remarks by Dr. Alan Middleton for Schulich School of Business Alumni Association

1. The Times they are A – Changin’….still…….50 years on!!!!!!- a look at the changes in marketing and what to do about them remarks by Dr. Alan Middleton for Schulich School of Business Alumni Association January 22nd 2014

2. “Come gather ‘round people Wherever you roam And admit that the waters Around you have grown And accept it that soon You’ll be drenched to the bone. If your time to you Is worth savin’ Then you’d better start swimmin’ Or you’ll sink like a stone For the times they are a changin” Bob Dylan October 1963

3. “When I wrote The World is Flat (in 2004/2005) Facebook didn’t exist; Twitter was a sound; the Cloud was in the sky; 4G was a parking place; LinkedIn was a prison; Applications were what you sent to College; and Skype for most people was a typo. All of that changed in just the last six years.” Thomas Friedman in an interview on US National Public Radio, September 6th 2011

4. Themes Changes • in the business environment • in business • with Brands • with consumers • in Marketing and MarCom • in Marketing and MarCom Measurement What to do about them

5. Business Environment is Changing • Demographics (eg: young-old and old- young) • Social attitudes (eg: emerging Millenials, nervous Gen. X-ers, Boomers that won’t retire; health & wellness for everyone) • Economic (eg: middle class anxiety but spend on experiences) • Political and Regulatory (eg: healthy food but deregulated healthcare) • Technology (eg: constant transformation in communications; cyber-security issues; genetically modified everything) • Global (eg: impacts of economic integration, terrorism, environment especially weather)

6. Business is Changing Faster Needs more innovation: faster, simpler, cheaper! Tougher to earn customers money Moving from ‘command & control’ models to flatter, project teams and self-managing groups Networked: many strategic alliances/partners Complex in social, environmental, ethical and regulatory issues Using more technology (both organizations and consumers) Agile management the key need Measurement is complex, multi-faceted, but critical Reputation Management a key issue in all areas – risk management and assessment a key driver Competition is global from multiple sources……….

7. Worlds 200 Largest Corporations 2012 (Revenue) US: 58 companies China: 28 Japan: 26 Germany: 18 France: 16 UK: 10.5 Switzerland: 5 Italy: 5 Netherlands 4.5 South Korea: 4 Source: Fortune, July 22nd 2013 Spain: 4 Australia: 3 Brazil: 3 Russia: 3 Mexico: 2 India: 2 1: Denmark, Indonesia, Luxembourg, Malaysia, Norway, Taiwan, Thailand, Venezuela

8. Business is Changing Faster Needs more innovation: faster, simpler, cheaper! Tougher to earn customers money Moving from ‘command & control’ models to flatter, project teams and self-managing groups Networked: many strategic alliances/partners Complex in social, environmental, ethical and regulatory issues Using more technology (both organizations and consumers) Agile management the key need Measurement is complex, multi-faceted, but critical Reputation Management a key issue in all areas – risk management and assessment a key driver Competition is global from multiple sources Brands in greater use but harder to build trust, but increasingly recognized as a financial asset…………

9. Brands are Changing Mission-critical employee recruitment, retention and engagement • Commerce • Function • Image social capital internal culture Role of brand Building strong community connections (place-based and virtual) Community Culture shared valuesand meaning(zeitgeist) Keeping pace with evolving cultural and social mores

10. Apple Samsung Google Microsoft Walmart IBM GE Amazon CocaCola Verizon AT&T Shell Vodaphone WellsFargo Toyota NTTGroup Volkswagen HomeDepot Chase ChinaMobile BMW HSBC BankofAmerica Citi McDonalds Intel Disney MecedesBenz Santander Hyundai ICBC Mitsubishi Siemens Ford AmericanExpress Pepsi BNPParibas ExxonMobile Tata Nestle Tesco Nissan Chevron Target Mitsui ChinaConstructionBank GDFSuez Hitachi UPS IKEA PWC Orange Honda HP Oracle AgricultureBankofChina Marlboro Cisco AXA Nike Toshiba DeutscheBank Sberbank BankofChina JPMorgan Bradesco Sinopec Barclays Total CVS PetroChina Deloitte ING Comcast Allianz Sam’sClub Itau Source: Brand Finance Most Valuable Global Brands 2013 Global Brandscape

