2-5

Marketing Orientation Sounds Easy,Isn’t • Even the “best” firms sometimes backslide into a production orientation • In today’s highly competitive markets it is often difficult to – keep up with changing customer needs – beat aggressive competitors to the punch – find the right focus -- one that matches the firm’s objectives and resources to market opportunities – offer customers superior value

Customer Value Reflects Benefits and Costs Customer value concerns the difference between the benefits a

customer sees

from a firm’s market offering and the costs of obtaining those benefits

Costs Benefits 2-6

The customer’s view of costs and benefits is not just limited to economic (or even rational) considerations--and a low price may NOT result in superior value...

Customer Value

Costs Benefits

• One customer’s view of the benefits and costs of a firm’s market offering may vary from another customer’s view, so firm may not be able to satisfy everybody with the same offering.

2-7

• Customer value concept takes the customers point of view, but customers may not explicitly weigh costs and benefits and even if they do their view may not match some “objective” reality.

Exhibit 2-7 2-11

The Four Ps of the Marketing Mix

Product Place Price C Promotion

Product Physical Goods Service Features Quality Level Accessories Installation Instructions Warranty Product Lines Packaging Branding

Strategy Decision Areas Organized by the Four Ps

Place Objectives Channel Type Market Exposure Kinds of Middleman Kinds and Locations of Stores How to Handle Transporting and Storing Service Levels Recruiting Middlemen Managing Channels Promotion Objectives Blend Salespeople Kind Number Selection Training Motivation Advertising Targets Kinds of Ads Media Type Copy Thrust Who Prepares?

Sales Promotion Publicity Price Objectives Flexibility Level over PLC Geographic Terms Discounts Allowances Exhibit 2-8 2-12

Focusing Marketing Strategy with Segmentation and Positioning

3-2

Objectives

When you finish this chapter, you should

1.

2.

3.

4.

Understand why marketing strategy planning involves a process of narrowing down from broad opportunities to a specific target market and marketing mix. Know about the different kinds of marketing opportunities.

Understand why opportunities in international markets should be considered.

Know about defining generic markets and product-markets.

5.

6.

7.

Know what marketing segmentation is and how to segment product-markets into submarkets.

Know three approaches to market-oriented strategy planning.

Know dimensions that may be useful for segmenting markets.

8.

Know what positioning is— and why it is useful.

10.

Understand the important new terms.

Marketing Strategy Planning Process

Narrowing down to focused strategy with screening criteria Customers Company S.

W.

O.

T.

Segmentation & Targeting Differentiation & Positioning Product Place Target Market Price Promo Competitors External Market Environment Exhibit 3-1 3-3

Types of Opportunities

Four Basic Types of Opportunities Present Products New Products Present Markets Market Penetration Product Development New Markets Market Development Diversification Exhibit 3-2 3-4

Market Segmentation

Broad product-market (or generic market) name goes here (The bicycle-riders product-market) Submarket 1 (Exercisers) Submarket 3 (Transportation riders) Submarket 4 (Socializers) Submarket 2 (Off-road adventurers) Submarket 5 (Environmentalists) Exhibit 3-5 3-8

Market Segmentation

A. Product-market showing three segments B. Product-market showing six segments Dependability dimension Exhibit 3-6 3-9 Dependability dimension

Positioning of Different Bar Soaps

High moisturizing

•

Tone

•

Zest 7

•

Lever 2000 4

•

Dove 2 5

•

Safeguard

•

Lux 8 Nondeodorant Deodorant 3

•

Lava “Product Space” Representing Consumers’ Perception for Different Brands of Bar Soap Exhibit 3-13 6 Low moisturizing 3-14 1

•

Lifebuoy

•

Dial

A Market Grid Diagram with Submarkets

The bicycle-riders product market Submarket 1 Exercisers Submarket 3 Transportation Riders Submarket 4 Socializers Submarket 2 Off-Road Adventurers Submarket 5 Environmentalists

Concept: divide a broad product-market (or generic market) into homogeneous submarkets

Toothpaste Market Segment

Principal benefit sought Demographic strengths Special behavioral characteristics Brands disproportion ately favored Personality Characteristics Life-style characteristics

The sensory segment

Flavor, product appearance Children Users of spearmint flavored toothpaste Colgate, Stripe High self involvement Hedonistic

The sociables segment

Brightness of teeth Teens, young people Smokers

The worriers segment

Decay prevention Large families Heavy users

The independent segment

Price Men Heavy users Macleans, Plus White Ultra Brite Crest High sociability Active High hypochondriasis Conservative Brands on sale High autonomy Value-oriented

Behavioral Dimensions of the Consumer Market

Elements of Product Planning for Goods and Services

9-2

Objectives

When you finish this chapter, you should

1.

2.

3.

4.

Understand what “Product” really means.

Know the key differences between goods and services.

Know the differences among the various consumer and business product classes.

Understand how the product classes can help a marketing manager plan marketing strategies.

5.

6.

Understand what branding is and how to use it in strategy planning.

Understand the importance of packaging in strategy planning.

7.

Understand the role of warranties in strategy planning 8.

Understand the important new terms.

