HorizonWatching

Keys To A Successful Brand Revitalization

As I mentioned in my last post”Growth Oriented Companies Pay Attention To Customer Goals”, a few weeks ago I attended a 2 day conference titled Realizing Opportunities for Profitable Growth.  The conference was jointly organized by the Marketing Science Institute and the Kellogg Graduate School of Management.  I am taking my notes from the conference and posting here on HorizonWatch some of the the key thoughts that resonated with me.

One of the presentations on the agenda talked about how a mature company can go about revitalizing its brand that perhaps had seen better times.  The case study that was discussed was McDonald’s. 

Back in 2002, McDonald’s was in a tough spot.  Overall, it’s customer base was declining, competition was taking business away, brand reputation was taking a hit, company-wide morale was low, and the stock price was at an all-time low.  In 2003, the McDonald’s executive team launched a strategy it called “Plan to Win” to drive an ongoing, customer informed revitalization of the business. 

Our discussion during the conference centered around strategy behind the revitalization and how it came to life through customer-facing initiatives.   There were six takeaways for me.

1.  Improving Customer Experience.  Center to the strategy to revitalizing any brand is a renewed focus on continuous improvement of product and service quality.   Many firms get too focused on cost reduction at the expense of improving the customer experience.  Firms that don’t have a  program to continuously improve customer experience will eventually see a degradation of product and service quality.  McDonalds helped restaurants understand what customers value with regard to customer experience and then developed programs designed to achieve operational excellence.  For example, in Singapore, customers value delivery in the congested areas of the city, so bikes and food carts have been used to enhance food delivery service. 

2.  Product/Service Innovation.  Innovation is also a key part of any brand revitalization strategy.  In McDonald’s case, a disciplined new product pipeline management system was developed resulting in a dramatic improvement in new product success rate.   Examples of successful McDonald’s innovations include white meat McNuggets (white meat is healthier), Milk Jugs (the jug is reseals better than milk cartons), and the Chicken Snack Wrap (has good price points and appeals to lighter eaters). 

3.  Re-Establishing The Brand Promise.  Improved marketing programs focusing on reestablishing the brand’s promise is critical for any brand revitalization.  The brand promise is an articulation of the relevant and differentiating experience that the brand will deliver to every customer, every time.  Brand revitalization means defining where you want the brand to be and then deciding how to get there.  Starting in 2003, marketing programs began stressing McDonald’s brand promise in order to restore the relevance of the brand.   Marketing programs based on on McDonald’s brand promise were built around the five P's (people, product, place, price and promotion). 

4.  Rebuilding Trust.  Brands that have been beaten down need to re-establish trust.  For McDonald’s, rebuilding trust was also critical.  Consumers today are demanding more openness, more social responsibility and more integrity.  One way McDonald’s has done this is through its Shrek movie promotion with a new meal for kids that packaged apples, milk, and white chicken McNuggets.

5.  Balance Global vs. Local.  Finally for global brands, any brand revitalization plan must be able to balance both global and local priorities.  There needs to be a clear understanding of consumer similarities and differences across markets.   For each market, an understand of consumer buying framework of who, what when, where, why is necessary.  From the global perspective, brand managers need to identify business and brand building initiatives that "will travel" worldwide.   For McDonald’s examples included  offering 24 hour operation, cashless transactions,  drive-thru, salad entrees,  low price point snack-wraps.  

6.  Leadership.   Brand revitalization needs the courage and perspective of strong leaders.   While many factors contributed to McDonald’s turnaround, the number one factor contributing to success of the brand revitalization was executive leadership.  McDonald’s execs were insistent and persistent in assuring the consistent implementation of the “Plan to Win”.

I really enjoyed this presentation and the discussion we all had as a result.  Thanks to the Marketing Science Institute for putting on such a great conference!!

Growth Oriented Companies Pay Attention To Customer Goals

A few weeks ago I attended a 2 day conference jointly organized by the Kellogg Graduate School of Management (at Northwestern University) and the Marketing Science Institute.  The conference was titled Realizing Opportunities for Profitable Growth.  

