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Innovation, Value & Positioning DR. DAWNE MARTIN MKTG 241 FEB. 24, 2011 Administrative Stuff Customer/Competitor Analysis: Thursday, Feb. 23 Tuesday, Feb. 28: Quiz 2 – Chap 4 – 6, Business Model Thursday: Chapter 6 & Business Model Development Learning Objectives To review value creation and map out your value proposition To investigate and design a product positioning strategy. To reassess what you need to know about customers and customer perceptions of competitors in your marketing research. Three Simultaneously Challenges 5-3 Anticipate and respond to change Leverage core competencies to exploit new market realities Learning faster and innovating better to explore new territory Rethinking Marketing, 1st Edition Creative Destruction: The Kissing Cousin of Opportunity 5-4 Entrepreneur is the innovator who “Shocks” and disturbs economic equilibrium Exploiting and creating uncertainty Creative destruction Old replaces the new Rethinking Marketing, 1st Edition 7 Outcomes of Entrepreneurial Creativity ? Wealth Employment Growth New ventures Change New markets Innovation (products, service, processes) Value Rethinking Marketing, 1st Edition 5-5 In curve A, and B the optimal time period during which 5-6 to pursue an opportunity with a given business concept is during the shaded area. Rethinking Marketing, 1st Edition Examples of Great Ideas 5-7 i. Ikea discovered its “flat-pack” furniture concept when an employee, Gillis Lundgren, cut the legs off a bulky table he had just purchased because it would not fit into the trunk of his car. ii. Wal-Mart store manager in Crowley, Louisiana, tried to scare off shoplifters by introducing “store greeters” rather than security guards—this new perspective soon became a signature of Wal-Mart stores. iii. American Express Travelers Checks were born out of the frustration of an Amex executive who tried unsuccessfully to cash his letters of credit while on holiday in Europe. iv. Skip Yowell & JanSport http://www.jansport.com/skip_yowell_collection/js_ski p_yowell_collection.html Rethinking Marketing, 1st Edition Value Company perspective Value must be captured or appropriated Market perspective 5-8 Value with innovation, called “value innovation” Southwest Airlines offers outstanding customer service and rock-bottom prices, defies traditional marketing logic Customer perspective Meeting needs Solving problem better than competitor Innovative products and services that were initially rejected by consumers: the microwave, CNN, the Sony Walkman, and Boeing’s 747 Rethinking Marketing, 1st Edition 5-9 Company perspective Market perspective Value must be captured or appropriated Value with innovation, called “value innovation” Southwest Airlines offers outstanding customer service and rock-bottom prices, defies traditional marketing logic Customer perspective Meeting needs Solving problem better than competitor Innovative products and services that were initially rejected by consumers: the microwave, CNN, the Sony Walkman, and Boeing’s 747 Rethinking Marketing, 1st Edition Economic Benefits and Value Creation Differentiation and Customer Value Positioning Strategy Study and understand the market Critical strategic decisions Choice of the target segment. Determine specifications to meet the target segment’s needs Determine the product or service’s competitive positioning from the customer’s perspective Copyright ©1997 Harcourt Brace & Company. All Rights Reserved. Segment Positioning Value Proposition: all the key elements of the situation and benefits the target customer is looking for in purchase Segment Positioning Strategy: product features, relative price, added value through channels and promotion. Acid Test of Positioning – storyboard target slogan, benefits and products – participants select storyboards based on their needs – Do they match? Mapping Competitive Positions Perceptual Mapping: two-dimensional map to compare the consumer’s image of competing products on two critical performance features Product position relative to competitors Product position relative to ideal points Uses for perceptual mapping Unique product differentiation & positioning Image differentiation New product or service Copyright ©1997 Harcourt Brace & Company. All Rights Reserved. An Intuitive Map of the Analgesic Market Gentleness (side effects) Segment cluster 1 Age=5+5 Use: fever Segment cluster 2 Age=70+10 Use: arthritis Tylenol Datril Generic acetaminophen Buffering Advil Extra-Strength Tylenol Segment cluster 3 Age=30+10 Use: aches Effectiveness (efficacy) Bayer Private-label aspirin Anacin Demand void Copyright ©1997 Harcourt Brace & Company. All Rights Reserved. Has a touch of class A car I’d be proud to own Distinctive looking Porsche #4 Lincoln Cadillac Mercedes Conservative looking #5 BMW Chrysler Buick Oldsmobile Appeals to older people Ford #2 Spirited performance Sporty looking Pontiac Fun to drive Appeals to young people Datsun Chevrolet #1 Dodge #3 Toyota Plymouth VW Very practical Gives good gas mileage Affordable The Planned Repositioning of Pontiac High price Upscale Luxurious Cadillac Mercedes Buick Porsche??? Oldsmobile Conservative Familyoriented Source: Adapted from John Koten, “Car Makers Use ‘Image’ Map as Tool to Position Products,” The Wall Street Journal, March 22, 1984, 31. Pontiac Expressive Sportyoriented Nissan Chevrolet VW Low price Practical Toyota Honda Mazda Copyright ©1997 Harcourt Brace & Company. All Rights Reserved. Major Sources of Competitive Advantage Defining your Value Proposition and Positioning Identify the market Identify the key issues/desires of that market as they relate to your product Identify the key benefits your product/service will provide Identify product/service characteristics that will provide those benefits Defining your Value Proposition and Positioning Investment Program A How to Beat Inflation and Higher Taxes Key Benefits Capital Appreciation Minimal Taxation Investment Program B Growth/Appreciation Safety Products Growth Stocks Municipal Bonds Growth Funds Special Help for Women with Special Money Problems Key Benefits Products Growth Mutual Funds Blue-Chip Stocks High-Grade Bonds