Course „Business Administration A (1,102)“
Assessment Year, Autumn Semester 2016
Course Part „Marketing Management”
Prof. Dr. Pietro Beritelli
Contents of this Script
1. General Information
Welcome Letter .......................................................................................................................... 2
Course Overview ........................................................................................................................ 4
Semester Calendar ..................................................................................................................... 5
Contact Details of the Lecturing and Teaching Team ................................................................ 6
2. Lecture Slides
Module 1: Business Processes and the Marketing Concept within the SGMM......................... 8
Module 2: Market analysis ....................................................................................................... 50
Module 3: Marketing strategy ................................................................................................. 90
Module 4: Marketing mix 1 .................................................................................................... 122
Module 5: Marketing mix 2 .................................................................................................... 156
Module 6: Controlling and innovation ................................................................................... 192
3. Exercises
Case Study „Weisse Arena“ .................................................................................................... 219
4. Independent Studies
Case Study „Appenzeller Beer“ .............................................................................................. 241
Page 1
Prof. Dr. Johannes Rüegg-Stürm
Autumn 2016
Academic Director, Assessment Year Course “Business Administration”
Institute for Systemic Management and Public Governance (IMP-HSG)
Dear students
We are pleased to welcome you to your studies at the HSG. You have in front of you the first
part of the script “Business Administration A (1,102)”. Together with
•
the book "Bieger, Thomas (2015). Marketing Concept - The St. Gallen Management
Approach. Bern: Haupt"
•
the book "Rüegg-Stürm, Johannes & Simon Grand (2015). The St. Gallen Management
Model. Bern: Haupt"
•
the second part of the script for the course segment " The St. Gallen Management
Model" (to be published at the second half of the semester) as well as
•
additional course-related content, as posted on the StudyNet (lectures, exercises and
independent studies)
it contains all the teaching materials relevant to this course.
The course “Business Administration A (1,102)” serves as an introduction to the important
tasks, challenges and basic concepts of management (as a function). It conveys to students
what we understand by management today, and what the most important tasks and the
value creation of management consists in. The lectures, exercises and independent studies
are based on the Marketing concept and the St. Gallen Management Model (SGMM), a
conceptual framework allowing for the categorisation of the most important search, action
and decision-making areas of management. Thus, the SGMM is intended to contribute to an
understanding of the multifaceted nature of contemporary management challenges in their
overall context.
This script for the first part of the course segment "Marketing Management" held by Prof. Dr.
Pietro Beritelli contains
•
general information about the course “Business Administration A (1,102)” in the
Assessment Year
•
the slides of the individual lectures
Page 2
•
the case study "Weisse Arena" that is subject of the exercises in the first half of the
semester (further information about the case study can be found on the StudyNet)
•
the case study "Appenzeller Beer" that is subject of the independent studies in
module 4
Your immediate, open feedback and constructive criticism are important to us. We strive to
translate your suggestions as quickly as possible into improvements in the Assessment Year
and the Bachelor’s level. For this purpose, the following channels are available to you:
•
If you have general questions, suggestions and feedback about the structure or
sequence of the course “Business Administration” in the Assessment Year, as well as
teaching materials and forms of teaching and learning, please contact me personally
(johannes.rueegg@unisg.ch).
•
If you have questions with regard to contents, please contact the faculty members in
charge of the individual lectures, the assistant responsible for the respective part of
the course (see list below) and/or your exercise leader, who is always glad to answer
your questions.
Course part
Faculty member in
Assistant
E-mail address
Samuel Heer
thomas.bieger@unisg.ch
charge
Marketing
Management
Prof. Dr. T. Bieger
Prof. Dr. P. Beritelli
pietro.beritelli@unisg.ch
samuel.heer@unisg.ch
The St. Gallen
Prof. Dr. J. Rüegg-
Management Model
Stürm
Naomi Kink
johannes.rueegg@unisg.ch
harald.tuckermann@unisg.ch
Dr. H. Tuckermann
naomi.kink@unisg.ch
You can find the contact address of your exercise leader in the course directory or on the
following pages of this script.
•
If you have organisational questions about course procedures or about the course
“Business Administration A (1,102)” in the Assessment Year in general, please
contact my assistant, Naomi Kink (naomi.kink@unisg.ch).
We are looking forward to working with you and wish you interesting and successful
studies!
sig. Prof. Dr. Johannes Rüegg-Stürm
Page 3
1
13
12
11
10
9
7&8
6
5
4
3
2
38
39
40
41
42
43
44&45
46
47
48
49
50
14
Date
19.9-23.9.2016
26.9.-30.9.
3.10.-7.10.
10.10.-14.10.
17.10.-21.10.
24.10.-28.10.
31.10.-11.11.
14.11.-18.11.
21.11.-25.11.
28.11.-2.12.
5.12.-9.12.
12.12.-16.12.
#
Version: 16.08.2016
Course Schedule "Business Administration A (1.102)"
Assessment Year, Autumn Semester 2016
3 Marketing Strategy
2 Market Analysis
Lecture
Mandatory Readings
(to be prepared before lecture)
Bieger, Marketing Concept - The St. Gallen
Management Approach, Chapter 1
Bieger, Marketing Concept - The St. Gallen
Management Approach, Chapter 2
Bieger, Marketing Concept - The St. Gallen
Management Approach, Chapter 3
Bieger, Marketing Concept - The St. Gallen
Management Approach, Chapter 4
Bieger, Marketing Concept - The St. Gallen
Management Approach, Chapter 5
Rüegg-Stürm & Grand, The St.Gallen
Management Model, Overview p. 5 -9,
Chapter 0.1 - 0.3, Chapter 2.0.2
Bieger, Marketing Concept - The St. Gallen
Management Approach, Chapter 6
Rüegg-Stürm & Grand, The St.Gallen
Management Model, Chapter 0.4 - 0.8
Environment as a landscape of possibilities and expectations
This lecture
takes places
on Friday,
7.10., 18-20
Uhr
Exercises
6
5
4
3
2
1
Management in theory
Case Study "Weisse Arena, module 6"
Case Study "Weisse Arena, module 5"
Case Study "Weisse Arena, module 4"
Case Study "Weisse Arena, module 3"
Case Study "Weisse Arena, module 2"
Introduction to Exercises;
Formation of Student Teams;
Rules of Cooperation
(Fridays, 8:15-20:00 o'clock)
Wednesday
14 - 16 o'clock
7
Management in practice
Lecture Times
This lecture
takes places
on 12:0013:30 Uhr
Tuesday, 8-10
o'clock
8
Environmental analysis, using BMW as an example
Semester Break (2 Weeks)
9
Controversies and stakeholders, using the example of
BMW
This lecture
takes places
on
Wednesday
30.11.,14- 16
o`clock
12 Frame of Reference, using BMW as an example
11 Primary value creation at the Grand Resort Bad Ragaz
10
es-Track
We kindly ask you to attend only those lectures assigned to your track/ group and not switch between groups or tracks!
Topic/ title of Lecture
4 Marketing Mix 1
Business Processes and Marketing Concept in the St. Gallen
Management-Modell
5 Marketing Mix 2
1
6 Controlling and Innovation, Guest Lecture
Rüegg-Stürm & Grand, The St.Gallen
Management Model, Chapter 1.0 - 1.2
Organization & Management
7 Their increasing significance over time
Organization as a value-creation system
Rüegg-Stürm & Grand, The St.Gallen
Management Model, Chapter 1.3, 2.0.1 –
2.0.5
Management as reflexive design praxis
Rüegg-Stürm & Grand, The St.Gallen
Management Model, Chapter 2.1 - 2.2
Organization as a value-creation system
Models and the SGMM IV
8 Overview on the St. Gallen Management Model
9
10
11
12
ds-Track
Group 2
* The lectures will be broadcast live from the Audimax to various other rooms in the university. Please check the lecture directory (or the web site www.stundenplan.unisg.ch) for the exact broadcast schedule.
Independent Studies
(StudyNet)
Independent Studies
"Appenzeller Beer"
Term Paper
Topic Allocation: 13.12.2016
(Deadline: 20.04.2017
Page 4
Di., 8-10 Uhr
Di., 8-10 Uhr
ds-Track
Group 1
End of Semester
Rüegg-Stürm & Grand, The St.Gallen
Management Model, Chapter 2.3, Chapter
3.3.1; Ulrich, The Normative Foundations
of Entrepreneurial Activity and Normative
Orientation Processes
Book
Semester
Week
51
19.12.-23.12.
Book
Book
Tuesday, 8-10 o'clock
Tuesday, 8-10 o'clock
Tuesday, 8-10 o'clock
Book
Book
Monday, 12-14
Uhr
Tuesday,
8-10 o'clock
Book
Book
Monday, 12-14 Uhr
Monday,
12-14 o'clock
Book
Book
Book
Book
Book/ Studynet
Marketing Management
(Prof. Dr. P. Beritelli)
The St. Gallen Management Model
(Prof. Dr. H. Tuckermann)
Calender
Week
Calendar, Autumn Semester 2016
Calendar
Week
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
1
2
3
4
5
6
7
1)
am
2)
Monday
Thuesday
13.9.
12.9.
19.9.
26.9.
3.10.
10.10.
17.10.
24.10.
31.10.
7.11.
14.11.
21.11.
28.11.
5.12.
12.12.
19.12.
26.12.
2.1.
9.1.
2)16.1.
23.1.
30.1.
6.2.
13.2.
12.-17.9.16
19.9.16
1.11.16
31.10.-12.11.16
23.12.16
24.12.-26.12.16
31.12.-2.1.17
16.1.-18.2.17
20.9.
27.9.
4.10.
11.10.
18.10.
25.10.
1)1.11.
8.11.
15.11.
22.11.
29.11.
6.12.
13.12.
20.12.
27.12.
3.1.
10.1.
17.1.
24.1.
31.1.
7.2.
14.2.
Wednesday
14.9.
Thursday
15.9.
21.9.
28.9.
5.10.
12.10.
19.10.
26.10.
2.11.
9.11.
16.11.
23.11.
30.11.
7.12.
14.12.
21.12.
28.12.
4.1.
11.1.
18.1.
25.1.
1.2.
8.2.
15.2.
22.9.
29.9.
6.10.
13.10.
20.10.
27.10.
3.11.
10.11.
17.11.
24.11.
1.12.
8.12.
15.12.
22.12.
29.12.
5.1.
12.1.
19.1.
26.1.
2.2.
9.2.
16.2.
Friday
Saturday
16.9.
17.9.
23.9.
30.9.
7.10.
14.10.
21.10.
28.10.
4.11.
11.11.
18.11.
25.11.
2.12.
9.12.
16.12.
23.12.
24.9.
1.10.
8.10.
15.10.
22.10.
29.10.
5.11.
12.11.
19.11.
26.11.
3.12.
10.12.
17.12.
24.12.
30.12.
6.1.
13.1.
20.1.
27.1.
3.2.
10.2.
17.2.
31.12.
7.1.
14.1.
21.1.
28.1.
4.2.
11.2.
18.2.
Semester
Week
Freshmann
Week
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Freshman Week for 1st semester students
Semester starts
All Saint's Day; University closed
Mid-term break
Semester ends
Christmas; University closed from 24.12. to 27.12., 7 am
New Year’s Eve/New Year; University closed from 31.12., 4 pm to 2.1., 7
central examination block
Segmentation of semester weeks:
1st half of the semester: 1st to 6th semester weeks
2nd half of the semester: 9th to 14th semester weeks
Mid-term break: 7th/8th semester weeks
Page 5
Course „Business Administration A & B (1,102 & 2,102)“
Assessment Year 2016/2017
Adress List
COURSE COORDINATION
Prof. Dr. Johannes Rüegg-Stürm, IMP-HSG, Dufourstrasse 40a, CH - 9000 St. Gallen,
Tel (office): 071 224 23 23, E-Mail: johannes.rueegg@unisg.ch
Assistant: Naomi Kink, IMP-HSG, Dufourstrasse 40a, CH - 9000 St. Gallen,
Tel (office): 071 224 39 06, E-Mail: naomi.kink@unisg.ch
PRINCIPAL LECTURERS ACCORDING TO COURSE SEGMENTS
Course Segment 1: Marketing Management
Lecturer German Track
Prof. Dr. Thomas Bieger, Dufourstrasse 48, CH – 9000 St. Gallen,
Tel (office): 071 224 22 04, E-Mail: thomas.bieger@unisg.ch
Lecturer English Track
Prof. Dr. Pietro Beritelli, IMP-HSG, Dufourstrasse 40a, CH – 9000 St. Gallen,
Tel (office): 071 224 25 25, E-Mail: pietro.beritelli@unisg.ch
Assistant
Samuel Heer, M.A. HSG, dipl. Wipäd., IMP-HSG, Dufourstrasse 40a, CH – 9000 St. Gallen,
Tel (office): 071 224 73 42, E-Mail: samuel.heer@unisg.ch
Course Segment 2: The St. Galler Management Model
Lecturer German Track
Prof. Dr. Johannes Rüegg-Stürm, IMP-HSG, Dufourstrasse 40a, CH - 9000 St. Gallen,
Tel (office): 071 224 23 23, E-Mail: johannes.rueegg@unisg.ch
Lecturer English Track
Prof. Dr. Harald Tuckermann, IMP-HSG, Dufourstrasse 40a, CH – 9000 St. Gallen,
Tel (office): 071 224 25 08, E-Mail: harald.tuckermann@unisg.ch
Course Segment 3: Financial Management
Lecturer German Track
Prof. Dr. Dirk Schäfer, ACA-HSG, Tigerbergstrasse 9, CH – 9000 St. Gallen,
Tel (office): 071 224 74 15, E-Mail: dirk.schaefer@unisg.ch
Lecturer English Track
Dr. Simon Pfister, ACA-HSG, Tigerbergstrasse 9, CH – 9000 St. Gallen,
Tel (mobil): 079 421 30 51, E-Mail: simon.pfister@unisg.ch
Assistant
Florian Hohmann, M.A. HSG, ACA-HSG, Tigerbergstrasse 9, CH - 9000 St. Gallen,
Tel (office): 071 224 74 17, E-Mail: florian.hohmann@unisg.ch
Page 6
EXERCISE INSTRUCTORS
Exercise Instructors English Track
Prof. Dr. Petra Kugler, Sonnrainweg 12, CH – 9008 St. Gallen,
Tel (priv.): 071 244 90 14, E-Mail: petra.kugler@unisg.ch
Dr. Stefan Kull, Turnerstrasse 26, CH – 8472 Seuzach,
Tel (priv.): 052 335 02 22, Tel (mobil): 079 820 46 70, E-Mail: stefan.kull@gmx.ch
Prof. Dr. Jens Meissner, Hölzliweg 11, D – 79576 Weil am Rhein,
Tel (mobil): 076 442 59 88, E-Mail: jens.meissner@hslu.ch
Dr. Simon Pfister, ACA-HSG, Tigerbergstrasse 9, CH – 9000 St. Gallen,
Tel (mobil): 079 421 30 51, E-Mail: simon.pfister@unisg.ch
Prof. Dr. Harald Tuckermann, IMP-HSG, Dufourstrasse 40a, CH – 9000 St. Gallen,
Tel (office): 071 224 25 08, E-Mail: harald.tuckermann@unisg.ch
Exercise Instructors German Track
Dr. Carole Ackermann, Im Wiesenmoos 3, CH – 8803 Rüschlikon,
Tel (mobil): 079 358 87 57, E-Mail: ca@diamondscull.ch
Prof. Dr. Daniel Bartl, IMP-HSG, Dufourstrasse 40a, CH – 9000 St. Gallen,
Tel (mobil): 079 250 12 46, E-Mail: daniel.bartl@unisg.ch
Dr. Thomas Bieker, Wiggenweg 1, CH – 9404 Rorschacherberg,
Tel (priv.): 071 245 18 43, E-Mail: thomas.bieker@unisg.ch
Dr. Barbara Desax, 11 Beaulieu Close, Datchet, SL3 9DD Berkshire, United Kingdom,
Tel (priv.): +44 175 354 54 18, E-Mail: bdesax@hotmail.com
Florian Hohmann, M.A. HSG, ACA-HSG, Tigerbergstrasse 9, CH - 9000 St. Gallen,
Tel (office): 071 224 74 17, E-Mail: florian.hohmann@unisg.ch
Dr. Stefan Kull, Turnerstrasse 26, CH – 8472 Seuzach,
Tel (priv.): 052 335 02 22, Tel (mobil): 079 820 46 70, E-Mail: stefan.kull@gmx.ch
Dr. Helen-Deborah Maier, Ormissteig 7, CH – 8706 Meilen,
Tel (mobil): 079 217 63 62, E-Mail: helen-deborah.maier@bluewin.ch
Dr. Christoph Meili, Blattenstrasse 13, CH – 9052 Niederteufen,
Tel (office): 071 278 02 06, E-Mail: christoph.meili@unisg.ch
Dr. Matthias Mitterlechner, IMP-HSG, Dufourstrasse 40a, CH – 9000 St. Gallen
Tel (mobil): 079 309 69 20, E-Mail: matthias.mitterlechner@unisg.ch
Dr. Mathias Müller, Fabrikstrasse 7, CH – 9200 Gossau,
Tel (mobil): 079 276 63 05, E-Mail: matmueller@pro4s.com
Prof. Dr. Stefan Sander, Neugasse 40, CH – 9000 St. Gallen,
Tel (office): 071 220 90 81, Tel (priv.): 071 244 21 06, E-Mail: stefan.sander@sandersg.ch
Dr. Susanne Zajitschek, Glärnischstr. 55, CH – 8805 Richterswil,
Tel (priv.): 043 888 03 44, E-Mail: zajitschek@swissonline.ch
Page 7
Assessment Level, Business Administration, 1,102,1.00
Marketing Management
Module 1: Business Processes and the Marketing
Concept within the St. Gallen Management Model
Introduction
Business Processes
Overview Marketing Concept
Prof. Dr. Pietro Beritelli
20.09.2016
Marketing Management
M1
20.09.2016
Page 2
Adding value processes, companies and
management
Page 8
Marketing Management
M1
20.09.2016
Page 3
St. Gallen Management Model
Environm. spheres
Controversies
Stakeholders
Environment
Management
Normative
Perspective
Decision- Differentiation
making
Imperatives
Strategic
Perspective
Forms of Decision
Processing
Operational
Perspective
Decisionmaking
Capacity
Processes
Stabilization
Source: Rüegg-Stürm & Grand, 2015
Marketing Management
M1
20.09.2016
Page 4
Structure Fall term 2016
7&8
46
9
24.10. 28.10.
