moving beyond product and price: positioning to win through intangible assets
DESCRIPTION
Moving Beyond Product and Price: Positioning to Win Through Intangible Assets Facilitated by Martin McLaughlin Mosaic Partners llc [email protected] 610.918.9171 October 1, 2004. Biggest Challenge? Competing against the Big Guys… But Growth of the Economy is on Our Shoulders. - PowerPoint PPT PresentationTRANSCRIPT
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Moving Beyond Product and Price: Positioning to Win Through Intangible
Assets
Facilitated by Martin McLaughlinMosaic Partners llc
October 1, 2004
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Biggest Challenge?
Competing against the Big Guys…
But Growth of the Economy is on Our Shoulders
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•Who is doing this well today? How are they doing this?
•Who is responsible for creating and managing value in your organization? Why is this important?
•Once you have a customer relationship, how can you migrate and expand these relationships?
– Well, it all depends on how you define what you do.
•What is the impact on your business and revenue model?
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What does Starbucks sell?
What does Progressive Insurance sell?
What does UPS sell?
What does Home Depot sell?
What does Mosaic Partners sell?
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Starbucks aims to provide quality coffee in a relaxed atmosphere for those seeking a respite between home and
work.
The ambience and service is the same everywhere. This is the vaulted Starbucks Experience, an elusive halo that competitors desire, but have trouble duplicating. “It’s very easy to copy the superficiality of the brand; in other words, the look and
feel of the store,” says Maslen.
“The most important thing is how welcome people feel and the connection they make.” “It’s really a contradiction in terms – intimacy on a mass scale. But Starbucks is a very
intimate brand.”
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Read It Closely: “We don’t sell
insurance anymore. We sell speed.” Peter Lewis, Progressive
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“UPS wants to take over the sweet spot in the endless loop of goods, information and capital that all the
packages [it moves] represent.”
ecompany.com/06.01 (E.g., UPS Logistics manages the logistics of 4.5M Ford vehicles, from 21 mfg. sites to 6,000
NA dealers)
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Nardelli’s goal ($50B to $100B by 2005): “… move Home Depot beyond selling
‘goods’ to selling ‘home services.’ … He wants to capture home improvement dollars
wherever and however they are spent.” E.g.: “house calls” (At-Home Service: $10B by ’05?) … “pros
shops” (Pro Set) … “home project management” (Project Management System … “a deeper selling relationship”).
Source: USA Today/06.14.2002
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SEI INVESTMENTS
HPCII
Mosaic Partners = 1 Guy with the Change in my Pocket
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•Customer-based perceptions
•Price-to-value trade-off
•Two broad positionslow costdifferentiated
Market Positioning at the Heart of Asset Investment
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PricePrice
ValueValuePrice
Selection
Quality
Atm
osphere Service
Brand
““Customer’s Eyes” ViewCustomer’s Eyes” View
xWal MartWal Mart
Low Low CostCost
DifferentiatedDifferentiatedxNordstromNordstrom
1 x1 x
4 x4 x
Positioning Analysis: Retail
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We live in constantly We live in constantly changing and intensely changing and intensely competitive marketscompetitive markets
We must constantly innovate We must constantly innovate and make tradeoffsand make tradeoffs
PricePrice
ValueValue
CommunityCommunity
20042004
$23$23
$46$46
<< $9 $9
AccessAccess ContentContent
NetZeroErols
AOL
Cable, Broadband
Positioning Analysis: Internet Connectivity
ExperiencesExperiences
Nokia
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So how are you enabling your customers to make the experience last?
Positioning Analysis: Internet Connectivity
Understanding consumers' gradual move towards collecting and storing experiences instead of goods (especially in mature economies), is crucial, whether you sell luxury handbags or manufacture cars.
