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Flipping the Marketing
Models Flipping the Marketing
Models Don Schultz, Ph.D.
Professor Emeritus-in-Service
Medill Integrated Marketing Communications Dept.
Northwestern University
AMA Western Michigan
11 November, 2015
Everything We Ever Learned About Marketing and Branding
Is Now Obsolete!
Everything We Ever Learned About Marketing and Branding
Is Now Obsolete!
A Rather Strong Statement
But, One I Believe Can Be Supported
A Rather Strong Statement
But, One I Believe Can Be Supported
And, Even If It Can’t, I Already Have a
Return Ticket to Chicago
And, Even If It Can’t, I Already Have a
Return Ticket to Chicago
So, Let’s Press On!
So, Let’s Press On!
The World of Marketing and Marketing Communication Is in
Turmoil…..
The World of Marketing and Marketing Communication Is in
Turmoil…..
What We’ve Always Done Before Doesn’t Seem to Work
What We’ve Always Done Before Doesn’t Seem to Work
Use of supply chain models
Focus on economies-of-scale
Continuous product improvement
Bigger marketer spend
More “feet-on-the-street” sales models
“Good enough” competitors
We Continue to Spend More With Unknown or
Unmeasurable Returns
We Continue to Spend More With Unknown or
Unmeasurable Returns
Our Conundrum:
I Guess That’s Why I’m Here!I Guess That’s Why I’m Here! I’m a radical thinker
A futurist
An explorer
A data-weenie
And, I’m a Tenured Professor in a Private University – about as much security as professors ever get
Today, At NU, We Find We’re in the
Same Boat as You
Today, At NU, We Find We’re in the
Same Boat as You
My Current NU Assignment:
What Should We Be Teaching Students in 2020?
My Current NU Assignment:
What Should We Be Teaching Students in 2020?
Core IMC Concepts
Brands/ Branding Financial
Analysis
Consumer Insights
Market Research
Comm StrategyMedia
Mgmt
Internal Mkt. Comm.
Data Analytics
Content Mgmt
Marketing Mgmt
What We Teach NowWhat We Teach Now
Other Units in Our Program Other Units in Our Program
Applied Neuromarketing Consortium – interdisciplinary research center
Retail Analytics Council – research on intersection of online and offline retailing
Omni-Channel Initiative – using software to identify, understand and communicate with consumers
Spiegel Research Center – cooperative research with industry to improve marketing results
One Over-riding Theme:
Everything Starts With the Customer!
One Over-riding Theme:
Everything Starts With the Customer!
Because They Are the Only Ones with Money…..
Everything Else Is a Cost!
Because They Are the Only Ones with Money…..
Everything Else Is a Cost!
Here’s Our Current Model Here’s Our Current Model 1. Customer Identification From Behavioral Data
2. Valuation of Customers/ Prospects
3. Creating & Delivering Messages & Incentives
4. Estimating Return-on-Customer- Investment
5. Budgeting, Allocation, Evaluation &Recycling IMC
It Assumes Marketers Decide What to Say, When to Say It, the Volume Level It Should be
Said…..
Although Circular, It’s Still All Linear and Outbound!
It Assumes Marketers Decide What to Say, When to Say It, the Volume Level It Should be
Said…..
Although Circular, It’s Still All Linear and Outbound!
What Should We Do?What Should We Do?
We’ve Identified Four Global Challenges to Current Marketing Methods
We’ve Identified Four Global Challenges to Current Marketing Methods
1. Digitalization
2. Financial planning models
3. Business models
4. Organizational and structural challenges
1. Digitalization Is -- and Isn’t -- an Issue
1. Digitalization Is -- and Isn’t -- an Issue
Isn’t an Issue: Isn’t an Issue:
For consumers, users, viewers, buyers, etc. it isn’t an issue It just happens – if I like it and
it’s fun, I use it
They adapt and adjust easily and quickly
Digitalization is now part of the landscape
Is an Issue: Is an Issue: It’s the marketers who have digitalization
problems
It doesn’t fit the current structural or management sets, suites or planning models
Digitalization requires substantial organizational change
That’s the most difficult task for any manager
Marketers No Longer Lead Customers ……..
We Follow Them
And, in Too Many Cases They Are Much More Agile and Adaptive
Marketers No Longer Lead Customers ……..
We Follow Them
And, in Too Many Cases They Are Much More Agile and Adaptive
The Challenge?
How Can Marketers Keep Up?
The Challenge?
How Can Marketers Keep Up?
One Way……
Listen to Them!
One Way……
Listen to Them!
Less Talking, More Listening!Less Talking,
More Listening!
