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GENERAL MANAGEMENT PROGRAM
Don O’Sullivan
Marketing
Constraint On Growth Has Shifted – From Supply To Demand
Australian GDP over the last 20 years
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Most leaders do notlike to make choices.They’d rather keeptheir options open. Choices force their hands, pin them down, and generate anuncomfortable degreeof personal risk
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A.G. Lafley, Former CEO P&G
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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 othergood ideas that there are.
You have to pick carefully. I'm actually as proud of the things we haven'tdone as the things I have done.
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What growth goals & expectations?
1. What is our competitiveadvantage? 2. Where can we grow?
3. Where shouldwe grow?4. What is our strategy?
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5. Howwill we execute?
Key choices
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Growth decisions
2. Where canwe grow?
3. Where shouldwe grow?
Retention/Referral
Market Share/
Customer
Share
Price Premium
AddressableMarket
4. What is our strategy?
5. How will we execute?
Brand Promise
Visibility
PromiseDelivery
Leverage
Goals & Expectations?
Revenue
Profit
CapitalEfficiency
MarketLeadership
1. What is our competitive advantage?
Valuable
Rare
Difficult
to Imitate
Organized
toCapture
Value
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Growth decisions
2. Where canwe grow?
3. Where should wegrow?
Retention/ Referral
Market Share/ Customer Share
Price Premium
AddressableMarket
4. What is our str gy?ate
5. Howwill weexecute?
Brand Promise
Visibility
Promise Delivery
Leverage
Goals &Expectations?
Revenue
Profit
Capital Efficiency
MarketLeadership
1. What is our competitive advantage?
Valuable
Rare
Difficult
to Imitate
Organized
to capturevalue
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Assets and Competitive AdvantageValuable, Rare, costly to Inimitable, Organized (VRIO)
Valuable?
Competitive disadvantage
No
Sustainablegrowthmodel
Yes
Competitive parity
No
Temporarycompetitiveadvantage
No
Unused competitive advantage
No
The assets are….. and is the firm….
Yes Organizedto capture value?
Costly toimitate?
YesYesYesRare?
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180o shift in firm value over 30 years
8800%%5555%%
1155%%
1 9 9 0 2 0 0 0
T a n g ib le B o o k V a lu e
2255%% 2106%%5 %
2200%%4455%%
8855%%7755%% 8804%%
19050%%
1 0 0 %
9 0 %
8 0 %
7 0 %
6 0 %
5 0 %
4 0 %
3 0 %
2 0 %
1 0 %
0 %1 9 8 0 2 0 0 2 2 0 1 0 F a c e b o o k
R e m a in in g M a rk e t V a lu e
Market to Book Value S&P 500 – 1980‐2016
2016
1313
104,680
78,752
68,620
62,783
53,466
45,410
45,147
52,533
31,845
44,779
Brand Value2015 ($M)
Brand Value2014 ($M)
128,303
81,716
76,683
67,060
59,843
58,820
56,124
48,019
47,916
46,737
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1414
A.G. Lafley
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Profit per User per Year – Male Wet Shavers
$57 billion
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1616
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?
Fail to retain existing users
If our users decrease their level of engagement
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
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
Our business is highly competitive, and competition presents an ongoing threat to the success of our business (growmarket share)
We may not be successful in our efforts to grow and further monetize the Facebook Platform
Retention
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Share of Customer
Word of Mouth
Margin
Share of Market
AddressableMarket
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Key Indicators
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1. Retention
– Our customers buying for longer2. Share of Customer
– Our customers buying more from us3. Referral
– Our customers advocating our product/ service4. Margin
– Our customers paying a higher price5. Share of market / Organic Growth
– Winning customers / business from competitors6. AddressableMarket
– Expanding the size of the potential market
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The decline in coffee‐drinking was due to thefact that most of thecoffee people bought wasstale and they weren't enjoying it. Once theytasted ours andexperienced what we call"the third place".. agathering place betweenhome and work wherethey were treated withrespect.. they found wewere filling a need theydidn't know they had.
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Howard Schultz CEO Starbucks
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Howard SchultzBob Donald
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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)
0
0
Retention
–
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Our customers buying for longer
Share of Customer
– Our customers buying more from us
Referral
–
Margin
–
Our customers advocating our product/ service
Our customers paying a higher price
Share of Market / Organic Growth
– Winning customers / business from competitors
AddressableMarket– Expanding the size of the potential market
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Rank importance for future growth(1 = highest growth potential, 6 = lowest growth potential)
0
0
Retention
–
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Our customers buying for longer
Share of Customer
– Our customers buying more from us
Referral
–
Margin
–
Our customers advocating our product/ service
Our customers paying a higher price
Share of Market / Organic Growth
– Winning customers / business from competitors
AddressableMarket– Expanding the size of the potential market
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
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Four elements of brand management – 8 questionsEvaluate your brand on a scale of 1 to 10 (1 poor, 10 excellent)
BrandPromise
Visibility
Promise Delivery
Leverage
Clear, compelling promise of unique value:
Strong, positive brand associations:
High levels of awareness of promise in target market:
Awareness achieved through paid, earned & owned media:
High internal awareness & alignment on promise:
Strong promise delivery across all touch‐points:
Leveraged to grow in retention/ share/ referral or margin
Leveraged to grow market share or addressable market:
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Delivery: Promises made and promises kept
Brand
Promise
Visibility
Promise
Delivery
Leverage
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"The restaurant manager trumps thebrand manager every time in terms of our ability to deliver thebrand promise."Russ Klein,CMO Burger King
Brand
Promise
Visibility
Promise
Delivery
Leverage
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The best customer service is if thecustomer doesn’t need to call you, doesn’t need to talk to.