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PricePrice
ValueValue
Good
Offerings
Ex-A
ndersen
Andersen
Netw
ork
Rosem
ont
Marketing
Exchange
Existing C
ustomers
““Customer’s Eyes” ViewCustomer’s Eyes” View
xLow Low CostCost
DifferentiatedDifferentiated
xMosaic PartnersMosaic Partners
1 x1 x
4 x4 x
Positioning Analysis: Marketing Consulting
Opinion
Series
Focus on N
eeds of C
MO
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Physical and Financial Customers, People, Brand, Processes, Relationships & Intellectual Property
CommodityProduct / Service
QualityProducts
QualityServices
UniqueCustomer
Experience
Increases DecreasesNumber of Competitors
Price Pressure and Margin ErosionReliance on Market Data
Make and Deliver Mindset
Marketing Migration
CustomerFocusedSolutions
Mosaic Partners LLC TM
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Migration Position Measure
Solutions & Success Experiences
Quality Services Satisfaction
Quality Products Six-sigma
Marketing Migration Measures
Source: Tom Peters
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MarketingFunctionsSell the productMake the product
ProcureDesignproduct Make Price Sell Advertise/
promote Distribute Service
Marketing Migration Outside-In View
Traditional Physical Process Sequence(Product-centric vs Relationship-centric)
OperationalFunctions
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Marketing Migration Process Impact
Physical and FinancialCustomers, People, Brand, Processes, Relationships & Intellectual Property Market Migration
• Communication - functional - cross functional- efficient and formal - effective and informal- guarded and one way - open and two way- set expectations - understand expectations
• Branding - external and static - internal and dynamic- corporate and products - corporate and people- one to many - one to one- marketing shapes - everyone shapes
• Customer Service - eliminate variation - orchestrate variation - transactional - relational- reactive and compromise - proactive and surprise
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Q: What is the value creation dynamic that is propelling the need for creative offerings in experiential marketing services?
Cost of coffee bean when harvested = $0.50/lb.
Value realized by Starbucks from selling cup of coffee = $230/lb.
- AN INCREASE OF VALUE OF +46,000%.
A: Because of their mastery of the experience economy and creating a holistic experiential marketing program....
Intangible Value is Real Value
Source: Pine and Gilmore
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Q: Why should retailers create theme-park like environments in their stores?
A: Toys 'R Us knows. Their 110,000 sq. ft. flagship store in Time Square has become the destination for thrill seekers, make-believe princesses and Jurassic fans of all ages. The store boasts a working 60-ft. Ferris wheel, a two-story Barbie doll house, and a five-ton, 20 ft. high, 34-ft. long animatronic T-Rex dinosaur. John Eyler, Chairman of Toys 'R Us, said:
"How do you compete with something like Wal-Mart? Our strategy is to make a store that is visually exciting, one that sells concepts and ideas instead of just boxes on a shelf. For years people have talked about the idea of retailment, which is about bringing theater and drama to retailing, but there are hardly any examples." - New York Times 2-17-02
OVER 30,000,0000 PEOPLE HAVE VISITED THIS STORE IN ITS FIRST YEAR!
Intangible Value is Real Value
Source: Pine and Gilmore
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Impact of New Economy on Marketing – Richness and Reach
• Years to reach 50 million users:– Radio, 38 years– TV, 13 years– Cable, 10 years– Internet, 5 years– Hotmail, 1 year– iTunes
• First 25 million downloads in 8 months• Next 25 million downloads in 4 months• Continuing 2.5 million downloads per week
• Why is this important in migrating from product and price?• Impact on the building/destroying brand and relationships?• Impact on the customer experience?
– Markets as conversations!!!!
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CGE&Y (Paul Cole):
“Pleasant Transaction” vs. “Systemic Opportunity.”
“Better job of what we do today” vs. “Re-think overall enterprise strategy.”
Marketing Migration End Game
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Increased Purchases: Over 40% of highly satisfied customers increase their purchases based upon their positive experience.
Acquisition Cost: It costs five times more to attract a new customer than to retain an old customer.
