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Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
Chapter 1
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2/9/2012
Objectives
Pivotal role of market-driven strategy in designing and implementing business/marketing strategies Links between business/marketing strategy and corporate strategy Challenges in the modern environment
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Determine the impact of changes on customer satisfaction Increase the rate of product innovation Pursue strategies to create competitive advantage
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Market Orientation
Information Acquisition Gather relevant information on customers, competition, and markets Involve all business function Inter-functional Assessment Share information and develop innovative products with people from different function Shared diagnosis and action Deliver superior customer value
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DISTINCTIVE CAPABILITIES
Capabilities are complex bundles of skills and accumulated knowledge, exercised through organizational processes, that enable firms to coordinate activities and make use of their assets.
George S. Day, Journal of Marketing, October 1994, p.38.
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Capabilities
Disproportionate (higher) contribution to superior customer value
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Capabilities
Desirable Capabilities
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Types of Capabilities
Outside-In Processes Spanning Processes
Inside-Out Processes
Organizations Process
EXTERNAL EMPHASIS Outside-In Processes Spanning Processes
Market sensing Customer linking Channel bonding Technology monitoring Customer order fulfillment Pricing Purchasing Customer service delivery New product/service development Strategy development
Source: George S. Day, Journal of Marketing, October 1994, 41.
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Distinctive Capabilities
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Creating Value:
Customer value is the outcome of a process that begins with a business strategy anchored in a deep understanding of customer needs.
Source: C. K. Troy, The Conference Board Inc., 1996, 5.
Benefits
Costs
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Value Composition
Product Services
Employees
Benefits
Value (gain/loss) Costs (sacrifices)
Image
Monetary costs
Time
Psychic and physic costs
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CORPORATE STRATEGY
Deciding the Scope and Purpose of the Business Business Objectives
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II.
The market target may be defined demographically (key characteristics only), geographically, or in social/economic terms. Each market target should have needs and wants that differ to some degree from other targets. These differences may be with respect to types of products purchased, use situation, frequency of purchase, and other variations that indicate a need to alter the positioning strategy to fit the needs and wants of each target. An objective is a quantified goal identifying what is expected when. It specifies the end results expected. The objectives should be written for each target market. Objectives should also be included for the following program components: (1) product, (2) price, (3) distribution, (4) promotion (salesforce, advertising, sales promotion, and public relations), and (5) technical services.
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B.
Price Strategy
The overall pricing strategy (I.e., competitive, premium-priced, etc.) should be identified along with a cost/benefit analysis if applicable. Identify what role you want price to play, i.e., increase share, maintenance, etc.
C.
Distribution Strategy
Describe specific distribution strategies for each market target. Issues to be addressed are intensity of distribution (market coverage), how distribution will be accomplished, and assistance provided to distributors. The role of the sales force in distribution strategy should also be considered.
D.
Promotion Strategy
Promotion strategy is used to initiate and maintain a flow of communication between the company and the market target. To assist in developing the communications program, the attributes or benefits of our product should be identified for each market target. How our product differs from competition (competitive advantage) should be listed. The sales forces responsibilities in fulfilling the market plan must be integrated into the promotion strategy. Strategies should be listed for (1) personal selling, (2) advertising, (3) sales promotion, and (4) public relations.
E.
V.
VI. VII.
Marketing Research Describe the market research problem and the kind of information needed. Include a statement which addresses why this information is needed. The specific market research strategies can be written once the above two steps have been followed. Coordination with Other Business Functions Indicate other departments/functions that have responsibilities for implementing the marketing plan. Sales Forecasts and Budgets Contingency Plans Indicate how your plans should be modified if events should occur that are different from those assumed in the plan.
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Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
Chapter 2
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Traditional Competitors
New Customers
AN ARRAY OF CHALLENGES
Disruptive Innovation
Commoditization Threats
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Form the Product-Market Describe and Analyze End-Users Analyze Competition Forecast Market Size and Rate of Change
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INNOVATION FEATURE
Progressive Insurance: Customer Needs at the Center of Strategy
In the period 1994 to 2004, Progressive Insurance increased sales from $1.3 billion to $9.5 billion, and ranks high in the Business Week Top 50 U.S. companies for shareholder value creation. The company invents new ways of providing services to save customers time, money and irritation, while often lowering costs at the same time. Loss adjusters are sent to the road accidents rather than working at head office, and they have the power to write checks on the spot. Progressive reduced the time needed to see a damaged automobile from seven days to nine hours. Policy holders cars are repaired quicker, and the focus on this central customer need has won much automobile insurance business for Progressive. These initiatives also enable Progressive to reduce its own costs the cost of storing a damaged automobile for a day is $28, about the same as the profit from a six-month policy.
Source: Adapted from Mitchell, Adrian (2004)Heart of the Matter, The Marketer, June 12, 14.
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1. Start with the generic need satisfied by the product category of interest to management 2. Identify the product categories (types) that can satisfy the generic need 3. Form the specific product markets within the generic product market
SUPER MARKETS
MICROWAVE OVENS
FAST-FOOD MARKET
CONVENIENCE STORES
TRADITIONAL RESTAURANTS
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Cereals
Product Type
Ready to eat
Regular Natural Nutritional Pre-sweetened
Variant A Variant B
Life
Product 19
Special K
Brands
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Environmental Influences
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Environmental Influences
External factors influencing buyers needs and wants: Government, social change, economic shifts, technology etc. These factors are often noncontrollable but can have a major impact on purchasing decisions
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ANALYZING COMPETITION
1. Define the Competitive
Arena for the Generic, Specific, and Variant Product Markets
4. Identify
and Evaluate Potential Competitors
3. Evaluate
Key Competitors
Product from competition: Product category diet colas competition: Juices soft drinks
Coffee
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Industry Analysis
Industry size, growth, and composition Typical marketing practices Industry changes that are anticipated (e.g. consolidation trends) Industry strengths and weaknesses Strategic alliances among competitors
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Competitive Forces
1. Rivalry among existing firms. 2. Threat of new entrants. 3. Threat of substitute products. 4. Bargaining power of suppliers. 5. Bargaining power of buyers.
