Marketing Orientation Sounds Easy,Isn’t

1. Marketing Orientation Sounds Easy,Isn’t • Even the “best” firms sometimes backslide into a production orientation • In today’s highly competitive markets it is often difficult to • keep up with changing customer needs • beat aggressive competitors to the punch • find the right focus -- one that matches the firm’s objectives and resources to market opportunities • offer customers superior value 2-5

2. Customer Value Reflects Benefits and Costs Customer value concerns the difference between the benefits a customer sees from a firm’s market offering and the costs of obtaining those benefits Costs Benefits The customer’s view of costs and benefits is not just limited to economic (or even rational) considerations--and a low price may NOT result in superior value... 2-6

3. Customer Value Costs Benefits • One customer’s view of the benefits and costs of a firm’s market offering may vary from another customer’s view, so firm may not be able to satisfy everybody with the same offering. • Customer value concept takes the customers point of view, but customers may not explicitly weigh costs and benefits and even if they do their view may not match some “objective” reality. 2-7

4. Product Place C Price Promotion The Four Ps of the Marketing Mix Exhibit 2-7 2-11

5. Product Place Promotion Price Physical Goods Service Features Quality Level Accessories Installation Instructions Warranty Product Lines Packaging Branding Objectives Channel Type Market Exposure Kinds of Middleman Kinds and Locations of Stores How to Handle Transporting and Storing Service Levels Recruiting Middlemen Managing Channels Objectives Blend Salespeople Kind Number Selection Training Motivation Advertising Targets Kinds of Ads Media Type Copy Thrust Who Prepares? Sales Promotion Publicity Objectives Flexibility Level over PLC Geographic Terms Discounts Allowances Strategy Decision Areas Organized by the Four Ps Exhibit 2-8 2-12

6. Focusing Marketing Strategy with Segmentation and Positioning

7. 1. Understand why marketing strategy planning involves a process of narrowing down from broad opportunities to a specific target market and marketing mix. 2. Know about the different kinds of marketing opportunities. 3. Understand why opportunities in international markets should be considered. 4. Know about defining generic markets and product-markets. 5. Know what marketing segmentation is and how to segment product-markets into submarkets. 6. Know three approaches to market-oriented strategy planning. 7. Know dimensions that may be useful for segmenting markets. 8. Know what positioning is— and why it is useful. 10. Understand the important new terms. Objectives When you finish this chapter, you should 3-2

8. Narrowingdowntofocused strategy withscreening criteria Customers S. W. O. T. Segmentation & Targeting Product Place Company TargetMarket Differentiation & Positioning Price Promo Competitors ExternalMarketEnvironment Marketing Strategy Planning Process Exhibit 3-1 3-3

9. Four Basic Types of Opportunities Market Penetration Present Products New Products Product Development Present Markets Market Development Diversification New Markets Types of Opportunities Exhibit 3-2 3-4

10. Submarket 1 (Exercisers) Submarket 3 (Transportation riders) Submarket 4 (Socializers) Submarket 2 (Off-road adventurers) Submarket 5 (Environmentalists) Market Segmentation Broad product-market (or generic market) name goes here (The bicycle-riders product-market) Exhibit 3-5 3-8

11. A. Product-market showing three segments B. Product-market showing six segments Status dimension Status dimension Dependability dimension Dependability dimension Market Segmentation Exhibit 3-6 3-9

12. Positioning of Different Bar Soaps High moisturizing • Tone • Zest 7 4 • Lever 2000 • Dove 2 5 • Safeguard • Lux 8 Nondeodorant Deodorant 3 1 • Lava • Dial “Product Space”Representing Consumers’ Perception for Different Brands of Bar Soap • Lifebuoy 6 Low moisturizing Exhibit 3-13 3-14

13. The bicycle-riders product market A Market Grid Diagram with Submarkets Submarket 1 Exercisers Submarket 3 Transportation Riders Submarket 4 Socializers Submarket 2 Off-Road Adventurers Submarket 5 Environmentalists Concept: divide a broad product-market (or generic market) into homogeneous submarkets

14. Toothpaste Market Segment Description

15. Behavioral Dimensions of the Consumer Market

16. Elements of Product Planning for Goods and Services

17. 1. Understand what “Product” really means. 2. Know the key differences between goods and services. 3. Know the differences among the various consumer and business product classes. 4. Understand how the product classes can help a marketing manager plan marketing strategies. 5. Understand what branding is and how to use it in strategy planning. 6. Understand the importance of packaging in strategy planning. 7. Understand the role of warranties in strategy planning 8. Understand the important new terms. Objectives When you finish this chapter, you should 9-2

18. Target Market Product Place Promotion Price Product Idea Brand Package Warranty Physical good/service Features Quality level Accessories Installation Instructions Product line Type of Brand: Individual or family Manufacturer or dealer Protection, Promotion, or both None, full, or limited Defining “Product” Exhibit 9-1 9-3

19. The Strategic Importance of Packaging Convenient packages are easier to use, making purchase decisions easier for the customer as well. 9-8

20. Using Warranties to Improve the Marketing Mix A warranty says the company stands behind the product. Consumers often feel more comfortable with products they know come with assurances. Warranty 9-9

