Wednesday, July 29, 2015

Advertising Sales Success For Media Companies

When I worked as a newspaper executive we had a special sales group called print specialists. This group typically was comprised of the more senior and gifted sales personnel. These specialists had knowledge of ROP (in-paper) advertising, preprints, commercial printing, direct mail and production processes.

This group sold the more complicated products and assisted sales people selling more traditional lines of newspaper products in broadening the scope of sales opportunities.

A print specialist was able to set down with an advertiser and develop an advertising program that best suited the customer’s needs. The program could include ROP ads coupled with a direct mail campaign with customized brochures reaching targeted audiences.

Sales commission programs encouraged all sales groups to use the expertise of the print specialist. Using this approach all sales personnel had an opportunity to increase their income while improving the newspaper’s profits and providing real value to the advertiser.

The newspaper was ideally suited to serve the customer since the newspaper was a key element of the marketing mix. The print specialist was trained to create packages to meet the advertiser’s needs and develop bundled pricing packages that encouraged use of the newspaper’s products as part of the mix. Newspapers were also able to sell third party products and services as part of the bundled package that provided additional revenue and profit streams.

I was once asked if selling products in this fashion cannibalized the core newspaper products. Since I didn’t really know, I asked our accounting department to conduct a study of ad revenues and the effect of the sales approach on our core products.

The audit showed that 100% of the advertisers using the expanded product offerings spent more in the core product lines than before starting the new programs. This was due primarily to providing real value to advertiser as well as having a carefully thought out pricing and commission program.

It was evident that advertisers viewed the program favorably because the relationship between the newspaper and the advertisers improved to the point that advertisers routinely called the newspaper staff for advice on production techniques and ad campaign ideas.  One of our key advertisers even called me to ask about the advantages of digital photography. I told him that I was no expert but that I would have an expert from one of our strategic alliances give him a presentation. The result was an even more robust ad program that resulted from the savings gained through the new photo process.

Today, as in the past, the winner in ad sales will be the organization that can best provide value to advertisers. It will not be the organization that is focused on selling one or two products, even if the products are the latest social media craze

In this age of the Internet and digital products, there appears to be an opportunity to return to the advertising specialist sales person.

Advertisers today are finding that developing a successful ad campaign is increasingly difficult. While many of the traditional sales tools continue to provide reach to a strong audience, new ad vehicles are finding ways to find new audiences and better target an advertiser’s key customers. Social media, search engine optimization and data analytics have provided new opportunities for all advertisers.

In earlier blogs I have said that creating a symbiotic relationship between print and digital editions of a newspaper and the website was strategically important for the survival of the newspaper industry.

Just as critical is having a sales team that can piece together customized ad campaigns that incorporate all of the capabilities offered by print, digital, direct mail and broadcast platforms.

Having sales leaders that can structure alliances and pricing with third party providers will be critical to piecing together an array of products that can be used to fit any advertiser’s needs.

Imagine a sales professional, developing an ad campaign with elements in the newspaper (print and online), on cable television, on YouTube, supported by Facebook  and a targeted direct mail campaign. That is considerably different from a newspaper sales person selling the newspaper website and digital products.


For success today an organization must embrace the idea of value creation for the customer, the company and the collaborators. For media organizations, having a sales team that can combine products and content in a manner that provides real results for advertisers and new revenue and profit streams for the company and the strategic allies will be absolutely essential.

Thursday, July 9, 2015

How to Avoid Being Displaced by Market Disruptions

Disruptive Innovation theory holds that disruptive innovations result from a new industry entrant finding a way to better serve the industry leader’s least profitable customers. After the new entrant has captured the least profitable customers from the industry leader it begins to pursue the next level of customers that are underserved by the industry leader. This process continues until the new market entrant displaces the industry leader.

This is well researched and there is a large body of evidence to support this theory of market disruptions. It does not, however, explain disruptions that seem to take place at the top of the customer value chain.

