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© 2014 Alexander Chernev
About this Slide Deck
✦
This slide deck includes figures from Strategic Marketing
Management (8th Edition) by Alexander Chernev
✦
Unless noted otherwise, all figures are copyrighted by the author
✦
Figures are presented in the same order as in the book and are
available in both Powerpoint and Keynote formats
✦
All figures are shown on white background; some of the figures are
also shown on back background. Some of the figures are animated
✦
All figures are fully editable and can be colored, enlarged, or scaled
down based on individual preferences. Some of the key figures are
offered in different sizes
© 2014 Alexander Chernev
Strategic Marketing Management (8th Edition)
Book Overview
© 2014 Alexander Chernev
The Big Picture
✦
✦
✦
Chapter 1: Marketing as a Business Discipline
Chapter 2: Marketing Strategy and Tactics
Chapter 3: The Marketing Plan
Company
value
Customer
value
OVP
Collaborato
r value
Goal
Strategy
Tactics
Product
Service
Brand
Incentives
Price
Communication
Distribution
Marketing Strategy and Tactics
(Value-Creation Model)
© 2014 Alexander Chernev
Implementation
Control
The Marketing Plan
(G-STIC Framework)
The Big Picture



Chapter 1: Marketing as a Business Discipline
Chapter 2: Marketing Strategy and Tactics
Chapter 3: The Marketing Plan
Company
value
Customer
value
OVP
Goal
Collaborato
r value
Strategy
Tactics
Product
Service
Brand
Incentives
Price
Communication
Distribution
Marketing Strategy and Tactics
(Value-Creation Model)
© 2014 Alexander Chernev
Implementation
Control
The Marketing Plan
(G-STIC Framework)
Marketing Strategy
✦
Chapter 4: Identifying Target Customers
✦
Chapter 5: Creating Customer Value
✦
Chapter 6: Managing Company Value
✦
Chapter 7: Creating Collaborator Value
Company
Value
Company
value
Value
Value
Customers
Value
Value
Collaborators
Value
Customer
value
OVP
Collaborator
value
Competitors
Context
Market Analysis
(6-V Framework)
© 2014 Alexander Chernev
Value-Sharing Model
(3-V Principle)
Marketing Strategy




Chapter 4: Identifying Target Customers
Chapter 5: Creating Customer Value
Chapter 6: Managing Company Value
Chapter 7: Creating Collaborator Value
Company
Value
Customers
Value
Company
value
Value
Value
Collaborators
Value
Value
Customer
value
OVP
Collaborator
value
Competitors
Context
Market Analysis
(6-V Framework)
© 2014 Alexander Chernev
Value-Sharing Model
(3-V Principle)
Marketing Tactics
✦
✦
✦
✦
✦
✦
Chapter 8: Managing Products and Services
Chapter 9: Managing Brands
Chapter 10: Managing Price
Chapter 11: Managing Incentives
Chapter 12: Managing Communications
Chapter 13: Managing Distribution
Product
Service
Brand
Incentives
Value
Price
Communication
Distribution
Marketing Tactics
(7-T Framework)
© 2014 Alexander Chernev
Marketing Tactics






Chapter 8: Managing Products and Services
Chapter 9: Managing Brands
Chapter 10: Managing Price
Chapter 11: Managing Incentives
Chapter 12: Managing Communications
Chapter 13: Managing Distribution
Product
Service
Brand
Incentives
Value
Price
Communication
Distribution
Marketing Tactics
(7-T Framework)
© 2014 Alexander Chernev
Managing Growth
✦
✦
✦
✦
Chapter 14: Gaining and defending market position
Chapter 15: Managing Sales Growth
Chapter 16: Managing New Products
Chapter 17: Managing Product Lines
© 2014 Alexander Chernev
Managing Growth




Chapter 14: Gaining and defending market position
Chapter 15: Managing Sales Growth
Chapter 16: Managing New Products
Chapter 17: Managing Product Lines
© 2014 Alexander Chernev
Marketing Workbooks
✦
Chapter 18: Segmentation and targeting workbook
✦
Chapter 19: Business plan workbook
✦
Chapter 20: Positioning statement workbook
© 2014 Alexander Chernev
Marketing Workbooks



Chapter 18: Segmentation and targeting workbook
Chapter 19: Business plan workbook
Chapter 20: Positioning statement workbook