Price Premium: High customer satisfaction companies charge 9 percent more than poor customer satisfaction companies.
Referrals: Over 60% of sales may result from referrals. Conversely, the average dissatisfied customer will tell 10 others about their bad experience.
Reduced Cost to Serve: In the insurance industry, a 5% increase in customer retention lowers the cost per policy by 18%.
Customer Experience Cycle
First Time Repeat Advocate
“The Loyalty Effect” Example: Why is Customer Retention
so Important?
Loyalty Effect = Acquisition Cost - Price Premium -Reduced Cost to Serve - Referrals - Increased Purchases
Marketing Migration Measures
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Relationship
Value-In-Use
Events
Internal Statistics
CustomerFeedback
External Sources
Measure value added to customer’s activities
Measure at or immediately after customer contact
Measure relationship across a series of contacts
Understanding Your Customers on Multiple Levels
•Customer Complaints•Customer Compliments
•Defects or Rejects•On-time Delivery•Error Free Orders
•Length of Relations•Repeat Purchases
•Share of Wallet?•Acquisition /
Defection Matrix?
•Structured Observation
or Site Visits
•Attribute Performance•Attribute Importance
(interviews/surveys)
•Benchmarking?
•Competitive ValueExchange
Marketing Migration Measures
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Our Methodology.
Delivering SolutionsThat Matter
to Your Customers
CreateValue
CommunicateValue
DeliverValue
Assess Customers
and Markets
Align the Organization andProcesses Around Customers
Artic
ulat
e Bra
nd S
trateg
y
to E
mpl
oyee
s and
Cus
tom
ers
Mosaic Partners LLC TM
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Our Process.
Focus on the customers’ problems, not your current offerings!
1. Understand needs of your Best Customers – Think Solutions, NOT Products!
2. Clearly Define Your Value Proposition within Your Defined Ecosystem!
3. Un-bundle Your Value – both Tangible and Intangible!
4. Re-bundle around the Personal / Intimate Needs of Your Customers, Business Partners, Channels, and Ecosystem!
5. Monetize Your Intangible Assets! Decide where do you need to Invest to Strengthen the Intangible Side of Your Balance Sheet?
CreateValue
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1. Define the Solutions / Experience that You Want to Create for Your Customers? How can you help Your Customers Create an Experience for Their Customers?
2. Understand that Solutions will require you to Partner with other solutions providers – Build and Nurture Your Business Ecosystem!
3. Understand that Ecosystems Don’t Respond Well to Protectionism (within limits)! Challenge, Test, Push, Expand, Invade the Value of Your Ecosystem to Ensue Long-Term Health!
4. Make it Easy for Your Customers to do Business with You and Your Business Partners! Welcome Your Customer to Your Ecosystems “Roach Motel!”
Our Process.
DeliverValue
Develop processes that make it easy for customers to do business with you!
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1. Develop Your “Burger King” Story! What you advertise, what you sell, and how you make money are 3 different things!
2. Focus on Internal Branding! You and Your People are the best Communication Vehicle! Can everyone clearly communicate who you are, what you do, and how you are different?
3. Everything Communicates! Add Value in Every Conversation – It Will Come Back to You…Even If It Takes A Year!
4. Don’t Make People Guess how they can Help You!
Develop a brand strategy that clearly defines who you are, what you do and how you are different!
Our Process.
CommunicateValue
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• Sustainable growth is not about products!• Value is migrating from products to solutions and experience!• Solutions and experiences are customer dependent!• Value can’t be applied evenly across all customers!• Value must be created for customers, business partners, ecosystem participants, etc.• You can’t do it all, so partner (build ecosystem) to create value through solutions!• Unbundle your value!• Understand the personal/ intimate needs of your customers!• Rebundle your value!• Invest in your intangible value (assuming your product is good)!• Focus on internal branding where all employees can communicate (with passion)
who you are, what you do, and how you are different!• Think about the relationship – even when closing on a transaction!
In Summary.