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CASEBOOK
Note:
A company can either introduce a product in a market where it has no presence or
can extend product line in its current market. Launching a product in a market with
no presence pose not only operational challenges but viability of product’s success
in the market also needs to be explored. Extending the product line in current
market may require looking into cannibalization while doing a feasibility check of
product in the market and how the current value chain can be leveraged in making
the product available to its customers
Gather Context
Increasing sales does not necessarily mean increase profits
Growth relative to industry
Market Share by value and volume
Customer inputs on their wants
Price benchmarking with competition
Actions of competitors in Product development and marketing
Problem statement
Our company wants to introduce anti-smoking pills which are similar to patches
and lozenges that curb the urge to smoke. The product is nicotine free and is
proved to be much more effective (almost three times) as compared to the
available options in the lab results. Please help us with a strategy to introduce
these pills in the market
Analysis
STP followed by Marketing Mix is used* to describe the strategy for new
product (anti-smoking pills) entry in the market
STP ANALYSIS
*Some of the other thought frameworks discussed above can also be used
•Unlike the patches and lozenges, pills are completely nicotine free which makes it
different from competition
PRODUCT •Quality of the product is higher which is also proved by the lab test results
• Available at usual drug stores and given only when prescription is available
• Also directly available at some of the hospitals and medical institutions
PLACE
• Since, the efficiency is more and we intend for premium positioning; value based pricing
approach to be taken
• Willingness of the customer will help in determining the price. Can be priced atleast
PRICE three times higher than the available options
•Direct sales agents and medical representatives will target the doctors and chemists
•Training of the sales agents is required to target doctors as the drug is a prescription
drug
PROMOTION • Communications can be also done through the healthcare applications
Problem statement
Ranbaxy has come up with a new cure for baldness. It is a pill that can re-grow
your hair to the thickness of when you were 15 year old within 3 months. The drug
called IPP2 has to be taken every day for it to work. How would you price it?
Analysis
Porter’s five forces used to analyse the industry followed by pricing strategy
PRICING
For pricing we can use either Cost Plus pricing, Value Based pricing or
Competitive pricing
Finally, we can combine these results with the results from our cost plus
pricing to figure out our price.
Marketing Casebook IIM, Ahmedabad | 11
EXAMPLE 3: SALES GROWTH
Starbucks
Problem statement
Wall Street wants Starbucks sales to grow annually by 30% for the next 5 year. The
“Street” has been Starbucks to open more coffee shops but coffee retailer feels
that it has exhausted all areas where it could grow. What should Startbucks do?
Identify the relevant “THOUGHT FRAMEWORK”
Analysis
Example: The steps in the process have also been adapted to the development
of internet security systems and company business plans.
Following are the GD topics in the form of a case. Use relevant frameworks
discussed above as well as refer the appendix to solve the cases.
ABC Capital has the two investment options. Details are provided below.
Pick one.
1. XYZ Jeans is manufacturer of custom denim pants. It has recently
developed a proprietary technique for taking measurements of the
customers quickly. These measurements are stored in their database
and used for any repeat orders. This disruptive innovation allows the
customers to acquire customized jeans with exact fit.
With the help of effective supply chain management, XYZ has a lead time
of 10 days. The average industry lead time is 6 weeks.
XYZ is charging 30% more for this service than its competitors.
Within 3 years, XYZ is expected to capture 20% of the 200 million $
market for denim pants given that the current technology in the market
prevails.
Investment required to achieve these goals is 10 million $.
2. EFG Co. is in the aviation business and manufactures twin engine planes.
They have patented a fuel injection system which promises greater
efficiency in fuel usage. This system is expected to be commercially
available in 5 years. The market for the system can vary between 200 to
300 units. Unit price is 15 million $.
Production cost for 300 units is 100 million $. As aviation is a regulated
industry, prior to the delivery, Government testing is done to ensure
compliance with the rules prevalent at that time.
Rank the characters mentioned in the case on the basis of their morality or
ethics in the context of the case.
1) PORTER’S 5 FORCES
In general, competition has been looked at too narrowly by managers. There is
a broad set of competitors that need to be looked at, which are described in
“Five Competitive Forces that Shape Strategy” by Michael Porter.
The intensity of Porter’s five competitive forces: threat of entrants, bargaining
power of buyers, bargaining power of suppliers, threat of substitution and
rivalry among existing competitors determine the long-run profitability of the
industry. Each of these forces can differently affect the profitability in different
industries. For instance, the power of buyers can be higher in one industry
than another. There are different factors that affect each of these forces. For
example, low level of switching costs increases the bargaining power of buyers
and suppliers vis-à-vis incumbents, high capital requirements restrict the
entries barriers, etc.Business managers can use this model to better
understand the market context
3) PULL STRATEGY
Pull strategy’ refers to the customer actively seeking out your product and
retailers placing orders for stock due to direct consumer demand. A pull
strategy requires a highly visible brand which can be developed through mass
media advertising or similar tactics. If customers want a product, the retailers
will stock it – supply and demand in its purest form, and this is the basis of a
pull strategy. Create the demand, and the supply channels will almost look
after themselves.