11. Global Brand Value – Brand Finance Value: Apple 87.3b Samsung 58.8 Google 52.1 Microsoft 45.5 Walmart 42.3 IBM 37.7 GE 37.1 Amazon 36.8 Coca Cola 34.2 Verizon 30.7 Source: Brand Finance Global 500 2013 Top 100 by Country: US : 45 Japan 12 Germany 8 China 7 UK 5 France 5 Netherlands 3 Brazil 3 Sth Korea 2 Switzerland 2 Canada 2* Russia 2 India, Italy, Spain, Sweden 1 *TD $10.4b; RBC $10.3b

12. Canadian Brandscape TD ($10.4b) Royal Bank Scotia BMO Bell CIBC Rogers Enbridge Bombardier WestonFoods Telus ManulifeFinancial Shaw CNRail Brookfield McCain Loblaw Blackberry CanadianTire Shoppers CP NationalBank Potashcorp PetroCanada TimHortons Lululemon Quebecor ImperialOil(Esso) GreatWestLife SunLife Husky Saputo CGI Vittera Desjardins IvanhoeCambridge IntactFinancial Gildan Sobey’s CadillacFairview HomeHardware BellAlliant CircleK CanadianUtilities Dollarama TransCanada Onex Cenovus TCK/CN Equity (0.9b) Source: Brand Finance Most Valuable Canadian Brands 2013

13. Four ‘Fragmentations’: target group fragmentation: needs and wants more specifically served: Product/Service development more targeted in all aspects of marketing mix Brand extensions more frequent and portfolio management required 2. distribution system fragmentation: more products in more different types of store 3. marketing communications organization fragmentation: differing suppliers, differing decision makers in organizations 4. MarCom fragmentation: greater use of non- advertising vehicles Marketing is changing

14. Marketing is Changing Data infrastructure and technology backbone becoming essential elements – marketing analytics (“data is the new oil”) Analytics linked to supply chain logistics expertise emerges as a key skill Strategic alliance skills essential to create coherent competitivity E – commerce, slow to start in Canada, is accelerating rapidly and will drive logistics productivity ever more strongly Segmentation leading marketing mix strategies more than ever eg: Specific product/service search for relevant differentiation Pricing more segment based and around ‘price worthiness’ Distribution now local trading area specific

15. Customer Purchasing Behavior is Changing Awareness Consider- ation Intention To Purchase Trial Purchase Re- purchase Influencers (Social + Commercial)

16. Customer Purchasing Model -Elaborated Loyalty Loop Trigger Active Consideration Initial Consideration Purchase Reviews Post Purchase Word-of Mouth Blogs Forums • Initial Consideration • Brands they know and/or have experience with • Purchase • Weigh the costs/risks vs. benefits. • Final brand and product is chosen. • Post Purchase • Customer voices opinion that is then mixed into the active consideration for other consumers to view and analyze. • Active Consideration • Increase in initial Consideration brands. • “word-of-mouth” shoppers. • Internet research/referrals etc. The Consumer decision journey : David Court, Dave Elzinga, Susan Mulder and Ole Jargen 2009

17. Customer Purchasing Behavior – Finding the Moments of Truth Awareness Install& Activate Add/Up-Downgrade Buy Use Support Billing Move Define customer expectations at all Moments of Truth** (based on management perception) Gaps may emerge that need to be carefully managed and trained. Potential gap Deliver customer experiences Potential gap Potential gap Test defined expectations with customers to validate customer expectations Define customer experience principles and design customer interactions Potential gap Potential gap Communicate intentional customer experiences (contributes to setting customer expectations) Measure customer perceptions of Brand’s’ performance against customer expectations Customer Moments of Truth**

18. Planned (controlled) messages: advertising, sales promotion, marketing public relations, direct marketing, personal selling, point of purchase/digital p-o-p and merchandising, packaging, specialties, sponsorship marketing, licensing, customer service, internal marketing, owned media, web sites, internet advertising, paid social media: twitter etc Unplanned (uncontrolled) messages: employee gossip and behavior, media investigation, government investigations, consumer group investigations, chat groups, blogs, on-line guerrilla sites, social media: twitter etc Must be considered: employee organization, knowledge and motivation; facilities; service; distribution channels; product design; product performance; price. MarCom is Changing

