September 21st, 2010

10 Ways to Make Your Marketing Organization More Strategic and Effective

One of the biggest challenges for marketing professionals is to determine how to balance their time to work on both tactical and strategic marketing activities and actions. Left to natural tendencies, most marketing people and teams will work on short-term activities that help drive the business for the next month or quarter. An old HP colleague of mine calls this the “tyranny of the current.” Most organizations naturally assume that the primary role of marketing is to help sales close short-term and mid-term business. And that certainly is an important part of the marketing function. After all, we are trying to create new products, brand awareness, and demand for something! If it is not for sales – or to generate incremental revenues or market share – then what is it for?

Yet at the same time, when marketing teams focus only on the short term, they miss some of the strategic roles that marketing can and should play within the organization. From experience, I know that tactical, short-term focused marketing teams are not very well-respected. In order to be considered a strategic function (like finance, operations, R&D, etc.), there are other critical roles the marketing function must play. I listed those key areas in the blog entry 6 Key Roles of Highly Successful Marketing Organizations. I won’t repeat them here.

What I would like to do is highlight 10 distinct ways marketing can become more strategic in any organization. They include:

1. Bring more customer insights and the voice of the customer into the organization.
2. Write a strategic marketing plan, budget funds towards it, and execute against it.
3. Focus a few key positions on strategy (long term) and keep those people focused on longer term activities and goals (such as planning, strategic initiatives, etc.) vs. execution (tactical).
4. Separate sales or business development functions from marketing, if they are organizationally together. When marketing is imbedded within the sales department, it makes it particularly difficult to be strategic.
5. Separate marketing operations (the business of marketing and reporting, forecasting, pricing, sales response, etc.) from marketing management. Give it focus within an organization.
6. Set objectives, accountability, and metrics for short and long-term team objectives and hold your people accountable for delivering results for both. After all, what gets measured gets done.
7. Hire the right people for your organization. You need people who have the skills to operate at both a strategic and tactical level.
8. Learn to prioritize and say no. Of course, this is very hard to do. But stick with activities that are aligned with the organization’s objectives, not the “issue du jour” advanced by an aggressive sales manager or the sales response team.
9. Read Marketing Managementby Kotler and Keller. This is a great book to learn about strategic marketing management.
10. Set expectations around long term focus with senior management. With constrained resources, a common feature to most marketing organizations, certain tactical activities will need to be de-prioritized in order to spend time on the longer term, strategic elements of the business plan. These strategic elements should contribute to the company’s longer term revenue and profitable growth.

Effective marketing requires a balance of strategic and tactical work. Too little tactical work and marketing will be seen as working “in the clouds.” Too much tactical work and marketing will not be valued as a strategic function but as a “sales assist” team.

I would be interested in hearing your thoughts on how you have balanced these orientations within your own marketing teams.

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Posted By Vince Ferraro

May 7th, 2010

I recently had a chance to read an exciting new report that was released by the CMO Council on the current state of collaboration and how it impacts innovation within an organization with  suppliers, partners, vendors, and customers. How do we, as marketers, lead the conversation to optimize the customer innovation and collaboration cultures inside and outside our companies?

Today, we live and work in a highly interconnected world. Global interdependence has become a definitive economic reality. The flow of goods, information and capital across borders is accelerating at an astounding pace. World exports grew from about 40 percent of global production in 1990 to more than 55 percent in 2004, according to the World Bank.  Cross border listings on world stock exchanges have also increased rapidly. Non-U.S. listings on the New York Stock Exchange doubled from about 8.5 percent in 1994 to 17 percent at the end of 2003 and, as of June 30, 2009, there were some 3,100 foreign listings on the world’s 52 leading exchanges. Nearly all Global 2000 companies now derive more than half of their sales from international markets.

For most companies today, borderless business is far more than a statistical abstraction. It reflects a new way of doing business. In a 24×7 interconnected economy, corporations are relying more heavily on outside business partners to innovate and deliver products and services, drive critical business processes and ensure seamless experiences for customers around the world. As a result, companies of all sizes and across all industries are seeking to redesign the way they do business in order to integrate a diverse mix of suppliers, partners and vendors more tightly into the fabric of their business. To do so, companies are seeking to transform the way they connect, communicate and collaborate across complex interconnected networks of customers, suppliers, business partners and vendors. If improving and integrating internal enterprise processes and systems was the mandate of business in the 1990s, today those requirements extend far beyond corporate boundaries.

