Around this time last year (9/1/2009) I wrote A Checklist for Making the Year. In it I highlighted tactics that the CMO could use in working to finish out 2009 on a positive basis.

In reviewing that post a year later the tactical advice provided is just as applicable this year as last, and bears repeating:

1. Protect and cultivate your current customers.  Losing a key customer to a competitor not only reduces revenue; it gives the competitor a weapon to go after your customers.  It is harder (more costly) to get a new customer, and very costly to lose an old customer.  To make sure that your customer base is protected, keep your customers happy.  Make them understand that their needs are being met and help them understand your goals, Remember, any additional sales, upgrades, migrations, etc. that you make to the installed-customer base is less costly than selling to a new customer.
2. Hone your value proposition message.  Today’s environment reflects fear and uncertainty.  A company’s value proposition should address these concerns, by merging the differentiated message (faster, easier to use, longer lasting, etc.) to creative financial offerings that enhance or increase the ROI… in a few words that are clear, memorable and always visible.
3. Enhance your value by offering more at the same price. This is not a recommendation to cut prices, but rather a recommendation to augment the product/service offering with more value.  Free shipping, free installation, lower cost training, extended warranties, no-cost upgrades, etc. can be tied to the basic value proposition to make a more compelling story.  Each of these tactical moves can be limited by time, or tied to volume, so that when the economy picks up they once again become chargeable items.
4. Understand your demographics.  If you have had success in a specific vertical, geography or segment, continue to push each and every part of that area.  Having success in the education market doesn’t automatically mean that you will be successful in Financial Services.  You might find it easier in a growing economy but trying to convince buyers in today’s economy is difficult…especially when competition is protecting their turf.
5. Increase your visibility.  Traditional ways of communicating your message/value proposition are changing.  The reach of print media is down, fewer people are attending trade shows and seminars, direct mail, both snail and email, appears to be less effective, traveling road shows aren’t getting the audiences they have in the past, etc.    Increasing your visibility in this environment requires the pragmatic integration of applicable social networking tools to an expanded program.

In a recent talk at the Wharton School, UPS’ CEO Scott Davis was reported as saying:

‘The current shaky economic environment is a challenge for all leaders, Davis acknowledged. He detailed three types of corporate responses to the economic downturn. “Some companies won’t make it. Some will be crippled; it may take five, six or seven years for them to get back to the level they were at before the collapse.” The third type of company, however, will keep its long-term goals in sight. It will pursue strategic growth in line with its core values. These companies will effectively balance conventional and digital business, strive for efficiency and think globally. Consequently, Davis said, these companies will learn, adjust and evolve as the global economy recovers. “Some companies will come out of the recovery stronger than ever. Times of great uncertainty are also times of great opportunity.” ‘

I asked the following a year ago;  “As the CMO, can you spell out the new plans and programs you are going to implement after Labor Day?” To this I should add Scott Davis’ words….These companies will effectively balance conventional and digital business, strive for efficiency and think globally. Is this what you are doing?

RHM  8/27/2010

Many key customer meetings fail because the sales team didn’t deeply understand and effectively exploit the opportunity – they didn’t do all their homework.   The “opportunity” is not just what the team thinks it can sell.  It is more about knowing how to best position and present what they can sell — given the corporate strategies, executive personalities and competitive offerings.  And for that they need an information-fed customer strategy.

Cases in Point:

The good:

– A sales team planning to sell a large-scale enterprise IT solution to Sears Holdings changed its strategy after research found Sears was in no condition to make the purchase.  Sears had serious IT deficiencies and greatly lagged its top competitors technologically.  However, just post-merger with K-mart, the combined entity had serious leadership and decision-making issues, and the team now expected slow comprehension and execution of the solutions.  Based on these findings the sales team decided to pitch smaller, point solutions, and provide a vision for longer term solutions.

– A leading IT outsourcing firm selling ERP services to a large chemical firm tweaked its positioning after research found that the firm’s new CIO was “in way over her head”.  We learned that this CIO had no formal IT education, had just been hired away from a much smaller firm, and that her last ERP implementation was now failing miserably.   Her new CEO had publicly promoted his new ERP plan and his new CIO as its champion.  We suspected she was a bit overwhelmed.  Based on this intelligence, the IT firm subtly positioned its ERP outsourcing service as a way to the take the load of her back, and even more delicately – as a way to save her job.

