Felixforge for Strategic Marketers

Its been a while...

Felix is back and ready to tackle the most challenging marketing subjects to help find resolution to that never ending struggle: How can I make products that truly satisfy my customers pain points and get those products to market in the most efficient way possible.

Automating Marketing

We, at felix, have been thinking long and hard about this. This will be our common theme for the forth coming months. Does marketing software work? Why is it so focused on the campaign management end of marketing? Do all marketers follow the same processes? Why doesn’t CRM functionality satisfy our marketing requirements? Plus a lot more.

Looking forward to it…

Marketing budgets

Now I have spent my entire working life in the product marketing function of large software companies. Each year I go through a planning and budgeting cycle. I ask for alot and get very little. I know it is not just me - I have many friends, in similar roles, and they have the same frustration. I think I understand why but lets explore my logic.

There are three key Marketing functions in any large organization. Corporate Marketing where the CMO sits and primarily governs the brand. Field Marketing ususally reports into the regional General Managers. Finally Product Marketing will report into the Heads of R&D for the product / business units. Each of these marketing functions has an annual budget. The question is - how is that budget allocated and in what proportions?

THINK GLOBAL

Corporate Marketing needs the big bucks to spend on promoting that brand. Consistently that investment only returns a 5% success rate (meaning out of 100 people you market to at this level only 5 will retain any kind of recall). The tools for Corporate marketing are advertizing, PR and the Web prodominately. These are high cost mediums and combining that with the 5% success rate means you need to increase that investment even higher.

ACT LOCAL

Field Marketing is the closest to customer in terms of customizing the messages for their particular market. They are also closely aligned to revenue targets and revenue generating marketing activity. That being tha case they can justify large budgets as long as they are bringing in the customers.

BUILD THE FRIGGIN THING

Now we come to Product Marketing. Arguably the most important function in any business (I am not biased). This function takes the product to market, packages and positions it in a way that makes it attractive to the target market. Here is the problem. Product marketing does not really use advertizing and PR too much and there is no real revenue drivers (not sure you would all agree with that - but it depends on the industry and the company). The key measurement is building products that make sense and making sure they get to the customer in a way that makes sense.

So there we go. I have little budget because my marketing friends in corporate and field get first bite of the cherry and I then find it hard to justify awareness and revenue generating activity that they are already doing. But that's OK...my job is far more mentally challenging (at least that is my story).

What Really Drives Early Adoption

Would Kelly Clarkson’s album have the same success if it was introduced 10 years ago? How about 20 years ago? Probably not. In fact, it may have been considered too progressive (i.e. alternative) during that time. That's not to say it wouldn't have been a success - just not in the eyes of consumers with more mainstream tastes. Which is interesting and brings me to my point – do progressive tastes influence mainstream product offerings over time. For example, (and since we're on the topic of music) consider Metallica. I can recall their early years (Fade to Black is still one of my favorite albums). They were considered progressive. As they picked up more and more fans, there music style evolved – almost to satisfy the tastes of a more main-stream consumer. Still recognizable, but less progressive (i.e. metal).

Now let’s consider a different twist. How do progressive tastes influence the development of product offerings for businesses? Perhaps this is what we commonly refer to as “early adopters.” But do we really understand the behaviors of early adopters? What makes a business seek early adoption of new product offering? Is it associated to the drivers and challenges specific to the industry the buyer is in – such as business and technology driven. But these drivers can’t be uncommon with other competing firms in the same industry – so does early adoption simply amount to desire – desire to seek competitive advantage before their competition.

We could discuss this for hours, but the point I’m trying to get as is that we may not really know (as well as we think we do) the kinds of behaviors that drives early adoption. Knowing this can help influence new product direction, and in fact accelerate the adoption curve.

What do you all think? Or am I totally out there – and should consider a career change?

Customer expectations in 1954

 

Event-Based Marketing

Not really an old concept – but the idea of event-based marketing has sure gotten a lot of buzz in recent years. Many organizations data systems are teemed with clues, or “triggers,” that alert them in slightest deviation on a specific “class” of customer has changed. This could indicate that the customer is thinking of moving to the competition, or perhaps are looking for a new product or service. Other firms use the slightest surge in the price of a commodity (steel, grain, oil, etc) as an event that triggers a sequence of automated actions down stream impacting price, packaging and distribution of an organization’s product or service. In some cases, organizations, like a bank, through their web site and call center analytics, become aware and in some cases more intelligent about customer behavior simply by monitoring customer frequency and their use of several on-line services correlated with their average account balances may introduce significant cross-sell or up-sell opportunities.

