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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
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
2-6
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...
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.
2-7
• 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.
The Four Ps of the Marketing
Mix
Product
Place
C
Price
Exhibit 2-7
2-11
Promotion
Strategy Decision Areas
Organized by the Four Ps
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
Exhibit 2-8
2-12
Focusing
Marketing Strategy with
Segmentation and
Positioning
Objectives
When you finish this chapter, you should
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.
3-2
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.
Marketing Strategy Planning Process
Narrowing down to focused strategy with screening criteria
Customers
Company
S.
W.
O.
T.
Segmentation
& Targeting
Differentiation
& Positioning
External Market Environment
3-3
Place
Target
Market
Competitors
Exhibit 3-1
Product
Price
Promo
Types of Opportunities
Four Basic Types of Opportunities
Present Products
Present Markets
New Markets
Exhibit 3-2
3-4
New Products
Market
Penetration
Product
Development
Market
Development
Diversification
Market Segmentation
Broad product-market (or generic market) name goes here
(The bicycle-riders product-market)
Submarket 1
(Exercisers)
Submarket 2
(Off-road
adventurers)
Exhibit 3-5
3-8
Submarket 3
(Transportation riders)
Submarket 4
(Socializers)
Submarket 5
(Environmentalists)
Market Segmentation
Dependability dimension
Exhibit 3-6
3-9
B. Product-market showing
six segments
Status dimension
Status dimension
A. Product-market showing
three segments
Dependability dimension
Positioning of Different
Bar
Soaps
High
moisturizing
• Tone
• Zest
7
4
• Lever 2000
• Dove
2
5
• Safeguard
• Lux
Nondeodorant
8
Deodorant
3
1
“Product Space”
• Lava
Representing Consumers’ Perception for
6
Different Brands of Bar Soap
Low
Exhibit 3-13
moisturizing
3-14
• Dial
• Lifebuoy
A Market Grid Diagram with
Submarkets
The bicycle-riders product market
Submarket 1
Exercisers
Submarket 2
Off-Road
Adventurers
Submarket 3
Transportation
Riders
Submarket 4
Socializers
Submarket 5
Environmentalists
Concept: divide a broad product-market (or generic market) into
homogeneous submarkets
Toothpaste Market Segment
Description
Segment Name
The sensory
segment
Principal benefit Flavor, product
sought
appearance
Demographic
Children
strengths
Users of
Special
spearmint
behavioral
flavored
characteristics
toothpaste
Brands
disproportion- Colgate, Stripe
ately favored
Personality
High selfCharacteristics
involvement
Life-style
Hedonistic
characteristics
The sociables
segment
Brightness of
teeth
Teens, young
people
The worriers
segment
Decay
prevention
The
independent
segment
Price
Large families
Men
Smokers
Heavy users
Heavy users
Macleans, Plus
White Ultra
Brite
Crest
Brands on sale
High sociability
Active
High
High autonomy
hypochondriasis
Conservative
Value-oriented
Behavioral
Dimensions of the
Consumer Market
Elements of Product
Planning for Goods
and Services
Objectives
When you finish this chapter, you should
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.
9-2
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.
Defining “Product”
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
Exhibit 9-1
9-3
The Strategic Importance of
Packaging
Convenient packages
are easier to use,
making purchase
decisions easier for
the customer as well.
9-8
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.
9-9
Product
Management and
New-Product
Development
Objectives
When you finish this chapter, you should
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.
10-2
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.
The Product Life Cycle
Market
Introduction
Market
Growth
Market
Maturity
Sales
Decline
Total Industry
Sales
+
Total Industry
Profit
$0
Time
–
New-Product Development Process
Idea
Generation
Ideas from:
Customers
and users
Marketing
research
Competitors
Other
markets
Company
people
Middlemen
Exhibit 10-4
10-5
Screening
Idea
Evaluation
Strengths
and
Weaknesses
Fit with
objectives
Market
trends
Rough ROI
estimate
Concept
testing
Customer
reactions
Rough
estimates
of cost,
sales,
profits
Development
R&D
Develop
model or
service
prototype
Test
marketing
mix
Revise plans
as needed
ROI estimate
Commercial
-ization
Finalize
product and
marketing
plan
Start
production
and
marketing
“Roll out” in
select
markets
Final ROI
estimate
Entrepreneurial Marketing
Tom Byers and Jeff Rosenberger
Stanford University
This document may be reproduced for educational purposes only.
Agenda and Objectives
“Companies that create the future do more than satisfy
customers, they constantly amaze them.”
~ Hamel and Prahalad
I. Mini-lecture
• What is Entrepreneurial Marketing?
• How Can a Venture “Cross the Chasm”?
• Positioning and Penetration Strategies
II. Positioning Examples
“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
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.”
Why is Marketing So Challenging
in a High-Technology Start-Up?
The Adoption Curve
Innovators
3-5%
Early
Adopters
10-15%
Early
Majority
34%
Percent Adoption
90
50
20
5
0
Time
Late
Majority
34%
Laggards or
Nonadopters
5-16%
Early
Early
Late
TheAdopters
Adoption
Curve
Majority
Majority
Innovators
(3-5%)
Percent Adoption
90
(10-15%)
(34%)
50
20
5
0
Exhibit 14-9
14-14
Time
(34%)
Laggards/
Nonadopters
(5-16%)
Most Famous Model … Geoff Moore’s
“Technology Adoption Life Cycle”
Tornado
Main Street
Try to Name a
Discontinuous
Innovation (or
Disruptive
Technology)
Where Do You Fit
When It Comes to
New Technologies?
Bowling Alley
Source: Moore (1995), Inside the Tornado
So How Does a Startup Cross the
Chasm?
1. Put Your Eggs in One Basket …
Target Market Segments.
2. Then Deliver a 100% Solution To Them …
A Whole Product.
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 substitute child?
Super Premium
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
Reference: A. Ryans
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.
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.
What is the Single Most Important Concept in a
Marketing Strategy?
Positioning (a.k.a. the “Elevator Pitch”)
Positioning Template
• Sentence #1
For (target customer)
who (statement of the need or opportunity),
the (product/service name) is a
(product/service category)
that (statement of benefit).
Positioning Drives Penetration
Strategies
1. Promotion and Communication
(including branding and
permission-based marketing)
2. Pricing and Business Model
(including viral marketing)
3. Sales and Distribution
A Short Checklist for Effective
Entrepreneurial Marketing …
Relationships Matter!
1. How will you get close to customers?
2. How will you leverage alliances and partnerships?
3. How will you influence the infrastructure or the
industry’s key “players”?
4. What is your international strategy (global
markets)?