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Marketing Strategy

Hao-Chieh LinAssistant ProfessorInstitute of International Managem

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g

Why are we here? (Why are you interest

Why should we care? (Why should we co

How much do we know? (What is MS?)

ThreeNaveQuestions

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FundamentalQuestions:Asamarkete

Howmuchdoyoulikemarketing/selling?

Whatdoyouexpectyourjobasamarketingprof

Whatarethedifferencesbetweenamarketingpsalesperson?Howmuchdotheydiffer?

WhatarethequalificationsasagoodmarketingWhatarethequalificationsasagoodsalesperson

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FundamentalQuestions:5W1H

What ismarketing?What istherelationsbetweenmarketingstrategy,businessstrandcorporatestrategy?

Why marketing?Why marketingstrategystrategic

marketing)?

Whom,when,andwheretomarket?How to conduct marketing strategy?

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SWOTAnalysisStrength,weakness,opportunities,

STPAnalysisSegmentation,targetmarket,positi

4PAnalysis (McCarthy)Product,price,promotion,place(ch

4C Analysis (Robert Lauterborn)

SomeAnalyticalFrameworksin(Strategic)M

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ANewMarketing4Ps:AProcessPersp

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WhyStrategicMarketing?

IfyouaskaPR(publicrelations)company whatytoattractcustomers,theywilltellyoutosendourelease.

Ifyouaskagraphicdesignfirm,theywilltellyoubrochure. Allmarketingsupplierstrulyareexpertsattheiroaretheyworkingtowardacommongoal? StrategicMarketingistheprocessoftakingabigview

of

planning

how

your

company

will

grow,

tyour eye on that goal as you design and implem

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Somestrategicmarketingissues

HowcanIconductinternalandexternalanalyseamarketingstrategy/program?

HowdoIinvest

intheproductmarket?(BCGMo

Investtogrow (orenteraproductmarket) Investonlytomaintain theexistingposition

Milk

thebusinessbyminimizinginvestment

Recoverasmanyoftheassetsaspossiblebyliquidatinbusiness

HowdoIgrow theproductmarket?(AnsoffMixMarketpenetration,marketexpansion,productexpadiversification(&verticalintegration)

CanIleverage

the

brand

brand

extension?

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BrandExtensionLogic

Brand Ne

Add Value

Enhance Brand

Fit

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ValueProposition

VVAA

LLUUBenefitsBenefits

RelatRelat

FunctionalEmotional

Self-expressive

Put Customers in Mind Always!!!

Social

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ValuePropositionExamples(cont.)

Excellenceonanimportantproductorseattribute

ThebestoverallqualityProductlinebreadth InnovativeofferingsA h d i f ti it d

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IntegratedMarketing

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Plans are nothing, planning is every- Dwight D. E

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YourStrategicMarketingSteps

KeeptheVisionSimple!!!

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KnowledgeIntegration

KnowledgeIntegration

Human Social Organizedeac

hingand

Mentor

Tea

chingandMentor

KnowledgeCreation

KnowledgeCreation

Intellectual Capital

Humanity

KnowledgeTransfer

KnowledgeTransfer

Learn and Unlearn

FlowFlow

St k

ChangeChangeRenewRenew

valuablevaluable

rarerare

inimi

inimit

non

AFrameworkforMyTeachingMindse

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LetsMoveForwardTogethe

Put yourself into the process (learning, job, friendcareer), and the process will carry you through

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Imperatives for Market-

Driven Strategy

Chapter 1

1

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Basic Marketing Concepts

* Marketing (AMA 2005 definition)

* an organizational function and a set of processes

for creating, communicating, and delivering value tocustomers and for managing customer relationshipsin ways that benefit the organization and itsstakeholders.

* Market

* A collection of buyers and sellers

2

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Basic Marketing Concepts

* Marketspace

* Electronic marketplaces that are not bound by timeor space

* Metamarket* A cluster of closely related goods and services that

center around a specific consumption activity

* Metamediary

* Provides a single access point where buyers canlocate and contact many different sellers in themetamarket

3

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Common Metamarkets and Participants

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What is Exchange?

* Exchange* Process of obtaining something of value by offering

something in return

* Five Conditions of Exchange* There must be at least two parties to the exchange.

* Each party has something of value to the other party.

* Each party must be capable of communication and delivery.* Each party must be free to accept or reject the exchange.

* Each party believes it is desirable to exchange with theother party.

5

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What is a Product?

- People

- Places

- Experiences and Events

- Real or FinancialProperty

- Organizations

* Product* Something that can be acquired via exchange to

satisfy a need or a want

* Examples

- Goods

- Services

- Ideas

- Information- Digital Products

6

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Products

An idea is also a form

of products

7

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The Concept of Utility

* Utility* Ability of a product to satisfy a customers

desires

* Five Types of Utility

* Form Utility

* Time Utility

* Place Utility

* Possession Utility* Psychological Utility

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Achieving SuperiorPerformance (4)

Determining DistinctiveCapabilities (2)

Customer Value/Capabilities Match

(3)

Becoming Market-Orientation (1)

Characteristics of a Market-Driven Strategy

9

k i ( )

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Market-Driven Strategy (1):

Becoming Market Oriented

Customer is the focal point of the organization Commitment to continuous creation of superior

customer value

Superior skills in understanding and satisfying customers

Requires involvement and support ofthe entire

workforce

Monitor rapidly changing customer needs and wants

Determine the impact of changes on customersatisfaction

Increase the rate of product innovation

Pursue strategies to create competitive advantage

10

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Characteristics of Market Orientation

Customer FocusWhat are the customers value requirements?A philosophy and a process for delivering customer value.

Competitive IntelligenceImportance of understanding the competition as well as

the customerThe case of Polaroid, IBM, Mobile phone

Cross-Functional CoordinationRemove the walls between business functions

Performance Consequences Market orientation leads to superior organizational

performances

11

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InformationAcquisition

Cross-FunctionalAnalysis of Information

Shared Diagnosis and

Coordinated Action

Delivery of Superior

Customer Value

Becoming A Market-oriented Organization

12

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Market Orientation

Information Acquisition Gather relevant information on customers,

competition, and markets

Involve all business function

Inter-functional Assessment

Share information and develop innovativeproducts with people from different function

Shared diagnosis and action

Deliver superior customer value

13

M k D i S (2)

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Market-Driven Strategy (2):

Distinctive Capabilities

Capabilities are complex bundles of

skills and accumulated knowledge,

exercised through organizational

processes, that enable firms to

coordinate activities and make use of

their assets.

George S. Day, Journal of Marketing, October 1994, p.38.

14

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Southwest Airlines Distinctive Capabilities

Organizational ProcessesSouthwest uses a point-to-point route system rather than the hub-and-spoke design used bymany airlines. The airline offers services to 57 cities in 29 states, with an average trip about 500miles. The carriers value proposition consists oflow fares and limited services (no meals).Nonetheless, major emphasis throughout the organization is placed on building a loyal customerbase. Operating costs are kept low by using only Boeing 737 aircraft, minimizing the time spanfrom landing to departure, and developing strong customer loyalty. The company continues to

grow by expanding its point-to-point route network.

Skills and Accumulated KnowledgeThe airline has developed impressive skills in operating its business model at very low cost levels.Accumulated knowledge has guided management in improving the business design over time.

Coordination of ActivitiesCoordination of activities across business functions is facilitated by the point-to-point businessmodel. The high aircraft utilization, simplification of functions, and limited passenger servicesenable the airline to manage the activities very efficiently and to provide on-time point-to-pointservices offered on a frequent basis.

AssetsSouthwests key assets are very low operating costs, loyal customer base, and high employeeesprit de corps (feelings of pride)

Components of Distinctive Capabilities

15

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CompellingLogic of Distinctive

Capabilities

Disproportionate(higher)

contribution to

superior

customer value

Provides value tocustomers on a morecost-effective basis

Capabilities

Source: George S. Day, Journal of Marketing, October 1994, p. 38.

Do customers concernwhether you are cost-effective?