The Collaborate to Innovate study, conducted by the Business Performance Management (BPM) Forum and the Chief Marketing Officer (CMO) Council, takes a new look at the state of business collaboration in the early 21st Century.

Sponsored by Sterling Commerce and AT&T, Collaborate to Innovate is based on an in-depth survey of more than 400 executives and managers whose companies do business around the world. Some 36 percent of respondents represent companies with revenues of more than $1 billion. In addition to our quantitative survey, we conducted 23 qualitative discussions with leading academic experts and executives with major global corporations who are deeply involved in supply-side and demand-side value chain partnership management and development.

As part of the Collaborate to Innovate initiative, the BPM Forum and CMO Council has aggregated statistics on the market impacts, supply and value chain management, customer collaboration and innovation cultures across various regions and industries.

To download the complete report, please find it here.

 http://www.bizcollaboration.org/wp-download.php

The Business Performance Management (BPM) Forum is dedicated to advancing performance accountability, process improvement, operational visibility and compliance in global organizations. It provides support to thousands of senior executives and practitioners representing enterprises with more than $500 billion in combined annual revenues. The BPM Forum’s C-level members engage in research, thought leadership, and knowledge exchange programs around a variety of strategic issues and challenges. www.bpmforum.org

The Chief Marketing Officer (CMO) Council is dedicated to high-level knowledge exchange, thought leadership and personal relationship building among senior corporate marketing leaders and brand decision-makers across a wide-range of global industries. The CMO Council’s 4,000 members control more than $120 billion in aggregated annual marketing expenditures and run complex, distributed marketing and sales operations worldwide. In total, the CMO Council and it’s strategic interest communities include over 12,000 global executives across 90 countries in multiple industries, segments and markets. Regional chapters and advisory boards are active in the Americas, Europe, Asia Pacific, Middle East and Africa. The Council’s strategic interest groups include the Coalition to Leverage and Optimize Sales Effectiveness (CLOSE), Brand Management Institute, and theForum to Advance the Mobile Experience (FAME). More information on the CMO Council is available at www.cmocouncil.org.

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Posted By Vince Ferraro

March 30th, 2010

Is Your New Product Introduction Process Launching Your Company to Success (Part 2)?

In this blog post, I will continue the conversation about key success factors for new product introductions. In the last blog (Part 1) we identified 6 factors that are crucial to your company’s product launch success. In this blog, I will discuss 3 more and offer some conclusions.

Accurate Supply and Demand Planning

Related to rollover strategy, having the right demand and supply plan is crucial for a successful product launch. In addition to the uncertainty of fluctuating introduction dates and slipping R & D schedules, a poorly executed supply and demand plan will knock the wind out of the sails of any new product launch, no matter how well executed or creative the other elements of the marketing mix are. This topic, in more detail, will be the subject of another blog post. But the short answer is that (often times) significant inventory needs to be built in advance of a product introduction, in order to accommodate the initial ordering spike and channel stocking requirements. There is no hard and fast or easy rule to apply here. The decision on how much inventory to build is a function of many factors including B2B or B2C segmentation, forecast accuracy, long lead time parts procurement, channel stocking requirements, and of course the rollover strategy – hard or soft. Also to be considered is the inventory policies for that range of products. For example, you may choose to have a higher degree of inventory, manufacturing and mix flexibility with a $199 product than a $99 product. Why? Because (generally speaking) there is more revenue, profit etc. in selling the higher priced products. When companies have a broad portfolio of products (like HP did) – low end and low priced products generally had lower levels of profitability than higher end and higher priced products. This should not be a surprise. As a result in some companies, low end volumes are limited to a certain percentage of total products sold or to a specific market share goal, in order to prevent too much erosion of profitability and mix to the low end.

Delivering Broad Communications

The importance of delivering broad launch communications to suppliers, the channel, key customers, and sales reps are crucial to coordinating a successful product introduction across key stakeholders. Some companies (like Apple) don’t let their sales reps know about their new products the day of the launch. This often results in end user confusion as nobody can answer the inquiries/support calls of end users when the product is announced. While there are legitimate issues with wanting to maintain confidentiality of a product launch (e.g. to prevent a premature competitive response), years of experience have told me the more open and coordinated conversations around the new products, their launch strategy, rollover plans, key messages, etc. are, the better the outcomes for OEMs and their channel partners and customers.