Source: Michael E. Porter, Competitive Advantage, Free Press, 1985, 5.
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Current Capabilities
Competitor Evaluation
Customer Satisfaction
Past Performance
Unrealized Potential
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2005
2006
2007
2008
2009
2010
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Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
Chapter 3
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Operational Segmentation
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ASPIRATIONS TV CHOICE
MAGAZINES
ADS
BRANDS
Source: Anthony Bianco, The Vanishing Mass Market, Business Week, July 12 2004, 58-62
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SEGMENTS
POSITIONING STRATEGY
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Form Segments
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Purchase behavior
Segmentation Variables
Purchase Behavior
Buyers Needs/ Preferences
Characteristics of People/ Organizations
Use Situation
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Use situation
Purchase behavior
Approaches to segment identification Customer group identification Forming groups based on response differences
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Favorable cost/benefit
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16% of buyers
27% of buyers
Homebodies
Price Shoppers
Brand E
Low Quality
GROUP I
GROUP II
Brand A
High Quality
Brand B
GROUP V
GROUP III GROUP IV
Brand D
Brand C
Inexpensive
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Customer Analysis
Financial and Market Attractiveness
Competitor Analysis
Positioning Analysis
Low
Attractive segments but with poor match with company capabilities Unattractive segments that do not match with company capabilities
High
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Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
Chapter 3
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Operational Segmentation
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ASPIRATIONS TV CHOICE
MAGAZINES
ADS
BRANDS
Source: Anthony Bianco, The Vanishing Mass Market, Business Week, July 12 2004, 58-62
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SEGMENTS
POSITIONING STRATEGY
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Form Segments
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Purchase behavior
Segmentation Variables
Purchase Behavior
Buyers Needs/ Preferences
Characteristics of People/ Organizations
Use Situation
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Use situation
Purchase behavior
Approaches to segment identification Customer group identification Forming groups based on response differences
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Favorable cost/benefit
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16% of buyers
27% of buyers
Homebodies
Price Shoppers
Brand E
Low Quality
GROUP I
GROUP II
Brand A
High Quality
Brand B
GROUP V
GROUP III GROUP IV
Brand D
Brand C
Inexpensive
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Customer Analysis
Financial and Market Attractiveness
Competitor Analysis
Positioning Analysis
Low
Attractive segments but with poor match with company capabilities Unattractive segments that do not match with company capabilities
High
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Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
CHAPTER 4
McGraw-Hill/Irwin
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4-3
4-4
THE CUSTOMER
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4-5
4-6
Other Stakeholders
CRM STRATEGY
3
Business Case
Customer Strategy
Source: V. Kumar and Werner J. Reinartz, Customer Relationship Management (Hoboken, NJ: John Wiley & sons, Inc.), 2006, 42.
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4-7
IMPLEMENTATION DANGERS
Implementing Without Developing a Customer Strategy Failing to Initiate Necessary Organizational Change Allowing Technology to Dominate the CRM Process Focusing on the Wrong Customers
4-8
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4-9
METRICS FEATURE
Happy (And Not-So-Happy) Customers General Electric is a big user of the Net Promoter concept of customer satisfaction, popularized by Fred Reichheld of Bain & Co. Below, questions similar to those on which GEs Capital Solutions unit asks customers to rate the units performance on a 0 10 scale. How willing are you to recommend us to a friend or associate? How would you rate our ability to meet your needs? How would you rate our people? How would you rate our processes? What is your impression of our market reputation? How would you rate the cost of doing business with us? How would you rate the overall value of our product or service as being worth what you paid?
Source: Kathryn Kranhold, Client-Satisfaction Tool Takes Root, The Wall Street Journal, July 10, 2006, B3.
4-10
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4-11
CRM
STRATEGIC MARKETING
From the perspective of strategic marketing, there are several reasons why CRM is important and why there should be extensive marketing involvement in decisions about CRM. Importantly, an organizational perspective is needed in guiding the CRM strategy.
Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
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Chapter 5
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Research Objectives
Research Questions
Planned Outcomes
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Database
Display
Analysis Capabilities
Models
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Neuromarketing
Magnetic resonance imaging (MRI) Pictures response of brain to stimuli Probing consumer preferences is controversial Invasive Privacy issues Information sharing
Insurance companies Employers Law enforcement
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Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
CHAPTER 6
Market Targeting and Strategic Positioning
Market Targeting Strategy Targeting in Different Market Environments Positioning Strategy Developing the Positioning Strategy Determining Positioning Effectiveness
McGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
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SEGMENTS VALUE OPPORTUNITES CAPABILITIES/ SEGMENT MATCH TARGET(S) POSTIONING FOR EACH TARGET
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Selective Targeting
Extensive Targeting
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Emerging Market
Buyer Diversity Segmentation limited due to similarity of buyers preferences Industry Structure Typically small new organizations Limited access to resources Capabilities and Resources Unique benefit (differentiation) strategy rather than low-cost First-mover advantage Targeting Strategy Single target or a few broad segments
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Growth Market
Buyer Diversity Segments should exist Industry Structure Numerous competitors Capabilities and Resources Survival requires aggressive actions by firms that seek large market positions Otherwise select one or a few market segments Targeting Strategy Three possible strategies 1. Extensive market coverage by firms with established businesses in related markets 2. Selective targeting by firms with diversified product portfolios 3. Very focused targeting strategies by small organizations serving one or a few market segments.
