Embed value-based marketing as a core business practice in Royal Mail, including the leadership and culture, processes

and capabilities.

Marketing matters more than ever
Markets are incredibly complex and competitive • Competitive intensity has tripled in most markets • Typical segmentation models now have 400 clusters • Product lifecyles have reduced by 70% over last decade

Customers are much more powerful than ever • Consumers now receive 1500 messages per day • 54% of consumers have registered for “do not call” • Purchase decisions are typically made in 2.6 seconds

Shareholders demand higher, faster returns • Intangible assets make up 78% of the Fortune 500’s value • 60% of brand investment impacts future years • 21% of CEOs are marketers delivering 5% better TSR

© Peter Fisk 2005

The old ways don’t work anymore. Complexity, speed and power means that even the best brands and marketers need to think differently in order to succeed
© Peter Fisk 2005

Marketing 1837 Marketing function

Products Candles and soap products

Innovations

Communications

First colour print ads 1900 First radio ads Laundry products Brand Management Hair care Oral care Home cleaners 1950 Supply chain management Coffee Flouride toothpaste Disposable nappies Salted snacks Global category management Enzyme detergents Cosmetics 2 in 1 shampoos Corporate venturing 2000 Customer is boss Pet food Tooth Whitening Digital ads pg.com Cable TV Inhouse TV programming 1-800 Numbers Synthetic Detergents Direct selling to consumers Radio soap operas

First TV ads

© Peter Fisk 2005

Intuitive Divergent Imaginative Non-Linear Holistic Subjective Interactive Convergent Directive Linear Analytical Objective

Marketing needs to be more intelligent and imaginative. It must combine more rigorous analysis and more radical creativity, to make sense and stand out in today’s markets.
© Peter Fisk 2005

Genius
Analytical thinking

Original thinking Creative thinking

Dual thinking

Observational thinking

Volume thinking

Visual thinking

Pragmatic thinking

Holistic thinking

Genius marketing requires the skills and confidence to make the best ideas happen. It brings together left and right-brain thinking with practical, integrated action.
© Peter Fisk 2005

Outside in

Inside in

Companies need to work “outside in” rather than “inside out”. Rather than improving what they do, they should be focused on the best opportunities in their marketplaces
© Peter Fisk 2005

Complexity Space Power Networks Pace Insight Responsibility Inversion
Genius insights include Apple, Coca Cola, eBay, Enterprise, Microsoft … Genius tools include Market Mapping, Ethnography, Ethics Compass, and Reverse Marketing.
© Peter Fisk 2005

Traditional definitions of markets make little sense. Boundaries blur, and new markets emerge. The pace and impact of this change can be phenomenal.
© Peter Fisk 2005

3 new stores open every day Starbucks name is taken from the sailor in Moby Dick, its painted lady emblem taken from an old fishing boat.

Acquires Tazo tea company

Howard Schultz acquires Starbucks and starts coffee bar roll-out Key accounts with corporates and airlines Pike Place Market Seattle starts selling coffee beans

7225
Frappucino launched With Pepsico

4709

2135 1412 676 17 55 1990 116 1992 272

1971

1988

1994

1996

1998

2000

2002

2004
Source : starbucks.com

Cool Places
where latest trends emerge

Hot Spots
where the new competition is

Black Holes
where old brands die
© Peter Fisk 2005

White Spaces
where nobody has ventured

Marketing needs to work outside in too. Starting with the customer and their need, rather than supplier and product. Campaigns are dead, channels invert, start with a Google.
© Peter Fisk 2005

Power Profile™
Brands define supplier or product Communicate in mass campaigns Products standard and discrete Distributed through defined channels Price based on competitors and costs Relationships sought by suppliers Innovation drives product derivatives Strategy based on current capabilities Measured on financial-based metrics Overall, supplier calls the shots S S S S S S S S S S C C C C C C C C C C Brands reflect buyer aspirations Get in touch when want to know Solutions assembled by buyer Agents help buyers solve problems Pricing based on perceived worth Buyers loyal to people like them Innovation redefines contexts Strategy based on best opportunities Measured on customer-based metrics Overall, buyer calls the shots

© Peter Fisk 2005

Short-term

Long-term

Marketing must create tomorrow whilst delivering today. Build the brands, innovations and relationships to drive future cashflows whilst also delivering quarterly profits.
© Peter Fisk 2005

Stakeholders Value Strategies Brands Innovation Design Portfolio Intangibles ROI
Genius insights include Boden, BMW, Paul Smith, Panera Breads, Virgin, Zara … Genius tools include Market Strategy, Value Propositions, Memetics, Brand Equity and Innovation.
© Peter Fisk 2005

What is the measure of marketing success? In the European car market, a different brand is “best” when measured on market share, revenue, operating profits or shareholder value.
© Peter Fisk 2005

£

Past

Future

Shareholders care about the future not the past. Shareholder value is the sum of likely future cashflows. Marketing creates three times more value than anything else.
© Peter Fisk 2005

Marketing – customers, brands, innovations – should be top of the boardroom agenda, at the front of the annual report (OFR) or a key topic for every investor relations meeting
© Peter Fisk 2005

Operating Profit

Economic Profit

0

0

However this also requires marketers to think differently, identifying the few markets, products and customers than really do “create value” and focusing creatively on them.
© Peter Fisk 2005

Nike outsells Reebok 3 times, with a market value of $12 billion. Knight hands over CEO role to Bill Perez Phil Knight launches his Nike brand of running shoes Nike regains market leadership from Reebok with “Just Do It”

Nike buys Converse and Starter brands Nike signs golfing star Tiger Woods

Nike signs tennis Superbrat John McEnroe

Nike signs basketball rookie Michael Jordan

Nike grows internationally. Soccer is key.

