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Copyrigll 2OO1 ly Ililip Koller. All riglls reserved.
Iullisled ly Joln Wiley o Sons, Inc., Holoken, New Jersey.
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lax (2O1) 18-6OO8.
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specically disclaim any implied warranlies ol merclanlalilily or lness lor a
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Uniled Slales al (1) 2-99 or lax (1) 2-1OO2.
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producl names appear in Inilial Capilal lellers. Readers, lowever, slould conlacl
lle appropriale companies lor more complele inlormalion regarding lrademarks
and regislralion.
--
Koller, Ililip.
1en deadly markeling sins : signs and solulions / Ililip Koller.
p. cm.
ISBN O-11-6O22-6 (cloll)
1. MarkelingManagemenl. I. 1ille: 1O deadly markeling sins. II. 1ille.
HI11.1 .K61 2OO1
68.8dc22
2OOO26O
Irinled in lle Uniled Slales ol America.
1O 9 8 6 1 2 1
I dedicale llis look lo my six grandclildrenJordan,
Jamie, Illie, Olivia, Ally, and Samwlom I love
dearly.
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1lis look is lased on many years ol working will con-
sulling rms and individual clienls. I would like espe-
cially lo acknowledge Hamillon Consullanls ol
Camlridge, Massaclusells (www.lamillonco.com).
An original version ol lle len mosl common ndings
was crealed ly my earlier co-aullor,
Will Rodgers, and lis colleagues al lle MAC Croup
and Hamillon Consullanls. 1ley lased lleir conclu-
sions on lle ndings lrom over markeling audils ol
lusiness unils conducled over a 1-year period. Hamil-
lon las lurller modied lle audil inlo somelling lley
call Markel-lased Irol Improvemenl wlerein lley
link audil ndings lo lollom line impacl. I used lle
lisl ol ma[or markeling deciencies and my own con-
sulling experiences as a springloard lor developing
llis look.
I also wanl lo acknowledge Koller Markeling Croup
ol Waslinglon, D.C. (www.kollermarkeling.com), lor
lleir commilmenl lo idenlilying ma[or markeling de-
ciencies and proposing innovalive solulions. Koller Mar-
keling Croup locuses on slralegic markeling and las
worked will sucl ma[or clienls as A1o1, IBM, JI Mor-
v
vi -
gan, Norllweslern Mulual, Weyerlaeuser, Baxler,
Izer, Slell Clemical, Iord, McDonalds, Miclelin,
and SAS Airlines. 1leir presidenl and lounder, Millon
Koller, las slown an uncanny markeling imaginalion in
lringing lresl oul-ol-lle-lox llinking lo guide com-
pany solulions.
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Your Company Is Nol Sulcienlly
Markel Iocused and Cuslomer
Driven 1
Your Company Does Nol Iully
Undersland Ils 1argel Cuslomers 29
Your Company Needs lo Beller
Dene and Monilor Ils Compelilors 1
Your Company Has Nol Iroperly
Managed Ils Relalionslips will
Ils Slakelolders
Your Company Is Nol Cood al
Iinding New Opporlunilies 6
Your Companys Markeling
Ilanning Irocess Is Decienl
Your Companys Iroducl and
Service Iolicies Need 1igllening 81
Your Companys Brand-Building
and Communicalion Skills
Are Weak 89
vii
viii -
Your Company Is Nol Well
Organized lo Carry On Illeclive
and Ilcienl Markeling 1O
Your Company Has Nol Made
Maximum Use ol 1eclnology 129
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Inlroduclion


Markeling is in lad slape. Nol markeling lleory, lul
markeling praclice. Ivery new producl or service needs
lo le supporled ly a markeling plan llal lrings in a
good relurn llal covers lle corresponding inveslmenl ol
lime and money. Bul llen wly do percenl ol new
producls, services, and lusinesses lail
1
1lese lailures
lappen in spile ol all lle work llal goes inlo markel re-
searcl, concepl developmenl and lesling, lusiness
analysis, producl developmenl and lesling, markel lesl-
ing, and commercial launcl.
Markeling is supposed lo drive lusiness slralegy. 1le
markelers [ol is lo - new opporlunilies lor lle
company and carelully apply -
- (S1I) lo poinl a new lusiness in lle
rigll direclion. 1len markelers are supposed lo esl oul
lle - making
sure llal lley are consislenl will eacl oller and will
lle S1I slralegy. 1len markelers are supposed lo
lle plan and lle resulls. Wlen lle resulls
deviale lrom lle plan, markelers lave lo decide il lle
culpril is weak implemenlalion, an incolerenl markel-
ing mix, a misdirecled S1I, or ullimalely incompelenl
markel researcl.
Bul loday, loo many markeling deparlmenls donl lan-
dle llis wlole process. Ils landled ly a mix ol markelers,
slralegisls, nancial lypes, and operalions people. Some-
low a new producl or service emerges and markeling is

1
lell lo ils lrue mission as conceived ly ollers in lle com-
pany, namely selling and promoling. Mosl ol markeling is
reduced lo a one-I lunclionIromolionnol a lour-I
[ol. Because lle company ends up making a producl llal
doesnl sell well, mosl ol markelings lask is lo clear up lle
mess llrougl lard selling and adverlising.
Here is an example ol one-I markeling. I asked lle
Markeling Vice Iresidenl ol a ma[or Iuropean airline
wleller le sels lle lares on lle airline:
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Clearly, llis airline is lrealing markeling as a one-I
lunclion.
Worse, markeling isnl landling adverlising and sell-
ing very well. Ask any CIO wlo sludders wlen le gels
lle adverlising lill in a period wlen sales are al or
down. Wlal did lle adverlising do lor us le asks lle
Markeling Vice Iresidenl. Al lesl, lle answer is llal

sales would lave leen even worse willoul il. Bul as an
inveslmenl, wlal did we gel lack And llere isnl a
good answer.
CIOs are underslandally growing impalienl will
markeling. 1ley leel llal lley gel accounlalilily lor
lleir inveslmenls in nance, produclion, inlormalion
leclnology, even purclasing, lul donl know wlal
lleir markeling spending is aclieving. Cranled llal
markeling involves a more complex clain ol evenls
wlere il is larder lo lrace cause and ellecl. Bul some
progress is leing made in lleory and oller companies
are pulling il inlo praclice. Wly canl llis lappen in
lleir company
Ivery sign suggesls llal markeling will lecome more
clallenging in lle lulure. Consider lle lollowing:
- Nalional lrands are nding il larder lo gel an ade-
quale premium lo cover lleir lrand-luilding cosl.
Wly Wal-Marl and ils imilalors are insisling on
mucl lower prices lrom suppliers il llese suppliers
wanl Wal-Marls lusiness. And megarelailers are in-
creasingly pulling oul lleir own slore lrands llal are
reacling a level ol qualily equal lo lle nalional
lrands. Slore lrands donl lave lo pay lor researcl,
adverlising, and selling. We are learing llal Cenera-
lion Y is more skeplical ol adverlising. Naomi Klein
and ler look is making a lol ol people
llink aloul low mucl slould lley pay lor lle more
6
adverlised lrands and wlal ellecls rampanl lranding
las on socielys cosls.
2
- Companies lave leen emlracing Cuslomer Rela-
lionslip Managemenl (CRM) as lle lalesl cure lor
lleir ills. 1lis means collecling privale inlormalion
aloul individuals lo leller guess al wlal lley can le
lempled lo luy. Bul llere is growing opposilion lo
lle colleclion ol personal inlormalion. Iurller-
more, people are increasingly upsel will [unk mail,
e-mail, and plone calls. In lacl, Congress passed a
law giving people lle rigll lo lisl lleir louselolds as
nol availalle lor plone calls, will a penally ol
$11,OOO lor ollending companies. Companies leller
move lo permission or opl-in markeling as soon as
lley can.
- Ioyally sclemes seem like a good idea and lley work
well lor lleir rsl adoplers. Bul lleir compelilors
lave no cloice lul lo launcl lleir own lrequenl-
luyer sclemes. 1oday, mosl lusinesspeople carry
Visa, MaslerCard, and American Ixpress and lley
gel poinls wleller lley y American, Uniled, or
Della.
- No maller low cleaply a company can produce ils
producl domeslically, il canl le lle cleapesl as
long as Clina las a say. Clina can produce every-
lling cleaper and is leginning lo make il as good.
Clina will lave lle power lo repeal lle Japanese

game: leller qualily al lower prices. 1lis las leen
a llow lo counlries llal would adverlise lower cosl
lalor, sucl as Ialin American and easlern Iuro-
pean counlries. 1lus Mexico las leen losing aulo
and oller laclories in lle area as lley
move lo Clina. Nalurally U.S. producers will
lransler domeslic sourcing and produclion lo
cleaper areas, leading lo declines in U.S. employ-
menl. Ialling employmenl means less purclasing
power and lewer sales, llus producing a vicious
circle.
- Mass markeling cosls are rising even llougl mass
markeling ellecliveness is lalling. As lewer people
pay allenlion lo 1V commercialseiller ignoring
or zapping llem1V nelworks are raising lleir
prices. 1lis will lorce markelers lo nd more ellec-
live media.
- Dillerenlialion las leen lle markelers war cry:
Dillerenliale, dillerenliale, dillerenliale. Irolessor
1leodore Ievill said years ago llal you can diller-
enliale anylling, including sall and cemenl. Bul
lle prollem is lwolold. Many dillerenlialions donl
maller lo cuslomers . . . lley are spurious or nol
compelling. Worse, compelilors are quick lo copy
any elleclive dillerenlialion, leading innovalors lo
en[oy even slorler lile cycles, larely recovering
lleir inveslmenls.
8
- Consumers are more inlormed and soplislicaled in
lleir luying lalils. Mr. Jones, wlo wanls lo luy a
Nikon Coolpix 1OO digilal camera, goes on
www.mysimon.com and nds over 2 online mer-
clanls slaling lleir prices lor llis camera. And lle
variance is slocking, prices range lrom $9 lo $119
Ieople are leing lrained inlo price consciousness.
Buying online is all aloul price, nol relialilily or ser-
vice dillerences. Consider lurller llal lodays cus-
lomers walk inlo an aulo dealerslip armed will
inlormalion on exaclly wlal lle car slould cosl
llem. Some even go on Iriceline.com and slale
wlal lley will pay lor sucl-and-sucl-a-car il any
dealer will accepl lleir oller.
- Companies conlinue lo cul lleir markeling expenses
during recessions, lle one prop on wlicl lleir sales
depend. Bul lecause lle company doesnl gel lard
dala on wlal lleir markeling expendilures are doing,
can you llame llem
We can go on lul lle poinl is well made: Markelers
will lace increasing clallenges in lrying lo preserve com-
pany margins and lil company prol largels. 1o make
mallers worse, many companies are inelcienlly orga-
nized lrom a markeling poinl ol view. Adding company
markeling inelciency and inellecliveness lo all llese
clallenges is a recipe lor disasler.
9
I sel oul lo idenlily lle mosl glaring markeling de-
ciencies llal landicap companies lrom succeeding
in lle markelplace. I lound len ol llem llal I call
- . Companies need lo
consider lwo llings: Iirsl, wlal -- would indicale
llal a company is commilling a specic markeling sin
Second, wlal are lle lesl -- lor overcoming
llis prollem
Il I ran a company, I would sil down will my col-
leagues and examine eacl ol lle len sins. We would
delermine wlicl are lle mosl serious. We would llen
delermine lle lesl solulion lo pursue in eacl case. I
would assign a senior execulive lo le responsille lor
improving our perlormance along llose lines. I would
recognize llal some ol llese deciencies will require a
suslained inveslmenl over a long period, lul il il is
prevenling our success in lle markelplace, I would
supporl il.
My lasic leliel is llal markelings work slould nol
le so mucl aloul selling lul aloul crealing producls
llal donl need selling. Markeling people need lle skills
ol idenlilying opporlunilies (i.e., unmel needs or lile-
enlancing solulions), and developing and implemenl-
ing plans llal succeed in lle markelplace. I wanl
markeling lo relrieve ils lrue role, llal ol driving lusi-
ness slralegy.
Iinally, lere are lle 1en Deadly Sins ol Markel-
ing.

1O
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1. The company is not sufciently market focused
and customer driven.
2. The company does not fully understand its tar-
get customers.
3. The company needs to better dene and moni-
tor its competitors.
4. The company has not properly managed its re-
lationships with its stakeholders.
5. The company is not good at nding new
opportunities.
6. The companys marketing plans and planning
process are decient.
7. The companys product and service policies
need tightening.
8. The companys brand-building and communica-
tions skills are weak.
9. The company is not well organized to carry on
effective and efcient marketing.
10. The company has not made maximum use of
technology.
11
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1. Doug Hall, --- (Cincin-
nali, OH: Brain Brew Books, 2OO1), p. .
2. Naomi Klein, (Iondon: Ilamingo, 2OOO).
. 1lere are over 16 looks lisled on Amazon.com
will lle words Deadly Sins. A couple in lle man-
agemenl lileralure include David I. Dollicl and Ie-
ler C. Cairo, - -
, and Jonallan Illis
and Rene 1issen, -
(Iondon: Irole Books, 2OO).
Clapler 1
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Here we single oul lwo sides ol lle mosl landicapping
deciency in mosl companies. We nd eiller llal your
company las nol gained insigll inlo your markel op-
porlunilies, or llal your company is nol well-organized
lo serve and deliver wlal your largel cuslomers wanl
and expecl.

Wlal indicales llal your markelers lave nol sulcienlly
analyzed your markel
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Poor identication of market segments.
Insufcient prioritization of market segments.
No market segment managers.
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We ask llis queslion: Wlo are you lrying lo sell lo
Ilease donl answer Iveryone. Ils nol acceplalle.
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Iorlunalely, mosl companies donl answer Ivery-
one. Bul llis doesnl mean lley are correclly locused. A
womens dress slop migll say: We sell clolling lo
women lelween ages 2O and O. I say, llals a prelly
large group wlose needs are quile varied. Younger
women are more likely lo dress lor lle social scene wlile
lle + group is prolally more inleresled in ulilily in
clolles lor work and lome.
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Many companies do idenlily dillerenl markel segmenls
and prepare ollerings lor eacl closen segmenl. 1lus an
aluminum manulaclurer may sell aluminum on dillerenl
lerms lo airplane manulaclurers, car manulaclurers, con-
slruclion conlraclors, and kilclen appliance manulaclur-
ers. My queslion is wleller llal company las really
measured lle relalive allracliveness ol eacl segmenl.
Olviously lle aluminum company is invesling resources
lo serve eacl segmenl, lul las il eslimaled lle likely rales
ol relurn on ils inveslmenl (ROI) in lle dillerenl seg-
menls Has il priorilized lle segmenls and reallocaled ils
resources lo lle more prolalle segmenls
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1le more imporlanl segmenls slould lave managers
wlo are empowered lo ask lor ludgels llal lley lelieve
18 -
will produce lle companys largel rale ol relurn. And
lley slould le rewarded accordingly. Bul nol llal many
companies lave appoinled clear leaders lo manage lle
more imporlanl segmenls.
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Adopt more advanced techniques in segmenta-
tion, such as benet segmentation, value seg-
mentation, and loyalty segmentation.
Prioritize the most important segments.
Specialize the sales force.

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Mosl companies can do a leller [ol ol segmenling lleir
markel llan lley are currenlly doing. 1oo many are slop-
ping lleir segmenlalion al lle demograplic or descrip-
live level. A given demograplic group, (say) O- lo
O-year-old men, usually conlains quile dillerenl individ-
uals will varying needs, prelerences, and values. Iord
lound llis oul wlen il launcled ils new Muslang aulo-
molile lo appeal lo young sporls-minded drivers, only lo
nd llal many young people were nol so inleresled and
many older people rusled lo luy lle car.
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In lusiness-lo-lusiness markeling, companies lend
lo segmenl luyers inlo large cuslomers, medium-size
cuslomers, and small cuslomers. Bul il I wanl lo sell
lusiness sollware lo small companies, I lad leller slarl
dislinguisling lelween lle needs ol small law rms,
accounling rms, and medical rms, and prolally
locus on only one ol llese and lecome lle supplier
ol cloice.
In general, rsl lry lo segmenl lle memlers ol a mar-
kel ly dillerenl needs or sougll lenels. 1len lry lo nd
demograplic descriplors llal migll correlale will llese
needs and lenels lo make lle searcl lor llese
prospecls easier.
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Suppose your company las idenlied more llan one
segmenl. Ior example, IBM sells mainlrame compul-
ers lo companies in numerous induslries. 1lal didnl
slop IBM lrom recognizing llal cerlain segmenls were
mucl more imporlanl llan ollers. IBM lisled 12 in-
duslries in parlicular wlere lley would locus lleir el-
lorl, induslries sucl as lanking, insurance, lolels,
lelecommunicalions, and lransporlalion. By locusing
lleir researcl on llese induslries lley were alle lo de-
sign more compelling ollerings llan unlocused com-
pelilors could presenl.
2O -
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Il lle cuslomer segmenls are quile dillerenl, llen you
slould develop specialized sales lorces. IBM learned
long ago llal sending an IBM salesperson in lle morn-
ing lo sell a compuler syslem lo a lank and in lle aller-
noon lo sell a compuler syslem lo a lolel clain didnl
resull in mucl lusiness. 1le salesperson knew loo lillle
aloul lle needs ol lanks or lolels. IBM lound oul llal
il is leller lo lire ex-lankers lo sell lo lanks and ex-
loleliers lo sell lo lolels. 1ley lave deep experience
in llese respeclive induslries, and prolally a nelwork
ol relalionslips, all ol wlicl puls llem in a mucl lel-
ler posilion lo sell elleclively.
DuIonl also learned low imporlanl il is lo orga-
nize ly cuslomer segmenls. In lleir ler division, lley
used lo lave salespersons specialized ly nylon, orlon,
and dacron. A nylon salesperson was expecled lo know
all lle dillerenl induslries llal luy nylon, sucl as
womens clolling manulaclurers, lurnilure manulac-
lurers, loal sales manulaclurers, aulo lire manulaclur-
ers, and so on. Iinally DuIonl reorganized and
assigned salespeople lo cover a parlicular cuslomer
markel sucl as womens clolling, lurnilure, oor cov-
ering, loaling, and so on. And lley were lo represenl
all lle lers, nol [usl one, giving lle cuslomers wlal
lley wanl.
1le message: Dene your segmenls carelully, priori-
- - 21
lize llem, and assign cuslomer segmenl managers lo lle
mosl imporlanl segmenls.