Mature Markets
Buyer Diversity
Segmentation essential for competitive advantage
Industry Structure
Intense competition for market share Emphasis on cost and service, and pressures on profits
Targeting Strategy
Deciding which segment to serve Firms pursuing extensive targeting strategies may decide to exit from certain segments
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Global Markets
Global Reach and Standardization Identify market segments that span global markets and serve these needs with global positioning strategies Local Adaptation Consider requirements of domestic buyers Buyers needs and preferences affected by social, political, cultural, economic, and language differences Industry Structure Restructuring, acquisitions, mergers, and strategic alliances altering industries and competition Targeting Strategy Targeting a single country, regional (multinational) targeting, or global targeting
GLOBAL FEATURE
Tesco announced plans to open a chain of convenience stores on the U.S. West Coast in 2007, spending an estimated $453 M. The very successful retailer has four types of stores, including the convenience chain, Tesco Express. This initiative is being launched even though the U.S. retail grocery market is experiencing intense competition, and some chains are cutting back or selling out. Tescos decision to enter the U.S. convenience market is bold and risky. Some authorities consider the action questionable. However, Tesco has a very impressive success record in Britain. With its Tesco Express, Tesco Metro, Superstore, and Extra hypermarkets, the giant retailer has dulled Wal-Marts drive to dominate the retail scene. Tesco has no brand awareness in the U.S. so building brand identity will be challenging. Yet the retailer has global buying power, powerful information technology, and strong supply chain capabilities. The stores will offer groceries, produce, and private-label ready-to-eat meals. Some observers think Tesco is planning to compete with Wal-Mart in its home market.
Source: Kerry Capell, Tesco: California Dreaming? BusinessWeek, February 27, 2006, 38.
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POSITIONING STRATEGY
Deciding the desired perception/ association of an organization/ brand by market target buyersand designing the marketing program to meet (and exceed) buyers value requirements.
MARKET TARGET
POSITIONING EFFECTIVENESS How well managements positioning objectives are achieved for the market target POSITIONING STRATEGY The combination of marketing actions used to communicate the positioning concept to targeted buyers
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Desired result
Gain a relevant, distinct, and enduring position by the targeted buyers that they consider important.
INNOVATION FEATURE
Its 1:30 p.m. on a Monday in the bustling H&M store on Manhattans fifth Avenue, and Alma Saldana, a 28-year-old makeup artist from Houston, is stuffing three tiny vests into her black Y&M shopping bag. Thats on top of blouses, jackets, and pants. Saldana is in a buying frenzy. This is her first visit to H&M, the Stockholmbased fashion retailer, and its everything she had hoped for. Somebody told me you find great fashion at a very cheap price, and its true! she exclaims. Such enthusiasm has made H&M one of the hottest fashion companies around. Central to its success is its ability to spot shifts in demand and respond with lightning speed. While traditional clothing retailers design their wares at least six months ahead of time, H&M can rush items into stores in as little as three weeks. Most of the work is done ahead, too. But when it sees consumers scooping up something like vests, it speeds a slew of new variations into stores within the same season, to the delight of shoppers like Saldana. Speed is important. You need to have system where you can react in a short lead time with the right products, says Chief Executive Rolf Eriksen.
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How does it work? H&M designers had included a couple of cropped vests in their autumn/winter collections. In august, shortly after the vests went on sales, they started flying out of the stores, say Margareta van den Bosch, H&Ms head of design. H&Ms designers in Stockholm (it has more than 100) spotted the trend in the companys worldwide sales reports, published internally every Monday. About half of them immediately started sketching new styles. As quickly as designs came off their desks, pattern makers snipped and pinned, pressing employees into service as live models. At the same time, buyers ordered fabrics. The designs were zoomed electronically to workers at H&Ms production offices in Europe and Asia, which then selected manufacturers that could handle the jobs quickly. In less than two months most H&M stores had 5 to 10 new vest styles in stock. One of the secrets to H&Ms speed is decisiveness. The people in charge of each collection can dream up and produce new fashions on their own authority. Only huge orders require approval from higher ups. We have a flat organization. We have a shorter way to a decision, says Sanna Lindberg, president of H&M Hennes & Mauritz USA. That makes H&M fashionable in more ways than one.
Source: Steve Hamm, SPEEDDEMONS, BusinessWeek, March 27, 2006, 70-71.
The Perception or Association that Management Wants Buyers to Have Concerning the Brand
Symbolic
SELECTING THE POSITIONING CONCEPT
Functional
Experiential
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Positioning Issues
1. The positioning concept applies to a
specific brand rather than all the competing brands that compose a product classification 2. The concept is used to guide positioning decisions over the life of the brand 3. Multiple concepts are likely to confuse buyers and may weaken the effectiveness of positioning actions
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The positioning strategy indicates how (and why) the product mix, line, or brand is to be positioned for each market target. This strategy includes:
The product strategy, indicating how the product(s) will be positioned against the competition in the product-market. The value chain (distribution) strategy to be used. The pricing strategy, including the role and positioning of price relative to competition. The advertising and sales promotion strategy and the objectives these promotion components are expected to achieve. The sales force strategy, direct marketing strategy, and the Internet strategy, indicating how they are used in the positioning strategy.
The marketing offer (product, distribution, price, and promotion) is both distinct and valued in the minds of the customers in the market target.
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Test Marketing
Customer and Competitor Research Research Studies Preference Maps Test Marketing Generates information about commercial feasibility and marketing program Provides market (sales forecasts) and effectiveness measures Positioning Models Incorporates research data into formal models of decision analysis
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Positioning Errors
Under-positioning customers have only vague ideas about the company and do not perceive anything distinctive about it Over-positioning Customers have too narrow an understanding of the company, product, or brand Confused positioning Frequent changes and contradictory messages confuse customers Doubtful positioning claims made for the product or brand are not regarded as credible
Positioning in Perspective
Positioning is a central part of business strategy Positioning analysis starts with an understanding of the value proposition for the target segment Value-driven positioning is the objective Positioning seeks to differentiate the organizations offer from the competition Positioning seeks to create a unique perception in buyers minds of the target market segment Positioning is the unifying dimension of marketdriven strategy
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Positioning usually means that an overt decision is being made to concentrate only on certain segments. Such an approach requires commitment and discipline because its not easy to turn your back on potential buyers. Yet, the effect of generating a distinct, meaningful position is to focus on the target segments and not to be constrained by the reaction of other segments.
Source: Aaker and Shansby, Business Horizons, May-June 1982, 61.
