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GENERAL MANAGEMENT. PROGRAM. Don O'Sullivan [email protected]mbs.edu ... hands, pin them down, and generate an uncomfortable degree of personal risk.

GENERAL MANAGEMENT  PROGRAM

Marketing Don O’Sullivan  [email protected]

Constraint On Growth Has Shifted – From Supply To Demand

Australian GDP over the last 20 years

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Most leaders do not like to make choices. They’d rather keep their options open.  Choices force their  hands, pin them down,  and generate an uncomfortable degree of personal risk A.G. Lafley,  Former CEO P&G 4

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“People think focus means saying yes  to the thing you've got to focus on. But that's not what it means at all. It  means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually  as proud of the things we haven't done as the things I have done.

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Key choices

What growth goals &  expectations? 1. What is our competitive advantage?

2. Where can we grow? 3. Where should we grow?

4. What is our strategy? 5. How will we execute?

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Growth decisions Goals &  Expectations?

1. What is our  competitive  advantage?

2.

Where can we grow? 3. Where should we grow?

4. What is our 

strategy? 5. How will we  execute?

Revenue

Valuable

Retention/ Referral

Brand Promise

Profit

Rare

Market Share/ Customer Share

Visibility

Capital Efficiency

Difficult to Imitate

Price  Premium

Promise Delivery

Market Leadership

Organized to Capture Value

Addressable Market

Leverage

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Growth decisions Goals & Expectations?

1. What is our  competitive  advantage?

2. 3.

Where can we grow? Where  should we grow?

4. What is our  str ategy? 5. How will we execute?

Valuable Revenue

Rare

Profit

Capital  Efficiency

Difficult  to Imitate

Market Leadership

Organized to capture value

Retention/  Referral

Brand Promise

Market Share/  Customer Share

Visibility

Price Premium

Promise  Delivery

Addressable Market

Leverage

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Assets and Competitive Advantage Valuable, Rare, costly to Inimitable, Organized (VRIO)

The assets are…..

Valuable?

No

Competitive  disadvantage

Yes

and is the firm….

Rare? Yes

No

Competitive  parity

Yes

Costly to imitate?

No

Temporary competitive advantage

Yes

Organized to capture  value?

Yes

Sustainable growth model

No Unused  competitive  advantage

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5

180o shift in firm value over 30 years

Market to Book Value S&P 500 – 1980‐2016 100% 90% 80%

2200% % 4455% %

70% 60%

8855% %

50% 40%

7755% %

880 4% %

19050%%

8800% %

30%

5555% %

20% 10%

1155% %

0% 1980

1990

2000

T a n g ib le B o o k V a lu e

Brand Value 2015 ($M)

2255% %

210 6% % 2010

2016

2002

5% Facebook

R e m a in in g M a r k e t V a lu e

Brand Value 2014 ($M)

128,303

104,680

81,716

78,752

76,683

68,620

67,060

62,783

59,843

53,466

58,820

45,410

56,124

45,147

48,019

52,533

47,916

31,845

46,737

44,779

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A.G. Lafley

Profit per User per Year – Male Wet Shavers

$57 billion 15

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Market Share Revenue Earnings Earnings growth Market Cap P/E ratio S&P 500 average P/E Google on IPO P/E Google current P/E Required 5 yr CAGR Risks to revenue

90% $3.7 billion $1 billion 65% $100 billion 100 15.5 79.3 19 40% ???

What are the risks? Retention

Fail to retain existing users

Share of Customer

If our users decrease their level of engagement

Word of Mouth

Improper access to or disclosure of our users’ information, or violation of our terms of service or  policies, could harm our reputation and adversely affect our business

Margin

Growth in use of Facebook through our mobile products, where our ability to monetize is  unproven, as a substitute for use on personal computers may negatively affect our revenue and  financial results

Share of Market

Our business is highly competitive, and competition presents an ongoing threat to the success of  our business (grow market share)

Addressable Market

We may not be successful in our efforts to grow and further monetize the Facebook Platform

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Key Indicators

1. 2. 3. 4. 5. 6.

