MGMT E-6020Session Three

Agenda

Tonight• Overview of Ch. 3 & 4• ThoughtWorks case• Starbucks assignments returned via email Wed or

Thurs

For next week:– Guest Speaker: Andrew Russell, Director of

Corporate Relations, Museum of Fine Arts– Chapter 7– A Consultant’s Comeuppance– Integrated Marketing Communications– Be prepared to discuss the readings

Standing Apart from the Competition

“A business must set itself apart from its competition. To be

successful it must identify and promote itself as the best

provider of attributes that are important to target

customers.”

George S. Day

Basic Focus Strategies for Services

5

Ch 3: Focus Strategies for Services

• Unfocused – wide range of services to a wide range of market segments

• Market-focused – wide range of services to a narrow market segment

• Service-focused – narrow range of services to a wide market segment

• Fully-focused – narrow range of services to a narrow market segment

6

S-T-P

• Segment

• Target

• Position

7

Market Segment

A group of buyers who share common:• Characteristics• Goals or needs• Purchasing behavior• Consumption patterns

Segment based on:• Benefits sought by customers (customer needs)• Observable characteristics of customers

Determinant AttributesSource: HBS 9-506-019

8

Target Market

• Evaluate attractiveness of market segment

• Determine which segments to serve and how– Customer (market analysis)– Company (internal corporate analysis)– Competitors (competitor analysis)

Segmentation in Practice: Best Buy Example

• Early 2000s, Best Buy was “product driven” and faced:– Increased competition– Eroding margins– Difficult economy

Source: Gulati, Ranjay (Re)(Organize) for Resilience: Harvard Business Press, 2009.

Best Buy Example (cont.)

Source: Boyle, Matthew, “Best Buy’s Giant Gamble.” Fortune April 3, 2006.

Customer-Centric Strategy:

Figure out which customers make you the most money, segment them carefully, then realign your stores and empower employees to target those favored shoppers with products and services that will encourage them to spend more and come back often.

“Angel Customers & Demon Customers” by Larry Selden

Best Buy Example (cont.)

Identification of Customer Groups–Tech fanatics (“Buzz”)–Home theater connoisseurs (“Barry”)–Family men (“Ray”)–Busy moms (“Jill”)

Source: Gulati, Ranjay (Re)(Organize) for Resilience: Harvard Business Press, 2009.

Busy Moms Segment: “Jill”

• Personal shopping assistants

• Just-for-kids displays

• Kitchen/laundry zones

• Practical signage

• Inspiring atmosphere

Source: Gulati, Ranjay (Re)(Organize) for Resilience: Harvard Business Press, 2009.

Concept Store: Jill Segment

Store Display

• “Customer-Centric” Implementation– Established segment teams– Focus groups– Lab stores– Expanded pilot– Segment training– Customer-centricity training– Employee recruitment & empowerment

Best Buy Example (cont.)

Source: Gulati, Ranjay (Re)(Organize) for Resilience: Harvard Business Press, 2009.Fetterman, Mindy. “Best Buy gets in touch with its feminine side.” USA Today, 12/20/06.

16

Positioning

A unique selling proposition relative to the competition

• Who are the customers?

• What is the set of needs that the service fulfills?

• Why is this service the best option to satisfy those needs?

Source: HBS 9-506-019

Principles of Positioning

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Position Statements

• Rarely stated in marketing collateral

• Evolve over time in response to – market changes– competitive activity– technology changes– company changes

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Positioning Statement (1)

Our

(product/brand)

is(single most important claim)

among all(competitive frame)

because

(single most important support)Source: HBS 9-506-019

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Positioning Statement (2)

• For [target end user]

• Who wants/needs [compelling reason to buy]

• The [product name] is a [product category]

• That provides [key benefit].

• Unlike [main competitor],

• The [product name] [key differentiation]

21

Harvard Extension School Example

For nontraditional students who want high quality,

thought-provoking, academic courses, Harvard

Extension School is a continuing education school that

provides a Harvard experience at a reasonable price.

Unlike some continuing education schools, our open-

enrollment courses are rigorous, designed for the student

who wishes to be challenged.

ThoughtWorks case

Positioning for Thoughtworks (Case A)

• To Type A firms who need flexible and reliable IT solutions, Thoughtworks is the company that can provide cutting-edge applications that are high quality and quickly deployable because it is the premier innovator in Agile delivery systems.

Positioning for ThoughtWorks (Case B)

• To senior IT executives and program managers responsible for the delivery of mission-critical projects in Global 1000 companies, ThoughtWorks delivers the business value that you seek faster than any other IT consultancy because only ThoughtWorks combines a team of elite IT professionals with advanced technologies and an enterprise-level Agile approach. ThoughtWorks enables you to achieve the results you need, making you a hero in delivering business value from custom applications.

ThoughtWorks Debriefing

• Don’t trust your intuition, instead talk to customers

• In the case of ThoughtWorks, every aspect of the positioning changed after talking to customers