Positioning Impact
Substantial changes in resource allocation, (e.g. advertising expenditures Changes in product strategy, methods of distribution, and promotional strategies may be necessary. Positioning strategy must be developed for each new target. Product, distribution, price, and promotion strategies may be affected. Primary impact on channel, pricing and promotion strategies. Positioning strategies must be developed (or acquired for the new business areas. Operating relationships and assignment or responsibilities must be established.
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Positioning Strategy
Promotion Strategy
Market Target
Distribution Strategy
Price Strategy
Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
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Chapter 7
Strategic Relationships
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Strategic relationships
End-User Customers Suppliers Joint Ventures Strategic Alliances Intermediate Customers Competitors
Strategic Relationships
External Partners Internal Partners
Strategic Relationships
The rationale for interorganizational relationships Forms of organizational relationships Managing interorganizational relationships Global relationships among organizations
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Environmental complexity
Competitive strategy
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Airline Alliances
Major global alliances Oneworld Skyteam Star Alliance Contain 18 of the worlds largest airline Account for 60% of total world airline capacity But a history of alliance failures and desertions
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Organizational Change
Relationship Strategies
Positioning with Distinctive Competencies
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Internal partnerships
Firm
Lateral partnerships
Customer relationships
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Partnering Capabilities
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Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
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INNOVATION FEATURE
Managing Googles Idea Factory
As director of consumer Web products Marissa Mayer is a champion of innovation. She favors new product launches that are early and often. She joined Google in early 1999 as a programmer when the workforce totaled 20. By 2007 Google had 5,700 employees with expected sales of $16 billion.
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BIG BRAINSTORMS
As it has grown, Google has cut back on brainstorming sessions. Mayer still has them eight times a year, but limits hers to 100 engineers. Six concepts are pitched and discussed for 10 minutes each. The goal: to build on the initial idea with at least one complementary idea per minute.
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OPPORTUNITIES
(1) New Products (2) Improvements (3) New and Improved Processes
TRANSFORMATIONAL Break-through innovation Digital photography NEW PRODUCT CATEGORY Dell Nike Printers Apparel Golf clubs
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STEP 1 Technology and information become commoditized and globalized. Suddenly, the advantage of making things faster, cheaper, better diminishes, and profit margins decline. STEP 2 With commoditization, core advantages can be shipped abroad. Outsourcing to India, China, and Eastern Europe sends a growing share of manufacturing and even the Knowledge Economy overseas. STEP 3 Design Strategy begins to replace Six Sigma as a key organizing principle. Design plays a key role in product differentiation, decision-making, and understanding the consumer experience.
Source: Bruce Nussbaum, How to Build Innovation Companies, BusinessWeek, August 1, 2005, 62-63.
STEP 4 Creative innovation becomes the key driver of growth. Companies master new design thinking and metrics and create products that address consumers unmet, and often unarticulated, desires. STEP 5 The successful Creative Corporation emerges, with new Innovation DNA. Winners build a fast-moving culture that routinely beats competitors because of a high success rate for innovation.
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Leveraging Capabilities
STRATEGIC INITIATIVES
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The Innovation Strategy Spells Out Managements Priorities for New Product Opportunities
1. Set specific New Product Objectives. 2. Communicate the role of New Products throughout the organization. 3. Define the areas of strategic focus: Product Scope Markets Technologies 4. Include longer term discontinuous projects in the portfolio along with incremental projects.
Source: Robert Cooper, Benchmarking New Product Performance, European Management Journal, Feb. 1998, 1-7.
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Finance
Coordination of new product activities by a highlevel general manager Inter-functional coordination by a team of new product planning representatives Creation of a project task force responsible for new product planning Designation of a new products manager to coordinate planning between departments Formation of matrix structure for integration new product planning with business functions Creation of a permanent design center
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IDEA GENERATION
Idea search: targeted or open-ended? How extensive and aggressive? What specific sources are best for generating a regular flow of new product ideas? How can new ideas be obtained from customers? Where will responsibility for the new product ideas search be placed? What are potential threats from alternative (or disruptive) technologies?
Creative Methods
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Comstock has a role whose importance is spreading throughout Big Business that of innovation champion. She began by studying the best practices at companies such as Procter & Gamble, FedEx, and 3M. She brought in a raft of creativity consultants, futurists, and design gurus to lead sessions with different operations. Their names were jolting for GE types: Play, a Richmond (VA.) group that helps execs think differently, and Jump, based in San Mateo, CA., which researches how people use things. GE is expanding its army of designers to bring businesses closer to customers. And Comstock is staging dreaming sessions where Immelt, senior execs, and customers debate future market trends. Comstock concedes some managers view the workshops as a waste of time. We have a long way to go, she says. But for GE, theres no turning back.
Source: Bruce Hussbaum, How to Build Creative Companies, BusinessWeek, August, 2005, 77.
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SCREENING, EVALUATING, AND BUSINESS ANALYSIS IDEA GENERATION SCREENING (fit/feasibility) CONCEPT EVALUATION BUSINESS ANALYSIS
Business Analysis
Revenue Forecasts Preliminary Marketing Plan Cost Estimation Profit Projections Other Considerations
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Does it have the required attributes? Verify claims PURPOSE OF USE TESTS Identify use situations Ideas for improvements
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COMMERCIALIZATION
The Marketing Plan Complete marketing strategy Responsibilities for execution Cross functional approach Monitoring and Control Real time tracking Role of the Internet Include product performance metrics with performance targets
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Marketing Strategy
Market Target(s)
Objectives
Marketing Program(s)
VARIATIONS IN THE GENERIC NEW PRODUCT PLANNING Technology Push Processes Platform Products Process Intensive Products Customized Products
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Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
Chapter 9
McGraw-Hill/Irwin
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STRATEGIC BRAND MANAGEMENT A product is anything that is potentially valued by a target market for the benefits or satisfaction it provides, including objects, services, organizations, places, people, and ideas
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A brand is a name, term, design, symbol, or any other feature that identifies one sellers good or service as distinct from those of other sellers.