This type of data mining, value segmentation, and predictive modeling can provide valuable insight into identifying customer needs. However, sometimes the rigor behind the task doesn’t necessarily equate to a willingness to act. Success can be dependent on organizations ability to react swiftly to the slightest deviations in customer behavior. And as modern organizations get vastly distributed across the enterprise – a company’s ability to execute go-to-market is greatly inhibited.

Recently, we deployed some data mining tools in my organization and I have come to the conclusion – although a powerful device that enables more thorough analysis and predictive modeling – it really does nothing to help an organization execute new actions based on the data discovered. So, before this valuable tool gets put back on the shelf, I’ve put together a small cross-functional task force designed to improve how we can successfully use our data mining processes and other analysis-intensive processes into a single platform, so that we can create, execute, store and control these key initiatives from the time they are conceived all the way to the point of fulfillment. I’ll keep this posting updated on our progress as it is becoming an extremely eye-opening exercise – one that I think will pay large dividends both in improving marketing bottom-line and accountability.

But, before I go - anyone, have any suggestions?

Missed marketing opportunities #1

If you could invent a flying car that could also change into a boat on water and return effortlessly to its origonal road going mode wouldn't you think "hey I'm onto something here?". If you invented a candy that could play a tune and cause all around you to spontaneously, and in unison, break into a song and dance wouldn't you think "hey I'm definately onto something here?".

Now meet Caractacus Potts, inventor of both, clearly a genius but as a businessman failed to market these world beating products. Lets look at one of his real marketing gaffs. In a demonstration of his candy products - "Toot Sweets" he captured the imagination of the manufacturing company (Scrumptious Sweets) only to let the opportunity go due to an invasion of dogs who had been attracted by the whistles the candy was making. Now Caractacus missed two opportunities here. First the fact that dogs were attracted singles out a market for Candy eating dog walkers. Well defined target markets are important in any marketing activity. Secondly Caractacus was dating the factory owner's daughter. Surely that is a relationship marketing activity just begging to be exploited. But he didn't do anything and Toot sweets came to nothing.

Next he invented a car. A flying, floating car. Do I need to say anymore? Who wants one of those?..."yes please" I hear. "Where can I buy one?" I hear - you can't - Caractacus only made one. This one worked perfectly and served him well. Why weren't the large motor conglomorates all over this? Again we have to point out Caractacus's lack of marketing savvy - he should have licensed the cr#p out of his design and lived off the 2% royalty. The only conclusion we can draw is that if he had been a felix member we would all have been driving these cars:

http://www.chittychitty.com/

Ah well.

Marketing mix #1 - technology partnerships

This weeks look at the marketing mix is a casestudy on distribution, in particular the open source database market where the product is becoming a commodity and database vendors need to consider the customer relationship carefully.

The market demands greater efficiency in all sectors of the economy. Industry reacts to that demand with initiatives such as ‘outsourcing’ and ‘consolidation’ to reduce the cost of production and pass that benefit back to the consumer. One efficiency initiative that has seen particular growth in the software industry has been the ‘open source’ business model. The premise is that making the code openly available to all will enable the user base, or community, to set the direction for the product making it more customer focused. The efficiency benefit to that same community is that the product will be license cost free, reducing the total cost of ownership (TCO) significantly.

The software industry value chain can be broken down into three segments. The first and the most mature is storage, which includes database and database tools vendors. The second is middleware, where the application server and security vendors play. The final segment is the application layer which can be web based or client / server architectures. Any technology solution will encompass each part of this value chain, and with thousands of vendors the network of relationships is becoming more and more important.

This article will explore how open source vendors, particularly those in the storage and middleware segments, must take advantage of their network of technology partnerships in the value chain. This maximizes the efficiency in their operations and in turn passes that benefit back to the market in the form of cost reduction and customer focus.

The Hungarian writer Frigyes Karinthy first coined the phrase ‘Six degrees of separation’ with the hypothesis that each person on earth could be connected to everyone else by no more that six associations.  In 1967, American sociologist Stanley Milgram  devised a new way to test the theory, which he called "the small-world problem". He randomly selected people in the mid-West to send packages to a stranger located in Massachusetts. The senders knew the recipient's name, occupation, and general location. They were instructed to send the package to a person they knew on a first-name basis who they thought was most likely, out of all their friends, to know the target personally. That person would do the same, and so on, until the package was personally delivered to its target recipient. The result in all cases was that the recipient was reached within six people associations.