19. Canada Major Media Advertising Trends - 2008 – 2012 & 2013 (forecast) Medium2008 20092010 2011 2012 f2013 % (2013) Total (Bil.): $10.2$ 9.5$10.4$10.9 $11.2 11.2 100 TV: $ 3.4 3.1 3.4 3.6 3.5 3.4 30% Internet $ 1.6 1.8 2.3 2.7 3.1 3.4 30% Newspapers: $ 2.5 2.0 2.1 2.0 2.0 1.7 15% Radio $ 1.6 1.5 1.5 1.6 1.6 1.6 14% Magazines: $ 0.71 0.61 0.62 0.61 0.59 0.57 5% Out-of-home $ 0.46 0.42 0.48 0.48 0.48 0.49 4% Cinema na……………………………………………… Source: Zenith Optimedia December 2013 :Canadian dollars billion 19 19

20. Canada Internet Advertising Trends - 2008 – 2012 & 2013 (forecast) Medium2008 20092010 2011 2012 f2013 % (2013) Total (Bil.) $1.61 1.84 2.28 2.66 3.07 3.43 100 Search 0.62 0.74 0.91 1.08 1.31 1.48 43.1 Display 0.49 0.58 0.69 0.84 0.92 1.00 29.2 Classified 0.46 0.47 0.59 0.58 0.58 0.59 17.2 Mobile 0.007 0.023 0.047 0.081 0.160 0.240 7.0 Video 0.012 0.020 0.037 0.073 0.092 0.115 3.4 E Mail 0.018 0.013 0.011 0.013 0.012 0.011 0.3 Source: Zenith Optimedia December 2013 :Canadian dollars billion 20 20

21. US MarCom Expenditure 2012/est2013 MarCom Vehicle % ofMedia % of MarCom 2012 $ 2013$est %CVYA 1. Media TV 38.8% 17.0% $62.6b $64.3+ 3% Internet 19.0% 8.3% $30.7b 36.3 +16% Newspapers 15.5% 6.8% $25.0b 23.0 - 10% Magazines 11.2% 4.9% $18.0b 17.5 - 3% Radio 10.4% 4.5% $16.7b 17.1 + 2% Outdoor 4.7% 2.1% $ 7.6b 7.9 + 4% Cinema 0.4% 0.2% $ 0.7b 0.8 +10% Total Media 100% 43.7%$161.2b $166.9 + 4% Total MarCom …………………. $370.0 $378.3b Source: Zenith Optimedia December 2013

22. US MarCom Expenditure 2012/est2013 2. Other MarCom: MarCom vehicle 2012$ % of MarCom 2013 est. %CVYA Sales promotion $68.1b 18.5% $70.3 + 3% • Consumer $47.2b…………12.8% $ 48.7..+3% • Business $20.8b………… 5.6% $21.7…+4% Telemarketing $51.4b 13.9% 52.4 + 2% Direct Mail $49.7b 13.5% 48.2 - 3% Event Sponsorship $25.8b 7.0% 27.8 +8% Directories $ 8.9b 2.4% 8.4 - 6% PR $ 3.9b 1.1% 4.1 +5% Total Other…………… $ 207.8 56.3%$211.3 +2% Total MarCom……….. $370.0$378.3 Source: Zenith Optimedia December 2013

23. Media now defined as paid, owned or earned Marketers seek integration Multiple voices Multiple measures Paid Owned Earned • Websites, catalogs, brochures, Facebook, custom content (e.g. Glow), loyalty programs, direct mail, outbound calling • May be monetized – forcing client into media management • Most measurable, highest returns • All traditional forms • Expanding digital forms • Measurement capability varies widely • Social media and traditional earned • Important for trust and authenticity • Desire to enter consumer conversation, not broadcast into it • Potentially most valuable, hardest to measure As complexity increases, marketers seek new solutions eg: Agency insourcing

