I am not so concerned about the method or methods you use but more importantly that you or someone is DOING an analysis.  In today’s age with all of the types of methods and tools available, I find it absolutely amazing how many companies are either not doing any analysis or do it once and think they are done.   Like death and taxes, one thing you can count on is that your competitors are doing an analysis on you!

Given that let’s first start with the SWOT analysis, some pros and cons regarding it and then a few alternatives methods.

First, SWOT analysis is the identification of Strengths, Weaknesses, Opportunities and Threats that are related to the strategic and tactical direction of a company.   The “scanning “or analysis of the internal factors that relate to your direction and strategy are the strengths and weaknesses.  Examples of strengths could be vertical integration or distinctive skills/ intellectual talent, while some weaknesses could be a poor sales channel or lacking of sufficient financial resources.   Scanning of external forces are opportunities such as new markets or new products, and threats are areas like governmental regulation or lack of market share.  While SWOT analysis is one of the most commonly used methods (2007 global survey of top executives by McKinsey stated that 82% used SWOT, second to competitive analysis)   it like other methods has its pros and cons.

The pros are:

- Easy to understand and the four categories can be acknowledge quite quickly.

-It really does not require a rigorous level of research

-The context is usually within the understanding of the corporation

The cons are:

                -Lists can become long

                – Lists can be poorly defined and ambiguous

                -Not a very detailed or well verified list

Some suggestion on how to improve your strategic analysis:

1-You can augment the SWOT analysis by adding a weight and rating factor to each entry on the SWOT analysis.   The weight is a factor (0 to 1)   that ranges from very important to not important for each internal and external entry.  Next have a rating factor (1 to 5) that indicates how well your company is doing regarding this entry.  Multiply the weight times the rating to get a weighted score. Next, rate each entry how it might impact your company in the short or medium or long term situation.   These enhancement greatly helps eliminating a lot of the guess work, ambiguity, long lists and improves the overall ranking of the to be developed tasks as related to each entry.

2-Another variation of the SWOT analysis is to form a matrix just like one does in the SWOT but have the Strengths, Weaknesses, Opportunities and Threats on the vertical and horizontal axis and is the four sectors produce Strategies for strengths for working on opportunities (SO), Strategies for avoiding threats (ST), Strategies for opportunities to overcome weaknesses (WO) and WT, strategies for a company to minimize weaknesses and avoid threats.

3-A different analysis method is the Balanced Scorecard Method; this tool is used to align business activities to the strategy of the organization.   It works off of four areas; 1-financial by using important financial “levers” or targets,2- customers, it  tracks and measures inputs about how customers view the company,3- business processes that measure where the business excels and 4-growth, measurements to see if the company is growing and improving.

4-A fourth method is the PEST analysis which stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the environmental and scanning component of strategic management.   Here we introduce external factors that in the current environment have become critical to the success or failure of many companies.  One very current example is the price of oil and gas and its impact on companies that are very dependent on oil and gas in one form or another.

In summary, it is not so much which method or tool one uses but most importantly, you must do some form of analysis and do it on a continuous basis!  If you would like to know more about these analytical methods or other methods that might be well suited to your company, send me a note. 

RHL 03/14/12

I have written about deflation before, here, and here.  Recent anecdotes lead me to believe that the rate of deflation is picking up.  Specifically:

1. Direction, from one of my Doctors, to either Target or Walmart to fill a generic description for $4.00, as opposed to my regular pharmacy and higher prices.
2. The rise and use of social networking coupon sites, and extreme couponing.
3. The reported lack of full time dentist hygienist positions…the work being done by part-timers…saving the dentists the costs of a full time employee.
4. The increase of “2 for $20.00” meals at some restaurants, where essentially an appetizer or desert is thrown in for free.
5. The promotion of “X years free service” when you buy/lease a new car.  Unless car prices have gone up to cover providing free oil changes, tire rotations, etc. this is a cost coming out of some profit center.