$12bn

Nike becomes top US running shoe brand and goes public

“Nike Air” launched With the Air Max
$3bn $1bn

$7bn

1972

1980

1985

1990

1995

2000

2005
Source : nike.com

Right brain

Left brain

Marketers need to change personally - to be more strategic, innovative and commercial. To drive the market and the business. They don’t need to be on the board, but they do make the best CEOs.
© Peter Fisk 2005

Ideas Decisions Focus Integration Capabilities Influence Leadership The best CEOs
Genius insights include Diageo, Dyson, Innocent, Nestle, P&G, and Nokia … Genius tools include Market Manager, Leadership, Customer Capital and Brand Blogging.
© Peter Fisk 2005

Even in difficult markets, there is space to stand out and be profitable. Jet Blue’s incredible success combines the lessons of low-cost and premium service airlines.
© Peter Fisk 2005

Value of Value of benefits benefits to to customer customer Perceived Perceived Perceived worth worth value relative relative to others
Priced Priced

“Value for money”

to offer to offer Price value for money money” to investors Return Return Return to investors

The only route to more shareholder value, is to create more value for customers – to manage perceptions and price, to change context and connotations of value.
© Peter Fisk 2005

Jones Soda Co. is perhaps the most radical of the 50 genius brands – “nobody needs my shit, but they love it” – explains Peter van Stolk, the man who makes turkey and gravy soda!
© Peter Fisk 2005

Radical creativity

Innovative state

Conventional state

Rigorous analysis

Genius drives innovation in every aspect of marketing – from products and media to market rules and business models. It requires disruptive push and creative pull, focused in the right places.
© Peter Fisk 2005

Marketers need the mind and skills of Steve Jobs, to spot the best opportunities, to make sense of complexity, and think how to best exploit their brands commercially.
© Peter Fisk 2005

Marketers need the guts and passion of Phil Knight, who gave up his running aspirations to sell shoes from his car, and over the years created a $12billion brand called Nike.
© Peter Fisk 2005

Sensing

Outside in Market Competitive Customer Inside out Business Capabilities Finance

Responding

Long term Market driving Strategic Value Short term Market driven Tactical Sales

Organisation
© Peter Fisk 2005

Market strategies

Inspiring leadership Profitable focus

Shaping the market

Distinctive brands

Leading the business

Deep Customer insight

Disruptive innovation

Genius Marketing
Compelling propositions Collaborative working

Engaging experiences

Engaging the customer

Integrated activities Personal relationships Effective delivery

Aligning the operation

© Peter Fisk 2005

Diagnostic available from peterfisk@peterfisk.com

Sensing

Right brain Concepts Creative Holistic Left brain Facts Analytical Specific

Responding

Radical ideas Conceptual Possibilities Development Practical action Operational Priorities Delivery

Organisation
© Peter Fisk 2005

Individual

Evaluating opportunities

Analytical thinker Factual evaluator

Creative thinker Idea generator

Exploring possibilities

Externally adaptive

Inner conviction

Genius Marketer
Pragmatic realist Conceptual guide

Practical implementation

Focused deliver

Integrated deliver Controlling manager Empowering manager

Creative implementation

© Peter Fisk 2005

Diagnostic available from peterfisk@peterfisk.com

The edge

1. Invert Marketing must bring an “outside in” approach to business, delivering today and creating tomorrow. 2. Insight Marketing must build brands around customers, create pull not push, work on their terms 3. Innovate Marketing must drive more significant innovation of the business and marketplace 4. Influence Marketing can take centre stage, shaping markets and driving the business. Marketers make the best CEOs. 5. Inspire Marketing can combine deep intelligence and radical creativity to deliver extraordinary results.

© Peter Fisk 2005

Genius marketers combine the intelligence of Einstein and imagination of Picasso to focus their efforts, build brands, drive innovation, and to deliver extraordinary results.
© Peter Fisk 2005

Marketing Genius is the radical new book from Peter Fisk. It describes a better approach to marketing in today’s complex markets, one that combines deep intelligence and extreme creativity in order to deliver extraordinary business results.

