“Whither the 4P’s…?” Kelly Rupp Lead To Results, LLC February 26, 2003 Oh, that way madness...

Lead To Results, LLCLead To Results, LLC

“Whither the 4P’s…?”

Kelly RuppLead To Results, LLC

February 26, 2003

Oh, that way madness lies; let me shun that. – Shakespeare ("King Lear", Act 3 scene 4)

Oh, that way madness lies; let me shun that. – Shakespeare ("King Lear", Act 3 scene 4)


“4 P’s” Marketing Mix

Marketing Investment

“4P’s” are still relevant… every marketing plan needs to address!


What’s discussed in the Plan: the “Marketing Mix”

… specifically, investment into the “4 P’s…”

– Price

– Promotion

– Product

– Placement (Channel)

Objectives:measurable results we want to achieve

Strategy:how we’ll accomplish the objectives

Tactics:what we’ll do to achieve the strategy


What’s discussed in the Plan: the “Marketing Mix”

… specifically, investment into the “4 P’s…”

– Price

– Promotion

– Product

– Placement (Channel)

Objectives:measurable results we want to achieve

Strategy:how we’ll accomplish the objectives

Tactics:what we’ll do to achieve the strategy


1P 2P 3P 4P: Must lead to 5Process

Create the B2B Marketing Machine

– Transform the 4P’s into ongoing 5Process

– Be Cognizant of B2B Pragmatics • Driven by financials: must demonstrate ROI

• Championed by internal customer sponsors 4P execution must be legitimate,

credible, math-sensible, and easily self-explained


1Product: If you build it, will they buy?

Hamlet: Do you see yonder cloud that's almost in shape of a camel?Polonius: By the mass, and 'tis like a camel, indeed.Hamlet: Methinks it is like a weasel. Polonius: It is backed like a weasel. Hamlet: Or like a whale? Polonius: Very like a whale.

– Shakespeare ("Hamlet", Act 3 scene 2)

Hamlet: Do you see yonder cloud that's almost in shape of a camel?Polonius: By the mass, and 'tis like a camel, indeed.Hamlet: Methinks it is like a weasel. Polonius: It is backed like a weasel. Hamlet: Or like a whale? Polonius: Very like a whale.

– Shakespeare ("Hamlet", Act 3 scene 2)


1Product: Talk to Customers/NonCustomers

• I mean, really, talk …– Consider anonymous probing

• Understand their real “pains”– Build Gap analysis: from where you’re

at to where you need to be– Blend in competitive positioning

• Test: Where are we different? Unique?

• Synthesize into a (phased) solution


1Product: Make Gap Analysis useful…

List first those criteria absolutely “Required” of meaningful competitors, followed by criteria that are “Important” and finally “Valuable”.

– “Required”: capability is necessary for credible consideration as a provider of this service. Customers expect that these capabilities are handled expertly and efficiently.

– “Important”: capability is expected of first-class operations within this category, perhaps subcontracted or otherwise engaged, but still available. Customers gain comfort/confidence from knowing their suppliers have these abilities.

– “Valuable”: capability is distinctive for cost or service advantage to a particular industry.

Within each set of criteria, score using “A”, “B”, “C” ranking relative to a “Composite Competitor”. Judgments are subjective and reflect internal perceptions of strengths/weaknesses.

– “A”: Best-in-class competency, with proven/demonstrable strength. Provide “unmatched value” [1] in this dimension relative to competition.

– “B”: Acceptable level of service/ability. “We can do that…” at an efficient “threshold” level expected minimally by customers.

– “C”: Weak, needs improvement relative to competitors. Regarded as competitive disadvantage.

[1] See related treatment/analyses in Treacy and Wiersema, “The Discipline of Market Leaders,” Addison-Wesley, New York, 1995.


1Product: Make Gap Analysis useful…

Required Instant Package Tracking, C B

Custom Reporting, C B Kit Building, C A Bulk Fulfillment, B A Real-time Customer order taking

by phone (credit card, etc) B A

Customer order taking over web (credit card, integrated XML, etc)

C A

Important, of Differential value Client Secure Access, (web and

physical area), C A

Full Service Standard Direct Mail, C A Real-time Inventory Management, C A Packaging Design, C B Freight Analysis and Management C B Customer services B A Custom Printing C A

Valuable, Distinguishing for Segment/Niche Bindery Services C A Direct Marketing, C A Digital Document Archiving, C A CD-Duplication, C A Print-On-Demand Document

Inventory, C B

Custom Imprinting C A Web Based Information integration C A

Criteria “You” “Composite Competitor”


1Product: “Look-alike” Segments

• Examine successful customer scenarios…

– What pains were solved? For Whom?

– Why was your company the best solution?

– What selling cycle? How found?

• Who else shares these pains?