And I am sure that you have your own examples.  The point is, as the economy slowly moves out of the Great Recession, the 99%’ers are taking advantage of every-day cost savings which, when aggregated together more than offset the inflationary effects of increases in gas and health care.  These cost saving actions and the cost saving mind set easily translates to business decisions, where the buyer or buying committee becomes receptive to "added value" when making a purchase.

For the CMO, this means making sure that each product offering now includes something “extra” that wasn’t there last year.  This could be free added service, lower cost financing, no cost installation, etc.  It is important to note that the value added is not adding another feature (higher speed, more I/O ports etc.); rather it is adding a new additional value to the original product package.

In short, in today’s environment even though a product/service’s value proposition separates it from the competition, the total offering has to be enhanced with an additional value in order to close the deal.  This is especially true in highly competitive oligopolistic markets where the differentiation between the key competitors is very small.

For management worried about how to pay for this change, the answer comes from the company's buyers/administrators.  For every 2-3% that is added to the value of the product, management must demand that the buyers get at least 2-3% added value from suppliers.

On a personal level, are you taking advantage of added value in the products/services that you are buying?  Has this added value swayed your purchase decision making?  Do you see how this process can translate to your firm’s product and services?  Are you prepared for deflationary times?

Or, do you feel that we are in a time of inflation and are acting accordingly?  Let me know how you see the future unfolding, and how your competitors are acting.

RHM 3/6/2012

Pawngo, a startup on-line pawn broker (who shares investors with Groupon) thought it could attract attention and gain customers by dumping 8.000 Butterfinger candy bars on Copley Square in Boston, with a sign that said, “Thank You, Wes Welker,”  and promoting the event on twitter.

FAIL!!!!

No marketing campaign should ever be built on or contain derogatory comments or references to your competitors, people or things.  Full Stop.

Boston sports fans are among the most loyal in the country.  They have suffered through heart-breaking losses and enjoyed championships.  Their relationships range from religious to fanatical.

But they are fans.  They know that they are rooting for teams, and that teams win, individuals don’t.  The Patriots as a team lost the Super Bowl.  They would have won as a team.

Highlighting a person, thing or place and making fun of it tends to alienate fans and followers.  Pawngo has about as much chance of gaining market share in New England as Bucky Dent has of being elected Mayor of Boston. (To reference another heart breaking loss.)  What Pawngo, Chevy (who belittled Ford in one of their ads) and others don't realize is that people follow teams (or brands) and an insult to a team/brand is an insult to them.  This negative impact lasts a long time.

While the CEO of Pawngo has offered an apology, it is full of marketing BS, and you can almost hear him chuckling, “gee, I am sorry” …but look at all the free press we got!  While some say that no publicity is bad, I say what Pawngo did is bad and will have a long term negative impact on them.

To young and old marketers, this is a valuable learning moment. 

To Wes Welker and the Patriots, I say thank you for doing as well as you did, we know that you tried hard and gave it your all…job well done.

RHM

2/9/2012

The past two months have been spent in caring for my mother-in-law.  This has involved living in the Philadelphia area for an extended period, a hectic but pleasant Christmas and more than sufficient time to think about what goes on about us while we are doing “work.”

Here is the first of my observations, with others to follow:

The University of Pennsylvania Hospital has a new pavilion dedicated to dealing with sick people.  The facility, from top to bottom is superb.  Each examining room (on the floor we visited) is equipped with the requisite examining table, a desk area with stool and two chairs.  One chair is of normal size.  The other is 50% larger.

This larger chair started a chain of thought that went something like this…the U of P wouldn’t put in larger chairs unless they were needed, they are needed because people are larger, people are larger because of the quality of health care and nutrition they receive when they are young…no they are larger because they are obese. 

A visual observation of other patients (very non-scientific) reinforced my thought about the obesity issue.  There are a lot of sick, obese people in hospitals today.  Why are they obese?  Too many calories, not enough exercise.