American Marketing Association
A compelling logic has been proposed that the distinction between goods and services should be replaced by a view that services are the dominant perspective in the 21st century, consisting of both tangible and intangible components.*
*Stephen LVargo and Robert F. Lusch, Evolving to a New Dominant Logic for Marketing, Journal of Marketing, January 2004, 1-17.
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FOR SELLERS, BRANDS CAN FACILITATE: repeat purchases that enhance the companys financial performance because the brand enables the customer to identify and re-identify the product compared to alternatives, the introduction of new products, because the customer is familiar with the brand from previous buying experience, promotional effectiveness by providing a point of focus, premium pricing by creating a basic level of differentiation compared to competitors, market segmentation by communicating a coherent message to the target audience, telling them for whom the brand is intended and for whom it is not, brand loyalty, of particular importance in product categories where loyal buying is an important feature of buying behavior.
Source: Marketing Science Institute Report No. 97-422, 1997
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GLOBAL FEATURE
Sir Howard Stringer, a Welsh-born American citizen, was appointed CEO of Sony, the troubled Japanese electronics giant in 2005. Sonys past strategic brand management initiatives had failed to close the digital gap between software/services/content/ devices. During the CEOs first year several cost reduction and portfolio initiatives were implemented to launch the turnaround strategy: The Aibo, a beloved robotic pet, was put to sleep. They shut down the Qualia line of boutique electronics that included a $4,000 digital camera and a $13,000 70-inch television. They eliminated 5,700 jobs and closed nine factories, including one in south Wales. (He took some flak back home for that). They have sold $705 million worth of assets. You probably dont know that Sony owned a chain of 1,221 cosmetics salons and the 18 Japanese outlets of the Maxims de Paris restaurant chain. Theyre gone. Gone, too, is a group of salary-men in their 60s, 70s, and 80s who, after retiring from senior management positions, were given the title of advisor, a tradition established by Sonys founders. That was very symbolic, says Hideki (Dick) Komivama, a Sony executive and key ally of Stringers. The 45 advisors each had a secretary, a car and driver, and worst of all, the ability to gum up decision-making and second-guess people doing real jobs. No more.
Source: Marc Gunther, The Welshman, the Walkman, and the Salary Men, Fortune, June 12, 2006, 72.
Competition
Brand(s)
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Determining the length and rate of change of the PLC Identifying the current PLC stage and selecting the product strategy that corresponds to that stage Anticipating threats and finding opportunities for altering and extending the PLC
Product Performance Analysis Managements performance criteria Strengths and weaknesses relative to portfolio Brand Positioning Analysis Perceptual maps for brand comparison Buyer preferences Other Product Analysis Methods Information Services Research studies Financial analysis
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BRAND EQUITY
Company/Customer Value of Brand Name and Symbol of a Product
Brand Equity
Effective strategic brand management requires that we understand brand equity and evaluate its impact when making brand management decisions: Brand equity is a set of brand assets and liability linked to a brand, its name, and symbol, that add to or subtract from the value provided by a product or service to a firm and/or to that firms customers.*
* David A. Aaker, Managing Brand Equity, The Free Press, 1991, 15. **Ibid, 102-120.
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Measuring Brand Equity. Several measures are needed to capture all relevant aspects of brand equity.** loyalty (price premium, satisfaction/loyalty), perceived quality/leadership measures (perceived quality, leadership/popularity), associations/differentiation (perceived value, brand personality, organizational associations), awareness (brand awareness), and market behavior (market share, price and distribution indices). These components provide the basis for developing operational measures of brand equity.
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Line of Products
Combination Branding
Corporate Branding
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Source: David A. Aaker, Building Strong Brands, New York: The Free Press, 1996, 241-242.
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STRATEGY FEATURE
Ten years ago apparel represented 70% of Limiteds sales. By 2005 70% of sales were from skin-care products, cosmetics, and lingerie Clothes are increasingly out of fashionafter declines for 3 years, U.S. apparel sales increased only 4% in 2004 to $172.8 billion. Apparel $ sales declines are due to discount pricing and households spending more on electronics, home improvement, and spa services. Limited is trying to make itself over as a high-end Procter & Gamble. Victorias Secret is adding hair and cosmetics lines to its beauty business (has 3 of the top 10 selling fragrances in the U.S.).
Sources: Limited Brands 2005 Annual Report; Value Line; and Amy Merrick, For Limited Brands Clothes Become the Accessories, The Wall Street Journal, March 8, 2005, A1 and A14.
One new product is Tutti Dolci (all sweets), food inspired scentslotion and lip gloss in fragrances like lemon meringue, angel-food cake, and chocolate fondue. Victorias Secret has also accelerated new product development. From 2003 through 2005 Intimate Brands (lingerie and beauty products) accounted for all the corporations operating income. Limited is also partnering with other companies to sell its brands and develop new products. Limited has three business groups: Beauty and Personal Care Lingerie Apparel Apparel is a continuing challenge with 2004 operating margins @ 1.4% compared to over 19% for Bath & Body Works and Victorias Secret. Limited has about 3700 stores. 2005 sales were nearly $9.7 billion with net profits at $51 million.