© 2014 Alexander Chernev
Strategic Marketing Management (8th Edition)
Figures: Part I
© 2014 Alexander Chernev
The Role of Frameworks in Marketing Management
Framework
Typical
problem
Typical
solution
Generalize
Specific
problem
Specific
solution
Trial & error
© 2014 Alexander Chernev
Apply
The Role of Frameworks in Marketing Management
Framework
Typical
problem
Typical
solution
Abstraction
Specific
problem
Specific
solution
Trial & error
© 2014 Alexander Chernev
Application
Identifying Target Markets: The 5-C Framework
Customers
Customers
Competitors
Competitors
Context
© 2014 Alexander Chernev
Context
Identifying Target Markets: The 5-C Framework
Customers
Competitors
Context
© 2014 Alexander Chernev
Defining the Value Exchange: The 6-V Framework
Company
Value
Value
Company
value exchange
Value
Customers
Value
Value
Value
Competitors
Context
© 2014 Alexander Chernev
Collaborators
Competitive
value exchange
Defining the Value Exchange: The 6-V Framework
Company
Value
Value
Company
value exchange
Value
Customers
Value
Value
Value
Competitors
Context
© 2014 Alexander Chernev
Collaborators
Competitive
value exchange
The Optimal Value Proposition (OVP)
Company
value
Customers
value
OVP
Collaborator
value
The Optimal Value
Proposition
© 2014 Alexander Chernev
The Optimal Value Proposition (OVP)
Company
value
Customer
value
© 2014 Alexander Chernev
OVP
The Optimal Value
Proposition (OVP)
Collaborator
value
The 7 Tactics Articulating the Offering's Value Proposition
Company
value
Customer
value
Product
OVP
Collaborato
r value
Service
Brand
Incentives
Price
Communication
Distribution
Marketing Mix (7 Ts)
© 2014 Alexander Chernev
The 7 Tactics Articulating the Offering's Value Proposition
Company
value
Customer
value
Product
OVP
Strategy
Collaborato
r value
Service
Brand
Incentives
Price
Communication
Distribution
Marketing Mix (7 Ts)
© 2014 Alexander Chernev
Tactics
The Seven Marketing Tactics (Marketing Mix)
Product
Service
Brand
Incentives
Value
Price
Communication
Product
Service
Brand
Incentives
Value
Price
Communication
© 2014 Alexander Chernev
Distribution
Distribution
Product
Service
Brand
Incentives
Value
Price
Communication
Distribution
The Seven Marketing Tactics (Marketing Mix)
Product
Service
Brand
Incentives
Value
Price
Communication
Product
Service
Brand
Incentives
Value
Price
Communication
© 2014 Alexander Chernev
Distribution
Product
Service
Brand
Incentives
Value
Price
Communication
Distribution
Distribution
Designing, Communicating, and Delivering Value
Designing
value
Product
Service
Brand
Price
Incentives
© 2014 Alexander Chernev
Communicating
value
Delivering
value
Designing, Communicating, and Delivering Value
Designing
value
Product
Service
Brand
Price
Incentives
© 2014 Alexander Chernev
Communicating
value
Delivering
value
Designing, Communicating, and Delivering Value
Designing the offering
Product
Communicating
the offering
Brand
Service
Incentives
Price
Communication
Distribution
Marketing Mix (7 Ts)
© 2014 Alexander Chernev
Delivering
the offering
Designing, Communicating, and Delivering Value
Designing the offering
Product
Communicating
the offering
Brand
Service
Incentives
Price
Communication
Distribution
Marketing Mix (7 Ts)
© 2014 Alexander Chernev
Delivering
the offering
The 7-T and the 4-P Frameworks
Product
Product
Brand
Service
Incentives
Price
Price
Communication
Distribution
Place
Promotion
Marketing Mix (7 Ts)
© 2014 Alexander Chernev
The 7-T and the 4-P Frameworks
Product
Product
Promotion
Brand
Service
Incentives
Price
Price
Communication
Distribution
Place
Marketing Mix (7 Ts)
© 2014 Alexander Chernev
Strategies for Generating a Business Model
Marketing Strategy
(value analysis)
Top-down business
model generation
Bottom-up business
model generation
Marketing Tactics
(offering design)
© 2014 Alexander Chernev
Strategies for Generating a Business Model
Marketing Strategy