What this experiment was able to demonstrate was the strength of ‘weak ties’ or the ‘network effect’. In finding a solution to this problem (sending a package to an unknown recipient) the sender could not use his best friend but had to use his most appropriate associate. In this case someone who lived closest to the recipient.

Now consider the software industry and in particular open source software vendors. The value chain with its three basic segments creates degrees of separation from the consumer. We can look at these degree of separation as choices that can be made by software vendors as they hunt for more efficient ways of engaging the consumer. 

The relational database market is mature to the point that analysts often use the term ‘commodity’ when referring to this sector of the software industry. There is very little growth and very little opportunity for new business. To satisfy shareholder requirements for increasing returns growth has been achieved through merger and acquisition activity for the larger players.

In the growth period for this layer vendors had a direct relationship with the customer or one degree of separation which was most effective and maximized profit margins. Today the database industry looks very different. New database sales, with one degree of separation, mostly happens if the salesman can displace the incumbent vendor. Migration costs and internal politics makes this a challenge. Add to that the price pressure in a commoditized market and the sales model with one degree of separation is too high a cost and won’t scale readily.

After the rise of the storage industry, then came the growth in middleware; managing and delivering integration of business processes. The customer had automated the storage market and now turned to their IT processes. This lead to the rise of application server vendors and placed two degrees of separation between the storage vendors and the customer.

The middleware vendors now interface with the customer, reducing both the logistical and marketing costs  for the storage vendors. In turn the storage vendors are benefiting from the network effect of this separation from the consumer. The focus for the storage vendors is then to build a strong channel management program so that they can benefit from the weak ties that exist in this new network.

Customers, in general, don’t buy new databases; they buy applications with databases embedded in the solution. The application is the ‘touch point’ for end users; it’s where they see the most value and, because of the process improvements, will deliver significant ROI.

There is no commoditization in the application space. It is relatively immature with high growth rates. With this third layer or three degrees the network effect is amplified again, allowing the storage and middleware vendors to really explore the strength of weak ties. Once these three layers are integrated we see the emergence of technology stacks giving customers a true end to end solution.

Combining these three layers in a single solution has benefits for both the vendors included and the consumer. The storage and middleware vendors (storage in particular) benefit from the weak ties and network effect that is generated. This reduces their sales and marketing costs significantly which is a benefit that can be passed to the application layer and in turn to the consumer as a lower cost of ownership.

This ‘packaging’ has lead to the emergence of technology stacks in the software industry, providing true efficiency gains in the value chain. Technology stacks enable the rapid deployment of applications and reduce the on-going maintenance costs of those technologies.

Reducing the sales and marketing overhead within open source vendors is critical to the commercial success of those organizations. This is driven by the lack of license revenue, which would ordinarily be the major contributor to overhead. The benefits of weak ties and the network effect both help achieve this but open source has another card up its sleeve.

The challenge in exploiting weak ties is to build open and common standards for all participants. This is the crucial ingredient that will allow vendors in each layer of the technology stack to build solutions that customers want and in a timeframe that they desire. Software has traditionally been built in a proprietary manner, so that vendors could benefit from protected differentiation and remain competitive. This has lead to many different platforms and standards being offered to customers who then have the challenge of integrating those products into a single solution. In this situation there is no benefit of weak ties. Open source vendors now have the opportunity to provide a true open and common standard for the software industry. The future for software vendors is less likely to be maximizing IP value and more about how they “go to market”. In this case having open standards allows the market to benefit from the network effect. Vendors can execute faster and more efficiently; consumers have solutions that are truly integrated. In this regard, open source vendors are leading the way.

Chris.

Steelheads

Listening to the radio this morning I heard one of the most amazing stories that I can recall. It defies logic and nature. I am desperately trying to tie it into a strategy model - lets see how I do later.

In Washington state there is a bountiful supply of Salmon. They fall into two distinct types - Rainbow and Steelheads. It seems that new born salmon make a decision about what species they want to be at hatching. Either they turn up stream and become a Rainbow and grow to about 5 lb's maximum or they turn downstream and head out to sea where they grow upto 20lbs and become Steelheads. Here is the amazing part. Two rainbows mating can produce a Steelhead and in turn (as a thank you) two Steelheads can produce a Rainbow. This is one of the biggest enigma's in aquatic science to the point where something unbelievable has been suggested. A forced extintion of Steelheads to see if the population would re-emerge in the future.