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BRAND EXTENSION
LEVERAGING ALTERNATIVES
LINE EXTENSIONS
BRAND EXTENSIONS
Another Product Class Range Brand CoBranding
Horizontal Extension
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Core Brand
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MOVING A BRAND UP
THE DRIVERS
Enhanced Margins at the High End Energy & Vitality Enhance Credibility and Prestige of the Brand
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CO-BRANDING
Co-branding (dual branding) involves two or more established brands making a joint offer of their product brands The participants brand names are identified on the good or service. Several different forms Component co-branding (Volvo and Michelin) Same company co-branding Alliance co-branding (Delta and American Express) Ingredient co-branding
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Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
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Chapter 10
McGraw-Hill/Irwin
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Dells dilemma
Business built around powerful direct business model Direct model poor fit with customer preferences in new target markets and weak on service Dell is braodening business model
Targeting computer re-sellers Global retail strategy (including Wal-Mart, Dellbranded stores, kiosks in malls)
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Supply Chains
Sales Agents
Direct Channel
Wholesalers
Wholesalers
Retailers
Retailers
Retailers
Consumers
Supply Chains
Sales Agents
Sales Agents
Direct Channel
Distributors
Distributors
Distributors
Re-sellers
Organizational Customers
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Purchases are large and infrequent Small number of geographically concentrated buyers Supporting services are required
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1. Type of distribution channel Conventional Vertical marketing system Administered/ Relationship Horizontal marketing system
Ownership
Intensive
Exclusive
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42,000 units Production Of Central Heating Boilers 5,000 units Direct sales = 1,000 units Small Hardware Retailers Large Hardware Retailers
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Value-added competencies Sales forecast (2 years) Forecast accuracy Estimated costs Selling Expense (cost/sales) Flexibility Control *
Includes 8% commission plus management time for recruiting and training representatives.
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2. Identification of Value Streams and Removal of Muda (Waste) 3. Organizing Around Flow, Instead of Batch and Queue 4. Responding to Pull Through the Supply Chain
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Channel metrics
Performance Objective Possible Measures Applicable Product and Channel Level
PRODUCT AVAILABILITY Coverage of relevant retailers In-store positioning Percent of effective distribution Percent of shelf facings or display space gained by product, weighted by store importance Frequency of sales calls by customer type; average delivery time Consumer products at retail level Consumer products at retail level
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Channel metrics
Performance Objective Possible Measures Applicable Product and Channel Level
PROMOTIONAL EFFORT Effective point-ofpurchase (POP) promotion Percent of stores Consumer products using special at retail level displays and POP materials, weighted by importance of store Percent of Industrial products; salespeoples time consumer durables at all devoted to product; channel levels; consumer number of salespeople convenience goods at receiving training on wholesale level products characteristics and applications
Channel metrics
Performance Objective Possible Measures Applicable Product and Channel Level CUSTOMER SERVICE Installation, training and repair Number of service technicians receiving technical training; monitoring of customer complaints Industrial products, particularly those involving high technology; consumer durables at retail level
MARKET INFORM,ATION Monitoring sales trends, inventory levels, competitors actions Quality and timeliness of information obtained All levels of distribution
COST-EFFECTIVENESS Cost of channel Functions relative To sales volume Middleman margins and marketing costs as percent of sales All levels of distrbution
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International channels
Examining international distribution patterns Factors affecting global channel selection Global issues regarding multichannel strategies
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Exporter
Importer
Foreign retailer
Foreign consumer
Source: Philip R. Cateora, International Marketing, 7th ed., Homewood, Ill.: Richard D. Irwin, Inc., 1990, 572.
Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
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CHAPTER 11 PRICING STRATEGY Strategic Role of Price Analyzing the Pricing Situation Selecting the Pricing Strategy Determining Specific Prices and Policies
McGraw-Hill/Irwin
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Product strategy
Positioning Strategy
Value-Chain strategy
Pricing strategy
Promotion strategy
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Pricing Situations New product pricing Life cycle pricing Changing positioning strategy Countering competitive threats
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Examples of Pricing Objectives Gain market position Achieve financial performance Product positioning Stimulate demand Influence competition
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Product Costs
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Perceived Value
A B E
Perceived Price
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Competitor Analysis
Which firms represent the most direct competition Competitors positioning on a relative price basis Competitors success with their pricing strategies Competitors probable responses to alternative price strategies
SELECTING THE PRICING STRATEGY How much flexibility exists? How to position price relative to costs? How visible to make the price of the product?
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Demand
Competition
Demand-Cost Gap
Pricing Objectives
Costs
Price Ceiling Nature of demand in target market Business and marketing strategy Product differentiation Competitors prices Prices of substitutes Price Floor Product costs
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Above Competition
Skim strategy
Below Competition
Penetration strategy
Signaling
Source: Thomas T. Nagle, Price Competition, Marketing Management, Vol. 2, No. 1, 38-45.
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DETERMINING SPECIFIC PRICES AND POLICIES Selecting Specific Prices Policies to Manage Pricing Strategy Special Pricing Issues
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Cost
Demand
Competition
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The more that the competitors and customers know about your pricing, the better off you are. In an information age, it is necessary to be transparent about prices and the value of a firms offerings. In highly competitive markets, the focus should be on those market segments that provide opportunities to gain competitive advantage. Such a focus leads to a value-oriented pricing approach. Pricing decisions should be made within the context of an overall marketing strategy that is embedded within a business or corporate strategy. Successful pricing decisions are profit oriented, not sales volume or market share oriented.
2.
3.
4.
Source: Adapted from Kent B. Monroe, Pricing, 3rd ed. (Burr Ridge, IL.: McGraw-Hill/Irwin, 2003) 624-6.
10.
Prices should be set according to customers perceptions of value. Pricing for new products should start as soon as product development begins. The relevant costs for pricing are the incremental avoidable costs. A price may be profitable when it provides for incremental revenues in excess of incremental costs. A central organizing unit should administer the pricing function. Generally, it is better to avoid letting salespeople set price, especially without access to profitability information and specific training in pricing and revenue management. Pricing management should be viewed as a process and price setting as a daily management activity, not a once-a-year activity.
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Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
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CHAPTER 12
Promotion, Advertising, and Sales Promotion Strategies Promotion Strategy Advertising Strategy Sales Promotion Strategy
McGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
PROMOTION STRATEGY
The Composition of Promotion Strategy Developing Promotion Strategy Communications Objectives Deciding the Role of the Promotion Components Determining the Promotion Budget Promotion Component Strategies Integrating and Implementing the Promotion Strategy Effectiveness of Promotion Strategy
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Promotion Strategy:
planning, implementing, and controlling an organizations communications to its customers And other target audiences.
