Maneuver Marketing Communique

CHIEF MARKETING OFFICERS (CMO'S) SHOULD HAVE MARKET SHARE QUOTA'S (AND BE JUDGED ON THEIR ABILITY TO ACHIEVE THEM)

There are three market share metrics that when aggragated can be used to gauge the effectiveness of your CMO and all marketing activities. These metrics are the volume, value and vector of your market share.

1. VOLUME. Market share volume is the traditional notion of share measured in dollars or units relative to your competition. While volume is a good initial indicator, marketers need to know the value of this share and the trend of their share.

2. VALUE. Market share value attachs a quantitative value, measured by percentage margin, to your market share volume. Having a large share of an unprofitable market is not sustainable. Alternatively, holding a smaller share that is profitable may be sustainable.

3. VECTOR. Market share vector is a trend measurement that depicts the direction your market share volume and value are heading, over time, relative to your primary and secondary competitors. The vector has a starting point, at least one intermediate measurement point and an ending point, typically the conclusion of a campaign, or performance review date of a CMO.

Market share vectors unambiguously measure enterprise success relative to it's peers. The primary function of market share vectors is to gauge the effectiveness of your marketing activities and the performance of your CMO. Market share vectors are the CMO's version of quota's, which sales reps are generally evaluated on (yes, I am saying that CMO's should have market share quota's and be judged on their ability to hit them). A few more comments on market share vectors:

1. Timing. Market share vectors can be used to judge effectiveness over a multi-year career, a multi-month campaign or as part of an annual review of budgets and plans. The vector requires a starting point at which all competitors are measured, an intermediate point and a concluding point that will be used to determine the vector trend.

2. Scaling. For start-ups or small firms with very small share, market share vectors can be scaled down so as to meaningfully measure actual performance. To scale down market share vectors simply select a subset of customers, territories, segments or categories and measure your relative share within that limited arena.

3. Influences. Poor vector performance may be due to influences outside the realm of control of marketing and the CMO. But the same thing applies to sales reps... there are many influences from quality, to shipping, to design decisions that a sales rep must live and die with, in their efforts to achieve a quota. The stark reality generated by market share vectors needs to be tempered within the context of issues, problems and opportunities faced by the enterprise and by the CMO. Market share vectors set up a baseline framework from which a CEO or CFO might begin to understand the effectiveness of their CMO and their marketing activities.

4. Intelligence. Some enterprises do not have the competitive data necessary to measure market share vectors. Others may not have the will or the interest to generate competitive intelligence. To the former, they need to begin the process of establishing a competitive intelligence competency... market share vectors are a great way to begin. Regarding the latter, enterprises without the will or interest need to understand the importance of external metrics and the peril they place themselves in when they operate without these guide posts.

We have a simple Excel worksheet you can use to plot market share vectors. Shoot me an email and I'll send you the worksheet.

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MARKET SHARE IS THE MOST IMPORTANT METRIC FOR CMO'S.

Market share is the most important metric that marketers can use in order to judge the effectiveness of marketing campaigns. This includes branding initiatives, advertising campaigns, CRM programs and any other revenue generation effort. Market share metrics are more important than ROI measurements. The reason is quite simple. Market share is a relative measurement against external benchmarks. Market share tells us how we are doing relative to our competition.

It amazes me how many enterprises ignore market share and focus on internal metrics like awareness, loyalty, churn, leads, recall, revenue growth, margin improvement etc. The problem is that internally focused metrics can be deceiving. While the inwardly-focused enterprise may be happy with it's results, this satisfaction can be delusional if the enterprise is performing below par relative to competition. Which is one of the reasons why many customer-centric enterprises are excellent targets for attack and dislodge campaigns - they never see you coming.

While market share is the most important metric other measurements are needed to develop a complete picture. Units, revenues and margin must also be tracked in order to determine the ultimate value of your market share. There are many ways to measure share. The easiest is to rank revenue or measure absolute volume in unit sold or gross sales generated. By itself volume measurements are a start but need to be further described by the value of your market share. Having 70% share of a market in which you are losing money is not a sustainable strategy.