10
48
11
49
12
14.11. 18.11.
Organization & Management
7 Their increasing significance over time
21.11. 25.11.
Models and the SGMM IV
8 Overview on the St. Gallen Management Model
28.11. 2.12.
5.12. 9.12.
13
12.12. 16.12.
51
Environment as a landscape of possibilities and expectations
9
10
11
Organization as a value creation system
Organization as a value creation system
es Track
ds Track
Group 2
ds Track
Group 1
Monday, 12 14 Uh
Rüegg Stürm & Grand, The St.Gallen
Management Model, Overview p. 5 9,
Chapter 0.1 0.3, Chapter 2.0.2
Rüegg Stürm & Grand, The St.Gallen
Management Model, Chapter 0.4 0.8
Rüegg Stürm & Grand, The St.Gallen
Management Model, Chapter 1.0 1.2
Rüegg Stürm & Grand, The St.Gallen
Management Model, Chapter 1.3, 2.0.1
– 2.0.5
Rüegg Stürm & Grand, The St.Gallen
Management Model, Chapter 2.1 2.2
Rüegg Stürm & Grand, The St.Gallen
Management Model, Chapter 2.3,
Chapter 3.3.1; Ulrich, The Normative
Foundations of Entrepreneurial Activity
and Normative Orientation Processes
14
19.12. 23.12.
Di., 8 10 Uhr
Tuesday, 8 10 o'clock
3 Case Study "Weisse Arena 3"
5 Case Study "Weisse Arena 5"
Tuesday, 8
10 o'clock
6 Case Study "Weisse Arena 6"
Independent Studies
"Appenzeller Beer"
Semester Break (2 Weeks)
31.10. 11.11.
The St. Gallen Management Model
(Prof. Dr. H. Tuckermann)
47
6 Controlling and Innovation, Guest Lecture
Term Paper
2 Case Study "Weisse Arena 1 and 2"
Wednesday,
14 16
o'clock
12
Management as reflexive design praxis
Tuesday, 8 10 o'clock
44&45
Independent Studies
(StudyNet)
Introduction to Exercises;
1 Formation of Student Teams;
Rules of Cooperation
End of Semester
Page 9
This lecture
takes places
on
Wednesday,
30.11.,14 16
o`clock
Tuesday, 8 10 o'clock
6
Bieger, Marketing Concept The St.
Gallen Management Approach, Chapter
5
Bieger, Marketing Concept The St.
Gallen Management Approach, Chapter
6
(Fridays, 8:15 20:00 o'clock)
4 Case Study "Weisse Arena 4"
Tuesday,
8 10 o'clock
43
5 Marketing Mix 2
Bieger, Marketing Concept The St.
Gallen Management Approach, Chapter
4
Di., 8 10 Uhr
17.10. 21.10.
50
E Book
5
E Book
42
4 Marketing Mix 1
Monday, 12 14 Uhr
10.10. 14.10.
Monday,
12 14 o'clock
4
3 Marketing Strategy
E Book
41
2 Market Analysis
E Book
3.10. 7.10.
Marketing Management
(Prof. Dr. P. Beritelli)
26.9. 30.9.
E Book
3
Book
40
Book
2
Bieger, Marketing Concept The St.
Gallen Management Approach, Chapter
1
Bieger, Marketing Concept The St.
Gallen Management Approach, Chapter
2
Bieger, Marketing Concept The St.
Gallen Management Approach, Chapter This lecture This lecture
takes places
3
takes places
on Friday,
on 12:00
7.10., 18 20
13:30 Uhr
Uhr
Book
39
Introduction, Overview
Business
1 Processes and Marketing Concept in the St. Gallen
Management Modell, Added value
E Book
19.9 23.9.2016
(to be prepared before lecture)
Book
1
Exercises
Mandatory Readings
Topic/ title of Lecture
#
Book
38
Lecture Times
Date
Book/ Studynet
Calender
Week
Semester
Week
Lecture
7 Management in theory
8 Management in practice
9 Environmental analysis, using BMW as an example
10
Controversies and stakeholders, using the
example of BMW
11
Primary value creation at the Grand Resort Bad
Ragaz
12 Frame of Reference, using BMW as an example
Topic Allocation: 13.12.2016
(Deadline: 20.04.2017
Marketing Management
M1
20.09.2016
Page 5
Objectives Module 1
•
•
•
•
•
Marketing Management
M1
20.09.2016
Page 6
Understand management as a reflexive design practice
of the value creation process
Be able to understand the essential dimensions and
classify them into the SGMM (stakeholders,
environments, meaning horizons, etc.)
Knowing business goals and be able to describe their
interactions
Structure business processes and describe their basic
tasks
Knowing the procedure when designing a marketing
concept
Value chain of chocolate
Cocoa
production
Transport
Chocolate
production
Finishing
Page 10
Packaging
Transport
Sale
Marketing Management
M1
20.09.2016
Page 7
Key definitions I
•
Need
«Perceived shortage that the buyer craves to satisfy»
(Kuss & Tomczak, 2001, 118ff)
•
Benefit
«A good’s ability to satisfy a specific need of the
consumer»
(Suchanek, Lin-Hi & Piekenbrock, 2015)
•
Marketing Management
M1
20.09.2016
Page 8
Value
«Expression of a product’s importance for satisfying the
subjective needs»
(Suchanek, Lin-Hi & Piekenbrock, 2015)
Key definitions II
•
•
Adding value
«Difference between the value of the input and the
value of the output of business processes» (Porter, 1986, 19)
Value chain / process
«Depiction of strung performance processes, which are
generating added value independently»
(Österle, 1995, 21)
•
•
Company
«Socio-technical system that provides goods and
services for third parties»
(Rüegg-Stürm, 2003, 20f)
Management
«Reflecting the contingency of organization and
environment»
(Rüegg-Stürm & Grand, 2015)
Page 11
Marketing Management
M1
20.09.2016
Page 9
Contents of Module 1
1. Introduction
2. Administrative notes
3. Management and companies
4. Classification of marketing decisions into management - the St.
Gallen Management Model as a guide
5. Goals of business processes
6. Business dynamics in the interaction of customer processes,
performance processes and innovation processes
7. Planning system for business processes, the marketing concept
8. Outlook
Marketing Management
M1
20.09.2016
Page 10
Traditional value chain
Buying car
Staff training
Telephone
switchboard
Page 12
Transport
Customer
Customer
Indep. drivers
Car industry
Platform
Platform
Marketing Management
M1
20.09.2016
Page 12
Intermediation
Drive service
Reconfiguration of the value chain
due to digitalisation
Fahrzeuge
Marketing Management
M1
20.09.2016
Page 11
Environmental sphers provide opportunities
and threats
Social
environm.
sphere
Legal
environm.
sphere
Economical
environm.
sphere
Political
environm.
sphere
Ethical
environm.
sphere
Natural
environm.
sphere
Page 13
Technological
environm.
sphere
Marketing Management
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Main topics part «Marketing Management»
• Environmental analysis
• Strategy
• Value chain configuration
Business processes
Marketing Management
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Page 14
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Consideration questions from the book
1. How is LÄDERACH embedded in the “chocolate” valueadding process?
2. What are the most important opportunities and threats of changing the
strategy by establishing a second mainstay?
3. What are the characteristics of the existing B2B strategy, in particular
the most important key points regarding target market, strategic
resources and cooperation?
4. What are the most important corporate objectives from the
owner’s point of view?
5. What are the most important premises for the company’s survival
and for reaching the owner’s objectives?
Marketing Management
M1
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Contents of Module 1
1. Introduction
2. Administrative notes
3. Management and companies
4. Classification of marketing decisions into management - the St.
Gallen Management Model as a guide
5. Goals of business processes
6. Business dynamics in the interaction of customer processes,
performance processes and innovation processes
7. Planning system for business processes, the marketing concept
8. Outlook
Page 15
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Module
1
Teaching structure for Marketing Management
Lecture
2
3
Goals &
organisation of the
tutorials
Reading
Studynet questionnaire
Case study text
Textbook, chapter 1
Value creation
Goals
SWOT analysis
Reading
Answer exercise
questions
Studynet questionnaire
Textbook, chapter 2
Market
segmentation
Positioning
Reading
Answer exercise
questions
Textbook, chapter 3
Marketing strategy
Marketing objectives
Market segmentation
Positioning
Customer processes
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M1
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Module
Teaching structure for Marketing Management
Lecture
Tutorials
Preparation
Readings
Marketing mix 1
Performance process
(physical production,
service)
Product design
Customer processes
Performance process
Reading
Answer exercise
questions
Learning platform
questionnaire
Textbook, chapter 4
Pricing
Distribution
Marketing mix
Reading
Answer exercise
questions
Textbook, chapter 5
Innovation
Marketing controlling
Discussing self study
case Locher Bier
Reading
Answer exercise
questions
Textbook, chapter 6
Marketing mix 2
Pricing
Distribution policy
Communication
Marketing mix
6
Readings
Market analysis
Customer behavior
and markets
Objectives of market
research and data
generating
SWOT analysis
Systemic Network
Analysis
5
Preparation
Adding value
Management with
focus on adding value
Classification of
business processes
Structure and aims
Marketing concept
4
Tutorials
Controlling and innovation
Marketing controlling
Innovations
Guest lecture
Page 16
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Lecture questionnaires
a) Questionnaires as discussion input for the lecture
• A questionnaire must be completed via the StudyNet
before some lectures
• The questions must be answered by the Sunday
before the event
b) At the end of each lectures, some reading revision
questions will be discussed. They will be provided after
the lecture within the additional slides on studynet.
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M1
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Contents of Module 1
1. Introduction
2. Administrative notes
3. Management and companies
4. Classification of marketing decisions into management - the St.
Gallen Management Model as a guide
5. Goals of business processes
6. Business dynamics in the interaction of customer processes,
performance processes and innovation processes
7. Planning system for business processes, the marketing concept
8. Outlook
Page 17
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Transaction interface and company
Chocolate producer
Input
Output
Transaction
interface
Transaction
interface
Bieger, T. (2015). Marketing Concept – The St. Gallen
Management Approach. Bern: Haupt.
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M1
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Boundaries of a company
cf. Theory of the Firm (O. Williamson, 1981)
The boundaries of a company are defined by transaction
and organizational costs.
Company
Transaction
interface
Page 18
Transaction
interface
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M1
20.09.2016
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Management cycle according to Fayol (old) and
the SGMM (new)
Preview and
planning
Controlling
Coordination
Organization
Management =
«Reflexive desgin
praxis»
Management
Bieger, T. (2015). Marketing Concept – The St. Gallen
Management Approach. Bern: Haupt.
Marketing Management
M1
20.09.2016
Page 24
Contents of Module 1
1. Introduction
2. Administrative notes
3. Management and companies
4. Classification of marketing decisions into management –
the St. Gallen Management Model as a guide
5. Goals of business processes
6. Business dynamics in the interaction of customer processes,
performance processes and innovation processes
7. Planning system for business processes, the marketing concept
8. Outlook
Page 19
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M1
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«3rd generation» of the St. Gallen Management
Model
Stakeholders
Society
Nature
Environmental spheres
Investors
State
Internal structures
Suppliers
& partners
Educational
institutions
Management processes
Business processes
Support processes
Fields of
interaction
Processes
Customers
Resources
Norms and values
Expectations, concerns,
needs and interests
Media
Employees
NGOs
Bieger, T. (2015). Marketing Concept – The St. Gallen
Management Approach. Bern: Haupt.
Marketing Management
M1
20.09.2016
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«4th generation» of the St. Gallen Management
Model
Environm. spheres
Controversies
Stakeholders
Environment
Management
Page 20
Normative
Perspecive
Decision- Differentiation
making
Imperatives
Strategic
Perspective
Forms of Decision
Processing
Operational
Perspective
Decisionmaking
Capacity
Processes
Stabilization
Rüegg-Stürm & Grand (2015)
Marketing Management
M1
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«4th generation» of the St. Gallen Management
Model
Environm. spheres
Controversies
Stakeholders
Developing of
resource
configuration
Bieger, T. (2015). Marketing Concept – The St. Gallen Management Approach.
Bern: Haupt.
Rüegg-Stürm, J. & Grand, S. (2015). The St. Gallen Management Model
Marketing Management
M1
20.09.2016
Page 28
4th generation of the St. Gallen Management
Model
Normative
Perspective
Decision- Differentiation
making
Imperatives
Strategic
Perspective
Forms of Decision
Processing
Operational
Perspective
Decisionmaking
Capacity
Processes
Stabilization
Bieger (2015); Rüegg-Stürm & Grand (2015)
Page 21
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Marketing Management
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Reference frameworks in the St. Galler
Management Model
Normative
Perspective
DecisionDifferentiation
making
Imperatives
Strategic
Perspective
Forms of Decision
Processing
Operational
Perspective
Decisionmaking
Capacity
Processes
Stabilization
Classification of marketing decisions in the St.
Gallen Management Model
e.g. structuring
Normative
Perspective
DecisionDifferentiation
making
Imperatives
Strategic
Perspective
Forms of Decision
Processing
Operational
Perspective
Decisionmaking
Capacity
business processes,
outsourcing
e.g. bidding
proceedings
Processes
e.g. market knowledge
Stabilization
Page 22
Rüegg-Stürm & Grand (2014)
Marketing Management
M1
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Key aspects in the St. Gallen Management
Model
1. Stakeholders
2. Environment
3. Horizions of meaning
4. Stabilizing & renewal
Marketing Management
M1
20.09.2016
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1. Stakeholders in a company
Supply market
State
Capital
market
Investors
Selling market
Suppliers
& partners
Customers
Added value
Employees
Competitors
Media
Labor market
NGOs
Markets overlap
(e.g. customer,
shareholder)
In a transparent
society all
communication have
to be consistent and
all measures justified.
Market for public attention
Bieger, T. (2015). Marketing Concept – The St. Gallen
Management Approach. Bern: Haupt.
Page 23
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2. Environment:
Comprehensive goal of all stakeholders Sustainability: Triple Bottom Line
Impact of an
enterprise
Business
environment
Natural
environment
Social
environment
Consumption/creation/regeneration of resources
Bieger, T. (2015). Marketing Concept – The St. Gallen
Management Approach. Bern: Haupt.
Marketing Management
M1
20.09.2016
Page 34
3. Significance of the three horizons of meaning
Management
level
Owners/ Board of
Directors
Board of
Directors/
Executive Board
Executive
Board/ Head of
Profit Center
Horizons of
meaning
Normative
management
Strategic
management
Operational
management
Documentation «tool»
Yardsticks
Objectives /
reference values
Conceptual principles
Legitimacy
Viability
•
useful, beneficial
performance
•
no negative external
effects that cannot be
legitimized (for products
and consumption)
•
loyal, happy customers
•
Customer satisfaction
•
Turnover
•
Profit margin/value
proposition
Mission statement
Conceptual principles
Strategic planning
Conceptual principles
Operational planning (annual
budget, annual plan)
Operational monitoring
(incl. operational early warning
system)
Process management
(incl. quality management)
Competitiveness
Economic viability/
Added value
Bieger, T. (2015). Marketing Concept – The St. Gallen
Management Approach. Bern: Haupt.
Page 24
Potential for
success / resources /
market positions
Success/
Liquidity
In the
marketing
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4. Stabilizing and Renewal
•
Organizations have to be equally stable, open for
evelopment and capable for change
(Brown & Eisenhardt, 1997)
«Dynamic stabilization»
(Rüegg-Stürm & Grand, 2015)
•
Processes of opening and closing in the decisions
regarding the reference framework and development
dynamics
(Rüegg-Stürm & Grand, 2015)
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Process
Definition:
A process can be defined 1as a sequence of activities
requiring one or more types of input that generate an output
with a value for a customer.
Output
Input
e.g. product that
generates customer
value
e.g. source substances
Sequence of activities
Source: Bieger (2000, p. 35)
Page 25
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What is a business process?
Business processes...
1. are company activities relating to customers and performance
2. are actually the core purpose of an enterprise ( provision
of performance for third parties in return for remuneration)
3. comprise the primary activity of the enterprise (see value chain by
Porter, 1996)
4. start at the preliminary work markets and end at the sales markets
5. generate value for customers and add value for the company
6. aim to add value for distribution to the stakeholders
7. need to meet the conditions of corporate social responsibility and
sustainability
Secondary procurement market
Marketing Management
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Business process and markets
Preparatory
work
Further processing/
consumption
Business process
Input
Output
Business processes connect markets and
look both backwards and forwards to at least one market.
Page 26
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Consideration questions from the book
1. How is LÄDERACH embedded in the “chocolate” value-adding
process?
2. What are the most important opportunities and threats of changing
the strategy by establishing a second mainstay?
3. What are the characteristics of the existing B2B strategy, in
particular the most important key points regarding target market,
strategic resources and cooperation?
4. What are the most important corporate objectives from the
owner’s point of view?
5. What are the most important premises for the company’s survival
and for reaching the owner’s objectives?
Marketing Management
M1
20.09.2016
Page 40
Contents of Module 1
1. Introduction
2. Administrative notes
3. Management and companies
4. Classification of marketing decisions into management –
the St. Gallen Management Model as a guide
5. Goals of business processes
6. Business dynamics in the interaction of customer processes,
performance processes and innovation processes
7. Planning system for business processes, the marketing concept
8. Outlook
Page 27
Marketing Management
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Page 41
Studynet questionnaire
What are the main goals within the framework of
the business processes for?
– a major bank (e.g. UBS)
– a consumer products company (e.g. clothes)
– a manufacturer of commodities (e.g. PC or car)
– a professional services firm (e.g. consulting, such as
McKinsey)
Marketing Management
M1
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1. Major bank
Commitment to customer focus
"Sergio Ermotti, whose appointment at the weekend as interim Group
CEO of UBS came as a surprise, wants to shrink investment banking
and increase its customer focus…"
"The investment bank is a leading provider in many areas and is
important for both personal and business and institutional clients..."
"…UBS will continue to invest in its core competencies. However, the
investment bank as a whole will be less complex and take fewer risks
as well as use less capital..."
"…The influential Swiss shareholder representative Ethos is demanding
a separation of investment banking. UBS will stand by the model of an
integrated bank in which asset management, investment banking and
the Swiss business complement one another..."
said Ermotti.