Wlal indicales llal your company is nol sulcienlly or-
ganized lo do an especially good [ol ol serving and salis-
lying your cuslomers Here are lle signs:
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Most employees think that it is the job of market-
ing and sales to serve the customers.
There is no training program to create a cus-
tomer culture.
There are no incentives to treat the customer es-
pecially well.
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Companies lave lound il convenienl lo organize lleir
employees inlo deparlmenls designed lo carry oul
specic responsilililies. A scienlisl will spend ler lime
in lle laloralory, nol will cuslomers, a produclion
22 -
engineer will spend lis lime in lle laclory, nol will
cuslomers, a purclasing person will spend ler lime
will salespeople, nol will cuslomers, and accounlanls
and nance people will spend lleir lime en[oying
numlers, nol cuslomers.
1le resull is llal people working in llese deparl-
menls nalurally assume llal anoller deparlmenlsales
and markelingwill landle cuslomers. Yel we know
llal every deparlmenl can damage cuslomer relalions.
Cuslomers gel angry wlen lle producl is poorly made,
wlen il is delivered lale, and wlen lle invoice is wrong,
and lle company loses ils cuslomers llrougl no laull ol
markeling.
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1raining people in oller deparlmenls lo llink cus-
lomers is expensive. Courses lave lo le designed,
leaclers lired, and people lave lo lake lime away
lrom lleir oller, more pressing aclivilies lo lear aloul
cuslomers.
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Ieople know low lley are measured ly lleir deparl-
menls and llals wlal counls. 1ley will lelave accord-
ingly. In lle alsence ol clear measures ol lle impacl ol
- - 2
lleir aclions on cuslomers, lley will nol pay mucl allen-
lion lo cuslomers on a day-lo-day lasis.
-
Develop a clear hierarchy of company values
with customers at the top.
Engage in activities that will produce more cus-
tomer consciousness in employees and the
companys agents.
Make it easy for customers to reach the company
by phone, fax, or e-mail with inquiries, sugges-
tions, and complaints and respond quickly.
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Ask senior managemenl lle lollowing queslion: Wlal is
lle main group llal you are working so lard lo salisly
Many senior managers will quickly answer: 1le slock-
lolders. 1ley own lle company. 1ley [udge our perlor-
mance. 1ley allecl our cosl ol capilal. 1ley lake lle
risk. 1leir opinion ol us slows up daily in lle move-
menl ol our slock price. Our rsl olligalion is lo lle
slocklolders and llals wly we look al everylling in
lerms ol slarelolder value.
21 -
I would clallenge llis on lle grounds llal making
lle slocklolders paramounl is lle leasl lelplul way lo
serve llem. I would raller endorse Jolnson o Jolnsons
ordering ol groups: JoJ declares llal Cuslomers come
rsl, employees come second, and llis will give lle in-
veslors lle lesl resulls.
1le Marrioll Holel clain puls lle ordering sligllly
dillerenlly. We rsl lire and lrain lle lesl employees. Il
lle employees are lappy, lley will serve lle cuslomers
enllusiaslically and compelenlly. 1len lle cuslomers
will come lack lo our lolels. 1lis will produce lle mosl
prols lor lle inveslors. Nol surprisingly, Hal Rosen-
llull, wlo leads one ol lle largesl lravel agencies, picks
up lle same lleme in lis look learing lle provocalive
1
lille, - - .
1le main poinl is clear: Companies musl olsess
aloul lleir cuslomers and lleir employees lecause il
lley are nol salised, lle rm migll as well close down.
-
- ----
Slilling a company lrom one orienlalion lo anoller is a
lormidalle lask. Companies develop deep cullures in-
volving valuing cerlain llings and nol ollers. 1lus an
engineering-orienled company will locus on designing
slale-ol-lle-arl producls and on designing lle lesl pro-
duclion syslems as lle key lo winning lle compelilive
- - 2
lallle. Ingineers assume llal mosl cuslomers will le
drawn lo lle lesl producls and lowesl cosls. Bul llis is a
nave view ol cuslomers, lecause cuslomers will vary
greally in wlal lley inlerprel as lesl producls and appro-
priale prices and cosls.
1o clange an ingrained cullure lo pul cuslomers al
lle cenler ol lle company universe would lake slrong
and delermined new leaderslip. Here we can only sug-
gesl some key sleps lo lake:
- - -. We
lave already slressed lle imporlance ol eslallisling
and disseminaling a clear lierarcly ol cuslomer
groups and values lo company personnel.
- - -
-. Slow lle employees in eacl deparlmenl
low lleir specic aclions can posilively or nega-
lively allecl lle allraclion or relenlion ol cuslomers.
Spolligll specic cases ol low cuslomers lave leen
eiller won or losl ly deparlmenlal lelavior. Slow
low eacl employee needs lo le serving cuslomers
or serving someone in lle company wlo is serving
lle cuslomers.
- - - --.
Measure cuslomer salislaclion overall, and ly cus-
lomer groups and ly specic ilems (producl, ser-
vice, price, elc.). Reporl lle scores lo lle various
26 -
deparlmenls, will a view lo inspiring everyone lo
seek lo improve cuslomer salislaclion eacl period.
One aclion is lo include a lonus il cuslomer salis-
laclion rises or reacles a cerlain poinl. Include in
every employees paycleck envelope lle slalemenl
llal lleir cleck is leing paid ly lle cuslomers.
- - -
- --. 1le company can sponsor
slorl classes designed lor dillerenl deparlmenls lo
lrain lle deparlmenls personnel in leller cuslomer
service. 1le aim is lo dene lle companys lrand
and values and lo gel lle employees lo live lle
lrand. 1lus Wal-Marls people are delermined lo
provide goods al lle lowesl possille cosl. Rilz-Carllon
employees are delermined lo provide lle lesl lospi-
lalily service. Volvos people are delermined lo design
lle salesl aulomoliles. In lacl, Volvo resisled adding a
glolal posilioning syslem (CIS) in ils new models
lecause lle screen poses a danger wlen lle driver
lakes lis eyes oll lle road. 1o live lle lrand, Volvo
engineers resisled adding CIS, lul nally designed a
screen llal was lle easiesl and salesl lo use.
- - -- - -
- ---. Il doesnl lelp a company il ils
people are cuslomer-olsessed lul ils agenls are nol.
1le company musl move ils parlners inlo lle same
mindsel il a cuslomer orienlalion is lo lear lruil.
- - 2
- --

I am conlinually lruslraled wlen ploning a leading elec-
lronics relailer and lislening lo a lwo-minule message
and nding il nexl lo impossille lo reacl a live person.
And wlen I reacl a live person and ask il lle slore is car-
rying a cerlain producl, sle says llal sle will cleck and
llen I lold lle plone lor anoller llree minules, only lo
learn llal lley are oul ol slock. And llis slore runs ads
on low lriendly lley are
Your company needs lo make il super-easy lor cus-
lomers lo reacl you ly plone, lax, mail, or e-mail. Iur-
llermore, you slould sel a ligl slandard lor answering
quickly. Amazon says llal mail and e-mail musl le an-
swered willin lwo days and leleplone calls willin lour
rings. 1le cosl ol llis level ol service is small in compar-
ison will lle cosl ol losing cuslomers.

1. Hal Rosenllull and Diane McIerrin Ielers,
- - -
(New York: HarperBusiness,
2OO2).
Clapler 2
-
-
- --
-
Your last study of customers was done three
years ago.
Customers are not buying your product at the ex-
pected rate; competitors products are selling
better.
There is a high level of customer returns and
complaints.


1le rsl queslion I ask is Wlo is your largel cuslomer
Il lle answer is nol clear, llen lle rsl lask is lo dialog
on llis queslion.
Il lle answer is clear, I ask lor a copy ol lle lalesl mar-
kel researcl sludy descriling low lle companys largel
cuslomers llink, acl, and leel. 1le worsl response is, We
donl lave sucl a sludy. 1le nexl-worsl response is:
Here il is, and you are landed a llree-year-old
lardcover-lound sludy. Wlals worse, il las never leen
opened or used. 1odays cuslomers cannol possilly llink,
acl, and leel as lley did llree years ago. Il was prosperily
1
2 -
llen, loday il migll le recession. We can even raise ques-
lions aloul wleller lle sludy mellodology was lle lesl
way lo aclieve insigll inlo lle largel cuslomers.
1le clallenge is even more daunling: How can your
company lislen conlinuously lo lle voice ol lle cus-
lomer 1le lesl answer is lo engage in conlinuous dia-
logue will cuslomers in lleir olces, in lle slores, over
lle plone, and llrougl e-mail. In llis way lle company
learns and can cuslomize appropriale ollerings, services,
and messages lor dillerenl cuslomers.
1

A companys markeling plan sels sales, cosl, and prol
goals lor lle year, lroken inlo quarlerly or monllly ex-
peclalions. Wlen perlormance is disappoinling, causes
musl le assigned. Is lle laull poor economic condilions,
an unlavoralle slill in cuslomer prelerences, a superior
compelilive ollering, or lle wrong pricing How slould
lle company revise ils slralegy and ollerings


A clear sign ol a company nol underslanding ils
cuslomers is wlen il receives a lol ol relurned mer-
- - --
clandise and complainls. Iroducl relurns resull lrom
a company misrepresenling or poorly communical-
ing ils ollerings. Calalog markelers suller wlen lley
donl clearly dene lle lealures ol a producl and il is
relurned.
Cuslomer complainls can arise lrom a wide range ol
irrilalions. 1le cuslomer nds il lard lo gel inlorma-
lion, lle invoice is inaccurale, lle employee is rude or
incompelenl. Complainls donl risk losing one cus-
lomer, every complainer migll lell len acquainlances
wlo in lurn lurller spread negalive news aloul lle com-
pany. Clearly a company musl respond quickly and ap-
proprialely lo complaining cuslomers. Some sludies
documenl lle surprising resull llal cuslomers wlo lave
complained and wlo lave received a quick resolulion
ollen end up leing more loyal lo lle company llan cus-
lomers wlo never complained
2
-
Do more sophisticated consumer research.
Use more analytical techniques.
Establish customer and dealer panels.
Install customer relationship marketing software
and do data mining.
1 -


1le currenl luzzword is - -. 1le company
llal gains deeper insigll inlo cuslomers needs, percep-
lions, prelerences, and lelavior will gain lle compeli-
live edge. Wlal researcl does your company underlake
lo gain cuslomer insigll Somelimes lle lesl researcl
consisls ol conlinuously dialoging will your largel con-
sumers, singly and in groups. One can pick up many
ideas and insiglls in llis way. However, slreel lalk, wlile
valualle, is nol sulcienl. More lormal approacles are
needed llal would include:
- Iocus groups.
- Surveys.
- Depll inlerviewing.
- In-lome researcl.
- In-slore researcl.
- Myslery slopping.
- -
One can learn a greal deal ly inviling 8 lo 12 individuals
lo parlicipale in a discussion led ly a skilled moderalor
on a locused lopic, sucl as a new producl idea, an exisl-
ing producl, a new communicalion approacl, or some
- - --
oller markeling issue. 1le moderalors lask is lo ask
queslions, solicil commenls, and manage lle discussion
in a way llal mainlains inleresl, moves il lorward, and
lrings oul everyones views.
I olserved a locus group sponsored ly Mercedes lo
lesl U.S. consumers inleresl in Mercedes new Smarl
Car, a diminulive lul slylisl car llal is a lil in Iurope.
Bul lle parlicipanls were largely skeplical, saying llal
lle car looked unsale, was loo expensive, and perlaps
migll le considered only il lley needed a llird car lor
slorl slopping lrips. Aller learing llis lrom several locus
groups, Mercedes decided nol lo inlroduce lle car in
lle Uniled Slales.
1le use ol one or more locus groups will mosl likely
yield some insiglls inlo consumer needs, views, alli-
ludes, and likely lelavior. 1le researcl is exploralory in
llal willoul a lollow-up slalislical survey, llere is no way
lo lell low represenlalive lle ndings are.
-
Designing a survey is lle answer lo llis prollem. 1le re-
searcler draws up a carelul queslionnaire llal is senl lo
and answered ly a represenlalive sample ol lle largel
populalion. 1lis will give a relialle piclure ol lle alli-
ludes ol lle populalion lrom wlicl lle sample is drawn,
providing llal all lle inlerviewees answer lle queslions.
Wlen llere are a lol ol noncooperaling respondenls, lle
6 -
lope is llal lle noncooperalors do nol diller signi-
canlly lrom lle cooperalors.

Iven il every respondenl lailllully answers lle ques-
lionnaire, llis is nol likely lo provide a deep insigll inlo
consumer molivalions. Ieople may willlold, ralional-
ize, or nol le in loucl will lleir lrue leelings. 1lis las
given rise lo one-lo-one in-depll inlerviews lased on
Ireudian, Jungian, or oller psyclological approacles
llal may include pro[eclive leclniques llal lypass lleir
ralional lacullies. Bul like locus groups, il is dilcull lo
know low represenlalive lle ndings are relalive lo lle
general populalion.
-
More lelavior-orienled researclers preler lo olserve
peoples lelavior in real silualions llan lo ask llem
queslions. 1lis las given rise lo increased in-lome re-
searcl wlere lamilies agree lo carry on lleir normal
aclivilies (cooking, ealing, and so on) wlile re-
searclers armed will a video camera record lleir in-
leraclions and lalk. Researclers lope lo gain insiglls
inlo low people landle cooking or ealing silualions or
make clolling cloices, lor example.
- - --
-
Besides olserving lelavior in lle lome, some re-
searclers are now aclively sludying lle lelavior ol slop-
pers in slores. Iaco Underlill wrole up lis ndings in
lis look, .

1le
look ollers lle lollowing advice lor designing lle relail
space in order lo keep sloppers spending:
- - Upon enlering a slore,
sloppers will likely le moving loo lasl lo respond
posilively lo signs, merclandise, or sales clerks. 1ley
will slarl slowing down in lle lransilion zone and le-
gin nolicing llings.
- - A slore can
oller lle nesl, cleapesl, sexiesl goods, lul il lle
slopper canl landle or lry llem, mucl ol lleir ap-
peal can le losl.
- - -- Men usually move lasler llan
women llrougl lle slores aisles. Ils lard lo gel llem
lo look al anylling lley ladnl inlended lo luy.
Alsomen generally donl like asking wlere llings
are. 1ley would raller leave lle slore llan ask a clerk.
-
A llird lelavior-orienled researcl approacl is lo lire
people lo acl as sloppers and reporl on lle lelavior ol
8 -
clerks in company and compelilor localions. 1lus a
lank could lire myslery sloppers lo open accounls and
reporl lack on lleir experience. Companies will ollen
le surprised al lle lailure ol lleir own employees lo lreal
cuslomers in lle rigll way.
I rememler acling as a cuslomer in a Iizza Inn prior
lo giving a lalk lo lleir managemenl. I was appalled ly
low long il look lor lle slall lo lake my order, low slow
lle slall was in lringing il lo lle lalle, and low lad lle
pizza lasled. I reporled llis lo senior managemenl and
lley look immediale sleps lo correcl lle silualion.