(value analysis)
Top-down business
model generation
Bottom-up business
model generation
Marketing Tactics
(offering design)
© 2014 Alexander Chernev
The Five Forces of Competition
New entrants
Suppliers
Competitors
Buyers
Substitutes
© 2014 Alexander Chernev
Source: Porter, Michael E. (1979), “How Competitive Forces
Shape Strategy,” Harvard Business Review, 57 (March–April),
137–145
The Five Forces of Competition
New entrants
Suppliers
Competitors
Buyers
Substitutes
© 2014 Alexander Chernev
Source: Porter, Michael E. (1979), “How Competitive Forces
Shape Strategy,” Harvard Business Review, 57 (March–April), 137–
145
The G-STIC Framework for Market Planning and Analysis
Goal
Strategy
Business model
Tactics
Implementation
Control
© 2014 Alexander Chernev
The G-STIC Framework for Market Planning and Analysis
Goal
Strategy
Business model
Tactics
Implementation
Control
© 2014 Alexander Chernev
The G-STIC Action-Planning Flowchart
The ultimate criterion for success
Goal
Benchmarks
Focus
The logic of the value-creation model
Strategy
The specifics of the market offering
Tactics
Product
Service
Price
Communication
Distribution
The process of evaluating goal progress
Control
© 2014 Alexander Chernev
Value
proposition
Brand
Incentives
Evaluate
performance
Target
market
Monitor the
environment
The logistics of developing the offering
Implementation
Organizational
infrastructure
Business
processes
Implementation schedule
The G-STIC Action-Planning Flowchart
The ultimate criterion for success
Goal
Benchmarks
Focus
The logic of the value-creation model
Strategy
The specifics of the market offering
Tactics
Product
Service
Price
Communication
Distribution
The process of evaluating goal progress
Control
© 2014 Alexander Chernev
Value
proposition
Brand
Incentives
Evaluate
performance
Target
market
Monitor the
environment
The logistics of developing the offering
Implementation
Organizational
infrastructure
Business
processes
Implementation schedule
The Marketing Plan
Executive summary
Situation analysis
Goal
Strategy
Business model
Tactics
Implementation
Control
Exhibits
© 2014 Alexander Chernev
Action Plan
(G-STIC Framework)
The Marketing Plan
Executive summary
Situation analysis
Goal
Strategy
Business model
Tactics
Implementation
Control
Exhibits
© 2014 Alexander Chernev
Action Plan
(G-STIC Framework)
Strategic Marketing Management (8th Edition)
Figures: Part II
© 2014 Alexander Chernev
Segment-Based Targeting
Segment A (target)
Segment B (nontarget)
Segment C (nontarget)
Unsegmented
market
© 2014 Alexander Chernev
Segment-based
target identification
Segment-Based Targeting
Segment A (target)
Segment B (nontarget)
Segment C (nontarget)
Unsegmented
market
© 2014 Alexander Chernev
Segment-based
target identification
The Key Targeting Principles
Company
resources
Company
goals
Company analysis
© 2014 Alexander Chernev
Target
attractiveness
Target
compatibility
Customer
needs
Customer
resources
Customer analysis
The Key Targeting Principles
Company
resources
Company
goals
Company analysis
© 2014 Alexander Chernev
Target
attractiveness
Target
compatibility
Customer
needs
Customer
resources
Customer analysis
The Resource Advantage Principle
Unutilized
company resources
Company
resources
The company's optimal
target customers
Competitive
wasteland
Target
Unmet
customer needs
Customer
needs
Competitor
resources
Competitors' optimal
target customers
© 2014 Alexander Chernev
Unutilized
competitor resources
Intense
competition
The Resource Advantage Principle
Unutilized
company resources
Company
resources
The company's optimal
target customers
Competitive
wasteland
Target
Unmet
customer needs
Customer
needs
Competitor
resources
Competitors' optimal
target customers
© 2014 Alexander Chernev
Unutilized
competitor resources
Intense
competition
The Customer Identification Process
© 2014 Alexander Chernev
Strategic
targeting
Tactical
targeting