Page 28
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2. Consumer products
Corporate Irresponsibility? Fashion’s Hidden Cost in Bangladesh’s
Garment Industry (I/II)
Do companies have a responsibility to ensure
the health and safety of the workers who
manufacture the clothing they sell? Do
consumers have any responsibility for
workers in other countries who make their
clothing?
Ever since a building with garment factories collapsed
in Bangladesh last week, killing more than 400
people, Western apparel companies with ties to the
country have scrambled to address public concerns
about working conditions there.
Bangladesh has some of the lowest wages in the
world, its government is eager to lure Western
companies and their jobs, and many labor groups
want those big corporations to stay to improve
conditions, not cut their losses and run.
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Page 45
2. Consumer products
Corporate Irresponsibility? Fashion’s Hidden Cost in Bangladesh’s
Garment Industry (I/II)
Walmart’s “Live Better” initiatives are making a difference
Save money. Live better. These are the words we live by at
Walmart. Our “Every Day Low Cost” strategy helps people save
money, stretch their paychecks, and provide a better life for their
families. But the work we do to help people live better goes far
beyond our store walls. It extends into our communities and
around the world and affects the lives of people we will never
meet.
Mr. Liu has been singling out Walmart in particular. “The tragedy in Bangladesh
may finally bring home the lesson to Walmart and others that they are
responsible for their suppliers,” he said. Walmart, Gap and H&M did not use any
of the five factories in the building that collapsed, but customs records show that
two American companies — the Children’s Place and Cato Fashions — bought
significant amounts of apparel from factories there over the last year.
Page 29
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3. Commodities
Competition for technology or market share?
Marketing Management
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20.09.2016
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3. Commodities
Technical superiority – vs. cost advantage?
BMW focuses entirely on
Munich.
The group is planning a
massive expansion of its
research activities in the
Bavarian regional capital.
The capacity for the location should also
create an additional 10,000 to 15,000
jobs, said a company spokesperson.
Some of these are likely to be new jobs, but
above all the goal is to bring in previously
scattered development engineers and
bind them to the research and innovation
center.
Furthermore, space for suppliers'
employees should be created on the site.
Page 30
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Goals of business processes
Contribution to sustainability/corporate social responsibility
3. Company value
Sustainable free cash flows
Production costs
2. Added value
Profit - Goals
Sales
Growth targets
(e.g. market share)
1. Customer value
Price/willingness to pay
'Value for the customer'
Innovation
Marketing Management
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Goal constructs
1. Customer value
2. Added value
3. Company value
Page 31
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1. Perceived customer value
Satisfaction/
perceived benefit of
alternatives
Expectations
Quality
Satisfaction/
perceived benefit
Relative perceiv
ed benefit
Willingness to
pay
Performance
Relative perceived
customer benefit
(customer value)
Perceived intangible
costs
Perceived costs
Relative perceived
costs
Perceived tangible
costs
Behavioral
outcomes
Repeat
purchase
Word of mouth
advertising
Perceived costs of
alternatives
Based on Matzler, 2000
Marketing Management
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Behavioral Outcomes – New dimension of
«word of mouth» in the digital age
Page 32
Source: Financial Times, January 7, 2015
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M1
20.09.2016
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2. Added value
= Primary goal of business processes
Preparatory
work
(Goods & services
procured from
third parties)
Depreciation
Turnover
Employees
State
Gross added
value
Net
added value
External investors
Internal investors
Business
Based on Bieger (2000)
Example of added-value statement for a
trading and transport company
90%
80%
70%
60%
Added value
Added value
100%
Anteil der Wertschöpfung [%]
Marketing Management
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50%
40%
Gewinn
Profit
Steuern
Taxes
Übrige
Auwände
Other expenditure
Abschreibungen
Depreciation
Personalaufwand
Personnel costs
Vorleistungen
Preparatory work
30%
20%
10%
0%
Retailer
Transport
High proportion of preparatory
work and personnel costs
High proportion of depreciation
and personnel costs
Source: www.migros.ch / Rigi-Bahnen
Page 33
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Example of an added-value statement I
Volkswagen Group – Annual Report 2012
Value added generated by the Volkswagen Group – Source of funds
Source of funds in € million
Sales revenue
Other income
Cost of materials
Depreciation and amortization
Other upfront expenditures
Value added
Appropriation of funds in € million
to shareholders (dividend)
to employees (wages, salaries, benefits)
to the state (taxes, duties)
to creditors (interest expense)
to the Company (reserves)
Value added
2012
2011
192'676
24'652
-122'450
-13'135
-22'077
59'666
159'337
13'125
-104'648
-10'346
-9'759
47'709
2012
%
2011
%
1'639
2.8
1'406
2.9
29'503
4'322
3'957
20'246
59'666
49.5
7.2
6.6
33.9
100.0
23'854
4'525
3'530
14'393
47'709
50.0
9.5
7.4
30.2
100.0
to shareholders
(dividend)
to employees
(wages, salaries,
benefits)
to the state
(taxes, duties)
to creditors
(interest
expense)
to the Company
(reserves)
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Example of an added-value statement II
Quelle: www.rigi.ch
Page 34
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3. Relationship between customer value, added
value and company value
Demand-specific
perspective
Perceived
customer benefit
(customer value)
Enterprise-specific
perspective
Customer
loyalty
Willingness to
pay
Recommenda
tion
Value of the
customer
(customer equity)
Revenues
across all
customers
Costs/
- Input
factors
value for
= Added
the enterprise
Discounted future
free cash flows
Company
value
Willingness to
complain
Behavioral
Outcomes
Marketing Management
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Page 61
Consideration questions from the book
1. How is LÄDERACH embedded in the “chocolate” value-adding
process?
2. What are the most important opportunities and threats of changing the
strategy by establishing a second mainstay?
3. What are the characteristics of the existing B2B strategy, in particular
the most important key points regarding target market, strategic
resources and cooperation?
4. What are the most important corporate objectives from the
owner’s point of view?
5. What are the most important premises for the company’s
survival and for reaching the owner’s objectives?
Page 35
Marketing Management
M1
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Page 62
Contents of Module 1
1. Introduction
2. Administrative notes
3. Management and companies
4. Classification of marketing decisions into management –
the St. Gallen Management Model as a guide
5. Goals of business processes
6. Business dynamics in the interaction of customer processes,
performance processes and innovation processes
7. Planning system for business processes, the marketing concept
8. Outlook
Marketing Management
M1
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Page 63
Structure of the business processes
Customer process
Reputation process / branding process
Customer acquisition process
Customer retention process
Performance process
Innovation process
Source: Bieger (2004, p. 38)
Page 36
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Decisions on the business processes
(I) Customer process
Reputation process / branding process:
How can I build a reputation (i.e. trust, affinity)?
Use of branding?
Customer retention:
How do I create customer
loyalty? E.g. preventing
customers leaving (lock-in)
or solidarity strategy
(bonus programs)
Marketing tools
Customer acquisition:
How do I acquire customers?
E.g. winning new customers
or enticing customers away from
the competition
(II) Performance process
How do I provide the performance, i.e. what is my product/service
range (what do I outsource), what type of production do I
use, how do I manage the performance provision with IT?
Target market/
positioning
(III) Innovation process
How do I put new customer requirements into practice or how do I
use new technologies (pull or push)? How do I design the
development process?
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(I) Customer process: the customer's buying cycle
Contact phase
Repeat purchase
Usage phase
Purchase
phase
Evaluation phase
Time
expanded according to Dittrich, 2002, 140; based on Mauch, 1990, 16
Page 37
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Reputation/branding processes as overlaying
processes
Brand = «Symbol or a name
that has a monopoly position for
a specific use in the consumer’s
mind»
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Examples of reputation/branding processes
Page 38
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Examples of reputation/branding processes
(II) Performance process as a value chain
Procurement
Processing
Stage 1
Processing
Stage 2
Transaction points
Page 39
Packaging
Outbound
logistics
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Possible roles of a company in a value chain
Layer Player Model
Market Maker Model
Market
Maker
Orchestral Model
Integrated Model
as per Knyppenhausen-Aufsess & Meinhardt, 2002, 95
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Possible roles of a company in a value chain
(examples)
Layer Player Model
Market Maker Model
Market
Maker
Orchestral Model
Integrated Model
Page 40
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Performance process: physical goods and
services
Procurement
market
Sales
market
Transformation
Service
activity
Customer
Customer processed
Service chain
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Service chain - incoming
Information/
reservation
Travel
Local info
Subsistence
Accom
modation
Transport
Activity/
animation
Entertain
ment
Departure
Follow up
support
Bieger & Schallhart, 1997
Page 41
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(III) Innovation process: five-phase product
lifecycle model as an enabler
Turnover
Profit
Loss
Turnover curve
Profit/loss curve
Time
Introduction
Growth
Maturity
Saturation
Decline
based on Kotler & Biemel, 1999, 566
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Interaction of performance and customer
systems. Basis for integrated business models
Customer
acquisition
Innovation
Performance
provision
process
Performance
provision
Customer
process
Customer
retention
Performance
cultivation
Source: Belz & Bieger (2004, p. 47)
Page 42
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Interaction of performance and customer
systems
Consideration questions from the book
6. What does the company’s value chain look like with the
old and with the new strategy?
7. How can the company’s “limit” in the value chain be
explained?
8. What are the most important issues that have to be
addressed when changing the strategy?
Page 43
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Contents of Module 1
1. Introduction
2. Administrative notes
3. Management and companies
4. Classification of marketing decisions into management –
the St. Gallen Management Model as a guide
5. Goals of business processes
6. Business dynamics in the interaction of customer processes,
performance processes and innovation processes
7. Planning system for business processes, the marketing
concept
8. Outlook
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M1
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Page 79
Marketing - Definition
Marketing as
Management philosophy
Function
Marketing is the deliberately market-focused
management of the entire enterprise or
market-focused decision-making behavior in
the enterprise.
Marketing is the performance of
company activities that guide the flow
of goods and services from the
producer to the consumer or user.
Marketing is so fundamental that it cannot be
regarded as a separate function. ...It relates to
the entire company activity viewed from the
perspective of its end result, i.e. from the
customer's point of view. Responsibility and
accountability for marketing must therefore
penetrate every area of the enterprise.
Source: Kuss & Tomczak (2004)
Market orientation:
“Market orientation means the implementation of the marketing concept.
Hence, a market-oriented organization is one whose actions are
consistent with the marketing concept.”
Source: Kohli & Jaworski (1990)
Page 44
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Development of marketing
Producer
Consumer
Market development
(primarily geographic: all products for everyone)
Market cultivation
(advertising)
Segmented market approaches
(misc. beer types)
Individualized marketing
(thanks to the Internet)
Communities, C2C
Social web, crowdsourcing,
prosumer
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Example Liberty Ships
Page 45
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Vision: own chain of surfing stores
Which stage of the development of marketing should be used?
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Definition of a marketing concept
A marketing concept can be considered as a coherent,
holistic plan of action that is geared to the desired goals, that
selects suitable strategies for their implementation and, based
on these, defines appropriate marketing tools.
Source: Becker (2001, p. 5)
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Marketing concept
Normative orientation processes
Development of vision, mission,
guiding principles, code of ethics etc.
Strategic development processes
Strategic analyses e.g.
•SWOT analysis
•Industry analysis
•Portfolio analysis to develop portfolio
strategies (role of SBUs)
•Skills analysis to build up core
competencies
•Analysis of strategic groups
•Stakeholder analysis
Operation management processes
Coordination and management of day-to-day
business
Vision, mission, guiding principles
Marketing concept
Market analysis
e.g. SWOT analysis
of the market
Marketing strategy
- Decision on target markets
- Positioning decision
Customer
processes
Performance
processes
Innovation
processes
Product
Controlling
•Definition of KPIs
•Monitoring of assumptions
•Measurement of progress
Communication
Marketing mix
Pricing
Distribution
Marketing controlling:
market KPIs
Bieger, T. (2015). Marketing Concept – The St. Gallen Management Approach. Bern: Haupt.
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Consideration questions from the book
6. What does the company’s value chain look like with the old
and with the new strategy?
7. How can the company’s “limit” in the value chain be
explained?
8. What are the most important issues that have to be
addressed when changing the strategy?
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Summary Module 1
Organization
SGMM
operative
Environment
Environmental
spheres
Stakeholder
Stabilizing/
renewing
See environment as
resource
Definition
Meta system
strategic
normative
Horizons of
meaning
M1
Businses
processes
Definition
process
Development
Company value
Marketing
concept
Customer process
- Brand
- Buying Cycle
Performance process
- Role of a company
in the value chain
Added value
Customer value
Goals
Marketing
Process
Innovation process
- Product life-cycle
Classification
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Contents of Module 1
1. Introduction
2. Administrative notes
3. Management and companies
4. Classification of marketing decisions into management –
the St. Gallen Management Model as a guide
5. Goals of business processes
6. Business dynamics in the interaction of customer processes,
performance processes and innovation processes
7. Planning system for business processes, the marketing concept
8. Outlook
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Module
1
Outlook
Lecture
Readings
Goals &
organisation of the
tutorials
Reading
Studynet questionnaire
Case study text
Textbook, chapter 1
Value creation
Goals
SWOT analysis
Reading
Answer exercise
questions
Studynet questionnaire
Textbook, chapter 2
Market
segmentation
Positioning
Reading
Answer exercise
questions
Textbook, chapter 3
Market analysis
Customer behavior
and markets
Objectives of market
research and data
generating
SWOT analysis
Systemic Network
Analysis
3
Preparation
Adding value
Management with
focus on adding value
Classification of
business processes
Structure and aims
Marketing concept
2
Tutorials
Marketing strategy
Marketing objectives
Market segmentation
Positioning
Customer processes
Page 49
Assessment Level, Business Administration, 1,102,1.00
Marketing Management
Module 2: Market analysis
Customer behavior and markets
Aims of market research and generation of data
SWOT analysis
Systemic network analysis
Prof. Dr. Pietro Beritelli
27.09.2016
«3rd generation» of the St. Gallen Management
Model
Stakeholders
Society
Nature
Environmental spheres
Investors
State
Internal structures
Suppliers
& partners
Customers
Management processes
Educational
institutions
Business processes
Support processes
Fields of
interaction
Processes
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Resources
Norms and values
Employees
Expectations, concerns,
needs and interests
Media
NGOs
Bieger, T. (2015). Marketing Concept – The St. Gallen
Management Approach. Bern: Haupt.
Page 50
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«4th generation» of the St. Gallen Management
Model
Environm. spheres
Controversies
Stakeholders
Environment
Management
Normative
Perspective
Decision- Differentiation
making
Imperatives
Strategic
Perspective
Forms of Decision
Processing
Operational
Perspective
Decisionmaking
Capacity
Processes
Stabilization
Source: Rüegg-Stürm & Grand, 2015
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Repetition 1a:
Example Airport Zurich
• Quoted on the stock exchange
• Kanton Zürich as majority
stockholder
• Profitabele
• Fee dispute with SWISS
1. How much is the airport
involved in the aviation transport
value chain?
2. What weight do the individual stakeholders have?
3. Which has to be the most important objectives in
terms of business processes?
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Repetition 1b:
European seed regulation
1. Describe the value chain
for agricultural products
2. Which elements are why
profitable / not
profitable?
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Added value
= Primary goal of business processes
Preparatory
work
(Goods & services
procured from
third parties)
Depreciation
Turnover
Employees
Gross added
value
State
Net
added value
External investors
Internal investors
Business
Based on Bieger (2000)
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Significance of the three horizons of meaning
Management
level
Horizons of
meaning
Owners/ Board of
Directors
Normative
management
Strategic
management
Board of Directors/
Executive Board
Executive
Board/ Head of Profit
Center
Operational
management
Documentation «tool»
Yardsticks
Objectives /
reference values
Conceptual principles
Mission statement
Legitimacy
Viability
Conceptual principles
Strategic planning
Conceptual principles
Operational planning (annual
budget, annual plan)
Operational monitoring
(incl. operational early warning
system)
Process management
(incl. quality management)
Competitiveness
Economic viability/
Added value
useful, beneficial
performance
•
no negative external
effects that cannot be
legitimized (for products
and consumption)
•
loyal, happy customers
•
Customer satisfaction
•
Turnover
•
Profit margin/value
proposition
Potential for
success / resources /
market positions
Success/
Liquidity
Bieger, T. (2015). Marketing Concept – The St. Gallen
Management Approach. Bern: Haupt.
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•
In the
marketing
Repetition 2:
Example Maestrani
• Local chocolate producer from Flawil SG
• Brands: maestrani, Minor, Munz
• In ownership of three families
What are the main challenges for a local chocolate
producer on strategic and operational level?
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Decisions on the business processes
(I) Customer process
Reputation process / branding process:
How can I build a reputation (i.e. trust, affinity)?
Use of branding?
Customer acquisition:
How do I acquire customers?
E.g. winning new customers
or enticing customers away from
the competition
Customer retention:
How do I create customer
loyalty? E.g. preventing
customers leaving (lock-in)
or solidarity strategy
(bonus programs)
(II) Performance process
How do I provide the performance, i.e. what is my product/service
range (what do I outsource), what type of production do I
use, how do I manage the performance provision with IT?
(III) Innovation process
How do I put new customer requirements into practice or how do I
use new technologies (pull or push)? How do I design the
development process?
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Marketing concept
Normative orientation processes
Development of vision, mission,
guiding principles, code of ethics etc.
Strategic development processes
Strategic analyses e.g.
•SWOT analysis
•Industry analysis
•Portfolio analysis to develop portfolio
strategies (role of SBUs)
•Skills analysis to build up core competencies
•Analysis of strategic groups
•Stakeholder analysis
Operation management processes
Coordination and management of day-to-day
business
Vision, mission, guiding principles
Marketing concept
Market analysis
e.g. SWOT analysis
of the market
Marketing strategy
- Decision on target markets
- Positioning decision
Customer
processes
Performance
processes
Innovation
processes
Controlling
•Definition of KPIs
•Monitoring of assumptions
•Measurement of progress
Product
Communication
Marketing mix
Pricing
Distribution
Marketing controlling:
market KPIs
Bieger, T. (2015). Marketing Concept – The St. Gallen Management Approach. Bern: Haupt.
