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mosaic_NAWBO

VIEWS: 5 PAGES: 29

  • pg 1
									 Moving Beyond Product and Price:
Positioning to Win Through Intangible
                Assets


       Facilitated by Martin McLaughlin
               Mosaic Partners llc
       mmclaughlin@mosaicpartners.com
                  610.918.9171
                 October 1, 2004

                                          1
Biggest Challenge?

 Competing against the Big Guys…

 But Growth of the Economy is on
 Our Shoulders

                                   2
•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?




                                                                  3
What does Starbucks sell?

What does Progressive Insurance sell?

What does UPS sell?

What does Home Depot sell?

What does Mosaic Partners sell?

                                        4
   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.”
                                                                                        5
  Read It Closely: “We       don’t sell
                We sell
insurance anymore.

          speed.”
          Peter Lewis, Progressive




                                          6
  “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)

                                                               7
   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



                                                               8
Mosaic Partners = 1 Guy with the Change in my Pocket

                    SEI INVESTMENTS




  HPCII




                                                       9
         Market Positioning at the Heart of Asset Investment

• Customer-based perceptions

• Price-to-value trade-off

• Two broad positions
  low cost
  differentiated




                                                               10
                  Positioning Analysis: Retail
            “Customer‟s Eyes” View

                                                                           Differentiated
   4x                                       Nordstrom        x

Price
        Low
        Cost
   1x       x Wal Mart
          Price




                      Selection




                                  Quality




                                                Atmosphere




                                                                 Service




                                                                               Brand
                                      Value                                                 11
            Positioning Analysis: Internet Connectivity

                                                      Nokia    2004
    $46                                                        Cable, Broadband

           We live in constantly
                            AOL

    $23
           changing and intensely
           competitive markets
Price
               NetZero
               Erols
    < $9   We must constantly innovate
           and make tradeoffs
                   Access     Content     Community           Experiences


                                  Value
                                                                              12
                     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.




So how are you enabling your
customers to make the
experience last?




                                                                                        13
        Positioning Analysis: Marketing Consulting
Price               “Customer‟s Eyes” View               Mosaic Partners
                                                                              x
   4x
                                                                    Differentiated



        Low
        Cost
   1x               x
                                                                                              Value
        Offerings
        Good


                        Andersen
                        Ex-


                                   Network
                                   Andersen


                                              CMO
                                              Needs of
                                              Focus on


                                                         Series
                                                         Opinion



                                                                   Rosemont


                                                                                  Customers
                                                                                  Existing


                                                                                              Exchange
                                                                                              Marketing
                                                                                                          14
                        Marketing Migration
       Physical and Financial         Customers, People, Brand, Processes,
                                      Relationships & Intellectual Property




                                                Customer          Unique
    Commodity         Quality       Quality
                                                Focused          Customer
  Product / Service   Products      Services
                                                Solutions        Experience




                                                            Mosaic Partners LLC TM

Increases                                                             Decreases
                             Number of Competitors
                       Price Pressure and Margin Erosion
                            Reliance on Market Data
                           Make and Deliver Mindset                                  15
            Marketing Migration Measures

Migration Position               Measure

Solutions &                      Success
Experiences
Quality Services                 Satisfaction

Quality Products                 Six-sigma
                                             Source: Tom Peters




                                                                  16
           Marketing Migration Outside-In View

           Traditional Physical Process Sequence
          (Product-centric vs Relationship-centric)


 Operational                  Marketing
  Functions                   Functions
 Make the product             Sell the product
Design Procure Make   Price Sell Advertise/ Distribute Service
product                           promote




                                                                 17
                     Marketing Migration Process Impact

                                                  Customers, People, Brand, Processes,
Market Migration         Physical and Financial   Relationships & Intellectual Property


• 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
                                                                                          18
                      Intangible Value is Real Value
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....
                                                                    Source: Pine and Gilmore
                                                                                           19
                             Intangible Value is Real Value




                                                                                  Source: Pine and Gilmore
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!
                                                                                                             20
  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!!!!

                                                               21
            Marketing Migration End Game
                 CGE&Y (Paul Cole):

                        “Systemic
    “Pleasant Transaction” vs.

               Opportunity.”

                        “Re-think
“Better job of what we do today” vs.

   overall enterprise strategy.”

                                           22
                           Marketing Migration Measures
“The Loyalty Effect” Example: Why is Customer Retention so Important?
           Customer Experience Cycle
                                                               Referrals:
                                                               Over 60% of sales may result from
                                                               referrals. Conversely, the average
                                                               dissatisfied customer will tell 10
                                                               others about their bad experience.

                                                               Increased Purchases:
     First Time            Repeat            Advocate          Over 40% of highly satisfied
                                                               customers increase their purchases
    Loyalty Effect = Acquisition Cost - Price Premium -        based upon their positive
    Reduced Cost to Serve - Referrals - Increased Purchases    experience.


    Acquisition Cost:             Price Premium:               Reduced Cost to Serve:
    It costs five times more to   High customer satisfaction   In the insurance industry, a
    attract a new customer        companies charge 9 percent   5% increase in customer
    than to retain an old         more than poor customer      retention lowers the cost per
    customer.                     satisfaction companies.      policy by 18%.
                                                                                                23
                  Marketing Migration Measures
Understanding Your Customers on Multiple Levels


                      Internal              External              Customer
                      Statistics            Sources               Feedback
                     Measure at or immediately after customer contact
Events         •Defects or Rejects    •Benchmarking?       •Customer Complaints
               •On-time Delivery                           •Customer Compliments
               •Error Free Orders
                     Measure relationship across a series of contacts
Relationship   •Length of Relations   •Share of Wallet?    •Attribute Performance
               •Repeat Purchases      •Acquisition /       •Attribute Importance
                                       Defection Matrix?    (interviews/surveys)

                        Measure value added to customer’s activities
                                      •Competitive Value   •Structured Observation
Value-In-Use                           Exchange             or Site Visits

                                                                                   24
            Our Methodology.


                     Create
                     Value




           Delivering Solutions
                That Matter
            to Your Customers
Communicate                               Deliver
   Value     Mosaic Partners LLC TM
                                          Value
             Align the Organization and
             Processes Around Customers

                                                    25
                              Our Process.

Focus on the customers’ problems, not
your current offerings!                                     Create
                                                            Value


 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?

                                                                             26
                               Our Process.

Develop processes that make it easy
for customers to do business with                               Deliver
you!                                                            Value

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!”
                                                                                27
                             Our Process.

Develop a brand strategy that clearly
defines who you are, what you do and                     Communicate
how you are different!                                      Value



 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!


                                                                           28
                                 In Summary.

• 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!

                                                                                   29

								
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