Value-based
analysis
Channel-based
analysis
The Customer Identification Process
© 2014 Alexander Chernev
Strategic
targeting
Tactical
targeting
Value-based
analysis
Channel-based
analysis
Strategic and Tactical Targeting: Linking Customer Value and Profile
Target
attractiveness
Value
Target
customers
Important
Unobservable
Not actionable
Target
compatibility
Strategic targeting
Value-based identification
Identification
(linking value & profile)
Demographic
factors
Profile
Observable
Actionable
Less important
Behavioral
factors
Tactical targeting
Profile-based identification
© 2014 Alexander Chernev
Strategic and Tactical Targeting: Linking Customer Value and
Profile
Target
attractiveness
Value
Target
customers
Important
Unobservable
Not actionable
Target
compatibility
Strategic targeting
Value-based identification
Identification
(linking value & profile)
Profile
Observable
Actionable
Less important
Demographic
factors
Behavioral
factors
Tactical targeting
Profile-based identification
© 2014 Alexander Chernev
Targeting Efficiency
Correct
“Sniper” targeting
(perfect fit)
Incorrect
“Shotgun” targeting
(broad)
Oversegmentation
(narrow)
Value-based segment (unobservable)
Profile-based-segment (observable)
© 2014 Alexander Chernev
Shot-in-the-dark
(off base)
Targeting Efficiency
“Sniper” targeting
(perfect fit)
“Shotgun” targeting
(broad)
Oversegmentation
(narrow)
Value-based segment (unobservable)
Profile-based-segment (observable)
© 2014 Alexander Chernev
Shot-in-the-dark
(misaligned)
Targeting Multiple Segments
Segment A (target)
Segment B (target)
Segment C (nontarget)
Offering A
© 2014 Alexander Chernev
Offering B
Targeting Multiple Segments
Segment A (target)
Segment B (target)
Segment C (nontarget)
Offering A
© 2014 Alexander Chernev
Offering B
Segmentation as a Process of Differentiation and Agglomeration
Mass market
(unsegmented)
Segmented
market
Differentiation
© 2014 Alexander Chernev
Idiosyncratic market
(Unsegmented)
Agglomeration
Segmentation as a Process of Differentiation and Agglomeration
Mass market
(unsegmented)
Segmented
market
Differentiation
© 2014 Alexander Chernev
Idiosyncratic market
(Unsegmented)
Agglomeration
Segmentation and Targeting: The Big Picture
Strategic segmentation
(value-based)
Tactical segmentation
(profile-based)
Divide customers into
segments based on their
needs and resources
Identify customers'
demographic and
behavioral profile
Channel A
Channel C
Channel B
Strategic targeting
(value-based)
Decide whom to target
© 2014 Alexander Chernev
Tactical targeting
(profile-based)
Decide how to reach target
customers to communicate
and deliver the offering
Segmentation and Targeting: The Big Picture
Strategic segmentation
(value-based)
Tactical segmentation
(profile-based)
Divide customers into
segments based on their
needs and resources
Identify customers'
demographic and
behavioral profile
Channel A
Channel C
Channel B
Strategic targeting
(value-based)
Decide whom to target
© 2014 Alexander Chernev
Tactical targeting
(profile-based)
Decide how to reach target
customers to communicate
and deliver the offering
Key Segmentation Principles: Relevance
Correct
(relevant)
© 2014 Alexander Chernev
Incorrect
(irrelevant)
Key Segmentation Principles: Relevance
Correct
(relevant)
© 2014 Alexander Chernev
Incorrect
(irrelevant)
Key Segmentation Principles: Similarity
Correct
(homogeneous)
© 2014 Alexander Chernev
Incorrect
(heterogeneous)
Key Segmentation Principles: Similarity
Correct
(homogeneous)
© 2014 Alexander Chernev
Incorrect
(heterogeneous)
Key Segmentation Principles: Exclusivity
Correct
(mutually exclusive)
© 2014 Alexander Chernev
Incorrect
(non-exclusive)
Key Segmentation Principles: Exclusivity
Correct
(mutually exclusive)
© 2014 Alexander Chernev
Incorrect
(non-exclusive)
Key Segmentation Principles: Comprehensiveness
Correct
(collectively exhaustive)
© 2014 Alexander Chernev