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The Competitive Marketplace Is Driving More And More Marketers From Marketing

Recently I've noticed a slew of marketers resigning from their positions. One thing they all had in common was the fact they were departing companies experiencing some form of minor duress - losing share, maturing technology, budget reductions, minor controversy, etc. None were fired. They where leaving voluntarily, ostensibly to spend more time with their family, pursue personal interests... blah... blah... blah, highlighting a current issue I have with marketing in general which is the absence of competitive instincts (not to be confused with personal survival instincts).

What happens when you don't have extraordinary people, innovative products, extraordinary customer experiences and rock solid infrastructure (as described by Tom Peters)? As marketers what do you do when you're dealing with regular folks, mediocre products, OK customer experiences, and infrastructure held together with spit and baling wire (in other words 99% of American enterprises)?

What happens when you don't have the cash or the competencies of a Fortune 500 enterprise to buy the media, create the ads, bring in the consultants, train the masses, attend the seminars, do the off-sites, implement the technology and get the certifications?

What happens when you don't have 18 months to wait for a branding campaign to work?

What happens when you don't have $500,000 to pay for new CRM technology?

What happens when the CEO says we need to grow or die? And as a marketer the tools, resources, competencies and capital you think you need are out of reach? In other words how do you play the hand you've been dealt? Not the hand you wished you had?

Many marketers when dealt this hand polish up their resume and start looking for a new gig. They flee. Which is interesting because quite often it was their dysfunctional marketing strategies that led to the situation they're fleeing. I am seeing a growing trend, that is disturbing to say the least, of refugee marketers looking for new territory to plant their flags on.

Rather than fleeing, marketers should be staying and fighting. But for many marketers who chose this profession because they like to attend award ceremonies, plan parties, write white papers, go on photo shoots, get wined and dined by Donnie Deutsch, be socially networked, and culturally connected the whole notion of fighting is quite distasteful.

The best place to generate new sales is by taking market share from your competition. Why? Because the risks are minimal, customers are trained to write checks for your type of products or services, you know where the customers live and how to reach them, you can start winning new business tomorrow, and you do not have to front precious resources on bet the ranch branding initiatives, new product launches, new market introductions, technology initiatives etc.

But to do this you need to compete. Why? Because your competition will likely resist. And the customer will need to be convinced to change. You need to have a desire to win to play this game, and a laser-like focus to maximize YOUR company's revenue and profit. You have to make the absolute best of the hand you've been dealt. You have get up earlier. Work later. Make more calls. Be smarter than your competition. Faster than your competition. And execute better than your competition. YEA! Lets go kick some ass!

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Richard Miniter - The Myth of Market Share: Why Market Share Is the Fool's Gold of Business

Somehow this escaped my normally eagle eyes when it comes to all things market share. Seems as if Richard Miniter, who has an impressive career writing about the war on terror also wrote a book on market share. In it he:

skewers the sacred cow of market share and debunks the conventional wisdom that corporate profits rise as you grab more territory in the marketplace.

It's not about the size of your share but the value and trend of your share relative to your competition.

We measure this via market share vectors. More here on market share vectors.

John Moore's take on Miniter is here.

FOR MARKETING MANAGERS ONLY: Free 3-Day Pass to vSente's Armory - Tool, techniques, wizards and manuals. Create a more effective and accountable marketing organization. Convert your MARCOM department into a ROI driven revenue engine. Also, click the links for information on our campaigns and workshops. 

TO PROCTOR & GAMBLE'S CMO JIM STENGEL: MARKET SHARE IS NOT "TRUST MATERIALIZED"

P&G'S CMO Jim Stengel told a group of agency exec's today that market share is trust materialized. He's wrong, nor is market share customer delight materialized, and it's not brand loyalty materialized. Is it possible to generate market share without trust, delight or loyalty? Of course. Just look at Microsoft. Market share is execution materialized. Trust may well contribute to maintaining and increasing your market share. But it is not a requirement.