Having An Integrated Marketing Plan

For many people, the launch plan is synonymous with marketing communications – PR, marketing, demo units, marketing collateral, advertising, and promotions. While these are certainly important elements of any new product intro, there is another layer of thinking in the launch plan that needs to be considered. For example, how strategic is this product for the company’s future revenues or company/brand image and how strong is the story? Is there any announcement within this intro (e.g. hardware, technology, partnerships) that fortifies or offers proof points for the company’s strategy along a new or existing dimension? Each product introduction should be like a piece of gigantic jigsaw puzzle that fortifies and moves the company to improved competitive advantage. Master this concept and you will beat out 95% of your competition in the effectiveness of your product launch process. If you start thinking like this right now, I am confident you will get the new product launch results you are looking for.

Here are some additional questions to think about, related to your launch strategy.

10 Questions to Consider About Your Launch Strategy

1. Is the new product strategic or tactical? Both in financial performance and market segment
2. What is the key value proposition and messaging of the product? Is it compelling and sustainable?
3. What is the positioning of the product, related to the competition, and other products the company manufactures? Is the product innovative and can it disrupt the competition?
4. How does this product contribute to the longer term vision and financial performance of the businesses? Is it a big contributor to future growth?
5. Is this product newsworthy? Will the press or industry analysts run a story about it?
6. How much do end users care, read or follow the news of a new product announcement?
7. How frequently does the company launch products – monthly, quarterly, or annually? The idea being is that the velocity of any particular introduction, and its activities, will be a function of how often introductions are done the business unit. Not all of them can be strategic.
8. Will there be enough inventory available at launch? A related question … is there too much inventory remaining for the old product? If so, what do we do about it?
9. Are all of the elements of the launch aligned and ready to go? For example in addition to product availability are demo units ready, advertising creatives media buying plan in place?
10. Is the product launch coordinated with end user and channel seasonality? If timing is not synched, the potential exists that you will not get enough channel or end user momentum for the launch.

Let’s recap. There are 9 factors that are key to successful product introductions. They include:

1. Reliability of the Product Development Schedule
2. Strategic Nature of the Product
3. What is The Story Behind the Product?
4. Availability of the Product after the Launch Announcement
5. Rollover Strategy
6. Windows Planning
7. Accurate Supply and Demand Planning
8. Delivering Broad Communications
9. Having an Integrated Marketing Plan

In conclusion, a product launch is one of those top 5 things marketing can do to help ensure the successful viability of the future business. Careful consideration about the right focus, resourcing, and support given to a new product launch will go a long way in helping build brand awareness and preference and future financial and market share growth. One final comment and that is as it relates to services and software. In the case of these product groups (vs. hardware), there may not be a physical product to rollover. But the think most of the other factors apply to these product categories. So please let me know your NPI success factors in your comments back to me on this blog.

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Posted By Vince Ferraro

March 22nd, 2010

Is Your New Product Introduction Process Launching Your Company to Success (Part 1)?

For many companies that are trying to grow, new product introductions (often called NPIs) are a critical component to that growth strategy. In fact, some companies even set goals around new product introductions in hopes that it drives significant future revenues and profitability. For example, 50% of future revenues over the next three years is derived from new product introductions. Of course, not all companies can achieve that goal. It depends on the industry, its typical product development cycle, customer expectations for new product releases, etc. A 50% goal for a technology company would not be an overly aggressive goal.

There are important distinctions to be made about how new products get introduced, depending on what type of product it is. Using Apple, as an example, new products can come from three general pipelines (although there are certainly variations). Completely new products (like the iPad), replacement products (like the iPhone 3GS), and product line extensions (iPod Touch after iPod Classic).

As a marketer attempting to plan for a successful NPI, there are some important considerations that need to be included. First, many people equate a new product introduction with their PR and Marcom activities. They would say that they have done the press release, created the data sheet, took a few photos, put the new product in the catalog and price list – so they are done. While these are essential components of an introduction, it is only a few of the many launch activities. Second, most successful introductions are tied to defining and articulating the strategic intent of the company and its business strategy. What do you think is more interesting? A press release about a new product and its specifications or a press release which talks about the strategic intent/strategy of the company with a new product and/or its technology as the proof or substantiation point? Here is a great example about merging strategy and product introduction messages from Hewlett-Packard.

The more effective new product introductions are measured on a weekly basis. Depending on the type of product introduction – new products in new markets are typically more complicated than a replacement/rollover product. Starting an introduction process more than 12 months in advance is not unheard of.

