CICERO

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OUTSIDE IN

FOR years, the concept that marketing should not just support but increase shareholder value creation is an idea to which marketers have paid lip service to at every opportunity. All well and good, but the connection between shareholders’ objectives and the most visual activity of marketing, marketing communications, remains the holy grail as far as the vast majority are concerned. Linking marketing communications with ROI requirements should be a natural, intuitive process and is the only place to start the planning process for any marketing campaign.

Across many industries, increased competition has eliminated ‘commodities’ and given customers freedom of choice. This in turn has led to differentiation being identified as the major focus of marketing strategy with options such as new product features, improved services, globalisation and brand advertising all used in the search for decisive differentiation.

Despite this realisation, marketing communications is still not being used to its maximum potential in the majority of instances. Often this is because marketers tend to look at their marketing opportunities from the inside out. In other words, they attempt to create a market for their products or services around their own circumstances. At Cicero, we believe that the only way to achieve success is to do the opposite and examine the market from the outside in.

Marketing communications managers should see themselves as architects or engineers – designing and building bridges between value creation and value realisation. They should understand that they are responsible for the fact that the more effectively relevant ‘organisational added-value’ is communicated to customers and potential customers, the more they are willing to pay a premium for those values.

Anecdotal evidence indicates that most businesses believe that customers are receiving an ever increasingly higher quality ‘product’ while their respective organisations receive lower returns on their investment. The claimed cause of this predicament? Increased and intense competition. We are not convinced by this argument and tend to look at the problem in another way.

The lower returns for higher quality phenomenon is illustrated in the figure 1 – which we have called the P/Q (Price/Quality) curve. The vertical axis represents quality (with a continuum between high and low). This is the value added ladder that organisations strive to climb, to differentiate and improve their products over and above those of their competitors. The horizontal axis depicts the price continuum the customer is willing to pay.

In a perfect world, the curve with a dotted line would depict where the two enjoy equilibrium - in other words, customer and company receive equal returns for their efforts and investment (eq0). The reality in competitive markets is often that the curve shifts to the left (q1 and p2).

As professionals, we see this phenomenon on a regular basis. Consider the chemical sector. A major global player in this market was very enthusiastic about its investment in new technology and infrastructure. The company believed it was now in a position to offer a superior service to its customers – but at the same time was concerned about price pressures and the fact that it still faced increased competition. The reality of the situation was that the company needed to focus more on driving home the value-added investment message – and allow customers to actually experience it. In that way, it would potentially assist in avoiding the curve shifting back towards an equitable Price/Quality parity.

We approach marketing communications activity – branding, advertising campaigns, sales initiatives etc - with the aim of shifting the curve to the left and therefore allowing the client organisation an equitable ROI.

There are two fundamental actions we recommend that will help in driving home an organisation’s value-added brand message.

1. Always regard each marketing campaign as a brand value chain. A journey that communicates value-added from the company to the customer
2. Establish multiple reasons why your campaign will stand out and be successful

The first point demonstrates how the brand value chain is a bridge to be built between a company’s value-added offering and a customer’s experience of it. The second point drills down into the validity of the product or service on offer. Is it something that ‘internally’ is seen as differentiating and dynamic but externally is regarded as perhaps novel and ‘interesting’ – but in reality, is no more than that. If that is the case, then the product or service need re-visiting from an ‘outside in’ perspective.

We’ve developed a methodology for working through this process that makes it simple but very effective. In the first instance, working closely with our clients, we break down campaigns into their critical stages. Each campaign is individual and different, however, for the purpose of this article campaigns are broken down into four key elements:

1. Proposition development
2. Proposition communication
3. Proposition delivery
4. Proposition enhancement

We then develop multiple principles that can be applied at specific stages of the campaign. As previously mentioned, each campaign will be uniquely different and we encourage companies to develop their own set of principles that will guarantee that they are directly relevant to the individual challenges facing them at that particular moment in time.

In summary, we advocate focusing on a client’s hidden added value and creating strategies to communicate that value to existing and potential customers. Find multiple, valid and relevant reasons why the marketing campaign value chain will be successful in promoting added value and then structure these reasons around the key stages of the campaign development model.

Agree in advance what is to be measured and how this will help maintain p/q equilibrium. By doing this successfully, the ROI on a company’s differentiation, innovation and quality investment will be rewarded - because customers will actually experience, appreciate and pay for it.

A version of this feature appeared in the October 2006 issue of Pharmaceutical Executive Europe magazine.

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