HBR Exam 2 Marketing Management

Common Myth #3 Build the brand, and the community will follow

Build the brand, and the community will follow -Instead, engineer the community structure, and the brand will be strong -Strongest way is with a "web" affiliation, which is based on strong one-to-one connections with others who have similar or complementary needs. These people often stay in touch after meeting one another Example: Facebook or Cancer Survivors Research

Value Proposition for B2B

CVP: Identify the customer's unique requirements. then explain how your offerings outmatch your competitors products on criteria that matter to the customer. Document the cost savings and profits your products deliver. Example: Resin manufacturer, they initially had an environmentally friendly product but after research they realized most of their costs were labor...created a product that helped paint dry faster which saved a lot of money

How to Use to Net Promoter Score

Compare the scores across branches or regions of your organization -Share best practices from strong-performing groups -Make the scores transparent to employers -Encourages all employees to raise the score in some way -Tie in rewards to score improvement

Why is Curve doing so well?

Curve has a very simple concept; cheap, fast, exercise for women only, with no frills spaces suited to middle-aged clients of average build. -Helpers stand by to usher them through a simple 30-minute circuit, so there's no need to hire a trainer

Myth #2 A brand community exists to serve the business

A brand community exists to serve the business -Instead, a brand community exists to serve people in it (members) -Community based brand builds loyalty by helping meet people's needs (ie cultivate their interests, expand their networks-social need, etc) -People participate in communities to meet a number of needs: find emotional support and encouragement, contribute to the greater good, cultivate interests and skills, etc -Example: Pepperidge Farms put out a website for games around its Goldfish brand. Then they uncovered stats about depressions and low self-esteem among kids and partnered with the Positive Psychology Center to launch an on-line community to help parents develop resilience in their kids.

Myth #1 A brand community is a marketing strategy

A brand community is a marketing strategy -Instead, a brand community is a business strategy -From its culture to its operating procedures and governance structure Example: "Brotherhood" of riders at Harley-Davidson offered a basis for a strategic repositioning: have to understand bikers on their own terms -Staffed community outreach events with employees so many became riders and spend time with customers; brought insights back to the firm -Community is the rightful "owner" of the brand

The Role of Advertising

Ads can build brands, but it can tell people about an existing branded products' ability to do a job well done. Example SOUPY SNAX

Myth #7 Successful brand communities are tightly managed and controlled

Instead, of and by the people, communities defy managerial control -Effective brand stewards participate as community co-creators-nurturing and facilitating communities by creating the conditions in which they can thrive. -Example: Vans skateboarding shoes provide support, not control, to its brand community. Vans worked with lead users to co-design new products, open skate parks, etc

Myth #6 Online Social networks are the key to a community strategy

Instead, online networks are just one tool, not a community strategy -Anonymity of online communication may be limiting. Face-to-face communities can be stronger. Physical Spaces are important Example: Harley Davidson "rides"

Myth #4 Brand communities should be love-fests for faithful brand advocates

Instead, smart companies embrace the conflicts that make communities thrive. -Conflict in groups is normal and firms can reinforce rivalries directly or engage others to fan the flames -Communities can become stronger by highlighting, not erasing, the boundaries that define them -Example: Dove's campaign for real beauty brought together women's who did not fit the idea image to discredit it

The Value of Loyalty

Loyalty affects profitability (drives growth, reduces cost of customer acquisition, buy more volume) -Promoters bring in new customers at no charge to the company; become marketers for the brand

A better way to think about segmentation and product innovation

Market segmentation and product innovation should revolve around the customer's needs to get things done. Products are seen as "hired" to get the job done for them Marketers must understand what jobs arise in customers' lives for which they might hire products the company could make Marketers should: understand the job, design a product and associate experiences in purchase and use to do the job, and deliver it in a way that reinforces its intended use. When a customer realize they need the job done, they will hire your product.