Page 54
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Module 2
Module
Lecture
1
Preparation
Readings
Adding value
Management with
focus on adding value
Classification of
business processes
Structure and aims
Marketing concept
2
Goals &
organisation of the
tutorials
Reading
Studynet questionnaire
Case study text
Textbook, chapter 1
Value creation
Goals
SWOT analysis
Reading
Answer exercise
questions
Studynet questionnaire
Textbook, chapter 2
Market
segmentation
Positioning
Reading
Answer exercise
questions
Textbook, chapter 3
Market analysis
Customer behavior
and markets
Objectives of market
research and data
generating
SWOT analysis
Systemic Network
Analysis
3
Marketing strategy
Marketing objectives
Market segmentation
Positioning
Customer processes
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Tutorials
Objectives module 2
•
•
•
•
•
•
Knowing the basic functions of markets
Ability to define the relevant markets for entrepreneurial
activities
Knowing the basic concepts for explaining buying
behavior
Knowing the basic definition of key market size
variables (market volume, market capacity, etc.) and
being able to estimate them
Being able to classify trends and to assess their
feedback reactions in a network analysis
Being able to do a SWOT analysis on the level of
business processes for specific situations
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Mammut case study
What market are we in?
Market types and their challenges
1) Customer behavior
and markets
How can customer behavior be explained?
What do my customers want? (motives & needs)
2) Aims of market
research and
generation of data
How big is the market?
What are the demand trends?
Use of market research tools
3) SWOT analysis
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Contents of Module 2
1. Definition and function of markets
1.1 Players and market types
1.2 Motives, needs, benefits and demand
2. Market research
2.1 Recording of market values
2.2 Trends in supply and demand
3. SWOT analysis
4. Outlook
Page 56
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Market - Function and Definition
Market:
Place where supply and demand meet
Exchange of goods, information and/or services
Pricing
Can be delimited materially (product, service, information)
Can be delimited geographically
Can be delimited in time
Use requires transaction costs
Source: based on Bieger (2001)
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Market – Interaction of supply and demand
Price P
Demand
Supply
equilibrium
price
equilibrium
quantity
Page 57
Quantity Q
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Composition of demand
Price
Individual preferences
Individual willingness to pay
Customer 4
Customer 3
Customer 2
Customer 1
Price x
Quantity
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Market identification and challenge
Intrawest Video
In which market is the
company faced with
which particular
marketing challenges?
Which factors sustain a
business model?
Video: Club Intrawest - The Crosby Family, Length: 1:01
Page 58
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Market types
Different decision making processes depending on the type
of market
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Customer system
Buyers / market
Community
Co-customers
Co-decision-makers /
decision influencers
(e.g. family)
Customer
Assurance / security
Social exchange / identity
Structures / infrastructures
Atmosphere
Social exchange / identity
Structures / infrastructure
Who does marketing address?
Source: Belz & Bieger, 2004, 46
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Benefits of long-term customer relationships
Customer club
Revenue
Additional
offers
Discounts,
active sales
Savings on
repeat
purchases
Contribution
Additional to acquisition
purchases
of new
"cross-selling" customers
"Share of
wallet"
Acquisition
costs
"Word of
mouth"
Decreasingly
critical
attitude
Length of relationship
Costs
Source: based on Österle, Schmid & Bach, 2000
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Contents of Module 2
1. Definition and function of markets
1.1 Players and market types
1.2 Motives, needs, benefits and demand
2. Market research
2.1 Recording of market values
2.2 Trends in supply and demand
3. SWOT analysis
4. Outlook
Page 60
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Learning platform questionnaire
What are generally the main motives for your
holiday?
–
–
–
–
–
–
–
–
–
–
–
–
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Nightlife
Comfort, indulgence
Time for your partner
Time for the family
Time for yourself
Landscape/nature
Visiting attractions
Spontaneous, flexible decision
Beauty
Sport
Sun and sand
Other
Motives, needs, benefits
Motive:
Motivation
Fundamental "driving force"
that can be explained
by internal factors
change as a result of
external and internal influences
Need:
Feeling of a lacking
Lack felt that needs to be
satisfied
Acts against the background
of external influences and
from inside
Benefit:
Satisfying a need
Benefit of a good/
service results directly
from the contribution
to satisfying the need
Source: Kuss & Tomczak (2004), Samuelson (1961)
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Approach to explaining customer behavior
1. Benefit
approaches
(static)
"neoclassic"
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2. Behavior models
(dynamic)
"behavioristic"
1. Traditional structuring approaches for needs
according to Maslow
General
explanation
Tourism
examples
Self-fulfillment, happiness, joy
Travel as a customized
experience, e.g.
tour through Greenland
Social acknowledgement, power,
freedom, prestige
Travel as a social
event, e.g. community
trips / luxury trips
Love, friendship,
communication,
feeling of security
Club trips,
private visitors'
trips
Laws, pensions,
insurance
Business trips, vacations
in locations with guaranteed
snow or sun
Food, drink,
sleep, health
Local recreation,
commuter traffic
Source: based on Freyer, 1998
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2a. Purchase decision-making processes for
holiday travel
Environment
Potential tourist
Motivation
Vacation experience
Vacation preferences
Alternative strategies
Stay at home
Go away
Specify
vacation requirements
Search process
Systematic
information procurement
There is
Special knowledge
Preliminary choice of potential regions
Search for suitable accommodation
Evaluate alternative accommodation using
vacation criteria
Satisfied
Dissatisfied
Compare with
other options
If repeated
Change the
vacation
requirements
Choose the
best alternative
Restructure
the search
process
No
vacation
Source: Goodall, 1998
Book the vacation
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2b. Behavior model (S-O-R model)
Familiar
destinations and
tourism products
Marketing
(advertising etc.)
Reference
groups
internal
Information
consolidation
Value system/
lifestyle
Information
search
Learning
processes
Categorize
Evaluate
Save
Replace
Images/
risk assessment
external
Inputs
Socio-demographic
grouping
Stimuli
Preferences/
attitudes
Decision
Comparison of
expectations vs.
performance
Organism
Response
Source: based among others on Correia, 2002
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Theory of planned behavior – intended and real
behavior
Attitude
toward the
Behavior
Subjective
Norm
Intention
Perceived
Behavioral
Control
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Stated
Behavior
Source: Ajzen, 1991, 182
Revealed Preferences
Not aware
undeliberately
suppressed
aware and
willing
Actual preference
Socially
unacceptable
deliberately
suppressed
Socially or
personally
desirable
Hidden
manifest preference
Stated/
confessed preference
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Example of stated and revealed preferences
Stated/
confessed preference
Hidden
manifest preferences
Socially desirable:
Actually desired:
Learning about other cultures
Being free, going to parties
Having time for the family
Having time for yourself
Usually
«Pull»
motives
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Usually
«Push»
motives
Contents of Module 2
1. Definition and function of markets
1.1 Players and market types
1.2 Motives, needs, benefits and demand
2. Market research
2.1 Recording of market values
2.2 Trends in supply and demand
3. SWOT analysis
4. Outlook
Page 65
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Market research methods
Qualitative:
•
•
•
Observation
In-depth/group interview
Analysing texts and documents
Quantitative:
•
Secondary
Data analysis, e.g. trend analysis
•
Primary
Survey
Descriptive, statistical
Multivariate
Perception
Big Data
Real Behavior
Pattern recognition
Source: Silverman, D. (2005). Interpreting Qualitative Data (2nd ed.). SAGE: London.
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Qualitative methods
Advantages:
• Flexibility instead of
standardization
• Contextuality
• Reflexivity
Disadvantages:
• Subjectivity
• Biases in the interpretation
• Very small number of cases
Lack of representativeness
Source: Silverman, D. (2005). Interpreting Qualitative Data (2nd ed.). SAGE: London.
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Data analysis
Example: Method of moving average
Moving
average
Data
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Survey
Example: Survey Travel Market Switzerland
Page 67
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Big Data
Example: Customer segmentation
«Big Data don’t want to understand the individual
customer, but how customer groups can be addressed
better, more specific and more efficient.»
(E. Wilcsek, 2015)
•
•
•
•
•
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Transparency
Increasing amount of data
Real-time system
Forecast system
Early warning system
Contents of Module 2
1. Definition and function of markets
1.1 Players and market types
1.2 Motives, needs, benefits and demand
2. Market research
2.1 Recording of market values
2.2 Trends in supply and demand
3. SWOT analysis
4. Outlook
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What is the potential for headlamps?
Trends
Market
volumes
Needs
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Market size (Training watches as a fictitious example)
Current market volume
approx. 100% market
saturation (5.04 million
customers)
Market capacity
e.g. millions of people who do
sport: 5.6 million potential
customers
Note
According to Polar's annual
report 2010, the penetration
of Polar watches among
Swiss customers is 119% (9
million Polar watches). The
reasons include additional
applications developed for
sports watches: e.g.
running, multisport, cycling,
fitness and leisure use.
Market potential
Theoretical max. penetration
e.g. 90% (demand at a particular
market price): 5.04 million
Market share
40% (2.02 million customers)
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Contents of Module 2
1. Definition and function of markets
1.1 Players and market types
1.2 Reasons, needs, benefits and demand
2. Market research
2.1 Recording of market values
2.2 Trends in supply and demand
3. SWOT analysis
4. Outlook
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Needs and trends
What will be the future demand
for helmet cameras?
Page 70
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Definition of a trend
Trend = Development direction or flow
Source: Bieger (2001)
Trends, by definition, are broad, sweeping and
long lasting; they represent fundamental changes
in our society and culture.
Source: Popcorn at URL:
http://www.barberusa.com/business3/popcorn_faith.html
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Leisure trends?
Kitesurfing
Speedminton
Skiking
Parkour
Sport climbing
Page 71
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Types of trend and their life expectancy
A: Hype
B: Fashion phenomenon
C: Medium-term trend
D: Long-term trend
Familiarity
D
C
B
Trend threshold
A
Time
Source: Buck/Hermann/Lubkovitz (1998)
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Trends
Page 72
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Important trends
...establish demand
trends:
Fundamental
megatrends...
(e.g. food trends)
• Multiple options
• Selection
• Risk society
• Health
• Service society
• Convenience
• Individualization
• Adaptability
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Trend development
Environment
ecological
political
economic
Social development
Megatrends
Demand trends
Opportunities / threats
Page 73
technological
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Trends in the travel market
Social environment
- demographic change: new living
models and family forms
Business environment
- Globalization: intensification of
competition
- Globalization: cultural change,
cultural diversity
- New offers/competitors, industry
migration
- Knowledge society, economic
differentiation
-
Golden Agers
Time/cash-poor
Multiple options
Dream worlds
Soft individualism
Hybrid consumption
Risk society
- Retirement homes
- Low-cost airlines/lowbudget hotels
- Luxury offers
- Holiday clubs
- Theme parks
- Family hotels
- Adventure activities
Technological environment
- Virtualization
Natural environment
- Scarcity of resources
- Environmental risks
Environmental development
Megatrends
Demand trends
Source: see Bieger (2006), Laesser & Bieger (2008) etc.
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Trend research methods
1. Trend scouting
2. Scanning
3. Semiotics
4. Trend monitoring
5. Future lab
6. Scenario method
7. Delphi study
8. Network analysis
Page 74
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Demand trends with feedback reactions –
as a result of various influence factors:
Systemic network analysis
to
from
Major influences:
Sports trend
Working hours
Family structure
Outdoor orientation
Regulation
Budget for leisure act.
etc.
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Network analysis in marketing research
Example:
What causes flexible prices in the long-distance transport
of the SBB?
e.g. route Zürich – Bern
08:00
09:30
SFr. 150.SFr. 25.-
Page 77
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Proceeding
1. Identifying central elements (direct, indirect effects)
–
–
–
–
–
Customers
Demand Railway
Demcand Car
Capacities Railway
Capacities highway
2. Expansion of the view by identifying relevant
stakeholders and environmental spheres
– Consumer protection
– Politics
– Regulator
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Proceeding
3. Determine the network – first the central «motor»
Customers
Demand
railway
Prices
Capacity utilisation
railway
Page 78
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Proceeding
4. Expansion with
– Indirect effects
– Additional actors
– Additional environmental spheres
Social
environment
Demand car
Consumer protection
Capacity utilisation
highway
Political
environment
Politics
Customers
Demand
railway
Prices
Capacity utilisation
railway
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Proceeding
5. Impact matrix
from
to
Pr
Cu
DeRa
CaRa
Prices
Customers
Demand railway
Capacity utilisation railway
Demand car
Capacity utilisation highway
Politics
Customer protection
Passiv sum
Page 79
DeCa
CaHi
Pol
CuPr
Active sum
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Proceeding
5. Impact matrix
to
from
Pr
Prices
Cu
DeRa
CaRa
CaHi
1
1
1
1
0.5
Capacity utilisation highway
1
1
1
1
1
Customer protection
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3
0.5
1
2
1
1.5
Active sum
1
Demand car
Passiv sum
CuPr
1
Demand railway
Politics
Pol
1
Customers
Capacity utilisation railway
DeCa
1
1
1
0.5
2
2
1
1
Systemic network analysis – Holistic problem
solving
Steps
1. Discovering and identifying problems
2. Understanding relationships and conflicts in the problem
situation (network analysis)
3. Developing design and steering options
Source: Based on Gomez, P. & Probst, G. (2004), Die Praxis des ganzheitlichen Problemlösens, 3. ed..
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1. Discovering and identifying problems
• Taking up different point of views
• Company
• Stakeholder
• etc.
• Determining the purpose of the system (for each point of
view)
• Deducing key factors (for each point of view)
Source: Gomez, P. & Probst, G. (2004), Die Praxis des ganzheitlichen Problemlösens, 3. ed.
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2. Understanding relationships and conflicts in
the problem situation
• Identifying the central cycle
• Motor of the system
• Positive / negative direction of the effect
• Building the network
• Adding more elements
• Determine temporal dependencies and intensities
• Short, medium, long term
• Influence, suggestibility
Source: Gomez, P. & Probst, G. (2004), Die Praxis des ganzheitlichen Problemlösens, 3. ed.
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2. Understanding relationships and conflicts in
the problem situation
Types of Element in the impact matrix
• Active elements
Strongly affect other elements (high active sum), are weakly affected by
other elements (low passive sum),
Multiplication effects
• Critical elements
Strongly affect other elements (high active sum), are strongly affected by
other elements (high passive sum),
Multiplication effects, caution
chain reaction
• Reactive elements
Weakly affect other elements (low active sum), are strongly affected by
other elements (high passive sum),
Indicators
• Lazy elements
Weakly affect other elements (low active sum), are weakly affected by
other elements (low passive sum),
no steering function
Source: Gomez, P. & Probst, G. (2004), Die Praxis des ganzheitlichen Problemlösens, 3. ed.
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3. Developing design and steering options
• Identifying modifiable and non-modifiable elements
• Which elements can I manipulate?
• Identifying steering options
• Which elements are manipulable and have a strong influence on the
system?
• Defining indicators
• Which elements show you the achievement of objectives?
Source: Gomez, P. & Probst, G. (2004), Die Praxis des ganzheitlichen Problemlösens, 3. ed.
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Example of tourism (from the textbook)
SBB impact model – analysis on company level
Results SBB
-
Price
Revenues
-
Costs
Punctuality
Dislocation
Demand
Timetable offerings
-
negative
Beziehung
relationship
Source: Wittmer, Gross, Bieger & Olesen (2012)
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Systematic analysis of new trends using the
moped as an example – analysis on industry
sector level
4b
4a
Legal environment
2
Social
environment
5
Offers
1
3
7
Innovation
6
8
Demand
Scarcity of resources
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Contents of Module 2
1. Definition and function of markets
1.1 Players and market types
1.2 Motives, needs, benefits and demand
2. Market research
2.1 Recording of market values
2.2 Trends in supply and demand
3. SWOT analysis
4. Outlook
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SWOT analysis
Strengths
–
Weaknesses
Opportunities
1.
–
Threats
2.
Supply analysis
(Inside-Out)
Competition
Market analysis
(Outside-In)
Offer
Trends
Offers
Source: based on Porter (1980)
SWOT analysis
Competition/
Demand
Trends
high
Threats
e.g. Relative market share
Rel. competitive strength
Weaknesses
Strengths
Product / Service
low
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Opportunities
Unique Selling
Proposition (USP)
Achilles heel
low
e.g. Market growth/
Market attractiveness
Page 85
high
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1. Supply analysis:
Sequence of analysis of strengths/weaknesses
Performance process chain
Benefit dimensions
Criteria for performance evaluation
Competition
Current requirements
Product / service
evaluation
Strengths / weaknesses
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Analysis of strengths and weaknesses
(e.g. Appenzeller Bier)
Customer oriented
criteria
Strength
Weakness
Justification
• natural foam formation
• Is related to the new technology
• Bio quality
• Trend-setter in this area
• fresh taste
• Good because of the new
technology
• Novelty ('arousal')
• New technology in 1998
• Location/availability
• Location Appenzell as province
1. Development of the
evaluation criteria
2. Evaluation in
comparison with the
competitors
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Quality check at Locher brewery
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2. Market analysis:
Sequence of analysis of opportunieties/threats
•
•
Customer behaviour in focus
Fundamental initial point: Trends
economical
ecological
political
technological
Social Development
Environment
Megatrends
Demand trends
Opportunities / Threats
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Analysis of opportunities and threats
(e.g. Appenzeller Bier)
Trends
Opportunity
Threat
Justification
• Deregulation
• Deregulation of alcohol advertising
benefits large manufacturers
• Regulation
• Drink-drive limit of 0.5 per millileter
• Demand for
naturalness,
originality and
authenticity
• Existing organic beers are already
trendy, the company's strong
innovation promises more new
products
• Multiple options,
fragmentation of
target groups
• The variety of options from the
relatively small company favors
"trialers" who like multiple options
• Making the
technology more
organic
• The technology is important but
products should not be sterile.
"Quöllfrisch" ferments in the bottle
• From theft of food
and other trivial
offenses
• Smoking hemp is a gray area. Hemp
beer appeals to this target group and
offers a legal substitute.
Source: for trends Eggert (1997)
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Summary Module 2
stated revealed preferences
markets
types of markets
customer systems and
customer retention
explanatory approaches
needs and benefits
definition and
function of
markets
dynamic
decision making
process
motives
market and
environmental
analysis
market figures
trends
SOR model
market capacity
market potential
hype to
megatrend
SWOT analysis
market volume
scoring model
market share
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Contents of Module 2
1. Definition and function of markets
1.1 Players and market types
1.2 Motives, needs, benefits and demand
2. Market research
2.1 Recording of market values
2.2 Trends in supply and demand
3. SWOT analysis
4. Outlook
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Module
1
Module 3
Lecture
Readings
Goals &
organisation of the
tutorials
Reading
Studynet questionnaire
Case study text
Textbook, chapter 1
Value creation
Goals
SWOT analysis
Reading
Answer exercise
questions
Studynet questionnaire
Textbook, chapter 2
Market
segmentation
Positioning
Reading
Answer exercise
questions
Textbook, chapter 3
Market analysis
Customer behavior
and markets
Objectives of market
research and data
generating
SWOT analysis
Systemic Network
Analysis
3
Preparation
Adding value
Management with
focus on adding value
Classification of
business processes
Structure and aims
Marketing concept
2
Tutorials
Marketing strategy
Marketing objectives
Market segmentation
Positioning
Customer processes
Page 89
Assessment Level, Business Administration, 1,102,1.00
Marketing Management
Module 3: Marketing strategy
Marketing goals and basic structure
Market segmentation and positioning strategy
Customer processes
Prof. Dr. Pietro Beritelli
04.10.2016
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How can you explain the consumer behavior which is
intended by this ad?