This story is just sensational. That a species can choose to give birth to another is overwhelming.

There is no strategic angle here - unless you can think of one. Maybe there is a genetic angle for the biotech industry to create superhumans (I can feel a new comic strip hero - Steelhead - already brewing inside me).

Chris

Hult International Business School

A special hello to the business school grads at Hult (Class of July 2006).

Felix looks forward to working with you.

Marketing Process Automation - A

Where does the product marketing process start? We should consider the Triggers that engage a marketer into action.

There are Macro triggers:

1. Management Directive, or
2. Planning cycle
3. Competitive moves
4. Government / industry legislation (Patriot Act, SOX, etc)
5. Industry growth / consolidation

There are Micro triggers:

1. New product launch / new version release
2. Segmentation / targeting / positioning effort
3. Campaign / activity success
4. Campaign / activity failure
5. Customer feedback

Each of these triggers will start a process - some of these processes will be planned (Go To Market planning) some will not (competitive campaigns) but all will need to feed into an overall process map that will be flexible enough to manage change.

Chris.

Marketing Automation continued

Felix is here to help. Go To Market processes are crucial to the success of any product. Traditional CRM processes (as Keith pointed out yesterday) focus on the customer as the unit of currency driving automation. At felix we feel that is short sighted. We add two new units to the mix - the product and the market.

Download product_marketing_process.jpeg

Take a look at this image and you can see we define GTM in terms of inputs and outputs and by different categories of definition and of how the resultant data should be presented.

Chris.

Software for Marketers

What is the primary software package used today by marketers? Well sadly, as research would indicate Microsoft - MS Word, MS Excel and MS Power Point. Typically, organizations leverage static documentation that usually reside in a folder icon on someone’s desktop. More recently, Customer Relationship Management (CRM) software has been increasingly used helping to improve the information management capabilities across business processes. Effective CRM systems can increase an organization’s ability into customer lifecycle dynamics, but it rarely predicts outcomes of new products, market messages and potentially market re-framing programs.  This rapid pursuit and adoption of CRM applications, has given rise organizations across industries are seeking ways to improve their ability to incorporate sales and marketing, product, and customer data into their business processes. Improving the information management capabilities of both CRM and EMM systems will effectively promote and measure the effectiveness of new product offerings, sales strategies, and marketing campaigns. 

More recently, a newer breed of marketing software that has been introduced, Enterprise Marketing portfolio management (EMM), comprises the processes involved in the planning, executing, monitoring and managing an organization’s marketing activity. EMM software spans three functional domains: marketing operations management, campaign management and lead management. It is a critical component of the CRM technology ecosystem with its footprint in operational, analytical and collaborative CRM.

Look for my posting later this week where I will be discussing a recent case study of an organization that has recently implemented a CRM ecosystem and has dramatically increased their ability to predict, monitor and manage key marketing initiatives using their new system.

.

Retail Marketing Genius

Here is a very cunning maketing tactic employed by some of the larger supermarket chains. When you are walking down the isles pushing a shopping trolley the wheels make a tick tick tick sound as they move over the floor tiles. Some clever and devious person realized this and at certain points in the store made the floor tiles smaller. The result is at that point the tick, tick, tick gets closer together so anyone pushing the trolley would get the subtle impression that they are moving faster. So what do people do at these points? They slow down. When they do slow down they are more likely to look at the merchandise so the marketing folk would make sure that promotional products were right next to these area. The result...significant increases in the sale of those products.

Mika.

Where's the Milkman?

I am British but I live in the US now. Each morning, whilst I was growing up, I would be woken by the sound of a 'milk float' - an electric truck that milkman use in the UK. It is a very distictive sound. I have been in the US for many years and on a recent trip back to the UK I heard that familiar sound again. It suddenly occured to me - I have never heard that sound in the US or even heard of a milkman. What is so different between the US and the UK where large distribution firms can make a profit delivering one product (although I hear they now deliver fruit juice and eggs aswell)in the UK and no firm has exploited that in the US?

