations clan culture can aid in improving the implementation of marketing strategies in several 1. Goals and beliefs of the organization are shared by employees resulting in less goal conflict. 2. Clan members believe that their self-interest is best served through team cooperation, so they support one another. 3. Costs associated with formalized control methods are reduced because of the increase in commitment and reduction of politics and conflict associated with implementation activities. Structure - Chandler's study of seventy large corporations revealed this pattern: -- new strategy creation -- emergence of new administrative problems -- a decline in profitability and performance -- a shift to a more appropriate organizational structure -- then recovery to more profitable levels and improved strategy execution - structure does to some degree influence the choice of strategy. - structure should generally be of service to strategy - can actually refer to either the formal or informal structure -- formal structure can be seen with the organization chart -- informal organizational structure refers to the social relations among the organizational members --- whether the existing organizational structure is likely to facilitate or impede the successful implementation of the strategy --- decisions must be made regarding which management levels and specific personnel will be responsible for carrying out the various tasks involved in the implementation of strategy --- informal organizational structure can be used to facilitate the implementation tasks

Key Factors a Marketing Audit Should Assess

Marketing Activities Commitment to Marketing Plan Marketing and Goals, Objectives, Metrics and KPIs Evaluation of Marketing Personnel Evaluation of Marketing Program Success

Effects of Loyalty (Retail)

Monetary Effects of Loyalty - enhanced purchasing frequency (i.e. more frequent store visits) - larger shopping baskets - lower customer price sensitivity - stronger resistance to counter offers from competitors - search less for competing product and service offers - Lower marketing costs are also assumed - targeted marketing - include cross-selling - up-selling - focus has shifted from market share in specific product categories to increased share-of-wallet Non-monetary Effects of Loyalty - recommend the retailer to friends and relatives - information value for the company - more often complain when its performance deteriorates

Customer Journey

One way to map the journey is to list the various touchpoints and activities that might occur at each stage stages Awareness Discovery Purchase Experience Participation - marketers can suggest that happy users write reviews, answer questions, or refer friends

Transition from Strategy to Tactics

Product - design team must understand --the strategic needs in the product's design before the sale -- the entire product use/consumption experience to -- consider the after-consumption disposal of the product and its packaging - indicates where competitive advantage lies Place - physical access - merchandising - personal selling - advertising - pricing - after-sales service - type and number of outlets (intensive, selective, or exclusive distribution) play a major role in positioning consumers. Promotion - models are never a perfect substitute for managerial judgment in this area - actual presentation of messages to target audience members - sales promotions - special-event marketing - trade show displays - collateral material - all other forms of promotion - competitive reactions to promotional efforts should also be factored into tactical actions - sales training, sales support materials, and reward systems must be considered Price - initiating price increases and responding to changes in competitors' prices Price Adjustments • Adoption of delayed quotation pricing—a price for a product is not set until the product is produced or delivered • Use of escalator clauses—customers pay a price at time of order, plus any inflation increase that occurs before delivery is made. • Unbundling of goods and services—the product's price is maintained, but previously included services are now priced separately such as delivery or installation. • Reduction of discounts— - policy changes --prevent the sales force from offering normal discounts - reaction to a change in competitors' prices. Market leaders, in particular, must determine how they will react to a drop in price by major competitors: - Maintain price - Raise perceived quality - Reduce price - Increase price and improve quality --belief that by establishing an elite image as the "best" on the market, a company can better capture the share of the market -- "fighting brand," which is intended to compete against the lower-cost competitor

Single-Company vs. Multi-Partner Loyalty Programmes

Single-company - run by an individual retailer Multi-partner programmes - customers can use their loyalty cards more often, collect points faster and qualify for certain premiums or prizes faster - The penetration of the programme in the population is often higher than that for single-company programmes. - multi-partner programmes have access to far more data about shopping habits - so that the retailer can also target profitable consumers who are not yet part of its customer base - high cost of a loyalty programme can be distributed among participating retailers. disadvantage of a multipartner - loyalty is often focussed on the coalition programme rather than on any particular retailer - the loyalty scheme (e.g. rewards, accumulation function) is not designed to meet a specific retailer's strategy

Tactics

Specific actions that marketers undertake when executing their strategy

Types of Loyalty

Spurious loyalty - repeat patronage is observed, but is not based on a strong positive attitude towards the retailer. - behavioural loyalty may merely reflect situational influences Latent Loyalty - Attitude does not necessarily correspond with behaviour - Situational influences can form a barrier between attitude and behaviour - very positive attitude towards Tiffany's, but not be able to buy there True loyalty - repeat patronage based on a strong relative attitude towards the retailer

People

Success within organizations - everyone doing their best - at an assigned role to achieve an objective - everyone understands and works to achieve manager seeking change: 1. Is invested with the authority and seniority to oversee the process and evaluate performance. 2. Can demonstrate that changes are needed when performance falls below competitive benchmarks. 3. Can demonstrate the feasibility of altering practices to improve performance. 4. Establishes a task force to identify those implementation procedures that are inefficient or ineffective and suggests improvements. 5. Approves improved practices. 6. Monitors changes and demonstrates their value to the organization.7 - taken to the extreme, however, this approach of "giving the busy person the job you need done well" may overburden even the most competent executive.