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Capabilities

DesirableCapabilities

Applicable toMultiple

CompetitionSituations

Difficult toDuplicate

Superior to theCompetition

Source: George S. Day, Journal of Marketing, October 1994, 49.17

Resources and capabilities that meet four

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18

Resources and capabilities that meet four

criteria become a source of: (Barney, 1991)

18

Valuable

Rare

Costly to imitate

Non-substitutable

CoreCompetencies/

Distinctive

Capabilities

ResourcesandCapabilities

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Types of Capabilities

Outside-InProcesses

Inside-OutProcesses

SpanningProcessesProcess-based

capabilities

19

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Organizations Process

Source: George S. Day, Journal of Marketing, October 1994, 41.

Spanning Processes

Outside-InProcesses

Inside-OutProcesses

EXTERNALEMPHASIS INTERNALEMPHASIS

Market sensing

Customer linking

Channel bonding(relationships)

Technology

monitoring

Customer orderfulfillment

Pricing

Purchasing

Customer service delivery

New product/servicedevelopment

Strategy development

Financial management

Cost control

Technologydevelopment

Integrated logistics

Manufacturing/transformationprocesses

Human resourcesmanagement

Environment health and

safety20

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Another Classification of Capabilities

InputPhysical, IT, Human, Financial, Routine

ProcessEntrepreneurship, culture, climate, managerial

Output

Reputation, image, brand, patent, customer

loyalty

21

Market Driven Strategy (3): Matching Customer

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Value Requirements

Distinctive

Capabilities

Market-Driven Strategy (3): Matching Customer

Value and Distinctive Capabilities

22

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Creating Value For Customers

Customer Value:

Value for buyers consists of the benefits less the costs

resulting from the purchase of products.

Superior value: positive net benefits

Creating Value: Customer value is the outcome of a process that

begins with a business strategy anchored in a deepunderstanding of customer needs.

HP/Epson: Printers vs. Ink Cartridges; Gillette: Razorvs. blades; Main dish vs. side dishes

Source: C. K. Troy, The Conference Board Inc., 1996, 5.23

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Creating Value for Customers

Benefits Costs

CustomerValue

24

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Value Composition

Monetary costs

Time

Psychic andphysic costs

Product

Services

Employees(RELATIONSHIP)

Image

Benefits

Costs/Price(sacrifices)

Value(gain/loss)

25

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Value Proposition

VAL

UE

Benefits

Relative Price

FunctionalEmotional

Self-expressive

Put Customers in Mind always!!!

Social

26

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Basic Concepts: Capturing the Value Proposition (cont.)

Expectation Performance

810

Expectation> Performance, Satisfaction decreases!

Expectation< Performance, Satisfaction increases!

Expectation Performance

108

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The Value Proposition of McDonald

Philosophy of customer serviceQSCV

Quality, Service, Cleanliness, Value

Service: Appeals to customer service

FAF

Fast, Accurate, Friendly

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Matching Customer Value with Market Driven Initiatives

1. Market Sensing Capabilities

Effective processes for learning about markets

Sensing:

Collected information needs to be shared

across functions and interpreted to determine

proper actions.

2. Customer Linking Capabilities

Create and maintain close customer relationshipsBut, how?

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3. Aligning Structure and ProcessesPotential change of organizational design

Improve existing processes

Process redesign

Cross-functional coordination and involvement

Primary targets for reengineering:

Sales and marketing, customer relations, order

fulfillment, and distribution

Matching Customer Value with Market Driven Initiatives

30

Corporate Business and Marketing Strategy (1):

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Corporate, Business and Marketing Strategy (1):

Corporate Strategy

Deciding the Scopeand Purpose of the Business

(based on Mission/Intent)

Corporate/BusinessObjectives

Actions and Resources forAchieving Objectives/Synergies

What businessw ill you do? (e.g.,BCG Model)

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Characteristics Of Successful Strategy

Unique competitive position for the company. Activities tailored to strategy.

Clear trade-offs and choices vis--viscompetitors.

Competitive advantage arises from fit acrossactivities.

Sustainability comes from the activity systemnot the parts.

Operational effectiveness.

Source: Michael E. Porter, What Is Strategy, Harvard Business Review, November-December 1996, 74.

32

Corporate Business and Marketing Strategy (2):

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Corporate strategy framework

Managements long-term vision for the corporation

(must be SHARED VISION)

Objectives (marketing, innovation, resources,

productivity, social responsibility, and finance) Assets, skills, and capabilities

Businesses in which the corporation competes

Structure, systems, and processes Creation of value

Source: David J. Collis and Cynthia A. Montgomery, Corporate Strategy, Chicago: Irwin, 1997, 7-12.

33


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p , g gy ( )

Business and marketing strategy

34


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Marketing Strategy Process

Markets,SegmentsAnd Value

Market-DrivenProgramDevelopment

Implementing

and ManagingMarket-Driven

Strategy

DesigningMarket-DrivenStrategies

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The marketing strategy process

Markets, segments and customer value

Markets and competitive space Strategic market segmentation

Strategic customer relationship management (CRM)

Indifference or difference?

Capabilities for continuous learning about markets

Designing market-driven strategies Market targeting and strategic positioning

Strategic relationships

Innovation and new product strategy

Market-driven program development Strategic brand management

Value chain strategy Pricing strategy

Promotion strategy

Implementing and managing market-driven strategy Designing market-driven organizations

Marketing strategy implementation and control

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Major Marketing Activities and Decisions-1

Strategic Planning

StrategyTactical PlanningMarketing Plan

Social Responsibility and Ethics

Social ResponsibilityMarketing Ethics

Research and AnalysisInternal AnalysisCompetitive Intelligence

Environmental ScanningSituation Analysis

Developing Competitive AdvantageCompetitive Advantage

SWOT Analysis37

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Major Marketing Activities and Decisions-3

Implementation and Control* Marketing Implementation

Developing and Maintaining Customer Relationships

* Transactional Marketing

* Relationship Marketing

39

Major Characteristics of Transactional and

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j

Relationship Marketing

40

h ll

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Challenges in Modern Environment

Escalating globalization

The world is flat

Technology diversity and uncertainty

The Web 2.0

My space, Face book, Youtube, blog, Twitter, buboo, Plurk, skype,

Wikipedia Ethical behaviour and corporate social responsibility (CSR)

Changing customers roles

Power Shift to Customers

Massive Increase in Product Selection

Audience and Media Fragmentation

Changing Value Propositions

Shifting Demand Patterns

41

Taking on the Challenges of Developing

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Marketing Strategy-1

Unending ChangePeople-Driven Nature of Marketing

Lack of Rules for Choosing Marketing Activities

Basic Evolution of Marketing & Business Practice

Increasing Demands of Customers

Overall Decline in Brand Loyalty & Increase inPrice Sensitivity

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Competing in Mature MarketsIncreasing commoditization

Little real differentiation among productofferings

Increasing Expansion into Foreign Markets

Aggressive Cost-Cutting Measures

Increasing Cooperation with Supply ChainPartners and Competitors

g g p g

Marketing Strategy-2

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Strategic Marketing Planning

Developing the strategic plan for each business

Preparing the marketing plan

Planning relationships and frequency

Planning considerations

Responsibility for preparing plans

Planning unit

Preparing the marketing plan

44

Marketing Plan Outline

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I. Strategic Situation Summary

Summarize the key points from your situation analysis (market analysis, segments,industry/competition) in order to recount the major events and provide information to better

understand thestrategies outlined in the marketing plan.

II. Market-Targets and Objectives

The market target may be defined demographically (key characteristics only),geographically, or in social/economic terms. Each market target should have needs and wants

that differ to some degree from other targets.

These differences may be with respect to types of products purchased, use situation, frequency

of purchase, and other variations that indicate a need to alter the positioning strategy to fit

the needs and wants of each target. An objective is a quantified goal identifying what is

expected when. It specifies the end results expected. The objectives should be written foreach target market. Objectives should also be included for the following program

components: (1) product, (2) price, (3) distribution, (4) promotion (salesforce, advertising,

sales promotion, and public relations), and (5) technical services.

45

M k i Pl O li

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III. Positioning Statements

Write statements that describe how you want each market

target to perceive each product relative to competition.State the core concept used to position the product (brand) in the eyesand mind of the targeted buyer.

The positioning statement shoulddescribe: (1) What criteria or benefits the customer considers when

buying a product along with the level of importance,(2) What we offer that differentiates our product from competition,

and (3) The limitations of competitive products.