For example the disruption of the nylon tire business by the steel belted radial tire was not due to unprofitable customers being underserved by the industry leader (DuPont). Rather it was the need for a superior tire that was sought by the most profitable customers.

For newspapers, the first segment of business to be lost was classified advertising. This group of advertisers found that the advanced search capabilities of the Internet helped match buyers and sellers with greater efficacy than the print model. This segment of business was one of the most profitable revenue streams for the newspaper industry.

Consider now the taxicab industry. New market entrants such as Uber and Lyft are attracting the core customers of that industry. The new market entrants provide speedier service, convenient pay methods, ability to choose vehicle type and other advantages not offered by taxis.

Finally, the hospitality industry is being challenged by the like of Airbnb. This service allows individuals to stay at private residences, condos and apartments instead of hotels. Airbnb provides individuals with the ability to customize their travel accommodations according to their needs. The process is highly efficient and provides exceptional value. Here too, the customer attracted is the most desired by the hotel industry.

In all of the cases above it appears that the disruptive innovation theories regarding underserved low profit customers might not be valid in certain instances.

What is certain with the underserved low profit customer is that there is a need for a “good enough” product that doesn’t have all of the “bells and whistles” or the pricing of the products the industry leader is selling to its most profitable customers.

In the case of the more profitable customers, it is likely that the market leading companies are aware of the new market approaches but are not able to respond due to the nature of their structure. It might be that the financial focus and current capital structure won’t allow changing market approaches without heavy financial loss. This encourages managers to focus on improving existing technologies to keep their profitable customers. This strategy can fail since the new technology is superior and using pricing and guarantees on the older technologies won’t stop consumer adoption.

In some instances the industry leaders just choose to keep the current business structure with some modifications to fend off the new market entrants. In the newspaper business this proved disastrous.

For the taxicab industry, it is a combination of financial structure and government regulations that are preventing a competitive response to Uber and Lyft.

For the hotel industry there may be a sense that the old model will survive entrants like Airbnb coupled with the financial investment in the current model that may prevent a successful defense of market share by the industry leaders.

Interestingly, a strategy suggested by Clayton Christensen works for protecting the lower and higher profit customer segments. Clay suggests that the market leader should invest in or develop a company to compete in the new technology arena.

This approach allows the industry leader to manage the output of the current technology while developing the potential of the new technology. For industries like newspapers and hotels it allows the ability for the current business model to continue to serve its loyal customers while developing a new model for changing customers needs.


For industries like taxicabs it provides a realistic way to develop a new market and sidestep regulations and bureaucracies that impede accommodating needed market changes.

Saturday, May 16, 2015

Creating Value for New Products

Value creation is a phenomenon that is much discussed and is the basis for all economic activity. That is, for a product or service to be sold it must be viewed as providing some value for the purchaser.

In some instances, value is based on long-standing measurements and is tied to supply and demand. The more some thing is demanded when there is a limited supply results in an increase in its value.

For individuals with new products or services, determining value is critical to the success of a new venture. In these situations there is no history to gauge value that might be based on supply and demand. There is only anecdotal and (at times) research based evidence on the potential value of the new offering.

In the early 1970s Gerald Zaltman (Processes and Phenomena of Social Change, Wiley Interscience, 1973) conducted research based on social change. In these studies he determined that there were several factors that caused societal change.

In the late 1970s I used these factors to establish Consumer Adoption Drivers that could be used to determine the factors that would cause consumers to by a product. These factors would be instrumental in determining the value of new products to audiences.

Some of these factors measured the influence of peer groups and social status as creating value for customer segments while other factors measured the impact of competing products and the need for technical training on the creation of values. Value was determined by the willingness of a market to adopt a product. This, in effect, was a means of using phenomena of social change to determine the willingness of a targeted market to adopt a product.