Stengel had some interesting things to say about selling too. As in "telling and selling" is defunct. Instead "It's about bringing a relationship mindset to everything we do." Stengel's mantra seems to be focused on what he calls "conversational two-way technologies". The problem with his view point is the FACT that 99% of consumers do not want a conversation or a relationship.They don't want a two-way dialog. As I said a while back:

So where are the teeming pissed-off customers storming corporate citadels demanding their peas and carrots in glass jars rather than tin cans? Nowhere.... the vast majority of consumers simply DO NOT WANT TO PARTICIPATE. The vast majority will not draw pictures, create blogs, read blogs, engage in conversations, establish a relationship, join a network, offer advice or file complaints for the several thousand different products and services the average American consumer will purchase during the course of a year.

And the majority of the 1% who do want a dialog are vigilantes. Read this piece in Wired Magazine - Hunting Down Digg's Bury Brigade.

FOR MARKETING MANAGERS ONLY: Free 3-Day Pass to vSente's Armory - Tool, techniques, wizards and manuals. Create a more effective and accountable marketing organization. Convert your MARCOM department into a ROI driven revenue engine. Also, click the links for information on our campaigns and workshops. 

MORE BLUE OCEAN DEBUNKING: You don't want no competition, what you want is bad competition...

More Blue Ocean debunking. This time via venture capitalist Ron Garret in his "Top Ten Geek Business Myths"

Myth #10: Having no competition is a good thing.

Reality: If you have no competition the most likely reason for that is that there's no money to be made. There are six billion people on this planet, and it's very unlikely that every last of them will have left a lucrative market niche completely unexploited.

The good news is that it is very likely that your competition sucks. The vast majority of businesses are not run very well. They make shoddy products. They treat their customers and their employees like shit. It's not hard to find market opportunities where you can go in and kick the competition's ass. You don't want no competition, what you want is bad competition.  And there's plenty of that out there.

Ron's myth's are similar in tone to the Guru Red Manifesto.

Download vSente's Free Campaign Planner to learn more about how we help marketing managers battle larger competitors. 

SHOULD BtoB USE MARKET SHARE GROWTH TO ANOINT "BEST OF" AWARDS?

There continues to be massive teeth-gnashing over measuring marketing effectiveness. The marketing community runs wildly away from the blindingly obvious answer as to how you measure marketing effectiveness and CMO performance. The blindingly obvious answer is market share.

You judge the effectiveness of your marketing campaign based upon it's impact on your market share.

You judge the performance of your CMO based upon the impact they've had on your market share.

You hire a new CMO based upon their track record generating market share.

BtoB Magazine the influential read for marketing strategists once again is seeking nominations for it's Best of 2006 awards. We've commented in the past about the lack of quantitative input for these awards. We'll likely comment in the future. The two major criteria for awarding the BtoB distinction is "awards won in the past 12 months" and "breakthroughs". Why not establish a criteria for "market share gains" or...

Greatest year over year gain in market share?

Best market share gain against enormous odds?

Best attempt at market share gain that failed?

OK, so you get the idea. Read my post titled: USING MARKET SHARE VECTORS TO GAUGE CHIEF MARKETING OFFICER EFFECTIVENESS for one approach on how to use market share to gauge marketing effectiveness.

Learn how to wage and win battles for market share. Download the free PDF preview of the Art of Attack. Just click to get the PDF. There are no forms to fill out, you don’t need to leave your email address. No annoying questions to answer. Just click and get your PDF.

JAFFE JUICE - 23 THINGS EVERY COMPANY SHOULD MONITOR...

Jaffe Juice has a super post up titled "23 Things Every Company Should Monitor". The list was originally Started by Cameron Olthuis on his blog, Pronet advertising. Several others joined in on the conversation and have created an ad-hoc list of sources and techniques companies should be using to monitor their reputation, competitor moves and other industry dynamics. This ties directly into my recent post on the importance of market share as your primary marketing metric. Market share is a relative measurement that gauges your performance against external benchmarks.