Other important considerations include the following.

Reliability of the Product Development Schedule

It is paramount that a new product is introduced using a highly confident R & D schedule and process. Nothing screws up an introduction more than a development team that cannot commit to key dates, especially within 90-120 days of the launch for this is when key introduction trigger decisions (e.g. buying media, press and analyst tours, product rollover decisions) need to be made. Often times, you will hear the term “pull the trigger”. This simply means a critical decision has to be made and any pull back would be difficult and/or costly.

Strategic Nature of the Product

How strategic the product is (which could be defined by revenue contribution, profitability, new market, market share potential, etc.) will determine how much effort and money will go into the launch strategy and plan. So the question is, is it a Big Bang launch or a minor new product introduction? Or is it something in between? Resources will generally get applied according to the strategic significance of a product’s launch. The Boston Consulting Group’s Portfolio Growth Matrix is one way to help define which products are the “Stars” and are worth more attention vs. the “Dogs”.

What is The Story Behind the Product?

In a successful, new product launch, there needs to be a strategic message or story behind the product. How does the product contribute to the future success of the company, develop a new market, and reinforce previous strategic announcements? A successful product launch will be a proof point to a company’s strategy and reinforce a strategic initiative, not distract from it.

Availability of the Product after the Launch Announcement

In a perfect world, we would launch a product on a particular day and customers would hear about it, rush to the store and buy it, and have instant gratification. Rarely does it work that way. There are two important things to consider. First, If it is a new product category for the company or a new product in a new market or a new product in a market where the company does not play (e.g. Apples original iPhone or Microsoft’s Xbox 360), there is some flexibility on when a product needs to be available in the channel. In fact, many companies introducing products in a category like this will sometimes pre-announce a product in order to disrupt their competitor’s business (like Apple’s iPad and Amazon’s Kindle). This can be an effective strategy when used appropriately. When the product replaces an existing product, great care needs to be exercised to ensure the rollover from the old product to the new product does not disrupt channel supply or company revenues. Of course, this is easier said than done; but it is possible in a company with world-class product development launch capabilities. There are, of course, numerous examples of companies that get this wrong.

Rollover Strategy

With products that are replacing existing products, great care needs to be exercised in the formulation of the rollover strategy. Sometimes companies will initiate a “hard rollover”, which means that production of a new product will ramp down or stop as the production of a new product ramps up. Others prefer to do a “soft rollover” where the old product and a new product co-exist for several months, until the new product has enough inventory and there is confidence of high quality units being produced. Based on my experience launching hundreds of new products, my suggestion is a “soft rollover” approach as a hard rollover is extremely difficult to execute well. It is somewhat channel dependent. There are other considerations including customer type, channel used, and build to order vs. an inventoried and stocked product.

Windows Planning

It almost always makes sense for new products to be bunched up together and introduced in a few, strategic timeframes (also called Windows as opposed to numerous discreet product introduction events throughout the year. Why? Because, some of the best product introductions will be tied to seasonal purchasing cycles of the customer. For example in retail, such windows include Back to School and Holiday. You would never launch a product in December. With business customers, these Windows can be tied to government and education buying cycles or non-holiday Spring and Fall months. For example, it makes no sense to introduce products for business during regional times for vacation (like summer months, August in Europe). I suggest a 3 stage introduction window planning approach – which looks at 0-6 months, 7-12 months, and 13-18 months out into the future. The idea is that introductions are being managed across three different time horizons as opposed to discreet moments in time. It would not uncommon for the actual launch dates and plans to change in these outer windows (greater than 12 months out) as more certainty comes from the product development schedule. At the same time, there needs to be a lot of detail (and stability) about launch plans in 0-6 months. Another important part of this process is that it allows comparative window introduction window planning. What I mean by this is the product messaging, promotional campaigns, advertising, strategic intent communications can be looked at as evolving and inter-related to each other over the 3 introduction windows. This approach, in and of itself, will make your new product launch process more strategic.

I will end the blog here for now. I will complete this discussion in a Part 2 of this topic, which will be my next blog post. In conclusion, let me say that the keys to success for any new product introduction is planning, planning, planning. In addition, it’s knowing how the new product fits into your company’s strategic plan and vision and being able to articulate that (product and strategy) to customers, channel partners, stockholders, and other key stakeholders.

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Posted By Vince Ferraro