Obesity has become an epidemic, and if not stopped will soon overwhelm our medical system with costs that could be avoided.  Some have called for taking away obese children from parents which they see as a form of child abuse. Certainly there is a precedent for Government action, as the Surgeon General was the power behind attempts to ban smoking.

My recommendation is less draconian and stems from my business background.  Place a significant tax on sugars (all types, cane, corn syrup and anything else that adds empty calories).  This will make high caloric sugar based items more expensive, and the monies raised can be used to offset the increasing costs of medical care.

In the 1700s, all that was available was refined cane sugar.  It was so highly prized that it was kept under lock and key and taxed.  Per capita sugar consumption, along with obesity, Type II diabetes, hypertension and other related medical problems was low.   In the 1700’s the average Englishman consumed about 4lbs of sugar a year.  Today it is estimated that the average American will consume over 150lbs of sugar a year.  I don’t think our bodies have evolved over the past 300 years to accommodate change of this magnitude.

As with all simple recommendations, this one doesn’t stand a chance due to the significant lobbying power of the food producers who will see their profits plummet.  Others will say that it is a regressive tax on the poor, for if they want to eat sugar, it will cost them more as a percentage of their income than the rich. 

To the food producers and lobbyists I ask, how do you sleep at night knowing that you are killing people?  To those concerned about the tax inequality, how much are you willing to be taxed in the future to pay for even higher medical costs?

As you can see, sitting in an extra large chair, with time to think, took me down a path of advocating for significant taxes on sugars.  While this is probably an imperfect solution with unintended consequences, the alternative that is facing us as a nation appears much less palatable.

Your thoughts?

RHM 1/17/2012

PS  Wide seats have a larger impact than just in hospitals: http://www.nytimes.com/2012/01/16/nyregion/transit-agencies-in-new-york-area-consider-wider-seats.html?

The implication of this 50 year old survey resonates today, as we struggle with 9+% unemployment and 25M+ people either unemployed or underemployed.  Marketers have to maintain or establish a brand that is trusted, to capitalize on a buyer who is reluctant to risk scarce resources on new products.  Conversely, if the trust is lost, so is the buyer.

This is reflected in this 2009 chart on Brand Trust from Concerto Marketing Group.

Maintaining a brand is one of the more difficult tasks.  In the market, the brand is under attack from competitors who are offering new features, discounts or blended services that are aimed at taking away the brand’s customers.  In the company, the pressure is on the development and manufacturing functions to make the same product, but at a lower cost.  While each change to the product/service may be subtle or appear inconsequential, the cumulative effect over time may cause customers to notice and reject the brand.  Or, the change can come from well intentioned causes, as NECCO found out with their wafers.  Regardless of the cause, once the trust in the brand has been lost, so is the customer.

Marketing’s role in this environment is clear… to do everything to maintain the status quo and to clearly communicate the brand’s value proposition.  50 years ago this was done by print and point-of-sale advertising, today it is done via Facebook pages, twitter and other social media tools.  The objective however is the same; reinforce the brand’s image, its message and its value.

At the same time the Marketing department has to fight the internal battle against changing the product.  This should include significant testing of any changes before allowing them to be introduced, as well as maintaining and expanding the same level of frequency and reach that was used to establish the brand in “good” times, regardless of the cost.

Typically, selling to a customer who knows you costs less than trying to sell to a new customer.  Knowing that customers trust your brand and are buying it provides a base or foundation…providing that you maintain that trust.  At the speed with which changes occur in today’s market, failure to maintain the buyer’s trust can be fatal to a brand.

If internal changes are planned for your brand in 2012, whether in formulation or resources, have you fully tested their impact?  (By testing I mean better testing than what Bank of America and Netflix did before they changed their products.)  Can you anticipate the external attacks and how you will respond?