Beyond collecling raw dala, companies need lo employ
more soplislicaled lools lor assessing consumer lelav-
ior. Here are some examples.
- -
Consumer needs could le proled more deeply ly psy-
clological in-depll inlerviewing consisling ol pro[eclive
leclniques sucl as word associalions, senlence comple-
lions, and llemalic apperceplion lesls (1A1s). Beyond
llis, some researclers use a laddering leclnique in
wlicl lley lollow lle consumers explanalion will an-
oller proling queslion. Ior example, lle consumer may
9 - - --
say llal sle lougll a Mercedes lecause il is leller engi-
neered. Wly is llis imporlanl lo you Because lle car
will ride more smoollly. Wly is llis imporlanl lo you
Because I like lo le comlorlalle. Wly is llis impor-
lanl lo you Because I leel imporlanl and deserve lle
lesl. 1lus we move lrom a simple explanalion lo a
mucl deeper sel ol meanings molivaling lle cuslomer.
- -
Using a leclnique called , lle re-
searcler can slow low consumers perceive dillerenl
lrands in relalion lo a sel ol allrilules. Suppose con-
sumers are asked lo rale car lrands on lwo dimensions,
slalus and relialilily. 1le researcl migll slow llal lle
average consumer would posilion Jaguar as ligl in sla-
lus lul medium in relialilily and rale 1oyola as medium
in slalus and ligl in relialilily. By viewing all lle cars in
lle perceplual mapping space, one can conclude wlicl
cars are lle closesl compelilors lo any parlicular lrand.
- -
Companies can use a numler ol leclniques lo assess
consumer prelerences. Among lle simpler approacles
are consumer ralings and rankings. A more soplislicaled
approacl is --, wlere consumers rank
lleir cloices among a lypollelical sel ol lully descriled
1O -
concepls. 1leir cloices can le analyzed lo reveal lle
relalive imporlance consumers place on eacl allrilule,
wlicl guides lle company lo know wlicl concepl
would le lle mosl successlul.
Consumer dala also can le analyzed ly regression,
discriminanl, and clusler analysis mellods lo lead lo pre-
diclions ol low likely consumers are lo respond lo diller-
enl slimuli (price, lealures, appeals, and so on).
- are used ly direcl mailers lo selecl
lle prospecls wlo lave lle liglesl prolalilily ol re-
sponding posilively lo an oller.
-
Mucl consumer lelavior is condilioned ly lle leliels,
norms, and values leld ly a specic social group,
wleller lley are upper-class leenagers, Iolisl-American
seniors, or Mormon lelievers in Ulal. 1le lools ol so-
cial anllropology promise lo sled ligll on many aspecls
ol lelavior llal are nol as readily visille llrougl ordi-
nary survey researcl.


Your company can lenel ly recruiling a sel ol your
cuslomers wlo agree lo le periodically inlerviewed
11 - - --
aloul new ideas, producls, and communicalions. 1le
panel memlers can le reacled ly mail, lax, e-mail, or
plone. You can reward lle panel memlers will money
or goods. 1le panel represenls a luill-in locus group
llal is closen lo represenl lle largel populalion. You
slould also run dealer and supplier panels lo slay in
loucl will lleir views.
Your company could go lurller and sel up an online
clal room wlere your cuslomers and prospecls can ex-
clange views. 1lis would lave lle mosl value will
companies wlose cuslomers are greal lanscompanies
sucl as Harley Davidson or Apple Compuler. 1lese
lans will exclange inlormalion, arrange meelings, and
lurller luild a slrong communily. Your company will
galler insigll ly moniloring lle conversalions. Bul lle
company wlose cuslomers are less sanguine slould nol
sponsor a clal room. Bad opinions ol lle company
would spread lasler. Al lesl, sucl a company slould au-
dil conversalions in regular clal rooms lo calcl any neg-
alive lalk llal calls lor quick remedies.



Companies are increasingly gallering inlormalion
aloul a cuslomers pasl purclases, demograplics, and
12 -
psyclograplics in lle lope ol gaining a ner under-
slanding ol eacl cuslomer. Ol llese slrands ol inlorma-
lion, pasl purclases serve as lle mosl uselul inlormalion,
indicaling lle cuslomers revealed prelerences. 1le pasl
purclases ol one cuslomer may reveal lim lo le an early
luyer ol new eleclronics producls, making lle cuslomer
a good largel lor lle companys nexl new eleclronics
producl. Sucl cuslomer dala are slored in a
-. A sample ol llese dala is pul inlo a and
analyzed ly skilled -. 1le dala miners are ol-
len alle lo spol new -- llal can represenl a new
opporlunily lor lle company. Or lley can spol - in
producls, lealures, or services llal migll alerl llem lo
new ollerings. 1ley can also lesl lle ellecliveness ol pre-
diclive analylics in reacling lle lesl prospecls.
-
1. _uole Don Ieppers and Marlla Rogers,
(New York: Doulleday/Currency, 199).
2. 1AIC sludies.
. Iaco Underlill,
(New York: Simon o Sclusler, 1999).
Clapler
-

- -
-
Your company overfocuses on its near competi-
tors and misses distant competitors and disrup-
tive technologies.
Your company lacks a system for gathering and
distributing competitive intelligence.


Companies normally nd il easy lo name lleir
compelilors.
- McDonalds would name Burger King and Wendys.
Il lley llougll more lroadly, lley would include
1aco Bell, Iizza Hul, and Sulway. And lo lroaden il
lurller, lley slould include supermarkels llal lave
added prepared loods.
- U.S. Sleel would name Belllelem Sleel and oller in-
legraled sleel companies, and mayle even companies
like Nucor (noninlegraled sleel manulaclurer). Bul lle
real queslion is wleller U.S. Sleel is paying enougl al-
lenlion lo lle inroads leing made ly lle aluminum
and plaslic induslries. Ior example, aulo makers are
1
16 -
cloosing lo replace a lol ol sleel in lleir cars will plas-
lic malerials. Wlo would ever llink llal Ceneral Ilec-
lrics Ilaslics Division compeled will U.S. Sleel


How mucl inlormalion does a lypical company lave
aloul ils compelilors Il Xerox is lidding againsl Slarp lor
a large conlracl involving 1,OOO copiers, low mucl does
Xerox know aloul lle lidding praclices ol Slarp Wlo in
Xerox keeps inlormalion on eacl compelilors ol[eclives,
resources, slralegies, and praclices Is llis in lle lands ol
a olce, or does lle Xerox sales-
person lave lo lunl lor some oller colleagues wlo lave
lad previous experience compeling againsl Slarp
-
Establish a person or ofce for competitive in-
telligence.
Hire away people from competitors.
Watch every new technology that might hurt the
company.
Prepare offerings similar to your competitors.
- - 1


A company would le wise lo eslallisl a person or olce
responsille lor and -- compelilive
inlelligence. 1link ol llis as selling up a lilrarian wlo is
gilled al lracking news aloul compelilors on lle Inlernel
and developing compelilor proles. Any company em-
ployee lacing a compelilor could conlacl llis person and
le lrieled on low lle compelilor llinks and reacls.

Your company slould consider liring people away lrom
your ma[or compelilors. 1lis slould nol le done lo sleal
secrels llal lelong lo lle oller companies (llis is unlaw-
lul and you will le sued) lul lo gel lo know low lle
compelilor llinks and acls.
I rememler wlen IBM lired away a young manager
lrom Sun Microsyslems and aller a lew years asked lim
lo appear lelore lle IBM Board ol Direclors and pre-
lend lo le Scoll McNealy, CIO ol Sun, and lell wlal le
is planning lo do lo IBM. 1le young lormer Sun em-
ployee looked direclly al lle 1 memlers ol lle IBM
Board and avowed:
---
- -
18 -
- - -
- - - -
- -
- - -
-
IBMs Board was slarlled ly lis direclness lul dis-
missed lis message. Slorlly llerealler IBM enlered a
long period ol decline and il wasnl unlil some years
laler wlen lleir new presidenl, Iou Cerslner, acclaimed
IBM lo le a nelwork-cenlric company. Had IBM
leeded lle young mans message earlier, ils lorlunes
would nol lave dimmed llal mucl.

A grealer llreal lo many companies is nol an exisling
compelilor so mucl as a new and leller leclnology. Iro-
lessor Claylon Clrislensen ol Harvard calls llis a disrup-
live leclnology.
1
Many examples can le ciled. 1le
meclanical adding macline made lle alacus olsolele
and lle eleclronic calculalor made lle slide rule olso-
lele. 1le aulomolile replaced lle lorse-and-luggy car-
riage. Some lypes ol surgeries were made olsolele ly lle
invenlion ol a pill.
Your company musl monilor every leclnology llal
may llrealen lo displace ils lasic ollering or produclion
- - 19
process. Iven leller, you slould view llese llrealening
leclnologies as inveslmenl oplions. By lelling some
money on llese new leclnologies, lle company may
prolecl ils lulure. Our maxim: Ivery company slould
cannilalize ilsell lelore someone else does.
1le slory is lold aloul lle Ceneral Ileclric manager
ol lle vacuum lule division wlo came inlo lis losss ol-
ce loasling ol laving increased lle vacuum lule lusi-
ness ly 2O percenl. His loss red lim. You increased
lle vacuum lusiness lecause our compelilors wenl oul
ol lusiness. 1lal was easy. Wlal you slould lave done
is gol us inlo lle lransislor lusiness. You kepl us in lle
pasl wlen you slould lave prepared us lor lle lulure


Your company may en[oy a well-recognized price-poinl
posilion in lle markel. 1lus Marrioll originally posi-
lioned ilsell as an upper mid-level lolel clain. Bul wlal
would lappen il a growing numler ol lusinesspeople
seek less expensive accommodalions 1lis possililily
led Marrioll lo design a molel syslem called Courlyard
lor lusiness lravelers wlo didnl wanl an expensive lolel
will a lancy reslauranl and large convenlion lacililies.
And Courlyard was a runaway success. 1len Marrioll
recognized lle need lor a slill less expensive molel sys-
O -
lem lor lraveling lamilies and luill Iaireld Inn, anoller
successlul molel syslem. Sulsequenlly Marrioll inlro-
duced oller lolel concepls, sucl as Residence Inns,
Marrioll Suiles, Marrioll Resorls, and ollers. 1lis
meanl llal Marrioll would nol le vulneralle lo a single
posilioning concepl lul would le sale will properlies
posilioned in several lospilalily classes.
A similar slory can le lold aloul lle Auslrian rm
Swarovski, maker ol ne cryslals. One ol ils divisions
makes ne lead cryslals lor mounlings on clandelier
lrames. 1leir cryslals are lle nesl and cosl lle mosl.
Sulsequenlly a Iuropean compelilor emerged wlo
clarged 2O percenl less llan Swarovski, and llen an
Igyplian compelilor emerged wlo clarged O percenl
less Wlal slould Swarovski do 1le easy way oul is llal
Swarovski slould lower ils price, lul llis would cul inlo
ils prols greally. A leller answer is lo use slrong pull
lranding lo gel lolels and lomes llal luy clandeliers lo
insisl on Swarovski cryslal. A slill leller answer is lo slow
clandelier makers or lolels low lley can save money or
lime using Swarovski cryslal lecause lley donl lave lo le
cleaned as ollen or lley can le mounled quickly will a
special Swarovski palenled process. Mayle lle lesl an-
swer is lor Swarovski lo luy lle Iuropean compelilor and
lle Igyplian compelilor or lo slarl lower-end lusinesses
so llal lle cryslal luyer can luy good, leller, or lesl
cryslal depending on ler ludgel. Again, Il you are going
lo le cannilalized, le lle rsl lo cannilalize yoursell.
- - 1
A company slould recognize llal llere are several
value/price posilionings availalle in any markel. 1ley are:
- Iess lor mucl less (Soullwesl Airlines).
- 1le same lor less (Wal-Marl).
- 1le same lor lle same (1ide).
- 1le same lor more money (nol recommended).
- More lor lle same (Iexus).
- More lor more (Mercedes, Haagen-Dazs).
I am nol recommending llal a company make an ol-
lering al all six levels. Sears lad il rigll wlen lley ol-
lered radios al llree levels: good, leller, and lesl.

1. Claylon M. Clrislensen, -
- - -
(Boslon: Harvard Business Sclool Iress, 199).
Clapler 1
-

- --
- -
-
Your employees are not happy.
You have not attracted the best suppliers.
You dont have the best distributors and your
dealers are unhappy.
Your investors are not happy.

1om Ielers, managemenl guru and co-aullor ol
, would claim llal le could enler a
company and lell willin 1 minules wleller lle em-
ployees were lappy or disgrunlled. A disgrunlled em-
ployee can salolage a company. Signs ol unlappy
employees would include ligl employee lurnover, lre-
quenl lailure lo carry oul policies, slrong laclionalism,
and negalive views ol oller company deparlmenls.

Suppliers diller greally in lleir capacilies lo deliver qualily
producls and services. Companies claiming ligl-qualily
goods need ligl-qualily suppliers. Bul ligl-qualily sup-

6 -
pliers may already le producing al capacily and nol le
alle lo lake on anoller cuslomer. Or lley may le limiled
lo serving only one compelilor in eacl induslry. Your com-
pany would lave lo lire lle second-lesl supplier and llis
may landicap ils claim lo lave lle liglesl qualily.
Your company may cloose lo work will second-rale
suppliers lo lring down purclase cosls. Bul you will
prolally incur oller and ligler cosls in dealing will a
second-rale supplier.


Your company lires dislrilulors and dealers lecause
lley can reacl your largel cuslomers leller llan you can
do on your own. You expecl llem lo give priorily allen-
lion lo your producls even wlen lley carry compelilors
producls. Bul you musl make your lerms rewarding lo
your dislrilulors. 1ley musl leel llal lley gain as mucl
or more selling your companys producls as selling lle
oller producls lley carry.

Inveslor salislaclion is quickly revealed ly low long in-
veslors keep lleir lunds invesled in your companys
--
slock. A lad sign is a lalling slare price or ligler loan
inleresl rales. 1lis raises your cosl ol capilal and llere-
lore your cosl ol lusiness, all poinling lo lower prols in
lle lulure.
-
Move from zero-sum thinking to positive-sum
thinking.
Manage employees better.
Manage supplier relations better.
Manage distributors and dealers better.
Manage investors better.

In earlier limes, a lusinessperson llougll llal lle size ol
lle pie was xed. His conclusion: He could gain lle
mosl ly paying lis parlnersemployees, suppliers, dis-
lrilulorslle leasl. 1lis is zero-sum llinking. 1oday,
llere is growing evidence llal your economic resulls
will vary will lle manner in wlicl you lreal your parl-
ners. Ired Reiclleld, in lis -, descriles
many successlul companies llal reward lleir employees,
suppliers, and dislrilulors generously, and llis creales a
8 -
larger pie, including lle slare llal goes lo your com-
pany.
1
Your company will allracl leller and more moli-
valed employees, suppliers, and dislrilulors, and lley
will manage as a leam lo oulperlorm lle compelilors.

Imployees work lesl wlen lley are well closen, well
lrained, well molivaled, and well respecled. 1lis doesnl
lappen in a rm llal [usl lires loads ol people, gives
llem lillle or no lraining, gives llem lillle lalilude in de-
cision making, and lrequenlly crilicizes lleir work. Sucl
workers can easily lecome in-company saloleurs.
Imployees slould nol le lired unlil senior manage-
menl las clearly dened lle companys values, vision,
mission, posilioning, and largel cuslomers. 1len lle
company can searcl lor lle rigll people, lrain llem ap-
proprialely, empower llem, and know lley will live lle
companys lrand.
Inligllened companies even clange lle lan-
guagenol - lul --- or -. Al
Soullwesl Airlines, CIO Herl Kelleler renamed lle
Human Resources Deparlmenl lle Ieople Deparlmenl.
Il is a new paradigm lor companies lo see lleir em-
ployees as crealive and responsille, especially wlen lley
are given a measure ol respecl. Smarl companies adopl
an perspeclive in llal lley see lleir
9 --
employees as dillering in lleir needs, and ly knowing
lleir individual needs, lle company can leller serve and
salisly llem. I rememler a lospilal llal lad a ligl rale
ol nurse lurnover, all lecause il insisled on lle same
lours lor all nurses, regardless ol wleller lley were sin-
gle, married, or will clildren. Only wlen a new nurse
adminislralor look over and eslallisled exille working
lours and leller working condilions did lle lospilal
slarl allracling and relaining a compelenl and salised
nursing slall.

Civen llal suppliers vary in qualily and perlormance, a
company slould seek lle lesl suppliers and reward
llem al a level llal will lring lorll lleir lesl ellorls.
Companies are conlinually reducing lle numler ol lleir
suppliers. 1le old gameusing llree suppliers in a cal-
egory, giving 6O percenl lo lle lead supplier, O percenl
lo a second supplier, and 1O percenl lo a llird sup-
plierin order lo keep llem all on edge and compeling
lor lle companys lusinessis giving way lo cloosing
one excellenl supplier in eacl calegory. 1le aulo indus-
lry las moved in llis direclion, conlracling will one
rm lo supply lle sealing, anoller lle lraking syslem,
and anoller lle air condilioning syslem. 1le company
and ils supplier parlners co-invesl in eacl oller and acl
6O -
as a winning leam in designing and making cars. 1lis
level ol parlnerslip can increase lle companys qualily,
produclivily, and innovaliveness wlile reducing cosls.


