Open Floor
 Look at the Chevron Ad from Yesterday’s
NY Times...
 There is a Clear Inaccuracy in the Ad, What is
it?
 What Impact Might the Inaccuracy have on
have on Chevron?
 What Would You do If You Were the Chevron
Person Responsible for This?
1-1
Open Floor
 Hand In Midterm III
 With Group Evaluations (from Website)
 Extra Copies Available in Front
 Hard Copy to Me
 E-mail me copy to Me with Group name and
Section (i.e., KEY-001)
1-2
Open Floor
 Midterm III…
 General Comments…
 What Went Well?
 Where is there Room for Improvement?
 What Did You Learn?
 What Was the Element that You Didn’t
Have that You Needed the Most?
 What Was the Most Helpful Element?
1-3
Preview
 Lecture…
 Finish Lecture on “Industry Analysis” from Last Time
 Lecture on…




Competitor Analysis
Customer Analysis
Sales Forecasting
Marketing Strategy
 Discussion on “Presentation”
 Overview and Comments
 Questions
 Comments on John Jolliff Guest Speaker
 Simon Luthi and Peter Reugger Next Week
1-4
Preview
 Remember…
 This is an “Overview”
 Book Covers This Quite Well
 Resource for Marketing Plan
 Resource for Future
 Exceptions and Differences in Categories
and Products
1-5
BA 590
Industry Analysis
(Continued)
1-6
Projected Change in U.S. Population 1995-2005
1-7
U.S. Income Inequality
1-8
Category Factors: Energy Bars (Attractiveness Summary)
Aggregate
Market
Analysis
Category Growth •Average annual growth rate of 57%
between 1997 and 2001
Attractiveness
++
U.S. energy bar category sales
forecasted at $750 mm in 2003 for a
continued expected growth of 22%
•IIndustry reports suggest
current annual growth for the
energy bar market 25%-30%
•CCategory expanding: new competitors are
entering, existing brands are expanding with
new products and flavors, market penetration
and usage occasion is increasing
1-9
Energy Bars: Attractiveness Summary
Aggregate
Market
Product Life
Cycle
Analysis
•Both the category and Odwalla
Bars specifically are both securely
in early stages of growth phase
Attractiveness
++
1-10
Energy Bars: Attractiveness Summary
Category
Threat of New
Entrants/Exits
Attractiveness
-
Analysis
•Strong potential for new competitors
given that the category is profitable,
fairly easy to enter, and increasingly
relevant to consumers.
•Further, with the “big three” brands strongly
in place [PowerBar, Clif (including Luna), and
Balance], it is most likely that small
competitors will enter through the natural
foods channel, creating more direct
competition with Odwalla bars.
1-11
PDA: Category Attractiveness Analysis
Aggregate
Market Factors
Attractiveness
Market Size
Market Growth
Product Life Cycle
$2.3 billion
Profits
Sales Cyclicity
Good
Sales Seasonality
one
0%-40%
Growth
one
+
+
+
+/0
+
+
1-12
PDA: Category Attractiveness Analysis
Category
Factors
Attractiveness
Threat of New
Entrants
•Moderate; R&D required,
distribution
0
Bargaining
Power of Buyers
Low, high switching costs
+
Bargaining Power
of Suppliers
Moderate; PCs use similar
components
0
Category Rivalry
Pressure from
Substitutes
Intense
-
High
-
Category Capacity Not a problem for now
+
1-13
PDA: Category Attractiveness Analysis
Environmental
Factors:
Attractiveness
Technological
•Very sensitive
-
Political/
Regulatory
Telecommunications
deregulation
+
Economic
Relatively inexpensive
+
Social
More work done on
the road
+
1-14
BA 590
Competitive Analysis
1-15
Competitor Analysis System
Secondary data
-
-
Primary data
Key questions:
Who are they?
What are the
competing product
features?
What do they
want?
What is their
current strategy?
Differential
competitor
advantage analysis
i.e. Who has the
competitive product
advantage?
What are they going to
do?
1-16
Primary Sources of Competitor Information
Consultants/
Specialized
Firms
Investment
Bankers
Sales Force
Primary
Data
Suppliers
Employees
Customers
1-17
Secondary Sources of Competitor Information
Consultants
Customer
Communi
cations
Internal
Sources
Local
Newspapers
Annual
Reports
Trade Press
Internet
Patent
Filings
Secondary data
Promotional
Literature
10Ks
Business
Press
Trade
Associations
News
Releases
Electronic
Databases
Government
1-18
Other Sources of Competitor Information
Help-Wanted
Advertisements
Hiring Key
Employees
Trade Shows
Primary
Data
Plant Tours
Monitoring
Test Markets
Reverse
Engineering
1-19
Sources with Ethical Considerations