Incorrect
(not exhaustive)
Key Segmentation Principles: Comprehensiveness
Correct
(collectively exhaustive)
© 2014 Alexander Chernev
Incorrect
(not exhaustive)
Identifying Target Customers, Developing a Value Proposition, and
Positioning
Primary
benefit
Value
Identifying
target customers
© 2014 Alexander Chernev
Developing a
value proposition
Positioning
Identifying Target Customers, Developing a Value Proposition,
and Positioning
Primary
benefit
Value
Identifying
target customers
© 2014 Alexander Chernev
Developing a
value proposition
Positioning
Value as a Function of Customer Needs and Offering Attributes
Customer
needs
© 2014 Alexander Chernev
Customer
value
Company
offering
Value as a Function of Customer Needs and Offering Attributes
Customer
needs
© 2014 Alexander Chernev
Customer
value
Company
offering
Dimensions of Customer Value
Customer
value
© 2014 Alexander Chernev
Functional value
Functional benefits
Functional costs
Monetary
value
Monetary benefits
Monetary costs
Psychological
value
Psychological benefits
Psychological costs
Dimensions of Customer Value
Customer
value
© 2014 Alexander Chernev
Functional value
Functional benefits
Functional costs
Monetary
value
Monetary benefits
Monetary costs
Psychological
value
Psychological benefits
Psychological costs
Reference-Point Dependence
Perceived
value
Gains
Reference
point
Actual performance
Losses
© 2014 Alexander Chernev
Reference-Point Dependence
Perceived
value
Gains
Reference
point
Actual performance
Losses
© 2014 Alexander Chernev
Loss Aversion
Perceived
value
Value of a
gain
Actual performance
Value of a
loss
© 2014 Alexander Chernev
Loss Aversion
Perceived
value
Value of a
gain
Actual performance
Value of a
loss
© 2014 Alexander Chernev
Diminishing Marginal Value
Utility
(perceived value)
Attribute performance
© 2014 Alexander Chernev
Diminishing Marginal Value
Utility
(perceived value)
Attribute performance
© 2014 Alexander Chernev
The Value Function
Perceived
value
Actual performance
Source: Kahneman, Daniel and Amos Tversky (1979), “Prospect Theory:
An Analysis of Decision under Risk,” Econometrica, 47 (March), 263–91
© 2014 Alexander Chernev
The Value Function
Perceived
value
Actual performance
Source: Kahneman, Daniel and Amos Tversky (1979), “Prospect Theory:
An Analysis of Decision under Risk,” Econometrica, 47 (March), 263–91
© 2014 Alexander Chernev
Creating Superior Customer Value
Functional value
Value
Value
Customer
value
© 2014 Alexander Chernev
Monetary
value
Competitive
advantage
Creating Superior Customer Value
Functional value
Value
Value
Customer
value
© 2014 Alexander Chernev
Monetary
value
Competitive
advantage
Competitive Value Map
Customer
value
Competitive
advantage
Attribute 1
© 2014 Alexander Chernev
Attribute 2
Competitive
parity
Attribute 3
Company’s offering
Competitive offering A
Competitive offering B
Competitive
disadvantage
Attribute 4
Attribute 5
Competitive Value Map
Customer
value
Competitive
advantage
Attribute 1
© 2014 Alexander Chernev
Attribute 2
Competitive
parity
Attribute 3
Company’s offering
Competitive offering A
Competitive offering B
Competitive
disadvantage
Attribute 4
Attribute 5
Single-Benefit Positioning
Reason to
choose
Primary
benefit
Benefit 1
+
Benefit 2
Secondary
benefits
Benefit 3
Benefit 4
Benefit 5
© 2014 Alexander Chernev
Single-Benefit Positioning
Reason to
choose
Primary
benefit
Benefit 1
+
Benefit 2
Secondary
benefits
Benefit 3
Benefit 4
Benefit 5
© 2014 Alexander Chernev
Dual-Benefit Positioning
Reason to
choose
Primary
benefits
Benefit 1
Benefit 2
+
Secondary
benefits
Benefit 3
Benefit 4
Benefit 5
© 2014 Alexander Chernev
Dual-Benefit Positioning
Reason to
choose
Primary
benefits
Benefit 1
Benefit 2
+
Secondary
benefits
Benefit 3
Benefit 4
Benefit 5
© 2014 Alexander Chernev
Holistic Positioning
Reason to
choose
Benefit 1
Benefit 2
Benefit 3
Benefit 4
Benefit 5
© 2014 Alexander Chernev
