New AMA 2008

Marketing is the activity, set of instructions, and process for creating,

communicating, delivering, and exchanging offerings that have value for
consumers, clients, partners and society at large.
Marketing 3.0 is marketing that puts cultural issues at the heart of a
companys business model.
Four Ps Product, Price, Place, Promotion
STP Segmenting, Targeting, Positioning
The Human Moment An authentic psychological encounter that can happen only
when two people share the same physical space. (Physical, emotional, and mental).
Relationship Building Requires
1. Willing Participation
2. Reciprocity - balance of giving and getting

Marketing 3.0: Chapter 5 Marketing the Values to the Channel Partners

Channel Partner as Collaborator: Select the fitmust mirror...
o Purpose --- overall key objective of partner
o Identity --- character of partner
o Value --- share beliefs w/in partners organization -- the first step to
introducing your values to a channel partner is to understand their values
1. Good partnerships create horizontal relationships, not vertical ones
2. Both groups must share the same high standards
3. Unique values of each must fit the others

Channel Partners as Creative AllyCompany/Channel Integration

o Company should understand margins, inventory turns, ect.
o Concern and active mgmt. regarding selling out
o Care and understanding about partners general impressions and satisfaction
o MUST BE INTENTIONAL ABOUT THIS

Building Deep Supplier Relationships

What is a Keiretsu?
o Close-knit network of vendors that continuously learn, improve and
prosper along with their parent company.

How did Toyota and Honda Accomplish this relationship:

o Understand how their suppliers work!!!
o Turn supplier rivalry into opportunity
o They supervise their vendors
o They develop suppliers technical capabilities
o They share information intensively but selectively
o Conduct joint improvement activities


o
o

Develop Compatible Technical Capabilities

Value of wage savings vs. value of innovation
INVEST IN RELATIONSHIPS

Ritz-Carlton Question
What is meant by ladies and gentlemen serving ladies and gentlemen?
o Horizontal nature of business, everyone knows what they/you are doing.

The Mismanagement of Customer Loyalty

Is loyalty profitable?
o It costs less to serve profitable customers. They expect something in return
for their loyalty. Do you put less effort into your most important
relationships? no
o Loyal customers pay higher prices why would anyone think this?
Customers resent companies trying to profit from loyaltyrelationships
cannot be based on price! (starbucks)
o Loyal customers market the company -- behavioral and attitudinal deed
and thought Should not require this but it is nice.
o
o
o

Author found that the relationship between loyalty and profitability is much
weaker and more subtle than the proponents of loyalty claim.
What drives loyalty (reduction of customer effort)
Instead of focusing on loyalty alone companies need to focus on the
relationship between loyalty and profitability so they can understand which
customers to target and which to ignore
Commercial intent is O.K.

Loyalty requires companies to

o Provide reciprocity provide more help
o Reduce customer effort
o Provide unique service
o Become part of a routine
o Develop cause connection
o Its just plain impossible these days to get away with price
differentiation for any length of time.
Know when to lose a customer
o Event history model _ Math vs. Relationships

Short-term Long-term
customers customers

Is Your Company Ready for 1-to-1 Marketing?

One to One Marketing means being WILLING and ABLE to change your
behavior towards an individual customer based on what they customer tells
you and what else you know about that customer.
o Requires Preparation

Relationship marketing is grounded in the idea of establishing a learning

relationship with EACH customer starting with your most valuable ones.
o Think of a learning relationship as one that gets smarter with each
interaction

Four Key Steps in order of increasing complexity and benefit for the
company
Identify Your Customers --- Internal (apple, Starbucks)
Differentiating Among Them --- Internal
o Different values and needs
o Focus on most valuable

Interacting With Them --- External/Action

o Every interaction should take place in the context of all previous
interactions
Customize Your Product or Service --- External/Action
o Company must adopt some aspect of its behavior to meet customers
individual needs
o Production/service delivery end of business must be able to treat a
customer differently Major point of most breakdowns

Start Small
o Take responsibility for developing a customer relationship across the
organization (companys responsibility)
Assess your situation -- involves all levels of the organization (customers
as well)
Set Priorities
o What is the variance in your customer base steep vs. shallow
CRM works better with Steep Skew (more tightly clustered
people)

The Dark Side of Customer Analytics

Why are customer analytics so important to CRM?
o You have to be able to use the data you collect, CRM is almost worthless
without customer analytics.
What role should company values play in this case? (use the front page
test)
o Front Page test --- Never try to hide something you would not want to
see on the front page of the paper (how we should make decisions)
o Values should drive the decision
How important is transparency in customer data programs? Give and Get?
Who has the most to lose?
o Transparency is everywhere. You do not have to separate having a good
business and doing what is right. They are not mutually exclusive.