Learn how to wage and win battles for market share. Download the free PDF preview of the Art of Attack. Just click to get the PDF. There are no forms to fill out, you don’t need to leave your email address. No annoying questions to answer. Just click and get your PDF.

A ROUGH RULE OF THUMB FOR ALLOCATING YOUR MARKETING BUDGET

Several years ago I had to really struggle breaking in a new client. The struggle was over the budget. For most campaigns there are two basic types of costs. The first are creative costs. These are costs to create the campaign elements and include, research strategy, positioning, art direction, photography, illustration, copywriting etc. The second are the costs to produce and place the campaign elements and include printing, postage, bandwidth and media placement expenses.

My new client was use to allocating 90% of his budget for production and placement costs. Leaving 10% for all creation activities. The struggle was generated by my allocation of a 50/50 split between creative and production/placement dollars. More specifically I was budgeting for a significantly higher expenditure for competitive analysis and message creation.Also, I knew that we could reduce his overall budget by better targeting prospects and by switching to a direct mail emphasis from his current trade ad bias.

The big numbers for the his campaign were $250,000 for a nine month campaign split 50/50 between creation and placement. The client had budgeted $300,000 for the campaign and the fact that I was saving him $50,000 off the top was lost on him. The only thing he could focus on was the fees he was paying for what he characterized as non-productive costs for research, strategy, positioning, etc.

Most businesses today still feel the way my client did - which is dollars spent on research, strategy and positioning are wasted dollars. Most large agencies reinforce this notion by giving away for free their research, strategy and creative via the traditional account review process - which is also one of the reasons why most campaigns fail. I was able to convince the client that research and strategy were the drivers of any campaigning effort. And with better intell we could immediately and materially reduce his campaign budget while significantly increasing the effectiveness of each dollar spent.

Maneuver marketing allows the astute practitioner to dramaticallyimpact their sales and marketing effectiveness. For many campaigns we have reduced marketing budgets on average 20%, and have increased revenue 50% - over an 18 month time frame. Here's a rough rule of thumb you can use in order to frame a maneuver campaign. Take your existing budget and cut it 20% - then allocate your remaining dollars on an equal basis to creation and production/placement categories. In other words every dollar you spend on media should be backed by another dollar for research, strategy, positioning and creation. Maneuver theory can decrease your marketing budget while significantly increasing revenue. Why? Because each dollar is targeted and accountable. The cornerstone of maneuver theory is competitive analysis.

Learn how to wage and win battles for market share. Download the free PDF preview of the Art of Attack. Just click to get the PDF. There are no forms to fill out, you don’t need to leave your email address. No annoying questions to answer. Just click and get your PDF.

HOW TO GET YOUR MARKETING BUDGET APPROVED...

The attacks on marketing accountability are gaining momentum. One of the outcomes of this increased scrutiny has been CEO's unwilling to continue to fund the soft, squishy marketing initiatives that do not clearly generate a measurable ROI.

If you find yourself in this situation, and you're running marketing for a mid-size enterprise or business unit, here is a different approach to gain the support of your CEO. Frame your budget around a tactical campaign defined by market share, profit, budget and a time frame. Most CEO's will react positively if you frame the budget this way:

We're developing and will execute an attack campaign, designed to win 7% share (42% direct margins) from competitors X, Y and Z, over the next 6 months, with a hard-dollar budget of $1.2 million.

What's really interesting about this kind of approach is that it requires the marketer to strictly examine and justify everything in the budget. If it doesn't contribute to share gain and profit margin within the campaign time period, it gets tossed. And it's critical you use the words attack, execute, campaign, profit, share, etc. CEO's are tuning out the soft fuzzy stuff.

Learn how to wage and win battles for market share. Download the free PDF preview of the Art of Attack. Just click to get the PDF. There are no forms to fill out, you don’t need to leave your email address. No annoying questions to answer. Just click and get your PDF.