Overall
benefit
Holistic Positioning
Reason to
choose
Benefit 1
Benefit 2
Benefit 3
Benefit 4
Benefit 5
© 2014 Alexander Chernev
Overall
benefit
Positioning Map
Attribute 1
Offering A
Offering B
Offering C
Attribute 2
Offering D
Offering E
© 2014 Alexander Chernev
Positioning Map
Attribute 1
Offering A
Offering B
Offering C
Attribute 2
Offering D
Offering E
© 2014 Alexander Chernev
The Three Dimensions of Company Value
Monetary
value
Company
value
Functional
value
Psychological
value
© 2014 Alexander Chernev
Monetary
goals
Strategic
goals
The Three Dimensions of Company Value
Monetary
value
Company
value
Functional
value
Psychological
value
© 2014 Alexander Chernev
Monetary
goals
Strategic
goals
Creating Company Value: The Key Profit Drivers
Price
Revenues
Current
customers
Volume
New
customers
Net income
Cost of
goods sold
Costs
Research and
development
Marketing
Other costs
© 2014 Alexander Chernev
New to the
category
Competitors’
customers
Creating Company Value: The Key Profit Drivers
Price
Revenues
Volume
Net income
Costs
Cost of
goods sold
Research and
development
Marketing
Other costs
© 2014 Alexander Chernev
Current
customers
New
customers
New to the
category
Competitors’
customers
Strategies for Growing Sales Volume
New customers
Customers new to
the category
Sales volume
Competitors’
customers
Current
customers
© 2014 Alexander Chernev
Market-growth
strategy
Steal-share
strategy
Market-penetration
strategy
Economic Value Analysis
Monetary
value
Company
value
Functional
value
Psychological
value
Strategic value
© 2014 Alexander Chernev
Monetizing
functional value
Monetizing
psychological value
Conflicts in Vertical Collaboration
Manufacturer
Distributor
Manufacturer
Distributor B
Distributor A
Customer
Customer
Vertical channel conflict
Horizontal channel conflict
© 2014 Alexander Chernev
Conflicts in Horizontal Collaboration
Collaborator
Company
Customer
© 2014 Alexander Chernev
Strategic Marketing Management (8th Edition)
Figures: Part III
© 2014 Alexander Chernev
Product and Service Management as a Value-Creation Process
Company
Customers
Product
Service
Competitors
Collaborators
Customer
value
OVP
Collaborator
value
The Optimal Value
Proposition
Context
Factors to consider
© 2014 Alexander Chernev
Company
value
Decision criteria
Branding as a Value-Creation Process
Company
Customers
Brand
Competitors
Collaborators
Customer
value
OVP
Collaborator
value
The Optimal Value
Proposition
Context
Factors to consider
© 2014 Alexander Chernev
Company
value
Decision criteria
Vertical Brand Extensions
Price
Upscale
extension
Price tier A
Price tier B
Price tier C
Core
offering
Downscale
extension
Benefits
© 2014 Alexander Chernev
Horizontal Brand Extensions
Price
Extension Core Extension
A
offering
B
Benefits
Category Category Category
A
B
C
© 2014 Alexander Chernev
Pricing as a Value-Creation Process
Company
Customers
Price
Competitors
Collaborators
Customer
value
OVP
Collaborator
value
The Optimal Value
Proposition
Context
Factors to consider
© 2014 Alexander Chernev
Company
value
Decision criteria
Incentives as a Value-Creation Process
Company
Customers
Incentives
Competitors
Collaborators
Customer
value
OVP
Collaborator
value
The Optimal Value
Proposition
Context
Factors to consider
© 2014 Alexander Chernev
Company
value
Decision criteria
Pull and Push Promotion Strategies
Push strategy
Pull strategy
Manufacturer
Manufacturer
Demand
Incentives
Communications
Retailer
Demand
Incentives
Communications
Customer
© 2014 Alexander Chernev
Demand
Retailer
Demand
Customer
Incentives
Communications
Communication as a Value-Creation Process
Company
Customers
Communication
Competitors
Collaborators
Customer
value
OVP
Collaborator
value
The Optimal Value
Proposition
Context
Factors to consider
© 2014 Alexander Chernev
Company
value
Decision criteria
Developing a Communication Plan
Goal
Strategy
Message