Your company needs lo idenlily and allracl lle lesl dis-
lrilulors (wlolesalers, dealers, agenls, and relailers).
1leir qualily makes a greal dillerence in your alilily lo
reacl and salisly lle end users. 1le key is lo gel lle dis-
lrilulors lo place a ligl value on lleir relalionslip will
you and lo pul oul special ellorl on your lelall. Mucl
depends on lle lerms ol engagemenl you sel will your
dislrilulors.
Calerpillar, lle worlds leading earllmoving equip-
menl company, las a slellar relalionslip will ils dealers:
- -- -
- - --
-
- - - - -
- ---
--- - - - -
-- -
- -- - -- -
-- - -
61 --
- --- -
- -
- -
--

Calerpillars senior managemenl see lleir dealers as lleir
ma[or compelilive advanlage and would avoid doing any-
lling llal migll damage lle sense ol parlnerslip.
Besides liring lle lesl dislrilulors, a company musl
mainlain a conlinuous learning relalionslip. Compa-
nies slould especially sel up exlranels will lleir dislrilu-
lors llal can serve several purposes, including inlorming
lle dislrilulors ol new ideas and developmenls and lacil-
ilaling lle ordering, delivery, and paymenl cycle.
-
1. Irederick I. Reiclleld, - -
- - -- (Boslon: Har-
vard Business Sclool Iress, 2OO1).
2. Slalemenl aloul Calerpillar.
Clapler
-

-
-
Your company has not identied any exciting
new opportunities in recent years.
The new ideas that your company has launched
have largely failed.


An inleresling queslion lor your company is How many
new producls and services did you launcl in lle lasl ve
years Companies will give dillerenl answers lo llis.
1le M Company would cile many new producls. In
lacl, lle company makes a poinl ol wanling lo derive O
percenl ol ils currenl revenue lrom producls inlroduced
in lle lasl ve years.
On lle oller land, ma[or companies sucl as Coca-
Cola and Irocler o Camlle (IoC) give a less rosy an-
swer. In lle case ol Coca-Cola, lle mosl successlul new
leverageslruil [uices, energy leverages, lollled waler
were inlroduced ly compelilors rsl. Al lesl, Coca-Cola
lollowed llem and in some cases grew ly acquiring llem.
1le greal IoC cannol loasl ol inlroducing many
successlul new producls in lle lasl ve years llrougl
lleir own RoD ellorls. 1o compensale, IoC las gone
6
66 -
on an acquisilion linge, growing ly luying companies
in cosmelics, loilelries, and lood.
1le lack ol company innovalion poinls eiller lo a
company llal lails lo syslemalically nd and researcl
new opporlunilies or lo one llal invesls in many new op-
porlunilies lul will disappoinling resulls.

Cood opporlunilies can le ruined ly poor new producl
managemenl processes. Somelow lle company eiller lels
poor opporlunilies go llrougl or lolcles up good opporlu-
nilies al some slage sucl as concepl developmenl, concepl
lesling, prololype developmenl, prololype lesling, lusiness
and markeling planning, lesl markeling, or producl launcl.
-
Set up a system for stimulating the ow of new
ideas from your partners.
Utilize creativity systems for generating new ideas.


Some companies lelieve llere are no new opporluni-
lies. 1ley say lleir induslry is malure. Or lley say llal
6 -
lley are selling a commodily. Bul llere is no sucl lling
as a malure markel or a commodily. Ils only llal your
leliels are gelling in lle way ol your imaginalion. Slar-
lucks didnl see lle collee markel as malure.
No company las lo go willoul new ideas. Iirsl ol all,
lle companys employees prolally lave many ideas lor
improvemenl. All lley lack is knowing wlere lo send
llese ideas and lle molivalion lo send llem. Second,
lle companys suppliers, dislrilulors, adverlising agency,
and oller parlners prolally could suggesl many new
ideas. 1lird, llere are syslemalic ways lo lelp employ-
ees generale new ideas.
In an excellenl arlicle called Bringing Silicon Val-
ley Inside Your Company, Cary Hamel presenled one
recipe lor generaling successlul new ideas.
1
Silicon Val-
ley, le said, scored ils successes lecause il was lle sile ol
llree markels: an , a , and a
. Many crealive and enlrepreneurial people
poured inlo lle Valley will new ideas, especially lor
slarling dol.coms. Venlure-capilal rms alounded lo
lend money lo people will superior ideas. And lle Val-
ley allracled many lalenled people wlo could wrile soll-
ware and implemenl ideas.
1le implicalion is llal companies need lo duplicale
Silicon Valley inlernally. 1le company slould place a
ligl value on new ideas and lacililale lleir colleclion and
evalualion. 1le leller ideas would draw on an inlernal
pool ol money lo lacililale researcl and developmenl.
68 -
1le lesl ideas would llen le assigned lo lle rigll lalenl
lo develop and launcl llem.
1o manage lle idea ow, lle company slould ap-
poinl a ligl-level execulive lo le lle Idea Caplain. He
or sle slould lave an Idea Commillee will represenla-
lion lrom eacl ma[or deparlmenl. Iveryone in lle com-
pany as well as in lle parlner companies slould know
lle name, address, and e-mail ol llis commillee and
slould le encouraged lo send ideas lo llis commillee.
1le Idea Commillee slould meel every lew weeks lo re-
view and evaluale lle ideas, pulling llem inlo llree
piles, lrom poor, lo good, lo greal-sounding ideas. 1le
greal-sounding ideas are assigned lo dillerenl commillee
memlers lo reporl lack. Il lle reporl is posilive, llen
some money would le granled lor lurller researcl and
developmenl. 1lose ideas llal conlinue lo look slrong
will le pusled llrougl lurller slage gales unlil lley are
eiller dropped or launcled.
Iveryone sulmilling an idea will le lold ol ils lale.
1lis would counler lle leliel llal lle commillee isnl
inleresled in ideas. 1le slrongesl ideas llal are evenlu-
ally implemenled successlully slould carry recognilion
lo lle proposers will eiller money, vacalions, or oller
langille rewards. Kodak, lor example, pays $1O,OOO eacl
year lo ils employees wlo lave conlriluled lop money-
making or money-saving ideas. Anoller company gives
lack 1O percenl ol lle savings or incremenlal prol lo
lle proposing parly or group.
69 -


Many ol lle lesl ideas will come lrom olserving ma[or
slills in lle markel environmenl. 1le markel environ-
menl consisls ol IIS1I elemenlsIolilical, Ico-
nomic, Social, 1eclnological, and Invironmenlal. Here
are ideas llal lave emerged lrom olserving lrends in
eacl componenl:
- A company olserves lle dilcully ol con-
ducling accurale eleclions will paper lallols and in-
venls a loolprool eleclronic voling macline.
- A company noles lle ligl price ol lolel
rooms in 1okyo and invenls a lolel llal renls lerlls,
nol rooms, al a low price.
- A company nolices lle dilcully ol singles
meeling new people and invenls a daling service on
lle Inlernel.
- A company invenls an eleclronic
lallel lor managers lo wrile in long-land inslead ol
using a keyloard, and lleir noles are digilalized.
- A company glls lle ligl cosl ol
energy ly luilding windmills lo generale eleclricily.
Companies can also use group or individual crealiv-
ily leclniques lo slimulale new ideas. Croup leclniques
O -
include lrainslorming, syneclics, and several oller
leclniques.
2
Mosl companies searcl lor new ideas ly slarling
will lleir currenl producl and varying il in some way.
Ior example, a cereal company will llink ol adding
raisins or nuls or more sugar or less sugar, or moving lo
wleal, or oals, or larley, or clanging lle package size or
lle lrand name, and so on. 1lis resulls in line exlen-
sions or lrand exlensions added lo lle cereal aisle in lle
supermarkel. 1leir compelilors do lle same. 1le cereal
aisle gels longer lul nol more prolalle. Iacl producl
varianl draws a smaller numler ol cuslomers wlo delecl
lrom lle larger-selling lrands, will lle resull llal lle
new producls earn lillle and lle old producls earn less.
We call llis and lle leclniques
are numerous:
- Modulalion
- 1le manulaclurer varies lle sugar conlenl,
lruil concenlrale, will or willoul vilamins . . .
- Sizing
- - are ollered in sizes grams, O grams,
grams, 12 grams, 2OO grams, mullipacks . . .
- Iackaging
- -- - come in dillerenl con-
lainers: cleap paper lox lor lle grocery lrade, pre-
mium melal lox lor lle gill lrade . . .
1 -
- Design
- designs cars will dillerenl slyling and
lealures . . .
- Complemenls
- -- will sugar spread on llem, will cinna-
mon, will clocolale, will wlile clocolale, will
dark clocolale, lled liscuils . . .
- Illorls reduclion
- - ollers dillerenl clannels lor lrans-
aclions sucl as relail slores, leleplone, Inlernel . . .
1le main prollem will verlical markeling is llal llis
leads lo a lyperlragmenled markel wlere lew producls
lave lle volume lo earn a lol ol money.
Companies need lo make use ol an allernalive idea-

generaling process llal we call . Ial-

eral markeling is lo llink ol your producl in relalion lo
anoller producl, service, or idea. You are llinking --
producls raller llan producl. Ior exam-
ple, lle cereal company could llink ol cereals + a snack.
Inslead ol pulling loose cereal in a lox, lley use lle ce-
real in lle lorm ol a snack lar llal can le carried and
ealen any lime. 1ley may call llis a lealll lar. Sud-
denly people are alle lo consume cereal any lime ol lle
day in a convenienl lorm.
Here are oller markeling lreakllrougls arising lrom
laleral llinking:
2 -
Cas slalion + lood slore = convenience slore
Cal + compulers = cylercale
Candy + loy = Kinder Surprise
Doll + leenager = Barlie Doll
Audio + porlalilily = Walkman
Donalion + adoplion = Be lle godlaller ol a kid
Ilower + lives lorever = arlicial owers
1le laleral markeling concepl las greal polenlial lo creale
new producl calegories, new markels, or new markeling
mixes. 1lese are ladly needed lecause ol lle limilalions
ol conlinuously varying lle same producl. In lrull, a com-
pany needs lo masler loll processes, verlical and laleral
markeling, il il is lo le successlul al innovaling.
-
1. Cary Hamel, Bringing Slicon Valley Inside Your
Company, --- Seplemler
Ocloler 1999, pp. 181.
2. See, lor example, James M. Higgins,
- (Winler Iark, II: New
Managemenl Iullisling Company, 1991).
. Ililip Koller and Iernando 1rias de Bes,

- (Holoken, NJ: Joln Wiley o Sons, 2OO).
Clapler 6
-

-- -
-
Your marketing plan format does not carry the
right components or logic.
Your plans lack a means for simulating the nan-
cial implications of alternative strategies.
Your plans lack contingency planning.


One las only lo ask a company lor some recenl markel-
ing plans lo learn low weak markeling planning is. Mar-
keling plans lypically lealure many numlers, ludgels,
and ads. Bul one looks in vain lor a clear and compelling
slalemenl ol ol[eclives, slralegy, and laclics. Iven il lle
ol[eclives are clear, llere may le no compelling slral-
egy. 1le laclics may le descriled lul lley may le lo-
lally unrelaled lo lle slralegy.
Ask lle company lor lasl years plan and llis years
plan lor lle same producl. My lel is llal lle slralegy and
lle laclics are lle same in loll cases. Namely, lle lalesl
plan is approximalely lle same as lle previous plan.
1lere is no new llinking. 1le planner las played sale

6 -
ly going will lle older plan. He or sle las ignored lle
new condilions in lle markel and lle lacl llal a new
slralegy is called lor and llal dillerenl markeling inslru-
menls lave clanged in lleir ellecliveness.


1le planning sollware may nol permil simulaling lle
impacl ol allernalive slralegies. Il is nol enougl lo de-
scrile (say) lwo slralegies and eslimale lle sales and
prols resulls lrom eacl. 1le plan needs lo incorporale
sales-response lunclions and cosl lunclions llal esli-
male lle resulls ol any comlinalion ol clanges in prod-
ucl lealures, price, adverlising, sales promolion, and
sales lorce size.


Ivery plan is lased on a sel ol assumplions aloul lle
markel environmenl, compelilive lelavior, and cosls.
Does your plan visualize some allernalive scenarios and
slale wlal your response would le Il lle economy sud-
denly dips inlo a recession, lave you gured oul in ad-
vance wlal clanges you would make in lle plan
--
-
Establish a standard plan format including situa-
tional analysis, SWOT, major issues, objectives,
strategy, tactics, budgets, and controls.
Ask marketers what changes they would make if
they were given 20 percent more budget or 20
percent less budget.
Run an annual marketing awards program with
prizes going to the best plans and performance.


A markeling plan slould slring logeller lle lollowing
componenls: silualional analysis, SWO1 (slrenglls,
weaknesses, opporlunilies, llreals), ma[or issues, ol[ec-
lives, slralegy, laclics, ludgels, and conlrols. Make sure
llal eacl slage lollows lrom lle previous slage. 1le sil-
ualional analysis leads lo sorling oul lle companys ma-
[or slrenglls, weaknesses, opporlunilies, and llreals.
1lis leads lo selling lle rigll ol[eclives. A slralegy is
lormulaled llal promises lo aclieve lle ol[eclives. 1ac-
lics are developed llal esl oul lle slralegy. 1le laclics
lave cosls llal add up lo lle ludgel requesl. Conlrols
8 -
are pul in place lo cleck on wleller lle plan is deliver-
ing lle ol[eclives or wleller clanges are needed in
mid-course.


Senior managemenl normally sel - - lor lle
managers (e.g., Crow your lusiness ly 1O percenl llis
year). Ils nol surprising, llen, llal lle manager asks
lor a 1O percenl increase in ler ludgel. Bul senior man-
agemenl migll say no and direcl lleir managers lo in-
crease lleir sales ly 1O percenl willoul any increase in
lleir ludgels.
A leller syslem would le . Senior
managemenl slould ask lleir managers wlal lley
llink lley can accomplisl will (say) 2O percenl more
money. 1le managers would eacl lave lo descrile
low lley would use lle exlra money and low mucl
lley llink il would increase lleir sales and prols.
Clearly llose managers wlo claim llal lley can pro-
duce more llan a 2O percenl increase in lleir sales and
prols slould receive 2O percenl more ludgel, il lleir
case is credille.
Senior managemenl slould ask lle same managers
lo eslimale wlal would lappen lo lleir sales il lle com-
pany was lorced lo reduce lleir ludgel ly 2O percenl.
9 --
Some managers will cry panic, llal lleir sales will col-
lapse draslically. Ollers would suggesl a modesl decline
in sales.
Now llis inlormalion can le used lo reallocale lle
companys money lo llose wlo llink lley can do lle
mosl will exlra lunding. And lle ludgel slould le
pared down less lor llose managers wlo llink llal lud-
gel culs would lurl lleir sales lle mosl.
1le workalilily ol exille ludgeling depends on lle
credililily ol lle eslimales supplied ly individual man-
agers. Inilially, managers may exaggerale wlal lley
could aclieve will a larger ludgel or lose will a smaller
ludgel. Bul lley will le accounlalle lor lle resulls. Al-
ler repealed use ol llis syslem, il will lecome clear
wlicl managers can compelenlly lorecasl resulls and
wlicl ones are nol lo le lrusled.


Iacl company deparlmenl slould celelrale ils leroes
wlo exemplily lle lesl llinking in lleir area ol
compelence. Iacl year lle markeling deparlmenl
slould celelrale lle groups llal developed lle lesl
markeling plans, [udged ly rsl-rale llinking and
grealesl success in lle markelplace. Companies sucl
8O -
as Beclon-Dickenson, DuIonl, and ollers lonor lleir
winning markeling plan leams eacl year. Nol only do
lle leams leel proud and receive exlra vacalion or
money, lul lle winning plans also are dislriluled lo lle
oller markeling managers lo sel ligler slandards lor
markeling planning and markeling implemenlalion.
Clapler
-
-

-
The company has too many products and many
are losing money.
The company is giving away too many services
free.
The company is poor at cross-selling their prod-
ucts and services.


Iarge companies are discovering llal a small percenlage
ol lleir producls accounl lor a large slare ol lleir prols.
1le prollem slarls lrom lle lacl llal il is relalively easy
lo slarl new lrands or line and lrand exlensions. Com-
panies can launcl producls ly crealing dillerenl pack-
age sizes, ingredienls, or avors, all in lle name ol
gaining more slell space or salislying more varialle
lasles ol consumers. Companies add producls more
readily llan lley remove llem. 1le producl mix grows
lo conlain loo many losers. 1le company nally wakes
up and in desperalion axes a wlole sel ol producls lo
llin ils producl line and increase ils prolalilily. Bul lle
producl prolileralion lorces evenlually resume again.
8
81 -


Companies lave lradilionally llougll less aloul lleir ser-
vices surrounding a producl llan lle producls llemselves.
1o win orders, salespeople will promise a lol ol services:
lree delivery, lree inslallalion, lree lraining. 1lis lappens
even llougl llese services carry a cosl. Services llal are
given away lree creale lwo prollems. Iirsl, cuslomers lend
lo devalue llem even il lley lake llese services. Second,
some services could lave supplied a separale revenue
slream llal is losl wlen lley are given away lree. 1le clal-
lenge is lo decide wlicl services slould le lree and wlicl
ones slould le priced and ly low mucl.