Retention – Our customers buying for longer Share of Customer – Our customers buying more from us Referral – Our customers advocating our product/ service Margin – Our customers paying a higher price Share of market / Organic Growth – Winning customers / business from competitors Addressable Market – Expanding the size of the potential market

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The decline in coffee‐ drinking was due to the fact that most of the coffee people bought was stale and they weren't  enjoying it. Once they tasted ours and experienced what we call "the third place".. a gathering place between home and work where they were treated with respect.. they found we were filling a need they didn't know they had. Howard Schultz CEO Starbucks 20

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Bob Donald

Howard Schultz

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The rise………and fall……….. and rise of Starbucks

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Rank capabilities (1 = what we do best, 6 = what we do sixth best) Retention – Our customers buying for longer Share of Customer – Our customers buying more from us Referral – Our customers advocating our product/ service Margin –

Our customers paying a higher price

Share of Market / Organic Growth – Winning customers / business from competitors

0

Addressable Market – Expanding the size of the potential market

0

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Rank importance for future growth (1 = highest growth potential, 6 = lowest growth potential) Retention – Our customers buying for longer Share of Customer – Our customers buying more from us Referral – Our customers advocating our product/ service Margin –

Our customers paying a higher price

Share of Market / Organic Growth – Winning customers / business from competitors

0

Addressable Market – Expanding the size of the potential market

0

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Evaluate the fit between capabilities and opportunities

Customer Retention  Share of customer  Referral Margin Winning market share  Extending addressable market

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Growth

%

Actions

Measure Owner

Customer Retention Share of Customer  Referral Margin Winning market share Extending addressable Market 26

Four elements of brand management – 8 questions Evaluate your  brand on a scale of 1 to 10 (1 poor, 10 excellent) Clear, compelling promise of unique value: Brand Promise

Strong, positive brand associations: High levels of awareness of promise in target market:

Visibility

Awareness achieved through paid, earned & owned media: High internal awareness & alignment on promise:

Promise  Delivery

Leverage

Strong promise delivery across all touch‐points:

Leveraged to grow in retention/ share/ referral or margin  Leveraged to grow market share or addressable market: 27

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Delivery: Promises made and promises kept Brand Promise

Visibility

Promise Delivery

Leverage

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"The restaurant  manager trumps the brand manager every  time in terms of our  ability to deliver the brand promise." Russ Klein, CMO Burger King

Brand Promise

Visibility

Promise Delivery

Leverage

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Brand Promise

The best customer  service is if the customer doesn’t  need to call you,  doesn’t need to talk  to.

Visibility

Jeff Bezos founder and CEO of Amazon

Leverage

Promise Delivery

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Brand Promise

A company's culture and  a company's brand are really just two sides of the same coin. The brand is just a lagging indicator of the culture.

Visibility

Your b Promise Delivery

Leverage

Tony Hsieh CEO Zappos

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Client management behaviours will change if..... leadership takes responsibility for development on a client centric organisational orientation Leadership team are  client facing and are effective developers of  client assets Leadership team develop  trusted relationship  status with key accounts

Brand Promise

Visibility

Clarity of vision on  demand side growth  Clarity on the growth  Promise drivers Delivery Regular reporting on performance on drivers Leverage

Incentives and  performance appraisal  Account planning and  reporting

Skills focus on client  experience skills, thought  leadership skills and  acquisition skills

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Leveraging Brand Assets: Key Indicators Brand Promise

1. Retention – Our customers buying for longer 2. Share of Customer – Our customers buying more from us 3. Referral – Our customers advocating our product/ service 4. Margin – Our customers paying a higher price 5. Share of market / Organic Growth – Winning customers / business from competitors 6. Addressable Market – Expanding the size of the potential market

Visibility

Promise Delivery

Leverage

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#1 Retention  Customer Effort Score Brand Promise

Visibility

Promise Delivery

Leverage

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For sellers its all about service

89%

100%

Brand Promise

of companies compete mostly on the basis of customer experience, versus 36% four years ago :Gartner 2016 Visibility

80% Promise Delivery

60% 80%

Leverage

40% 8% 20%

Firms who believe they provide a superior service

Client lens

Firms who’s clients agree

0% Source: Bain customer led diagnostic questionnaire & Satmetrix Net Promoter Database

