CITM360 – Week 8

1. CITM360 – Week 8 Steven A. Gedeon, PhD, MBA, PEng

2. This Week’s Agenda • Review of Interim Presentations • Focus on Competitor / Differentiation / Strategic Maps • Workshop on Strategic Maps for Each Group • Case Study Presentations • The Marketing Plan • Product • Price • Place • Promotion

3. Room Change DATE: Monday March 14, 2005 TIME: 3 - 5pm ROOM: KHS329 One Day Only – Double Class

4. Review of Interim Presentations • Tremendous Improvement Over Assignment 1 • In Virtually All Cases, I Graded Higher than the Class • All Ave Class Scores were 6-8 with No Exceptions, Even When the Subject was Skipped or Excellent • Very Few Grammatical/Spelling Mistakes • Still Some Major Weaknesses • Customer Segmentation (and Who is the Customer) • Differentiation and Positioning Strategy • Business Model • Value Chain and “Space” • Key Success Factors

5. Customer • Anyone Who Pays You Money is a Customer! • Connectix, RU3, eWed • Most Groups Still Vague over the Concept of Customer Segmentation and Characteristics • Buying Characteristics • Market Stats to Validate the Size, Ability and Willingness to Buy • Addressable Market • Becomes Very Important during Market Plan!

6. Sample Customer Questions • Students: Do they own DVD Players? Don’t they do P2P instead? How much do they spend on DVDs? What’s their discretionary income? How much do they spend on convenience items?… • 24-32 Yr Old Daters: How many in any given region? Do they have 3D graphics cards? How many are using dating sites or VR sites today? • Business who Print: Who makes the buying decision within the company? Does their Marketing Firm make the decision? • Advertisers to Brides: What do they spend now and where? Local vs National Chains? What are you Offering them (in contrast to what you offer to Brides)?

7. Value Prop – Customer Pain • Ideally 1-2 Focused Statement(s) (in Contrast to a List of Features) • Can use 2 Slides Here if Needed • Difference Between Value (Seeking a Positive) and Pain (Avoiding a Negative)

8. Competition > Differentiation > Strategic Map • Must Connect Competition to Differentiation to the Strategic Map • The Strategic Map Tells You if You Can Sustain Your Differentiating Advantage • If NOT, Then Start Over Again! • The Key is Picking the Correct Axes • How Well do you Understand Your Key Sustainable Differentiation and How the Customer Compares you? • Generic Axes did not Add to Understanding!

9. What are Key Differentiators?(Good Axes to Pick on Map) • Strong • Price, Quality, Speed, Customization, Support, Design (remember these?) • Exclusive Channels or Partnerships • Customer Segment Only IF Barriers to Entry • special knowledge required, special needs, hard to reach… • Weak • Features (unless very hard to replicate) • Geography, Language… • Customer Segment IF simple to enter • Narrow vs Broad (Unless Creates Barriers to Entry)

10. Strategic Mapping Workshop • Let’s Discuss Each Group in Detail

11. Business Model • Tremendous Confusion and Disagreement over this Term • Not the Same as Porter or Revenue Model • Credit Given for Most Aspects of “How do you Deliver Value” • Only Three Groups Actually Showed This Properly (as it was described in class) • RU3, OPP, Campus Express

12. Value Chain – “Space” • Some Groups did a Great Job on This • OPPrint and Campus Express • Tremendous Confusion Over Value Chain if Selling B2B • The Value Chain for Who you Sell to and The Value Chain for How You Deliver Value to Your Clients (only 1 Value Chain in B2C) • You MUST Engage in ALL Aspects of Your Own Value Chain. The Question is: What Parts are you going to Do Better Than Anyone Else? • “Space” is Related to Your Clients’ Value Chain in B2B and/or Porter 5 Forces Environment

13. Revenue Generation • Don’t Need to Complicate This • Many Groups Put a Lot of Non-Revenue Related Info on these Slides • Must be Crystal Clear on Details of Revenues vs Expenses for Financial Plan

14. Key Success Factors • Most Groups were Surprisingly Weak Here • Cannot Be Excellent at Everything! • This Violates the Concept of Differentiation • Lowest Cost, Best Quality, Fastest, Custom… • Key Word Here is: KEY • Since Each Business is Unique, I Cannot Give Generic Comments Here

15. Presentation • Slides and Graphic Quality were Good • Pace and Length were Good • Don’t Read • Use Bullets as Talking Points • Don’t Turn Your Back While Speaking • Add Introduction Slide (You Never Know Who will get a Copy of your Slides!) • Add Contact Info ( “ ) • Be Consistent! Pick a Key Theme and Stick to It

16. The Marketing Plan • Product • Price • Place (Distribution Channels) • Promotion • People – Organization Plan • Profits – Financial Plan

17. Product • Core Product • e.g. transportation (affects who your competition will be in the future) • Actual Product • e.g. the car itself, its features, quality… • Augmented Product • e.g. services, warranty, ease of purchase, prestige associated with owning a Porsche…

18. Services as the Product Characteristics of Services – not the same as selling a product • Intangibility – Can you touch and feel? • offset by stressing competence, professionalism, and experience • Inseparability – Delivered by people • It’s the person you trust • Highly perishable • Timing is important (you cannot inventory a haircut) • Quality control issues/standardization • Difficult to standardize – people dependent • Rely on repeatable/well documented processes • Customer involvement • The customer must be present to get a haircut

19. Features into Benefits • Customers value products and services not for what they are but for what they do. Concentrate on benefits! • Turn features into benefits • For example – credit card • Compact size -> Easy to take anywhere • One monthly bill -> Saves time • A single feature may offer different benefits to different audiences, so have a particular target market in mind.