Milk is a very important commodity in both economies. Looking at the "got milk?" campaign run in the USA (www.whymilk.com) and the "3 a day" campaign in the UK (www.milk.co.uk) leaves no doubt that both countries value milk's nutritional benefits. But why is there one huge distribution choice that is so different?

How can it be economically viable that the delivery of one item each day (at a cost of $1 dollar per bottle) add up? There is only so much milk the average houshold can consume. But it is viable because this has been happening in the UK for over 50 years...no corporation would operate at a loss for that long. Are the milk consumption habits different in the UK? Does the milk have to be fresh every morning and waiting on the doorstep for consumption right away? I don't think so. Supermarkets in the UK sell milk in various sized containers - just like in the USA. Is it just tradition? Is the UK more nostalgic about its industries than the US and reluctant not to let go of the familiar sound in the mornings?

Having lived in both places I tend to think the prolonged use of the milkman in the UK is based on nostalgia. Could they survive without door to door milk delivery - of course. In the USA, a service that you could live without (like this one) would either die or not be a success in the first place. The US consumer is driven by "what makes sense"...and the milkman just doesn't.

There is a lesson here for marketers. Customer are not only loyal to brands but also to traditions and choices. Think about the series "Cheers" - its always the same 6 people sitting at the bar. They could get the same beer elsewhere but they like the tradition in this distribution method. This is exactly the same for milk deliveries in the UK and just like Woody Harrelson behind the bar - in the UK they also have their favourite Milkmen (www.milkdeliveries.co.uk/doorstep) - see milkman of the year 2005.

Chris

More on Google and the future

If you are into this kind of thinking:

http://felixnet.blogs.com/felix_is_a_forum_for_star/2006/01/google_whats_th.html

then visit my good friends blog www.speculist.com where you can learn all about the future and what might be instore.

Customer, You’re Fired!

Can we fire customers? is that allowed? Seriously. Have you ever told a customer, “I don’t want you anymore.” I’m sure the thought has crossed our minds. Perhaps it’s baked into our genetic code, but we always seem to succumb to the customer needs - after all, “the customer is always right!”  I call bull s***!

In our modernized economy, where customer-centricity has been a driving force behind new competitive strategies “firing” a customer can be a death-sentence. On the other hand, when the customer seems to be consuming resources beyond their appetite and inhibiting our ability to service the business and other customers then it should be considered. This is a concept that frequently surfaces inside marketing organizations – particularly inside a business that is growing in size and in customers requiring service. But have you ever considered how firing a customer could lead to a strategic advantage?

Conventional wisdom suggests the longer a business can retain a customer the greater value will result, in turn creating more profits from a single customer. But how can an organization determine if by retaining a specific customer, or set of customers, will hinder their ability to produce profitable innovation? The only reliable method in making this determination must stem from data and research. Organizations must rely on robust operational data that cuts across product planning, market planning, and customer support business processes. When a particular customer, or set of customers appear to be monopolizing process and resources ask the question – why? After you methodically deduce it is not a product performance concern – then maybe it is time to consider alternatives with the customer so they do not consume resources that will inhibit future innovation.

They will likely seek alternative with your competition – and this is good. Sure, they’ll receive a new source of revenue from your prior customer, but will also likely consume valuable time and resources downstream – impacting their ability to produce profitable innovation efficiently.

I’m curious to hearing other experiences on managing customer lifecycles.

Google - what's the plan?

What is Google's grand plan? They are growing their content capability buy acquiring comapanies like Keyhole (google earth) and they are now moving into providing WIFI capability across the US. Heck, they have even impacted our vocabulary - how many times have you googled something?

Is their plan to rival Microsoft? Have they got their targets on the media corporations like NBC or Fox? Or have they got even bigger aspirations?

Think about the future. In most apocolyptic movies the 'machines' take over and turn on the human race (Terminator with Cyberdine, Matrix with...ummm...the Matrix). Should we be looking at 3Com or Sony as the producer of the artificial intelligence that could surplant our own? I don't think so. I think that we should be looking at the roadmaps for Google, Amazon and Yahoo for a glimpse where our lives are heading.

Anyone who has an interest in scenario planning might like to ponder this and post a comment.

Dave

More on celebrites as products

We at Felix think about products and how they go-to-market. We think about the processes that impact that. Sound boring?

We have long debated "what is the single most important product that the US produces?"...think about that. The key word is 'important', and you can define important in many ways. But when we boiled it down we decided that the most important product was CELEBRITIES - (http://felixnet.blogs.com/felix_is_a_forum_for_star/2006/01/celebrities_as_.html). That's not so boring.