Aerial reconnaissance
Buying/stealing trash
Bribing printers
Running phony want ads
Snooping on airplanes
1-20
Assessing Competitors’ Strategies
Marketing strategy
Comparing value chains
Marketing mix
 Pricing
 Promotion
 Distribution
 Product/Service capabilities
1-21
Value Chain
Support
Activities
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Inbound
Operations Outbound
Logistics
Logistics
Marketing
and Sales
Service
Primary Activities
1-22
Criteria to Assess Technological Strategy
1. Technology selection or specialization
2. Level of competence
3. Sources of capability: internal versus
external
4. R&D investment level
5. Competitive timing: initiate versus respond
6. R&D organization and policies
1-23
Competitor Information to Collect
 Ability to conceive and design
 Ability to produce
 Ability to market
 Ability to finance
 Ability to manage
1-24
A Competitive Conjecture Process
First period
Our
total
outcome
Second period
Should we cut price?
1-25
Energy Bars: Competitor Feature/Strategy Matrix
1-26
Energy Bars: Current & Future Strategy Matrix
1-27
BA 590
Customer Analysis
1-28
What We Need to Know
about Current and Potential Customers








Who buys and uses the product
What customers buy and how they use it
Where customers buy
When customers buy
How customers choose
Why they prefer a product
How they respond to marketing programs
Will they buy it (again)?
1-29
Who Buys and Uses the Products
 Initiator -who identifies the need for
product
 Influencer -who has informational or
preference input to the decision
 Decider –who makes the final decision
through budget authorization
 Purchaser –who makes the actual purchase
 User
1-30
Buying Roles and Needs/Benefits Sought
1-31
Categories for Describing Consumers
1.
2.
3.
4.
Demographic
Socioeconomic
Personality
Psychographics and values
1-32
Major Segmentation Variables for Consumer Markets
1-33
Major Segmentation Variables for Consumer Markets
(cont.)
1-34
Major Segmentation Variables for Consumer Markets
(cont.)
1-35
Lifestyle Typologies
1-36
List of Values
1.
2.
3.
4.
5.
6.
7.
8.
9.
Self-respect
Security
Warm relationship with others
Sense of Accomplishment
Self-fulfillment
Sense of belonging
Respect from others
Fun and enjoyment
Excitement
1-37
Major Segmentation Variables for Business Markets
 Demographic
 Operating variables
 Purchasing approaches
 Situational factors
 Personal characteristics
1-38
Multiattribute Model Questions
1. Which attributes do customers use to
define a product?
2. How do customers determine how much
of each attribute a brand possesses?
3. How are the importance weights
determined?
4. What decision rule is used to combine
the information?
1-39
Bank Perceptual Map
B•
A•
Courteous
personnel
C•
E•
D•
Convenient
ATM locations
1-40
Sources of Customer Value
 Economic:
 The economic benefit a customer derives from using a
product
 Functional:
 Those aspects of a product that provide functional or
utilitarian benefits to customers
 Psychological:
 The image of the product, including how the product
“feels” and whether that feeling matches the image the
customer wants to project
1-41
Measuring Brand Equity
1. Awareness:
Being aware of a brand is usually a requirement for its purchase
and tends to lead to more favorable opinions by reducing the risk
associated with a familiar option.
2. Associations:
Images related to overall quality as well as specific product
attributes and user characteristics affect the reaction to a brand.
3. Attitude:
Overall favorability toward a brand is a critical part of brand
equity.
4. Attachment:
Loyalty to a brand is the strongest type of equity, and most
beneficial for sellers.
5. Activity:
The strongest fans of a brand become advocates.
1-42
Manifestations of Customer Value

Price.