The bad:

– At a customer briefing, the CIO of mid-size manufacturer began by asking the sales team if anyone was familiar with his firm’s business strategy.  After an awkward silence, he dejectedly looked down and explained their strategy.  Clear to me was that this deal was already lost – the sales team didn’t do its homework.

– Just recently, a state government CIO told me how frustrated she was with IT vendors lack of preparation — and respect, and she now insists that vendors understand their business strategy before they walk in her door.  “This is public information”, she tells them, “Find it”.

…and the ugly

– I witnessed a Fortune 100 firm senior executive, in support of a regional sales team, fly cross-country to attend a regional executive briefing — and swore never to return as he witnessed an unprepared, unfocused sales team stumble its way through the meeting.

From what I have seen, too much expectation is put on each sales person to analyze their strategic customer opportunities – and so this analysis rarely gets done to any acceptable level.  Customer meetings often take place with sales teams recognizing a lot more could have been known about the opportunity and decision makers.  No real connection is made with attendees.  Meetings meander.  Presentations are less customized, executive speakers less focused, and conversations less relationship-oriented.  Customers leave under-whelmed.  Sales teams leave potential relationships on the table.  Selling to strangers is a drag.

Sound familiar?

Despite the availability today of just about any customer information, few do the hard work of deep-dive customer analysis.  Everyone recognizes the need for customer research before a meeting.  Crucial information lies not just in SEC documents, Hoover’s and Crush reports, but also in blogs, Tweets, Facebook, LinkedIn, and every trade magazine and website on earth.  Add to this your firm’s hidden internal knowledge both from former sales teams and from your Market Research team.  Ignore the entirety of available strategy-setting customer intelligence and you are your competitors’ dog meat.  Ok, that was harsh, but you get the point.

What is Deep-Dive Customer Analysis?

Deep-dive is digging further into issues, reading between the lines, and constantly asking why.  Say you find a customer’s CEO quote in his quarterly earnings update that indicates a future 50% reduction in IT expenditures.  Digging deeper is trying to find out why.  What is driving this reduction?  Are they simply finishing off a large IT contract or are they fundamentally changing their IT approach?   How should you re-position your solution in light of these deeper findings?

The problem is this — Sales people simply don’t have the time, skill, or will to dig deep –and it is a tough assignment.  Research is not their specialty — and I would argue that today it takes a specialist.  Few world-class meetings result from second-rate research efforts.

Funny to me is how firms spend big bucks on McKinsey, Accenture, Gartner, IDC and even their own in-house research departments for overall market assessments, but when it comes to an actual, live strategic opportunity, they expect their sales people to Google and Hoover their way to the finish line.  Why does quality research support stop when it is most needed and when the ROI is so clear?

Serving a nice hot beef brisket lunch to a CIO who had recently blogged about his family’s devotion to Veganism?  Oops.  I bet the competition served nice hot Soba Noodles with Peanut Sauce.

Public information may be your gift, but it’s also your burden.

Here’s a solution — and what some top firms do: Embed a “Customer Strategist” into sales teams for strategic accounts.  Appoint a senior level analyst who understands the sales process, and who can gain the respect of, and influence “Type A” sales people and executives.   The Customer Strategist is responsible for deeply analyzing select customer opportunities, and for helping to construct intelligence-fed account and meeting strategies.  This person could also help coordinate customer briefings – ensuring sales strategies and presentations synch and reflect research findings.

The strategist’s role is to ask the sales team at each step of the sales cycle, “So what information do you need to close this deal?”  Then they use their skills to answer these questions, and proffer their own ideas and recommendations.  They filter, analyze and help integrate customer intelligence into the overall sales strategy.   They ensure the sales team conducts a focused, coordinated, visionary, and relationship-building customer meeting.

The illustration below depict the role of an embedded Customer Strategist:

Think about it – a more informed, focused, and relationship-directed sales strategy makes meetings more effective, efficient and fun.   Everyone wins.