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$600 $400
Advertising
$200 0
INTERNET FEATURE
SEARCH WORKS Google and Yahoo! Have demonstrated the power of the Web by using customers search queries to connect them with advertisers. CUSTOMERS ARE ONLINE More than half of American households have always-on Net connections. And the Web reaches millions at the office. The Big Three portalsYahoo, AOL, and MSNreach a combined 50 million a day-twice the TV audience of a World Series game. VIDEO ROCKS The adoption of broadband, which can handle videos, lets advertisers put TV-like ads online. Longer spots by BMW and Adidas have reached cult status. As demand for video soars, portals sell choice slots in advance, much like TVs up-front sales. FEEDBACK IS INSTANT Marketers and online publishers have tools to track an ads performance in real time allowing them to make quick adjustments if customers arent clicking. This turns the Net into a vast marketing lab. And as video grows, it becomes a test bed for TV ads. CUSTOMERS LEAVE TRAILS It was an empty promise during the dot-com days, but now advertisers have the technology to follow customers, click by click, and to hit them with relevant ads. The upshot? No wasted money peddling dog food to cat owners.
Source: Stephen Baker, The On-Line Ad Surge, BusinessWeek, November 22, 2004, 79.
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PROMOTION BUDGET
Coordination with Product, Distribution, and Price INTEGRATE AND IMPLEMENT PROMOTION Strategies
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Budgeting Approaches
Percent of Sales
Budgeting Methods
Features
Percent of Sales Fixed percent of sales, often based on past expenditure patterns.
Limitations
Percent of Sales The method is very arbitrary. Budget may be too high when sales are high and too low when sales are low. Comparative Parity Differences in marketing strategy may require different budget levels.
Objective and Task Set objectives and then determine tasks (and costs) necessary to meet the objectives.
Objective and Task The major issue in using this method is deciding the right objectives so measurement of results is important.
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Number and dispersion of buyers Buyers information needs Size and importance of purchase Distribution
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ADVERTISING STRATEGY
Setting Objectives and Budgeting Creative Strategy Media/Scheduling Decisions Role of the Advertising Agency Program Implementation and Measuring Effectiveness
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Advertising Strategy
Target Audience Advertising Objectives Advertising Budget
Creative Strategy
Advertising Media and Programming Schedules Evaluate the Effectiveness of the Strategy
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Advertising Objectives
Expose communication to target audience Create awareness
Change attitude(s)
Increase Sales
Generate profits
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Budget Determination
OBJECTIVE AND TASK METHOD HAS THE MOST SUPPORT
*At constant rate of exchange **Gucci division of Gucci Group Data: Company reports. BW
Vuitton increased advertising 20% in 2003spends only 5% of revenues on advertisingabout half the industry average
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CREATIVE STRATEGY
The creative strategy is guided by the market target and the positioning strategy.
Product
Distribution
Price
Promotion Advertising
(How to communicate intended positioning to buyers and others influencing the purchase.)
Provide a unifying concept that binds together the various parts of the advertising campaign.
Creative Strategy
Media/Scheduling Decision
Television Radio Magazines Online Website Outdoor
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Favorable zone
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Advertising Budget
Creative Strategy
Advertising Agency
Advertising Media and Programming Evaluate the Effectiveness of the Strategy
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Controlled Tests
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STRATEGY FEATURE
Consumers hate the hassles, companies love unredeemed rebates, and regulators are investigating the consumer complaints. As much as 40% of rebates never get redeemed. Some 400 million rebates are offered each year with a total value of $6 billion. Unclaimed rebates translate into more than $2 billion of extra revenue for retailers and their suppliers each year. Complex filing rules and long delays discourage consumers. Companies emphasize the filing processes are intended to discourage fraud. The largest rebate processor monitors 10,000 addresses suspected of submitting bogus rebates. Rebates offer companies an opportunity to promote small discounts without marking the products down. Rebates have become very popular with computer and consumer-electronics companies.
The value of rebates has also increased. Regulators are intensifying their scrutiny of the companies offering rebates. The developing back-lash against rebates is pushing some companies to halt rebate strategies. Others are encouraging online filing. Fulfillment houses are revising their processing systems, using computer technology to validate claims. Consumers would like mail-in rebates to go away but want the best price they can get.
Source: Brian Grow, The Great Rebate Runaround, BusinessWeek, December 5, 2005, 34, 36, and 37.
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Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
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CHAPTER 13
McGraw-Hill/Irwin
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RELATIONSHIP FEATURE
During the 2000s Boeing experienced an intense competitive battle against Airbus for control of the commercial jetliner market. Airbus was winning the battle until 2005 when Boeings Asia-Pacific jet sales were $26 billion compared to Airbus $9 billion. Under a new CEO management gave salespeople much more control over selling strategy compared to previous tight and rigid control by top management. Boeing lost many sales to Airbus because of top managements unwillingness to give competent professionals flexibility in negotiating sales. Salespeople like Larry Dickenson, Boeings top salesman who covers the Asia-Pacific market, builds on over 18 years of relationships with airlines like Cathay Pacific, Quantas Airways Ltd., and Singapore Airlines, Ltd., to negotiate winning contracts. Importantly, Dickenson carefully plans and executes each sales campaign, overseeing every detail in the process that may span several years. The strategy is a combination of attractive pricing, financing, and leasing arrangements in combinations with training and service packages.
Source: Stanley Holmes, Boeings Jet Propellant, BusinessWeek, December 26, 2005, 40.
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SALES STRATEGY
Pricing Strategy
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Consulting-Type Relationships
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Source: Mark W. Johnston and Greg W. Marshall, Sales Force Management, McGraw-Hill/Irwin, 2003, 51-56.