Media
Creative solution
Implementation
Control
© 2014 Alexander Chernev
Tactics
Distribution as a Value-Creation Process
Company
Customers
Distribution
Competitors
Collaborators
Customer
value
OVP
Collaborator
value
The Optimal Value
Proposition
Context
Factors to consider
© 2014 Alexander Chernev
Company
value
Decision criteria
Distribution Channel Structure
Company
Wholesaler
Customer
Direct channel
Retailer
Retailer
Customer
Customer
Indirect channels
Hybrid channel
© 2014 Alexander Chernev
Strategic Marketing Management (8th Edition)
Figures: Part IV
© 2014 Alexander Chernev
Steal-Share Strategy
Current users
New users
© 2014 Alexander Chernev
Market-Growth Strategy
Current users
New users
© 2014 Alexander Chernev
Market-Growth Strategy for a Superior Offering
Current users
New users
© 2014 Alexander Chernev
Market-Innovation Strategy
Current users
Current market
© 2014 Alexander Chernev
New users
New market
Defensive Marketing Strategies
Customer
costs
Move
upscale
Do
nothing
Launch
premium
offering
Increase
benefits
Move
downscale
Launch
economy
offering
Reduce
costs
Customer
benefits
Source: Hoch, Stephen J. (1996), “How Should National Brands Think
about Private Labels?” Sloan Management Review, 37 (2), 89–102
© 2014 Alexander Chernev
Product-Market Growth Matrix
Current customers
New customers
Current
products
Market
penetration
Market
development
New
products
Product
development
Diversification
Source: Ansoff, H. Igor (1979), Strategic Management.
New York, NY: John Wiley & Sons.
© 2014 Alexander Chernev
The SWOT Framework
Internal
factors
External
factors
© 2014 Alexander Chernev
Favorable
factors
Unfavorable
factors
Strengths
Weaknesses
Opportunities
Threats
Company
analysis
Market
analysis
Managing Sales Growth
New customers
Managing
adoption
Current
customers
Managing
usage
Managing Sales
Growth
© 2014 Alexander Chernev
The Adoption Funnel
Awareness
Attractiveness
Affordability
Availability
Purchase
© 2014 Alexander Chernev
Identifying Adoption Gaps
Attractiveness
gap
Affordability
gap
Purchase
gap
All target
customers
© 2014 Alexander Chernev
Aware of the
offering’s
existence
Perceive the
offering to be
attractive
Perceive the Have access to Purchased the
offering to be the offering
offering
affordable
Key Factors Influencing Consumption Quantity
Satisfaction
Usage
frequency
Purchase
Usage
quantity
Replacement
frequency
Availability
Consumption
variables
© 2014 Alexander Chernev
Repurchase
Identifying Consumption Gaps
Usage
quantity
gap
Replacement
frequency
gap
Purchased
the offering
© 2014 Alexander Chernev
Satisfied
with the
offering
Use the
offering
frequently
Use large
quantity per
occasion
Replace the Repurchase
offering
the offering
frequently
New Product Adoption
Individual
adoptions
Total
adoptions
Inflection
point
Speed of
diffusion
Inflection
point
Market
potential
Time
Time
Individual adoptions over time
© 2014 Alexander Chernev
Cumulative number of adoptions over time
New Product Adoption
Individual
adoptions
Total
adoptions
Inflection
point
Speed of
diffusion
Inflection
point
Market
potential
Time
Time
Individual adoptions over time
© 2014 Alexander Chernev
Cumulative number of adoptions over time
The Stage-Gate Approach for Minimizing Risk in New Product
Development
Stage 1
Stage 2
Stage 3
Stage 4
Stage 5
Stage 6
Idea
generation
Concept
development
Business
analysis
Product
development
Market
testing
Commercial
deployment
Gate 1
Idea
screening
© 2014 Alexander Chernev
Gate 2
Concept
screening
Gate 3
Business
review
Gate 4
Product
review
Gate 5
Market
review
Managing the Product Life Cycle
Sales
Introduction
Market size
Growth
Maturity
Decline
Time
Small
Moderate
Large
Moderate/Small
Market growth
Low
High
Low
Negative
Competition
Low
Moderate
High
Moderate/Low
Source: Levitt, Theodore (1965), “Exploit the Product Life Cycle,” Harvard
Business Review, 43, (November–December), 81–94.
