copyright 2008 by the mcgraw-hill companies, inc. all rights reserved. mkt452 marketing strategy,...

Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

MKT452 Marketing Strategy, W’08

Web Slides, Ch. 7-13

Differentiation and Positioning

7


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


Steps in the Positioning Process

Exhibit 7.4 (1 of 2)

1. Identify competitive products1. Identify competitive products

2. Identify determinant attributes for the current “product space”2. Identify determinant attributes for the current “product space”

3. Collect information from customers and potential 3. Collect information from customers and potential customers about determinant attributes.customers about determinant attributes.

4. Determine product’s current positioning4. Determine product’s current positioning


Steps in the Positioning Process

Exhibit 7.4 (2 of 2)

5. Determine customers’ most preferred combination of 5. Determine customers’ most preferred combination of determinant attributesdeterminant attributes..

6. Examine the fit between preferences and current position6. Examine the fit between preferences and current position

7. Write positioning statement or value proposition to guide 7. Write positioning statement or value proposition to guide development and implementation of marketing strategy.development and implementation of marketing strategy.

8. Position8. Position


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).

Marketing Strategies for

New Market Entries

8


Marketing Strategy: Introduction Stage.

Price

High Low

Pro

mo

tion High

Low

High-Profile Strategy

Preemptive Penetration

Strategy

Selective Penetration

Strategy

Low-Profile Strategy

Most important attributes at this stage are: Price & Promotion


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

How do opportunities evolve

over time?

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.

Time (years)

Pro

du

ct c

ateg

ory

sal

es(r

eal d

olla

rs)

Pro

fit

per

un

it(r

eal d

olla

rs)

Profit/unitSales

Life cycleextension

GrowthCompetitiveturbulence

Maturity Decline orextension

Introduction


Discussion Question

1.Is it better to be a market pioneer, or a follower?


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.

Strategies for Growth Markets

9


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


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


Customer Retention Strategies. Value innovation (additions, enhancements,

subtractions reductions) Reconfigure targets Increase availability Loyalty rewards Improve CRM Engage customers etc.


Discussion Question

4. If you want to be a follower (challenger), what are your strategic options?


Discussion Question

5. How do you capture competitors’ customers?


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’

Strategies for

Mature and Declining Markets

10


Marketing Strategies in the Maturity Stage.

1. Market Modification

2. Product Modification

3. Marketing Mix Modification


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


Innovating for Mature MarketsTo Increase Revenues

Line Extension Innovation Marketing Mix/Execution Innovation Experiential Innovation

To Reduce Costs Process Innovation Integration Innovation Business Model Innovation


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!


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


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.


Profits Through Product RenaissanceWhen is a Product “Ripe” for Redesign?

1. Profit slipping: Redesign to reduce costs or justify price increase2. Market Share Declining: Redesign to keep present customers and attract new ones3. Steady Sales: Redesign to boost sales4. 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

Marketing Strategies for

the New Economy

11


The ‘Old’ vs. the ‘New’ Economies. 1/2

ISSUES

ECONOMY-WIDE

Markets

Competition

Organizational form

Structure

Source of value

‘OLD ECONOMY’

Stable

National

Hierarchical bureaucratic

Manufacturing core

Raw materials, physical

capital

‘NEW ECONOMY’

Dynamic

Global

Networked

Services Core

Human and social capital

BUSINESS

Production

Drivers of growth

Technology driver

Competitive advantage

Research/innovation

Inter-firm relations

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


The ‘Old’ vs. the ‘New’ Economies. 2/2Source: Progressive Policy Institute, Washington, DC

ISSUES

CONSUMERS/WORKERS

Tastes

Skills

Education needs

Workplace relations

Nature of employment

‘OLD ECONOMY’

Stable

Job-specific skills

Craft or degree

Adversarial

Stable and secure

‘NEW ECONOMY’

Changing rapidly

Broad skills, adaptability

Life-long learning

Collaborative

Marked by risk and opportunity

GOVERNMENTS

Business-government

relations

Regulation

Government services

Impose regulations

Command and control

Nanny state

Encourage growth

opportunities

Market tools, flexibility

Enabling state


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

Organizing and Planning for Effective Implementation

12


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


SBU Autonomy

Prospector - relatively high level

Differentiated

defender - moderate level

Low-cost defender - relatively low level


Shared Programs and SynergyProspector - relatively little

Differentiated

defender - little synergy in areas central to differentiation

Low-cost

defender - high level of synergy and shared programs


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


Organizational Structure.Important structural variables include:- Formalization- Centralization- Specialization

- Functional organization- Product line organization- Market-based organization- Regional organization- Matrix organization


The Formal Marketing Plan.• Total product and/or service plan

• Decisions affecting the total product• Distribution plan

• Decisions regarding product delivery to customers

• Pricing plan• Setting an acceptable value on the product

• Promotional plan• Communicating information to the target

market

Marketing Metrics for

Marketing Performance

13


The Control Process (Exhibit 13.2.)

Setting standards of performanceSetting standards of performance

Specifying the necessary feedback dataSpecifying the necessary feedback data

Obtaining the needed control dataObtaining the needed control data

Evaluating feedback data -- explaining gapEvaluating feedback data -- explaining gapbetween actual and given standards of performancebetween actual and given standards of performance

Taking corrective actionTaking corrective action


The Contingency Planning Process (Exhibit 13.14)

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


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.


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


Characteristics of Marketing Audit.

Comprehensive Must cover all marketing areas

Systematic Sequential diagnostic steps

Independent Internal & external auditors

Periodic Performed at regular intervals


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. mkt452 marketing strategy,...

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