– What other companies/industries? Other titles?

Build segment strategy around “shared pains” where your business differentiation is clear!


1Product: “Dominate… Differentiate… Par”

Customer Relevancy Matrix, from Fred Crawford & Ryan Mathews, “The Myth of Excellence”

Level Access Experience Price Product Service Dominate (the customer seeks the company)

Given me a solution; help me out of a bind

Establish intimacy with me by doing something no one else can

Be my agent liet me trust you to make my purchases

Inspire be me with an assortment of great products I didn’t know about.

Customize the product or service to fit my needs

Differentiate Make the interaction convenient

Care about my needs

Be fair and consistent in pricing (not necessarily lowest)

Be Dependable in your selection, so I can rely on you in a bind

Educate me when I encourage a product or situation I don’t understand

Operate at Par

Make it Easy to find what I need…

Respect me, treat me like a human being

Keep the prices honest; don’t jack them up or around

Be Credible in your offerings

Accommodate me; bend over backward sometimes to show that you care.


2Pricing: Maximize Your Top-Line

Though this be madness, yet there is method in 't.

- Shakespeare ("Hamlet", Act 2 scene 2)

Though this be madness, yet there is method in 't.

- Shakespeare ("Hamlet", Act 2 scene 2)


2Pricing: Science and Art (or Punt!)

• Simple

• Complex: Solve four simultaneous equations

– Quantity = f(Price, Demand)– Revenue = f(Price, Quantity)– Costs = f(Fixed Costs, Quantity,Variable Costs)– Profits = f(Revenue, Costs)

There ain’t no brand loyalty that two-cents-off can’t overcome. - Anonymous (reported by Philip Kotler, Marketing Management, 1967, p. 249)

There ain’t no brand loyalty that two-cents-off can’t overcome. - Anonymous (reported by Philip Kotler, Marketing Management, 1967, p. 249)


2Pricing: Above all, be Pragmatic

• What are your objectives?

– Market penetration?

– Market skim?– Early-cash recovery? (quick return on

investment)

– “Satisficing”? (achieve internally-set rates of return)

– Product-line promotion?


2Pricing: “Numbers Need To Add Up…”

Which Approach? 1. Determine “what

the market will bear…”

– Value-based on judged ROI

2. Competitive- and Industry-influenced

– Relative to alternativesand conventions

3. Add Margin to Costs

– Loser strategy

Model all Segments, over (years-long) Time:By unit, by month, by target category (discount or packaging)

www.webcriteria.com

Perspective:

Number of Units (Orig Model)…

30

50

69

96

610

1621

63

38

25

13

59

35

23

10

0

10

20

30

40

50

60

70

80

90

100

Q1'01 Q2'01 Q3'01 Q4'01

Nu

mb

er o

f u

nit

sal

es

Number of New Customers

Number of Renewing Customers

Number of Traffic AnalysisIntegrations

Number of Solutions ServicesSales

Number of Task Sales

Number of Site Subscriptions

Orders: $9.2M

www.webcriteria.com

Perspective:

Number of Units (Orig Model)…

30

50

69

96

610

1621

63

38

25

13

59

35

23

10

0

10

20

30

40

50

60

70

80

90

100

Q1'01 Q2'01 Q3'01 Q4'01

Nu

mb

er o

f u

nit

sal

es

Number of New Customers

Number of Renewing Customers

Number of Traffic AnalysisIntegrations

Number of Solutions ServicesSales

Number of Task Sales

Number of Site Subscriptions

Orders: $9.2M

20042004 HW Erosion % 15%2004 SW Erosion % 0%

Qty Hardware OnlyField Test 6 Mths 1 Year

0 99 100$ 90$ 83$ 100 499 NA 85$ 76$ 500 999 NA 79$ 66$

1000 2499 NA 72$ 61$ 2500 4999 NA 62$ 54$ 5000 NA 54$ 33$

20042004 HW Erosion % 15%2004 SW Erosion % 0%

Qty Hardware OnlyField Test 6 Mths 1 Year

0 99 100$ 90$ 83$ 100 499 NA 85$ 76$ 500 999 NA 79$ 66$

1000 2499 NA 72$ 61$ 2500 4999 NA 62$ 54$ 5000 NA 54$ 33$


2Pricing: Validate before Launch

• Play “what if…”

– Estimate demand elasticity

– Predict competitive responses

– Modify business model or packaging options (!)

• Gather customer responses

– “…relative to what you’re paying now?”

– “…how measure ROI on these expenditures?”

– “…what’s [competition or alternative] charging?”


2Pricing: Two Tests for Credibility

• Test: Do these prices get your business to where it needs to be? (i.e., do they support needed growth/margin models?)

• Test: Do these prices (and terms) support a clear ROI value proposition that your customers can self-articulate? (i.e., can your buyer “prove” the value of this purchase to his financial management?)