© 2014 Alexander Chernev
Extending Product Life Cycle through Innovation
Sales
revenues
Third generation
Second generation
First generation
Time
Source: Christensen, Clayton (1997), The Innovator's Dilemma: When New
Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business School Press
© 2014 Alexander Chernev
Rogers’ Model of Adoption of Innovation
Number of
adoptions
Innovators
(2.5%)
Early adopters
(13.5%)
Early majority
(34%)
Late majority
(34%)
Laggards
(16%)
Time
(x)
(x-SD)
(x-2SD)
© 2014 Alexander Chernev
(x+SD)
Source: Rogers, Everett M. (1962), Diffusion
of Innovations. New York, NY: Free Press
Rogers’ Model of Adoption of Innovation
Number of
adoptions
Innovators
(2.5%)
Early adopters
(13.5%)
Early majority
(34%)
Late majority
(34%)
Laggards
(16%)
Time
(x)
(x-SD)
(x+SD)
(x-2SD)
Source: Rogers, Everett M. (1962), Diffusion
of Innovations. New York, NY: Free Press
© 2014 Alexander Chernev
Moore’s Technology Adoption Model
Number of
adoptions
The chasm
Enthusiasts
Visionaries
Early market
Pragmatists
Conservatives
Skeptics
Time
Mainstream market
Source: Moore, Geoffrey A. (1991), Crossing the Chasm: Marketing and Selling
High-Tech Products to Mainstream Customers. New York, NY: HarperBusiness
© 2014 Alexander Chernev
Moore’s Technology Adoption Model
Number of
adoptions
The chasm
Enthusiasts
Visionaries
Early market
Pragmatists
Conservatives
Skeptics
Time
Mainstream market
Source: Moore, Geoffrey A. (1991), Crossing the Chasm: Marketing and Selling
High-Tech Products to Mainstream Customers. New York, NY: HarperBusiness
© 2014 Alexander Chernev
Product-Line Positioning Map
Attribute 1
Offering A
Target A
Offering B
Offering C
Target C
Target B
Offering D
Target D
Offering E
Target E
© 2014 Alexander Chernev
Attribute 2
Product-Line Attribute Value Map
Value
Attribute 1
Attribute 2
Attribute 3
Attribute 4
Offering A
(Target A)
© 2014 Alexander Chernev
Offering B
(Target B)
Offering C
(Target C)
Offering D
(Target D)
Offering E
(Target E)
Product
line
Vertical Product-Line Extensions
Upscale
extension
Price
Core
offering
Downscale
extension
Benefits
© 2014 Alexander Chernev
Horizontal Product-Line Extensions
Price
Extension Core Extension
A
offering
B
Benefits
© 2014 Alexander Chernev
Product-Line Cannibalization
Existing
offerings
Existing
offering
A
A
Existing
offering
New
offering
A'
Loss of share due
to cannibalization
C
B'
B
Competitive
offerings
Single-offering
scenario
-
© 2014 Alexander Chernev
Competitive
offerings
Dual-offering scenario
without cannibalization
Competitive
offerings
Dual-offering scenario
with cannibalization
New
offering
Product-Line Cannibalization and the Price-Benefit Tradeoff
Price
Value-equivalence line
A
D
B
C
F
E
Benefits
© 2014 Alexander Chernev
The Fighting Brand Strategy
Price
Quality
Incumbent brand
Low-price
competitors
Fighting brand
Time
© 2014 Alexander Chernev
The Sandwich Strategy
Price
Quality
Incumbent
brand
Premium brand
Low-price
competitors
Fighting brand
Time
© 2014 Alexander Chernev
The Good-Better-Best Strategy
Price
Quality
Incumbent
brand
Best
Better
Low-price
competitors
Good
Time
© 2014 Alexander Chernev
Strategic Marketing Management (8th Edition)
Figures: Part V
© 2014 Alexander Chernev
The Business Model as a Value-Creation Process
Company
value
Customer
value
© 2014 Alexander Chernev
OVP
Collaborato
r value
Customer
value model
Collaborator
value model
Company
value model
Strategy
Tactics
Strategy
Tactics
Strategy
Tactics
Customer Value Model
Customer
value
Value proposition
Product
© 2014 Alexander Chernev
Service
Brand
Incentives
Price
Communication
Distribution
Collaborator Value Model
Collaborator
value
Value proposition
Product
© 2014 Alexander Chernev
Service
Brand
Incentives
Price
Communication
Distribution
Company Value Model
Company
value
Value proposition
Product
© 2014 Alexander Chernev
Service
Brand
Incentives
Price
Communication
Distribution
© 2014 Alexander Chernev
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