It was a fantastic conference for me.  The agenda was packed with excellent presenters, I met many interesting people, and I felt like I was back at graduate school on the Kellogg GSM campus, my alma matar.   It was especially great to see one of my favorite professors, Professor Greg Carpenter, again.

I’ve had a busy couple of weeks since the conference so I am just getting around to organizing my notes from the conference.   Over the next few posts I plan on summarizing those notes and providing the most important nuggets of learning to you.

The first topic area discussed at the conference was how companies can go about the task of developing better strategies to achieve growth in a competitive marketplace. 

An obstacle to growth for many maturing customers is how they currently think about their customers.  Many companies can't grow a mature product until they put aside their traditional thinking about how and why their customers buy.  Many companies in mature markets have blinders on and have hard fast assumptions about their customers.  For example, they think that their customers have the following purchasing behaviors

• Lower price is better
• Buyers choose rationally
• Buyers know what they want
• More choice is better
• Information improves choice

Growth companies tend to throw out those assumptions and ask: How can we think differently about our customers?   Companies that do a good job of developing competitive growth strategies in maturing product categories know that it requires a deep understanding of what customers value. 

To understand what customers value, we must understand how customers set goals…for goals are what drive customer decisions.  Goals are desired future states of being.  Customers set goals because they have ambitions about the future.   They set both short term and long term goals.   The goals drive customer wants, needs, and purchase behaviors. 

There are, of course, different types of goals, but from a marketing perspective, there are three important types of goals that customers have that impact purchasing decisions.  

1. Emotional goals
2. Functional goals
3. Economic goals

Most goals are set high and are somewhat difficult to achieve.  So by the mere process of setting goals, customers are also creating problems that need to solved if they are to achieve the goals.   Thus goal setting quickly turns into a process of learning what problems they need to solve and then coming up with action plans to solve those problems.   As a result, customers place a high value on products and services that can solve their problems. 

Growth oriented companies who pay attention to their customer’s goals and help position products to help solve problems, can grow, even in mature product categories.  They can do this by helping shape how customers learn how to solve problems.

As they go about solving problems, customers seek knowledge.   All customers have a process for how they go about learning how to solve problems, and eventually, making decisions.  Based on learning activities they choose participate in customers form their own sense of reality.   Growth oriented companies develop marketing strategies that are designed to influence what and how the customers learn …and therefore impact customer’s perception of reality.

Growth companies look to create new learning paradigms around maturing products by innovating uniqueness in their products.   By innovating uniqueness into maturing products, growth companies cause customers to seek more knowledge.  But you also need to keep things simple as customers need to know just enough information to solve their problems...not much more than that.

It is also worth noting that customers have an unlimited supply of goals.  As goals are achieved, new goals are created.  So this leads to a unlimited supply of problems customers must solve. 

As I said above, look for a few additional posts in the near future summarizing some of the other key thoughts from the conference.

Thanks to the Marketing Science Institute for putting on such a great conference!!

Intelligent Transportation Scenario: Advanced Traveler Information Systems

I’m wondering when in the future will we arrive at a place where there will be open standards for traffic information that will allow us to have Advanced Traveler Information Systems.  

Traffic information is certainly needed by everyone.  That means we need to have it available on all sorts of devices using all sorts of applications.   So why not open standards so the information can be available and used to help us all get from point A to point B in less time and with less frustration/hassle?

I see a future where Advanced Traveler Information Systems are capable of advising travelers of suggested travel route changes due to traffic congestion changes...all in real time.  An integrated system would need to be able to draw real-time information from any type of transportation in the region, then process that information against the traveler’s requests/needs,  then provide that information back to the traveler in the format needed for the traveler’s device and application.

Here is a scenario….

Monday evening

1. Jack receives an email from his global head of marketing that an important client will be visiting London to discuss a new deal. Jack is to host dinner for the global client on Friday evening at Nobu in London.