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A. Product StrategyIdentify how each product fits the market target. Other issues that may be addressed wouldbe new product suggestions, adjustments in the mix of existing products, and productdeletion candidates.

B. Price StrategyThe overall pricing strategy (I.e., competitive, premium-priced, etc.) should be identified

along with a cost/benefit analysis if applicable. Identify what role you want price to play, i.e.,increase share, maintenance, etc.

C. Distribution StrategyDescribe specific distribution strategies for each market target. Issues to be addressed are

intensity of distribution (market coverage), how distribution will be accomplished, andassistance provided to distributors. The role of the sales force in distribution strategy shouldalso be considered.

D. Promotion Strategy

Promotion strategy is used to initiate and maintain a flow of communication between thecompany and the market target. To assist in developing the communications program, theattributes or benefits of our product should be identified for each market target. How ourproduct differs from competition (competitive advantage) should be listed. The sales forcesresponsibilities in fulfilling the market plan must be integrated into the promotion strategy.Strategies should be listed for (1) personal selling, (2) advertising, (3) sales promotion, and(4) public relations.

IV. Market Mix Strategy for Each Market Target

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E. Marketing Research

Describe the market research problem and the kind ofinformation needed. Include a statement which addresseswhy this information is needed. The specific marketresearch strategies can be written once the above twosteps have been followed.

V. Coordination with Other Business FunctionsIndicate other departments/functions that haveresponsibilities for implementing the marketing plan.

VI. Sales Forecasts and Budgets

VII. Contingency PlansIndicate how your plans should be modified if eventsshould occur that are different from those assumedin the plan.

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Chapter2

Marketsand

Competit

Space

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MARKETS AND COMPETITIVE

Markets and Strategies Defining and Analyzing Product-M Describing and Analyzing End-Use Analyzing Competition Market Size Estimation Developing a Strategic Vision abou

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MarketsAndStrategies

TheChallenges

Marketsareincreasinglycomplex,turbulent,and

Importance

of abroadviewofthemarket.Essentialtodevelopavisionabouthowthemarkechangeinthefuture.

ContinuousMonitoringisNecessaryto:

Findpromisingopportunities

Identify shifts in value requirements

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MarketsImpactStrategies

Marketchangesoftenrequirealt

strategiesForcesofchangecreatebothma

opportunitiesand

threats

Inherentdangerinfaultymarket

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OpportunitiesOutsideTheCompeti

TheCompetitiveBox

Traditional

CompetitorsNewTypesof

Competition

New

CustomersConventionalValue

Propositions

Existing

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An Array of Challenges

Disruptive

Innovation

Creating New

Fast

Changing

Markets

CDriversofChanges

inMarkets

f

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An Array Of Challenges

Disruptiveinnovation Providesimplerandlesscostlywaystomatchthevae.g.Amazon&Google.

CommoditizationthreatsWhenmodularization(productscomprisedofstandacomponents)occurs,productsbecomecommoditiesdifficulttoearnanythingmorethansubsistenceretu

Creatingnewmarketspace Blueoceanstrategy.Cameramobilephonevs.digitaAPPLESIPOD&iPhone

Fast changing markets

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Googlesstrategyfeature:DisruptiveI

Initialincomewasfromsearchrelatedadvertisi 100%relevantbeyondsearch:intendtoleveraginareasbeyondsimplyWebsearching TargetingtheglobaladvertisingindustryonlinethepurchaseofYouTube(video),theacquisitio

adealwithClearChannel (audio),andtheagreeUSnewspapers(print) Partneringwithmediacompaniestosupplyvideaffiliatedwebsites,e.g.MTV.Also,haveanallia

Myspace toaccesssocialnetworking PositioningitselfasarivalofMicrosoft:Gmail,Gand Google Maps, On

line office suite

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MatchingNeedswithProductBenef

Aproductmarketmatchespeoplewithne

product

benefits thatsatisfythoseneedsAmarketexistsonlywhentherearebuyerswhavetheabilitytopurchasegoodsandservice

areavailabletosatisfytheneeds(ability&wil

Aproductmarketisthesetofproductsj

substitutes within

those

usage

situations

insimilar patterns of benefits are sought by

f

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ProgressivesInnovationfeature

Intheperiod1994to2004,ProgressiveInsuranceincreasedsales

$9.5billion,andrankshighintheBusinessWeek

Top50U.S.com

shareholdervaluecreation.

Thecompanyinventsnewwaysofprovidingservicestosavecusto

andirritation,whileoftenloweringcostsatthesametime.

Benefitstocustomers

Lossadjustersaresenttotheroadaccidents

ratherthanwor

andtheyhavethepowertowritechecksonthespot.

Progressivereducedthetimeneededtoseeadamagedauto

daystoninehours.

Policyholders carsarerepairedquicker,andthefocusonthi

need has won much automobile insurance business for Progr

Customer Needs at the Center of Strategy

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ProductMarketBoundariesandStructure

DeterminingProduct

Market

Structure

Acompanysbrandscompetewithothercompanigeneric,producttype,andproductvariantproduc Genericproductmarket:includingabroadgroupsatisfyageneral,yetsimilar,need.E.g.kitchenap Producttype(aproductcategoryorclassification)market:Includingallbrandsofaparticularproduc

ovens.

Productvariants:Differencesintheproductswithtypeproductmarket.E.g.electronic,gas,andmicr1. Startwiththegenericneedsatisfiedbytheproductcategory

management

Illustrative FastFood delis

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Super

Markets

Microw

Oven

ProductMarketStructure

FastfoodMarket

The consumption need being satisfi

fast and convenient preparation of f

F i P d M k

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FormingProductMarkets

Thefactorsthatinfluencehowproductm

shouldbedeterminedinclude

Thepurpose

of

analysis

Oftennotrelatedwithwhetherornottoexitfro

withfindingoneormoreattractivetargetmarket

Includingall

relevant

products

and

brands in

an

a

Therateofchangesinmarketcomposition

Newtechnologyandnewcompetition

Industry

classifications,

typically

having

a

producthan a customer demand orientation often do no

E t t f M k t C l it

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Extent of Market Complexity

Threecharacteristicsofmarketsre

complexity: Functions orusesoftheproduct:thevaluthecustomer.E.g.PCorMobilephone The

enabling

technology oftheproduct:e

Customersegments intheproductmarkemarketcanbeclassifiedintohouseholdsvorganizations. It also can be further classif

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IllustrativeProductMarketStructur

Generic Pro

Prod

Regular

Food and beverages

for breakfast meal

Cereals

Ready to eat

Natural

D fi i d A l i M k t /E d

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DefiningandAnalyzingMarkets/Endus

Define Product-Market Boundaries and Stru

Identify and Describe End-Users

Analyze Industry and Value Added Cha

Evaluate Key Competitors

fi i d l i d

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Identifying andDescribing Buyers

BuildingCustomerProfiles

Describingand Analyzing

End-users

DefiningandAnalyzingEndusers

d if i d ibi d

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IdentifyingandDescribingEndUsers

Illustrativebuyercharacteristicsinconmarkets: Familysize,age,income,geographilocation,sex,andoccupation

Illustrativefactorsinorganizationalm Typeofindustry Companysize

Location

H B M k Ch i

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HowBuyersMakeChoices

BuyingDecisionProcess:1. Problemrecognition2.

Informationsearch

3. Alternativeevaluation4. Purchase decision

Finding

criteria

usein

m

decision

Th C t E i t

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TheCustomerEnvironment

WhoareourCurrentandPotentialCustom

Whatdo

our

Customers

do

with

our

Produ

WheredoCustomersPurchaseourProduct

WhendoCustomersPurchaseourProducts

Why(andHow)doCustomersSelectourPr

WhydoPotentialCustomersnotPurchase

E i l I fl

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EnvironmentalInfluences

Externalfactorsinfluencingbuyers

andwants: Government,socialchange,economicshifts,etc.

Thesefactors

are

often

non

contro

canhaveamajorimpactonpurcha

decisions

Q i

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Duringthefinancialcrisis,doyouhav

ideasabout

what

kind

of

businesses

flourishingorgrowingup?Why?

Question

B ildi C t P fil

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BuildingCustomerProfiles

Concernedaboutthesizeandgeneralcom

thecustomerbase

(marketsize,growthra

customers,and

other

general

characterist

Startwithgenericproductmarket

Movenexttoproducttypeandvariantpr

increasingly morespecificCustomer profiles guide decision making (

Di i Q iDi i Q ti

Q i

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DiscussionQuestionDiscussionQuestion

Understandingthemotivationsofafirms

customers isoftenjustasimportantasunditscustomers. Rethinkofthereasonswhywouldnotpurchaseafirmsproducts. How

reachout

to

noncustomers

and

successfull

themtocustomers?

Question

Analyzing Competition

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Analyzing Competition

1.1. Define the Competitive Arena for the GeneSpecific, and Variant Product Markets

5. Identify and

EvaluatePotentialCompetitors

Product- Market

StructureAnd MarketSegments

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ExamplesofLevelsofCompetition

Diet-RiteCola

Diet PepsiDietCoke

Product fromcompetition:

diet colas

Regularcolas

Diet lemonlimes

Lemonlimes

Fruit

flavoredcolas

Product category

competition:

Bottlewater

Beer

Juices

Baseballcards

Fast

Food

VG

Major Types of Competition

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MajorTypesofCompetition

Product variants Product Type Generic

Industry Analysis

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IndustryAnalysis

Theindustryanalysisishorizontal andcoverssimfirms(e.g.softdrinkproducers),whereasthevalanalysisconsidersthevertical

networksoffirms.

Horizontalanalysis:Domesticvs.International;relevantindustries Industry

size,

growth,

and

composition

Typicalmarketingpractices

Industrychangesthatareanticipated(e.g.consol

DefiningIndustry

Structure

&

Characte

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VerticalValueChain

IndustryForm

IndustryEnvironment Competitiveforces

Suppliers

Producers

Wholesalers/ distributors

Retailers/dealers

Look at the types ofrelationships(collaborative vs.

Competitive Forces

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CompetitiveForces

1. Rivalryamongexistingfirms(Googlevs.2. Threatofnewentrants(WalMartintosbusiness)3. Threatofsubstituteproducts(PCmarke4. Bargainingpowerofsuppliers(keycomp

AssessingCompetitive

Intensity/Indu

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Attractiveness:PortersFiveForces

Rivalry amongRivalry amongexisting industryexisting industry

firmsfirms

BBBargainingBargainingpowerpower

of suppliersof suppliers

Threat of newThreat of new

entrantsentrants

KeyCompetitor(anyorganizationgoi

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afterthesamemarket)Analysis

Businessscopeandobjectives

Management

experience,

capabilities,

aweaknesses

Marketpositionandtrends

Markettarget(s)

and

customer

base

Marketingprogrampositioningstrategy

Financial,technical,andoperatingcapa

(current and past)

Key Competitor Analysis

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Extent ofMarket Coverage

Current

Capabilities

Competitor

Evaluation

KeyCompetitorAnalysis

Anticipating Competitors Actions

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AnticipatingCompetitors ActionsEstimatingcurrentcompetitors futurest Identifyingnewcompetitors:

Industrymargins

Futuregrowthopportunities

Entrybarrier

Theextentofcompetition

Competitiveadvantageconsideration

MARKET SIZE ESTIMATION

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MARKETSIZEESTIMATION

UnrealizedPotential

MarkE

Product-Market ForecastRelationships

(area denotes sales in $s)

ProductMarketForecastRelationsI d i l P i i U i

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300

400

500

600700

800

900

Sales (in 1000s

of units)

Market

Potential

Sales Forecast

IndustrialPaintingUnits

Developing A Strategic Vision About Th

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DevelopingAStrategicVisionAboutTh

IndustryBoundariesBlurringandEvolving CompetitiveStructureandPlayersChang ValueMigrationPaths ProductVersusBusinessDesignCompetit FirmsareCollaboratingtoInfluenceIndu

Standards

Developing A Strategic Vision About Th

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Areproductmarketboundariesandcompositionproductmarketundergoingtransformation?

Howandtowhatextentistheendusercustome

Arethescopeandstructureofcompetitorspacetomarketandindustrytransformationandentrycompetitors?

Arethesepotentialthreatsfromdisruptivetechn

commoditization? Arethecompositionandstructureofthevaluectheendusermarket(s)changing?

Do

other

influences

operating

in

the

product

mapotential to significantly transform the product?

DevelopingAStrategicVisionAboutTh

Conclusion

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Conclusion

Opportunitiesareonlyasgoodasthepeoplewhowillpursue

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Di i Q tiDiscussion Question

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DiscussionQuestionDiscussionQuestion

Whyshouldwesegmentma

andtargetcertainsegments?

Aretherebenefitsindoingso

Are there drawbacks?

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BestBuy segmentationstrategy

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y g gy Goal:Focusingonthemostattractivecustomer BasedonbasiclifestyleJills

soccermoms:Themainshopperfor

Barrys wealthyprofessionals:Thewealthyman

Buzzs

techenthusiasts:thosewhowant

entertainmentRays thefamilyman:thosewhowanttechfamilylifeMr Storefront the small business customerl ti d i

Levelsandtypesofmarketsegmentat

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yp g

Operational

Segmentation

ManagerialSegmentation

StrategicSegmentation

Vision

Strategic intent

Product benefits

Resource allocation

Alignment

PlanningM

Levelsand

types

of

market

segmentatio

The case of Best Buy

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ThecaseofBestBuy

Operational

Segmentation

ManagerialSegmentation

StrategicSegmentation

Concerned with consumer lifestyles and the

benefits that different consumers seek in

choosing consumption electronics

Concerned with identifying tarmembers, redesigning stores tosegments, and training employ

segment targets

Concerned wrelevant mess

supporting thstrategy at th

Levels and types of market segmentat

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Levelsandtypesofmarketsegmentat

Thedeepestdecisionsarewhethert

thebusinessmodel

Theshallowest

decisions

are

whethe

smallimprovementsinexistingprod

whetherto

adjust

price

Differentaspectsofsegmentationsh

alignedandintegrated.

FromMassMarketstoMicroMarket

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OLD NEW

CONSUMERS Passively receive Empowered medi

whatever TV control and shape

networks thanks to TiVo, iP

broadcast Internet

ASPIRATIONS To keep up with To standout from the crowd crowd

TV CHOICE Three networks Hundreds of chan

plus maybe a plus video on dem

PBS stationMAGAZINES Age of the big Age of the specia

glossies: Time, magazine for ever

Life, Newsweek and affinity group

ADS Everyone hums Talking to a group

the Alka-Seltzer one, ads go ever

Types of Market/preference

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TypesofMarket/preference

homogeneoushomogeneous Totally heterogeneous Cl

Mass Marketing

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MassMarketing

Involvesno

segmentation

whatsoever

Isanundifferentiatedapproach

Worksbest

when

the

needs

of

an

entire

m

homogeneous

Isefficientfromaproductionstandpoint

Resultsin

lower

marketing

costs

Isinherentlyriskyandvulnerabletocomp

Differentiated Marketing

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DifferentiatedMarketing

Involvesdividingthetotalmarketintogrou

customershavingrelativelycommonorho

needsand

developing

astrategy

to

pursue

ofthesegroups

May

be

necessary

when

customer

needs

arwithingroupsbutdifferacrossgroups

Involvestwooptions:

Multisegment approach

Niche Marketing

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NicheMarketing

Focusesmarketing

efforts

on

one

small,

w

marketsegmentornichethathasauniqu

setofneeds

Requiresthatfirmsunderstandandmeet

oftargetcustomerssocompletelythatth

substantialshare

of

the

segment

makes

it

profitable

Strategic market segmentation (2)

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Strategicmarketsegmentation(2)

Marketdriven

strategy

and

segmentation

Marketsegmentation,valueopportun

newmarket

space

Markettargetingandstrategicposition

SegmentationintheMarketDrivenSt

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g

Segments

Value Opportunities

Capabilities/SegmentMatch

T t( )

MarketTargetingandStrategicPositio

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g g g

Markettargetingconsistsofevaluatingaoneormoresegmentswhosevaluerequprovideagoodmatchwiththeorganizatcapabilities.

Positioningstrategyinvolvesthecombinaactionsmanagementtakestomeetthenwantsofeachmarketsegments.

Wrongpositioning:Oldsmobile


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g g ( )

Marketdriven

strategy

and

segmentation

Marketsegmentation,valueopportun

newmarket

space

Markettargetingandstrategicposition

Activitiesanddecisionsinmarketsegmen

MarketSegmentationActivitiesandD

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a et Seg e tat o ct t es a d

Defining the Market toBe Segmented

Deto

(select

F

Strategic Analysisof Segments

(Decide target market)


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g g ( )

Marketdriven

strategy

and

segmentation

Marketsegmentation,valueopportunnewmarketspace

Markettargeting

and

strategic

position

Activitiesanddecisionsinmarketsegmen

Step1:

Defining

the

market

to

be

segm

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Product Variant Segmentation

(e.g. electric razors)


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g g ( )

ActivitiesanddecisionsinmarketsegmentationStep1:DefiningthemarkettobesegmentedStep2:Identifyingmarketsegments:

Segmentationvariables

Characteristics

ofpeopleandorganizations(dem

psychographic

personalityorlifestyle)

Consumermarkets

Organizationalmarkets

Productusesituation

segmentation

Buyers needsandpreferences

C d

SegmentationVariables(CPPU

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PurchaseBehavior

Charactof Peo

Organiz

Use

Buyers Needs/Preferences

g (

IllustrativeSegmentationVaria

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Characteristicsof people/

organizations

ConsumerMarkets

IndustriOrganiz

Age, gender, income,family size, lifecycle

stage, geographiclocation,lifestyle

Type of igeograp

corporatdevelopmintermed

Use situation Occasion, importance of

purchase, priorexperience with product,user status

Applicati

Procedumodifiedrebuy

Buyers needs/preferences

Brand loyalty status, brandpreference, benefits sought,quality proneness to make

Performabrand prfeatures

Lifestylesegmentationformaleshopp

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y g pp

Themetrosexual

Thematuriteen

Themodern

man

Thedad

Theretrosexual

Benefit/NeedsSegmentationoftheSnackF

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Strategic market segmentation (6)

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Formingmarket

segments

Requirementsforsegmentation:Fivecriteria

Responsedifferences

Identifiablesegments

Actionablesegments

Cost/benefitsStability

Approachestosegmentidentification

Customer group identification

MillerBrewings beerbrandtargets

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Millergenuinedraft mainstreamsophisMilwaukeesBestLight hardworkingmePilsner

Urquell beerafficionados

MillerIcehouse fordrinkingbuddies

RequirementsforSegmentation(FAIR

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Segmentation

Requirements

Responsedifferences

Identifiablesegments

Ase

Favot/Stabilityi

CharacteristicsofGoodSegmentation

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g

SegmentsareSubstantialMeasurable

and

IdentifiableAccessible/Actionable

ResponsiveandDifferentiable

Timebound/Stable

Avoidethicallysensitive,butlegal,segments Avoidsegmentsthatdonotmatchthefirmsex

ApproachestoSegmentIdentification

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pp g

IDENTIFIERS

OF CUSTOMER

GROUPS

CUSTO

RESPON

PROFIL

Characteristicsof People and

Organizations

Use Si

Buyersand Pre

CustomerGroup

Identification Segment Dimensions for Hotel Lodging

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SegmentDimensionsforHotelLodging

IllustrativeExample:GasolineBuyers

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RoadWarriors

TrueBlues

GenerationF3 (Fuel,Food & Fast)

Homebodies

Higher-income, middle-aged men, drive 250000 miles a year buy premium with acredit card purchase sandwiches and dfrom the convenience store will sometim

use carwashMen and women with moderate tohigh incomes, loyal to a brand andsometimes a particular station frequently buy premium, pay in cash

Upwardly mobile men and women -half under 25 years of age -constantly on the go drive a lotsnack heavily from the convenience store

Usually housewives who shuttle

children around during the day and

Illustrative Consumer Perception Map

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ust at eCo su e e cept o ap(Forminggroupsbasedonresponsediffere

LowQuality

Expensive

GROUP

I

GR

V

GROUP

III

GROUP

II Brand E

Brand D

Brand B


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Finer/Individualized segmentationstrategies LogicCustomizedofferings

Diversecustomerbase

Closecustomer

relationships

Finersegmentationstrategies

Microsegmentation:

Eachsegmentreceivesama

designedtomeettherequirements

Oneto

one

marketing: Involvescreatinganentireproductofferingforeachcustomer

Masscustomization:

Providingcustomizedproduc

muchhigherthanmassproduceditemsbyusingcdesignandmanufacturingsoftwares,FMS,andFS

providing unique solutions to individual customers


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SelectingthesegmentationstrategyDecidinghowtosegmentStrategicanalysisofmarketsegments

Customeranalysis

Competitor

analysisPositioninganalysis

Estimatingsegmentattractiveness

Segmentation fit and implementation

Decidinghowtosegment

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Thechoiceofsegmentationmethoddepematurityofmarket,thecompetitivestruct

organizationsexperience

in

market

Thefivecriterianeedtobeapplied

TargetMarketingStrategies

SingleSegment

Targeting

SelectiveTargeting

Mass

Market

Targeting

BasicStrategiesforTargetMarketSele

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StrategicAnalysisofMarketSegm

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Customer

Analysis

Financial and

Market

AttractivenessCom

An

SegmentationFit forImplementation

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Segment Attractiveness

and Internal Compatibility

Internal Compatibili

Market SegmentAttractiveness

High

High

Attractive segmentsthat match with

companycapabilities

Attracbut w

wic

UnattrUnattractive segments

HowshouldweDecideWhichSegmentstoTarget?S

ConstructingaMarketAttractiveness/Competitive

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1. Choose criteria to measure market attractiveness and

competitive position.

2. Weigh market attractiveness and competitive position factors

reflect their relative importance.

3. Assess the current position of each potential target market on efactor.

4. Project the future position of each market based on expected enviro

customer and competitive trends

Tip A Useful Tool for Assessing Market Segment

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AUsefulToolforAssessingMarketSegment

Rating

ChartWEIGHTWEIGHT RATINGRATING

Market attractiveness factorsMarket attractiveness factors

Customer needs and behaviorCustomer needs and behavior .5.5 1010

Segment size and growth rateSegment size and growth rate .3.3 77

Macro trendsMacro trends .2.2 88Total: Market attractivenessTotal: Market attractiveness 1.01.0

Competitive position factorsCompetitive position factors

Opportunity for competitiveOpportunity for competitivedd 66 77

TheMarket

Attractiveness/

Competitiv

Matrix

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Matrix

l

MarketAttractiveness

High(8-10)

Moderate

(4-7)

Low(0-3)

MediumWeak

Implications of Alternative Positions Within the Attractiveness/Competitive-Position Matrix

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High

Mod.

Ma

rketAttractiveness

Competitive PositionMediumWeak

Desira

Prote

Inverate

Con

stre

Desirable Potential Target

Invest to build:

Challenge for leadership

Build selectively on strengths

Reinforce vulnerable areas

Build selectively:

Spec. in limited strengths

Seek to overcome weak.

Withdraw if indications of

sustainable growth are lacking

Desira

Build s Emp

incr

Buil

com

Manage for earnings:

Protect existing strengths

Invest to improve position only in

areas where risk is low

Limited expansion or harvest:

Look for ways to expand w/outhigh risk; otherwise min. invest.and focus operations

Prote DefeManage for earnings: Protect position

Divest:

Sell when possible to maximize cash

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Chapter 4

StrategicCustomer

Relation

Management

IntegratedCRM

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PivotalRoleofCustomerRelationshipM

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Developing A CRM Strategy

CRM Levels

CRM Strategy Development CRM Implementation

Value Creation Process

Customer Value Value Received by the Organization CRM and Value Chain Strategy

CRM and Strategic Marketing

CustomerRelationshipManagement

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CRMisacrossfunctionalcorebusinessp

concernedwithachievingimprovedshare

valuethrough

the

development

of

effecti

relationshipswithkeycustomersandcust

segments.

CRMRecognizesThatCustomers:


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CRMsupports

acustomer

responsive

stra

Deliversuperiorcustomervaluebypersonali

interactionbetweenthecustomerandtheco

Demonstratethe

companys

trustworthiness

reliabilitytothecustomer

Tightenconnectionswiththecustomer

Achievethe

coordination

of

complex

organiz

capabilitiesaboundthecustomer

Focusoncustomerloyalty andretention

5% increase in retention result in 95% increa


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TheoverarchingframeworkofCRMinclud

morethandatabasesandITsystems.

AdatabasecreatedthroughCRMtech.sh

contain:

Transactions

Customercontacts

Descriptiveinformation

Responsetomarketingstimuli

CustomerLifetimeValue

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Customerlifetime

value

(CLV):

A

metric

that

calcul

profitproducedbythecustomer forthefirm themarginsofalltheproductspurchasedovertime,lereaching

that

customer

tying

Tothisisaddedaforecastofmarginsonfuture

(underdifferent

assumptions

for

different

cust

discountedbacktotheirpresentvalue.

Thisprocessprovidesanestimateoftheprofita

customer during the time span of the relations

CRMLevels:PerspectivesTowardCRM

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Company w ide level:Strategic-

The Entire Company

Functional level:Required Marketing

Functions

THE Customerfacing Level

Consideknowledand theirthe entire

TheStepsinDevelopingaCRMStrateg

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Gain enterprise commitment

Build a CRM project team

Business needs analysis

DefineTheCRMStrategy

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ValueProposition

BOtherStakeholders

Enterprise

Transformation Plan Custo

CRM STRATEGY

1

2

34

5

What the organprovide in ordecustomer expe

An as

indicavaluedelivecusto

All relevant stakeholdersmust be familiar with the plan.

SuccessfulImplementation

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A front office that integrates sales, markservice functions across all media (call cepeople, retail outlets, value chain membeinternet)

Data warehouse Business rules to encourage learning frocustomers

Implementation Dangers

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ImplementingWithoutDevelopingaCustomFailtomakecustomerandpositioningchoiconly

on

IT

and

call

centers

etc.

FailingtoInitiateNecessaryOrganizationalCProcesses,cultureandstructureareallinvo AllowingTechnology toDominatetheCRMNeedtomatchITwithcustomerstrategy.

VALUE CREATION PROCESS

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THEVALUE

EXCHANGE

ValueReceivedbythe

Customer

ValueRec

Orga

ValueProposition

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Thebenefits

the

customer

receives

are

ex

thevalueproposition.

Explaintherelationshipamongtheperfor

theproduct,

the

fulfillment

of

the

custom

andthetotalcosttothecustomeroverth

relationship

life

cycle.

METRICSFEATURE

How General Electric CMeasures Customers

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Happy (And Not-So-Happy) CustomersGeneral Electric is a big user of the Net Promoter concept of satisfaction, popularized by Fred Reichheld of Bain & Co. Belowsimilar to those on which GEs Capital Solutions unit asks custo

units performance on a 0 10 scale.

How willing are you to recommend us to a friend or associa

How would you rate our ability to meet your needs?

How would you rate our people?

How would you rate our processes?

What is your impression of our market reputation?

ValueReceivedbytheOrganization

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CLV:usefulinselectingvaluablecustome

targeting

Customerequity:

The

sum

of

CLV

for

all

o

customers

Pay

attention

to

customers trustandpri Identifyingunfavorableconsumerbehavi

wardrobing,packattacks,andexcessive

is also critical

CRM and Value Chain Strategy

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CRM needs to be integrated across mult

channels: Salespersons, value chain partand internet, telephoning, and direct ma

CRM and Value Chain Strategy

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The Perfect Customer Experienc

The perfect customer experience, which must

for the company in the context of the segments in woperates and its competition, is a relatively new conconcept is now being embraced in industry by compTNT, Toyotas Lexus, Oce, and Guinness Breweries,to receive much attention in the academic literaturemulti-channel integration is a critical process init represents the point of co-creation of customer v

a companys ability to execute multi channel integra

CRM and Strategic Marketing

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CRM STRATEGICMARKETING

From the perspective of strategic marketing, t

several reasons why CRM is important and wh

CMRbasedPerformanceMeasures

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Sales,profitability,

market

share

Customeracquisitioncost,conversionrate

lookerstobuyers),retention/churnrates,

customersales

rates,

loyalty

measures,

an

shareofwallet

Longterm

value:

e.g.

targeting

at

under

a

graduatestudents.

Conclusions

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Decisionsabout

customer

choices

reflect

priorities.

The

investments

in

CRM

cant

focus

only

oautomatedcallcentersandcustomercom

systems.

Creatingamajor

new

source

of

knowledg

customerstobuildcompetitiveadvantage

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Chapter5

Capabilitiesfor

Learning

a

CustomersandMarke

Capabilitiesforlearningaboutcustomersan

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Marketdriven

strategy,

market

sensing

a

learningprocesses

Marketinginformation

and

knowledge

re

Marketingintelligenceandknowledgem

Ethicalissuesincollectingandusinginfor

Premise

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Learningaboutmarketsismoreabout

interpreting/understandinginformationt

itOverwhelmedbyinformation:Internet,A

agencyreportsandsurvey,ethnographica

techniques

Marketsensingandlearningarerequired

competenciesunderpinningmarketdrive

LearningCapabilitiesatP&G

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Competitivestrengthisfromsuperiorcustomerk Todeliveracustomerexperience(morethanbranresearch,yetmoreonetoonecommunication ConsumerVillage(facilitiesthatreplicatecustomeenvironmenttoidentifycustomerneeds)

OnlinevirtualrealityCave:testalternativeretailc

experiences

WatchpeoplecleanbathsMr.CleanMagicRea Understandwhatitisliketoliveon$50/monthhi i Chi

MarketSensingandLearningProcesse

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Marketdrivencompaniesarecharacterizedbythsenseandrespondtoeventsandtrendsintheirm

Marketorientationisbothacultureandalsoapro

committedto

achieving

superior

customer

value.

includes:Informationacquisition,broadininform

dissemination,andshareddiagnosisandcoordina

MarketsensingprocessesBuildingopenmindedinquiryprocessesAnalyzingcompetitorsactions

Listeningtofrontlineemployees

MarketSensing

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Marketsensingresultsinknowledgeintensity,revealingandrelevantdataaregatheredandstufrequently.

Knowledgeintensity identifiesmarketrisks andopportunities forgrowthItsansweringthequestions:whatdoweknocustomersthatothersdont? Andthenusingknowledgetomakeandkeepcustomersfor

MarketSensingandLearningProcesse

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P&Gillustratesthecloserelationshipbetweenmorientedcultureandorganizationallearning Learningorganization: Thefivedisciplines(Peter PersonalMastery

Mentalmodels

Buildingsharedvision

Teamlearning

Systems

thinking:

The

Fifth

Discipline

that

integrates

t Learningandcompetitiveadvantage Learningmakesfirmsabletoquicklyandeffectivelyre

opportunitiesandthreatsandtosatisfycustomers ne

products and improved services

Learningorganization

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Learningabout

markets

Objective(openminded)inquiry:Tryingtoeviewsaboutmarket

Informationdistribution

for

synergy:

Remove

hurdlesandpractices

Mutuallyinformedinterpretations:sharedvi

shared

mental

modelAccessiblememory:knowledgestorage

Barrierstomarketlearningprocesses

M t i ti l t t /

LearningAboutMarkets

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Objective

Inquiry

Keepingand

GainingAccess

toPrior

Learning

Syn

Info

Dist

Mutually

I f d

Barriers to market learning

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Managersrejectnewinsights/information Rigidorganizationalstructuresandinflexibleinfosystems Politicsfavourthestatusquo Overwhelmingpressureofexistingbusinessope Tendencytoactiveinertia

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Best Buys customer knowledge strateg

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Strategytreatscustomersasindividual,developsforneedsandengagesemployeestoservethem

Newideasfromlisteningmorecloselytocustom

employees

Knowledgesharedwithmanufacturersandprodudevelopers Coreinnovationcompetencyisgatheringandsyncustomerintelligence

Customers and design at Xerox

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Customerledinnovation dreamingwiththe Notjustbuildingprototypeandgettingfeedbac Focusgroupsasfirststepincommercialprinter Changingdesignsinresponsetocustomerinsigh Investmentinunderstandingwhatcustomersththe

bright

ideas

Marketinginformationandknowledge

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Concernedwith

Continuousscanningprocesses,or

Specificmarketingresearchstudies

Internalandexternalmarketinginformat

resources

Relationshipswith

external

marketing

resea

Existing(e.g.Google)ordevelopingnew

throughsurveyorobservationalmethods

M k i i f i h ll

ScreeningANew ResearchSupp

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1.Client

Wouldyou

recommend

this

supplier?

2.Supplier Doyouhavesufficientfundsforthis

3.Whatpartsoftheprojectwillbesubcontracted,

youmanage

subcontractors?

4.MayIseeyourinterviewersmanualanddataen

5.Howdoyoutrainandsuperviseinterviewers?

6.What

percentage

of

interviews

are

validated?

7.MayIseeatypicalquestionnaire?

8.Whodrawsyoursamples?

9 Wh t t f d t t i ifi d?

ScanningProcesses

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Bealert:

Watching

for

new

market

opport

(especially,disruptiveinnovation)outsidecoremarkets

Usingonline

review

facilities

to

get

rapid

f

becomesmorepopular

Involveafewinitiativesorapproaches

Makingexisting

functional

groups

responsible

Createadhocgroups

Ahighlevellookout

N i iti ti

Frameworkfor

Market

Sensing

(presentthescanningresults)

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Things to

Probability of the Event Oc

Effect of theEvent on theCompany

High Medium

3

4

5

6

7

Utopia

Watch

Specificmarketingresearchstudies

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Thestarting

point

is

carefully

determining

problemtobestudied,indicatingspecific

anddeterminingwhatinformationisneed

Problemdefinition

to

guide

marketing

studies

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ResearchProject and Scope

ResearchObjectives

ResearchQuestions

Describethetopicforth

thebackground.

Setspecificgoalsforthe

whyisitbeingundertak

Identifythe

specific

piec

informationrequiredan

questionsthatneedtob

obtainthatinformation

Marketingresearchproject

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Definingthe

problem

Understandingthelimitationsoftheresea

Qualityoftheresearch

Costs

Evaluatingandselectingsuppliers

Researchmethods

DefiningProblem&Objectives

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CokesIntroductionofNEWFORMULAin1985.LosingmarketsharetoPepsi.Wemustresearcpreferences

ofconsumers.

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Creatingnewmarketinginformation

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Observationand

ethnographic

studies

(Assinformationandinsightcanbegeneratedbyimmersionin

Marriott rethinkhotelexperiencefortheyotechnology

sophisticated

road

warriorsGE developingplasticfibers business positioIntel

useofcomputersbychildreninChina

Researchsurveys

Internetbasedresearch

ImpactoftheInternetonMarketingCostsa

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OnlineSurveys

Fast

Inexpensive

Limitationsinpopulationcoverage

ResistancetoexcessiveWebcommunications

Customerfeedback

and

peer

to

peer

Web

communications

MonitoringcustomerWebbehaviour

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Input Output sub

DDMarketing Information System ModelMarketing Information System Model

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p

subsystems

Output sub

DD

AATT

AA

BB

AA

S

Internal sources

Environmental sources

Accountinginformation

system

Marketingresearch

subsystem

Productsubsyste

Placesubsyste

Promotiosubsyste

Price

s bs ste

Material, Money, and InformatiMaterial, Money, and Informati

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SupplierManu-

facturerWhole-saler Retailer Material MMaterialMaterial

MoneyMoney MMMoneyMoneyMoneyMoney

MarketingDecisionSupportSystemCo

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Database

AnalysisCapabilities

Display

Models

Marketingintelligenceandknowledgem

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Marketingintelligence

Knowledgemanagement

Roleofthechiefknowledgeofficer

Leveragingcustomerknowledge

Ethicalissuesincollectingandusinginfor

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Invasionofcustomerprivacy

Informationandethics

Informationcollection

Researchsubjects

Informationsharing

Neuromarketing

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Magnetic resonance imaging (MRI)

Pictures response of brain to stimuli

Probing consumer preferences is controve Invasive

Privacy issues

Information sharing

Insurance companies

E l

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ImperativesforMarke

DrivenStrategy

Chapter1

Apple Internal Experience

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Remember that Think Different ad campaign

th t ? It t i l f t b t

What the Hell Is Market Oriented'?

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Product-Oriented versus Market-OrientedDefinitions of a Business

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Company Product Definition Market DMissouri-Pacific

Railroad

We run a railroad We are a

goods mo

Xerox We make copying equipment We help iproductiv

Standard Oil We sell gasoline We supply

Columbia Pictures We make movies We markeentertainm

Encyclopaedia We sell encyclopedias We distrib

I f i

Product-Oriented versus Market-Orien

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Company Product-Oriented MarketinOriented

Kodak We make cameras

and film.

We help p

beautifulmemories

Amazon.co

mWe sell books and

recordings.

?

Hewlett- Packard We make computerprinters. ?

The Gaps model (Zeithaml, Parasuraman

& Berry 1990)

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ValueProposition Put Customers in M

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VVAALL

UUB fitB fit

RelatRelat

Functional

Emotional

Self-expressiveSocial

Kaplan & Norton: Strategy is based on a differentiated customproposition. Satisfying customers is the source of sustainable

M t

Functionalvalue

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Product attributes (features or ingredientsproduct) Application (what the product is used for) Performance (what the product does) Usage (how the product is used) Product quality (how good the product is) Price/value (value for money)

What is McDonalds CORE?

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What is Starbucks CORE?

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The Price of the Coffee Experience

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$$1

$5$5

Good

25

ServiceUSD 1.00-1.50

C dit

ExperienUSD 2.00-

The

price

ofa

cu

p

of

coffee

SomeMythsinMarket/Customerori

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Myth 1 The larger the range of products, thcustomer-centric I am.

MythbusterMythbusterThe range of productsThe range of products

has emerged from beinghas emerged from being

competitioncompetition--centric.centric.

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Myth 2 Better technology (read CRM) leadscustomer service.

MythbusterMythbusterTechnologyTechnology

alone does not deliver,alone does not deliver,

but people do.but people do.

Myth 3 Launch a product and the customer

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Myth 3 Launch a product and the customerinstantly.

- Give a customer a card and he will learn howimmediately

MythbusterMythbusterCustomersCustomersneed to be educated tooneed to be educated too

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MythbusterMythbusterCustomersCustomers

are not only presentare not only presentwhere competition is.where competition is.

Myth 4 The only way to get a customer is fcompetition.

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M hbM hb Ad i i ill lAd i i ill l

Myth 5 Just advertise and You will sell.

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Myth 6 No difference between marketing &

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Myth 7 Atrust relationship differentiate

New challenge: digital media execution

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Social networks Sharing

Content Device

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Markets

and

CompetitSpace

Chapter2

Levels of Competition

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Budget Com

Generic Co

Product typ

Brand Com

Competition?DynamicandRelative

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CompetitiveAsymmetry

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Because of asymmetry, firms often ovor underestimate their rivals.

Strategy E(1)

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Strategy(2) Transform Competition

into Cooperation

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Strategic Market

Segmentation

Chapter 3

Extension

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Whatisthe80/20Rule?!!

=largevolumesofareducednum

popularitems

afewcustome

Whatis

Long

Tail

Theory

?!

=smallvolumesofhardtofinditemmanycustomers

LongTailTheory

ThetheoryoftheLongTailisthatourcultureandeconomyisincreafrom a focus on a relatively small number of "hits" (mainstream prod

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fromafocusonarelativelysmallnumberof hits (mainstreamprodat

the

head

of

the

demand

curve

and

toward

ahuge

number

of

nich

costsofinventoryanddistributionfall,especiallyonline,thereisnowproductsandconsumersintoonesizefitsallcontainers(ChrisAndeanOctober2004Wired

magazine).

Inanerawithouttheconstraintsofphysicalshelfspaceandotherbo

distribution,narrowly

targeted

goods

and

services

can

be

as

econom

mainstreamfare.

LongTailTheory

DataontravelfromtheUK,from19982008.Overthatperio

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, p

destinationsfrom

the

UK

(the

head oftravel fellfrom36%just26%,whileeverythingelse(thetail)grew.

EvidenceofLongTailTheory

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Googles:Most

of

ads

are

from

SME,

not

bi

eBay:Mostofprofitsarefromnicheproduexquisitecarsandhighprice&delicategol

Amason:one

fourth

profit

is

from

non

hits

Internet,superstores,bigbookstores,andcAlargevarietyofnicheproducts

sellingv

volumes

AnExtensionofLongTailTheory

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Thefortuneatthebottomofthepyra

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Chapter 4

StrategicCustomer

Relation

Management(CRM)

Customerloyalty

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Aloyal

customer

Verysatisfied

Willingtorecommend

Keeppurchasing

Profitearninglaw:

20/80

20/100

20/120

satisfied recommend

Threewaystogrowbusiness/sales

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DerivedRelationships

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Original:AB AC

B

A

C

D

E

Original:

DE DF

Plannedbehaviortheory

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Chapter5

Capabilitiesfor

Learni

AboutCustomersand

MarketResearch

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SecondaryResearch

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InternalSources

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CompanyAccounts InternalReportsandAnalysis StockAnalysis Retaildata loyaltycards,tilldata,etc.

ExternalSources

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GovernmentStatistics(ONS)

Tradepublications

CommercialData Gallup,Mintel,etc. HouseholdExpenditureSurvey

Magazinesurveys

Otherfirms research Researchdocuments publications,journals,et

SamplingMethods

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MarketResearch

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Sampling Methods: RandomSamples equalchanceofanyonebeingMayselectthosenotinthetargetgroup indSample

sizes

may

need

to

be

large

toberepresentative

Canbeveryexpensive

StratifiedorSegmentRandomSampling

Samplesonthebasisofarepresentativestrataorsegment

Stillrandombutmorefocussed

Maygivemorerelevantinformation

MarketResearch

QuotaSampling

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Again bysegmentNotrandomlyselected

Specificnumberoneachsegmentareinterviewed,etc

Maynot

be

fully

representative

Cheapermethod

ClusterSampling

Primarilybased

on

geographical

areas

or

clusters tha

beingrepresentativeofthewholepopulation

MultiStageSampling

PrimaryResearch

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MarketResearch

h

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PrimaryResearch

Firsthandinformation

Expensivetocollect,analyseandevaluate

Canbe

highly

focussed

and

relevant

Careneedstobetakenwiththeapproachan

methodologytoensureaccuracy

Typesof

question

closed

limitedinformatopen usefulinformationbutdifficulttoana

MarketResearch

d

l

f

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Quantitative and Qualitative Information:Quantitative basedonnumbers 56%of18ydrinkalcoholatleastfourtimesaweek doesntwhen,howQualitative moredetail tellsyouwhy,when

Purpose

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MarketResearch

d

f

k

h

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Advantages ofMarket ResearchHelpsfocusattentiononobjectives

Aidsforecasting,planningandstrategicdevel

Mayhelp

to

reduce

risk

of

new

product

deve

Communicatesimage,vision,etc.

Globalisationmakesmarketinformationvalu

adverts!!)

MarketResearch

Di d

f

M k

R h

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Disadvantages ofMarket ResearchInformationonlyasgood

asthemethodologyused

Canbe

inaccurate

or

unreliable

Resultsmaynotbewhatthebusinesswantst

Maystifleinitiativeandgutfeeling

Alwaysaproblem

that

we

may

never

know

e

sure!

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Chapter 6

Market Targeting and Strategic Positioning

1

Market targeting strategy

Th M k i T i D i i id i i h l

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The Marketing Targeting Decision identities the peopleor organizations in a product-market toward which a

firm directs its positioning strategy guided by an

understanding of:

The product-market

Its buyers

Firms capabilities resources

Competition

2


C di i f k t d i t t

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Core dimensions of market-driven strategy:deciding which buyers to target and how to

position the firms products

Effective targeting and positioning strategies are

essential in gaining and sustaining superior

performance

3

Segments


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Value

opportunities

Capabilities/segment match

Target(s)

Positioning for

each Target4

Identify segments within

th d t k t


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Targeting

And

Positioning

the product-market

Decide which

segment(s) to target

Decide and implement apositioning strategy for

each targeted segment

5

Examples of Target Market and Value Propositions

Company

and Product

Target

Customers Benefits Price Value Proposition

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and Product Customers Benefits Price Value PropositionPerdue(chicken)

Quality-consciousconsumers ofchicken

Tenderness 10%premium

More tender goldenchicken at a moderatepremium price

Volvo(stationwagon)

Safety-consciousupscalefamilies

Durabilityand safety 20%premium The safest, mostdurable wagon inwhich your family canride

Dominos(pizza)

Convenience-minded pizza

lovers

Deliveryspeed and

good quality

15%premium

A good hot pizza,delivered to your

door within 30minutes of ordering,at a moderate price

6

Market Targeting Alternatives

Segments Clearly Defined

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Selective

Targeting

Extensive

Targeting

Differentiated But SegmentsNot Clearly Defined

TargetSelectedNiche(s)

TargetMultipleSegments

ProductVariety

ProductSpecialization

7

Factors Influencing Targeting Decisions

Stage of productmarket maturity

f f

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Extent of diversity in preferences

Industry structure

Capabilities and resources Opportunities to gain competitive advantage

8

Life-Cycle Targeting Strategies

To say that a product has a life cycle asserts four

things

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things

1. Products have a limited life.

2. Product sales pass through distance stages, each

posing different challenges, opportunities, and

problems to the seller.

3. Profits rise and fall at different stages of the product

life cycle.

4. Products require different marketing, financial,

manufacturing, purchasing, and human resource

strategies in each life-cycle stage.

9

Product Life Cycle (Stage of productmarket)

Sales andProfits ($)

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Time

ProductDevelopment

Introduction/Birth/Emerging

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Profits ($)

10

Variants in Product Life Cycle Patterns


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Variants in Product Life-Cycle Patterns

Case: Levi's managed to re-invent their jeans brandthrough the use of differentfabrics and cuts that havegiven their product a new,youthful look.11

Style Fashion and Fad Products Life Cycles


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Style, Fashion, and Fad Products Life Cycles

12

Emerging Market

Buyer Diversity

Segmentation limited due to similarity of buyerspreferen es

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preferences

Industry Structure

Typically small new organizations

Limited access to resources

Capabilities and Resources

Unique benefit (differentiation) strategy rather than low-cost

First-mover advantage

Targeting Strategy

Single target or a few broad segments

13

Growth Market

Buyer Diversity

Segments should exist

Industry Structure

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Industry StructureNumerous competitors


Survival requires aggressive actions by firms that seek largemarket positions

Otherwise select one or a few market segments

Targeting Strategy

Three possible strategies

1. Extensive market coverage by firms with established

businesses in related markets2. Selective targeting by firms with diversified product

portfolios

3. Very focused targeting strategies by small organizationsserving one or a few market segments.

14

Mature Markets

Buyer Diversity

Segmentation essential for competitive advantage

I d t St t

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Industry Structure

Intense competition for market share

Emphasis on cost and service, and pressures on profits


Managements objectives: cost reduction, selective targeting,

product differentiation

Targeting Strategy

Deciding which segment to serve

Firms pursuing extensive targeting strategies may decide toexit from certain segments

15

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GLOBAL

FEATURE

Successful British Retailer Tesco

Enters the U.S. Market

Tesco announced plans to open a chain of convenience stores on the U.S. West

Coast in 2007, spending an estimated $453 M. The very successful retailer has four

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Coast in 2007, spending an estimated $453 M. The very successful retailer has fourtypes of stores, including the convenience chain, Tesco Express.

This initiative is being launched even though the U.S. retail grocery market isexperiencing intense competition, and some chains are cutting back or selling out.

Tescos decision to enter the U.S. convenience market is bold and risky. Someauthorities consider the action questionable. However, Tesco has a very impressivesuccess record in Britain. With its Tesco Express, Tesco Metro, Superstore, and Extrahypermarkets, the giant retailer has dulled Wal-Marts drive to dominate the retailscene.

Tesco has no brand awareness in the U.S. so building brand identity will bechallenging. Yet the retailer has global buying power, powerful informationtechnology, and strong supply chain capabilities. The stores will offer groceries,produce, and private-label ready-to-eat meals. Some observers think Tesco isplanning to compete with Wal-Mart in its home market.

Source: Kerry Capell, Tesco: California Dreaming? BusinessWeek, February 27, 2006, 38.17

Positioning: The place a product, brand, or group of

products occupies in consumers minds relative toi ff i

Positioning strategy

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products occ

MS Combine

Documents

Transcript of MS Combine