RHM

11/7/2011

That the “Occupy” movement has gained visibility and traction over the past few weeks is an interesting commentary on our times.  The demographic studies done a few days ago as to who is part of the group seems to dispel the myth that they are white suburban hippy want-a-be’s.  What is clear at this point is that the group is dissatisfied with any one of the following:

• Lack of jobs and/or unemployment
• Student loans
• Mortgage rates/foreclosures/loss of housing
• Wall Street players making inordinate amounts of money
• The demise of the American dream that if you work hard, you will be rewarded
• The inability of elected officials to act positively

My interpretation of this social upheaval and dissatisfaction is less nuanced.   I believe that the average American is born with a fundamental sense of Fair Play.  We intuitively know when something is right and when something is wrong.  The “Occupy” people are expressing this feeling that something is not fair and is wrong, and they want it to be made right.  This does not mean that they want hand-outs, or a more socialistic society, or stronger government intervention.  They want things to be more in balance and more equitable.  (An example of the inequality can be found in this NY Times chart: http://www.nytimes.com/interactive/2011/10/26/nyregion/the-new-gilded-age.html?ref=politics)

What does this mean to Marketers?  Dick and I have written before about “under-promising and over-delivering” and the need to exceed expectations.  If my assumption about Fair Play is correct, the practice of exceeding expectations is now a requirement for every company. 

This does not mean lowering prices, or giving things away.  It means being responsive to customers, whether B2B or B2C.  For example:

• Making it a practice to solve a customer complaint on the first call, or within a designated period of time.
• Beating or meeting all communicated delivery dates, whether it is a product or services.
• Including all elements of a purchase at the time of purchase, not “nickel and diming” the purchase experience.
• Deciding not to charge for something that has been free or bundled in…the Bank of America debit card charge and Netflix streaming video change are two current classic examples of creating customer dissatisfaction.

I am sure that you can implement other actions that are specific to your business or service.  The point is that in America today there is a growing desire for Fair Play in all things.  Recognizing this, good marketers will ensure that their products and services do not run against this current, or if they do, make the appropriate changes.

Do you even know how your products are perceived in the market or do you act with the hubris of BofA and Netflix?  If this movement gains more steam will you win or lose?

RHM ­- 10/27/2011

Q4 is the usual time for pulling together plans and budgets for the following year.  In the past, I have written about the problems and issues that this process generates, but decided this year that a checklist might be of better use.

  __  Strategy, goals and objectives – Are the goals and objectives for 2012 articulated?  Is the strategy to reach these goals and objectives clearly spelled out, with priorities specified?

__  Budget and staffing – Is the budget for 2012, even at an approximation level, available?  Is the headcount forecasted to go up, down or remain the same?

__  Support groups – Are all the support functions (customer support, field services, product services, etc.) in line and capable of supporting the plans.

__  Events – Are all the major events/milestones known, i.e., new product introduction in Q1, major trade show in Q3, major partnership agreement in Q1?

__  Cost and profitability – For multi-product companies, are the costs, by product, going up, down, or remaining the same?  Will pricing remain the same or change?

__  Policies – Is there any need to change or modify customer facing policies or social media policies?  For example, has the current “Response” policy and procedure been effective?  Is the policy about employees discussing the company on Facebook and twitter clear and being followed?

__  Target market – Have you identified the target market?  Is it (audience) the same as it was in 2011?  Does it have the same segmentation?

__  Campaigns – Are there developed campaigns (strategies) to support all the marketing activities?

__  Marketing mix – Is the 2011 allocation of Marketing spend applicable to 2012?  For example, should more resources be devoted to social media, or to trade shows?

__  Tactical product pans – Will the 2011 tactical plan be effective in 2012?  Specifically is the “volume” product still competitive and profitable, is the “loss-leader” able to generate sales, and are there contingency plans in place in the event of competitive inroads?

__  Sales relations – Is there agreement on what constitutes a qualified lead?  Is Sales looking for additional support in the form of Product Managers?  Are Sales’ lost sales reports meaningful in helping to define the Marketing mix?