For big-ticket, strategic opportunities, having a professional “Customer Strategist” perform deep-dive research duties for sales teams will accelerate opportunities and relationships.  Let the top sales people sell, and an embedded Customer Strategist support strategic opportunities – together they can deliver much more effective, focused, successful and fun customer meetings.

In future blogs, I will discuss more specifically how to dig deeply; what tools to use and how to spot business and individual drivers.   I will also discuss how firms point to price as their customers’ chief concern, but research often proves them wrong, as they were leaving millions on the table.

Ned Daubney is Principal Consultant at SalesTeam Strategies, http://www.salesteamstrategies.com/ with over twenty five years of sales and marketing management and research experience in both high-tech and financial services industries. Ned holds an MBA in Marketing from Babson’s F.W. Olin Graduate School of Management, and a BS in Accounting from the State University of New York at Plattsburgh.

This the third is a series on planning for 2011

For many B2B companies, September to December will define their year.  Current indicators are pointing to a flat to down macro economic environment, which does not bode well for those who had planned on growth in Q3 and Q4, with the flat to down forecast extending into 2011.

CEO’s and CFO’s, sensing that they cannot hit top line numbers (revenue), will strive to “manage” their companies by cutting expenses to meet or come close to net income goals.

THIS IS EXACTLY THE WRONG STRATEGY.

• In 1929, Ford outsold Chevy 10:1.  For a number of reasons, Ford essentially stopped advertising in 1929 and 1930.  By the mid 30’s Chevy, which introduced new products and continued to advertise was outselling Ford by more than 2:1.
• Going into the Great Depression, Post Cereal was the number one breakfast cereal company in the US.  They stopped advertising.  Kellogg’s became the number one breakfast cereal company.
• Proctor and Gamble moved to a new medium, Radio, created a new method of advertising, “soaps” and came out the Depression stronger than when they went in.
• In a previous article, I quoted, Ralph Grabowski who has proof that Marketing expenditures should exceed Engineering expenditures by 2.5:1 or more! In order to be successful.

Certainly conditions have changed from the 1930s.  However, the basic principles remain the same.

• Buyers need to know who you are, and why you are better/different.  Instead of print and radio, a better (lower cost) way to reach them may be through social media.
• Value predominates.  As every company is looking to cut expenses, those that can deliver high value will win out.  This can be delivered in the product itself or through a combination of products and services.  But the buyer must be aware of the value, before the sale, in order to judge it against other vendors.
• Consistency is important.  Buyers want to believe that the supplier is going to be there “tomorrow.”  Since tomorrow in this case is indefinite, it is important for the seller to project an image, via branding, of solidarity and permanence.  Cutting Marketing dollars is not the way to do this.

There is a high probability that B2B buying cycles will be extended and that some companies will “make-do” with what they have and forgo purchases.  However, companies can take advantage the opportunities provided by obsolescence and organic growth by providing true value propositions and positive customer experiences.

In order to be included on buyer’s short-lists a seller must be known.   In the Great Depression this was accomplished by using print advertising and a new media, Radio, and by promoting newer products.  The same applies today, with the opportunity to use new media as a means to promote your messages.

Instead of cutting expenses, the CEO and CFO should be investing in Marketing.  As the CMO, can you show them the impact of your LinkedIn, Facebook and Twitter placements?

Related:

http://firealarmmarketing.com/2010/06/24/how-much-marketing-is-enough/

http://firealarmmarketing.com/2009/03/30/369/

http://firealarmmarketing.com/2009/06/03/why-doesnt-the-buyer-buy/

RHM   8/12/2010

The more popular forms of sales structures are:

1-Product sales orientation: here sales people are well versed in the products that the enterprise has to offer.  This can be a specific product or a suite of products or a series of solutions that the sales person is the “expert” in.  One major advantage to this structure is having product experts, but a major disadvantage is potentially high costs to support.

2-Market orientation: here the sales team is orientated towards certain industries. Examples could be government, financial or transportation segments where the sales person sells solutions that are appropriate for each segment. One major advantage to this structure is having industry/solutions experts, but a major disadvantage is potentially duplication of function per areas.

