MMM CEO

Making Marketing MatterTo Your CEO: 

Making Marketing Matter To Your CEO Virtual Seminar March 23, 2004 Roy Young, Principal Making Marketing Matter Jerry Noonan, VP Spencer Stuart

“There are two types of CEOs: Those who know that they don’t understand marketing and those who don’t know that they don’t understand marketing.” Philip Kotler  Marketing Insights from A to Z, 2003: 

“There are two types of CEOs: Those who know that they don’t understand marketing and those who don’t know that they don’t understand marketing.” Philip Kotler Marketing Insights from A to Z, 2003 Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004

CEO Challenges: 

CEO Challenges Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 Marketplace Downward Pressure On Prices 48% Changes in Competition 43% Industry Consolidation 41% Changing Technology 25% Shortages of Key Skills 23% Source: “The CEO Challenge: Top Marketplace and Management Issues,” The Conference Board and Heidrick & Struggles, 1999 Management Customer Loyalty 41% Managing Mergers, Acquisitions, Alliances 30% Reducing Costs 30% Engaging Employees 29% Flexibility and Speed 26%

C-E-O Marketing Education: 

C-E-O Marketing Education Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 C = Customers + Competition E = Effectiveness O = Organization

Think of Marketing as a BrandAll Brands Require 3 Dimensions of Value:Unique Value Relevant Value Sustainable Value: 

Think of Marketing as a Brand All Brands Require 3 Dimensions of Value: Unique Value Relevant Value Sustainable Value Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 How can we build the Marketing brand as Unique, Relevant and Sustainable value for our organization?

Build the Marketing Brand1. Unique Value = Customers + Competition2. Relevant Value = Effectiveness3. Sustainable Value = Organization: 

Build the Marketing Brand 1. Unique Value = Customers + Competition 2. Relevant Value = Effectiveness 3. Sustainable Value = Organization Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004

“C” is for understandingCustomers and Competition: 

“C” is for understanding Customers and Competition Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 The Difference Between Success and Failure Successes Failures Dell DEC Ebay E-Toys IBM AT&T BMW GM GE Levi’s

Fearof Failureis a Powerful Motivator: 

Fear of Failure is a Powerful Motivator Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004

“E” is for Effectiveness (producing results): 

“E” is for Effectiveness (producing results) Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 Definition of Marketing for the CEO: MARKETING is the process of creating and harvesting inward cash flow by solving customers’ problems profitably.

Demonstrating Effectiveness Requires:1. Marketing “Upstream”: Identifying Sources of Money2. Marketing “Downstream”: Making Money3. Marketing Metrics: Evaluating Effectiveness: 

Demonstrating Effectiveness Requires: 1. Marketing “Upstream”: Identifying Sources of Money 2. Marketing “Downstream”: Making Money 3. Marketing Metrics: Evaluating Effectiveness Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004

Marketing “Upstream”: Identifying Sources of Money: 

Marketing “Upstream”: Identifying Sources of Money Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 Decisions which play a critical role in the financial performance of our organization: Who to sell to? What to sell? At what price? How much can we sell? Why will customers buy from us? What can we sell next year? To whom? How will we make money? How much will we sell? How can we sell more next year? How can we improve customer loyalty? What new customers can we attract? How?

Marketing “Downstream”: Make Money: 

Marketing “Downstream”: Make Money Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 Change CEO’s Perception of Marketing as “Inputs” (expenses) to “Outputs” (profits) Keep Up With Changes in the Marketplace Act on our Knowledge Act as Entrepreneurs

How Does Your Organization Make Money?: 

How Does Your Organization Make Money? Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 *Just 8 of 23 examples in The Art of Profitability, Adrian Slywotzky, Warner Books, 2002

Four Functions:: 

Four Functions: Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 Marketing Metrics for Evaluating Effectiveness Provide information about current and future sources of money Guide resource allocation Document results Establish credibility and accountability for Marketing

Metrics Most Widely Used* : 

Metrics Most Widely Used* Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 Marketing Metric % of Firms Reporting to Board (N=697) Market Share 79 Perceived product/service quality 77 Customer loyalty/retention 64 Customer/segment profitability 64 Relative price 63 Actual/potential customer/segment lifetime value 40 Source: Study for the Marketing Science Institute, 2003. *Among CMOs and VPs of for-profit businesses in U.S., Japan, Germany, U.K. and France spending $1 million or more on advertising

Metrics of Effectiveness Tied to Business Strategy: 

Metrics of Effectiveness Tied to Business Strategy Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 Examples: HP: Total Customer Experience Disney: Share of Vacation Dollar Andersen: Share of Dollars in Adjacent Markets Payless: Grow Customer Base 3M: Share of Sales from New Products Amex: New Products and New Segments GE: New Services to Existing Customers SRP: Customer Loyalty Indicators

“O” = Organization(Work with Other Major Functions) : 

“O” = Organization (Work with Other Major Functions) Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 Internal Customers Needs

Meeting the Needs of Internal Customers:Finance: 

Meeting the Needs of Internal Customers: Finance Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 Forecasting Revenue Pricing Budgets Measuring Performance Financial Value Added (E.g., Customer Equity, Brand Equity, Price/Earnings Ratio, Future Earnings)

Meeting the Needs of Internal Customers:Sales: 

Meeting the Needs of Internal Customers: Sales Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 Communications and Lead Generation Customer Retention and Cross-Sell Strategies Product Development and Positioning Target Market Definition Top Management Oversight

Slide20: 

Making Marketing Matter to Your CEO Virtual Seminar, March 23, 2004 roy@makingmarketingmatter.com www.makingmarketingmatter.com Make Marketing Matter to Your CEO By Building the Marketing Brand Inside Your Organization