2. Jack books a table over the Internet for 1900 on Friday and puts the details into his Lotus Calendar.

Friday

10:00 - The day has not started well: Jack is in back-to-back meetings the entire day with some client issues.

17:30 - Jack’s online calendar reminds him of the dinner and alerts him of his travel options based on reaching the restaurant by 1900:

1. Taxi: due to ongoing road works on the route, there is a bad traffic jam along the route - he would need to leave the office by 1800. The estimated cost was £25.
2. Bus: as there were bus lanes throughout the route, the road works would not impact the journey too significantly - he would need to leave the office by 1810. The cost would be £2.
3. Tube & walking: the Piccadilly line was currently on schedule; he would need to start walking to the Tube by 1815. The cost would be £3.

The application on Jack’s smartphone recommends that Jack go with option 4:  Tube and walking.

18:20  -  On Jack’s walk to the Tube, his smartphone alerts him of a security incident on the Bakerloo Tube line. If he were to continue with the planned route, he would arrive at the restaurant only at 1945. It advises him to change his route by walking to the nearest bus stop. The bus route would get him to the restaurant at 1910.

19:10 - Jack arrives at the restaurant slightly late but thankfully his guest has not yet arrived – the guest took a taxi and was caught in a traffic jam!

The successful outcome in the scenario above is dependent on open transportation information standards and Advanced Traveler Information Systems, including

• An extensive sensor-based transportation system operating in the region where real-time information is collected on every type of transportation available to the traveler
• An back office analytics-rich system capable of analyzing the millions of transactions coming into the system for each mode of transportation
• Applications available on personal mobile handheld devices capable of interacting with the regional Advanced Traveler Information System.  The mobile application needs to be able to become an agent for the person, acting on stored personal preferences, the calendar for the day, and the real-time information available from the regional system.

Foresight Method - A Primer on Scenario Planning

Introduction To Scenario Planning

Scenario planning is a Foresight technique that can help provide a view into the future in a world of great uncertainty.   Scenarios are carefully crafted stories about the future embodying a wide variety of ideas and integrating them in a way that is communicable and useful.  Using scenario planning techniques, teams can imagine plausible futures with the objective to explore potential surprises and unexpected developments.  It can help manage strategic risks and opportunities. 

Scenario planning has its roots in military strategy studies, but it was transformed into a business tool in the late 1960's and early 1970's, by Pierre Wack of Royal Dutch/Shell.  By applying scenario planning techniques, Shell was better prepared to deal with the oil shock that occurred in late 1973.  As a result, Shell greatly improved its competitive position in the industry during the oil crisis and the oil glut that followed.

Why Should Companies Do Scenario Planning?

Scenario planning is a technique analysts and strategists can use to deal with major, uncertain shifts in a company’s environment.  Scenario planning is particularly useful in emerging markets or when existing markets are gong through rapid changes and disruption.  It is during these times that information is limited and it is hard to predict with certainty what might happen in the future.  In these cases, traditional forecasting techniques often fail to predict significant changes going on in the external environment.  Consequently, important opportunities and serious threats may be overlooked and the very survival of the firm may be at stake.  

Other benefits of scenario planning include:

• It forces people out of their typical view of the market and therefore can expose blind spots that might have been overlooked in the current long range strategic plans

• As the future unfolds, we are better able to recognize a scenario in its early stages as it happens, rather than being caught off guard.

It is important to understand that the objective of scenario planning is not to fully predict the future.  Instead, it attempts to help describe what is possible.  The objective of scenario planning is to describe a group of distinct futures, all of which are plausible.  Once those potential futures are developed, the challenge then is how to deal with each of them.

The Basics Of Scenario Planning

Scenario planning usually takes place in a workshop setting.  The workshop can range from a half a day to a number of days, depending on the complexity of the market being studied.  It is best to have a diverse team assembled, including  analysts, strategists, subject matter experts, and industry leaders.  The idea is to bring together a group that has a wide range of viewpoints in order to fully explore alternative scenarios that are outside the current accepted forecasts. 