The Consumer Adoption Drivers used are as follows:

1)   Group Influence Intensity – relates to peer pressure exerted on customers
2)   Perish ability – the length of time the product is deemed useful,
3)   Psychological appeal – status associated with the product
4)   Price sensitivity – the need for the customer to budget for the purchase,
5)   Relative Price Influence – the attractiveness of other products as a substitute when price is a consideration,
6)   Frequency of Purchase – The frequency with which the customer purchases the product,
7)   Search Time Intensity – the amount of time invested in the search for the “right” product,
8)   Tangible Differentiability – physical differences between products,
9)   Intangible differentiability – non-physical differences between products (guarantees, relationships with company, branding etc.),
10)         Technical Complexity – the need for training before a customer can use the product. This may be a factor in determining the type of sales force that will be required.

These adoption drivers are used by my firm, GWR Research, as the basis for developing questionnaires to determine the basis for value of a new product offering to a potential target market.

In some cases availability (supply chain) will be the creator of value. This happens most often when the product is frequently purchased and the search time willingly invested in finding the “right” product is low.

In other cases, promotion will be important in creating value. This happens in cases where peer-pressure plays an important factor (showing peers benefitting from the product) or similar products are available (differentiating the products based on benefits derived).

Pricing can be critical in value creation when other products are similarly priced or the target market has a limited budget.

The product design can be critical in creating value through tangible differences in product design and reduction in technical complexity for the consumer.

Using the Consumer Adoption Drivers as a basis for research can assist marketers in determining the best marketing mix of price, place, product and promotion for the creation of value.


If marketers do not consider all of the factors that may cause an audience to adopt a product, they could miss a critical component of value creation, which could lead to failure when launching a new product.

This process along with programs for developing the marketing strategies and tactics are discussed more thoroughly in the book, Developing Successful Marketing Strategies, Business Expert Press, 2014. The book is available on Amazon.com, BarnesandNoble.com and Businessexpertpress.com. 

Sunday, March 22, 2015

BUILDING THE OPTIMAL MARKETING STRATEGY






In order to develop any marketing strategy, a strategist must consider how value will be created for the company, the customer and the collaborators. Pictured in the graphic below, the highest strategic value is created when the value for each of the participants (customers, collaborators and the company)  coincide or overlap. 

The larger the area of common value, the greater the chance for strategic success. As the overlapping areas decrease in size the more difficult the strategy will be to execute successfully.  

As discussed in earlier blogs value is created by using the 4 Ps of marketing: Price, Place, Product and Promotion.  In the grid below a strategist can address the value for each of the four Ps as it relates to the customers, collaborators and the company. Each of the four Ps must be in alignment with each other and create the intended value for each of the participants.


When the area of the participants'  common value is identified for each of the 4 Ps an overall strategy can be developed. The Optimal Marketing Strategy will be when the optimal area of overlap for each of the 4 Ps are combined as is shown below.




 A company that seems to have accomplished the development of an optimal marketing strategy is Coca Cola.

The Coke price seems to be within the range customers are willing to pay and provide distributors and the company the the revenue required for a successful operation.

Coke is available to customers when and where they want to consume the product. The territories are large enough for the bottlers (collaborators) to provide the distribution to the customers and the distribution supports the market share objectives of the company.

The Coca Cola products are numerous and varied enough to meet the customers needs, provide bottlers with a means of expanding the revenue base and provides the company with the capability to maintain and grow market share.

Finally, the promotion programs underscore the company's mission by aligning Coke with happiness and refreshment for the customer and supports the bottlers' and the company's efforts to maintain and grow marketshare.



Friday, December 26, 2014

For Better Strategies - Ask Why?