Managing Implementation

Top-down Approach - senior executives develop the marketing strategies, advantages - simplifies decision-making, - clarify implementation expectations, - employees' uncertainty should be reduced disadvantages - outweigh the advantages - Without the input of the front-line employees and managers, the marketing strategy and corresponding implementation may not be feasible - executives rarely have the depth of customer knowledge needed to develop the most cohesive and effective marketing plan - employees fail to buy-in to the strategy, or lack the motivation necessary Change Approach to Implementation - focuses solely on implementation. - management invests in human capital, technology, or other resources that can help with implementation - alters training or compensation plans, as needed - Consultation with lower level management is inevitable, - ultimate decisions are made by top-level executives - may also require a shift in organizational thinking away from a production or operations mentality to a customer and marketing viewpoint advantages - specifically thinks through the implementation process, resulting in a more feasible implementation plan than the top-down approach - executives favor the change approach because they retain power and control over the implementation - large firms such as Samsung have used the change approach successfully to grow their business disadvantages - employee buy-in is often weak, and motivation remains difficult. - the amount of time it takes for changes to occur can be costly to the firm Consensus Approach to Implementation - Collaboration and listening are the keys - this approach can be chaotic - strategies and implementation plans that result from this process are often successful. - it is imperative that the top manager or person in charge of the project pulls together the best overall marketing strategy - decision-making is not entirely in the hands of senior management advantages - broad perspective and insights brought to the table - often quite successful when the firm faces uncertainty or instability in the environment, or when the situation is complex and requires expertise from multiple areas. - employee buy-in and motivation likely to be higher disadvantages - many executives are loath to give up their power - there is a danger that group-think may occur, leading to less than optimal decisions - more time-consuming than the top-down or change approach to implementation - those at higher levels of the firm often don't have the patience or time to fully understand the needs of those who implement plans, or the concerns that they may have with planned strategies or implementation. Organizational Culture Approach to Implementation - marketing strategy and marketing implementation become a true extension of the vision, mission, and corporate goals - top-level executives WANT employees at all levels to understand and commit to the marketing strategy. advantages - marketing implementation is much easier to accomplish - Employees are so finely tuned to the mission, goals, and strategy that they know exactly what their role is in the implementation process and to accomplish their designated tasks. - largest difference between this approach and the consensus approach is that anyone in the firm, from any position, at any level can participate in decisions that help meet the mission, goals, and fulfill the marketing strategy. - employees are empowered to make decisions (within reason) during the marketing implementation. - reduces silo thinking between departments, executives, middle-management, and employees - increasing commitment to the organization's goals. challenges - it won't happen overnight - things may get worse before they get better - need to dismiss individuals who are unwilling or unable to adapt to the new way of thinking - More money is invested in the hiring and training of employees because they must be responsive to the organizational culture - Training is critical - trying to make too large of shift too quickly will result in a host of problems throughout the firm.

Total Quality Management

Total quality management (TQM) continuous quality improvement (CQI) - processes intended to deliver greater customer satisfaction - never be satisfied with "good enough." - TQM involves evaluating how everyone in the organization can integrate their activities to address customer needs - CQI involves evaluating how each activity can be measured and improved as a means of delivering need satisfaction - benchmarking the top-performing product in each product category is the starting place for such improvements - the company can expect lower operating costs, better returns on sales and investments, and a high-quality image which allows for premium pricing of goods and services. - more rapid introduction of innovations, improved access to global markets, better retention of customers, better corporate image, andbetter employee morale.

Geographic

advantages - delegation of profit/loss responsibility to the lowest strategic level - improvement of functional coordination within the target geographic market - opportunity to take advantage of the economics of local operations disadvantages - increased difficulty in maintaining consistency of practices within the company - necessity of maintaining large management staff - duplication of staff service, - problems with control of local operations from corporate headquarters

Type of Organizational Structures

functional geographic divisional SBUs matrix

Organizing for Implementation

people systems corporate cultures organizational structures