Customer Value Proposition

Determine the critical elements of the customers experience and deliver them well. -Position the brand uniquely in the marketplace; state the benefits of the customer experience -Create a mutually beneficial value exchange -Very important for industrial products where quantifiable customer benefits are critical to make the sale -Can strip away attributes that competitors may think are critical but customers do not. Offer attributes that are usually only offered by high-end competitors ( a stripped down value proposition); include information about pricing relative to competitors

Six Industries with the Greatest Potential (For women)

FOOD: Women do the most grocery shopping and meal preparations (WF/TJ) Fitness: Curve Beauty: P&G Olay brand Apparel: Banana Republic/ H&M and fast fashion Healthcare: Johnson and Johnson Financial services: no example given

Focus on Branded Products

Focusing on a product and its brand on a job creates differentiation. But that also communicates what a brand should not be hired to do-focus is scary but effective Example: Volvo is for safety. Rolls-Royce is asirational (prestige) Toyota conntes reliability. Other brands are unclear about their job. Purpose branded products that do specific jobs well command premium pricing and compete in markets that are much larger than those defined by product categories (think arm and hammer)

Crafting a compelling Customer Value Proposition

For example: Dewalt solved a problem that saved time for its customers with observational research. They changed the colors of their products to include bright yellow so users could see their tools under sawdust 1. Understand Customer's Businesses -Invest time and effort to understand your customer's businesses and identify their unique requirements and preferences 2. Substantiate Your Value Claims -Back up claims (such as cost savings) in accessible, persuasive language that describes the differences between your offerings and rivals'. Explain how those differences translate into monetary worth for customers. 3. Document Value Delivered -Create written accounts of cost savings or added value that existing customers have captured by using your products/services 4. Make Customer Value Proposition a central business skill -Improve and reward managers' ability to craft compelling customer value proposition.

How to read a Net Promoter Score

Given the NPS range of -100 to +100 a "positive" score or NPS above 0 is considered "good", +50 is "excellent" and above +70 is considered "world class"

Focus on customer needs

How do you define your business? -People do not want to buy gasoline. They buy the rights to drive their cars. Requires refueling (inconvenient), Costly, and bad for the environment (air pollution)- ripe for sub products -Have to consider the realities of the market from the customer perspective -R&D (the realm of engineers and scientists) is important, of course, but product innovation and improvement may not consider the realities from the customers perspective.

Develop a "Purpose Brand"

Instead of trying to understand the "typical consumer" in a segment, develop a purpose brand-products or services a consumer can hire to perform a specific job Example: Fed Ex

Myth #5 Opinion Leaders build strong communities

Instead, communities are strongest when everyone plays a role -Opinion leaders can be beneficial to marketers to help spread information, influence decisions, and help new ideas gain traction, but others play a variety of social and cultural roles critical to community function, preservation, and evolution -Role Examples: mentor (shares expertise with members), greeter (welcomes new members), storyteller (tells the history of the organization) -Example: Saddleback Church monitors members' needs and creates new subgroups (such as personal financial planning) to keep people engaged

Harley-Davidson: A strong brand community

Top 50 Global brand valued at $7.8 billion -Consumers organized around lifestyle, activities, and ethos (guiding beliefs) of the brand -Firms aspire to the customer loyalty, marketing, efficiency, and brand authenticity that strong communities deliver

The One Number You Need to Grow

Net Promoter Score: Research shows there is a strong correlation between a company's growth rate and the percentage of it customers who are promoters (IE extremely likely to recommend the brand) Calculation: Ratio of promoters to detractors Ask a statistically valid sample "How likely is it you would recommend our company to a family or colleague?" Use a 0-10 scale. 9-10 is extremely likely to recommend. 7-8 are passively satisfied. 0-6 extremely unlikely to recommend The difference between the percentage of promoters and Detractors

Designing Products that do the job

Virtually every job has a social, functional, and emotional element. When marketers understand each dimension, they can design a product that does the job well. The job becomes the focus. Start by observing customers. What are the jobs o the milk shale.... know milkshake and Arnold Hammer example

A focus on Mass Production may get in the way

Mass production should not get in the way on a focus in marketing -A marketing minded firm tries to create value-satisfying goods and services that customers will want to buy -Detroit makes cars is mainly product-oriented (and production-oriented) rather than customer-oriented *The manufacturers don't own the retailing and services ends of the industry *Missing profit opportunities such as servicing cars overnight *Listen to customers, rather than simply focusing on production *Mass production must follow hard thinking about the customer

Final Thoughts

Need a leader with a vision Entire company must be viewed as a customer-centric and customer satisfying organization -Management must think in terms not of producing products, but as providing customer-centric value satisfaction -Then push the idea into every nook and cranny of the organization (remember internal activation) -Make people want to do business with your organization

How is it done?