Companies llal sell a range ol producls and services ol-
len do a poor [ol ol selling lle oller ilems leyond lle
one requesled ly lle cuslomer. 1lus a luyer may luy a
car lrom lle dealer and llen go elsewlere lo luy insur-
ance and gel a loan. 1le cuslomer wlo luys a suil may
nol le direcled ly lle salesperson lo slirls, lies, and
sloes llal migll enlance lle suil. 1le cuslomer llal
lakes oul a clecking accounl may nol le lold aloul lle
lanks oller nancial producls, sucl as a savings ac-
counl, or a college or lome loan.
8 -
-
The company needs to establish a system for
tracking weak products and xing or eliminating
them.
The company should offer and price services at
different levels.
The company should improve its processes for
cross-selling and upselling.


Many years ago I proposed a producl lracking and evalu-
alion syslem llal a company could use lo dislinguisl ils
slrong producls lrom ils weaker ones and make appropri-
ale pruning decisions.
1
1odays companies need a syslem
like llis more llan ever, given lle explosion ol producl
varianls and lle lacl llal many ol llem lose money lor
companies.
In 1999, Unilever lound llal O ol ils 1,6OO lrands,
or percenl, accounled lor 6 percenl ol ils revenue.
2
Unilever proceeded lo idenlily 1OO ol ils slrongesl
lrands, calling llem core or power lrands. 1lese were
ils currenl lig money makers llal lad lle polenlial lo
pull in mucl more sales and prols il lley received
86 -
more lunding. 1ley were lrandssucl as Knorr, Dove,
Iiplon, Hellmansllal could supporl more line,
lrand, clannel, and geograplical exlension. 1le oller
1,2OO lrands would le reduced in numler llrougl sale,
liquidalion, or comlinalion. Ullimalely Unilever would
sell lewer lrands lul make more money. 1lis relocusing
on - is also going on in IoC, Nesll, Heinz,
and several oller companies.


Regarding a companys service mix (e.g., inslallalion,
lraining, delivery), lwo silualions musl le avoided. 1le
rsl is wlere lle company gives away lree services llal
cuslomers lake lul donl value or even use. 1lis means
lle company is wasling money on services llal are nol
valued. 1le second is wlere lle company gives away lree
producls llal cuslomers would lave leen willing lo pay
lor. One solulion calls lor lle company lo eslallisl diller-
enl cuslomer segmenls, some ol wlicl will lave lo pay
lor lle service and ollers llal will gel lle service lree.


Some salespeople resisl menlioning oller producls ol lleir
company lor a numler ol reasons. 1ley may le lappy
8 -
will making lle sale ol lleir producl and donl wanl lo ap-
pear pusly. 1ley may nol make mucl or any commission
on lle oller producls. 1ley may nol llink lle oller prod-
ucls are ol sulcienlly ligl qualily lo salisly lle cuslomer.
1le same prollem occurs in lle prolessions. A cerli-
ed pullic accounlanl may nol recommend llal lis
clienl use lle accounling rms managemenl consulling
service lecause lle accounlanl doesnl wanl lo risk lle
clienl receiving lad service lrom llis oller group. Some
lawyers will nol recommend oller law services lrom
lleir own rm il lley donl llink liglly enougl ol lleir
lellow lawyers and donl gel rewarded anyway.
A deparlmenl slore salesperson wlo sells a slirl lo a
cuslomer may nol le molivaled lo suggesl oller ilems il
le is on slraigll salary. 1le cuslomer asked lor a slirl.
Wly exerl yoursell
Clearly a company will a range ol producls needs lo
supply lraining and incenlives lo encourage ils slall lo
promole oller producls llal migll inleresl lle cuslomer.
As lor upselling, il las lwo meanings: One is inducing
a cuslomer lo luy a more expensive version ol a producl
llan lle one sle came lo see. 1le cuslomer came lo luy
a simple digilal camera, sle ends up luying a $999 Sony
Cyler-slol DSCI1. 1le oller meaning is lo approacl
a cuslomer some years aller a purclase and suggesl llal il
is lime lo replace lle old producl will a mucl leller one.
1le seller may even oller a lrade-in allowance. Slalls
need more skills in loll upselling and cross-selling.
88 -
-
1. Ililip Koller, Ilasing Oul Weak Iroducls,
--- (MarclApril 196), pp. 1O118.
2. Markeling Ieaderslip Council,
(Waslinglon, DC: Cor-
porale Ixeculive Board, Decemler 2OO1), p. 19.
Clapler 8
-

-

-
Your target market does not know much about
your company.
Your brand is not seen as distinctive and better
than other brands.
Your company allocates its budget to the same
marketing tools in approximately the same
amounts each year.
You do little evaluation of the ROI impact of your
different promotional programs.


A company can easily assess wleller lleir communica-
lions are paying oll ly surveying largel cuslomers as lo
lleir knowledge ol and alliludes loward lle company. 1le
worsl resull is wlere lle company las spenl a lol ol money
adverlising ils name and ollerings, lul a large numler ol
largel cuslomers eiller never leard ol lle company or
know very lillle leyond ils name and possilly ils producl
area. Iess lad lul slill dislurling is lle case wlere largel
cuslomers know less llan lley need lo know and even
lave picked up wrong ideas aloul lle company.
91
92 -


Iven wlen a company nds llal cuslomers lave a lairly
good idea ol lle companys ollerings, il may learn llal
cuslomers donl see mucl dillerence lelween lle com-
panys ollerings and compelilor ollerings. Ask llis ques-
lion ol cuslomers: Il all compeling lrands were lle
same price, wlicl would you luy Il a cuslomer an-
swers Any ol llem or I donl lave a prelerence, llis
is lad news. Or you migll ask llem, Descrile wlal you
llink is dislinclive aloul eacl lrand, and lley canl
name any dillerences.


Wlen we examine lle allocalion ol promolional money
lo ma[or communicalion calegories sucl as adverlising,
sales promolion, pullic relalions, direcl mail, and e-mail,
we are likely lo nd llal lle proporlions remain lle same
over lle years. One reason is llal lle original allocalions
led lo eslallisling slalls, relalionslips, and expeclalions
llal lend lo persisl. Yel we know llal lle produclivily ol
dillerenl communicalion velicles and clannels clanges
over lime. Il lle company doesnl clange ils allocalions
over lime, ils markeling produclivily will decline.
- 9


Markelers lend lo llink in lerms ol sales oulcomes raller
llan prol oulcomes. Iven venluring a sales eslimale in
conneclion will some markeling expendilure is done
will some lesilalion and usually lle manager slales a
range raller llan a numler. And eslimaling lle prol
impacl involves a more experl underslanding ol nance
lor wlicl markelers are nol well equipped.
One reason is llal markeling lends lo allracl people
wlo like lo deal will lle people world raller llan lle
numler world. Il a person loved numlers, le or sle
would prolally lave gone inlo nance or accounling.
Anoller prollem is llal nancial pro[eclions lor markel-
ing expendilures are more dilcull llan nancial pro[ec-
lions lor capilal equipmenl or oller oullays.
-
Improve your brand-building strategies and your
measurement of results.
Shift money into those marketing instruments
that show increasing effectiveness.
Develop a nancial mindset in the marketers and
require them to estimate the ROI impact in ad-
vance of their spending requests.
91 -



Ivery company wanls lo luild slrong lrands. 1le Inler-
lrand Corporalion uses a valualion mellod ol lrand eq-
uily llal leads llem lo eslimale llal lle Coca-Cola
lrand, aside lrom lle companys plysical assels, was
worll $O lillion in 2OO.
1
1lis is lollowed ly nine
oller glolal leading lrands: Microsoll ($6), IBM ($2),
CI ($12), Inlel ($1), Nokia ($29), Disney ($28), Mc-
Donalds ($2), Marlloro ($22), and Mercedes ($21).
Alllougl Inlerlrand explains ils mellod ol eslimal-
ing lrand equily, Irolessor 1im Amller and ollers lake
issue will valualion mellods ol lrand equily.
2
One can-
nol really nd oul wlal a lrands equily is worll unlil
llere are luyers lidding lo luy lle lrand name. And in-
leresled luyers will diller in low mucl lley would oller
lo luy a lrand. Iven llen, aller lle lrand is purclased,
lle slalemenl migll le made llal lle luyer paid (say)
lour limes look value, as il llis caplures lle value ol lle
lrand ilsell.
Inslead ol placing a valualion on lle lrand, Amller
llinks il is leller lo monilor selecled melrics llal would
move will lrand equily. Il lle lrand commands a larger
premium llan lasl year, llis is a good sign. Il lle lrands
markel slare rises, llis is a good sign. Il largel cuslomers
say lley see rising value in luying and using llis lrand
in relalion lo compelilive lrands, llis is a good sign.
- 9
Iacl company las lo delermine lle markel melrics llal
indicale increases or decreases in lrand equily.
How can companies slrengllen lleir lrand equily
1oo many markelers llink llal lle magic lullel is adverlis-
ing. Aller all, adverlising is designed lo luild more aware-
ness, knowledge, inleresl, and lopelully prelerence. Bul a
lrand is luill ly many communicalion lools, as well as lle
qualily ol lle producl and ils packaging, lle relialilily ol
lle slipping and invoicing, and many oller laclors.
Among lle communicalion lools llal creale lrand impres-
sions, posilive or negalive, are salespeople, lrade slows, so-
cial responsililily inilialives, and especially word-ol-moull
lrom cuslomers, compelilors, and producl reviewers.
In many cases adverlising played a very small role in
lle success ol companies: McDonalds in lle early days
relied more on pullic relalions and Slarlucks and Wal-
Marl grew ly word-ol-moull.
1le lacl is llal a lrand evokes a sel ol cuslomer ex-
peclalions. Brand equily resulls lrom low well cuslomer
expeclalions are lullled. 1le ligler lle salislaclion,
lle ligler lle lrand equily. And lle ligler lle per-
ceived value ol lle ollering, lle ligler lle lrand equily.



Markeling lools clange in lleir cosl ellecliveness over
lime. Wlen 1V adverlising rsl appeared, il was consid-
96 -
erally more elleclive llan radio adverlising lor many
classes ol producls. 1V adverlising was exlremely ellec-
live lrom lle 196Os llrougl lle mid-198Os. Bul a new
look ly Al and Iaura Ries pullisled in 2OO2 carried lle
clallenging lille: - -
.

Il lle Rieses are correcl, lodays markelers slould
slill more ol lleir ludgel lo pullic relalions.
1len we nolice llal lelemarkeling kepl growing in
lle 199Os and early 2OOOs, implying growing elleclive-
ness. Bul in July 2OO, lle U.S. governmenl decided lo
pass a law llal made il easy lor consumers lo delisl llem-
selves lrom receiving lelemarkeling calls will a penally
ol $11,OOO per call per ollender.
Civen llal markeling lools clange in lleir cosl ellec-
liveness over lime, wly do so many companies make lle
same ludgel allocalions over lime Is il laziness, disle-
liel, or incompelence Clearly companies courl markel-
ing wasle wlen lley slick lo old ludgel allocalions.
Iels examine lle clanging elciencies ol some ma-
[or markeling lools.
-
1le old saw ol Joln Wanamaker, wlo said, Hall ol my
adverlising is wasled lul I donl know wlicl lall, slill ap-
plies loday, especially in conneclion will mass adverlis-
ing. Does Coca-Cola need lo pul anoller ad slowing ils
lollle on lle lack cover ol a magazine al a cosl ol $8O,OOO
- 9
wlen mosl people know aloul Coca-Cola and mosl peo-
ple prolally wonl pay allenlion lo lle ad And wlal il
lley did 1le ad doesnl convey any new inlormalion or
lenel. And do women rememler lle O-second 1V
commercial lor a new skin cream wlen lle commercial
was lucked lelween ve oller equally lriel commercials
Mosl companies spend money in llis way lecause
lley lave done llis in lle pasl and leel llal il is loo risky
lo do ollerwise. 1ley see spending money on coslly ads
as a lorm ol insurance llal lle company will le remem-
lered even wlen il las nolling new lo say and no new
way ol saying il. 1le real queslion companies slould ask
is wleller lle same amounl ol money would work lel-
ler il spenl on improving lle producls qualily or cus-
lomer service or on leller logislics. Rememler llal
adverlising is a cosl llal lle cuslomers pay and mayle
many ol llem would preler a lower price. Civen llal lle
average Ceneral Molors car consumes $,OOO in adver-
lising cosl, low many more cars could CM sell il il re-
duced ils price ly $,OOO a car
Some ad campaigns admilledly are elleclive and
loosl lle companys sales. Ieople wouldnl lave leen so
exciled lo pay a ligler price lor Alsolul Vodka llan
Smirnoll Vodka il il wasnl lor Alsoluls lrillianl ad cam-
paign. Bul low many adverlising campaigns are lril-
lianl Mosl are al lesl average In lacl, some ads cannol
even le deciplered as lo lle poinl lley are making.
So wly are many ad campaigns average Ask lle ad
98 -
agency and il will llame lle lrand manager wlo wanls
lo play sale and llerelore lames lle lold ad inlo a sale
one. Ask lle lrand manager wlo claims llal lle ad
agency didnl come up will a greal ad idea.
I advise lrand managers lo ask lleir agency lor llree
dillerenl ad campaign ideas, going lrom mild lo wild. A
leller answer migll le lor lle company nol lo go lo only
one agency lor crealive ideas, lul inslead pay several
agencies lo compele lo deliver a greal ad idea.
Ads work leller wlen lley are placed in lle media
read ly lle largel markel. Iind lle magazines read ly
slermen, molorcycle enllusiasls, lollyisls, meclani-
cal engineersand adverlise producls ol inleresl lo
llem and lle ads will le read. 1le ads usually carry re-
sponse cards lor readers lo gel lurller inlormalion or
place orders, making ROI measuremenl mucl easier.
Measuring adverlisings nancial impacl is mosl di-
reclly accomplislalle will direcl markeling campaigns
wlen lle adverliser can lrace lle numler ol orders re-
sulling lrom a specic campaign laving a cerlain cosl.
-
Mosl sales promolion programs are unprolalle One
exlensive sludy ol sales promolion programs concluded
llal only 1 percenl were prolalle. 1le mosl unprol-
ilalle sales promolion program is one wlere only lle
currenl users end up luying lle producl on sale. No
new cuslomers lried lle producl. 1lis amounls lo giving
- 99
lle currenl cuslomers a sulsidy llal leads llem lo luy
more unils llis period and lewer unils nexl period.
1le second-worsl case is wlere lle sales promolion
allracls some new lriers lul lley come lrom lle ranks ol
lle deal-prone price sloppers wlo never remain loyal lo
any lrand. 1le company allracled incremenlal sales,
lul [usl lor lle period.
1le lesl sales promolion occurs wlen lle campaign
allracls many new lriers wlo nd lle lrand lo le superior
and lley make il lleir prelerred lrand. 1lis lappens only
il lle lrand las leen a sleeper in llal il is superior lo lle
oller lrands lul was nol well known lo lle consumers. In
llis case, lle company would le advised lo dislrilule sam-
ples and nol [usl rely on sales promolion as lle slimulus.
1oo ollen sales promolions are developed ly lrand
managers will lillle experience in wlal conslilules ellec-
live promolions. One solulion is lo appoinl an experi-
enced sales promolion person lo advise ollers on lesl
promolions. 1lis person would also analyze lle resulls
ol eacl promolion lo lurller learn wlal works lesl. Al-
lernalively, lle company slould lire a sales promolion
agency llal can prolessionally recommend lle lesl pro-
molion lo use under dillerenl circumslances.
-
1lere is a growing leliel llal pullic relalions, long
lrealed as an orplan in lle promolion mix, deserves
growing use relalive lo lle adverlising ludgel. Iullic re-
1OO -
lalions is a leller audience-luilding lool parlicularly
will new ligl-lecl producls wlere luyers wanl inde-
pendenl prolessional opinion lelore lley cloose a
lrand. 1le maker ol a ligl-lecl producl slould rsl
idenlily opinion leaderskey experls, columnisls, and
ollerswlo review and lalk aloul new producls. Ior
example, Waller S. Mosslerg ol lle
wriles an inuenlial column evalualing new producls.
Many cuslomers value lis recommendalions.
Consider low Volvo launcled ils new SUV using
IR raller llan adverlising rsl.
-
- - -
- - --
-- -
-- - --
- - -
-- - -
- -- -

Molor 1rends -
- - - -

Companies llal can sell direcl lo lleir cuslomers and
prospecls en[oy a consideralle advanlage. 1ley donl
- 1O1
lave lo pay commissions lo inlermediaries or lose sigll
ol wlo is aclually luying lleir producls. 1ley donl lave
lo ll lle inlermediaries pipelines lul lase lleir pro-
duclion more on wlals direclly coming in as orders.
- -
-
-
- -- -
- -
-
- -- --
- -
-
- -- - -
- - -
- -
- -



Senior managemenl are lecoming impalienl will mar-
keling ludgel requesls lrom markelers wlo do nol sup-
ply an eslimale ol lle nancial impacl ol lleir planned
expendilure. Iurllermore, senior managemenl donl
1O2 -
even gel an aller-lle-lacl eslimale ol lle aclual nancial
impacl.
Al Coca-Cola, senior managemenl is leginning lo
insisl llal llese lelore-and-aller eslimales le supplied.
1ley know llal markelers are making a guess, lul lope-
lully an educaled guess. Coca-Colas real purpose is lo
produce a - in ils markelers. Il wanls ils
markelers lo lecome lamiliar will margins, assel
lurnover, ROI, economic value added, and slarelolder
value. 1le more llal markelers gel lo llink in nancial
lerms, lle leller lle dialog llal will lake place lelween
lle markeling and nancial people.
-
1. Brands in an Age ol Anli-Americanism, ---
, Augusl 1, 2OO, pp. 698.
2. 1im Amller, , 2nd
ed. (Iondon: I1 Irenlice Hall, 2OO).
. Al Ries and Iaura Ries, -
- (New York: HarperBusiness, 2OO2).
Clapler 9
-



-
The head of marketing does not seem to be very
effective.
The staff lacks some marketing skills needed in
the twenty-rst century.
There are bad vibes between marketing/sales
and the other departments.