Customer Data: Designing For Transparency and Trust

Three Categories of Data Type:
1. Self-reported Data: information people volunteer about themselves,
such as their email addresses, work and educational history, and age
and gender.
2. Digital Exhaust: location data and browsing history, which is created
when using mobile devices, web services, or other connected
technologies (digital footprint)
3. Profiling Data: personal profiles used to make predictions about
individuals interests and behaviors, which are derived by combining
self-reported, digital exhaust, and other data.

Three Categories of Data Use:

1. Making a product or service better, for example, by allowing a map
application to recommend a route based on a users location.
2. Facilitation targeted marketing or advertising, such as ads based on a
users browsing history.
3. Generating revenues through resale, by selling credit card purchase data
to third parties.

Enlightened Data Principles:

1. Teach Your Customers: Users cant trust you if they dont
understand what youre up to.
2. Give Them Control: Milano study using ECG monitors -- the patients
see all their own data and control how much data goes to whom,
using a browser and an app. This patient-directed approach is a
radical departure from the tradition of paternalistic medicine that
carries over many medical devices even today, with which the
patient doesnt own his data or even have access to it.
3. Deliver In-Kind Value: In designing its service, Pandora understood
that customers are most willing to share data when they know what
value theyll receive in return.

There is an opportunity for companies in this defining moment. They can

abide by local rules only as required, or they can help lead the change
under way. Grudging and minimal compliance may keep a firm out of
trouble but will do little to gain consumer trust --- and may even undermine
consumer trust.
o FIRMS MUST LEAD THE WAY!

Marketing 3.0: Chapter 6 Marketing the Values to the Shareholders

Shareholders: owns part of the company through stock ownership. (stockholders)
Stakeholders: interested in the performance/actions of the company for
reasons other than just stock appreciation. (Employees, consumers,
suppliers)
Smart companies will focus on all stakeholders (consumers, employees,
channel partners, government, non-profits, etc...)
o A successful company is never successful by itself. It is successful
because it has built a superior network of stakeholders.

How Great Companies Think Differently

Institutional Logic: holds that companies are more than just instruments
for generating money _ they are also vehicles for accomplishing societal
purposes and for providing meaningful livelihoods for those who work in
them. According to this school of thought, the value that a company
creates should be measured not just in terms of short-term profits or

paychecks but also in terms of how it sustains the conditions that allow it
to flourish over time. These corporate leaders deliver more than just
financial returns _ they also build enduring institutions.
o Institutional Logic cannot be captured by cost-benefit equations or
reduced to the language of economics, and yet it turns out to be a
powerful driver of financial performance.
o Rather than viewing organizational processes as a way of extracting
more economic value, great companies create frameworks that use
societal values and human values as a decision making criteria. They
believe that corporations have a purpose and meet stakeholders needs
in many ways:
By producing goods and services that improve the lives of users
By providing jobs and enhancing workers quality of life
By developing a strong network of suppliers and business partners
By ensuring financial viability which provides resources for
improvements, innovations, and returns to investors

Institutional Logic Internalize values and purpose act to produce

societal value _ weather or not these are tied to core functions of making
and selling goods.
Financial Logic Aim is to maximize return on capital increase
shareholder value.
Institutional logic should be aligned with economic logic but need not be
subordinated to it.
At great companies profit is not the sole end; rather it is a way of ensuring
returns will continue. This institutional view is no more idealized than the
profit maximizing one.
If companies are to serve a purpose beyond their business portfolios, CEOs
must expand their investments to include employee empowerment,
emotional engagement, value based leadership, and related societal
contributions.
SIX WAYS GREAT COMPANIES USE INSTITUTIONAL LOGIC
1. The Common Purpose: establishing clear institutional valuesleaders
can compensate for business uncertainty through institutional
groundingbuild organizational culturemust intentionally build
culturea sense of purpose infuses meaning into the organization
ROLE OF LEADER IS TO INSPIRE!!!
Affirming purpose and values through service is a regular part of how
great companies express their identities.
2. Long-Term Focus: thinking of the firm as a social institution generates
a long-term perspective that can justify any short-term financial
sacrifices required to achieve the corporate purpose and to ensure over
time.