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# 2 Share of Customer Brand Promise

Visibility

Promise Delivery

Leverage

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# 3 Referral NPS

=

% Promoters (9 & 10) Detracto  rs

Not Likely

0

1

2

3

4

% Detractors (0 to 6)

-

Passives

5

6

7

8

Promote rs

9

10

Brand Promise

Visibility

Extremely Likely

Promise Delivery

Leverage

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# 4 Margin Mean Impact of Price Change on S&P 1500 Company (%)

Profit increase of 8%

Price increase of 1% 1

Brand Promise

13.5

101.0

12 68.3

100.0

1

.5

Visibility

Promise Delivery

Leverage

19.2 Revenues

Fixed

Variable

Costs

Costs

Op

erating  Profits

Source: Compustat; Mckinesy Analysis 39

# 4 Margin

“The single most important decision in evaluating a business is pricing power……. If you’ve got the power to raise prices without losing  business to a competitor,  you’ve got a very good business.

Brand Promise

Visibility

Promise Delivery

Leverage

And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.” 40

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# 5 Market Share Brand Promise

Visibility

Promise Delivery

Leverage

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# 6 Size of Addressable Market Brand Promise

Visibility

Promise Delivery

Leverage

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Campaign Management Business Objectives Customer Insights

Competition Brand Attributes

Strategy

Messaging

Media

Implementation

Metrics

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The Brief – the project definition

GET: [target] WHO: [currently think / feel / do this] TO: [desired think / feel / do] BY: [communicating proposition (our point of differentiation)] LIKE THIS: [tone] Success will be measured By [metric of think / feel / do]

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GET: [target]

Drives a minivan

35 years old Married

Works at home

Two children

Subscribes to Sunday newspaper, buys occasional single-copy

Owns home

Newcomer Home value $175,000 Interests: Food, Wine Parenting

$100,000+ HH income Reads Business Week & Sports Illustrated

Travels out of state three times a year, international travel once a year.

Plays tennis and golf

Anna Combines quantitative & qualitative data Must deliver consumer insight 45

Brand Performance Total market  size (# or value) % Aware of your offer

% Relevance

% Performance  (consideration)

% Purchase

% Loyal

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Virtuous & Vicious Marketing Communications Cycles

Disciplined Execution (budget and process) High Low

Something New To Say

Low

High

Failed Campaign

Viable Campaign

No Impact and or No Reach

Reliant on creative execution

Marketing Graveyard

Pointless Noise

The Colouring In Department Logo Cops Discretionary Spend

Marketer & budget chasing a message  Creatively Impossible to provide breakthrough

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Applying the framework to Tourism

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The Best Job in the World

Presentation Video

Branded Facebook

Press Job Adverts

Branded Twitter Campaign Web Site Branded YouTube

Onle Job Adverts Applicant Videos

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Declining effectiveness of marketing

Almost 50% increase in advertising / sales ratio 51

Components of a Contemporary Media Strategy

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How Australian businesses perform on drivers of trust? 0

Capability

10

20

30

40

50

Provide high quality services

60 Importance Performance

Are innovators in services and ideas  Are highly regarded (TMT) Put customers before profits Character Have ethical business practices Treat employees well  Ease of  doing  business

Have transparent business practices Listen to customer needs Proactively address a crisis How important are each of the following for building trust: 9‐point scale. Top wo box extremely / very important Adapted from Edelman 2015 Australian Trust Barometer

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57% Australian CEOs concerned about the lack of trust in Australian Business Up from 40% two years ago

Source: PWC 19th Global Survey of CEOs 55

The economic Impact of low / high Trust in Australia in 2015 56 56 56

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Contextual attributes of the brand: heritage, values & mission

Heritage

Values

Brand  Promise

Values

Mission

Heritage

Values

Visibility

Values

Mission

Heritage

Values

Promise  Delivery

Values

Mission

Heritage

Values

Leverage

Values

Mission 57

The Big Idea – 1988 to 2015

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Joshua Bell

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MARKETING

Don O’Sullivan  [email protected]

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