2Pricing: Is the Channel Appropriate?

REVENUE FORECAST Nov-02 Dec-02 2002 Jan-03

Number of TransactionsHQ Biz Dev 1 1 14 2Sales Director - West Q2-02 3 3 16 4

Inside Sales Rep Q2-02Inside Sales Rep YR-03

Sales Director - North Mid West Q2-02 2 2 6 3Inside Sales Rep Q2-02Inside Sales Rep YR-03

Sales Manager - East Q3-02 3 3 8 3Inside Sales Rep Q3-02Inside Sales Rep YR-03

Sales Manager - Southmidwest Q3-02 3 3 8 3Inside Sales Rep Q3-02

International EU Channel I YR-04International EU Channel II YR-05International Asia Channel YR-04

Number of New Units Installed 240 240 2490 1680

Mega 1000 1 1Large 100 4 4Medium 40 5 5 23 6Small 10 4 4 19 4

REVENUE FORECAST Nov-02 Dec-02 2002 Jan-03

Number of TransactionsHQ Biz Dev 1 1 14 2Sales Director - West Q2-02 3 3 16 4

Inside Sales Rep Q2-02Inside Sales Rep YR-03

Sales Director - North Mid West Q2-02 2 2 6 3Inside Sales Rep Q2-02Inside Sales Rep YR-03

Sales Manager - East Q3-02 3 3 8 3Inside Sales Rep Q3-02Inside Sales Rep YR-03

Sales Manager - Southmidwest Q3-02 3 3 8 3Inside Sales Rep Q3-02

International EU Channel I YR-04International EU Channel II YR-05International Asia Channel YR-04

Number of New Units Installed 240 240 2490 1680

Mega 1000 1 1Large 100 4 4Medium 40 5 5 23 6Small 10 4 4 19 4

www.webcriteria.com

Decision: I tem Pricing Satisfactory

• Today: I tempricing satisfactory – Dec’00

increase

– Feedback: Pricing pain (finally)

• Competitive Forces now factor…

$70

$60

$50

$40

$30

$20

$10

Site+

Task

Vividence

Hire ½Usability

Eng’r

TrafficMeasure

PerfMeasure

Usability Test

Gomez

SolnServ

www.webcriteria.com

Decision: I tem Pricing Satisfactory

• Today: I tempricing satisfactory – Dec’00

increase

– Feedback: Pricing pain (finally)

• Competitive Forces now factor…

$70

$60

$50

$40

$30

$20

$10

Site+

Task

Vividence

Hire ½Usability

Eng’r

TrafficMeasure

PerfMeasure

Usability Test

Gomez

SolnServ

2002 Price Schedule

$325

$293

$260

$225

$186

$150

$290

$255

$217

$185

$150

$96

$-

$50

$100

$150

$200

$250

$300

$350

0 100 500 1000 2500 5000

QuantityP

er m

on

th L

icen

se F

ee 6 Mos

12 mos

2002 Price Schedule

$325

$293

$260

$225

$186

$150

$290

$255

$217

$185

$150

$96

$-

$50

$100

$150

$200

$250

$300

$350

0 100 500 1000 2500 5000

QuantityP

er m

on

th L

icen

se F

ee 6 Mos

12 mos


2Pricing: Current Experiments

• Real-time testing– live, ongoing price tests for individual products and then

use the data to predict how many units are likely to be sold at each possible price point.

– ProfitLogic, Optivo

• Dynamic Pricing– online robotic shoppers, or "shopbots"

– set rules to adjust price based on knowledge of buyer habits

• IKEA: Begin with the Price…– Business 2.0, Oct 01, 2002


3Promotion: Get the Word Out

An honest tale speeds best, being plainly told.

-Shakespeare ("King Richard III", Act 4 scene 3)

An honest tale speeds best, being plainly told.

-Shakespeare ("King Richard III", Act 4 scene 3)


3Promotion: To thine own self be true.

• Byline: is the descriptor of the brand

• Tagline: is the expressive line used to clarify or dramatize the brand’s emotional and functional benefits to customers and potential customers. The tag line tells the consumer how they hopefully will feel about the brand…

• Mission: the overall goal or reason the organization exists; a self-imposed duty

• Vision: the overview of a company’s purpose form 30,000 feet; intelligent foresight

• Brand Promise: the expected emotional and functional benefits of experience an organizations product and services; ie.., how an organization wants the customer to feel ... Is always reviewed with customers, consumers, and employees…creates a long-term value proposition that describes the brand’s core benefits for customers.

Should address three questions…– what business is our brand in?– what differentiates our products and services fro the competition?– What is superior about the value we offer our customers?