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Behavior model (S-O-R model)
Familiar
destinations and
tourism products
Marketing
(advertising etc.)
Reference
groups
internal
Information
consolidation
Information
search
Value system/
lifestyle
Learning
processes
Categorize
Evaluate
Save
Replace
Images/
risk assessment
external
Inputs
Socio-demographic
grouping
Preferences/
attitudes
Decision
Comparison of
expectations vs.
performance
Stimuli
Organism
Response
Source: based among others on Correia, 2002
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Types of trend and their life expectancy
A: Hype
B: Fashion phenomenon
C: Medium-term trend
D: Long-term trend
Familiarity
D
C
B
Trend threshold
A
Time
Source: Buck/Hermann/Lubkovitz (1998)
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For which motives, these
products provide a benefit?
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Traditional structuring approaches for needs
according to Maslow
General
explanation
Self-fulfillment, happiness,
joy
Social acknowledgement,
power, freedom, prestige
Love, friendship,
communication,
feeling of security
Tourism
examples
Travel as a customized
experience, e.g.
tour through Greenland
Travel as a social
event, e.g. community
trips / luxury trips
Club trips,
private visitors'
trips
Laws, pensions,
insurance
Business trips, vacations
in locations with guaranteed
snow or sun
Food, drink,
sleep, health
Local recreation,
commuter traffic
Source: based on Freyer, 1998
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Module 3
Module
Lecture
1
Preparation
Readings
Adding value
Management with
focus on adding value
Classification of
business processes
Structure and aims
Marketing concept
2
Goals &
organisation of the
tutorials
Reading
Studynet questionnaire
Case study text
Textbook, chapter 1
Value creation
Goals
SWOT analysis
Reading
Answer exercise
questions
Studynet questionnaire
Textbook, chapter 2
Market
segmentation
Positioning
Reading
Answer exercise
questions
Textbook, chapter 3
Market analysis
Customer behavior
and markets
Objectives of market
research and data
generating
SWOT analysis
Systemic Network
Analysis
3
Marketing strategy
Marketing objectives
Market segmentation
Positioning
Customer processes
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Tutorials
Objectives module 3
•
•
•
•
Be able to derive conclusions for the marketing strategy
based on the corporate goals
Be able to derive a positioning strategy through market
segmentation and target market decision
Be able to assess the determinants of the use of the
marketing tools
Can determine the emphasis of the use of the marketing
tools in a specific context
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Contents of Module 3
1. Corporate goals and marketing goals
2. Segmentation criteria and degree of segmentation
3. Choice of target market
4. Positioning
5. Determinants for the use of tools
6. Focus of the use of marketing tools in the marketing mix
7. Outlook
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Conceptual embedding: marketing strategy
Normative orientation processes
Development of vision, mission,
guiding principles, code of ethics etc.
Strategic development processes
Strategic analyses e.g.
•SWOT analysis
•Industry analysis
•Portfolio analysis to develop portfolio
strategies (role of SBUs)
•Skills analysis to build up core
competencies
•Analysis of strategic groups
•Stakeholder analysis
Operation management processes
Coordination and management of day-today business
Vision, mission, guiding principles
Marketing concept
Market analysis
e.g. SWOT analysis
of the market
Marketing strategy
- Decision on target markets
- Positioning decision
Customer
processes
Performance
processes
Innovation
processes
Product
Controlling
•Definition of KPIs
•Monitoring of assumptions
•Measurement of progress
Communication
Marketing mix
Pricing
Distribution
Marketing controlling:
market KPIs
Source: Dubs, Euler, Rüegg-Stürm & Wyss (2004). Managementlehre ( Bd. 3). (Management studies (Vol. 3)) p. 33.
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Entry case
Transformation from a manufacturer of electrical goods to a
coffee specialist: Jura
What marketing goals should
the CEO set?
What consequences have
these goals on the
marketing strategy?
Source: www.jura.ch
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Contribution of marketing to company goals
Normative:
Legitimacy
• Customer value
• Contribution to the
stakeholders
Dynamic goals
(development
oriented)
Strategic:
Competitiveness
• Market positioning such as
brand
• market share
Static goals
(oriented to one
period)
Operative:
Success
• Added value
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Contents of Module 3
1. Corporate goals and marketing goals
2. Segmentation criteria and degree of segmentation
3. Choice of target market
4. Positioning
5. Determinants for the use of tools
6. Focus of the use of marketing tools in the marketing mix
7. Outlook
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From market segmentation to differentiation
Demand
Supply
Market
1. Market segmentation
Market segmentation can be taken to mean the sub-division of the
market into homogeneous groups of potential buyers that differ
from one another in terms of their needs, their buying and consumption
behavior and/or their differentiated reaction to the use of
marketing tools. (Hill/ Rieser, 1993, p. 96)
Segmented total market
2. Choice of target market
The choice of target market is the search and decision
by a company for market segments into which
an entry is forecast to be worthwhile.
(Kotler/Bliemel 1995, p. 451)
3. Positioning
The position is defined by the development of features
of a brand, performance, a strategic
business area in a multi-dimensional
array of features. (Meffert/Bruhn 2000)
4. Differentiation
Differentiation is the process by which useful differences are
integrated into the design of a product range,
to separate one's own offering from
that of the competitors. (Kotler/Bliemel 1995, p. 489)
Target market in which a company positions
itself and can differentiate its products from
those of competitors in the same target
market.
Source: Bieger (2000)
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Benefits of differentiated marketing
Recognition in the market: the product becomes identifiable
through allocation to individual target markets.
Customer involvement: allocation to a sub-market makes it
possible to build a deeper customer relationship.
Product features can be specifically tailored to the precise
needs of the respective customers.
Market cultivation tools can be used in a segment-specific
way.
Source: see Hill & Rieser (1990, p. 192)
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Segmentation criteria
Consumption behavior
Key segmentation criteria?
d) geographic
b) psychographic
c) Needs/
motivation
Value system
Golfers
Urban
Gender
Sailors
Rural
Age
etc.
a) socio-demographic
Income
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Requirements criteria for market segmentation
features
1. Relevance to buying behavior - geographic segmentation for skis?
2. Informational value for the use of marketing tools - marketing tools
for "urban romantics"?
3. Measurability - measurability of golfers (commitment or handicap)?
4. Accessibility - distribution channels?
5. Stability over time - freerunning (fad or longer-term scene?)
6. Economic viability – quality of operation?
7. For suppliers of industrial goods - acceptance among sales reps?
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a) Example of socio-demographic
segmentation - Kids Hotels Austria
Target group
Young families with one or more children
Parents (aged 25-45) looking for R&R, sport and experiences
Young children (aged 1-13) who enjoy nature
Source: www.gaspingerhof.com/kinder
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b) Example of psychographic map of
Switzerland
Path of Switzerland
The trend is towards conservative values
progressive
Sharply increasing values
Slightly increasing values
Declining values
Escapism
Hedonism
Romanticism
Modesty
external
Internal
Realism
Reservedness
Conformism
Rootedness
conservative
Source: Demoscope
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c) Statistical market segmentation by
motivation using cluster analyses
Cluster #
Cluster denomination
Market share
Type of motive activation
Profile variables
Predominant motivation
(rank order within cluster)
Cluster 1
Rest and
relaxation
34.5%
PUSH
Cluster 2
Family holiday
Rest and relaxation
Time for the family
Experience
landscapes and
nature
Sports (active)
Get away from it all
(daily routine)
Experience
landscapes and
nature
Regeneration from
daily home routine
and job
Time for partner
Time for oneself
Liberation from
obligations (and
relations)
Sun and beach
34.7%
RATHER PUSH
Get away from it all
(daily routine)
Ability to make
flexible, spontaneous
decisions
Challenge and
stimulate oneself
Experience of
nativeness
Experience of exotic
Page 99
Cluster 3
Curious
hedonism
21.9%
RATHER PULL
Cluster 4
Social matters
Visit/ experience
sights/ culture;
expand horizon
Other
Experience
landscapes and
nature
8.9%
PULL
Enjoy nightlife
Termination of a
phase in one's life by
a trip
Get away from it all
(daily routine)
Experience of
adventure and
perhaps even risk
Enjoyment of comfort
and pampering
Do something for my
beauty
Make contact with
new people
Search for esteem
Prestigious character
of trip
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From market segments to cluster analysis
Market segments:
Groups of market participants with similar needs
Cluster analysis:
"Proximity" in a multi-dimensional space, e.g. in relation to
needs
A cluster analysis is a type of interdependence analysis, a
multi-variant method of grouping in which paratypical behaviors
are classified and grouped based on an algorithm. (Laesser, 2001;
Kuss, 2012, p.236)
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Characterization of cluster analysis
• The goal of cluster analysis is to find classes in a whole host
of classification objects.
• These classes are groups of homogeneous objects among
the entirety of objects.
• The aim is to achieve the maximum possible degree of
homogeneity within a group (or cluster)
the elements in a
cluster should resemble one another as closely as possible.
• Likewise, the greatest possible degree of heterogeneity
(difference) should be achieved between the different
clusters
the clusters should differ from one another as
much as possible.
(Bacher, Pöge & Wenzig,, 2010)
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Conceptual representation of a cluster analysis
Motive 1
Motive 2
Cluster 3
Cluster 1
Cluster 2
Motive 4
Motive 3
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Types of cluster analysis by standardization
method
graph theory
divisive
hierarchical
agglomerative
Cluster method
exchange method
partitioning
iterated minimum
distance method
optimizing
Page 101
Backhaus, Erichson, Plinke & Weiber, 2004
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Optimum segmentation intensity
Segmentation
costs
Loss of profit from
failure to segment
Legend:
Segmentation costs
Optimum
segmentation
low
(small or large
segments)
Intensity of
segmentation
Costs of lost profit
high
(small segments)
Overall costs of
segmentation
(Bieger et al. 2009, 126)
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Multi-level market segmentation –
example ski market
1st level:
Benefit
All-mountain (slope)
Ski market
Freestyle (park)
Freeride (off slope)
Page 102
2nd level:
Psychographic
conservative
progressive
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Contents of Module 3
1. Corporate goals and marketing goals
2. Segmentation criteria and degree of segmentation
3. Choice of target market
4. Positioning
5. Determinants for the use of tools
6. Focus of the use of marketing tools in the marketing mix
7. Outlook
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From market segmentation to differentiation
Demand
Supply
Market
1. Market segmentation
Market segmentation can be taken to mean the sub-division of the
market into homogeneous groups of potential buyers that differ
from one another in terms of their needs, their buying and consumption
behavior and/or their differentiated reaction to the use of
marketing tools. (Hill/Rieser, 1993, p. 96)
Segmented total market
2. Choice of target market
The choice of target market is the search and decision
by a company for market segments into which
an entry is forecast to be worthwhile.
(Kotler/Bliemel 1995, p. 451)
3. Positioning
The position is defined by the development of features
of a brand, performance, a strategic
business area in a multi-dimensional
array of features. (Meffert/Bruhn 2000)
4. Differentiation
Differentiation is the process by which useful differences are
integrated into the design of a product range,
to separate one's own offering from
that of the competitors. (Kotler/Bliemel 1995, p. 489)
Target market in which a company positions
itself and can differentiate its products from
those of competitors in the same target
market.
Source: Bieger (2000)
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Decision on target markets
Selection criteria
Criteria for choosing a market segment and hence the
positioning of a company or product:
Market size (market capacity, market potential, market
volume, market share)
Cultivation costs
Strategic significance of a market segment
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Contents of Module 3
1. Corporate goals and marketing goals
2. Segmentation criteria and degree of segmentation
3. Choice of target market
4. Positioning
5. Determinants for the use of tools
6. Focus of the use of marketing tools in the marketing mix
7. Outlook
Page 104
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From market segmentation to differentiation
Demand
Supply
Market
1. Market segmentation
Market segmentation can be taken to mean the sub-division of the
market into homogeneous groups of potential buyers that differ
from one another in terms of their needs, their buying and consumption
behavior and/or their differentiated reaction to the use of
marketing tools. (Hill/Rieser, 1993, p. 96)
Segmented total market
2. Choice of target market
The choice of target market is the search and decision
by a company for market segments into which
an entry is forecast to be worthwhile.
(Kotler/Bliemel 1995, p. 451)
3. Positioning
The position is defined by the development of features
of a brand, performance, a strategic
business area in a multi-dimensional
array of features. (Meffert/Bruhn 2000)
4. Differentiation
Differentiation is the process by which useful differences are
integrated into the design of a product range,
to separate one's own offering from
that of the competitors. (Kotler/Bliemel 1995, p. 489)
Target market in which a company positions
itself and can differentiate its products from
those of competitors in the same target
market.
Source: Bieger (2000)
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Positioning
Strategic and active shaping and steering of the position of a
market performance in the relevant market.
(see also Esel, 1992)
Positioning provides the guiding idea for the quantitative or
qualitative design of a marketing mix.
(see Becker, 1996)
The position is defined by the development of properties of a
brand, a good or service, a strategic business area in a multidimensional array of features.
(see also Meffert/Bruhn, 2000)
Act of designing the company’s offering and image to occupy a
distinct place in the mind of the target market. The objective of
positioning is to locate the brand/product into the minds of
stakeholders; customers and prospect in particular.
(see also Kotler & Keller, 2006)
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Example:
three-dimensional positioning model
negative
EB
AF
Ideal
PA
BA
Service
positive
EB:
PA:
BA:
AF:
Ideal:
Euro Berlin
Pan American
British Airways
Air France
ideal position
Source: Kuss & Tomczak (2001)
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Beispiel Spielkonsolenmarkt
Video 1
Video 2
Quelle: www.youtube.com
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Active versus reactive positioning
Starting point
Articulated
customer wishes
Methods
Goals
"Traditional"
market
research
Bundle of
marketing
measures
Achieving profits via
long-term satisfaction
of customers
"Exploratory"
market
research
Bundle of
marketing
measures
Achieving profits via
long-term satisfaction
of customers
Reactive positioning
Latent
customer wishes
Problemsolving ideas
Active positioning
Source: Kuss & Tomczak (2001)
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Entry case
How should Jura be positioned?
High price segment
Coffee
Automatic coffee machines
Household appliances Accessories
Low price segment
Crockery collection
Care products
Source: www.jura.ch
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Example: positioning of the main Swiss watch
brands
Mechanical watches
Low price segment
High price segment
Quarzuhren
Watches as jewelry
Luxury watches
Fashion watches
Sports watches
Source: Handelszeitung,
17.11.2004
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Illustrations of positioning
Page 108
Bieger; Scherer; Bischof; Laesser (2001)
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Example: multi-dimensional illustration
Product
Distribution
…
Locations
5
Product quality
4
Distribution frequency
Product configuration
3
Number of distribution channels
Range/assortment
2
1
Distribution density
Customer service
0
(List) price
Information
Discounts/terms
Sales promotion
Multimedia advertising
Communication
Sales financing
Print advertising
Company A
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…
Pricing
Company B
Example: SWISS brand strategy
Values
Logo
Claim
Positioning
Communication
Page 109
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SWISS Positioning statement
“We are the airline of
Switzerland.
Our Swiss commitment to
quality means we can deliver a
consistent, high-grade product
and service at all touch points.
Because we are smaller, we
can better emphasize personal
service and customer
intimacy.”
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Positioning – and its implementation
Page 110
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From market segmentation to differentiation
Demand
Supply
Market
1. Market segmentation
Market segmentation can be taken to mean the sub-division of the
market into homogeneous groups of potential buyers that differ
from one another in terms of their needs, their buying and consumption
behavior and/or their differentiated reaction to the use of
marketing tools. (Hill/Rieser, 1993, p. 96)
Segmented total market
2. Choice of target market
The choice of target market is the search and decision
by a company for market segments into which
an entry is forecast to be worthwhile.
(Kotler/Bliemel 1995, p. 451)
3. Positioning
The position is defined by the development of features
of a brand, performance, a strategic
business area in a multi-dimensional
array of features. (Meffert/Bruhn 2000)
4. Differentiation
Differentiation is the process by which useful differences are
integrated into the design of a product range,
to separate one's own offering from
that of the competitors. (Kotler/Bliemel 1995, p. 489)
Target market in which a company positions
itself and can differentiate its products from
those of competitors in the same target
market.
Source: Bieger (2000)
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Definition of Brand
•
«A symbol or a name that has a monopoly position for a
specific use in the consumer’s mind»
(Domizlaff, 1992, 60; Woodruff, 1997, 139)
•
«Notions in the stakeholders’ minds that assume an
identification and differentiation function and influence the
decision behavior»
(Esch, 2010, 20)
•
«A brand is made up of a logo or trademark, a brand claim
and brand content»
(see also Aaker, 1992)
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Design of a brand
• Brand essence
the brand’s substance; e.g. a luxury brand
• Core brand identity
E.g. reliability
• Extended brand identity
E.g. a particular lifestyle
Source: Aaker, 1992, p. 31
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Contents of Module 3
1. Corporate goals and marketing goals
2. Segmentation criteria and degree of segmentation
3. Choice of target market
4. Positioning
5. Determinants for the use of tools
6. Focus of the use of marketing tools in the marketing mix
7. Outlook
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Overview of marketing tools
Marketing and
product policy
Pricing
Marketing and
communications
policy
Distribution
• Quality
• (List) price
• Advertising
• Area
• Equipment/
packaging
• Discounts/terms
• Sales promotion
• Channels
• Sales financing
• (Product) PR
• Bodies
• Range/assortment
• Logistics
• Labeling
• Locations
• Service/customer
service
Supply policy
Sales policy
(Kotler et al., 2007, 121)
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Determinants for the use of marketing tools
Determinants for marketing tools
1. Type of customer (functionality of the customer)?
2. Nature of the marketing goal / conflict of goals
3. Type/goals of customer retention
4. Phase of the customer process
5. Type of customer decision
6. Industry environment
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1. Functionality of the "customer"
Ordering
party
End user
Payer
Target group for
communication and
sales
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2. Conflicts in marketing goals
Differentiation
• Exhaustion of
individual
willingness to pay
• Economies of
scope "bundling
gains"
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Scale Consolidation
• Familiarity
• Economies of
scale
• Dominance
effects
• Learning curve
effects
• Clarity of
positioning/no
customer
confusion
Pricing strategy:
• Individual vs.
generic pricing
• Price level
Goal conflict:
Main customer retention tasks
Customer
retention
maintaining existing potential
continuously
generating
repeat
purchases
preventing
customer
migration
expanding existing potential
generating/
increasing
additional
purchases
generating/ increasing
increasing repeat
subsequent purchases
purchases
(Bieger et al., 2004, p. 69)
Page 115
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Why customer retention pays
Profit from price
increases
Profit due to
recommendations
Profit due to lower
operating costs
Profit due to increased
buying frequency and
higher invoices
Basic profit
Acquisition costs
1
2
3
4
5
6
7
Year
(Reichheld & Sasser , 1991)
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3. Types of marketing
Transactional
marketing
Relational
marketing
Traditional marketing that
largely concentrates on the
initial purchase.