An elleclive (CMO) las llree
[ols. 1le rsl is lo run lle markeling deparlmenl well,
liring compelenl slall, selling ligl slandards lor mar-
keling planning and implemenlalion, improving lle
slalls skills al researcl, lorecasling, and communica-
lion. 1le second lask is lo win lle condence ol lle
leads ol oller deparlmenlsnance, operalions, pur-
clasing, inlormalion leclnology, and so onand lo
gel lle wlole organizalion lo serve and salisly lle cus-
lomers. A llird lask is lo work well will lle CIO and
deliver on lle CIOs expeclalions regarding growll
and prolalilily.
1O
1O6 -
A lew CMOs are compelenl al all llree lasks, some are
compelenl al lwo lasks, and loo many may lail al all llree
lasks. In lle laller cases, il is lime lo nd a new CMO.


Markeling deparlmenls lave lradilionally pracliced lour
skills: markeling researcl, adverlising, sales promolion,
and sales managemenl. 1lese are lradilional skills and
scores ol looks lave leen wrillen aloul eacl. Yel many
deparlmenls are decienl in even llese skills, lel alone a
sel ol new skills llal are required lo deal will lwenly-
rsl-cenlury markeling clallenges.



Il would lake a lriel sel ol inlerviews lo eslallisl low
well lle markeling people are respecled or disrespecled
ly lle slalls in oller deparlmenls ol lle company. 1le
oller deparlmenls lrequenlly complain aloul various
praclices ol lle markeling deparlmenl. And lle markel-
ing people will poinl oul many laulls and lriclions in
lleir relalionslip will lle oller deparlmenls.
1O
-
Appoint a stronger leader of the marketing de-
partment.
Build new skills in the marketing department.
Improve marketings relations with the other de-
partments.


Markeling vice presidenls come lrom a variely ol lack-
grounds: adverlising, sales, new producls, somelimes en-
gineering or nance. 1ley lring lleir liases will llem.
1le lope is llal lley will lake a more lolislic view ol
markeling principles, lools, and processes and eslallisl a
good lalance among llem.
1le CMOs clallenge is lo gain lle respecl ol lle
CIO and various deparlmenl leads and employees
llrougloul lle company. 1lis will lappen il markel-
ings lorecasls are lairly accurale, and llere is accounl-
alilily lor lle markeling expendilures in lerms ol lleir
conlrilulion lo ROI or oller nancial measures.
Herl Kelleler, lle lrillianl co-lounder ol Soullwesl
Airlines, wenl so lar as lo rename lle markeling deparl-
menl: We donl lave a Markeling Deparlmenl, we lave
1O8 -
a Cuslomer Deparlmenl. And in lle words ol an en-
ligllened Iord execulive, Il were nol cuslomer driven,
our cars wonl le eiller.


1odays markeling environmenl is mucl more clalleng-
ing llan ever, will ils launling overcapacily, lypercom-
pelilion, and lalling margins. Markelers need lo lry new
inilialives and acquire new skills. 1lese new skills are
descriled lelow.
-
Positioning.
Brand asset management.
Customer relationship management (CRM) and
database marketing.
Partner relationship management (PRM).
Company contact center.
Internet marketing.
Public relations marketing.
Service and experiential marketing.
Integrated marketing communications.
Protability analysis.
Market-driving skills.
1O9
-
Al Ries and Jack 1roul inlroduced lle concepl ol lrand
posilioning in 1982 and il is a cenlral concepl in markel-
ing.
1
1ley asserled llal eacl lrand slould a :
Volvo owns salely and BMW owns driving perlor-
mance and 1ide owns Cleans cleanesl. 1ley argue
llal no lrand slould come inlo lle markel as a me-loo
lrand. A new lrand slould oller an imporlanl new lene-
l and llerelore creale a new calegory. Donl come in sec-
ond in a calegory, always come in rsl in a new calegory.
Iosilioning llinking evolved lurller wlen Miclael
1reacy and Ired Wiersema wrole -
-.
2
1ley dislinguisled lelween llree la-
sic posilionings: producl leaderslip, operalional excel-
lence, and cuslomer inlimacy. A compelilor can opl lor
lle producl leaderslip posilion, always leading lle
oller rms in advancing lle qualily and perlormance
ol lle producl. A second compelilor could lead lle
ollers in operalional excellence, excelling in cosl man-
agemenl and service relialilily. A llird compelilor
could claim lle posilion ol cuslomer inlimacy, know-
ing more aloul eacl cuslomers needs and varying
lleir ollerings accordingly. In lle aerospace lusiness,
CI claims lle posilion as producl leader. In lle lasl-
lood lusiness, McDonalds claims operalional excel-
lence wlile Burger King claims cuslomer inlimacy
(or Have il Your Way).
1reacy and Wiersema claim llal companies lypically
cannol excel in all llree ways, rsl lecause llis would
11O -
le loo coslly and second lecause lle llree posilions
conlain conlradiclions. 1lus il McDonalds wanls lo le
loll operalionally excellenl and cuslomer inlimale,
llese would conicl: cuslomers wlo wanled lle lam-
lurger cooked dillerenlly would slow down lle lines and
McDonalds operalional excellence, lased on slandard-
izalion, would suller.
So 1reacy and Wiersemas message is lo lead in one
ol llese llree posilionings and le al leasl al lle average
level in lle oller lwo posilionings. Donl lall lelow aver-
age in lle oller lwo Cuslomers may wanl lo luy lrom
lle producl leader lul will drop llis supplier il ils relia-
lilily is poor or il reluses lo modily ils ollerings.
More recenlly, Crawlord and Mallews ollered an-
oller lormula lor posilioning. 1ley see rms posilioned
along ve allrilules: - --
- and - .

1ley asserl llal a
company will le mosl prolalle il il - on one ol
llese allrilules, perlorms alove average (-)
along a second, and is al - will lle remaining
llree. 1ley advise llal il is loo coslly lor a company lo lry
lo le greal in all ve ways. As an example, Wal-Marl dom-
inales in low prices, is alove average in producl range,
and is quile average in ease ol access, value-added service,
and cuslomer experience.
Clearly lurller ideas will evolve on lle sul[ecl ol po-
silioning. My olservalion is llal loo many lrands are
slill weakly posilioned and sound very mucl like lleir
111
compelilors, in wlicl case posilioning remains a ladly
needed skill.
--
Brand assel managemenl is closely relaled lo posilion-
ing. Cerlain lrands are so cenlral lo a companys cur-
renl and lulure perlormance llal lley need lo le
managed, enlanced, and prolecled as an assel. Brand
names sucl as Coca-Cola, Sony, Inlel, and Disney can
le exlended inlo new producls, producl varianls, and
services. And someone las lo police lle use lo wlicl
sucl slar power names are pul. None ol llese rms
can lel a cleap or disappoinling producl le launcled
under ils name. Disney cannol risk operaling poorly
managed slores or lolels. Coca-Cola cannol use ils
name lor a new delergenl or lleme park. 1lese names
are well-posilioned and devialions lrom lle posilioning
cenler ol llese lrands musl le avoided.
- -
-
Companies can improve lleir largeling precision ly
collecling inlormalion aloul lleir individual cus-
lomers. By luilding a cuslomer dalalase llal conlains
pasl lransaclions, demograplics, psyclograplics, and
oller uselul inlormalion, lle company will le in a
112 -
mucl leller posilion lo malcl ollers lo individuals. Be-
yond llis, skilled slalislicians can mine lle cuslomer
dala lo discern new segmenls and lrends llal poinl lo
new opporlunilies. 1le cuslomer dalalase can le ac-
cessed ly managers in markel planning, merclandising,
producl developmenl, cuslomer rewards, clannel man-
agemenl, sales analysis, cross-selling, and promolion
analysis. CRM skills are rapidly leing added in markel-
ing deparlmenls lo creale a compelilive advanlage over
compelilors wlo work al a grosser level ol analysis.
-
As more companies perlorm more ol lleir aclivilies
llrougl parlners, lle skill ol managing parlner relalion-
slips lecomes crilical. 1le produclivily ol parlners de-
pends on lleir leeling salised will lle lerms ol lle
relalionslip and lle opporlunilies llal will come lleir
way in working closely will lle company. 1le company
needs lo periodically lake lle lemperalure ol eacl ma[or
parlner, and respond quickly lo any signs ol dissalislac-
lion or dislancing. A company slould appoinl someone
lo manage supplier relalions and anoller lo manage dis-
lrilulor relalions, very mucl like lle luman resource
deparlmenl manages employee relalions. Beyond llis,
individual managers slould manage eacl signicanl
parlner and develop a plan lor slrengllening lies and
perlormance.
11

A company needs lo consolidale ils aclivilies lor reacl-
ing, lislening lo, and learning aloul cuslomers in wlal
las leen descriled as a (or -
). 1le conlacl cenler was originally lle
companys leleplone syslem, wlicl lrougll in incom-
ing calls and also was used lor lelemarkeling purposes.
1oday, companies need lo inlegrale all lle inlormalion
coming lrom cuslomer louclpoinls, sucl as lle lele-
plone, regular mail, e-mail, laxes, and slore visils. In llis
way, lle company can caplure inlormalion llal will pro-
vide a 6O-degree view ol lle individual cuslomer.
- -

-
- - -
-
-
-
- -
--- -
1le companys leleplone lines are lecoming in-
creasingly crilical lo serving cuslomers well. Cuslomers
need lo le alle lo reacl a company will queslions, or-
ders, and complainls. Answering queslions well, laking
111 -
down orders accuralely, and resolving complainls
quickly are imporlanl skills. Ivery call can yield valu-
alle inlormalion lo add lo lle cuslomers le in lle dala-
lase and can also occasion a sales message.
1le plone is also imporlanl lo use lor oullound
lelemarkeling campaigns. Mucl design goes inlo gelling
access lo a sel ol prospecl plone numlers and knowing
wlen lo call and wlal lo say. A company can quickly as-
sess ils lelemarkeling ellecliveness ly lle purclase re-
sponse rale llal il aclieves will ils calls.
So imporlanl is lle leleplone operalion lo elleclive
markeling llal many companies lave oulsourced llis
operalion lo prolessional lelemarkelers. In Japan, com-
panies sucl as Sony, Slarp, 1oslila, and many ollers
lave oulsourced lle managemenl ol lleir cuslomer lele-
plone operalions lo Bell 21, a ma[or oulsourcer.
One ol lle negalive ways companies are currenlly
landling lleir leleplone operalions is overaulomaling
lle leleplone-answering syslem, wlere lle cuslomer
lears several oplions, clooses one, only lo lear anoller
sel ol oplions, and on and on, will no clance ol reacl-
ing a live operalor, resulling in a losl service opporlunily
and mayle a losl cuslomer. Alllougl leleplone auloma-
lion delivers lower cosls, wlicl pleases lle companys -
nancial lypes, llere is lailure lo recognize lle grealer
cosls in losl cuslomer sales and salislaclion. A uselul res-
olulion is lo make sure llal callers know llal al any lime
lley can lil zero and reacl a live operalor.
11

Virlually all companies lave crealed lleir own wel sile
wlere viewers can learn aloul lle companys producl
line, lislory, plilosoplies, [ol opporlunilies, and recenl
news aloul lle company. Some companies go lurller
and use lleir wel sile as a sales clannel, as does Dell
Compuler, Amazon, W.W. Crainger, and scores ol oller
companies llal sell over lle Inlernel.
Bul llere are many addilional markeling applica-
lions llal mosl companies lave nol yel lapped: markel
researcl, compelilive inlelligence, concepl and producl
lesling, coupon and sampling dislrilulion, producl cus-
lomizalion, and employee and dealer lraining. 1le key
need is lor lle company lo add Inlernel-savvy individuals
lo lurller exploil lle polenlials ol lle Inlernel.
-
Iullic relalions, long lle slepclild ol lle promolion
mix, is now coming inlo more prominence. Some years
ago, 1om Harris wrole a look called -
- llal underscored low many clever
IR campaigns, and nol adverlising, deserved lle credil
lor crealing many producl successes.
1
1om was a parl-
ner in lle IR rm ol Colin-Harris and llis rm was
largely responsille lor McDonalds IR lrom lle lime ol
McDonalds lowly leginnings. In many ways, McDon-
alds is a IR success slory, will ils clildrens lospilal,
116 -
clildrens playgrounds, clarilalle conlrilulions, spon-
sorslips, and Colden Arcles.
Higl-lecl rms discovered early llal IR skills are
crilical lo spreading inlormalion aloul a new producl.
Iirms would sulmil lleir new ligl-lecl producls lo
well-known reviewers in lle lope ol receiving a liglly
posilive recommendalion. 1leir IR deparlmenls would
assiduously cullivale press allenlion lo circulale posilive
slories aloul lle producl in addilion lo crealing ligl-
prole evenls and sponsorslips.
1le mosl recenl case lor lle imporlanl role ol IR is
lound in Al and Iaura Riess new look,
- - . 1le Rieses lave reposi-
lioned IR as a communicalion lool lo le used in lle
early slages ol lle commercial launcl process wlile ad-
verlising slould le used in lle laler slages.
1le main poinl lere is llal companies need lo add
IR skills in lle markeling deparlmenl and nol rely on
legging and lorrowing llem on an as-needed lasis lrom
lle companys IR deparlmenl or agency.

Oulslanding service can le a powerlul dillerenlialor in
lle alsence ol oller dillerenlialors. Ieonard Berry, one ol
lle leading experls on service markeling, personally inler-
viewed several companies llal were widely praised lor
lleir oulslanding servicecompanies sucl as 1le Con-
11
lainer Slore, Clarles Sclwal Corporalion, Click-l-A,
Cuslom Researcl, Inlerprise Renl-A-Car, and USAAin
lis quesl lo improve our underslanding ol service markel-
ing.

He lound lle mosl salienl praclices lo le:
- Values-driven leaderslip.
- Slralegic locus.
- Ixeculional excellence.
- Conlrol ol desliny.
- 1rusl-lased relalionslips.
- Inveslmenl in employee success.
- Acling small.
- Brand cullivalion.
- Cenerosily.
Service markeling las leen lilled lo a new level ly
lle recenl work on . Joe Iine and
James Cilmore llink llal companies slould develop
6
skill in designing markeling -. 1le idea las
many sources. Creal reslauranls are known lor lle cus-
lomer experience as mucl as lor lleir lood. Reslauranls
sucl as Ilanel Hollywood and Hard Rock Cal were
specically sel up lo deliver a special experience. Slar-
lucks clarges us $2 or more lo experience collee in a
special selling. Ias Vegas lolels, anxious lo dislinguisl
llemselves, lake on lle claracler ol Ancienl Rome or
118 -
Venice or New York. Bul lle experience masler is Wall
Disney, wlo crealed park simulalions ol lle cowloy
Wesl, lairyland caslles, pirale slips, and lle like. 1le
aim ol lle experienlial markeler is lo add drama and en-
lerlainmenl lo wlal ollerwise migll pass as slale lare.
- - --

- - - -- -
- --
- -
-
- --
- - - -
All merclanls oller services, your clallenge is lo escorl
your cuslomer llrougl a memoralle experience.
-
Among lle mosl imporlanl skills in markeling are commu-
nicalion and promolion. Communicalion is lle lroader
lerm and il lappens wleller planned or nol. A salesper-
sons clolles communicale, lle calalog communicales,
lle companys olce decor communicales . . . all creale
impressions on lle receiving parly. 1lis explains lle grow-
ing inleresl in -
(IMC).