3. Emotional Engagement: the transmission of institutional values can

evoke positive emotions, stimulate motivation, and propel selfregulation. Moods are important.
Value statements the point is not the words themselves but the
process of nurturing a dialogue that would keep social purpose at the
forefront of everyones mind and ensure that employees use the
organizational values as a guide for business decisions.
4. Partnering With The Public: create a concern for public issues beyond
the boundaries of the firm, requiring the formation of public-private
partnerships in which executives consider societal interests along with
their business interests.
One paradox of globalization is that it can increase the need for the
local connections.
5. Innovation: articulate a purpose broader than making money can guide
strategies and actions, open new sources for innovation, and help people
express corporate and personal values in their everyday work.
6. Self-Organization: great companies assume they can trust people and
can rely on relationships, not just rules and structuresthey are more
likely to treat employees as self-determining professionals who
coordinate and integrate activities by self-organizing and generating
new ideas.

Understanding New Power

Old Power -- works like a currency. It is held by few. Once gained, it is
jealously guarded, and the powerful have a substantial store of it to spend.
It is closed, inaccessible, and leader-driven. It downloads and it captures.
New Power -- operates like a current. It is made by many. It is open,
participatory, and peer-driven. It uploads, and it distributes. Like water or
electricity, its most forceful when it surges. The goal with new power is
not to hoard it but to channel it.

Producing: consume and produce

Co-ownership: peer mutualism

New Power Values --- power is not just flowing differently; people are
feeling and thinking differently about it. A Lyft user experiences
consumption as a kind of sharing and subtly shifts his view of asset
ownership. _ When consumers give feedback they strengthen norms
around collaboration and make the case that we can do just fine without
the old power middlemen that dominate the 20 th century _ We all have
an inalienable right to participate. Today, people increasingly expect to
actively shape or create many aspects of their lives.

New Values:
o Governance informal network approach -- new power is more flash
mob and less general assembly

o
o
o

Old Rely on Govt

_
New Rely on Self
Collaboration new power models, at their best, reinforce the human
instinct to cooperate (rather than compete) by rewarding those who
share their own ideas spread those of other, or build on existing ideas to
make them better.
SharingCommunity Ownership
DIO the heroes in new power are makers who produce their own
content, grow their own food, or build their own gadgets.
Transparency new power proponents believe that the more light we
shine, the better. New power of conversation
Affiliation new power loves to affiliate, but affiliation in this new world
is much less enduringnew power is fast but it is also fickle.

Models and Values:

o Castles -- old modelsold values (apple, NSA)
o Connectors -- old valuesnew model (Uber, FB)
o Cheerleaders -- new valuesold model (Patagonia, Zappos)
o Crowds -- new valuesnew model (Etsy, Lyft)
Cultivating New Power -- having a Facebook page is not the same as having
a new power strategy. Traditional organizations but engage in the
following:
1. Audit Your Power --- to understand how your organization is deploying
new power, consider which participation behaviors you are enabling.
Assess your organizations place in the shifting power environment
2. Occupy Yourself --- deep introspection _ do you have an engagement
culture? Today, the wisest organizations will be those engaging in the
most painfully honest conversations, inside and outside, about their
impact. HIGHER EDUCATION?
Channel harshest critic
3. Develop A Movement Mindset --- old power organizations need to
think differently about how they reach out _ to succeed, a movement
needs much more than ad campaigns or astroturfing. Leaders must
be able to actually mobilize true believers, not just talk at them. A key
new power question for all organizations is who will really show up for
you?
Develop a mobilization strategy
The Challenge of New Power
o Respect Your Communities --- dont become the man
o Go Bilingual --- for all of new powers progress, it is not yet making
much of a dent in societys old power superstructure. Develop both new
values and new power capacities.
o Get structural --- new power models will always have limited influence
and impact unless they are operating within a superstructure designed
to play to their strengths. The battle ahead, whether you favor old or

new power values, will be about who can control and shape societys
essential systems and structures.

For all of its democratizing power, the Internet, in its current form, has
simply replaced the old boss with a new boss, warns Fed Wilson, a partner
at Union Square Ventures. And these new bosses have market power that,
in time, will be vastly larger than that of the old boss.