Building a long-term
customer relationship by
maximizing the perceived
customer value
The goal is achieved by
selling the goods/service
Worth the effort as acquiring
a new customer is more
expensive than selling
goods/services to an
existing, happy customer
Communication:
Emphasis of the
customer retention
(Bieger, 2013)
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4. Customer process
How should the
Contact phase
market be cultivated?
Consider usage
phase
Usage
Minimize cognitive
phase
dissonance
Repeat purchase
2. Customer
retention
1. Customer
acquisition
Purchase
phase
Evaluation phase
Time
Depending on the phase
in the customer process,
different emphasises (e.g.
product quality in the usage
phase)
Source: Bieger et al. (2004, p. 64)
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5. Factors influencing the nature of purchase
decisions
Extensive
purchase
decisions
high
Involvement
low
large
Perceived
small
product differences
low
Frequency of similar
high
Routine
purchase
decisions
decisions
low
Time pressure in the
high
purchase decision
Image/brand
Information
Depending on the nature
of the purchase decision,
different importances of
the instruments, esp.
pricing / communication
Page 117
Availability
Price
Source: Kuss & Tomczak (2004)
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6. Industry environmental conditions and basic
customer-acquisition strategies
Increasing concentration within the sector
Fragmented structure
Concentrated structure
Emerging sector
e.g.
Skullcandy
headphones
Transition to a
mature market
Declining sector
Winning customers from the competition
e.g. airlines
Winning previous non-users
Company
Depending on the
concentration (consolidation)
degree, different importances
of the instruments, esp.
Individ. communication
(Bieger et al. , 2004, p. 67)
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Overview of marketing tools
Marketing and
product policy
Pricing
Marketing and
communications
policy
Distribution
• Quality
• (List) price
• Advertising
• Area
• Equipment/
packaging
• Discounts/terms
• Sales promotion
• Channels
• Sales financing
• (Product) PR
• Bodies
• Range/assortment
• Logistics
• Labeling
• Locations
• Service/customer
service
Supply policy
Sales policy
(Kotler et al., 2007, 121)
Page 118
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Effect of the marketing tools
Product
policy
(PRODUCT)
Contracting
policy
(PRICE)
Distribution
policy
(PLACE)
Communication
policy
(PROMOTION)
Availability
Attitude
Image/familiarity
Supply
Value for money
Market positioning
Market/segments
Source: Weiss (1993, p. 58)
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Use of tools by context
Concentration/
maturity of the
sector
Generic commodities
Availability
Community/trend products
Guerilla marketing/scene
marketing
Involvement
Page 119
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Detailed planning of marketing mix - marketing
plan
Tool
Target
Budget
Actions
Promotion
Place
Product
Price
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Summary Module 3
Differentiation
Company goals/
marketing goals
operative
Differentiation by application of
marketing tools
strategic
normative
Positioning
Choice of target
market
Positioning
socio-demographic
psychographic
Determinants
geographic
Focus
Market segmentation
Application of marketing
toosl
Page 120
Contents of Module 3
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1. Corporate goals and marketing goals
2. Segmentation criteria and degree of segmentation
3. Choice of target market
4. Positioning
5. Determinants for the use of tools
6. Focus of the use of marketing tools in the marketing mix
7. Outlook
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Module
4
Outlook
Lecture
Readings
Customer processes
Performance process
Reading
Answer exercise
questions
Learning platform
questionnaire
Textbook, chapter 4
Pricing
Distribution
Marketing mix
Reading
Answer exercise
questions
Textbook, chapter 5
Innovation
Marketing controlling
Discussing self study
case Locher Bier
Reading
Answer exercise
questions
Textbook, chapter 6
Marketing mix 2
Pricing
Distribution policy
Communication
Marketing mix
6
Preparation
Marketing mix 1
Performance process
(physical production,
service)
Product design
5
Tutorials
Controlling and innovation
Marketing controlling
Innovations
Guest lecture
Page 121
Assessment Level, Business Administration, 2,102,1.00
Marketing Management
Module 4: Marketing mix 1
Performance process (physical production, service)
Product design
Prof. Dr. Pietro Beritelli, IMP-HSG
11.10.2016
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Clif Bar - Which positioning strategy is pursued
here?
Clif Bar – Which marketing tool dominates here
and why?
Page 123
Marketing concept
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Normative orientation processes
Development of vision, mission,
guiding principles, code of ethics etc.
Strategic development processes
Strategic analyses e.g.
•SWOT analysis
•Industry analysis
•Portfolio analysis to develop portfolio
strategies (role of SBUs)
•Skills analysis to build up core
competencies
•Analysis of strategic groups
•Stakeholder analysis
Operation management processes
Coordination and management of day-to-day
business
Vision, mission, guiding principles
Marketing concept
Market analysis
e.g. SWOT analysis
of the market
Marketing strategy
- Decision on target markets
- Positioning decision
Customer
processes
Performance
processes
Innovation
processes
Product
Controlling
•Definition of KPIs
•Monitoring of assumptions
•Measurement of progress
Communication
Marketing mix
Pricing
Distribution
Marketing controlling:
market KPIs
Bieger, T. (2015). Marketing Concept – The St. Gallen Management Approach. Bern: Haupt.
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Module
4
Module 4
Lecture
Readings
Customer processes
Performance process
Reading
Answer exercise
questions
Learning platform
questionnaire
Textbook, chapter 4
Pricing
Distribution
Marketing mix
Reading
Answer exercise
questions
Textbook, chapter 5
Innovation
Marketing controlling
Discussing self study
case Locher Bier
Reading
Answer exercise
questions
Textbook, chapter 6
Marketing mix 2
Pricing
Distribution policy
Communication
Marketing mix
6
Preparation
Marketing mix 1
Performance process
(physical production,
service)
Product design
5
Tutorials
Controlling and innovation
Marketing controlling
Innovations
Guest lecture
Page 124
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Objectives module 4
•
•
•
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Knowing the dimensions of designing the production
process
Be able to structure performance processes and
knowing the essential decisions on stratetic and
operational levels
Be able to structure service processes and knowing the
essential dimensions of designing these
Contents of Module 4
1. Product design as a part of the marketing instruments Definition & typology
2. Performance provision - Physical performance
2.1 Basic structure of the performance provision process
2.2 Strategic level
2.3 Operational level
3. Performance provision - Services
3.1 Characteristics of services
3.2 Design and control of performance provision
3.3 From service chain to service blueprint
4. Outlook
Page 125
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Hoverboard
Conception of a completely new product and service system
Performance provision between physical product and service
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Hoverboard
Source: www.youtube.com
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Definition of marketing tools
Marketing tools mean action variables with which providers
can influence demand. (based on Hill, 1982, p. 46)
Structuring approaches:
Kotler, 1988
Gutenberg, 1976
Meffert, 1980
Belz, 1993
Product
Product design
Product and range
policy
Product design
Price
Price policy
Contracting policy
Pricing
Distribution
(placement)
Sales method
Distribution policy
Distribution
Promotion
Advertising
Communications
policy
Market cultivation
Source: Bieger (2005)
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Overview of marketing tools
Market performance
design and product
policy
Pricing
Marketing and
communications
policy
Distribution
• Quality
• (List) price
• Advertising
• Area
• Equipment/packagi
ng
• Discounts/terms
• Sales promotion
• Channels
• Sales financing
• (Product) PR
• Bodies
• Range/assortment
• Logistics
• Labeling
• Locations
• Service/customer
service
Supply policy
Sales policy
Source: Bieger et al. (2004, p. 133)
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Product policy
The product policy comprises all decision aspects that relate
to the design of the market performance. The enterprise's
range of products and services is not only an essential
component in the range of marketing tools, but also in many
cases a dominant component ("heart of marketing"). It is the
actual exchange item that is intended to create a particular
benefit for the consumer.
(Kuss & Tomczak, 2002, p. 207)
Product:
“A performance that is geared for satisfying needs and
producing a benefit for customers”
(Hill, 1985, p. 111; Kotler, 1982, p. 20 et seq.)
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From customer value to the value of the
customer
Product policy = key instrument, basis for customer value
Expectations
Quality
Satisfaction
Performance provision
Repeat purchase
Customer value
Tangible costs
Costs
Intangible costs
e.g. time
Perceived
customer value
Additional
purchases
(share of wallet)
Word of mouth
Value
of the
customer
Risk
Cost / benefit of
alternatives
Source: Based on Matzler, 2000, S. 289ff
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Conception levels for the product
Hotel with integrated business center /
customer service
Potential product
Augmented product
Room with shower / WC
Expanded product
Room
BasicBasic
product
product
Bed
Somewhere
to sleep
Core product
Example of
accommodation /
hotel
Source: Based on Kotler & Biemel (2001, S. 717)
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Conceptual levels for the product over time Example: Calida
Sleepwear
1970s
Page 129
2016
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Conceptual levels for the product over time Example: Calida
Sleepwear
1970s
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2016
Goods and services typology
Industrial goods
(B markets)
Packaging
machines
Business
meal
Type of goods
Consumer goods
(C goods)
Management
consulting
Vacuum cleaner
high
(cf. purely
physical
product)
Medical
treatment
Level of materiality
Page 130
low
(cf. services)
Source: Engelhard et al. (1993, S. 417)
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Alternative decisions depending on program
policy («assortment policy»)
Maintain
Shift in weight
Structural
change
Alternative
decisions
depending on
program policy
Product variation
Depth of
range
Change
Vertical diversification
Expansion
Breadth of
range
Remark:
Depth of range = Number of
products to solve an
identical problem
Breadth of range = Number of
services to solve different
problems
Product differentiation
Horizontal diversification
Lateral diversification
Narrowing
Depth of
range
Standardization
Breadth of
range
Specialization
Source: Bieger et al. (2004, S. 138)
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Clif Bar – Depth and breadth of range
Page 131
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Example of product range policy in retail
Broad range
Deep range
Backpacks, clothes, shoes, swimming trunks,
headphones, helmet cameras etc.
Video games
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Stand Up Paddling
1. How does the product design fit into the marketing mix
and what interdependencies should be taken into
account?
2. What elements does the "Stand Up Paddling"
product/service comprise and what are the resulting
design considerations?
3. What prospects are there for developing the product
range?
4. What decisions should be taken in the physical
performance provision at strategic and operational levels?
5. How can "Stand Up Paddling" be optimized as an integral
service?
Page 132
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Contents of Module 4
1. Product design as a part of the marketing instruments Definition & typology
2. Performance provision - Physical performance
2.1 Basic structure of the performance provision process
2.2 Strategic level
2.3 Operational level
3. Performance provision - Services
3.1 Characteristics of services
3.2 Design and control of performance provision
3.3 From service chain to service blueprint
4. Outlook
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Performance provision processes: definition
Performance provision processes start from preparatory work and lead, via
transformation (for material performance) or provision to customers or their
objects (for services), to performance marketed in the sales market.
The performance provision process...
is dependent on product properties and the industry
has a physical process level (e.g. installation, assembly etc.) and an
informational level (e.g. implementation of customer wishes)
is closely connected with the customer process and is triggered by customer
requirements, the satisfaction of which constitutes the ultimate goal of the
process
Source: Dubs et al. (2004, vol. 3, p. 77)
Page 133
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Contents of Module 4
1. Product design as a part of the marketing instruments Definition & typology
2. Performance provision - Physical performance
2.1 Basic structure of the performance provision process
2.2 Strategic level
2.3 Operational level
3. Performance provision - Services
3.1 Characteristics of services
3.2 Design and control of performance provision
3.3 From service chain to service blueprint
4. Outlook
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Basic structure of performance process
Core process: perceived customer benefit, core competence
Added value
Throughput
Input
Support processes
Output
• Physical product
• Service
e.g. carriage cleaning in
rail company
Necessity to cost and quality optimization
Strategic focusing
Efficiency "to do it right"
effectivity "to do the right things"
Page 134
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Production process Appenzeller Bier
http://www.youtube.com/watch?v=Q6dV7qr5u-c
From customer needs to product design to production
process
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Production process Appenzeller Bier –
purchase/raw materials
Spring Water
Hop plant
Hops
Page 135
Yest cells
Hops
Malt
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Production process Appenzeller Bier - fabrication
Production process Appenzeller Bier - fabrication
Page 136
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Production process Appenzeller Bier - filling process
Production process Appenzeller Bier - filling process
Page 137
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Production process Appenzeller Bier - distribution
Basic structure of the physical performance
process
Indirect areas
Work preparation
Order
clarification
Design
Customer
enquiry
Customer
Supplier
Information flow
Material flow (physical added value)
Procurement
Production
Assembly
Shipping
Direct areas
Characteristics of the performance process of physical products:
Transformation of goods and materials
Several process chain elements (technically specified transaction interfaces)
Indirect areas as levels of information and planning
Source: Dubs et al. (2009, Bd. 3, S. 74)
Page 138
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The production process starts at the customers’
needs – also in services
Flight information
Check-in
Baggage
At the airport
In the air
Additional services
Source: www.swiss.ch
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Contents of Module 4
1. Product design as a part of the marketing instruments Definition & typology
2. Performance provision - Physical performance
2.1 Basic structure of the performance provision process
2.2 Strategic level
2.3 Operational level
3. Performance provision - Services
3.1 Characteristics of services
3.2 Design and control of performance provision
3.3 From service chain to service blueprint
4. Outlook
Page 139
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Performance provision: strategic decisions
Customers’ needs
Internal and external
resources
Competitors'
strategic behavior
In the performance strategy, a distinction is made
between breadth and depth of added value/production.
1. Horizontal business area (breadth)
2. Vertical business area (depth)
Breadth of added value/production
determines the complexity of the
performance range (e.g. variants in the
assortment)
Depth of added value/production
determines transaction and organization
costs
(how much does an enterprise produce
itself?)
Core competence vs. market
requirements
Cooperations, purchases of preparatory
work
Tool: variant tree
Source: Based on Dubs et al. (2004, vol. 3, p. 78-81)
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Strategic management area of conflicts
1. Horizontal business area
Economies
of scope
Economies
of scale
A scale-related reduction in average costs
of performance provision with a small
spectrum of performance variants (e.g.
Ford Model T)
Learning-bydoing
economies
Efficiency and cost benefits based on
economies of scope and quality benefits
when the breadth or depth of performance is
increased (e.g. Swatch)
Learning curve effects show a unit-cost reduction with
existing production capacity and are attributable to
learning processes.
Source: Based on Dubs et al. (2004, vol. 3, p. 78-80)
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Strategic management area of conflicts
1. Horizontal business area
Economies
of scope
Economies
of scale
A scale-related reduction in average costs
of performance provision with a small
spectrum of performance variants (e.g.
Ford Model T)
Learning-bydoing
economies
Efficiency and cost benefits based on
economies of scope and quality benefits
when the breadth or depth of performance is
increased (e.g. Swatch)
Learning curve effects show a unit-cost reduction with
existing production capacity and are attributable to
learning processes.
Source: Based on Dubs et al. (2004, vol. 3, p. 78-80)
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Strategic management area of conflicts
1. Horizontal business area
Economies
of scope
Economies
of scale
A scale-related reduction in average costs
of performance provision with a small
spectrum of performance variants (e.g.
Ford Model T)
Learning-bydoing
economies
Efficiency and cost benefits based on
economies of scope and quality benefits
when the breadth or depth of performance is
increased (e.g. Swatch)
Learning curve effects show a unit-cost reduction with
existing production capacity and are attributable to
learning processes.
Source: Based on Dubs et al. (2004, vol. 3, p. 78-80)
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Strategic management area of conflicts
performance Learning
area curve
1.Cost
Horizontal
area
per piece business
It is:
f(x)
= log2(x)
Economies
Y1 of scale
Y1
X
>
X
Y2
A scale-related reduction
in average costs
X
of performance provision with a small
spectrum of performance variants (e.g.
Ford Model T)
Y2
Economies
of scope
X
f(x)
Efficiency and cost benefits based on
economies
of scope and quality benefits
Cumulative
when the
breadth
or depth of performance is
production volume
increased (e.g. Swatch)
constant cost reduction with each doubling of the
production volume
Learning-bydoing
economies
Learning curve effects show a unit-cost reduction with
existing production capacity and are attributable to
learning processes.
Source: Based on Dubs et al. (2004, vol. 3, p. 78-80)
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Strategic management area of conflicts
2. Vertical business area
Integrated added-value stages within
the enterprise:
+ Reduction in transaction costs
- Costs of hierarchical coordination
within the organization
Vertical
Integration
Outsourcing
Outsourcing of added-value activities
as strategy:
+ Concentration on core
competences
- New dependencies from handover
to supplier
Example:
Development of ABS, ESP through outsourcing in the automotive industry
Source: Based on Tomczak et al. (2009, p. 80)
Page 142
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Source:
Financial Times, 11.12.2013
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Source: Financial Times, 11.12.2013
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Contents of Module 4
1. Product design as a part of the marketing instruments Definition & typology
2. Performance provision - Physical performance
2.1 Basic structure of the performance provision process
2.2 Strategic level
2.3 Operational level
3. Performance provision - Services
3.1 Characteristics of services
3.2 Design and control of performance provision
3.3 From service chain to service blueprint
4. Outlook
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Performance provision - operational
decisions
The operational performance provision process involves decisions
on the products to be produced and the production tools and methods.