There is a process for developing a successful Marketing Strategy. The steps outlined below describe that process:
I.               State the Mission  - This is a description of the purpose of the quest. For example Coca Cola’s Mission is to: refresh the world, inspire optimism, to create value and make a difference.
II.             State the Vision - This is a description of how value is created for all who participate in the quest or a business. For businesses, the Vision describes how value will be created for the customers, the collaborators and the company.
III.           State the Objective – This is a description of the desired outcome of the strategy. The objective must have a quantifiable and a timing element.  An example would be “to increase sales 5% in 6 months”.
IV.            Situation Analysis – This is a process to understand the current environment in which the strategy must be deployed. The situation analysis should consider: the competition, the state of the economy, the strengths and weaknesses of the group setting the objective, the opportunities and threats that would affect the successful deployment of the strategy and so on.
V.              Strategy – This is the process of formally stating how the objective will be achieved in broad terms after considering the Mission, Vision, Objective and Situation Analysis.  For businesses, a strategy describes what Price, Place, Product and Promotion strategies will be employed. For example a retailer might decide the best way to achieve an objective of sales growth might be to use Every Day Low Prices coupled with Just in Time inventory strategies. (For Strategy, tactics and execution See http://gwrresearch.blogspot.com/2014_03_01_archive.html )
VI.            Tactics – This is the process of defining specific actions that will be used to deploy the strategy(ies) chosen to meet the Objective. This usually involves creating procedures on how the organization will develop a plan, organize its resources, direct the deployment of those resources and control the deployment to assure success.
VII.          Execution – This is the process that describes in detail how the tactics will be executed and controlled. The leaders of an organization will need to know how they will utilize human resources, cash, policies and capital expenditures in a manner that fits with the organizations wherewithal, the markets needs and achieves the Objective.

This is a pretty straightforward approach but I find that CEOs, Marketing Officers, General Managers and undergraduate and MBA students struggle at times and seem to want someone to tell them what they should do to move forward through this process. As it turns out, there is no one that has the answer to the final solution of strategy development. Again there are ways to jump start the strategy planning process.

I have found that asking the question “why?” is very helpful. It doesn’t matter what stage of the strategic process difficulty is encountered, asking “why?” can get the process back on track.  Even asking “Why am I not able to make progress on developing a strategy?” will provide some answers if the question is answered thoughtfully.  For example the answer to lack of progress in developing a strategy might be a lack of useful information. This should lead to identifying the type of information that is needed. This would then lead to identifying specific information needed and perhaps a plan for acquiring this information,

At the beginning of the strategic process and at every step throughout the process the questions of  “Why?”  and "Why not?" can help the strategic planner. 
Examples of how the question “Why?” and "Why not?" might be used include:
I.               Mission – Why was this mission chosen? This might lead to follow up questions: Is this a mission that can be achieved?  And What does completing this mission accomplish? Equally important is asking "Why not pursue this mission?"
II.             Vision – Why does completing the mission create value? For Whom? How? Why Not?
III.           Objective – Why is it important to achieve this objective? What is driving the timing? Are the time frame and the quantitative element of the objective realistically achievable? Why? Why not?
IV.             Situation Analysis – Why are the competitors successful? Why does demand exist in this environment? Why would demand exist in a different economic environment?  Why does the organization have its strengths, weaknesses, opportunities and threats?
V.              Strategy – Why will this mix of Price, Place, Product and Promotion be better than another mix? Why not?
VI.            Tactics – Why will this plan of specific actions, organizational design, directives and control procedures result in successful attainment of the objective? Why not?
VII.          Execution – Why will this planned use of resources result in deploying the strategy successfully? Why is this plan superior to alternative plans? Why not?



Even after the execution process has begun, asking “Why?”  can help keep the execution of the strategic plan on track. Asking why a plan is working can be as valuable as asking why a plan isn’t working.

Saturday, September 13, 2014

Business Strategies Should Create Value For Customers, Collaborators and The Company







The graphic above, used in Alexander Chernev's Marketing Plan Handbook, is an illustration of how optimal value is created for business strategy. As the graphic suggests optimal value is created when a strategy provides adequate value for the company providing a product or service, adequate value for the customer and adequate value for any collaborators facilitating the interaction between the customer and the company.

As the graphic suggests, the optimal value that insures strategic success provides success for all three participants: customers, collaborators and the company providing the service or product. Also as the graphic suggests an increase in optimal value for one of the participants can mean a reduction in the value for the other participants. For example a strategy that has too much focus on the customer can reduce the ability of the company to survive by putting undue negative pressure on profit margins.