Further sub divisions within market orientation are structures such as major/ named or national account management (NAM) or global (GAM) account management, where large of important accounts have assigned people.

3-Geographic structure: here sales people are assigned and are responsible for all accounts in their territory and for knowing all products. One major advantage to this structure is having low costs, but a major disadvantage is limited or few real experts in the field.

4- Sales function orientation: here sales people perform certain sales functions such as order entry, selling, or managing sales events.  One major advantage to this structure is having an efficient sales operation, but a major disadvantage is duplication of costs to support.

Complicating the different options is when a re-seller is added to the mix.  For example, a firm may have a direct sales force to sell to everyone except Federal and State Governments.  For these customers they use a specialized reseller.

Regardless of structure one selects consider the following guidelines.

-What selling efforts will be needed to meet the organizational goals?

 -What skills and how many sales people are required to meet these goals

 -What structure (from above) is best suited to handle the type of products or solutions for the types of accounts and/or industries.

-How should the selling effort be allocated/deployed to meet these goals

-How will the sales force be managed and compensated

-What will the workload be per sales person to achieve the targeted goals?

Most importantly, know your customers and make sure they will receive the best in class services!

RHL 8/10/10

This is the second in a series of articles about planning for 2011.

We are in the Dog Days of Summer, a hot stagnant period marked by a lack of progress.  Not surprisingly, this is often the time when many take well-earned vacations and when the wheels of commerce slow.

How does this impact the B2B CMO and how can he/she best use this time in planning for 2011?

First, quantify the knowns and givens.  For example:

• Macro view –
  • Economic growth will be slower during the second half than in the first.
  • Un and Underemployment rates will not change before the end of 2011.
  • Inflation is low, and there is a risk of deflation.
  • There will probably not be any additional stimulus money, from either the Federal or State governments.
• Micro view -
  • Half the year is gone.  Unless your company is dependent upon on providing services during the holiday season, you have a good idea what the year is going to be.
  • You probably know where you stand vs. competition.  Relatively few companies introduce new products during the second half.  What is is.
  • Growth, i.e., increasing market share will come from taking sales away from competitors vs. a general growing demand.

Second, make some assumptions (of course yours will be more specific):

• Depending upon how well you have done against plan, your budget for the balance of the year will be constant or cut.  It is unlikely that it will increase.
• At least one competitor will attempt to grow share (or remain in business) by cutting prices.
• The buying cycle is going to stretch out.
• Reaching buying decision makers is going to be more and more difficult.
• At least one key employee will leave.

Third, develop action plans for Management review late in August, early in September before all thoughts turn to making the month/quarter.  Examples of plans that would fit the assumptions above are:

1. A plan to involve management in reaching out to the installed base/key customers…showing them the love.
2. A plan to pre-announce products/features that are planned for the first-half of 2011.
3. A plan to “repackage” current products and services that addresses customer complaints and provides something new, providing an answer to competitive price cuts.
4. A plan to increase social networking/media focusing on key product differentiators.
5. A plan to hold a series of training webinars for the sales force, led by Product Management, that reinforces the corporate message, reviews the differentiators and address customer objections.
6. A contingency plan outline.  The CMO cannot plan for what is unknown, but knowing that there are unknowns allows for shorter reactions.  For example, no-one knew that volcanic ash was going to disrupt air travel to Europe, or that oil in the Gulf of Mexico was going to impact shrimp prices.  But those firms that have contingency plans are better able to ride out the storm.

With the exception of the “repackaging” effort, implementation of the other plans requires people’s time.  Since in the Dog Days things are moving more slowly the CMO has some time to put these plans together, sharing them with management at the end of the month.

How are you spending the Dog Days of Summer?

Related:

http://firealarmmarketing.com/2010/06/17/2011-planning-and-trends/

http://firealarmmarketing.com/2010/04/01/2010-the-first-milestone/

http://firealarmmarketing.com/2009/10/29/guide-for-the-cmo-in-planning-2010/

RHM  8/4/2010

Before you answer the question, have you done and do you understand the following issues in determining your selling price?