Companies need lo orcleslrale a consislenl sel ol
119
impressions lrom lleir personnel, lacililies, and aclions
llal deliver lle companys lrand meaning and promise lo
ils various audiences. Il all slarls will dening lle com-
panys values and making sure llal lley are underslood
and exemplied ly all ol lle companys employees.
--
Mosl companies do nol know lleir real prolalilily ly
geograplies, producls, segmenls, cuslomers, and clan-
nels. 1ley loo ollen assume llal lleir prols are propor-
lional lo lleir sales volume lul llis ignores lle dillerenl
margins and dillerenl cosls. Ior example, many compa-
nies no longer lelieve llal lleir largesl cuslomers are
lleir mosl prolalle cuslomers. Iarge cuslomers ollen
demand lle lowesl prices and consideralle services.
Some mid-sized cuslomers are more prolalle mea-
sured as a rale ol relurn on lle cosl ol serving llem.
Company accounling deparlmenls, wlile ready lo con-
ducl deep analyses ol produclion cosls and variances, are
less willing or alle lo accumulale lle cosls ol serving var-
ious markeling enlilies and sullracling llese cosls lrom
lle respeclive revenue slreams. 1lus lwo cuslomers
spending lle same amounl may yield dillerenl prols. Il
one cuslomer keeps ploning lle company, asking lor
discounls, consuming many more company services,
and paying ils lills lale, il is less prolalle llan lle sec-
ond company llal does none ol llis.
12O -
Iorlunalely Rolerl Kaplan and Rolin Cooper oul-
lined a correcl approacl lo accounling lor prolalilily
will lleir Aclivily-Based Cosling (ABC) accounling.
8
1le mellod would require salespeople lo reporl low
mucl lime and expense eacl cuslomer consumed,
mucl like lawyers lill clienls lor eacl lall lour ol lleir
lime and expense.
All said, markelers musl add prol measuremenl and
nancial skills lo increase lle markeling deparlmenls
accounlalilily lor lleir ludgel allocalions over geogra-
plies, producls, segmenls, cuslomers, and clannels.
-
Illeclive markeling las lradilionally leen dened as lle
alilily lo nd needs and ll llem. 1lis denes a
. Bul will so many needs now leing lled ly
counlless producls, lle clallenge now is lo invenl new
needs. 1lis is lle goal ol a . As Sonys
visionary leader, Akio Morila, pul il: Our plan is lo lead
lle pullic will new producls raller llan ask llem wlal
kinds ol producls lley wanl. 1le pullic does nol know
wlal is possille, lul we do. And according lo an execu-
live al M, Our goal is lo lead cuslomers wlere lley
wanl lo go lelore know wlere lley wanl lo go.
9
Markel-driving rms revolulionize lleir induslries ly
crealing a - and/or a ---
-- llal ollers leaps in lenels and/or reduclions in
121
acquisilions ellorls/cosls. Many compelilors may imilale
lle new value proposilion lul lend lo le less successlul
in copying lle lusiness syslem. Markel-driving rms
lave llese claraclerislics:
1O
- Cuiding ly vision raller llan ly lradilional markel
researcl (IedIx, Body Slop, Swalcl).
- Redrawing induslry segmenlalion (Soullwesl, Wal-
Marl, SAI).
- Crealing value llrougl new price poinls (Soullwesl,
Clarles Sclwal, and Wal-Marl crealed lower prices,
CNN, Slarlucks, and IedIx sel ligler prices).
- Crowing sales llrougl cuslomer educalion (IKIA).
- Reconguring clannels (IedIx, Soullwesl,
Benellon).
- Using lle luzz nelwork (Soullwesl, Clul Med,
Virgin).
- Overwlelming cuslomer expeclalions (IedIx,
Home Depol, Soullwesl).



Anoller inilialive lo luild a slronger markeling deparl-
menl is lo improve markelings relalionslip will every
122 -
oller deparlmenl. We will examine lle relalionslips
slown lelow.
--
-
Marketing and sales.
Marketing, R&D, and engineering.
Marketing and manufacturing.
Marketing and purchasing.
Marketing and accounting.
Marketing and nance.
Marketing and logistics.
-
Il may le surprising lo say llal markeling musl improve
ils relalions will lle sales deparlmenl. In mosl compa-
nies, lle lwo deparlmenls are leaded ly dillerenl vice
presidenls. Markeling lypically lakes care ol producl
planning, markel planning, pricing, lead generalion, and
communicalions. Sales lakes care ol reacling and devel-
oping cuslomers and gelling orders. Various lriclions can
arise. 1le sales vice presidenl may urge markeling lo
lower prices, or requesl a larger slare ol lle ludgel lo
12
lire more salespeople or pay llem more. 1le markeling
vice presidenl may preler lo use lle money lor slronger
communicalions lo luild lle lrand and pull in demand
and may [uslily lle ligler prices as a way lo pay lor lle
communicalion cosls.
1le cenlral queslion is wleller lle lwo vice presi-
denls respecl eacl oller and lry lo ol[eclively (nol polili-
cally) delermine lle lesl division ol lle markeling/sales
resources. 1lis underscores lle need lo develop more ac-
counlalilily overall lor markeling/sales expendilures, so
issues can le sellled on larder evidence ol ellecliveness.
Oller measures will also improve lle relalionslip le-
lween markeling and salespeople. Iirsl, lle markeling
planning process musl include one or more salespeople
involved in lle process so llal lley lave lleir say and luy
inlo lle plan. Second, lle relalionslip will le improved il
markeling people regularly gel oul ol lleir olces and
lravel will salespeople lo meel cuslomers and undersland
lle cuslomers and lle salespeople leller. Markelers can
make leller decisions il lley regard lle salespeople as
lleir immediale cuslomers wlo also musl le salised.

Markelings only issue will RoD is wlen lley are nol in-
viled in early enougl in lle planning ol new producls. In
designing new producls, scienlisls and engineers will
make a lol ol assumplions aloul cuslomers and markel
121 -
lorces willoul sulcienl invesligalion. 1ley migll over-
design lle producl, causing ils price lo le loo ligl, or lley
may descrile lle producl in loo leclnical a language llal
emplasizes lealures raller llan lenels. All llis can le
improved ly markelers working closely will RoD and en-
gineers lo supply consumer guidance lased on lard dala.

Markeling ollen inlerleres will lle smooll operalion ol
produclion. Markeling may plan a special promolion
llal requires manulacluring lo scledule increased pro-
duclion work and llis may involve working overlime al
ligler cosl. Or markeling may requesl smaller lalcles
ol producl lor special markels and llis requires manulac-
luring lo resel lleir lools and dies.
Wlo slould prevail 1le queslion is one ol eslimal-
ing lle increased revenue owing lrom llese requesls
againsl lle increased cosls. Il markelings requesls lead
lo ligler prols, llen lleir view slould prevail. Wlen
llis is less cerlain, il is somelimes leller lor markeling
nol lo make demands on manulacluring unlil lley really
can lave a lig win.
-
Markeling las luill lrands llal make qualily promises.
Iurclasing las lo meel lle expecled qualily slandards.
12
Yel purclasing is lempled lo lring down cosls. Il pur-
clasing clooses poorer or slower suppliers, markelings
promises lo lle cuslomers will nol le realized. Markel-
ing needs lo develop good relalions will lle purclasing
people lo insure llal lle qualily slandards are mel.

Markelers could lave a numler ol concerns aloul lle
accounling deparlmenl. 1le company accounlanls are
responsille lor sending oul invoices and collecling re-
ceivalles. Il cuslomers call and complain llal invoices
are inaccurale or dilcull lo undersland, do lle accoun-
lanls answer quickly Il clienls are lale in lleir pay-
menls, do lle accounlanls landle llis carelully or larass
llem Do lle accounlanls prepare uselul sludies ol prol-
ilalilily ly geograplical areas, producls, markel seg-
menls, cuslomers, and clannels

1le lig issue lelween markeling and nance concerns
markelings accounlalilily lor lle nancial impacl ol ils
expendilures. Willoul a slrong case ly markeling llal re-
quesled lunds would produce measuralle prol, nance
is less willing lo granl lle lunds. Iinance also is carelul
aloul accepling new cuslomers wlose credil is queslion-
alle. 1le sales lorce llinks llal lle credil people willin
126 -
nance are loo conservalive and undermining lleir com-
missions ly re[ecling some new lusiness.
--
1o gel orders, salespeople lypically make promises re-
garding delivery limes. Iale deliveries can alienale lle
cuslomers. Somelimes lle laull may lie will purclas-
ing or manulacluring. Or il may lie will lle invenlory
group or lle slipping deparlmenl. Markelers lave a
slake in lle relialle perlormance ol lle people involved
in logislics.
-
1. Al Ries and Jack 1roul, -
(New York: Warner Books, 1982).
2. Miclael 1reacy and Ired Wiersema, -
- (Reading, MA: Addison-Wesley,
1991).
. Ired Crawlord and Ryan Mallews,
-
- (New York: Crown Business,
2OO1).
1. 1lomas I. Harris, -
- (New York: Joln Wiley o Sons, 1991).
. Ieonard J. Berry, -
(New York: Iree Iress, 1999).
12
6. B. Josepl Iine II and James H. Cilmore,
- ---
(Boslon: Harvard Business Sclool Iress, 1999).
. Don I. Sclullz, Slanley I. 1annenlaum, and
Rolerl I. Iaulerlorn,
- (Iincolnwood, II: N1C Business Books,
199).
8. Rolerl S. Kaplan and Rolin Cooper, -
- - --
(Boslon: Harvard Business Sclool
Iress, 1998).
9. See Cary Hamel and C.K. Iralalad, Seeing lle Iu-
lure Iirsl, , Seplemler , 1991, pp. 61O,
Ililip Koller, (New York: Iree
Iress, 1999), pp. 2O21, and Anllony W. Ulwick,
1urn Cuslomer Inpul Inlo Innovalion,
--- , January 2OO2, pp. 919.
1O. Nirmalya Kumar, Ililip Koller, and Iisa Sleer,
Markel Driving Companies,
, April 2OOO, pp. 129112.
Clapler 1O
-

-
-
The company has made minimal use of the
Internet.
The companys sales automation system is
outdated.
The company has not introduced any market
automation.
The marketing group lacks decision-support
models.
The marketing group needs to develop marketing
dashboards.

Many companies llink llal lley are using lle Inlernel
lecause lley lave eslallisled a wel sile(s) and may
even sell online. Bul llis represenls only 1O percenl ol
lle opporlunilies allorded ly lle Inlernel.


Salespeople normally use a sollware program lo remem-
ler llings aloul lleir cuslomers. Bul lle sollware pro-
grams conlinue lo improve and musl le updaled.
11
12 -

Some markeling decisions can le made more easily or
leller ly sollware llan ly luman decision making, yel
loo lew companies lave used markeling aulomalion.

Mosl markeling decisions are slill made inluilively. Yel
company decisions can lenel lrom lle conslruclion
and use ol lormal markeling decision models.

Markeling is increasingly a game won ly lle compelilor
possessing leller inlormalion. 1le inlormalion can le
codied and made availalle lo managers llrougl slandard
compuler screen --. 1odays daslloards are rela-
lively primilive in relalion lo wlal polenlially can le done.
-
Make more use of the Internet.
Improve the sales automation system.
Apply market automation to routine marketing
decisions.
Develop some formal marketing decision models.
Develop marketing dashboards.
- 1

1le Inlernel las many more uses llan companies com-
monly know. Here are lle ma[or uses.

1le mosl imporlanl markeling use ol lle Inlernel is lle
eslallislmenl ol an elleclive and allraclive wel sile de-
scriling lle company, ils producls, ils dislrilulors, ils [ol
opporlunilies, and ils olcers. Nol all wel siles are user-
lriendly or elleclive. 1le download lime could le exces-
sive lecause ol overly lancy graplics. Il migll le
conlusing lo navigale lo new pages or lo make paymenl
lor a purclase on lle Inlernel. 1le wel sile migll lack
lle kind ol inlormalion llal would draw visilors lack
again. 1le wel sile migll le lland like many ollers and
lail lo convey lle companys personalily.
Il is a lairly slraiglllorward maller lo assess lle el-
lecliveness ol your companys wel sile. 1le main
group lo survey is your cuslomers. Wlal is lleir experi-
ence will lle wel sile and wlal are lleir suggeslions
lor improvemenl 1le oller source is lo invile wel
sile experls lo give lleir assessmenl and suggeslions lor
improvemenl.
Companies need lo gure oul low lo add value lo
lleir wel siles llal will draw visilors lack again. Ior ex-
ample, Sony uses ils www.IlaySlalion.com wel sile lo
luild relalionslips will game-players ol all ages. 1le
11 -
sile ollers inlormalion aloul lle lalesl games, news
aloul evenls and promolions, game guides and supporl,
and even online lorums in wlicl game-players can swap
lips and slories.

Your company needs lo use lle inlranel as an elcienl
communicalion lool willin lle company. Imployees
musl le alle lo reacl eacl oller ly e-mail, lo download
documenls lrom lle companys mainlrame, and lo up-
load sales and oller reporls lo lle mainlrame.
-
Companies are increasingly linking llemselves elec-
lronically lo lleir main suppliers, dislrilulors, and
dealers. 1ley are using lle Inlernel as a plallorm lor
llese conneclions. 1lus a company like Iord can
send orders lor needed aulo parls lo ils suppliers will-
oul laving lo plone or mail paper documenls. Iord
can also send lunds lo lle suppliers lanks in paymenl
lor ils parls. Iord can also send inlormalion lo ils deal-
ers on a daily lasis will selling suggeslions, price
clanges, car searcles, and so on. In all llese cases,
companies can save consideralle money and lime ly
invesling in eleclronic links will lleir key suppliers,
dislrilulors, and dealers.
- 1

All companies musl keep lleir employees up-lo-dale
will lle lalesl knowledge and skills lor running lleir
lusiness. In lle pasl llis meanl lringing lleir people lo-
geller in a cenlral localion and running a several-day
lraining session. 1le companies would lear ligl lravel
and lolel cosls and losl produclion and selling lime.
1lanks lo lle Inlernel, companies are increasingly de-
veloping lraining malerials lor online viewing on lle In-
lernel will passwords. Imployees will le expecled lo
give lime lo reading lle malerial and laking lesls. IBM,
lor example, now runs 2 percenl ol ils lraining online,
saving millions ol dollars.

1le Inlernel las lacililaled companies searcling lor lal-
enl. 1lis occurs in lwo ways. 1le company can posl [ol
openings on ils own wel sile. Il can also ulilize [ol mar-
kel Inlernel siles sucl as Monsler.com in lrying lo ll
[ol vacancies.

1le quickesl way llal a company can save money is
lor ils purclasing people lo slarl luying lleir inpuls
on lle Inlernel. Companies can use lle Inlernel lo
idenlily new sources ol supply, lo compare prices, lo
16 -
go on lidding siles lor new or used producls, and
lo announce lleir own needs and requesl lids.
I-procuremenl lrings down lle cosls lecause ol lle
lessened need lo deal will salespeople and lle grealer
price lransparency availalle lo luyers.
-
1le Inlernel provides an inlormalion liglway llal is a
loon lo markel researclers. A company can learn a greal
deal aloul ils compelilors ly designaling llal all news
ilems aloul specic compelilors le gallered in one sile.
1le companys markel researclers can run online locus
groups, consumer panels, and dealer panels lo lesl new
producl, service, and communicalion ideas. 1le com-
pany can send oul dillerenlialed ollers lo similar groups
and measure lle response dillerence. 1le company can
oller coupons and samples and cleck wleller lley lead
lo purclases. All said, lle companys markeling researcl
skills are enlanced manylold ly lle use ol lle Inlernel.
-
Some companies may wanl lo add a clal room lo lleir
wel sile in order lo luild a wlere
lleir cuslomers and lans can exclange ideas and inlor-
malion. 1lis works well will companies sucl as Apple
Compuler or Harley Davidson, wlose cuslomers en[oy
- 1
meeling and learning lrom eacl oller. I-clal rooms
are nol a good idea lor companies llal donl lully sal-
isly lleir cuslomers and will prolally draw some unsa-
vory crilicism. Companies would le wise lo audil
oller clal rooms dealing will lleir producl area lo
learn lrom llem.


Your sales lorce slould le equipped will lle lalesl sales
aulomalion syslem. 1le syslem slould enalle llem lo
answer any queslions in lle prospecls or cuslomers ol-
ce and empower llem lo make decisions on lelall ol
lle company. 1lus a prospecl may slow an inleresl in
lle salespersons proposal. However, le migll say llal
le would need delivery in llree days. Using lle sales au-
lomalion syslem, lle salesperson clicks on ler com-
panys invenlory silualion and reporls llal a delivery
could aclually le made in lwo days. 1le prospecl is
pleased lul le lesilales: I need a leller price. 1le
salesperson lils ler sales aulomalion syslem and says: I
donl wanl you lo lose lle order. I can cul lle price ly
lwo percenl. Bul llal is all I can do. Cood, says lle
prospecl, lul le slill lesilales. I donl like lle lialilily
provision in lle lourll paragrapl ol lle conlracl. Il musl
le modied. 1le salesperson suggesls a clange in lle
18 -
paragrapl lo wlicl lle prospecl agrees. Al lasl lle
prospecl places lle order and signs lle conlracl.
All said, lle sales aulomalion syslem enalles sales-
people lo possess lle knowledge needed lo make prol-
ilalle decisions on lelall ol lle company.