Jeff Bezos founder andCEO of Amazon
Brand
Promise
Visibility
Promise
Delivery
Leverage
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Your b
A company's culture and a company's brand arereally just two sides ofthe same coin.
The brand is just alagging indicator of theculture.
Tony Hsieh CEO Zappos
Brand
Promise
Visibility
Promise
Delivery
Leverage
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Client management behaviours will change if.....
leadership takes responsibility for development on a client centricorganisational orientation
Incentives and performance appraisal Account planning and reporting
Leadership team are client facing and areeffective developers of client assetsLeadership team develop trusted relationship status with key accounts
Clarity of vision on demand side growth Clarity on the growth driversRegular reporting onperformance on drivers
Skills focus on client experience skills, thought leadership skills and acquisition skills
Brand
Promise
Visibility
Promise
Delivery
Leverage
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Leveraging Brand Assets: Key Indicators
2. Share of Customer
– Our customers buying more from us
3. Referral
– Our customers advocating our product/ service4. Margin
– Our customers paying a higher price
5. Share of market / Organic Growth
– Winning customers / business from competitors6. Addressable Market
– Expanding the size of the potential market
Brand
Promise
1. Retention
– Our customers buying for longerVisibility
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
100%
80%
0%Source: Bain customer led diagnostic questionnaire & Satmetrix Net Promoter Database
Promise
Delivery
60%80%
Leverage
40%
20% Firms who believethey provide a superior service
8%
Firms who’s clients agree
Client lens
89%of companies compete mostly on the basis of customer experience, versus 36%four years ago :Gartner 2016
Brand
Promise
Visibility
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# 2 Share of Customer
Brand
Promise
Visibility
Promise
Delivery
Leverage
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# 3 Referral
NPS% Promoters(9 & 10)
% Detractors (0 to 6)
= -
0 1 2 3 4 5 6 7 8 9 10
Detracto rs
Passives Promoters
NotLikely
ExtremelyLikely
Brand
Promise
Visibility
Promise
Delivery
Leverage
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19
# 4 Margin
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100.0 68.3
19.2
Revenues Fixed Variable Op
Costs CostsSource: Compustat; Mckinesy Analysis
erating Profits
1
Priceincrease of 1%
Profitincrease of 8%
1101.0 13.5
.5
Mean Impact of Price Change on S&P 1500 Company (%) Brand
Promise
Visibility
Promise
Delivery
Leverage
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“The single most importantdecision in evaluating abusiness is pricing power…….
If you’ve got the power toraise prices without losing business to a competitor, you’ve got a very goodbusiness.
And if you have to have aprayer session before raisingthe price by 10 percent, thenyou’ve got a terrible business.”
# 4 Margin
Brand
Promise
Visibility
Promise
Delivery
Leverage
40
20
# 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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Business Objectives
Campaign Management
Brand Attributes
Messaging
Customer Insights
Media
Strategy
Implementation
Competition
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]
Anna
Combines quantitative & qualitative data Must deliver consumer insight
35 years old
Two children
$100,000+ HH income
Reads Business Week& Sports Illustrated
Plays tennis and golf
NewcomerHome value $175,000
Interests:
Owns home
Married
Drives a minivan
Works at home
Food, WineParenting
Travels out of statethree times a year,
international travel oncea year.
Subscribes to Sunday newspaper, buys occasional single-copy
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Total market size
(# or value)
Brand Performance
% Aware ofyour offer
% Relevance
%Performance (consideration) %
Purchase%
Loyal
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4747
Virtuous & Vicious Marketing Communications Cycles
Disciplined Execution (budget and process)
Low High
Low
High
Failed CampaignNo Impact and or No Reach
Pointless NoiseMarketer & budget chasing a message
Creatively Impossible to providebreakthrough
Viable CampaignReliant on
creative execution
Marketing GraveyardThe Colouring In Department
Logo CopsDiscretionary Spend
SomethingNew
ToSay
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Applying the framework to Tourism
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The Best Job in the World
CampaignWeb Site
Applicant Videos
Onle Job Adverts
Press Job Adverts
Presentation Video Branded Facebook
Branded YouTube
Branded Twitter
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25
Declining effectiveness of marketing
Almost 50% increase in advertising / sales ratio
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Components of a Contemporary Media Strategy
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5353
How Australian businesses perform on drivers of trust?
Capability
Put customers before profitsCharacter
Have ethical business practices
Ease of doing business
How important are each of the following for building trust: 9‐point scale. Top wo box extremely / very important
0 10 20 30 40 50 60
Proactively address a crisis
Listen to customer needs
Treat employees well
Have transparent business practices
Are innovators in services and ideas
Are highly regarded (TMT)
Provide high quality servicesImportance
Performance
54Adapted from Edelman 2015Australian Trust Barometer
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57% Australian CEOs concerned about the lack of trust inAustralian Business
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Up from 40% two years ago
Source: PWC 19th Global Survey of CEOs
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5656
The economic Impact of low / high Trust in Australia in 2015
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Values ValuesHeritage Mission
Values ValuesHeritage Mission
Values ValuesHeritage Mission
Values ValuesHeritage Mission
Contextual attributes of the brand: heritage, values & mission
Brand Promise
Visibility
Promise Delivery
Leverage
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The Big Idea – 1988 to 2015
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5959
6060
Joshua Bell