Planning tasks in respect of:
Input
Planning of the requirements of production
factors
Throughput
Planning the
implementation
Output
Planning the
production range
Material disposition
Capacity management
Range management
Structural support: ideal business types can be derived from various criteria
Performance provided
Place of performance
Size of production units
(Non-)existence of separate work preparation
Responsible for operational performance provision
Source: Based on Dubs et al. (2004, vol. 3, p. 83-86)
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Types of business
Industry
Publisher
Performance provided
Tangible
products,
material services
Tangible
Tangible
Bridging services
products, material products, material (intangible)
services
services
Other intangible
services
Place of performance
central
decentralized
flexible or central
open
open
Size of production units
large
small
small
open
open
Existence of separate work
preparation
yes
no
no
open
open
Responsible for operational
performance provision
Employees
Publisher, its
employees and
freelancers (e.g.
authors)
Tradespeople,
employees
Employees,
partly also
business owners
Employees,
partly also
business owners
Form of performance provision
Company
Trade
Commerce
Other service
Source: Based on Tomczak et al. (2009, Bd. 3, S. 84)
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Cottrell Boatbuilding in Searsport, Maine
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Industrial production at
Doppelmayr & Garaventa
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Work preparation as the link between definition
and implementation of the product
The work preparation determines from what, how, in what order, with what and
in what time a work piece, module etc. should be produced and assembled. A
distinction is made between work planning and work management.
Work planning
Work management
What? (order scheduling)
In what quantities?
How? (choice of procedure)
When?
What will the order be produced
with? (choice of production means)
Where?
With what resources?
Production documents
Source: Dubs, Euler, Rüegg-Stürm & Wyss (2004). Managementlehre ( Bd. 3).
(Management studies (Vol. 3) p.89
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Contents of Module 4
1. Product design as a part of the marketing instruments Definition & typology
2. Performance provision - Physical performance
2.1 Basic structure of the performance provision process
2.2 Strategic level
2.3 Operational level
3. Performance provision - Services
3.1 Characteristics of services
3.2 Design and control of performance provision
3.3 From service chain to service blueprint
4. Outlook
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Function models for services
Self-service
Service
'Enabling'
'Relieving'
New concepts between enabling and relieving
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Services:
High importance of front, staff and culture
Contents of Module 4
1. Product design as a part of the marketing instruments Definition & typology
2. Performance provision - Physical performance
2.1 Basic structure of the performance provision process
2.2 Strategic level
2.3 Operational level
3. Performance provision - Services
3.1 Characteristics of services
3.2 Design and control of performance provision
3.3 From service chain to service blueprint
4. Outlook
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Characteristics of services
Features of the service
Consequences for producers and
consumers
• Intangible (no transformation of goods)
• Non-transparency of the service
• No transfer of title
• Increased risk for customers
• Principle of uno actu (congruence of
consumption and production; service is
provided on the customer or its property)
• Involvement of the customer (e.g., physical
presence)
• Lack of storage capability/ transience
• Harmonization of supply and demand
• Heterogeneous service, i.e. dependent on
external factor
• Individual unpredictable quality: need for
quality management
• Measures to manage customers and cocustomers
• Significance of personal contact
• Promotion of quality of interaction
• Quality management
Source: Bieger, 2007, S. 11
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Contents of Module 4
1. Product design as a part of the marketing instruments Definition & typology
2. Performance provision - Physical performance
2.1 Basic structure of the performance provision process
2.2 Strategic level
2.3 Operational level
3. Performance provision - Services
3.1 Characteristics of services
3.2 Design and control of performance provision
3.3 From service chain to service blueprint
4. Outlook
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Information
Reservation
Service chain in incoming tourism – destination
point of view
Travel
Local info Catering
EnterAccomTransport Activity/
Departure After-sales
modation
Animation tainment
support
Source: Bieger & Schallhart, 1996/97, p. 47
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Individual service chain
Activation of service elements through the customer (e.g. in
destinations, shopping centers, etc.)
Importance of the first and last element of the service chain
Weakest link shapes the overall quality
Source: Bieger, 2007, p. 48
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Contents of Module 4
1. Product design as a part of the marketing instruments Definition & typology
2. Performance provision - Physical performance
2.1 Basic structure of the performance provision process
2.2 Strategic level
2.3 Operational level
3. Performance provision - Services
3.1 Characteristics of services
3.2 Design and control of performance provision
3.3 From service chain to service blueprint
4. Outlook
Conception of a service chain from the
customer perspective
Customer purchase cycle
Customer
Intangible service Orchestration
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design
Interaction
Perception line
Visibility line
Logistics line
Information/
support
Company
delimiter
Source: Bieger, 2007, p. 51
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Conception of a service chain from the
customer perspective (example tourism)
Customer purchase cycle
Perception line
design
Visibility line
Catering
Accommodation
Activity
Checkin
Abroad
Travel
Booking
Information
Interaction
Billing/
Final info
Intangible service Orchestration
Customer
Logistics line
Travel agency
Transport
company
Company
delimiter
Hotel
Ski
school
Information/
support
Source: Bieger, 2007, p. 51
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Summary module 4
Product design
Performance provision (physical)
Assortment structure
Types of business
Product/service typology
Conception levels
Production planning
Horizontal
business area
Module 4
Production
process
Vertical
business area
Performance
process
Service Blueprint
Strategic decisions
Services
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Operative decisions
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Contents of Module 4
1. Product design as a part of the marketing instruments Definition & typology
2. Performance provision - Physical performance
2.1 Basic structure of the performance provision process
2.2 Strategic level
2.3 Operational level
3. Performance provision - Services
3.1 Characteristics of services
3.2 Design and control of performance provision
3.3 From service chain to service blueprint
4. Outlook
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General remarks
•
Self-study regarding performance and innovation:
Case study Locher Bier in the scriptum
• Autonomous work at home
• Discussion of solutions in the last tutorial of the part marketing
management
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Module
4
Outlook
Lecture
Readings
Customer processes
Performance process
Reading
Answer exercise
questions
Learning platform
questionnaire
Textbook, chapter 4
Pricing
Distribution
Marketing mix
Reading
Answer exercise
questions
Textbook, chapter 5
Innovation
Marketing controlling
Discussing self study
case Locher Bier
Reading
Answer exercise
questions
Textbook, chapter 6
Marketing mix 2
Pricing
Distribution policy
Communication
Marketing mix
6
Preparation
Marketing mix 1
Performance process
(physical production,
service)
Product design
5
Tutorials
Controlling and innovation
Marketing controlling
Innovations
Guest lecture
Page 155
Assessment Level, Business Administration, 2,102,1.00
Marketing Management
Module 5: Marketing mix 2
Pricing
Distribution policy
Communication
Marketing mix
Prof. Dr. Pietro Beritelli, IMP-HSG
19.10.2016
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Repetition Case Migros
Source: Ostschweiz am Sonntag, 4.10.15, p. 5
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What ist the medical product from Migros?
Potential product
Augmented product
Expanded product
BasicBasic
product
product
Core product
Source: Based on Kotler & Biemel (2001, S. 717)
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How does the performance processes looks
like?
Source: Bieger, 2007, p. 48
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How does the performance processes looks
like?
Customer purchase cycle
Intangible service Orchestration
Customer
design
Interaction
Perception line
Visibility line
Logistics line
Information/
support
Company
delimiter
Source: Bieger, 2007, p. 51
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Service orientation
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Medical services – a global commodity?
Marketing concept
Normative orientation processes
Development of vision, mission,
guiding principles, code of ethics etc.
Strategic development processes
Strategic analyses e.g.
•SWOT analysis
•Industry analysis
•Portfolio analysis to develop portfolio
strategies (role of SBUs)
•Skills analysis to build up core
competencies
•Analysis of strategic groups
•Stakeholder analysis
Operation management processes
Coordination and management of day-to-day
business
Vision, mission, guiding principles
Marketing concept
Market analysis
e.g. SWOT analysis
of the market
Marketing strategy
- Decision on target markets
- Positioning decision
Customer
processes
Performance
processes
Innovation
processes
Product
Controlling
•Definition of KPIs
•Monitoring of assumptions
•Measurement of progress
Communication
Marketing mix
Pricing
Distribution
Marketing controlling:
market KPIs
Bieger, T. (2015). Marketing Concept – The St. Gallen Management Approach. Bern: Haupt.
Page 159
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Module 5
Module
Lecture
4
Preparation
Readings
Marketing mix 1
Performance process
(physical production,
service)
Product design
5
Customer processes
Performance process
Reading
Answer exercise
questions
Learning platform
questionnaire
Textbook, chapter 4
Pricing
Distribution
Marketing mix
Reading
Answer exercise
questions
Textbook, chapter 5
Innovation
Marketing controlling
Discussing self study
case Locher Bier
Reading
Answer exercise
questions
Textbook, chapter 6
Marketing mix 2
Pricing
Distribution policy
Communication
Marketing mix
6
Controlling and innovation
Marketing controlling
Innovations
Guest lecture
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Tutorials
Objectives module 5
•
•
•
•
Knowing the basic theories of pricing behavior and the
essential design parameters of pricing, be able to
assess pricing measures in context
Knowing the basic design parameters of the distribution
policy, be able to assess a distribution concept
Knowing the important forms and design parameters of
communication, be able to assess a communication
concept in context
Knowing the design parameters of the marketing mix,
be able to assess a marketing mix in context
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Overview of marketing mix
Market performance
design and product
policy
Pricing
Marketing and
communications
policy
Distribution
• Quality
• (List) price
• Advertising
• Area
• Equipment/
packaging
• Discounts/terms
• Sales promotion
• Channels
• Sales financing
• (Product) PR
• Bodies
• Range/assortment
• Logistics
• Labeling
• Locations
• Service/customer
service
Supply policy
Sales policy
Source: Bieger et al. (2004, p. 133)
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Contents of Module 5
1. Pricing
2. Distribution policy
3. Communication
4. Marketing mix
5. Outlook
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Definition of price policy
Price
= Consideration/quantity
= Customer's financial commitment/surrender or enterprise's
revenue per item/unit
Price policy
Focus
"Price policy (consideration policy) includes all sales-policy measures
to determine and enforce the monetary considerations by the buyer for
the products and services offered by an enterprise.«
(Diller, 2000, p. 26)
Contracting policy
Price policy, policy on terms and conditions, sales policy
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Goals of price policy
Covering costs
and profit
Goals
Page 162
Acquisitional
effect
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Pricing theories
Neoclassical pricing
theory
Behavioral Pricing
theory
• Assuming a
mechanistic consumer
behavior (homo
oeconomicus)
• Is based on classic
demand curves of the
micro-economics
• Is based on behavioral
models
(1) Neoclassical pricing theory
a) Price effect elasticity
P
P
price elastic
inelastic
e.g. beer
e.g. garbage
bags
M
M
Is price control worthwhile?
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b) Pricing in monopoly
•
•
•
A company has a monopoly in the production of a
commodity x if it is the only supplier of this good
Profit-maximizing monopolists add a "markup" on the
marginal costs. The amount of the markup depends on
the price elasticity of the demand. Market research and
controlling are central.
A monopoly depends on how easily households can
substitute the product with other products
elasticity of
demand
Source: Kolmar (2013, S. 123 ff.)
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c) Price discrimination in monopoly
Price discrimination: Setting different prices for different buyers
depending on certain characteristics (not always possible)
•
First-degree price discrimination (full price discrimination): The
supplier sells different units of goods at different prices and prices
may differ from buyer to buyer.
•
Second-degree price discrimination: The supplier sells different
units of goods at different prices, but every buyer buys at the same
price.
•
Third-degree price discrimination: The supplier sells the goods to
different buyers at different prices, but every unit buyed from the
same buyer has the same price.
Source: Kolmar (2013, S. 136 ff.)
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d) Product bundling I
Numerous products consisting of several components,
which are sold together:
• Microsoft Office
• Car with radio
• „ready to use“ house
• Journals with several articles
• Journey with flight, accommodation and full board
How can be explained which components are sold separately and which
are sold together („bundling“)?
•
•
Cost savings through bundling
Complementarities between the components
•
Skimming the willingness to pay of the consumers
Source: Kolmar (2013, S. 150 ff.)
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Product bundling II
Different willingness to pay of two customers for
different office applications:
Customer type
Word processing
app
Spreadsheet
processing app
Both applications
A
120
100
220
B
100
120
220
1. Sold separately:
Word processing application:
Spreadsheet processing application:
100
100
Revenue:
400
2. Sold bundled:
Word + Spreadsheet processing apps:
220
Revenue:
440
Source: Kolmar (2013, S. 150 ff.)
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Product bundling III
Bundling the components can increase the revenue and
profit of a monopolist, because with seperate sale the
smallest willingness to pay for each component is
determining the price whereas with bundled sale the
differences of the smallest willingnesses to pay can be
offset against each other.
Source: Kolmar (2013, S. 150 ff.)
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(2) Behavioral Pricing
Assimilation contrast theory
Price stimuli
Adaptation
level
Negotiation
point
Resistance
point
Contrast
effect
Contrast
Internal
reference price
Assimilation effect
Assimilation
Contrast
Contrast
effect
Acceptance range
Price
Importance of «anchor prices» (reference prices)
Controlling of the pricing behavior, inter alia by price perception
Source: Friesen, 2008; based on Huber et al., 2000, S. 692ff.
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Price determination - Decision topics
Static view
•
Basic price
•
Price differentiation
Dynamic view
Skimming strategies
Penetration strategies
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Determination of basic price
Costs
Demand
• Full costs
• Customer benefit
• Variable costs
• Elasticity
Price
level
Competitors
• Market structure
• Substitutability
• Strategic objectives particularly in
network-economic sectors
Page 167
Price differentiation (yield management)
individual willingness
to pay
Goal = Price differentiation
Customer W
Full absorption of individual
willingness to pay
Customer Z
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Demand curve as an aggregation of individual
preferences
Customer X
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Price differentiation (yield management)
Optimization of revenue
Differentiation by
market segment/
customer category
Exhaustion of
consumer
surplus
Differentiation by
time of consumption
Differentiation by
time of booking
Regular
capacity utilization
Reaching a
booking target
Source: Bieger, 2007, S. 285
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Example of price differentiation –
Whistler Blackcomb
The earlyer the
tickets are buyed
the greater are
the potential
savings.
Page 169
Source: www.whistlerblackcomb.com
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Example price differentiation in the airline
industry
Economy Class
Business Class
First Class
Price range (Economy-First) on the sample routes (one way):
Zürich-New York (Swiss): CHF 586 – 8474 (August 9, 2016)
Frankfurt-NY (Lufthansa): EUR 706 – 4396 (August 9, 2016)
Absorption of the willingness-to-pay through segmentation
Source: www.swiss.ch / www.lufthansa.de
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Yield Management for booking systems
Bookings
Capacity
limit
Target bookings
Current bookings
Closing cheap tariff
categories
Opening cheap
tariff categories
Acceptable
variance
Flight/
hotel night
Days
Source: Bieger, 2007, S. 287
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Hoverboard
1. How should the price level be
set, statically and dynamically?
2. How should the distribution be
organized?
3. How should the communication
be designed?
4. How should the tools be
combined and planned?
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Contents of Module 5
1. Pricing
2. Distribution policy
3. Communication
4. Marketing mix
5. Outlook
Page 171
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Definition distribution policy
The Distribution marketing tool refers to all decisions by an
enterprise that serve to supply the various performance
elements in the offering to the consumer.
Source: Bieger et al. (2004, p. 149)
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Goals of distribution policy
Goal
1.
Importance
depending
on product
Acquisitional distribution
Design, relationship with buyers
(Goal: "Retention", "Acquisition")
2. Physical, logistical distribution
Transport, storage, delivery, commissioning, service
(Goal: "Delivery in the right place, in the right
quantity, at the right time")
Source: Bieger et al., 2009, 150; Specht, 1998, 14f.; Tomczak et al., 2007, 246
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Functions of distribution
• Logistic function
• Payment function
• Range function
• Acquisition function
• Experience function and customer value
function
• Service function
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Source: Bieger (2013, S. 130)
Strategic distribution
Selective
Disadvantages Advantages
Example:
Intensive
Example:
Exclusive
Example:
+ Low distribution
costs
+ Broad availability
+ Positioning
- Low acquisition
potential
- High costs
- Availability reduced
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Distribution system
Decision between channels
Producer
Wholesale
Internet
Retail
Direct sale
Indirect sale
Consumer
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Distribution decision-making criteria
Effect of capital, costs, revenues
(importance of cash reflows)
Properties of demand
(type of decision-making [e.g. impulse buying], quantity)
Product-specific properties
(complexity, risk of spoiling)
Properties of intermediaries
(closeness to the customers, qualification
of the staff)
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Trends in the development of distribution
Intermediation and disintermediation
Intermediation:
Producer
e.g. sales representative
Disintermediation:
e.g. direct sales
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Example of direct sales - Apple
Page 175
Consumer
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Example of direct sales - Mammut
Example: Changing distribution strategy - Dell
Vertriebsstrategie
Dell-Computer gibt es bald auch im Supermarkt
Von Roland Lindner
25. Mai 2007 Der mit Schwierigkeiten kämpfende Computerhersteller Dell hat einen
radikalen Strategiewandel unternommen: Dell wird vom Juni an Computer beim
größten amerikanischen Einzelhändler Wal-Mart verkaufen. Das Unternehmen verfolgte bislang ein reines Direktmodell und fertigt Computer nach den Vorgaben von
Kunden, die ihre Bestellung über das Internet abgeben. Die Rechner werden dann
ohne jede Beteiligung von zwischengeschalteten Groß- und Einzelhändlern direkt an die Kunden ausgeliefert. Vom Juni an sollen nun zwei Desktop-Modelle in insgesamt 3500 Wal-Mart-Geschäften verkauft
werden. Nach Angaben von Dell soll dies nur der Anfang eines breiter angelegten Vorstoßes in den
Einzelhandel sein. Es könnten also weitere Allianzen folgen.
Der Bruch mit der bisherigen Tradition hatte sich schon angedeutet: Vor rund einem Monat schrieb Vorstandschef und Unternehmensgründer Michael Dell in einem internen Rundschreiben an seine Angestellten,
das Direktmodell sei „keine Religion“. Dell ist mit dieser Direktstrategie einst groß und erfolgreich geworden. Das Unternehmen musste damit keine Mittelsmänner an der Marge beteiligen und konnte die
Lagerbestände gering halten, weil erst nach Bestellung produziert wurde. So blieben die Kosten niedrig,
und Dell konnte seine Computer billig verkaufen.
