DR. DAWNE MARTINMKTG 241

FEB. 24, 2011

Innovation, Value & Positioning

Administrative Stuff

Customer/Competitor Analysis: Thursday, Feb. 23

Tuesday, Feb. 28: Quiz 2 – Chap 4 – 6, Business Model

Thursday: Chapter 6 & Business Model Development

Learning Objectives To review value creation and map out your value

proposition To investigate and design a product positioning strategy. To reassess what you need to know about customers and

customer perceptions of competitors in your marketing research.

Rethinking Marketing, 1st Edition

© 2009 Prentice Hall

5-3

Three Simultaneously Challenges

Anticipate and respond to change

Leverage core competencies to exploit new market realities

Learning faster and innovating better to explore new territory

Rethinking Marketing, 1st Edition

© 2009 Prentice Hall

5-4Creative Destruction: The Kissing Cousin of Opportunity

Entrepreneur is the innovator who “Shocks” and disturbs economic

equilibrium Exploiting and creating

uncertainty Creative destruction

Old replaces the new

Rethinking Marketing, 1st Edition

© 2009 Prentice Hall

5-5

7 Outcomes of Entrepreneurial Creativity

?

Wealth

Employment

Growth

New ventures

Change

New markets

Innovation (products, service, processes)

Value

Rethinking Marketing, 1st Edition

© 2009 Prentice Hall

5-6 In curve A, and B the optimal time period

during which to pursue an opportunity with a given business concept is during the shaded area.

Rethinking Marketing, 1st Edition

© 2009 Prentice Hall

5-7

i. Ikea discovered its “flat-pack” furniture concept when an employee, Gillis Lundgren, cut the legs off a bulky table he had just purchased because it would not fit into the trunk of his car.

ii. Wal-Mart store manager in Crowley, Louisiana, tried to scare off shoplifters by introducing “store greeters” rather than security guards—this new perspective soon became a signature of Wal-Mart stores.

iii. American Express Travelers Checks were born out of the frustration of an Amex executive who tried unsuccessfully to cash his letters of credit while on holiday in Europe.

iv. Skip Yowell & JanSport - http://www.jansport.com/skip_yowell_collection/js_skip_yowell_collection.html

Examples of Great Ideas

Rethinking Marketing, 1st Edition

© 2009 Prentice Hall

5-8

Company perspective Value must be captured or appropriated

Market perspective Value with innovation, called “value innovation” Southwest Airlines offers outstanding customer

service and rock-bottom prices, defies traditional marketing logic

Customer perspective Meeting needs Solving problem better than competitor Innovative products and services that were

initially rejected by consumers: the microwave, CNN, the Sony Walkman, and Boeing’s 747

Value

Rethinking Marketing, 1st Edition

© 2009 Prentice Hall

5-9

Company perspective Value must be captured or appropriated

Market perspective Value with innovation, called “value innovation” Southwest Airlines offers outstanding customer

service and rock-bottom prices, defies traditional marketing logic

Customer perspective Meeting needs Solving problem better than competitor Innovative products and services that were

initially rejected by consumers: the microwave, CNN, the Sony Walkman, and Boeing’s 747

Economic Benefits and Value Creation

Differentiation and Customer Value

Positioning Strategy

Study and understand the marketCritical strategic decisions

Choice of the target segment. Determine specifications to meet the

target segment’s needs Determine the product or service’s

competitive positioning from the customer’s perspective

Copyright ©1997 Harcourt Brace & Company.All Rights Reserved.

Segment Positioning

Value Proposition: all the key elements of the situation and benefits the target customer is looking for in purchase

Segment Positioning Strategy: product features, relative price, added value through channels and promotion.

Acid Test of Positioning – storyboard target slogan, benefits and products – participants select storyboards based on their needs – Do they match?

Mapping Competitive Positions

Perceptual Mapping: two-dimensional map to compare the consumer’s image of competing products on two critical performance features Product position relative to competitors Product position relative to ideal points

Uses for perceptual mapping Unique product differentiation & positioning Image differentiation New product or service

Copyright ©1997 Harcourt Brace & Company.All Rights Reserved.

Effectiveness (efficacy)

Gentleness (side effects)

Demand void

Private-label aspirin Anacin

Bayer

BufferingAdvil

Generic acetaminophen

Segment cluster 1Age=5+5Use: fever

Segment cluster 2Age=70+10Use: arthritis

Segment cluster 3Age=30+10Use: aches

Extra-Strength TylenolTylenolDatril

Copyright ©1997 Harcourt Brace & Company.All Rights Reserved.

An Intuitive

Map of the Analgesic Market

Oldsmobile

Buick

ChryslerMercedes

CadillacLincoln

BMW

Pontiac

Porsche

Datsun

ToyotaVW

Plymouth

Dodge

Ford Chevrolet

#1

#3

#5

#2

#4

Mercedes

Porsche???

ToyotaNissan

VW

HondaMazda

Chevrolet

Pontiac

Oldsmobile

Buick

Cadillac

The Planned Repositioning of Pontiac

High price Upscale Luxurious

Low price Practical

Very practical Gives good gas mileage Affordable

ExpressiveSporty-oriented

Conservative Family-oriented

Conservative looking

Appeals to older people

Spirited performance

Sporty looking

Fun to drive Appeals to

young people

Has a touch of class A car I’d be proud to own Distinctive looking

Source: Adapted from John Koten, “Car Makers Use ‘Image’ Map as Tool to Position Products,” The Wall Street Journal, March 22, 1984, 31.

Copyright ©1997 Harcourt Brace & Company.All Rights Reserved.

Major Sources of Competitive Advantage

Defining your Value Proposition and Positioning

Identify the marketIdentify the key issues/desires of that market

as they relate to your productIdentify the key benefits your product/service

will provideIdentify product/service characteristics that

will provide those benefits

Defining your Value Proposition and Positioning

Investment Program A How to Beat Inflation

and Higher Taxes Key Benefits

Capital Appreciation Minimal Taxation

Products Growth Stocks Municipal Bonds Growth Funds

Investment Program B Special Help for

Women with Special Money Problems

Key Benefits Growth/Appreciation Safety

Products Growth Mutual Funds Blue-Chip Stocks High-Grade Bonds