Too often, new power bosses dream only of a good exit from a hot
business, but we need new power leaders to make a grand entrance into
civil society. Those capable of channeling the power of the crowd must turn
their energies to something more fundamental: redesigning societys
systems and structures to meaningfully include and empower more people.
The greatest test for the conductors of new power will be their willingness
to engage with the challenges of the least powerful.

The Algorithmic CEO

Connection of Things the internet of things

Stages in the evolution between business and consumers

1. The first stage, before the industrial revolution, was the onto-to-one
transactions between artisans and their customers.
2. Then came the era of mass production and mass markets
3. Followed by the segmenting of markets and semi-customization of the
buying experience.
4. With companies such as Amazon able to collect and control information
on the entire experience of a customer, the math house now can focus
on each customer as an individual. In a manner of speaking, we are
evolving back to the artisan model, where a market segment is
comprised of one individual.

Marketing 3.0: Chapter 7 Delivering Socio-Cultural Transformation

Cause Marketing --- a strategy designed to promote the achievement of
marketing objectives via company support of social causes.

As CRM evolves companies must recognize that there are other

stakeholders involved and impacted such as employees, investors, general
public, etc.
o Consumers own the brand --- Marketing 3.0 must engage the spirit

Mature Market -- challenge the marketers

o Little or no growth
o Knowledgeable customers
o Customers view products as commodities

Creative companies must differentiate themselves in this market with

great service and exciting experience.

Marketers need to deliver transformation

Companies need to address the challenges in society and participate in
finding a solution.

Two Forces Require Companies to Support Transformation

o Future growth
o Differentiation
From Philanthropy to Transformation
o Philanthropy does not stimulate transformation in society.
Transformation in society drives philanthropy. You cannot address social
issues with philanthropy as the impact will be short.
o Cause Marketing --- companies direct their energy, not just their money,
to address the cause. They start to link the cause to their product.
A practice where companies support a specific cause though their
marketing.

Cooperate executives still see social causes as a responsibility instead of

an opportunity to create growth and differentiation.
Creating transformation is the ultimate form of marketing to the mature
market. (transformation is about alignment with values)
To win customers attention and trust, marketers must think LESS about
what advertising says to its target and MORE about what it does for
them.advertising new medium Human Experience
THREE STEPS TO TRANSFORMATION
1. Identify Socio-Cultural Challenges
i. Wellness
ii. Education
iii. Social Justice
iv. Privacy
2. Select Target Constituents
i. Gender and Age
ii. Middle Class
iii. Minority Groups
3. Offer Transformational Solution
i. Jobs
ii. Breakthrough Innovation idea, desirable, feasible, viable (hear,
create, deliver)
iii. Making products or services that provide solutions

The HBR Interview: Howard Schultz

I do not believe shareholder value is sustainable fi you are not creating

value for the people who are doing the work and then the value for the
customers.
Leaders today must be both transparent and vulnerable truthfulness and
humility

Strong Coffee Article Howard Schultz

We think of Starbucks not as a coffee company but as a media company
impacts their approach and their style of marketing.
The emergence of bloggers and social media gave critics an instant
platform
The commoditization of our brand and the watering down of the
Starbucks experience
o I had to transform both the company as well as myself.

The Case Against Corporate Social Responsibility

The idea that companies have a responsibility to act in the public interest
and will profit from doing so is fundamentally flawed.
This only works when the two are in sync
Transformation vs. Philanthropy

Three Stages in the Development of a Relationship Between Marketing and Values

1. Marketing and Values are polarized --- living up to higher values will
erode profits
2. Marketing and Values are balanced --- donate some profits to a cause
3. Marketing and Values are integrated --- live out values which give the
company personality and purpose.

Marketing 3.0: Chapter 8 Creating Emerging Marketing Entrepreneurs

Eradicating poverty is arguably humankinds biggest challenge

The pyramid must be reshaped into a diamond. In other words, more

people at the bottom of the pyramid should have higher purchasing power
and therefore move to the middle level. The bottom of the pyramid will
shrink and the middle will flatten.
The real solution has to be an investment and promotion of
entrepreneurship. The poor should be empowered to be able to lift
themselves to the middle of the pyramid.
o Companies must be the big players in this movement. Companies need
to be the ones to empower poor people to lift themselves.