A numler ol rouline markeling decisions can le leller
landled ly sollware llan ly company personnel. 1le
company makes leller decisions and saves on lalor
lime. 1le lacl llal sollware can leal luman decision
making is well-illuslraled ly IBMs Deep Blue sollware
lealing lle worlds grealesl living cless clampion,
Cary Kasparov. Il sollware can le developed lo landle
sucl a complex game as cless, cerlainly il can le de-
veloped lor some rouline markeling decisions. Here
are lwo examples:
1. Airlines would like lo sell as many seals on a prospec-
live igll as possille lelore lle plane lakes oll. Al-
mosl anylling lley can gel lor an ollerwise-unsold
seal will exceed lle cosl. 1le airlines use sollware
programs lo guide - . 1le sollware
programs delermine wlen lle price ol a seal slould
le lowered lelore a igll and sends lle inlormalion
lo lravel agenls and cerlain cuslomers. An airline as
- 19
large as American prelers lo lrusl lle sollware pro-
gram lo laving several employees involved lull lime
in clanging airline lares.
2. Cloosing posilions lor lrands on a slell can now le
leller accomplisled will sollware llan guesswork.
Krall manages lle cleese calegory lor many slores,
and can delermine lle lesl mix ol cleese lrands and
lleir slell posilionings lor slores in low-, medium-,
and ligl-income areas.
In lle lulure, we can expecl companies lo invesl lurller
in aulomaling lleir rouline markeling decisions.

Since lle 196Os, academic markelers lave leen develop-
ing markeling decision supporl models. 1ley go under
sucl names as CAIIIIAN, DI1AIIIR, MIDIAC,
IROMO1IR, and so on.
1
Iacl model deall will a spe-
cic markeling decision area. 1oday rms are also lrying
lleir land al llal comlines lle
separale and colleclive ellecls ol a markeling mix on sales
and prols. A company can gel lelp in developing llese
and oller models lrom a variely ol markeling resource
managemenl vendors sucl as Veridiem or Markeling
Managemenl Analylics.
11O -

We drive our aulomoliles will lle lelp ol lle dials on a
daslloard. Consider an airplane laking oll al nigll, y-
ing up O,OOO leel, and laler landing salely, wlere lle
only guide lo lle pilol is lle daslloard. 1lis is
, llal is, ying only will inlormalion. Can a rm
also guide ils igll loward ils ol[eclives primarily ly re-
lying on currenl inlormalion on ils daslloard
We can discern llree lypes ol daslloards coming
inlo use:
1. A - llal reporls
wlere lle company now slands in relalion lo ils ol-
[eclives. Included would le lalesl dala on sales, mar-
kel slares, cosls, and prices ol lle company and ils
compelilors. Red ags would indicale underaclieve-
menl. 1le user can drill down lurller inlo any num-
ler lo analyze wlal migll accounl lor any
underaclievemenl. 1le user migll nd llal one ol
lle llree salespeople in lle Clicago area las lallen
way lelind in meeling lis quolas. 1lis is a signal lo
conlacl lim and delermine wlal las lappened and
wleller il can le correcled.
2. A --- - llal coacles users
on low lo carry oul any markeling process in a lesl-
ol-class way. 1lus a new lrand manager migll wanl
lo do a concepl lesl. Sle lypes in - and lle
- 111
compuler screen slows llal a concepl lesl las lour
sleps. Ior eacl slep, an example is supplied will lips
on low lo do il elcienlly. In essence, a menlor las
leen pul inlo lle compuler lo guide lrand managers.
Oller processes would le markel lesling, cloosing a
new adverlising agency, and so on. IoC las done
work lo codily all ol ils processes in llis way.
. A - - llal conlains slalislical
programs llal can le applied lo dala sels lo nd
means, slandard devialions, cross-lalulalions, regres-
sion analysis, discriminanl analysis, laclor analysis,
clusler analysis, and so on. Suiles ol lle more uselul
programs are commercially availalle lrom SAS and
oller companies.

1. See Ililip Koller, , 11ll ed.
(Upper Saddle River, NJ: Irenlice-Hall, 2OO), p. 111.
Ipilogue

-
--
1le lleory ol markeling is solid lul lle praclice ol mar-
keling leaves mucl lo le desired. I lave lisled lle len
deadly sins, decils, weaknesses, call-il-wlal-you-will, ol
markeling as pracliced. I lave descriled lle main signs
ol eacl sin and proposed solulions. Applying lle solu-
lions will lurn lle len sins inlo lle -

. 1le len commandmenls are lisled lelow. Irame
llem and lang llem on your walls
1. 1le company segmenls lle markel, clooses lle lesl
segmenls, and develops a slrong posilion in eacl
closen segmenl.
2. 1le company maps ils cuslomers needs, percep-
lions, prelerences, and lelavior and molivales ils
slakelolders lo olsess aloul serving and salislying
lle cuslomers.
. 1le company knows ils ma[or compelilors and lleir
slrenglls and weaknesses.
1. 1le company luilds parlners oul ol ils slakelolders
and generously rewards llem.
. 1le company develops syslems lor idenlilying oppor-
lunilies, ranking llem, and cloosing lle lesl ones.
6. 1le company manages a markeling planning syslem
llal leads lo insiglllul long-lerm and slorl-lerm
plans.
11
116 -
. 1le company exercises slrong conlrol over ils prod-
ucl and service mix.
8. 1le company luilds slrong lrands ly using lle mosl
cosl-elleclive communicalion and promolion lools.
9. 1le company luilds markeling leaderslip and a
leam spiril among ils various deparlmenls.
1O. 1le company conslanlly adds leclnology llal gives il
a compelilive advanlage in lle markelplace.

Alsolul Vodka, 9
Accounling and markeling
deparlmenls, 12
Aclivily-Based Cosling accounling,
12O
Adverlising, 998
Amazon, 2, 11
Apple Compuler, 161
Beclon-Dickenson, 98O
Benellon, 121
BMW, 1O9
Body Slop, 121
Brand assel managemenl, 111
Brand-luilding skills
allocalions lo markeling lools
and, 961O1
lrand equily, markel melrics,
and, 919
dislincliveness and, 92
nancial pro[eclions and, 9,
1O11O2
signs ol prollems will, 91
solulions lo prollems will, 9
largel markel and, 91
Brands, 6, 886
Bringing Silicon Valley Inside
Your Company (Hamel), 6
Budgeling, exille, 89
Burger King, 1O9
Business slralegy, markeling as
driving, , 9
Cannilalizing sell, 19, O
Calerpillar, 6O61
CIO and markeling cosls, 1
Clallenges ol markeling, 8
Clarles Sclwal Corporalion,
11611, 121
Clal room, online, 11, 161
Click-l-A, 11611
Cliel markeling olcer, 1O1O6,
1O1O8
Clina, 6
Clul Med, 121
Coca-Cola, 6, 91, 1O2
Communicalion skills
cuslomers and, 2, 2
nancial pro[eclions, 9,
1O11O2
inlegraled markeling lype,
118119
promolion allocalions, 92,
961O1
signs ol prollems will, 91
solulions lo prollems will,
9
largel markel and, 91
Compelilors, dening and
moniloring
liring employees lrom, 118
inlelligence on, 16, 1
overlocus on wrong compelilor,
116
signs ol prollems will, 1
11
118
Compelilors, dening and
moniloring ()
solulions lor prollems will, 16
value/price posilions and, 191
Complainls, 2
Con[oinl analysis, 91O
Conlacl cenler, 2, 11111
1le Conlainer Slore, 11611
Cross-selling, 81, 868
Cullure ol company, clanging,
212
- -
(Rosenllull), 21
Cuslomer inlimacy, 1O911O
Cuslomer orienlalion
employee organizalion and,
2122
lierarcly ol values and, 221
incenlives and, 222, 2126
signs ol, 21
solulions lor, 2
lraining and, 22
Cuslomer Relalionslip
Managemenl
descriplion ol, 6, 111112
sollware lor, 1112
Cuslomers. Researcl on
cuslomers, 1argel cuslomers
Cuslom Researcl, 11611
Daslloards, 12, 11O111
Dalalase markeling, 111112
Dala warelouse, 1112
Dealers. Dislrilulors
Dealing will sins, 9
Decision models, 12, 19
Dell Compuler, 1O1, 11
Depll inlerviewing, 6, 89
Dillerenlialion,
Direcl markeling, 1OO1O1
Disney, 91, 118
Disruplive leclnology, 18
Dislrilulors
cuslomers and, 26
managemenl ol, 6O61
panels ol, eslallisling, 1O11
as slakelolders, 6
DuIonl, 2O, 98O
Imployees
cuslomer salislaclion and,
2
e-recruilmenl, 1
liring lrom compelilors, 118
managemenl ol, 89
unlappy, signs ol,
Imploymenl, lalling,
Ingineering and markeling
deparlmenls, 12121
Inlerprise Renl-A-Car, 11611
I-procuremenl, 116
I-recruilmenl, 1
Illnograplic researcl, 1O
I-lraining online, 1
Ixperienlial markeling, 116118
Ixlranels, 61, 11
- -
(Ries o Ries), 96, 116
IedIx, 121
Iinance and markeling
deparlmenls, 12126
Iinancial pro[eclions, 9, 1O11O2
Iocus
idenlilying segmenls and, 11
markel segmenl managers and,
118
priorilizing segmenls and, 1,
19
segmenlalion leclniques, 1819
119
signs ol, 1
solulions lor, 18
verlicalizing sales lorce, 2O21
Iocus groups, 1
Iord, 1O8, 11
Ceneral Ileclric (CI), 19, 91,
1O9
Ceneral Molors, 9
Colin-Harris, 11
Haagen-Dazs, 1
Hamel, Cary, Bringing Silicon
Valley Inside Your Company,
6
Hard Rock Cal, 11
Harley Davidson, 161
Harris, 1om, -
-, 11
Heinz, 86
Hiring lrom compelilors, 118
Home Depol, 121
IBM, 19, 2O, 118, 91, 1
Ideas, generaling, 662
Idenlilying markel segmenls, 11
IKIA, 121
Incenlives
cross-selling and upselling,
8
cuslomer service, 222, 2126
In-lome researcl, 6
In-slore researcl,
Inlegraled markeling
communicalions, 118119
Inlel, 91
Inlerlrand Corporalion, 91
Inlernal markeling, 89
Inlernel markeling, 11, 11,
11
Inlranel, 11
Inveslors, salislaclion ol, 6
Jolnson o Jolnson, 21
Klein, Naomi, , 6
Kodak, 68
Krall, 19
Iaddering leclnique, 89
Ialeral markeling, 12
Iexus, 1
Iimiled clain ol slores, 161
Iogislics and markeling
deparlmenls, 126
- (Reiclleld), 8
Ioyally sclemes, 6
Manulacluring and markeling
deparlmenls, 121
Markel-driving rm, 12O121
Markel environmenl, 69
-
- (Harris), 11
Markeling mix modeling, 19
Marlloro, 91
Marrioll Holel clain, 21, 19O
Mass markeling, cosls ol,
McDonalds, 91, 9, 1O9, 11116
Measuring cuslomer salislaclion,
226
Men and slopping,
Mercedes, , 1, 91
Microsoll, 91
Mosslerg, Waller, 1OO
Myslery slopping, 8
Needs ol cuslomers, assessing,
89
Nesll, 86
1O
Nokia, 91
(Klein), 6
One-I markeling, 1
Online, luying, 8
Operalional excellence, 1O911O
Opporlunilies, nding new
generaling ideas, 692
signs ol prollems will, 666
solulions lo prollems will, 66
slimulaling ideas, 6668
Organizalion ol company
cliel markeling olcer, 1O1O6,
1O1O8
deparlmenlal relalionslips and,
1O6, 121126
markeling deparlmenl, skills ol,
1O6, 1O8
signs ol prollems will, 1O
solulions lo prollems will, 1O
Organizalion ol employees, 2122
Overlocusing on wrong compelilor,
116
Ianels ol cuslomers and dealers,
eslallisling, 1O11
Iarlner relalionslip managemenl,
112
Iarlners, slimulaling ideas lrom,
6668
Ierceplual mapping, 9
Iersonal inlormalion, colleclion ol,
6
Ielers, 1om,
Ilone supporl, 2, 11111
Ilanel Hollywood, 11
Ilanning process
celelralion ol, 98O
componenls ol, 8
exille ludgeling and, 89
lormal ol, 6
signs ol prollems will,
solulions lo prollems will,

Iolicies, producl and service
cross-selling and, 81, 868
lree services, 81, 86
prolalilily and producl
prolileralion, 8
signs ol prollems will, 8
solulions lo prollems will,
8
lracking and evalualion syslem,
886
Iosilioning, 1O9111
Iosilive-sum llinking, 8
Irediclive analylics, 1O
Irelerences ol cuslomers, assessing,
91O
Irice consciousness, 8
Iriorilizing markel segmenls,
1
Irollems will markeling,
Irocler o Camlle (IoC), 666,
86
Iroducl
prolalilily and, 8
relurns ol, 2
lracking and evalualion syslem
lor, 886
Iroducl leaderslip, 1O911O
Irolalilily analysis, 8, 11912O
Iullic relalions, 991OO, 11116
Iurclasing and markeling
deparlmenls, 12112
RoD and markeling deparlmenls,
12121
Reiclleld, Ired, -,
8
11
Researcl, online, 16
Researcl on cuslomers
analylical leclniques, 81O
depll inlerviewing, 6, 89
locus groups, 1
in-lome, 6
in-slore,
myslery slopping, 8
overview ol, 1
surveys, 6
Relurned merclandise, 2
Ries, Al and Iaura,
- - ,
96, 116
Rilz-Carllon, 26
Rosenllull, Hal, -
- , 21
Sales and markeling deparlmenls,
12212
Sales aulomalion syslem, 11,
118
Sales lorce, verlicalizing, 2O21
Sales lagging expeclalions,
2
Sales promolion, 9899
SAI, 121
Segmenlalion ol markel
idenlilying, 11
manager ol, 118
priorilizing, 1, 19
leclniques lor, 1819
Service markeling, 116118
Services, lree, 81, 86
Silualional analysis,
Sollware
Cuslomer Relalionslip
Managemenl, 1112
nancial simulalion, 6
markel aulomalion, 1819
markeling aulomalion, 12
sales aulomalion syslem, 11,
118
Sony, 12O, 111
Soullwesl Airlines, 1, 8,
1O1O8, 121
Slakelolder relalionslips
dislrilulors, 6
employees, , 89
inveslors, 6
posilive-sum llinking, 8
signs ol prollems will,
solulions lo prollems will,

suppliers, 6, 96O
Slarlucks, 9, 11, 121
Slimulaling ideas lrom parlners,
6668
Slrelcl goals, 8
Suppliers, 6, 96O
Surveys, 6
Swarovski, O
Swalcl, 121
1argel cuslomers
analylical leclniques and, 81O
dala warelouse and, 1112
panels, eslallisling, 1O11
researcl and, 18
relurns, complainls, and, 2
sales, expeclalions, and, 2
signs ol, 1
solulions lor,
weak inlormalion and, 12
1eclnology, moniloring, 1819
1eclnology, use ol
daslloards, 12, 11O111
decision models, 12, 19
Inlernel, 11, 11
markel aulomalion, 1819
12
1eclnology, use ol ()
sales aulomalion syslem, 11,
118
signs ol prollems will, 11
solulions lo prollems will, 12
1elemarkeling, 111
1eleplone supporl, 2, 11111
1en Commandmenls ol Markeling
Illecliveness, 11116
1en Deadly Sins ol Markeling, 1O
M Company, 6, 12O
1ide, 1, 1O9
1racking and evalualion syslem,
886
1raining issues
cross-selling, upselling, and, 8
cuslomer service and salislaclion,
22, 26
e-lraining online, 1
1ransilion zone,
1reacy, Miclael,
-- -,
1O911O
Underlill, Iaco,
,
Unilever, 886
Upselling, 8
USAA, 11611
Valualion mellods ol lrand equily,
91
--
- (1reacy o Wiersema),
1O911O
Value/price posilions, 191
Values lor company, 221, 2
Verlicalizing sales lorce, 2O21
Verlical markeling, O1
Virgin, 121
Volvo, 26, 1OO, 1O9
Wal-Marl, 26, 1, 9, 11O, 121
Wel sile, 11, 11, 111

(Underlill),
Wiersema, Ired,
-- -,
1O911O
W.W. Crainger, 11
Yield-lased pricing, 1819
Zero-sum llinking,