Sunoco believes that distinctive value propositions are crucial to support the growth initiative Each value proposition must be: Distinctive: It must be superior to those of Sonoco's competition Measurable: All value propositions should be based on tangible points of difference that can be quantified in monetary terms Sustainable: Sonoco must be able to execute this value proposition for a significant period. What did the resin manufacturer create for a value proposition.

Watch for Obsolescence

There is not such thing as a growth industry, there are only companies organized and operated to create and capitalize on growth opportunities Dry cleaning suffered due to fabric and chemical changes, not competition. Will it become obsolete? What is on the horizon? Electric utilities: will they be replaced by solar, batteries or fuel cells? What are the advantages that other forms of power have?

Why did Quicken Financial Planner Fail?

This company helped customers create a retirement plan but it flopped. While the demographics suggested that lots of families needed a financial planner, constructing one wasn't actually a job that most people were looking to do.

Some Truths about most industries

-Every major industry starts as a growth industry -Growth slows due to failure of management Example: Railroads should have defined themselves as being in the "transportation industry" not the "railroad industry." The need for passengers and freight transportation did not decline, it grew. But it was filled by cars, trucks, and planes Example 2: Film companies should have defined themselves as being in the "entertainment industry" not the "movie industry" Exposes the major flaw that they SHOULD BE CUSTOMER-ORIENTED, NOT PRODUCT-ORIENTED

Need an organization-wide commitment and willingness to work across functional boundaries (it takes everyone's input and participation)

-Have to be bold and try things -A strong brand community increases customer loyalty, lowers marketing costs, authenticates brand meanings, and yields an influx of ideas to grow the business.

Start from the End point

-View an industry as a customer-satisfying process, not a goods producing process -Begin with the customer needs, not with a patent, raw materials, or selling skills -Develop backwards: given the customer needs, start with concern for the physical delivery of customer satisfaction. Then create the things by which this satisfaction is in part achieved (how they are created is of no concern to customers) Then find the raw materials necessary to make the product.

What happens when there is an expanding market?

An expanding market keeps the manufacturer from having to think very hard or imaginatively -Petroleum industry is defined on efficiency of getting and making its product, not on improving the product or its marketing -The industry is defined as "gasoline" rather than energy, fuel, or transportation -This means they pay little to no attention to customer's basic needs or preferences

Examples from Consumer Markets Value Proposition

Jet Blue: Stripped away some common attributes that customers can live without. (such as only flying to certain cities, no round trip pricing, eliminate meal service, no segregation between coach and business/first class). Offer "luxury" attributes such as leather seats, entertainment systems at every seat, policy to never bump passengers. Creates a unique market position, set apart from both low-end and high-end carriers. Target: Has benefits similar to high-end department stores with extensive product assortments, aesthetics in layout/merchandise, designer labels in clothing/sunglasses and houseware. But is similar in pricing to low-end department stores. Target market is lower middle class.

Loyalty and Growth

Key driver of profitable growth: customers who keep buying your brand but also recommend to a friend -The recommender is called a "promoter" and they put their reputation on the line -The more promoters your company has, the bigger its growth -Tell employees to get more promoters (and fewer detractors) and the message is clear-cut, actionable, and motivating (can tie into incentives too)

More about a Purpose Brand

Purpose brands build brand equity (Fed ex, Crest, Kleenex) A good purpose brand builds the features and functions relevant to the job. Purpose brands can make use feel a certain way (prestigious, sassy, pampered, such as Gucci, Rolex, etc) These are called aspirational jobs: the brand itself is more important than function to get the job done.

The Future

Women are 40% of the U.S businesses and growing -Women seek to buy products/ services that do good for the world, especially for other women

What do we know about the market?

Women feel vastly underserved' have too many demands on their time; constantly juggling the demands of work, family, and home; need time-saving solutions in products and services -Gaining influence in the world; number of working women is about to surpass men; paid less, work part-time

Consider the issue of time

Women feeling overburdened and overwhelmed -Household tasks take a lot of time; have to know the particular culture -Women don't make time for themselves, so marketers should respond with products and services to meet this need

The Female Econonmy

Women now drive the world economy -Globally they control $20 trillion in annual spending -Represent a market bigger than China and India combined -The old ways of reaching women don't work (example: Dell marketing to women with a "make it pink" mindset)-what did they do and what was the response?