Any scenario planning workshop should encourage unstructured thinking, therefore, the process itself should not necessarily be too structured.  With that in mind, the following outlines the sequence of actions that may constitute the process of scenario planning.

1. Form Team.  Identify people who will contribute a wide range of perspectives.
2. Conduct pre-workshop interviews as appropriate.  Ideally, the process should include pre-workshop interviews with managers who later will formulate and implement strategies based on the scenario analysis.  Without their input the scenarios may leave out important details and not lead to action if they do not address issues important to those who will implement the strategy.
3. Begin workshop.  Introduce Scenario Planning Exercise.  Define goals/objectives.  Specify the scope/time frame.
4. Develop a clear understanding of the present situation.  This will serve as a common departure point for each of the scenarios.
5. Document current trends any future events/elements that are virtually certain to occur.
6. Understand external environment.  Identify the critical uncertainties in the political, economic, social, and technological factors.
7. Identify the more important driving forces.  Take into account the potential variation and impact of each driver.  After listing all driving forces, rank the driving forces in order of significance.
8. For the most important drivers, consider a few possible values for each.  Range between extremes while avoiding highly improbable values.
9. Understand potential interaction between the driving forces.  One way to do this is to develop a matrix of scenarios using the two most important variables and their possible values.  Each cell in the matrix then represents a single scenario.  Assign names to each scenario and sketch out rough pictures/descriptions of different futures based on these scenarios.  One of these scenarios most likely will reflect the mainstream views of the future, while others will shed light on what else is possible.  At the end of this step, there is not any detail associated with these rough scenarios.  They are simply high level descriptions of a combination of important environmental variables.
10. Develop Detailed Stories.  During this step further work is needed to develop detailed impact scenarios that explain in more detail how each scenario might affect the corporation.  Specifics can be generated by writing a story to develop each scenario starting from the present.  The story should be internally consistent for the selected scenario so that it describes that particular future as realistically as possible.   Experts in specific fields can be called upon to develop more detail around each story.  The goal of the detailed stories is to transform the analysis from a simple matrix of the obvious range of environmental factors into decision scenarios useful for strategic planning.
11. Quantify the impact of each scenario on the firm, and formulate appropriate strategies.
12. At this point, if the team is comfortable doing so, it can be useful to assign a probability to each scenario.
13. Establish signposts for each scenario.  During this step, the team should identify a set of early warning signals or signposts for each scenario.  These are event that could happen that would indicate to the team that the particular scenario is beginning to unfold.
14. Finally, the team should establish a process that regularly monitors, evaluates and reviews the scenarios.

What comes out of the scenario planning process is a number of plausible scenarios that can be used to as input into strategic planning discussions.  The point is not to select one scenario as the preferred future and hope for it to become true.  Nor is the point to fund the most probable future and adapt to it.  Rather, the point is to make strategic decisions that will be sound for all plausible futures. 

It should be noted that strategists/executives may not take scenarios seriously if those scenarios deviate too much from their preconceived view of the world.  Many will prefer to rely on forecasts and their judgment, even if they realize that they may miss important changes in the firm's environment.  To broaden their thinking,  it is useful to create "phantom" scenarios that show the adverse results if the firm were to base its decisions on the mainstream view while the reality turned out to be one of the other scenarios.  For each scenario, I always like to ask the question:  What is the worse impact that we can imagine will happen if we do nothing and this scenario comes true?

Summary

 

Scenario planning works by understanding the nature and impact of the most uncertain and important driving forces affecting the company's future.  It is a group process which encourages knowledge exchange and development of mutual deeper understanding of central issues important to the future of the business. 

The goal is to craft a number of diverging stories by extrapolating uncertain and heavily influencing driving forces.  The stories together with the work getting there has the dual purpose of increasing the knowledge of the business environment and widen both the receiver's and participant's perception of possible future events. 

I'd encourage you to try out scenario planning as a way to imagine the potential futures. 

Additional Reading/Resources

• Wikipedia Article on Scenario Planning 
• Shell Oil's Scenario Planning Website 
• Scenario Planning Resource Website 
• Scenario Thinking Community