Collaborators can be critical to the success of a business strategy, particularly when outsourcing is a key component of a strategy.  A company utilizing collaborators must be mindful of the value the collaborator is receiving from the execution of the business strategy. If the collaborator isn’t receiving adequate value then the entire business strategy may be in jeopardy.

In the graphic the best outcome is achieved when the optimal value for each of the three participants have the greatest overlap.  In other words, as the black area of overlap grows the value of the three participants increase and the value circles for each participant are more congruent. As the overlap of optimal values for each of the participants increases so does the overall value of the business strategy.

This outcome may be akin to a “Blue Ocean Strategy” where businesses seek new business opportunities where the competition is small or nonexistent. Southwest Airlines accomplished this through a focus on short airline trips that the major airlines were not structured to service. This strategy provided high value for the short distance travel customer and collaborators such as secondary airports in metro areas. The significant value provided to customers and collaborators provided significant value to the Company, Southwest Airlines.  The value circles for all three participants in this scenario are more congruent, providing greater value for the participants.

This graphic also supports the research on disruptive innovations. Disruptive innovations occur when a company business strategy focuses on providing products and product improvements for their most profitable customer segments. This results in a growing set of customers who no longer need or want all of the attributes provided by the company’s products. So in graphic terms the focus is increased on the optimal value of the company at the expense of the optimal value for the customer. For the short term the collaborators’ optimal value may be served at least adequately. Overtime, the overlap between the company and customer optimal value circles decreases. This can lead to new market entrants providing products that more nearly fit customer needs and provide optimal customer value. This can lead to disruptions in the market and cause industry leaders to fall to the new market entrants.

When developing business strategies, it is important to consider customers, the company and collaborators. Strategies that provide scenarios where customers, collaborators and the company values are more congruous will create the greatest value for all and result in the best chances for both long and short-term success.

Strategies that focus too much on one of the three will decrease the value for the other participants. This will result in scenarios where one or more participants will be on the look out for situations that will provide better value. This can result in new market entrants creating market disruptions.


Thursday, September 4, 2014

Free MBA Consulting Team for a Semester

I teach a consulting lab at the University of Houston's C.T. Bauer College of Business. Each semester two to four companies are selected to have a team of MBA students assigned to work with key company executives on a business challenge. Each team of students is selected from a field of applicants. The students’ resumes are reviewed and the faculty makes final selection for the team.

This semester there are two companies participating. The first is a regional bank looking to establish a presence in Houston. The second is a consortium of institutions working on a specific program to provide triage evaluations to emergency personnel through telecommunication devices.

To participate a company must complete an application (shown below) and be willing to cover any travel or project expenses required (company approves any expenses before they are incurred).

If your company would like to be considered, please complete the application below and email it to me at gary@gwrresearch.com. We will be selecting companies for the Fall semester (starts in August 2015) by June 15, 2015.

Developing a Project Request for Proposal (RFP) Description
Using this format, please describe the project that you want a C.T. Bauer MBA team to work on. Once you submit it to C.T. Bauer, it will be reviewed by a faculty member to assess whether it is feasible or not. Often the projects, as described by clients, are more than a team of students can do successfully in the time available. Sometimes the projects do not require the skills and knowledge of MBA students. You will get feedback from the faculty about the proposal.

1.     What is the problem or the challenge to be addressed?

2.     What is the scope of the project?  (What specifically the student team will focus on. What it will not focus on)

3.     What is the context – The organizational unit? The business it is in? Any previous efforts to address it? The reason for addressing it now?  The stakeholders for it?  Any other relevant information about context?

4.     What background information do the students need to know about your business in order to do this project?

5.     Sources: How will they get this background information?

6.     What data or information will the students have to get to address the problem or challenge?

7.     What data does your organization already have that the student team can analyze?

8.     What additional data would the team have to collect?

9.    What is the value of this to you?  Can you use it?  If so, how?

14. What obstacles or difficulties do you expect the team to encounter in doing this work?


15. Any other comments that will make this project interesting or attractive to the students: