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8/3/2019 MS Combine
1/360
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
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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
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InformationAcquisition
Cross-FunctionalAnalysis of Information
Shared Diagnosis and
Coordinated Action
Delivery of Superior
Customer Value
Becoming A Market-oriented Organization
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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
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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
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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
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Market Driven Strategy (3): Matching Customer
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Value Requirements
Distinctive
Capabilities
Market-Driven Strategy (3): Matching Customer
Value and Distinctive Capabilities
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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
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Value Composition
Monetary costs
Time
Psychic andphysic costs
Product
Services
Employees(RELATIONSHIP)
Image
Benefits
Costs/Price(sacrifices)
Value(gain/loss)
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Value Proposition
VAL
UE
Benefits
Relative Price
FunctionalEmotional
Self-expressive
Put Customers in Mind always!!!
Social
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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
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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.
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Corporate Business and Marketing Strategy (2):
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Corporate, Business and Marketing Strategy (2):
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.
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Corporate, Business and Marketing Strategy (3):
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p , g gy ( )
Business and marketing strategy
34
Corporate, Business and Marketing Strategy (3):
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Corporate, Business and Marketing Strategy (3):
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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Taking on the Challenges of Developing
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
42
Taking on the Challenges of Developing
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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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Marketing Plan Outline
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.
Marketing Plan Outline
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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
Strategicmarketsegmentation(3)
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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)
Strategicmarketsegmentation(4)
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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)
Strategicmarketsegmentation(5)
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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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Strategicmarketsegmentation(6)
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
Strategicmarketsegmentation(7)
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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
Strategicmarketsegmentation(8)
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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:
CustomerRelationshipManagement
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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
CustomerRelationshipManagement
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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
8/3/2019 MS Combine
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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
Market Targeting and Strategic Positioning
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
Market Targeting and Strategic Positioning
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Value
opportunities
Capabilities/segment match
Target(s)
Positioning for
each Target4
Identify segments within
th d t k t
Market Targeting and Strategic Positioning
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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
Life-Cycle Targeting Strategies
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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
Life-Cycle Targeting Strategies
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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
Capabilities and Resources
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
Capabilities and Resources
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