Price is the company’s assessment of the product’s value.
Price sensitivity.


A product with constant sales when prices increase generally is of
greater value than one for which demand slumps.
Satisfaction.


Survey-based satisfaction measures are standard practice in my
business.
Complaints and compliments.


The number of complaints or compliments the company receives
indicates the product’s value.
Word-of-mouth.

Although often difficult to track, spoken and written comments
provide a useful subjective assessment of a product’s value.
1-43
Manifestations of Customer Value cont.

Margin/profit contribution.


Generally, higher margins indicates partially monopolistic
positions due to greater communicated value.
Dollar sales.


Total dollar sales provide an aggregate measure of the value of a
product as assessed by the market.
Competitive activity.


Competitive activity such as new-product introductions indicates
that the total gap between customer value and company costs is
sufficiently large to allow for profits even when more companies
divide the market.
Repeat purchase rate.

High loyalty indicates high brand value.
1-44
Assessing the Value of the Product Category
1.
2.
3.
4.
Determine the uses of the product
Estimate the importance of the uses
List competing products for the uses
Determine the relative effectiveness of the
product category in each usage situation
1-45
Desirable Criteria for Segments
 Sizeable
 Identifiable
 Reachable
 Respond differently
 Coherent
 Stable
1-46
Cluster Analysis Illustration
1-47
Customer Analysis Illustration: PDAs
 Who the Customers Are:





Primarily upscale mobile professionals
Predominately male
Analytical and quantitative in nature
Well educated
Over 21 years of age
1-48
PDA Market Segments
Segment
Size
Characteristics
Distinctive Attribute
Wide Area
Travelers:
Globetrotters
10%
Age 45-54; mostly
male; employed in
senior positions
Innovators, have modems
installed in their portable
PCs
Road Warriors
20%
Mostly in corporate
management and sales,
property management
and real estate
High cellular phone usage
Overall computer usage
lower than for other
mobile pros
Corporate
Wanderers
12%
Travel less than
Globetrotters or Road
Warriors; spend most
time visiting employees
within their own
companies
Employ portable PCs least
Heaviest fax users (on
PCs)
High e-mail users
Longest owners of cellular
phones
1-49
PDA Market Segments
Segment
Size
Characteristics
Distinctive Attribute
Collaborators
8%
Age 25-44
Well educated young professionals, tend
to hold advanced degrees
Team leaders, project managers
Innovators
High use of pagers (20% of
segment)
Not very mobile but need
mobile products
Corridor Cruisers
15%
Similar profile to Collaborators
Not as likely to adopt new
products as Collaborators
Hermits
8%
Least mobile;
Youngest segment (many under 35)
Seldom work with others
Mostly finance and telemarketing
Heavy e-mail users
Virtually all are PC users but
not portable users
Solo Practitioners
16%
Like Hermits but older
Diverse collection of technical
professionals in small to medium-size
companies
Typically connect to corporate
network when traveling
Highest connect times of any
group
Small-Site Bosses
11%
Run small business
Highest portable PC purchase
intention in next 12 months;
shifting to portable PC as
primary computer
Local Area Travelers
1-50
Customer Analysis Illustration: PDAs (cont)
 What They Buy:






Small size/light weight
PC connectivity
E-mail communications capability
Phone/address book
Appointment book/calendar/alarm
One-way paging
1-51
Important PDA Functions
1-52
Customer Analysis Illustration: PDAs (cont)
 Where They Buy:
 Buy lower-priced, low feature devices from
consumer electronics stores and office supply
superstores
 Higher-end PDAs are purchased from computer
stores, through mail order, or via the Internet
1-53
Three Minute Drill…
 How Would We Improve Our
Customer Analysis for Our Project?
 Demographic
 Socioeconomic
 Personality
 Psychographics and values
1-54
BA 590
Forecasting and
Planning
1-55
Forecasts vs. Potential
Expectations
Firm/Brand
Category
Sales Forecast
Possibilities
Sales Potential
Market Forecast Market Potential
1-56
Major Uses of Potential Estimates
1. To make entry / exit decisions
2. To make resource level decisions
3. To make location and other resource
allocation decisions
4. To set objectives and evaluate
performance
5. As an input to forecasts
1-57
Deriving Potential Estimates
Data
Calculations
Result
Secondary sources
1-58
How Are Sales Forecasts Used?
1. To answer “what if” questions
2. To help set budgets
3. To provide a basis for a monitoring
system
4. To aid in production planning
5. By financial analysts to value a
company
1-59
Judgment-based Forecasting Methods
 Naïve extrapolation
 Sales force composite
 Jury of expert opinion
 Delphi method
1-60
Graphical Eyeball Forecasting
Range
• ••
•
•
•
ƍ
Forecast
•
• •
•
Time
1-61
Customer-Based Forecasting Methods
 Market testing
 Situations in which potential customers are
asked to respond to a product concept
 Mall Intercept Surveys
 Focus Groups
 Market surveys
 A form of primary market research in which
potential customers are asked to give some
indication of their likelihood of purchasing a
product
1-62
Time-Series Forecasting Methods
 Moving Averages
 Exponential Smoothing
 Regression Analysis
1-63
Potential Customers by Industry and Size
1-64
Model-Based Methods
 Regression analysis
 Leading indicators
 Econometric models
1-65
Developing Regression Models
 Plot Sales Over Time
 Consider the Variables that Are Relevant to
Predicting Sales
 Collect Data
 Analyze the Data
 Examine the correlations among the independent
variables
 Run the regression
 Determine the significant predictors
1-66
Bass Model: PDA Actual vs. Predicted
1-67
Sample Format for Summarizing Forecasts
1-68
BA 590
Marketing Strategy
1-69
A Successful Strategy:



Helps achieve coordination among
functional areas of the organization.
Defines how resources are to be
allocated.
Leads to a superior market position.
1-70
Elements of a Product Strategy
1. Statement of the objective(s) the product
should attain
2. Selection of strategic alternative(s)
3. Selection of customer targets
4. Choice of competitor targets
5. Statement of the core strategy
6. Description of supporting marketing mix.
7. Description of supporting functional
programs
1-71
Hierarchy of Objectives
Company Mission/Vision
Level 0
Corporate objectives
Level I
Corporate strategies
Divisional objectives
Level II
Divisional strategies
Product/brand objectives
Level III
Brand strategies
Program objectives
Level IV
Tactics
1-72
Strategic Alternatives
Longterm
profits
Efficiency,
short-run
profits
Growth in sales
or market share
Market
development
Market
penetration
Decrease
inputs
Increase
outputs
New
segments
Existing
customers
Reduce
costs
Increase
price
Improve
asset
utilization
Improve
sales mix
Competitors’
customers
Convert
nonusers
New product
development
1-73
Criteria for Evaluating Strategic Alternative Options
 Size/growth of the segment
 Opportunities for obtaining
competitive advantage
 Resources available to penetrate the
segment
1-74
Total Product Concept
Potential
product
Generic
product
Expected
product
Augmented
product
1-75
Five Areas for Differentiation
1.
2.
3.
4.
5.
Quality
Status and Image
Branding
Convenience and Service
Distribution
1-76
Joint Space for Colas
Cola
Segment
3
Diet •
Pepsi
•
Diet
Rite •
Diet
•
Tab
•
RC
Cola
•
Pepsi
•
•
Segment
2
•
•
Nondiet
Segment
Dr
1
Peppe
r
•
Coke
•
7-Up
Fresca
Noncola
1-77
Brand Equity
Reduced marketing
costs
Trade leverage
Brand
Brand
loyalty
loyalty
Attracting new
customers
• Create awareness
• Reassurance
Time to respond to
competitive threats
Anchor to which
other associations
can be attached
Brand
Brand
awareness
loyalty
Familiarity-liking
Provides value to
customer by
enhancing
customer’s:
• Interpretation/
processing of
information
• Confidence in the
purchase decision
• Use satisfaction
Signal of substance/
commitment
Brand to be
considered
Brand
Brand
equity
loyalty
1-78
Brand Equity cont.
Reason-to-buy
Brand
Brandequity
loyalty
Differentiate/position
Perceived
Brand loyalty
quality
Price
Channel member
interest
Extensions
Provides value to
firm by
enhancing:
• Efficiency and
effectiveness of
marketing programs
• Brand loyalty
Help process/
retrieve information
Brand
Brand loyalty
associations
Reason-to-buy
Create positive
attitude/feelings
• Prices/margins
• Brand extensions
• Trade leverage
• Competitive
advantage
Extensions
Other
proprietary
Brand loyalty
brand assets
Competitive
advantage
1-79
Some Brand Attribute and Image Dimensions
Attributes
• Flavor/taste
• Caffeine
content
• Price
• Packaging
• Size
• Calories
• Brand name
• Sweetness
• Weight
• Warranty
• Durability
• Convenience
• Color
• Style
• Comfort
• Freshness
• Construction
material
• Availability
• Serviceability
• Compatibility
• Energy efficiency
• Instructions
• Automation
• Ease of Use
Image Dimensions
Reliable—unreliable
Old—young
Technical—nontechnical
Sensible—rash
Interesting—boring
Creative—noncreative
Sentimental—nonsentimental
Impulsive—deliberate
Trustworthy—untrustworthy
Conforming—rebellious
Daring—cautious
Forceful—submissive
Bold—timid
Sociable-unsociable
1-80
Ten Guidelines for Building Strong Brands
1. Brand Identity
 Each brand should have an identity, a personality. It can be
modified for different segments.
2. Value Proposition
 Each brand should have a unique value proposition.
3. Brand Position
 The brand’s position should provide clear guidance to those
implementing a communications program.
4. Execution
 The communications program needs to implement the identity
and position, and it should be durable as well.
5. Consistency Over Time
 Product managers should have a goal of maintaining a consistent
identity, position, and execution over time. Changes should be
resisted.
1-81
Ten Guidelines for Building Strong Brands (cont.)
6.
Brand System
 The brands in the portfolio should be consistent and synergistic.
7.
Brand Leverage
 Extend brands and develop co-branding opportunities only if the
brand identity will be both used and reinforced
8.
Tracking
 The brand’s equity should be tracked over time, including
awareness, perceived quality, brand loyalty, and brand
associations.
9.
Brand Responsibility
 Someone should be in charge of the brand who will create the
identity and positions and coordinate the execution.
10. Invest
 Continue investing in brands even when the financial goals are
not being met.
1-82
Basic Customer Strategies
1.
2.
3.
4.
Customer acquisition
Customer retention
Customer expansion
Customer deletion
1-83
Review of Guest Speaker
 John Jolliff – Country Insurance and
Financial
 Things to Continue…
 Additional Requests…
1-84
Presentation
 See Folder for Guidelines…
 Feedback from Both Class and From Me…
 “Presentation” Element
 100 Points
 Group
 “Marketing Plan” Element (Written)
 100 Points
 Group
 Individual Element
 50 Points
1-85
Presentation
 Comments Back to First Group by Thursday
 Comments Back to Second Group by Next
Tuesday
1-86
Next Week…
 Simon Luthi and Peter Reugger Next Week
 First Groups Present…
1-87