Defining “Product”

Target Market Product Place Promotion Product Idea Physical good/service Features Quality level Accessories Installation Instructions Product line Exhibit 9-1 9-3 Brand Package Type of Brand: Individual or family Manufacturer or dealer Protection, Promotion, or both Price Warranty None, full, or limited

9-8

The Strategic Importance of Packaging

Convenient packages are easier to use, making purchase decisions easier for the customer as well.

9-9

Using Warranties to Improve the Marketing Mix

A warranty says the company stands behind the product. Consumers often feel more comfortable with products they know come with assurances.

Product Management and New-Product Development

10-2

Objectives

When you finish this chapter, you should

1.

2.

3.

Understand how product life cycles affect strategy planning.

Understand what is involved in designing new products and what “new products” really are.

Understand the new-product development process.

4.

5.

See why product liability must be considered in screening new products.

Understand the need for product or brand managers.

6.

Understand the important new terms.

+ $ 0 –

The Product Life Cycle

Market Introduction Market Growth Market Maturity Sales Decline Total Industry Sales Total Industry Profit Time

New-Product Development Process

Idea Generation Screening Idea Evaluation Development Commercial -ization

Ideas from: Customers and users Marketing research Competitors Other markets Company people Middlemen Strengths and Weaknesses Fit with objectives Market trends Rough ROI estimate Concept testing Customer reactions Rough estimates of cost, sales, profits R & D Develop model or service prototype Test marketing mix Revise plans as needed ROI estimate Finalize product and marketing plan Start production and marketing “Roll out” in select markets Final ROI estimate Exhibit 10-4 10-5

Entrepreneurial Marketing

Tom Byers and Jeff Rosenberger Stanford University This document may be reproduced for educational purposes only.

I.

Agenda and Objectives

“Companies that create the future do more than satisfy customers, they constantly amaze them.” ~ Hamel and Prahalad Mini-lecture • What is Entrepreneurial Marketing?

• How Can a Venture “Cross the Chasm”?

• Positioning and Penetration Strategies II. Positioning Examples

“Market Analysis” Versus “Marketing”

Step #1: Opportunity Recognition (Market Analysis) – Identify a Market Need – Examine the Competitive Dynamics of the Industry – Determine Growth Potential Step #2: Marketing Strategy – Develop a Unique Positioning – Develop Marketing Objectives

What is Marketing Anyway?

• Marketing must be more than a sales support function. Not just ad tag lines. In all kinds of businesses, it must satisfy “the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and finally consuming it.” • Especially in high technology venturing, marketing must “invent complete products and drive them to commanding positions in defensible market segments.”

Why is Marketing So Challenging in a High-Technology Start-Up?

50 20 5 0

The Adoption Curve

90 Innovators 3-5% Early Adopters 10-15% Early Majority 34% Late Majority 34% Laggards or Nonadopters 5-16% Time

90 (3-5%)

The Adoption Curve

Adopters (10-15%) Early Majority (34%) Late Majority (34%) Laggards/ Nonadopters (5-16%) 50 20 5 0 Exhibit 14-9 14-14 Time

Most Famous Model … Geoff Moore’s “Technology Adoption Life Cycle”

Tornado Main Street

Try to Name a Discontinuous Innovation (or Disruptive Technology) Where Do You Fit When It Comes to New Technologies?

Bowling Alley Source: Moore (1995), Inside the Tornado

So How Does a Startup

Cross the Chasm

?

1. Put Your Eggs in One Basket …

Target Market Segments

.

2. Then Deliver a 100% Solution To Them

… A Whole Product.

An Example of the Power of Segmentation and Target Marketing: Pedigree Petfoods in

Dog’s Role

UK

Segment Brand Price/100 gr.

Dog as a substitute child?

Super Premium

Dog as a family member Dog as a companion Dog as an animal Premium Moderate Economy Chum Pal and Bounce Chappie 8.7 pence 6.4 & 7.9 pence 6.3 pence Reference: A. Ryans

Segmentation and the UK Dog Food Market: Pedigree’s Super Premium Strategy

• Benefits?

Very best product that can be bought, reassurance, confidence, leads to an enhanced relationship • Name?

Mr. Dog (later Caesar) • Product?

Very high quality ingredients, wide variety of flavors, special packaging • Target Market?

Intense relationships, own smaller dogs, older and urban females • Price?

17.7 to 30.7 pence per 100 grams • Advertising?

Dog bringing newspaper, slippers, etc.

Results: Fours years later, it had a 10% share of the total dog food market. The total super premium segment of the market was about 15% -- about 10% coming from dog food brands and about 5% coming from fresh foods. In addition, Pedigree's premium brand retained its market share.

What is the Single Most Important Concept in a Marketing Strategy?

Positioning (a.k.a. the “Elevator Pitch”)

Positioning Template

•

Sentence #1

For (target customer) who (statement of the need or opportunity), the (product/service name) is a (product/service category) that (statement of benefit).

•

Sentence #2

Positioning Drives Penetration Strategies

1. Promotion and Communication (including branding and permission-based marketing) 2. Pricing and Business Model (including viral marketing) 3. Sales and Distribution (including affiliate marketing)

A Short Checklist for Effective Entrepreneurial Marketing …

Relationships Matter!

1. How will you get close to customers ? 2. How will you leverage alliances and partnerships ?

3. How will you influence the infrastructure or the industry’s key “ players ”?

4. What is your international strategy (global markets)?