Markets are incredibly complex, competition is intense, change continues at pace, and power has fundamentally shifted to customers. Yet most companies still do business inside out, driven by financial blinkers, trying to improve what they have always done. Whilst the markets, competitors and customers do otherwise. Business needs marketing more than ever, but not as today. Customers are more different, discerning and demanding than ever. Competitors challenge from every angle, across sectors and geographies, imitation is immediate and differentiation is rare. Shareholders, similarly demand better returns on investment, quicker and at less risk. Marketers are under pressure to deliver better results. Marketing is the key driver of long-term shareholder value in business. Intangible assets now account for around 70-80% of market value, and much of this is driven by marketing, and can increasingly be accounted for. Witness the enormous “customer capital” paid by P&G for Gillette, contributing to a price 25 times the operating profits. Profits are not the same thing as value creation. Cont > Marketing Genius will be published by Wiley Capstone in September 2005 at £14.99. You can order your copy now from Amazon, and download free extracts at www.MarketingGeniusLIVE.com

Marketing Genius is the radical new book from Peter Fisk. It describes a better approach to marketing in today’s complex markets, one that combines deep intelligence and extreme creativity in order to deliver extraordinary business results.

Marketing creates the future whilst delivering today. Whilst supporting current sales, it also develops the markets and innovations, brands and relationships, which secure future profitability. Indeed, most large investors take a long-term view on their investments, despite the short-term obsession with quarterly results internally. Marketers need to work in double time. Value-based marketing starts with focusing on what matters most – the few markets and segments, brands and products which will deliver a superior, return on equity in future years. Evaluating most portfolios will reveal that most companies are still focusing on many activities which actually cause them more harm with every penny spent on marketing, and every extra sale. Focusing on the value creators, eliminating the value destroyers. Value-based marketing is typically about doing the right things, identifying the best opportunities, focusing on what matters most, doing less rather than more. Value-based marketing is about creating more value for customers and shareholders. Shareholder value has often been tarred with the brush of short-term greed, and the financially-blinkered behaviour and corruption which that can drive. Indeed creating this virtuous circle is the only way to drive long-term value for shareholders. More customer value creates more shareholder value. Cont > Marketing Genius will be published by Wiley Capstone in September 2005 at £14.99. You can order your copy now from Amazon, and download free extracts at www.MarketingGeniusLIVE.com

Marketing Genius is the radical new book from Peter Fisk. It describes a better approach to marketing in today’s complex markets, one that combines deep intelligence and extreme creativity in order to deliver extraordinary business results.

Creating more value for customers is about insight and innovation, but also about managing perceptions and perceived value in smarter ways. That is the route to the win-win, where strong brands really can charge a premium. This requires more radical innovation, more compelling propositions, and doing business on customer terms – where, how and when they want, not you. The death of campaigns, the reversal of channels. Value-based marketing demands that marketers step up to lead both their markets and the business, to be the driving force of strategy and decision-making, investment and performance. This requires marketers to work more strategically, innovatively and commercially. It also requires them to be more collaborative and accountable, better team players and leaders. Indeed marketers make the best CEOs. Marketing needs to articulate its real value to business. The new OFR requirements for annual reporting, which came into effect on 1 April 2005, are an excellent opportunity. Marketing is the driving force of future performance, its time for to take centre stage, and become the drivers of business. A marketing genius, brings together the intelligence and imagination to achieve this, and to deliver exceptional business results.

Marketing Genius will be published by Wiley Capstone in September 2005 at £14.99. You can order your copy now from Amazon, and download free extracts at www.MarketingGeniusLIVE.com

Peter Fisk
Peter is a highly experienced marketer. He spent many years working for the likes of British Airways and American Express, Coca Cola and Microsoft. He was the CEO of the world’s largest professional marketing organisation, the Chartered Institute of Marketing, and for almost 10 years led the global marketing Peter is a highly experienced marketer. He spent many yearsof PA Consulting of British Airways and American Express, Coca Cola and practice working for the likes Group. strategy and valuation firm. He writes and speaks regularly on all
He is Managing Director of Brand Finance, the leading brandof marketing, and in particular and how marketing, brands of aspects strategy and valuation firm. He writes on speaks regularly on all aspects marketing, and in particular on how marketing, brands and innovation drive exceptional long-term value for customers and shareholders. He and innovation drive exceptional long-term value for customers recently authored The Marketing Society’s Manifesto for Marketing, and led the development of Customer Capital in response to the DTI’s new and shareholders. He recently authored The Marketing Society’s OFR reporting requirements.

Microsoft. He was the CEO of the world’s largest professional marketing organisation, the Chartered Institute of Marketing, and for almost 10 years led the global marketing practice of PA Consulting Group. He is Managing Director of Brand Finance, the leading brand

Manifesto for Marketing, and led the development of Customer Capital in response to the DTI’s new OFR reporting requirements. Peter’s new book Marketing Genius will be published by Wiley later this year, and describes how a more intelligent and creative approach to marketing can deliver exceptional results in today’s complex markets. He has also authored over 50 papers, published around the world, and is co-author of the FT Handbook of Management and The Complete CEO. You can email him at peterfisk@peterfisk.com Or visit his website www.MarketingGeniusLIVE.com

Embed value-based marketing as a core business practice in Royal Mail, including the leadership and culture, processes and capabilities.

peterfisk@peterfisk.com www.MarketingGeniusLIVE.com