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Organizational Structure
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Geography-Driven design
ProductDriven design
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INTERNET FEATURE
Salesforce.com is an interesting example of a dot-com start-up which has developed a successful business model supplying customer management software over the Net for use by salespeople. A key feature of the software is that it is sold as a service to customers at a monthly charge for each individual user. Salesforce.com has nearly 450,000 subscribers @ 22,700 companies worldwide. Salesforce.com illustrates how Internet information technology can enhance the capabilities and efforts of salespeople. By replacing large up-front software purchases with monthly service charges, Salesforce.com offers customers a compelling value opportunity. Since this feature can be duplicated by software competitors such as Siebel Systems, Oracle, and PeopleSoft, Salesforce.com may have difficulty sustaining its competitive edge. CEO Marc Benioff launched a new product initiative in 2005 intended to strengthen Salesforce.coms competitive edge. AppExchange is an online market place enabling software firms and customers to trade and sell applications they develop. There will be no charge for the eBay like service but Benioff expects to expand demand for the firms software.
Source: Salesforce.com website and An eBay for Business Software, BusinessWeek, September 19, 2005, 78-79.
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40
Current level
35
Maximum profit contribution level
30
25
Gross profit contribution
20
Selling expense
15
10
60
70
Number of salespeople
80
90 100 110
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STRATEGY FEATURE
Wyeths changes in the sales organization are driven by concerns of physicians about duplicated sales coverage and the need to improve salesforce productivity. The prior approach of multiple salespeople calling on doctors to market the same drugs is being changed. Out of Wyeths salesforce of 5000, about half call on primary-care doctors. As many as 750 nay be cut or reassigned. The selling strategy is to reduce the frequency of sales calls, while making each more worthwhile. Initiatives include assigning each salesforce responsibility for more drugs, reducing sales calls on the doctors who write the fewest prescriptions, and utilizing a part-time sales force for coverage of selected accounts, and use of Internet-based seminars.
Source: Scott Hensley, Wyeth to Revamp, Cut Its Sales Force, The Wall Street Journal, June 20, 2005, A3, A6.
Performance Standards
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Performance Huddles
Sales Structure
Keeping Score
INTERNET STRATEGY
Strategy Development Deciding Internet Objectives E-Commerce Strategy Value Opportunities and Risks Measuring Internet Effectiveness The Future of the Internet
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Communication Tool
Value-Chain Channel
Creating Awareness and Interest Information Dissemination Obtaining Research Information Brand Building Improving Customer Service
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DIRECT MARKETING
Kiosk Shopping Catalogs
Electronic Shopping
DIRECT MARKETING
Direct Mail
Radio/Magazine/ Newspaper
Telemarketing Television
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Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
Chapter 14
McGraw-Hill/Irwin
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Organization costs
Cadbury Schweppes - worlds largest confectionery business Restructuring at cost of $900 million Organizational structure has become too complex with too many overlaps Organizational costs account for 20% of turnover - compared to 12% at competitors Reorganization is central to regaining competitiveness
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Employee motivation
MySpace Generation
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Specialist resource groups support process Managers e.g. functional departments, business units, external collaborators Resource Group Leadership
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Back-end Units
Product customers
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Marketing departments
Centralization versus decentralization Integration or diffusion Contingencies for organizing Evaluating organizational designs
Organizing Concepts
Centralized Formalized Nonspecialized
BUREAUCRATIC
Internal (hierarchical) Organization of Activity
TRANSACTIONAL
External (market) Organization of Activity
ORGANIC
RELATIONAL
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Matrix
TRADITIONAL DESIGNS
MarketFocused
ProductFocused
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Product-Focused Structure
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Customer Service
Customer Database
Marketing Research
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Source: Ravi S Achrol, Evolution of the Marketing Organization: New Forms for Turbulent Environments, Journal of Marketing, October 1991, 88.
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Strategic Marketing
1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control
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Chapter 15
McGraw-Hill/Irwin
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II.
The market target may be defined demographically (key characteristics only), geographically, or in social/economic terms. Each market target should have needs and wants that differ to some degree from other targets. These differences may be with respect to types of products purchased, use situation, frequency of purchase, and other variations that indicate a need to alter the positioning strategy to fit the needs and wants of each target. An objective is a quantified goal identifying what is expected when. It specifies the end results expected. The objectives should be written for each target market. Objectives should also be included for the following program components: (1) product, (2) price, (3) distribution, (4) promotion (salesforce, advertising, sales promotion, and public relations), and (5) technical services.
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IV.
A.
Product Strategy
Identify how each product fits the market target. Other issues that may be addressed would be new product suggestions, adjustments in the mix of existing products, and product deletion candidates.
B.
Price Strategy
The overall pricing strategy (I.e., competitive, premium-priced, etc.) should be identified along with a cost/benefit analysis if applicable. Identify what role you want price to play, i.e., increase share, maintenance, etc.
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IV.
C. Distribution Strategy Describe specific distribution strategies for each market target. Issues to be addressed are intensity of distribution (market coverage), how distribution will be accomplished, and assistance provided to distributors. The role of the sales force in distribution strategy should also be considered. D. Promotion Strategy Promotion strategy is used to initiate and maintain a flow of communication between the company and the market target. To assist in developing the communications program, the attributes or benefits of our product should be identified for each market target. How our product differs from competition (competitive advantage) should be listed. The sales forces responsibilities in fulfilling the market plan must be integrated into the promotion strategy. Strategies should be listed for (1) personal selling, (2) advertising, (3) sales promotion, and (4) public relations.
E.
Marketing Research Describe the market research problem and the kind of information needed. Include a statement which addresses why this information is needed. The specific market research strategies can be written once the above two steps have been followed.
V.
Coordination with Other Business Functions Indicate other departments/functions that have responsibilities for implementing the marketing plan.
VI. VII.
Sales Forecasts and Budgets Contingency Plans Indicate how your plans should be modified if events should occur that are different from those assumed in the plan.
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Process Consistency
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Implementation process
Activities to be implemented
IMPLEMENTATION PROCESS
Improving Implementation
Skilled Implementers Effective Communications Organizational Design
Improving Implementation
Internal Marketing Incentives
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Internal Marketing
Strategy Plan
Internal Marketing Program: Targeted at key groups in the company, alliance partner companies, and other influencers
External Marketing Program Targeted at key customers, segments and niches, and other external influencers
Customer Measures
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Evaluation Activities
Find New Opportunities or Avoid Threats Solve Specific Problems Keep Performance on Target
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