1-      Are your current product price objectives in line with the corporate objectives (profit oriented, gain market share, etc)?

2-      Do you understand the values (quality, serviceability, ease of use, etc.) customers put on your product/service?

3-      How is your cost method derived (sell price minus margin to arrive at cost or is it a combination of fixed and variable cost)?

4-      Do you understand the competitor’s strategy (gain market share or market entry) and their cost structure (initially a loss leader or penetration)?

5-      Are there any legal issues regarding price reductions( some cases like market monopoly/oligopoly)

6-      Does this price reduction impact other products in your portfolio?

For more details on pricing, see our Pricing Guide.

Given the above, here are some considerations you should consider before you react.

A-     If you react with a price reduction will it be less then preventable sales losses?

B-      If you react will the competitor just reduce their price again

C-      Where will multiple reductions lead you ( margin issues or sales loss impact)

D-     If you react, how will it impact other products/service?

If you have good product/service differentiations, then I would suggest stressing your benefits and value proposition via marketing messages to your customers in some form of a campaign.  Also look at the competitor’s pricing strategy, cost structure and past record regarding price changes.

Third, look at the market with regards to new potential technologies, customer’s experiences with your competitor’s product and any past or present technical issues.  Use the results to combat the price changes.

In most cases responding to a price reduction by matching it results in disaster.

George Cressman Jr. & Thomas Nagle of the Strategic Pricing Group state “Pricing is like playing chess: players who fail to envision a few moves ahead will almost always be beaten by those who do.”

Cressman and Nagle recommend the following:

1-      Never participate in a competitive engagement you cannot win.  Fight from strength NOT your weaknesses.

2-      Compete from an advantage position ( example, value differentiation), do not compete by using the competitor’s rules

In summary,

** Know your overall pricing objectives and know your competitor’s objectives and position.

** Project the possible next steps (what if scenarios).

**Engage from a competitive advantage.

**Consider actions such as improved warranties or including some form of service.

** Use price reduction as a very last resort!

RHL 8/3/10

There is an old joke about economists that goes, “If you have six economists in a room, you will have 7 opinions.”  Recognizing this phenomenon, the Associated Press seeks to derive a consensus by surveying up to 50 economists on a quarterly basis. The most recent report suggests that economic growth for the next 12 months will be relatively low, and that unemployment will remain where it is today.  Significant factors in developing this prognostication are the continued high unemployment, State budget shortfalls, European debt situation, and the weak housing market.

On the positive side, the economists think that we are growing, i.e., that the recession has ended, and reports show that Americans are saving more than they have in the recent past.

Good information, but how does this relate to the CMO or Product Management struggling with making the year and forecasting 2011?

First is the necessity to face reality.  Unless you have a game changing product like an iPhone, it is unlikely that you will see double-digit growth.  High single digit projections should be viewed as the optimistic forecast.

Second, Marketing budgets will be flat to down over the period.  The 2008 guidance, “You will have to make do with less” will come back or be reinforced.  For the CMO this means expanding on those tools and tactics that work, ruthlessly cutting those that don’t and exploring new, lower cost ways of reaching potential customers.

Third, your customer base is the lowest cost way to generate new and/or incremental sales.  Add-on features, new services, and related products should all be developed and directed to the customer base.

Fourth, product differentiation and market segmentation have to be foremost in all product development activity.  The more that you can differentiate your product, to the key target market segments, the more you insulate yourself from price competition and commoditization of your product/services.

Fifth, if you have not done so, now is the time to reduce the number of products and services that you offer to only a few.  Sunsetting products is never easy and is often emotional as the different stakeholders (Sales, Management, Key Customers) weigh in.  But, reducing the number of products and focusing on the key ones has the potential to reduce costs and increase profitability.

Like the economist’s opinions, these suggestions are at a high level. Every company is different and will embrace different tactics.  The key to remember is that it appears that for the next 12-18 months economic growth will be slow, and to act accordingly.

How are you integrating macro economic forecasts in your planning for the balance of 2010 and 2011?

RHM  7/29/2010

Pricing is one the four “P’s” of Marketing.  The right price drives margin, profit, and to some degree perception of the product.  But it appears that a fixed price is rapidly going the way of the buggy whip.  If this is true, has the CMO lost one of his key tools?