Examples of pull tactics
Advertising and mass media promotion
Word of mouth referrals
Marketing Casebook IIM, Ahmedabad | 17
Customer relationship management
Sales promotions and discounts
Designed by Philip Kotler, the Price Quality Matrix centers on the cross-section
between the two metrics that lend the model its name. By determining the
position of your products or services relative to the competition, retailers are
able to use the price and quality of each item to identify where they stand in
the market.
When developing new products think of the price strategy before the
product is completed. Ask yourself, what are you trying to achieve? The cost-
plus pricing model has long gone as we expect goods and services to be
appropriately priced. One marquee hire company I worked with offered high
quality service and a very low price which was a superb-value strategy. It didn’t
work. Research showed that potential customers were suspicious and didn’t
place orders with them as they thought the product quality was low because
the price was low. They raised their prices adopting a high value strategy and
increased sales by 40%. When they introduce a new product, such as fans and
heaters, these follow the same premium pricing strategy. Be realistic and
research perceptions. ' If it sounds too good to be true then it usually is'. It's
essential to fit our price to the product's perceived quality.
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In recent years, product pricing has become a bigger issue than ever before,
thanks to the dynamic created by increased automation and the expansion of
online retailers. However, by developing a better understanding of the
connection between price and quality as described by Kotler’s model, you can
use the psychological aspects of product pricing to create a trust with
customers that will ultimately reap long-term rewards. Simply asking yourself
where each of your product offerings fits within the above categories can
shape a clearer vision of where you fit within the marketplace and the
possibilities for growth that lie ahead of you.
DRIP Marketing
This model helps a business to understand how a buyer adopts and engages
with new products or technologies over time. Companies will use it when
launching a new product or service, adapting it or introducing an existing
product into a new market.
How to use the Diffusion of Innovation- If you are launching a new tech
product, such as software, you can use this model which will help with
identifying the marketing materials needed for each group.
The STP model is useful when creating marketing communications plans since
it helps marketers to prioritise propositions and then develop and deliver
personalised and relevant messages to engage with different audiences.
strengths weaknesses
opportunities threats
The Product Life Cycle (PLC) describes the stages of a product from launch to
being discontinued.
Growth Here, the product is being bought and with volume, the price
declines. Distribution increases and promotion focuses on product benefits
Maturity Here, the product competes with alternatives and pricing drops.
Distribution becomes intense (it’s available everywhere) and promotion
focuses on the differences to competitors’ products.
Decline The product is reaching the end of its life and faces fewer
competitors. The price may rise and distribution has become selective as
some distributors have dropped the product. Promotion aims to remind
customers of its existence.
The marketing mix is about putting the right product or a combination thereof
in the place, at the right time, and at the right price. The difficult part is doing
this well, as you need to know every aspect of your business plan. The
following graphic shows the key elements of the 7Ps marketing mix.
7Ps are an extension of the 4Ps (Product, Promotion, Price, and Place) which
were designed at a time where businesses sold products, rather than services
Marketing Casebook IIM, Ahmedabad | 24
and the role of customer service in helping brand development wasn't so well
known. 4P’s referred to. The 7Ps helps companies to review and define key
issues that affect the marketing of its products and services and is often now
referred to as the 7Ps framework for the digital marketing mix.
Companies can use the 7Ps model to set objectives, conduct a SWOT analysis
and undertake competitive analysis. It's a practical framework to evaluate an
existing business and work through appropriate approaches whilst evaluating
the mix element as shown below (taking the example of Hubspot) and ask
yourself the following questions:
The AIDA Model identifies cognitive stages an individual goes through during
the buying process for a product or service. It's a purchasing funnel where
buyers go to and fro at each stage, to support them in making the final
purchase. It helps companies plan how and when to communicate during each
of the stages as consumers will be using different platforms, engaging at
different touchpoints and requiring different information throughout the
stages from various sources.
Let us understand the stages and the questions we should ask ourselves by
seeing how an award-winning hairdressing company, Francesco Group(FG)
used the model to launch their new salon.
Q: How will we gain their interest? What is our content strategy? Social
proof available to back up our reputation? How do we make this
information available and where ? ie. on website, via videos, customer
ratings,
FG: Executed a direct mail campaign to offer a free consultation or hair cut
and finish. They used research to support that this would work, as females
are loyal if the offer is compelling.
FG: Close to the opening of the new salon, they ran exclusive local launch
events which was advertised through local press and social media. This
created a local buzz for 'people wanting an invite' and excited to see the
new salon.
Action: CTA - Move the buyer to interacting with your company and taking
the next step ie. downloading a brochure, making the phone call, joining
your newsletter, or engaging in live chat etc.
Q: What are the call to actions and where do we place them? Is it easy for
consumers to connect and where would they expect to find it? Think about
which marketing channel/platform you are using and how to engage ie.
across emails, website, landing pages, inbound phone calls etc.
FG: Clear CTAS were positioned on the Facebook site (call to reserve), the
website (call to book) and local advertising (call in to receive discount or the
offer.
The RACE mnemonic summarises the key online marketing activities that need
to be managed as part of digital marketing
2 ACT Act is short for Interact. It's about persuading site visitors or prospects
take the next step, the next Action on their journey when they initially reach
your site or social network presence
14) SOSTAC ®
Hard Factors
Soft Factors