2. Financial Planning Models 2. Financial Planning Models
Stop looking backward……accounting ROI
Start looking forward…..forecasting actuarial returns
Think of Customers as Income Flows to the Firm
Think of Customers as Income Flows to the Firm
Build customer risk and value models
Measure and manage customer income flows…..those are the “lifeblood” of the firm
Build based on Internal Rates of Return – invest to meet IRR, not control spending
Determining Customer Financial Value
Determining Customer Financial Value
OurBrand
Consumers
Total Customers
Annual Demandper Customer
Share of Purchases
(%)
$ C-BV = P x BR x SOP x M
Contributionto Brand
Penetration
X
BuyingRate
Brand Y
XBrand X
Share
Units/Revenue/
Gross Margin
Margin
X
If We Know the Value of a Customer,
We Can Invest Appropriately
More Forecasting, Less ROI
If We Know the Value of a Customer,
We Can Invest Appropriately
More Forecasting, Less ROI
3. Most Companies Have the Wrong Business Model
3. Most Companies Have the Wrong Business Model
Marketers Have Inherited a Mass of Often Irrelevant Planning Concepts and
Approaches
Marketers Have Inherited a Mass of Often Irrelevant Planning Concepts and
Approaches 4Ps and product management
Supply-chains
Internal KPIs
Hierarchy of Effects and funnels
Customer attitudinal models of success
Traditional 4Ps Supply-Chain Model
Traditional 4Ps Supply-Chain Model
Customers/End UsersCustomers/End Users
Supp
liers
Raw
mat
eria
l
Asse
mbl
yBa
tch/
line/
Conti
nuou
s pr
oces
s
Fina
l Pac
kagi
ng
Manufacturer
DistributorsAgents &Brokers
Retailers
We Put “Value” Into the Product….
Assuming Customers Would Extract It……
With a Profit for Us!
We Put “Value” Into the Product….
Assuming Customers Would Extract It……
With a Profit for Us!
But, We Don’t Know If What We Put
In Is the “Value” Customers Want
But, We Don’t Know If What We Put
In Is the “Value” Customers Want
That’s Why Supply Chains Are All
“Sales Based Models”….
Sell What We Have Made!
That’s Why Supply Chains Are All
“Sales Based Models”….
Sell What We Have Made!
What We Really Need … What We Really Need …
Marketing/Sales
Customer-Driven Demand-Chain Model
Customer-Driven Demand-Chain Model
Customers/End Users
SolutionSeeking:
Wants/Needs/Desires
Recognized/Unrecognized
Co
ns
ide
rati
on
s
Appropriatenessof Solution
Knowledge of Solution
Value/Sacrificeto Obtain
Access to Solution
Ma
rke
t P
lan
nin
g
Marketing/Sales
Production
R & D
Admin
Intermediaries
Based on What Customers Want and Need…..
Relying on What They Are “Saying” and “Doing”
Based on What Customers Want and Need…..
Relying on What They Are “Saying” and “Doing”
Using Data Customers and the Marketplace Have Created
Using Data Customers and the Marketplace Have Created
Network #1:Customers
Network #2:Data
Network #3:Analytics
Network #4:Marketing Planning
Network #5:Communication Delivery
The Data Flood The Data Flood
Creating Customer Focus With a “SIVA” Model
Creating Customer Focus With a “SIVA” Model
Solutions – what problems, issues, wants and needs customers have?
Information – what knowledge, experience, background, details customers need?
Value – what value will customers receive and what will the have to give up?
Access – where do customers want to buy, how do they want to learn, how do they want to acquire
Recognizing Marketing Must Be Networked, Dynamic and
Non-Linear
Recognizing Marketing Must Be Networked, Dynamic and
Non-Linear
Recognizing Customer Patterns as the Critical Ingredients
Recognizing Customer Patterns as the Critical Ingredients
We Must Become Collaborative Marketers and Communicators
and Share That Value With
Customers
We Must Become Collaborative Marketers and Communicators
and Share That Value With
Customers
More on Research and Understanding,
Less on Campaigns and Short-Term Incentives
More on Research and Understanding,
Less on Campaigns and Short-Term Incentives
4. A Major Internal Challenge: Organizational Structures
4. A Major Internal Challenge: Organizational Structures
Most Organizations Are Still Based on
“Command and Control”Lines and Boxes
Most Organizations Are Still Based on
“Command and Control”Lines and Boxes
Marketing Sales Country C Region X
CEO
We Still Look Like ThisWe Still Look Like This
Marketing SalesHuman
ResourcesIT/Digital Operations
Source: Adapted from Cranfield School of Management
Where Are the Customers?Where Are the Customers?
We Must Put Customers at the Center of the Organization?
We Must Put Customers at the Center of the Organization?
Customer Centric Model
We May Have to Change the Content of All the Bubbles
We May Have to Change the Content of All the Bubbles
Needed: Horizontal Planning Processes That Focus on Customers
Needed: Horizontal Planning Processes That Focus on Customers
Source: Adapted from Cranfield University
Marketing Finance Sales InformationTechnology Operations
CEO
Cu
stom
ers
Strategy Development Process
Value Creation Process
Channel Management Process
Information Management Process
Performance Management Process
Final Thought
If We “Flip the Marketing Models”,
Will Companies be Ready for Our Students When They
Graduate?
Final Thought
If We “Flip the Marketing Models”,
Will Companies be Ready for Our Students When They
Graduate?
Network #1:Customers
Network #2:Data
Network #3:Analytics
Network #4:Marketing Planning
Network #5:Communication Delivery
A Data-Driven, Real-Time Business Model
Our Goal…
Based on a Customer-Focused Response Model
Based on a Customer-Focused Response Model
Solution(s) – Customer Pain Relief
Information – Sorted and Supplied
Values – Input and Outcomes
Access – Client’s Where and When
S I V A
Can We Reach Our Goals?I’m Betting We Can Adapt and
Adjust
If We Don’t, I’m Out of a Job!
Can We Reach Our Goals?I’m Betting We Can Adapt and
Adjust
If We Don’t, I’m Out of a Job!