It is an axiom among hi-tech buyers that negotiating a price in the last week of the quarter will result in a cost savings over the “quoted” or “regular” price.  Whether the cost savings are a lower price or are expressed as additional features at no cost, extended warranties or something similar, the result is the same…lower margin for the seller.

On the other side many Sales Managers, backed by Management, tell their sales force, “Don’t let price get in the way of closing a sale!”  This is communicated to the buyer, either directly or indirectly, again resulting in a pricing concession and lower margins.

The offline and online business press has been buzzing about deflation, often drawing parallels to the Japanese experience of the past 15 years.  In a deflationary environment, buyers wait to the last minute to make their buying decision, and then seek the lowest price for a product that meets their needs.  Sellers, with inventory on hand or needing to meet a goal, recognize that something is better than nothing and compete for the business based on price.  After repetitive downward rounds marginal vendors go out of business, leaving larger players who are still forced to compete on price.

Assuming that deflationary pricing is a fact of life through 2011, how should a B2B CMO price his/her product?  Some suggestions are:

1. Emphasize the value proposition of the product/service to the buyer, highlighting the unique differentiating features that will save the buyer time and money, allowing him to be more profitable using your product.  This can be communicated via:
   1. Use cases
   2. Testimonials
   3. Blogs/Tweets
2. Motivate the sales force and buyers to make a decision earlier, thereby blocking out competition.  If there is tacit acknowledgement that closing the sale in the last week of the quarter results in a 5% price reduction, offer those monies as an incentive to close the deal earlier in the quarter.
3. Increase the price of add-ons and service.  If these are normally “thrown-in” in order to close the deal, make their perceived value higher so that fewer concessions have to be made to show a price reduction.
4. Provide an estimated ROI based on purchasing the product.
5. Modify the financial terms of the deal; lower payments for the first six months, lower interest rates, lower cost service contract, etc.
6. Lower your costs by working with Management and purchasing to ensure that your margins remain constant under the downward pressure.

There are other tactics that can be applied, depending upon each company’s specific situation, i.e., price leader, price follower, etc.

Can you share how you are planning to price your products in a deflationary environment?

RHM  7/22/2010

Given the technology focus of Boston area companies, with a high concentration of hi-tech, bio-pharma, and green oriented companies this statement might be viewed as heresy and unbelievable.

However, Ralph is an MIT educated engineer and has real world examples to back up his claim, both for success and failures.  The data can be found on his web site:  http://www.marketingvp.com/index.html

What I especially like is his definition of what he includes in Marketing:

• budgeting the resources and time – the Marketing/Engineering Investment Ratio™
• conducting primary and secondary market research
• developing strategy
• articulating the value of the technology
• understanding the potential customer
• modeling both the customer’s business, and your own
• calculating customer payback
• quantifying customer needs
• specifying the product – guiding engineering
• thinking through the “6 P’s and a D”

• questioning and surveying the customer
• analyzing and reporting customer survey data
• segmenting the market
• sizing the market
• scrutinizing the food chain
• creating channels of distribution
• surfacing competitive intelligence
• developing an unfair, defensible, and decisive competitive advantage

• realizing value from intellectual property through patents and technology licensing
• building strategic alliances
• guiding promotion motion
• guiding selling motion
• guiding support
• steering the enterprise

In short, all the tasks that fall to a Product Manager in developing and delivering a product to the market place.

In our discussions with hi-tech B2B companies in the Boston area, we have observed Marketing departments which are still staffed at levels 50% below where they were in 2008, while Engineering and R&D are down 10-15%.  At the same time, Management is turning to Marketing and asking for increased leads, new product launches and increased market share.

Suggestion – review Ralph’s work.  Discount it by 50% (i.e. Marketing expenditures, not including promotion and selling, should be 1.25% higher than engineering expenditures) to reflect the 2010 environment and just to be cynical.   Compare it to the ratio of Marketing expenses (less promotion and selling) to Engineering/Development expenses in your company.  Then look at the company goals for 2010 and 2011.  Are they in-line or is more investment in Marketing required?