(from Duane Knapp, “The Brand Mindset,” McGraw Hill, New York, 2000)


3Promotion: Get your positioning right

Jill Dornan’s key points for positioning statement:– For (target audience)– Who (need/problem or business goal)– The (company name)– Is a (business category/customer’s

frame of reference)– That (solution/compelling reason to buy)– Unlike (primary competitive alternative)– Our company (unique selling

proposition/primary differentiators)

(from Jill Dornan, Dornan Communications, [email protected] )

mailto:[email protected]


3Promotion: Leverage the Press

• “Feed the Machine…”

– News

– Data syndication

– Customer successes

– Issue Stories

• What’s Hot in B2B: Customer Successes

• What’s Not: Hype


3Promotion: Advertise for Results

• Test : “Are we generating enough qualified leads for Sales?”

• Test : “Are we credible in our messaging?”


4Placement: Match 1-3P to Channel

Cry "Havoc," and let slip the dogs of war.

- Shakespeare ("Julius Caesar", Act 3 scene 1)

Cry "Havoc," and let slip the dogs of war.

- Shakespeare ("Julius Caesar", Act 3 scene 1)


4Placement: Think Channel Cost

The “Financial Reality” of Channels: Channel Costs per Dollar of Sales Revenue1

Existing Account

New Account2 New Market3

Existing Technology $.10-$.15 $.30-$.40 $.60-$.80

New Technology $.30-$.40 $.60-$.80 $.80-$1.00

New Category $.60-$.80 $.80-$1.00 $1.20-$1.60

1 Adapted from ChannelCorp, Inc., 1997.

2 “New Account” means that the salesperson “doesn’t know anyone…”

3 for the particular channel; i.e., a set of customers or individuals within those customer companies that the channel has no

previous selling experience.


4Placement: Channel “Truths”

• There are no “low cost” channels, just lower priced channels.

• Vendors sell through channels, not to channels. • Channels don’t do what they can’t do.

(channel “competency” must be matched to the product and target market)

• Channels don’t do what they are not paid to do.

• If you don’t tell a channel how you want your product to be sold, they will make it up.

• Channels don’t deliver primary demand.

• If you want channels, deliver a sound business proposition.• If you want loyalty, get a dog! (channel motivation is all about money)

Adapted from Bruce Stuart, Reseller Management Handbook, ChannelCorp Management Consultants, 2000.


1P 2P 3P 4P

Expect to Revisit and Rework the “5Process”

Truth is truth To the end of reckoning.

- Shakespeare ("Measure for Measure", Act 5 scene 1)

Truth is truth To the end of reckoning.

- Shakespeare ("Measure for Measure", Act 5 scene 1)


Personal Footnotes


New Economy … all about “Half’s”

• You’ve got half the time

• To reach half the market

• And win half the share

Early Adopters/Pioneers

Mass Market/Followers

End of Life

Time

Numberof

customers


Move Quickly with Products• Mentor Graphics’ Model Technology

– High-quality alternative at half-price– “Commoditized” speciality software

• Mentor Graphics, Synopsys – Switch to term-based licensing

• Intel 1984– 18 mos development cycle

• Test Question:“Will this [characteristic of our business] be leading edge in 6 months?”

A+A+

C C

D D


Establish Brand Uniqueness; Solve Real Pains

• Synopsys/Logic Modeling– SmartModel as defacto “standard”

• Mentor Graphics’ Microtec acquisition– FAA certification “didn’t matter”

• Mentor Graphics 1995– “white volkswagon beetle”

• Test: Can Sales say, “we’re the only…” and Customers say, “Good, because that’s important…”

A A

C C

D D


Partner Smartly• Tektronix/CAE

– Exit partner with Mentor Graphics

• Synopsys/Logic Modeling– Investment in integration

• WebCriteria– Opportunity, but no followthru

• Test: “Does the partnership increase customer value?”

A A

C C

B+B+


Leverage the Press

• WebCriteria– Data syndication– Uniqueness of offering

• WebCriteria– Struggle for case studies

• Mentor Graphics/Antares– Hollow launch, no customers

• Test: “Will a Customer/User provide a reference?”

A A

D D

C-C-


Promote for Results

• WebCriteria– Data syndication (PR!)

• Mentor Graphics– Umbrella brand advertising of no help

• Mentor Graphics/Embedded Systems– Public credibility lost

• Test: “Do we generate enough qualified leads?”

B B

D D

C C


5Process: Lead To Results, LLC

Helping build sales and marketing traction

with new products or new markets.

Helping build sales and marketing traction

with new products or new markets.

Kelly RuppManaging [email protected]

direct: 503.708.1623vmail: 360.665.0115

fax: 360.665.0044

“Whither the 4P’s…?” Kelly Rupp Lead To Results, LLC February 26, 2003 Oh, that way madness...

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