__  Social media – Which 2011 metrics have been the most useful to Management?   How can these be improved or expanded in 2012, and at what cost?  Additionally:

• Is this the year to redo your website?
• When is the last time you updated your SEO activity/measure?
• Do you have a content calendar with confirmed inputs for Q1, the year?
• Can you improve your utilization of content?
• Are you up-to-date on the latest Facebook, LinkedIn, and twitter changes?

This checklist is meant to be a memory jogger, as each company and situation is different.  The point is that in approaching the 2012 budgeting process without a checklist, key things can be overlooked or forgotten.  The importance of a checklist has been proven by pilots and doctors, and should be used by all good Marketers.  (See: The Checklist Manifesto: How to Get Things Right by Atul Gawande)

Have you constructed your checklist for 2012 yet?  How many items are checked off?  What other items would you add to this checklist?

PS.  If all this is confusing, you can find help in our Marketing Resource Optimizer (MRO) product.  Click here to obtain a copy of Part 1.

RHM  10/20/2011  

Typically companies go from a very simple organizational structure to some form of corporate or divisional or strategical business units (SBUs).

Start –ups or small size companies are typically managed by one or two people (entrepreneurs) who have the vision and passion to get things started. The environment is usually flexible, dynamic, has little in the way of processes or procedures and is freewheeling. 

Unfortunately when the company hits a certain revenue size or development phases, the entrepreneurial skills become secondary or more bluntly, other skills are needed to move into the next growth stage.

Skills like marketing, sales, or financial become critical for the company to grow.  Again it is more often than not that the original founder does not have the required skills for the next phase.

Here are examples what some call “crisis of leadership” that happens every day:

A small software company was started by a very talented engineer and their initial revenues came from personal referrals, which helped the company grow to a certain point , then the stall point happened and no one seem to know what the problem was. After close to a year of stagnation, a consult concluded that this company was not doing any marketing what so ever, mainly because the founder believed “if we make it, they will come”.  Eventually the founder hired a marketing person and gave her ownership not only for creating some marketing programs but developing the next wave of market development documents.

Another example is about an extremely passionate person who started a charity organization and again grew it to a certain “donation level” and once again things came to a halt. In this case the founder tried to do everything from fund raising to printing the next newsletter. The problem was no one knew who was responsible for what and what their contribution was, so most just sat back and waited for the founder to take action.  Again, objectives and goals were personal and not for the overall benefit of the organization.

A third example is about Larry Ellison and Oracle.  Larry Ellison has great vision and a passion for his company, but Oracle also hit a stall point, but in this case Larry saw he was part of the problem and hired some financial experts and he focused on the next innovations.

For those at the top, here are some things to avoid according to J. Hamm “Why Entrepreneurs don’t scale” Harvard Business Review.

1-Don’t be to loyal to your comrades

2-Don’t become too task and detailed oriented

3-Be careful of single – mindedness,   because this can develop into tunnel vision

4-Don’t work in isolation, leaders lead, do not hide

If you see any or all of the above situations within your company, I would suggest seeking some outside advice in order to get a third party’s point of view.

Remember, a management strategy is just as critical as having a product or service strategy.  Not having a strategy is like sailing a ship without a rudder.

RHL  10/13/11

 I stated that customer satisfaction is the responsibility of EVERYONE!

Everyone “touches “  the customer and how everyone performs their job relates to the customer being satisfied.  I also listed several steps for starting a customer satisfaction program within any company. Lastly, Marketing should always look at their activities from the customer’s “glasses.”

Several people asked about research on customer satisfaction and activities that a company can perform and linking it to either starting a customer satisfaction program or improving their current customer satisfaction program.   Well the answer is a definite YES!

There are a number of approaches, companies and experts on this subject, but they basically boil down to a relatively small number of activities that help improve customer satisfaction.