24. Marketers seek integration in this complex ecosystem r

25. From evening primetime to ‘always on’: Cross – screen engagements (TVs, PVRs, desktop computers, laptops, mobile phones, tablets, E-readers, gaming consuls) add to our ability to reach customers when and how they want to be reached: Content Grazing (multi-tasking or distraction behavior: habit + background) Investigative Spider-webbing (simultaneous information and discovery across different screens: find out ‘more’) Social Spider-webbing (simultaneous connection and sharing: others-oriented) Quantum (sequential and intent based discovery and engagement) MarCom is Changing - Video

26. So: Integration is key Influence(ers) are key persuasion mode growing: growth of PR, product placement and social media Timeliness: be there with information and/or purchase capability when/where/how the customer wants it Growing importance of ‘show me’ media versus ‘tell me’: sampling, sponsorship MarCom is Changing

27. Depending on the category, sales promotion, direct/database, public relations, sponsorship etc. may be increasingly even more or equally important tools Who will manage the integration of these tools… Client? In-house Agency? Ad Agency? MarCom specialist Agency? How will effects be measured? Key Considerations

28. Measurement more complex:- Brand Measures- Effect Measures

29. Business: sales, margin, share + Brand Equity: Brand Awareness/Salience: unprompted and prompted, versus competition Brand Associations: positive/negative, image/personality/attributes and degree of difference versus competition Brand Relationship (attitudinal and behavioral): perceived relationship to the brand: never used, intent, occasional, habitual, loyal, apostle and strength of commitment (Net Promoter Score) Brand Behavior: share of customer (mind and wallet) and share of market + Brand Value: Which measure? Brand Finance, Interbrand, BrandZ Brand Measures

30. Qualitative and Quantitative insight into attitudes and motivations, still essential, but- Business Analytics (BA) now key: “data is the new oil” - A continuous, iterative exploration and data based investigation of past performance to gain insight and understanding and drive decision making A $12.2 billion industry in North America Nucleus Research estimate $1 spent in BA drives $10.66 in results Key users: Capital One, Gallo, Harrah’s, Target Brand Measures - The Big Data Revolution

31. BUT IBM Global CMO 2012 study only 48% feel prepared for the volume and complexity of data Deloitte CMO Council study say they feel underprepared to manage: data explosion 71% Social media 68% Growth of channel and device choices 65% EMC study only 38% of business intelligence/data scientists agree that data is used effectively to learn more about customers Brand Measures - The Big Data Revolution

32. Effect Measures – Integration – The MarCom Dashboard The key is understanding the patterns of connection between three categories: InputIntermediaryOutput/ MarCom (‘Driver’) metrics End Objectives activityBrand MetricsBusiness & Brand and - awareness revenue, margin spending - associations reputation/ brand - engagement value, share etc. - Net promoter score MarCom Metrics eg: clicks, fans, followers, views, advertising awareness, engagement, referrals, advertising value equivalent etc.

33. Keys to understanding the new times are Understanding the insecure consumer and business and differing demographics/psychographics Notions of control must change: think influence even more Don’t just ‘tell’ – ‘show’ me.. and my friends Integration of silos in marketing/HR/operations organization Integration of MarCom activity Experimentation of effects Measurement of effects Times are A – Changin’….50 years on- Conclusions

34. Be what, where and when the end user wants you Allow the end user more input, influence and control in purchase and use of your brand(s) Reexamine the whole logistics and supply from raw material to final delivery: cut unnecessary stages/costs Pay priority strategic attention to innovation and differentiation opportunities driven by health, environment, fair trade, diversity talent management etc. Times are A – Changin’….50 years on- Priorities

35. Ensure research priorities reflect need to gain faster feedback loops from end users and customers about their ‘world’ and their response to the marketing mix Planning and Execution agility required to more rapidly reflect changes in the business environment (retail – speed) Build detailed understanding of direct, but also non-direct, competition: condition, motives and actions Look for appropriate strategic alliances in product/service development, channel strategies, MarCom Times are A – Changin’….50 years on- What to Do - Marketers

36. 5. Brands even more important but more complex to manage - internal (staff) and external (customers and end-users) equal attention for brand communication - not just Marketing Dept. management but senior integrated activity across Operations, Finance, HR, Sales etc - continuous improvement R&D in both product/service and MarCom - find ways to gain continuity of purchase: customer experience, cross promotion activity with other relevant brands etc. Times are A – Changin’….50 years on- What to Do - Marketers

