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

September 6th, 2010

The Zen of Marketing Management

Courtesy of Filomena Scalise / FreeDigitalPhotos.net

I was thinking about how, as marketers, we are so completely focused on end results, whatever they may be. We are obsessed about new product intro dates, pricing, social media impact, web site hits, sales, profit, market share, and the list goes on. We are whipped into a frenzy around measurement and ROI of our marketing investments.

This in turn reminded me of a Zen story that will shed some light on another important aspect of marketing. It goes something like this:

A student asked a Zen Master,
‘If I work very hard,
how long will it take for me to realize Zen?’
The Master replied,
‘Ten years.’

The student replied,
‘If I work very very hard,
how long will it take for me to realize Zen?’
The Master replied,
‘Twenty years.’

The student replied,
‘If I work very very very hard,
how long will it take for me to realize Zen?’
The Master replied,
‘Thirty years.’

The student replied,
‘But, I don’t understand…
why does it take longer when I work harder?
The Master replied,
‘When you have one eye on the goal, you only have one eye on the path.’

Too often in marketing we are obsessed with the goal, to the point that we fail to understand that the path, or the process, we used to reach the goal is equally, if not sometimes more, important. Oftentimes, marketing professionals fail to invest adequately in infrastructure and business processes that will ultimately help us achieve the expected business results. In marketing, it is often hard to rise above the challenges of the quarter to quarter “what have you done for me lately mentality.” Truth be told, businesses need to ensure that the right processes and tools are in place to reach those treasured results. Having a processes-oriented mentality (following the path if you will) will achieve many important things. First and foremost, it will help you build a better framework for problem solving.

For example, do you want to build a more effective new product launch capability?  In order to do that, you need to map out all of elements of a successful product launch – the timing, actions, owners, and interdependencies. A second important outcome is that a well-defined process should improve overall operating efficiency. Build the process out and you will find what you really need (and don’t need) to run the business efficiently. A well-defined process also optimizes workflow, making the overall decision process more efficient. That could mean reductions in people, time and money. Great BPO projects don’t add resources—they take resources away, because they are more automated, require fewer steps, and so forth. Finally, there is the matter of effectiveness. The path will lead to more effective decisions. The results include (among many other things) better product designs, enhanced time to market for new products, more accurate forecasts and improved pricing. One shortfall of the marketing function is that it is not always favorably viewed as being a tightly-run ship, due to all of the processes, metrics, and control systems such as the supply chain or the financial aspect. Because of this, we get a bad rap; but I think we are getting better and improving over time. Having said this, we still have a long way to go, and a long path to follow!

Therefore, the path to great decisions is as important as the goal. Being more process-oriented will help you keep your eyes on the path. Marketing professionals who focus only the goal will miss the enlightenment that can be found by following the path.

What is your marketing Zen?

Resources:

http://www.amazon.com/Z-B-Business-Administration-Practice-Transform/dp/1577314697

http://www-usr.rider.edu/~suler/zenstory/zenstory.html

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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

February 24th, 2010

I am late with this blog post, but I wanted to take some time to think about and define essential elements and functions world class marketing organizations exhibit. I may be biased because of the previous positions I have had at HP. But I believe the most successful marketing organizations and leaders create and blend roles that drive the business growth and deliver upon their functional objectives and deliverables. While I assume I will deliver many future posts on the topic of the role of marketing and CMO, let me say the following which may obvious to many.

The more the marketing role is structured around deliverables and tactics, the less value the rest of the company (and the people who manage the budgets) will ascribe to the marketing function. In contrast, the greater the ability of marketing to influence the business – whether that be strategy, value creation, new product development, growth initiatives, etc. the more value and importance a company will derive out of their marketing organizations. In my consulting practice and network, I have met many companies “enlightened” about the value of marketing. They say they want to build a “strategic marketing” organization and invest money, hire talented people, etc. The goal, of course, is admirable. But then ask the tough questions. You find out that marketing doesn’t report to the CEO/President like HR, Finance, Operations, etc. It reports two or three levels down in the organization. Think that is a strategic investment in marketing? Ask another question and they will tell you they don’t know much about marketing – they read that is important (or some consultant or the board told them it was important) and they want to invest, but watch it at a distance. “Prove to me that marketing has strategic value and we will elevate it in the organization”, they pontificate.

The marketing professionals that take on these roles, in many cases, are doomed to failure because their organization is not really ready to engage or support the marketing function at an appropriate level. Finally, some sales-focused organizations and CEO/owner managers are not ready to be “enlightened” by a more capable and powerful marketing organization or leader. They say, “Ignorance is bliss, but knowledge is power”.

What I can say, after observing great and not so great marketing organizations, is I believe there are 6 key roles that most successful marketing organizations (and the people in them) play.  Executing on them greatly improves the chances that world class marketing will be delivered.

• Be the Strategic Visionary for the Business – Shape the future direction of the company and help the company and the board see what the future and success looks like. Be an externally facing PR/Industry Analyst spokesperson about this vision and strategy with the CEO and the other executives.
• Grow Revenues and Share While Effectively Managing Profitability – Be the champion of growth in the company.  Build strategic plans, portfolios, and initiatives that drive growth short term and long term revenue and market share while delivering on the bottom line profit of the company – net profit, operating profit, EBIDA, etc.
• Identify and Create New Business Opportunities – Help the company identify adjacent, new business opportunities that can be grown organically or through acquisition. Assist the company in its make, buy or build decision-making. Finally, lead the organization in the identification of potential partners or acquisition targets
• Bring the Voice of Customer and Insights to CEO and C-Level Staff – Do it in a way they can be internalized and used to create value and competitive advantage for the company. Listen to what customers are saying. Create different ways to interact and capture that feedback (i.e. social media).  Be able to aggregate the data and provide meaningful insights that are actionable.
• Create and Manage the Right Marketing Structures – Ability to successfully brand, create, introduce, manage, and sell a company’s products and services at the appropriate cost and with the right ROI. Not everything in marketing is fun and glamorous. We need to create structures that measure the investment return (ROI) of the money we spend and create structures and processes to get what we need out of the organization to deliver the functional goals. We also need be great in the functional practice of creative and innovative marketing and understand and master relevant, new marketing techniques and practices.
• Proper Marketing Role is a Blend of Activities and Roles Over the Strategic Planning Horizon - Spend too much time in strategic planning, and the company may view marketing as being in an ivory tower. Spend too much time in tactical execution mode and you might not be seen as value-added function, but one that wildly spends money on frivolous activities. It is the classic Prisoner’s Dilemma. While not easy, good marketing organizations are able to balance the two well. One other thing I would mention is that as a marketing functional leader, spending too much time in strategy or execution risks labeling you as too strategic (can’t execute) or not strategic enough. Balance and harmony on this continuum is key.

The important point, in summary, is that marketing is the only function, in the office of the CEO, which can broadly lead an organization down the path of growth and strategic insight. Because of the scope of what marketing people do, this leadership doesn’t come from other functions such as HR, Finance, or Operations.

There is a lot of literature and articles out there about the evolving role of marketing and CMO. Here are a few that I found interesting.

CMO Tenure – Slowing the Revolving Door

The Evolving Role of the CMO

Evolving to a New Dominant Logic for Marketing

Happy reading and please let me know if you have other ideas, comments, or thoughts about key marketing roles.

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Posted By Vince Ferraro