We are activily building best practice processes for strategic marketing and if we could manage the life cylce of say "Ben Affleck" we get a big tick in our box.

Thats not to say we have not forgotten about other product types (Automobiles, software, milk, etc) but running a celebrity through our processes is more fun.

Anyone know any celebrities that we could run through the felix process - real time?

Introducing Felix's Thought of the Week

Coming tomorrow...

Each Friday we will post a obervation / opinion / question regarding the marketing mix.

Keith.

The Marketing Terminator

"I'll be back..."

Some products have very long life spans - take baked beans for example. The humble bean in a smoky tomato sauce has remained unchanged for many decades. Contrast that with the Camcorder where last years model looks more like a washing machine in our hands compared to the slim, lite (I've gotta have it) model in the shop window.  Why do we, as consumers, remain satisfied with the inertia in R&D at the beans factory and yet will spend money each year to reduce the size of our domestic appliances? Baked beans and Camcorders are just extreme examples of products where consumers have vastly different aspirations of the pace of change.

Anyone heard of the prisoner's dilemma? (http://pespmc1.vub.ac.be/PRISDIL.html) Pace of change forces organizations to compete on an R&D and time to market basis. The baked bean manufactures have got it right, in this context, where they do not force each other to invest in new and improved beans each year. The electronics manufacturers have to play this strategy in order to remain competitive. As this cycle perpetuates their R&D depts become Marketing Terminators - stating that their next version of the technology will grab back market share "we'll be back".

Managing both strategies effectivily requires a keen understanding of consumer requirements and matching those to product developement cycles. Sounds easy...but processes must be water tight to remain competitive. Whether its beans or VCR's having effective development to communication processes keeps that organization ahead of the game. Are these processes different for each organziation type? Are beans easier to manage than VCR's?

Felix would love hear your thoughts and ideas on this...

Dave.

Market Planning: How Often Should I Plan?

As it would play, most organizations plan annualy usually consistent to their operational or financial cycles. Planning in of itself has to be a competency that an organization must possess in order to produce profitable innovation across the enterprise. Most importantly, planning must be part of a vicous cycle, rather a mundane routine for producing static documents that will sit on a person's desktop and remain isolated - until the next planning cycle, of course.

Instead of routinely investing into the market planning process annually, usually characterized by incremental increases in budgets, why not explore more trigger-based or dynamic-marketing processes. This requires continuous surveylance of attributes, behaviours and conditions across segments that could have gone missed in annual planning cycle. After all, many industries, particularlry high-tech or those with much shorter product lifecycles - require this level of flexibility in order to respond to changing demands and requirements of market segments. This type of planning process requires the constant engagement of marketers in their markets, inside their customers, seeking for high potential opportunites for investments. 

How often do you all plan?

Strategic Marketing: where's the automation?

Marketing 101 - marketing is both an art and a science. Isn't this the most frustrating fact?

No matter how much you number crunch there will always be some intuition or luck required when making a commitment in this profession. Seasoned marketers rely more and more on their intuition and quite rightly so where as fresh marketing grads should lean heavily on the quantitive methods of their studies. But where is the grey area? where do the stats and the gut feeling meet?

Strategic marketing is the meeting ground where theory and results should correlate. Where there are business processes that are exploit a marketers creativity and measure their results. But let me ask you this. When, as a strategic marketer, was the last time you used a software package to make your life easier? Where is the automation of this last component of the business that needs process management?

If there were automated processes there would be less reliance on the art and more scientific support for decision making.

Felix is here to help.

Chris

GTM processes in the technology industry

In yesterday's Blog I introduced some thoughts on Go-To-Market GTM processes. Here is a model I have used in the technology industry. There are two primary revenue streams. The first is repeatable revenues which take the form of license sales and maintenance contracts. The second is revenues from ancilliary services such as consultants and education.

In any instance to acheive revenues a series of decisions need to be made in the GTM process. The first is where to focus - existing customers or new business (boxes a,b and c). New business can be split into two sub categories - completely new business (b) and competitive replacement (c) which is replacing the incumbant technology that a customer already owns. After this a series of questions need to be answered:

Which Markets will I focus on? Which Partners (vendors) will help me? What are my most effective channels? Are my products right for these markets / channels or is there a gap I need to fill? and finally what is my ability to execute (in terms of geography, people skills, industy or vertical knowledge, etc)?

