Download Chapter 1 Themes for Class Discussion

MKT452 Marketing Strategy, W’08
Web Slides, Ch. 7-13
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
7
Differentiation and Positioning
Positioning Concepts
three types of positioning concepts:
 Functional positions
 Solve problems
 Provide benefits to customers
 Get favorable perception by investors and lenders
 Symbolic positions
 Self-image enhancement
 Ego identification
 Belongingness and social meaningfulness
 Affective fulfillment
 Experiential positions
 Provide sensory stimulation
 Provide cognitive stimulation
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Steps in the Positioning Process
Exhibit 7.4 (1 of 2)
1. Identify competitive products
2. Identify determinant attributes for the current “product space”
3. Collect information from customers and potential customers
about determinant attributes.
4. Determine product’s current positioning
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Steps in the Positioning Process
Exhibit 7.4 (2 of 2)
5. Determine customers’ most preferred combination of
determinant attributes.
6. Examine the fit between preferences and current position
7. Write positioning statement or value proposition to guide
development and implementation of marketing strategy.
8. Position
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Positioning Statement for Volvo in
North America


For upscale American families, Volvo is the
family automobile that offers maximum
safety
Generic format for positioning statements:
For (target market), (brand) is the (product
category) that (benefit offered).
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
8
Marketing Strategies for
New Market Entries
Marketing Strategy: Introduction Stage.
Most important attributes at this stage are: Price & Promotion
Price
High
Low
Promotion
High
High-Profile
Strategy
Preemptive
Penetration
Strategy
Low
Selective
Penetration
Strategy
Low-Profile
Strategy
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Marketing Strategy: Introduction Stage.
1.High-Profile Strategy (High price-High Promotion)
When? - High control over offering
- Low fear of competition
2. Selective Penetration Strategy (High Price-Low Promotion)
When? - High profitability
- High fear of competition
3. Preemptive Penetration Strategy (Low Price-High Promotion)
When? - Strongly felt buyer need
- Easy competitive entry
4. Low-Profile Strategy (Low Price-Low Promotion)
When? - Current Production constraints
- Large potential market
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Profit per unit
(real dollars)
Product category sales
(real dollars)
How do opportunities evolve
over time?
Life cycle
extension
Profit/unit
Sales
Introduction
Growth
Maturity
Decline or
extension
Competitive
turbulence
Time (years)
Source: Reprinted with permission from p. 60 of Analysis for Strategic Marketing Decisions, by George Day. Copyright © 1986 by West Publishing
Company. All rights reserved.
Discussion Question
1.Is it better to be a market pioneer,
or a follower?
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Some Advice for Would-Be Pioneers

Being a pioneer without the basis for
sustainable competitive advantage is a
trap!

First mover advantage is trumped by
pioneers who are better. Best beats first.
Concentrate on being best.
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
9
Strategies for Growth Markets
High-Growth Market Circumstances.
1. Competitive Risk
- Overcrowding
- Superior competitive entry
2. Market Changes
- Changing KFSs (Key Success Factors)
- New Technology
- Disappointing Growth
3. Firm Limitations
- Resource constraints
- Distribution unavailable
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Marketing Strategies in the Growth Stage.
Major Objective: Sustain rapid market share growth as long as
possible
Means:
 Improve product quality
 Add new product features and models
 Vigorously seek new market segments
 Explore additional distribution channels
 Shift promotional emphasis from building product awareness to
conviction and product purchase
 Create brand preference
 Decide n the right time to lower prices to attract the next layer of
price-sensitive buyers into the market
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Customer Retention Strategies.







Value innovation (additions, enhancements,
subtractions reductions)
Reconfigure targets
Increase availability
Loyalty rewards
Improve CRM
Engage customers
etc.
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Discussion Question
4. If you want to be a follower
(challenger), what are your
strategic options?
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Discussion Question
5. How do you capture competitors’
customers?
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Some Advice for Followers

Differentiation is key for followers




Better benefits
Better service
Lower price
Beware of competing on price, however,
unless your costs really are lower than
competitors’
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
10
Strategies for
Mature and Declining Markets
Marketing Strategies in the Maturity Stage.
1. Market Modification
2. Product Modification
3. Marketing Mix Modification
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Marketing Strategies in the Maturity Stage.
Overall Objective: Defend Market Share
1. Market Modification
- New markets and market segments
- Increased usage
- Repositioning
2. Product Modification
- Quality improvement
- Functional improvement
- Feature improvement
- Style improvement
- Re-launch
3. Marketing Mix Modification
- Price
- Promotion
- Distribution
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Innovating for Mature Markets
To Increase Revenues
 Line Extension Innovation
 Marketing Mix/Execution Innovation
 Experiential Innovation
To Reduce Costs
 Process Innovation
 Integration Innovation
 Business Model Innovation
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Some Advice for Marketers in
Mature Markets



Don’t give up - think strategically. Most of
the world’s leading companies and brands
serve mature markets.
A key imperative: maintain the satisfaction
and loyalty of existing customers
Find avenues for market growth: someone
will, so it might as well be you!
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Marketing Strategies in the Decline Stage.
1. Continuation Strategy
- Continue past marketing strategy
- Let product decline
- Drop product eventually
2. Concentration Strategy
- Concentrate resources in strongest markets only
- Phase out efforts elsewhere
3. Milking Strategy
- Sharply reduce marketing effort
- Increased current profits
- Accelerated sales decline
- Drop product
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Some Advice for Marketers in Declining
Markets

Again, don’t give up - think strategically.
Money can be made in declining markets,
depending on market conditions.