20. Price Customer’s goal is to obtain the most benefit for the price paid for a product or service. Your goal is to obtain the most price for the benefits. • What are your pricing objectives? • Market share? • Maximizing profits? • What price do you need to be profitable? To break even? • High demand, few alternatives? Able to charge higher price – inelastic demand • Less demand, high volume of substitutes and plenty of alternatives – elastic demand. • What information do you need to determine your break even point? • Don’t compete on price if you can help it – Find other alternatives. • What are other alternatives?

21. Pricing Decisions • Cost Plus Pricing • Fixed vs Variable Costs • Marginal Cost Pricing • Demand Based Pricing • Price Segmentation between User Groups • Competitor Based Pricing

22. Additional Price Considerations • Commissions or Referral Fees • Discounts, Specials, Incentives • Flexible Pricing, Bundles • Account for Cost of Returns • Sometimes Premium Pricing Conveys Superior Quality • Opportunity Costs (Should you Bother Selling This or Focus on Primary Product?)

23. Alternatives to Price Competition • Customization • Personalization • Specialization (niche focus) • Increased convenience • Additional service enhancements • Demonstrated quality

24. Place/Distribution • Direct Sales • Sales Staff • Sales Funnel Management • Company Website • Traffic Generation • Indirect Sales • Reps, Agents, Distributors • Affiliate Websites

25. Promotion • Getting the word out – communicates availability and desirability of your offering • Positioning • Image of company is distinct to customer • About finding or creating a dimension in which you can become known as the best • Reflects personality – based on: • Advertising • Customer’s experiences • Web site • Should be consistent • Building a brand (extension of positioning) • Association/expectations that come to mind when exposed to a name, logo or package. • Conveys credibility

26. Promotion Mix • Prospecting (e.g. cold calling) • Trade Shows • Public Relations • Magazine Articles, Stories, TV appearances… • Advertising • Direct Marketing (Mail, eMail) • Word of Mouth

27. Build Brand Highlight Products/Services Communicate Value Proposition Drive Website Traffic Generate Life-time Value Promotional Campaigns • Increase Revenue • New Customer Acquisition • Drive More Business from Core Customers • Build Long Term Customer Value/Relations Increase awareness while improving ROI.

28. Promotion • Getting people to your site • Search marketing - Directories e.g. Yahoo! and Search engines e.g. Google • Email Marketing • Other PR strategies • Advertising & Branding • Forrester Research in UK suggests 81% of British internet users find sites using a search engine or directory

29. Search Engine Marketing • Different search engines search on different parts of web sites (e.g. titles, words on page) • How to get Ranked by Search Engines? • Titles, Metatags… • Keywords • Other sites pointing to you • Paid placements • Will Google bring you business? • Cost of search vs. Revenue per customer • Monitor traffic, keywords used, pages visited, how much time spent… • For search engine submissions tips, see http://searchenginewatch.com/webmasters/index.php

30. Email Marketing Don’t Spam Your Customers! Provide Value Get Permission Unsubscribe Easily

31. Shifting to email Don’t Spam Your Customers! Provide Value Get Permission Unsubscribe Easily

32. Sales conversion process Aware of you Comprehend your offering Convinced of the superiority of your offering Buying

33. Other PR Strategies • Newsgroups/Forums • Affiliate programs • Exchanging links • Web rings • Word of mouth • Traditional PR methods – press releases, contributions to trade publications, speeches at conferences/industry events

34. ‘Traditional’ Media • Put URLs and e-mail address on all publications • Other places for ads? • T-shirts/clothing • Posters • Etc.

35. Affiliate Programs • Allows non-transaction based sites to refer customers to site that will sell specific goods • Referrer site gets a fee from the sales site • E.g. amazon.com ‘Associates’ program • You earn up to 15% in referral fees

36. Exchanging Links • Links complementary web sites • You don’t have control over how other sites incorporate/display your link • May be difficult to get your link removed from other sites

37. Internet Advertising • Banner ads (e.g. doubleclick) • Sponsored links in search engines • Advertising glossary • Internet advertising links • thestar.com (see link on left for online ads) • Marketitright.com

38. Strategic Alliances • Can’t be an expert at everything • Source of leads • Don’t give away too much • Trust is key

39. Key Issues • Consistency in the Marketing Plan • How do you reach the different customer segments for your business? • What do you think is the best strategy to get people to your site? • What promotional techniques are likely to be most effective for your business?