Fundamentally, customers (both B2B and B2C) are looking for value (see my posting on good value propositions) and value is benefit minus cost.    Given this basic premise, one can link activities that focus on benefits and cost, and if one improves on these activities it will result in an improvement in customer satisfaction and in most cases have a positive impact on the company’s revenue stream.

Two examples of this relationship are:  One, developing a quality product that addresses a customer’s critical issues, resulting in a perceived benefit and subsequent purchases of that product or service. (e.g. disposable diapers)  Secondly, by developing a great relationship with the customer base or creating a wonderful image of your company that will be viewed as a benefit to the customer and again resulting in a purchase of the product or service. (e.g., Apple, Disney)

Bradley T. Gale’s book titled “Managing Customer Value” talks about developing a matrix of attributes related to customer satisfaction consisting of “levers” that when improved will result in an increase to the benefit attribute or when levers addressing costs are improved will also increase the overall value and thus the potential for increased revenues.   The key point is incremental or small improvements in some or all of these attributes have a multiplying impact on the revenue improvement factor.    So just a 1-5% improvement in several areas can result in increased revenues.  

So, as I stated before, everyone can impact customer satisfaction and there are metrics that can be put in place that do not require a major undertaking to measure overall customer satisfaction AND increased revenues. 

Have you stated your customer satisfaction program; if not why not?

RHL 8/16/11

The stumble in the economy could not come at a worse time.  Most companies are going into their planning for 2012, taking the first six months of 2011 as a baseline, estimating the balance of the year and using that information as the basis for 2012.  The information is not pretty and the forecasts are ugly.

This situation will produce the same old aphorisms and phrase; “Do more with less,” “Work smarter, not harder, “When the going gets tough, the tough get going” and so on.  The problem is that these trite phrases are the ones that have been repeated over and over since 2008.

There are 5 truisms that you, as the CMO, can use in planning for 2012.  If applied they will help, but not ensure that you will make the year.

1. Make sure that your product/service is differentiated.  If you have a “me-too” product you will only be able to compete on price, and no one wins a race to the bottom.  Lead with a differentiated product that offers more.
2. Provide quality.  Buyers, whether consumers or business, are looking to spend as little as possible over the long term.  They get this from quality products and service.  Poor quality reflects on their decision-making, and in the base of a business buyer, may be a career-limiting move.  Prove to the buyer that your product/service is superior in quality.
3. Service the buyer.  The day of “kiss and sell” is over.  Treat each customer as though they are unique, because they are.  The implementation of CRM tools makes it easy to personalize each buyer, both before and after the sale.
4. Match expenses to revenue.  For the next 18-24 months, the economy is going to be flat to down.  Unless you have a unique product in a growing segment, e.g., iPhone, plan on minimal growth and plan you expenses accordingly.  For example, if you are competing in an oligopolistic segment growing 2-3% a year, pouring money into building your brand may not be the best use of scarce resource.
5. Invest in Marketing.  This is not the time to cut back on Marketing.  Both Product Marketing and Product Management need to be fully funded.  The objective of most firms should be to maintain their market share, and if possible, grow it at the expense of competition.  This can only be done by fully funding marketing.  Moreover, everything is cyclical and this downturn will eventually correct itself.  When it does, those companies that have invested in Marketing will be the ones in the best position to take advantage of the upward curve.

For a related discussion on this topic, see the recent McKinsey article, We’re all marketers now…https://www.mckinseyquarterly.com/Marketing/Strategy/Were_all_marketers_now_2834

The next 18 months or so are going to be ugly.  There is no leadership emerging, either from Washington or from Wall Street.  The economy, worldwide, is drifting downward.  Companies that focus on their mission, and follow the 5 steps above will succeed.  Those that engage in attempts to win share and/or drive revenue by providing cheaper products, and choose to compete on a price basis, will lose.

Where are you in your 2012 planning?

RHM  8/4/2011