21. Product Management and New-Product Development

22. 1. Understand how product life cycles affect strategy planning. 2. Understand what is involved in designing new products and what “new products” really are. 3. Understand the new-product development process. 4. See why product liability must be considered in screening new products. 5. Understand the need for product or brand managers. 6. Understand the important new terms. Objectives When you finish this chapter, you should 10-2

23. Market Introduction Market Growth Market Maturity Sales Decline Total Industry Sales + Total Industry Profit $ 0 Time – The Product Life Cycle

24. Idea Generation Screening Idea Evaluation Development Commercial -ization Ideas from: Customers and users Marketing research Competitors Other markets Company people Middlemen Strengths and Weaknesses Fit with objectives Market trends Rough ROI estimate Concept testing Customer reactions Rough estimates of cost, sales, profits R & D Develop model or service prototype Test marketing mix Revise plans as needed ROI estimate Finalize product and marketing plan Start production and marketing “Roll out” in select markets Final ROI estimate New-Product Development Process Exhibit 10-4 10-5

25. Entrepreneurial Marketing Tom Byers and Jeff Rosenberger Stanford University This document may be reproduced for educational purposes only.

26. Agenda and Objectives “Companies that create the future do more than satisfy customers, they constantly amaze them.” ~ Hamel and Prahalad • Mini-lecture • What is Entrepreneurial Marketing? • How Can a Venture “Cross the Chasm”? • Positioning and Penetration Strategies • Positioning Examples

27. “Market Analysis” Versus “Marketing” Step #1: Opportunity Recognition (Market Analysis) • Identify a Market Need • Examine the Competitive Dynamics of the Industry • Determine Growth Potential Step #2: Marketing Strategy • Develop a Unique Positioning • Develop Marketing Objectives • Build a Set of Penetration Strategies (e.g., Pricing, Promotion) • Support through Sales and Execution

28. What is Marketing Anyway? • Marketing must be more than a sales support function. Not just ad tag lines. In all kinds of businesses, it must satisfy “the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and finally consuming it.” • Especially in high technology venturing, marketing must “invent complete products and drive them to commanding positions in defensible market segments.” Reference: Levitt and Davidow

29. Why is Marketing So Challenging in a High-Technology Start-Up?

30. Innovators 3-5% Early Adopters 10-15% Early Majority 34% Late Majority 34% Laggards or Nonadopters 5-16% 90 Percent Adoption 50 20 5 0 Time The Adoption Curve

31. Innovators (3-5%) Early Adopters (10-15%) Early Majority (34%) Late Majority (34%) Laggards/ Nonadopters (5-16%) 90 Percent Adoption 50 20 5 0 The Adoption Curve Exhibit 14-9 Time 14-14

32. Tornado Main Street Laggards LateMajority Bowling Alley Early Majority EarlyAdopters Innovators Source: Moore (1995), Inside the Tornado Most Famous Model … Geoff Moore’s“Technology Adoption Life Cycle” Try to Name a Discontinuous Innovation (or Disruptive Technology) Where Do You Fit When It Comes to New Technologies?

33. Put Your Eggs in One Basket … Target Market Segments. Then Deliver a 100% Solution To Them … A Whole Product. So How Does a Startup Cross the Chasm?

34. An Example of the Power of Segmentation and Target Marketing: Pedigree Petfoods in UK Dog’s Role Segment Brand Price/100 gr. Dog as a family member Premium Chum 8.7 pence Dog as a companion Moderate Pal and Bounce 6.4 & 7.9 pence Dog as an animal Economy Chappie 6.3 pence Dog as a substitute child?Super Premium Reference: A. Ryans

35. Results: Fours years later, it had a 10% share of the total dog food market. The total super premium segment of the market was about 15% -- about 10% coming from dog food brands and about 5% coming from fresh foods. In addition, Pedigree's premium brand retained its market share. Segmentation and the UK Dog Food Market: Pedigree’s Super Premium Strategy • Benefits? Very best product that can be bought, reassurance, confidence, leads to an enhanced relationship • Name? Mr. Dog (later Caesar) • Product? Very high quality ingredients, wide variety of flavors, special packaging • Target Market? Intense relationships, own smaller dogs, older and urban females • Price? 17.7 to 30.7 pence per 100 grams • Advertising? Dog bringing newspaper, slippers, etc.

36. What is the Single Most Important Concept in a Marketing Strategy? Positioning (a.k.a. the “Elevator Pitch”)

37. Positioning Template • Sentence #1For (target customer)who (statement of the need or opportunity),the (product/service name) is a (product/service category)that (statement of benefit). • Sentence #2Unlike (primary competitive alternative),our product (statement of primary differentiation).

38. Positioning Drives Penetration Strategies • Promotion and Communication(including branding and permission-based marketing) • Pricing and Business Model(including viral marketing) • Sales and Distribution(including affiliate marketing)

39. A Short Checklist for Effective Entrepreneurial Marketing … Relationships Matter! • How will you get close to customers? • How will you leverage alliances and partnerships? • How will you influence the infrastructure or the industry’s key “players”? • What is your international strategy (global markets)?