If you can answer these questions and build a strategy around the answers you will be achieving significant advantage in your GTM model.

Chris.

Go-To-Market processes

How do we compete? Traditionally we have on two major categories:

1. Lowest cost of production or,

2. Product differentiation.

These two options protect market share but increasingly their effectivness as competitive strategies is weakening. In both cases the pace of technological change and veracious consumer appetite has caused that reduction in effectiveness. Now firms need to look to other strategies to remain competitive. How they Go-To-Market GTM will be a crucial differentiator.

Look at the success of the various Virgin organizations (airlines, record labels, holidays, mobile phones). None of these businesses could compete on a cost or product differentiated basis so the only other option was to exploit how these operations reach the consumer or GTM. Each Virgin division has defined some unique customer focused process that has been a key contibutor in its GTM approach.

At felix we feel that the definition of robust GTM processes is crucial to our success and will keep our organizations competitive. As such we will spend a great deal of blog time on this subject and we hope that the felix community will help us to help you in defining GTM best practices.

Chris

Predicting Marketing Play effectiveness

Keith's Posting : 5th Jan - Marketing Accountability has stired a huge issue. Of the three "must haves" (Predicable / measureable / auditable), before any marketing activity or marketing plays should begin, lets look at prediction. And in particlular when you have many activities to choose from and a finite budget - where should you place your bets.

Above is a simple way of prioritizing activity. I have chosen 5 factors that, I feel, impact my decision making and I have associted a level of importance to them. You will see that that for me revenue potential (RP) represents the highest importance and I give it 35% (note all add up to 100%). The chart below that is where I then answer (on a scale of 1 to 10) how each play rates against those 5 categories. I then multiply the rate by the index and then avarage and BAM I get a crude list of priorites...helps me justify my investment and as long as everyone agrees on the rates and index levels no-one can argue with the priorities...

Chris

Forgeries - good or bad for Louis Vitton?

My Posting on the 5th Jan re: Luxury products in the Software business has stirred a further thought...

Anyone who has visited the Empire State Building cannot have missed the hords of Hawkers who sell copies of designer watches, handbags, perfumes, etc. I am sure if the management team of Louis Vitton LV have been to the 85th floor they will have also seen copies of their merchandise being sold for 5% of the price right outside the main entrance. Should they get mad? Should they snatch the copies right out of the hands of the hawkers? or should they be flattered that a whole secondary market has been created on the shoulders of their brand? Does the sale of forgeries impact their revenues? maybe sales of LV bags has increased? Does having LV copies on the streets promote their own merchandise or does it dilute the brand out of "the right crowd"?

Chris

Celebrities as Products

What if Ben had used Felix Marketing Processes?

Consider the world of products. Some countries have comparative advantages with products that occur naturally. Some companies have competitive advantage through a patent that protects its products. Everything can be considered a product as not a lot is free these days.

Lets pick a product. The felix team has built key marketing processes to manage products across all industries so any product will do. Lets pick a product that is particularly crucial to the US economy. Celebrities. They are products that generate 100’s of millions each in their lifetime. Its is a very competitive industry where product aesthetics are highly desired. Some have longer product life cycles lives that others, why?

Now lets narrow down the product description. Lets call him Ben Aff. Here is a product that had the perfect launch gaining an Oscar for its first sale. The next few sales, although not as artistically recognized, turned out to be commercially rewarding. Then some bad product placement decisions led to a severe decline in the value of the product. This then allowed the competition to squeeze into future sales opportunities further compounding the downward spiral.

Now consider that situation if Ben had spoken to the boys at felix. It is essential that Ben monitors all of the functions of his product. Its is not just the aesthetics of his product but also the third party products he endorses (JLO). It is the Ads he appears in and the magazine articles that are written. Then there is the trends that will affect Ben and the competition who are hungry for his slice of the action. Felix processes have been designed to, at any point in time, position a product with the right functions to the right customers. In Ben’s case how could he have emulated the product life cycle of De Niro or Cruise? He should have talked to Felix.