If they are out of line, do you have a plan of action aimed at resolving this?  And no, cutting Engineering/Development expenses is not an option.

Shameless Plug: Fire Alarm Marketing offers a Marketing Health Check which covers the points that Ralph makes as well as a company’s overall strategy.  You can get the details here:  http://firealarmmarketing.com/marketing-programs/marketing-health-check/

RHM  6/24/2010

Many years ago, when I worked for GE’s Audio Electronics Products Department, planning was a major part of a Product Manager’s work.  The planning started about this time of the year and was focused on the “5 Year Plan” that every GE Product Department had to submit.  Primary emphasis was given to the first year of the 5 year plan, as that became the basis for the “Annual Plan” which was submitted in the fall, and then went through several iterations.  Most companies today follow a similar, but probably not so detailed process.  And remember this was before PCs and laptops; Excel spread sheets and the Internet.

The first step was to identify trends, ranging from macro to micro.  On the macro side, what was the economy doing, what was the forecast, was it an election year (this did make a difference!), what was the exchange rate and what was the arbitrage spread, etc. etc. The objective was to lay a foundation and correlation, as we had access to historical industry information that grossly correlated with some of major economic indicators.

This was then followed up by more detailed demographic information.  Who was buying which products, why, were any products or combination of products surging ahead of the others, to whom and why?  For example, small ‘transistor” radios were popular with teenagers.

Next came a competitive review.  What was the status of the competition, were there new competitors, new competitive winning products, new distribution channels, etc.?

Following this was an internal examination of our products.  Which ones were winners, which were losers, which had the highest profit margin, lowest, etc.?

Critical to this planning was the early identification of trends that would impact our business.  Connecting the “dots” became a mixture of art and science, as what we were selling was purchased out of disposable income.  But, even if that went down, the products were great gift items, with peaks around Christmas, Father’s Day, Graduation, etc.

The same process that allowed GE’s AEPD to succeed is applicable today to both consumer and B2B companies.  As the CMO going into your 2011 planning cycle, you should be asking and finding the answer to these questions:

• How strong a correlation exists between the purchase decision for your product(s) and the economy?  Note that if there is no correlation, your messaging better be focused on providing a high degree of pleasure (for consumer goods) or cost savings/ROI (B2B).
• Who makes the decision to buy your product(s) and has there been any change?  Has a self-purchase migrated to a family purchase; has a committee replaced a purchasing agent?
• Has there been any change in the way the buyers of your product(s) learn about them?  How effective has your promotional mix been?  Should it remain the same, or change?  (This is where an evaluation of social media comes in.)
• Has there been any change in sales in your current product line, i.e., price erosion on Product XXX, higher volume on the lowest cost, minimal featured product, or user demand shifting to s a particular “must have” feature?
• What changes have occurred regarding your competition?  Have any increased their market share?  Have any gone out of business?  Are there new (or indications of new) models and/or features being introduced?  Do any of the competitors appear to have locked up a specific segment, vertical market, or distribution channel?
• What is the status of your products and product development?  Should you be planning new launches or cost improvements?  What features/functions will continue your differentiation, which ones need to be added to remain competitive? Is this doable in the next 6 months?

An example of the outcome of this type of planning was the decision one year to cost-reduce the highest volume cash cow product (400K+ units), rather than replace it with a new one, knowing that the market was shifting to a different format.

Now is the time to begin asking and answering these questions.  For most companies, what is going to happen in June is set and done.  The third quarter revolves around September, and for Marketing, doing this type of planning and analysis in September usually conflicts with the tactical need to make the quarter.  Where you don’t want to be is sitting around a table in the first week of October asking, “Well, we have visibility into 2010, what are we going to do next year?

Have you begun your planning process yet?  Can you identify the major macro and micro trends in your industry that impact your company?

Related:

http://firealarmmarketing.com/2010/04/01/2010-the-first-milestone/

http://firealarmmarketing.com/2009/10/29/guide-for-the-cmo-in-planning-2010/

http://firealarmmarketing.com/2009/10/22/the-only-metric-to-use-in-2010-planning/

RHM  6/17/2010