Others’ desire to exit can be your chance to
grow, if you believe the market will survive.
Look for opportunities to acquire your
competitors for little or no cash. This can
improve industry attractiveness.
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Profits Through Product Renaissance
When is a Product “Ripe” for Redesign?
1. Profit slipping:
Redesign to reduce costs or justify price increase
2. Market Share Declining:
Redesign to keep present customers and attract new ones
3. Steady Sales:
Redesign to boost sales
4. No Recent Changes:
Why hasn’t a product changed over certain time period?
Procedure:
- Reexamine Highest cost components
- Prepare a one-hour report on What the typical customer is looking for?
- What product features is the competition knocking most?
- Hear competitor’s sales pitch (if possible)
- Re-examine basic product concept (the customer only cares about what your product
does - not how it is done)
- Does the product have the right semiotics?
- Get customers’ ideas for product improvement
Important:
- Be creative and open-minded
- Try to minimize departmental rivalries
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
11
Marketing Strategies for
the New Economy
The ‘Old’ vs. the ‘New’ Economies. 1/2
ISSUES
ECONOMY-WIDE
Markets
Competition
Organizational form
Structure
Source of value
‘OLD ECONOMY’
‘NEW ECONOMY’
Stable
National
Hierarchical bureaucratic
Manufacturing core
Raw materials, physical
capital
Dynamic
Global
Networked
Services Core
Human and social capital
Mass production
Capital and labor
Mechanization
Economies of scale
Low-moderate
Go-it-alone
Flexible production
Innovation and knowledge
Digitization
Innovation, quality, speed
High
Alliances, collaboration,
Outsourcing
BUSINESS
Production
Drivers of growth
Technology driver
Competitive advantage
Research/innovation
Inter-firm relations
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
The ‘Old’ vs. the ‘New’ Economies. 2/2
Source: Progressive Policy Institute, Washington, DC
ISSUES
CONSUMERS/WORKERS
Tastes
Skills
Education needs
Workplace relations
Nature of employment
‘OLD ECONOMY’
‘NEW ECONOMY’
Stable
Job-specific skills
Craft or degree
Adversarial
Stable and secure
Changing rapidly
Broad skills, adaptability
Life-long learning
Collaborative
Marked by risk and
opportunity
Impose regulations
Encourage growth
opportunities
Market tools, flexibility
Enabling state
GOVERNMENTS
Business-government
relations
Regulation
Government services
Command and control
Nanny state
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Seven key elements of new-economy
technologies: are they advantages or
disadvantages?







Syndication of information
Increasing returns to scale of networks
Personalization and customization
Disintermediation
Global reach
24x7 access
Instantaneous delivery
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
12
Organizing and Planning for Effective
Implementation
Implementing the Strategy.
Involves:





Allocating sufficient resources (financial, personnel, time,
computer system support)
Establishing a chain of command or some alternative structure
(such as cross-functional teams)
Assigning responsibility of specific tasks or processes to specific
individuals or groups
Managing the process: monitoring results, comparing to
benchmarks and best practices, evaluating the efficacy and
efficiency of the process, controlling for variances, and making
adjustments to the process as necessary.
Implementing specific programs involves acquiring the requisite
resources, developing the process, training, process testing,
documentation, and integration with (and/or conversion from)
legacy processes
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
SBU Autonomy
Prospector
- relatively high level
Differentiated
defender
- moderate level
Low-cost defender
- relatively low level
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Shared Programs and Synergy
Prospector
Differentiated
defender
Low-cost
defender
- relatively little
- little synergy in areas
central to differentiation
- high level of synergy and
shared programs
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Evaluation and Reward Systems
Prospector
- high incentives based
on sales and share growth
Differentiated
defender
- high incentives based
on profits or ROI
Low cost defender
- incentives based on
profits or ROI
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Organizational Structure.
Important structural variables include:
- Formalization
- Centralization
- Specialization
-
-
Functional organization
Product line organization
Market-based organization
Regional organization
Matrix organization
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
The Formal Marketing Plan.
•
Total product and/or service plan
•
•
Distribution plan
•
•
Decisions regarding product delivery to
customers
Pricing plan
•
•
Decisions affecting the total product
Setting an acceptable value on the product
Promotional plan
•
Communicating information to the target
market
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
13
Marketing Metrics for
Marketing Performance
The Control Process
(Exhibit 13.2.)
Setting standards of performance
Specifying the necessary feedback data
Obtaining the needed control data
Evaluating feedback data -- explaining gap
between actual and given standards of performance
Taking corrective action
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
The Contingency Planning Process
Identify critical assumptions about the future
Assign probability of each critical assumption’s being right
Rank order critical assumptions
Track/monitor action plan
Set triggers to activate contingency plan
Specify alternative response options
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
(Exhibit 13.14)
Some Advice on Designing Control
Systems for Managing Marketing
Performance


A well-designed control system can provide
competitive advantage. Ask yourself, “What
critical data do my competitors have, and
when?” Can I compete based on better or
more timely information?
“What gets measured gets done.” Measure
the things you want your people to pay
attention to.
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Marketing Audit.
“Marketing audit is a comprehensive,
systematic, independent, and periodic
examination of a company’s—or business
unit’s—marketing environment, objectives,
strategies, and activities with a view to
determining problem areas and
opportunities and recommending a plan of
action to improve the company’s marketing
performance”
Philip Kotler
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Characteristics of Marketing
Audit.

Comprehensive


Systematic


Sequential diagnostic steps
Independent


Must cover all marketing areas
Internal & external auditors
Periodic

Performed at regular intervals
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.
Marketing Audit Procedure.








Marketing environment audit
Marketing strategy audit
Marketing organization audit
Marketing system audit
Marketing productivity audit
Marketing function audit
Marketing excellence review
Ethical and social responsibility review
Copyright 2008 by The McGraw-Hill
Companies, Inc. All rights reserved.