Chris

Measuring Marketing Effectiveness

The NAACAAS model measures the progress of prospects through to satisfied customers. Included in this process are the decision stages that the prospect would go through and the promotional tools we will use to push prospects through the sales funnel. These stages include moving prospects from no awareness of the product to some recognition of its name (we expect a 4% success rate from mass marketing activity). The customer then needs to move from recalling the brand to comprehending the benefits of the product (under the category Collateral – we expect a success rate of 15%). Once the prospect has been educated they can form an opinion or attitude towards the product (either they will agree with the benefits or not). If they agree they can then chose to purchase or not (at this stage 50% of respondents could be converted to customers).

You will note that the NAACAAS model includes an S for satisfaction. Many organizations focus on customer retention and try to minimize churn. Customer satisfaction surveys could determine the satisfaction level according to predetermined thresholds.

We can also use the NAACAAS model to measure the effectiveness of each promotional component. For example – we will sample the prospect base to measure awareness levels via an awareness survey. We can then cross match that with each campaign (assuming some time lag for effective awareness levels). If it rises then the content of that campaign can be analyzed and reproduced. By doing this the organization can establish an effective ROI for each piece of promotional activity.

More to follow...

Chris.

Marketing Accountability

Something that I feel is one of the hottest topic for marketers today - is how to gain, and sometimes even restore, accountability inside business. Let me take you back in time – just one year ago - I was in a meeting, and a marketing manager expressed his desire to launch a local campaign he felt would generate significant business in a relatively short amount of time. He went through a very detailed project plan detailing a timeline and the resources required to execute the program. However, perhaps it was that I missed having my second cup of coffee that day, but I found myself perplexed by his campaign proposal. Missing in his proposal were the results he intended to generate. After all, if I’m going to spend money on something that is designed to generate business I would like to understand the ratio to investments required to meet specific targets. So I figured I’d pose the question. He was not able to provide an answer, only argued that his market analysis was enough to suggest real demand across this particular segment.

Now, back to the future – Today, one year later, after spending an exuberent amount of resources, we have yet to generate any results? Sound familiar?

I was tasked recently to discover the roots to why some of our marketing programs and campaigns have resulted in nominal results. After all, it’s not too often you see in a win/loss report a sales person citing “was outsold.” I’m curious in knowing how others seek to gain accountability inside their organizations?

Keith

Luxury Products in the Software Business

As a way of introducing us (felix) I would like to pose a question in an industry that felix knows well. The founders of this blog both work in the software business (and have been for over 20 years between them) and I (Chris) have long wondered if luxury products exist here?

Some software purchases can cost many millions of dollars and would be considered very expensive to any other entitiy than a large corporate enterprise. But does a high price tag make them luxurious products?

In most industries there are low cost / high volume and low volume / high cost unit extremes. Luxury products will fit firmly in the latter alternative. In general we buy luxury product, not because we need them, but because they have some brand association that lets other know that we are in "that crowd". We will spend over $100 dollars on a branded pair of jeans that are three times the price of a low cost option but may not represent three times the value. Another characteristic of Luxury products this that they hold their value and do not tend to reduce in price over time (there is very little consumer pressure to reduce price - otherwise, God forbid, anyone could join this crowd).

In most industries there is a Luxury option (cars, clothes, holidays, air travel) but where is the Luxury option in the software business? Skimming is the chosen pricing model always - price high then bring down the price as the product penetrates the market - so no luxury aspriations there. Software is constantly evolving, with new versions being released each year but then so do car companies with new vehicles being released each year (how many models does Mercedes have? - over 50 - and they are certainly considered a luxury brand by most). So frequency of product can't be a deterrent. And where is the "crowd"? Where is the software product that you just 'have to have'? The software product that puts you in "that crowd". And a product that you will pay anything for and that you know customers will pay more for the same version in a few years time just because they see you with it?

Is there a category of software that is being overlooked?

http://en.wikipedia.org/wiki/Luxury

Chris.

Who is Felix?

Who is Felix?

Felix is not an “I”, it is “we” –

Felix is a group of marketing professionals from across different industries that have built this as an resource to share today’s leading marketing challenges, ideas and best practices. Our goal is to heighten awareness, and in some cases restore the accountability of marketing inside today’s organizations, both large and small. In order to discover and drive innovation, today’s marketing organizations must rise to a new set of challenges set forth by today’s senior executives. We believe there is a framework of knowledge and practice marketing executives can adopt in order to drive value and profitable innovation.

We welcome your ideas, thoughts, and experiences. After all, marketing is our passion – it’s what keeps us up each night!

To learn more, or to put you in direct communication with a member of Felix, you can contact us at teamfelix@gmail.com.