A key actor in this solution is not nonprofits and government.

It is corporations that generate the vast majority of the economic

development and that own the business network. Companies should
help the poor even if only for the selfish reason of expanding the market.
However, ultimately the three parties have to work together in
collaboration to get the job done.

The Three Enabling Forces:

1. Increased access among the poor to information and communication
technology infrastructure
2. The blend of excess supply, under consumption in mature markets, and
hyper-competition at the top and middle of the pyramid
3. Government policy to discourage people from migrating to overcrowded
urban area.

Social Business Enterprise (SBE)

o A Social Business Enterprise (SBE) helps people to improve their lives by
providing affordable products and income-generating opportunities.
To be successful, an SBE must:
1. Stretch Disposable Income --- provide goods at lower price
2. Expand Disposable Income --- provide goods previously not available
3. Increase Disposable Income --- providing new jobs and markets
To Ensure Success an SBE Must
o Educate the underserved market continuously
o Link with local communities and leaders helps eliminate the cultural
barriers
o Partner with Govt and NGOs reduce costs and add credibility

Marketing 3.0: Chapter 10 Putting it All Together

Millennium Development Goals
1. Eradicating extreme poverty and hunger
2. Achieve universal primary education
3. Promote gender equity and empower women
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria, and other diseases
7. Ensure environmental sustainability
8. Develop a global partnership for development

10 Credos that integrate marketing & values

1. Love Your Customer --- Respect your competitor
Essential difference in emotion and reason is that emotion leads to
action while reason leads to conclusions. Loyalty to a brand is
greatly influenced by emotions
Respect your competitors _ they enlarge the market, learn our
strengths and weaknesses.
2. Be Sensitive to Change

 Be ready to transform when times change, change with them

3. Guard Your Name --- Be clear about who you are
In marketing, brand reputation is everything
Make your values clear and dont surrender them
4. Customers are Diverse
Go first to those who can benefit most from you
5. Always Offer a Good Package at a Fair Price
True marketing is fair marketing where product and price must
match
Set fair prices to reflect your quality
6. Always Make Yourself Available --- Spread Good News
Help your would be customers to fine you (Zappos)
7. Get Your Customers ---- Keep and grow them
Get to know them personally one by one
Look upon your customers as customers for life
8. Whatever Your Business, It Is a Service Business
Every product delivers a servicemust have a spirit of service
(internally as well as externally)
9. Always Refine Your Business Process In Terms of Quality, Cost,
and Delivery
Everyday improve your business process in every way
10. Gather Relevant Information, But Use Wisdom in Making Final
Decisions
Learn, Learn, And Learn!!!!!
Wise managers consider more than financial impact of a decision.

Reaching the Rich Worlds Poorest Consumers: Poverty is Not Just an Emerging
Market Problem
Social business is a concept originally developed in the context of poor
countries. Such a business has three key characteristics:
1. First, it seeks to alleviate social problems, including all forms of poverty
2. Second, it must run sustainable that is, it should not lose money
3. Third, profits when they exist are reinvested in the business rather
than funneled back to shareholders. Investors eventually get back only
the money they initially invested
Early results from these companies experiments suggest that the social
business model is both an efficient way of fighting poverty and a
productive source of new business ideas.

The Model:
o
o
o

Customer Exclusivity targeted

High Quality Products and Services
Carefully Designed Solutions to solve a social problem

The Hidden Payoffs:

o
o
o

Breakthrough Innovation --- consumer focused innovation

Motivation For Employees
Reputation --- not predators

Unilever Article
Future Proofing the business (sustainable farming)
If you buy into this long-term model, which is equitable, which is shared,
which is sustainable, then come invest with us. If you dont buy into this, I
respect you as a human being, but dont invest you money in our
company.
o Shareholder return cannot and will not trump nobler aims
o Our purpose is to have a sustainable business model that is put at the
service of the greater good.

Preventing the Premature Death of Relationship Marketing

Relationship Marketing Requires:
o Seeing Marketing Through Customers Eyes
o Regaining Customers Trust
o Attaining True Intimacy

Relationship Building Requires

o Willing Participation
o Reciprocity balance of giving and getting
Marketers serve as the boundary line between the consumer and the
company. And in that capacity they are both representatives of the
company and advocates for the customers point of view. Both roles are
critical, and yet in recent years the balance has become selfishly skewed.