37. 6. Measure, measure and measure Just because something is difficult to measure does not mean that you shouldn’t do it But ensure the measurement device is valid Shift measurement: - from project/campaign to ongoing - from trying to measure the effect of one media to the integrated campaign effect - ‘CYA’ to understanding + continuous feedback loops Times are A – Changin’….50 years on- What to Do - Marketers

38. 7. Work more closely with product/service development and with Sales: form joint projects Build your MarCom team to handle internal and external communication: balance the value of inside control with external freshness and innovation BUT, you have to integrate it Choose your external MarCom team for their specific strengths but use a PBR system to encourage cooperation Times are A – Changin’….50 years on- What to Do - Marketers

39. 10. Regularly reach outside of your country, company, competence, comfort zone for fresh perspectives for your whole team Times are A – Changin’….50 years on- What to Do - Marketers

40. “The line it is drawn The curse it is cast The slow one now Will later be fast As the present now Will later be past The order is Rapidly fadin’ And the first one now Will later be last For the times they are a changin” Bob Dylan, October 1963

41. Biography: Dr. Alan Middleton B.Sc. Hons. Sociology (LSE) , MBA and Ph.D. (York) in Business Administration; Currently Executive Director, Schulich Executive Education Centre (SEEC) and Assistant Professor of Marketing, Schulich School of Business, York University. 23 years working in marketing and advertising with UOP Inc., Esso Petroleum and J. Walter Thompson in UK, US, Norway, Japan and Canada. Last roles were President/CEO JWT Japan and Executive V.P. and Board Director of the worldwide JWT Company organization, subsequent to being President of Enterprise Advertising Associates in Toronto. 23 years as an academic/marketing trainer and consultant. Taught marketing courses at Schulich School of Business , York University in Toronto; Rutgers Graduate School of Business in US; Chiangmai , NIDA and Yonok Graduate Schools of Business in Thailand ; IDEA Graduate School in Buenos Aires, Argentina; Moscow State University and Academy of National Economy in Moscow and Nizhny Novgorod, Russia; and Southwest Normal and Sichuan Universities in China. Research topics in branding, private labels and e brands internationally; As a trainer and consultant have worked for Bell, Manulife Financial, ACNielsen, Nortel, Pfizer Warner- Lambert, Quaker Foods, Unilever amongst many others; Co-author of ‘Advertising Works II’ , co-founder of the ‘CASSIES’ and co-editor of the CASSIES I Case Book, author of publications on MarCom PBR, MarCom ROI and MarCom client-agencyrelations and in 2012 “Measuring Marketing Communications Effectiveness in an ever changing world – the role of the MarCom Dashboard for the ACA/ICA. Co-author of ‘Ikonica –a fieldguide to Canada’s brandscape’, author of “Brand Traitors” a chapter in ”The Disloyal Company” and “City Branding and Inward Investment” a chapter in “City Branding”. In January 2005 was inducted into the ‘Marketing Hall of Legends’ in the Mentor category, in 2012 was awarded the ACA Gold Medal and the Queen Elizabeth II Diamond Jubilee Medal. Member of the Honorary Trustees of the Royal Ontario Museum (Trustee 1996-2002) and on the ROM Marketing Advisory Committee (2008-date). Alan is on the Board of AIESEC-Canada and the ABC Life Literacy Canada Board having been its Chair 2003-2009. He is on the Board Marketing Committee of Sunnybrook Hospital and is a Research Committee member of Ontario Tourism Marketing Partnership and the Scientific Committee of Leger Marketing. He is Chair of the Judging Committees for the Marketing Hall of Legends and the Product of the Year Awards. He sits on the Advisory Council of the Centre of Excellence in Financial Services, TFSA. Previously Alan was a member of the United Way of Greater Toronto Marketing Committee (1992- 2006) and on the branding committee of Toronto International Film Festival, the Ontario Ministry of Health ‘Healthy Ontario.com’ committee and Chair of the Editorial Advisory Committee of Marketing Magazine.