Source: www.faz.net
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Example: Traditional sale channels in tourism
Product
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Incoming
operator
Tour
operator
Travel
agency
Customer
Distribution system: Tourism today
Travel
agent
portal
Cable car
Ski rental
Price + Sales
Accommodation
Cable car
portal
Destination
portal
Ski school
Hotel chain
portal
Channel
Swapping!
Airline/
transport
portal
Page 177
Customer
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Hoverboard
1. How should the price level be set,
statically and dynamically?
2. How should the distribution be
organized?
3. How should the communication
be designed?
4. How should the tools be
combined and planned?
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Contents of Module 5
1. Pricing
2. Distribution policy
3. Communication
4. Marketing mix
5. Outlook
Page 178
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Definition communications policy
Communications policy comprises all decisions and
actions to define and convey information and substance to
selected target groups for the purpose of exerting influence.
Source: Shimp (1993)
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Goals of communication
Acquisition goal
• Short-term
• Sales
Reputation goal
• Long-term
• Image
contribution margin/
turnover
Brand equity
Page 179
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General communication process and
marketing communication process
Transmitter
Transmission channel
Recipient
Decoding & interpretation
Encoding
General model of the
communication
process
Source
Transmitting the
message to the
recipient
Encoding the
message
Decoding the
message
Change in
recipient's
behavior
Source: Kuss & Tomczak (2007, S. 238)
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AIDA
Page 180
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Communications causal chain
Communications goals
A ttention
Familiarity
Acceptance
I nterest
Profiling
D esire
Purchase
A ction
Source: Bieger (2007)
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Communications tools
Communications tools
Product-related,
short-term
Image-related,
long-term
Advertising
X
Sales promotion
X
X
Trade fairs
X
X
Personal sales
X
Sponsorship
X
Product placement
X
Event marketing
X
Multimedia communications
X
X
Source: Based on Kuss & Tomczak (1998, p. 169)
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Communication tools
Example: Sales promotion
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Example: Advertising
Example: Social Media –
Whistler Blackcomb
Page 183
Quelle: www.facebook.com, www.twitter.com, www.youtube.com
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Example: Emmi's marmot
– viral marketing
Give Murmeli a nice home for the winter and keep him in a
good mood by feeding and stroking him and giving him lots of
exercise. Collect 500 points by January 31, 2011, to win one of
many great holidays from Interhome. More information about
Interhome here: www.interhome.ch.
Will you manage to keep Murmeli happy or will he decide to
move out?
Great 3D graphics for long-term gaming fun:
* Incredible photo-realistic 3D graphics
* Murmeli responds to every touch and loves being stroked
* Call his name and he will wake up
* Feed Murmeli with berries, nuts and delicious yoghurts, milk
or cheese from Emmi
* Murmeli will perform somersaults on command and loves
fancy dances.
But take care! The little rodent can get very angry...
Source: http://www.emmi.ch
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Configuration of communication
Source: Bieger (2005)
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Example for analyzing of communication
?
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What is this video about and how was the
communication constructed?
Hoverboard
1. How should the price level be set,
statically and dynamically?
2. How should the distribution be
organized?
3. How should the
communication be designed?
4. How should the tools be
combined and planned?
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Contents of Module 5
1. Pricing
2. Distribution policy
3. Communication
4. Marketing mix
5. Outlook
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Definition of marketing mix
The term "marketing mix" refers to the marketing tools chosen for a particular period
and their quality and quantity in relation to achieving the long-term strategic and shortterm operational marketing and business goals.
Source: Based on Meffert, (2000, p. 971)
Every enterprise has a greater or smaller number of variables available in a
particular situation in order to implement the respective marketing strategy (profile
of core tasks and positioning goals and strategies) and to achieve the defined
marketing goals. These variables can be assigned differently to what are known as
marketing toolboxes and are referred to collectively by the term "marketing mix". The
marketing tools are generally classified into the following four toolboxes:
the product and range policy or marketing
the price and contract policy or pricing
the communications policy or market cultivation
the distribution policy
Source: Kuss & Tomczak (2002, p. 203)
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Examples for tool goals in marketing
Goals for the tools
Product goals
• Exclusive top-quality
product
• Increase availability of
supply
• Intelligent top-quality
product
• Cheap mass product
• Common standard product
• Solid product
• Pioneering product
• Me-too product
Distribution
goals
Service goals
Communication
goals
Price goals
• Expand distribution facilities • Price stabilization
• Raise awareness
• Concentrate distribution
facilities
• Price increase
• Increase familiarity
• Improve quality of supply
• Price monitoring
• Improve knowledge
• Accelerate customer
measures
• Consolidate distribution
facilities
• Price image change
• Build attitude
• Improve customer-service
image
• Increase level of
distribution facilities
• Discount agreement
• Strengthen purchase
intention
• Reduce customer-service
costs
• Accelerate logistics
• Design-oriented product
• Increase transparency of
warranty
• Special product
etc.
• Reduce costs of logistics
etc.
• Accelerate incoming
payments
• Reduce credit risk
• Purchase confirmation
etc.
etc.
etc.
Source: Koppelmann, 2000, S. 249
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Red Bull – marketing mix in chronological order
Questions:
How was Red Bull positioned in the market?
State the aspects of a semantic differentiation to highlight the positioning of
Red Bull compared with M-Budget
What tools are used to acquire and retain customers?
Source: www.redbull.ch / www.leshop.ch
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Red Bull: customer pull strategy
PR
Sales promotion –
consumer promotions
Producer
New type of
product
Selective distribution
via bars
Consumer
Customer pull
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Lessons to be learned from Red Bull
Clear strategy (target market focus & positioning)
Variety of marketing tools
Direction of action of the tools: "pull"
Balanced mix
Source: www.redbull.ch
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Marketing mix within the buying cycle
Source: Bieger et al. (2004, S. 160)
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Detailed planning marketing mix – marketing
plan
Tool
Actions
Budget
Actions and use of resources over the year
J
Promotion
Place
Product
Price
Page 189
F
M
A
M
J
J
A
S
O
N
D
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Hoverboard
1. How should the price level be set,
statically and dynamically?
2. How should the distribution be
organized?
3. How should the communication
be designed?
4. How should the tools be
combined and planned?
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Summary module 5
Distribution
policy
Pricing
policy
Basic price
Disintermediation
Price determination
Differentiation
Trends
(Re-)intermediation
Behavioral oriented
Pricing theories
Distribution system
Neoclassical
Goals
Types of decision
Module 5
decision-making
criteria
Strategic
distribution
Functions
Goals
Goals
Communications
causal chain
Communication instruments
and their effects
Marketing mix
Communication
policy
Page 190
Contents of Module 5
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1. Pricing
2. Distribution policy
3. Communication
4. Marketing mix
5. Outlook
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Module
4
Outlook
Lecture
Readings
Customer processes
Performance process
Reading
Answer exercise
questions
Learning platform
questionnaire
Textbook, chapter 4
Pricing
Distribution
Marketing mix
Reading
Answer exercise
questions
Textbook, chapter 5
Innovation
Marketing controlling
Discussing self study
case Locher Bier
Reading
Answer exercise
questions
Textbook, chapter 6
Marketing mix 2
Pricing
Distribution policy
Communication
Marketing mix
6
Preparation
Marketing mix 1
Performance process
(physical production,
service)
Product design
5
Tutorials
Controlling and innovation
Marketing controlling
Innovations
Guest lecture
Page 191
Assessment Level, Business Administration, 2,102,1.00
Marketing Management
Module 6: Controlling and innovation
Marketing controlling
Innovations
Guest lecture
Prof. Dr. Pietro Beritelli, IMP-HSG
25.10.2016
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Repetition: Adding value processes, companies
and management
Page 192
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Repetition: Sony – made for bond
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Which communication tool is used here?
Page 193
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Which communication goals are hereby
pursued?
Acquisition goal
• Short-term
• Sales
Reputation goal
• Long-term
• Image
contribution margin/
turnover
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Brand equity
Marketing concept
Normative orientation processes
Development of vision, mission,
guiding principles, code of ethics etc.
Strategic development processes
Strategic analyses e.g.
•SWOT analysis
•Industry analysis
•Portfolio analysis to develop portfolio
strategies (role of SBUs)
•Skills analysis to build up core
competencies
•Analysis of strategic groups
•Stakeholder analysis
Operation management processes
Coordination and management of day-to-day
business
Vision, mission, guiding principles
Marketing concept
Market analysis
e.g. SWOT analysis
of the market
Marketing strategy
- Decision on target markets
- Positioning decision
Customer
processes
Performance
processes
Innovation
processes
Product
Controlling
•Definition of KPIs
•Monitoring of assumptions
•Measurement of progress
Communication
Marketing mix
Pricing
Distribution
Marketing controlling:
market KPIs
Bieger, T. (2015). Marketing Concept – The St. Gallen Management Approach. Bern: Haupt.
Page 194
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Module 6
Module
Lecture
4
Preparation
Readings
Marketing mix 1
Performance process
(physical production,
service)
Product design
5
Customer processes
Performance process
Reading
Answer exercise
questions
Learning platform
questionnaire
Textbook, chapter 4
Pricing
Distribution
Marketing mix
Reading
Answer exercise
questions
Textbook, chapter 5
Innovation
Marketing controlling
Discussing self study
case Locher Bier
Reading
Answer exercise
questions
Textbook, chapter 6
Marketing mix 2
Pricing
Distribution policy
Communication
Marketing mix
6
Controlling and innovation
Marketing controlling
Innovations
Guest lecture
Marketing Marketing M6
25.10.2016
Page 8
Tutorials
Objectives module 6
•
•
•
•
•
Knowing the functions and the areas of conflicts of
controlling
Be able to derive a simple controlling concept
Knowing the structure and success factors of innovation
processes
Be able to identify drivers of innovation
Be able to comprehend the essential elements of a
marketing concept in a case study
Page 195
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Contents of Module 6
1. Marketing controlling
1.1 Properties of marketing controlling
1.2 Developing a controlling concept
1.3 Contribution accounting
2. Innovation
2.1 Definition, types and enablers of innovation
2.2 Innovation in the model
2.3 Directions of innovation
3. Guest lecture
Marketing Marketing M6
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Management function according to Fayol
Preview
and
planning
Controlling
Coordination
Organization
Management
Quelle: Fayol, 1929
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Marketing controlling
Supports marketing and management decisions by
controlling the impact of the marketing tools using suitable
marketing KPIs
Measurement of the extent to which monetary financial goals
(sales, product and customer marginal returns etc.) and nonmonetary material goals (familiarity, image, market share,
customer satisfaction etc.) are met
Continuous process up to and including marketing information
system
Market research as a key task of marketing controlling
Source: Seidenschwarz & Gleich, 2001, 625 et seq.
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Marketing controlling - Basic problem
Marketing
Controlling
"creative-initiative"
"precise-quantitative
monitoring"
General: A picture that is out of focus does not come into focus just by
looking at it in a more focused way...but it may be possible to identify
structures and trends.
Source: see Reinecke, S. & Janz, S. (2007)
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Contents of Module 6
1. Marketing controlling
1.1 Properties of marketing controlling
1.2 Developing a controlling concept
1.3 Contribution accounting
2. Innovation
2.1 Definition, types and enablers of innovation
2.2 Innovation in the model
2.3 Directions of innovation
3. Guest lecture
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Goal hierarchy and controlling
Added value
Company goals
Contribution margin product category X
Sales volume per
customer category
Price
Marketing goals
Market share per
customer category
Discounts and
marketing costs
Familiarity
Sales /
market
Repeat purchase ratio
Bookings
Page 198
Response per
advertisement
Goals of tools
Operational /
tactical goals
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Swiss International Air Lines controlling structure
Other Revenues
(CHFM)(Charter, Cargo,
Maintainnace, etc.)
Revenues
(CHFM)
x
+
Scheduled Passenger
Revenues (CHFM)
+
Avg. No. of Seats
per Aircraft
+
Seat Load Factor
No, of Pessengers
(Coupon Pax)
x
EBIT
(CHFM)
Revenue per ASK
(RASK) (CHF)
or
Avg. Gross Revenue per
Pax incl. Fuel Surcharge
(CHF)
Revenue per Revenue
Pax Kilometer (Yield)
Side Revenues
(expired coupons, excess
baggage etc.) (CHFM)
Flights
x
Avg. Stage Length
(km)
Available Seat km
(Mio AKS)
x
Avg. No. of Aircraft
(LX Operated)
_
Avg. No. of Flights
per Aircraft
Avg. No. of FTE‘‘s
Costs
(CHFM)
+
Fixed Costs
(CHFM approx.)
Variable Costs
(CHFM approx.)
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Driver (Passengers,
Flights, ASK etc.)
x
Unit Cost
per Driver
Unit Cost per Driver (CHF)
Fuel
Cockpit
Cabin
Maint.
Ground
Inflight
Cost per ASK
(CASK) (CHF)
Hoverboard
1. What requirements/goals must
marketing controlling meet/achieve?
2. Which controlling indicators are
relevant for a market launch?
3. How does a contribution accounting
analysis for a sports equipment
wholesaler looks like?
4. Why innovating and in which direction?
5. How can the innovation process be
structured?
Page 199
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Contents of Module 6
1. Marketing controlling
1.1 Properties of marketing controlling
1.2 Developing a controlling concept
1.3 Contribution accounting
2. Innovation
2.1 Definition, types and enablers of innovation
2.2 Innovation in the model
2.3 Directions of innovation
3. Guest lecture
Marketing Marketing M6
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Contribution-accounting analysis
Marginal return
– based on the recognition that success in a period depends not only on sales efforts in
the market but also on the production volume
– makes a distinction between activity-dependent ("variable") and independent ("fixed")
costs
– indicates the contribution that, for example, a product makes to covering all the fixed
costs incurred in the company
– can be used in marketing controlling for multiple reference objects (e.g. products, lines,
orders, customers or regions)
Distinction: single-level vs. multi-level breakeven analysis
In the breakeven analysis directly imputable costs (e.g. products, product
groups, cost centers, divisions, customers, customer groups) are deducted from
the revenues
Page 200
Based on Reinecke & Janz. (2007). Marketing controlling. Kohlhammer, p.81-84
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Product-specific, multi-level contributionaccounting analysis
While a single-level breakeven analysis handles costs as an undifferentiated block,
in a multi-level breakeven analysis, they are imputed to particular reference objects
(e.g. products, product groups, cost centers, the enterprise as a whole).
The multi-level breakeven analysis provides information on the profitability of
products or product groups, taking account of fixed cost levels.
Net turnover
- variable manufacturing costs (e.g. use of materials)
= Contribution margin I
- partially variable costs (e.g. manufacturing salaries, transport costs for sales)
= Contribution margin II
- divisional fixed costs (e.g. cross-divisional marketing campaign, expenditure for market research)
= Contribution margin III
- corporate fixed costs (e.g. administration costs for sales and marketing)
= Net profit
Based on Reinecke & Janz. (2007). Marketing controlling. Kohlhammer, p. 81-84
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Illustration: single-level contribution-accounting
analysis
Product
Revenues
- Variable costs
= Contribution margin
1
2
3
4
5
20,000
15,250
9,550
11,600
8,300
3,500
2,700
5,500
4,300
2,350
16,500
12,550
4,050
7,300
5,950
- Fixed costs
41,850
= Operating profit
4,500
Page 201
Based on: Reinecke & Janz. (2007). Marketing controlling. Kohlhammer, p.83
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Illustration: customer-related, multi-level
contribution-accounting analysis
Customer group by gross revenues
< 100,000
Customer
100,000-250,000
> 250,000
1
2
3
4
5
6
90,000
75,500
225,750
175,000
275,000
325,550
750
550
1,250
985
1,400
1,000
= Net revenues
89,250
74,950
224,500
174,015
273,600
324,550
-- Goods purchased
15,550
27,850
55,000
55,000
63,000
100,000
= Customer contribution margin I
73,700
47,100
169,500
119,015
210,600
224,550
18,000
22,500
55,000
65,000
125,000
155,850
55,700
24,600
114,500
54,015
85,600
68,700
Gross revenues
-
-
Revenue reductions (bonuses, price
reductions, discounts)
costs that can clearly be imputed to the
customers (e.g. sales and marketing costs,
packaging, transport costs)
= Customer contribution margin II
-
costs that can clearly be imputed to the
customer groups (e.g. marketing costs
specific to the customer group)
= Customer contribution margin III
-
35,750
87,400
100,150
44,550
81,115
54,150
costs that cannot be imputed to the customer
(e.g. national advertising, administration)
86,815
= Profit
93,000
Based on Reinecke & Janz. (2007). Marketing controlling. Kohlhammer, p.85
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Contribution-accounting analysis for a
sports wholesaler
Lines
Line 1
Line 2
Skateboards
Segways
Gross revenues
2.5 million
1.5 million
-
Revenue reductions (bonuses, price reductions,
discounts)
0.3 million
0.1 million
=
Net revenues
2.2 million
1.4 million
-
Goods purchased
1.5 million
0.9 million
=
Customer contribution margin I
0.7 million
0.5 million
-
costs that can clearly be imputed to the customers
(e.g. directly imputable staff costs)
0.2 million
0.1 million
=
Customer contribution margin II
0.5 million
0.4 million
-
costs that can clearly be imputed to the customer
groups (e.g. directly imputable marketing costs)
0.2 million
=
Customer contribution margin III
0.7 million
-
costs that cannot be imputed to the customer (groups)
(e.g. national advertising, administration)
0.3 million
=
Profit
E-Boards /
Hoverboards
0.4 million
Page 202
Based on Reinecke & Janz. (2007). Marketing controlling. Kohlhammer, p.85
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Hoverboard
1. What requirements/goals must
marketing controlling meet/achieve?
2. Which controlling indicators are relevant
for a market launch?
3. How does a contribution accounting
analysis for a sports equipment
wholesaler looks like?
4. Why innovating and in which direction?
5. How can the innovation process be
structured?
Marketing Marketing M6
25.10.2016
Page 24
Contents of Module 6
1. Marketing controlling
1.1 Properties of marketing controlling
1.2 Developing a controlling concept
1.3 Contribution accounting
2. Innovation
2.1 Definition, types and enablers of innovation
2.2 Innovation in the model
2.3 Directions of innovation
3. Guest lecture
Page 203
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Innovations based on new customer needs
Pull effect, Example: Polar
Quelle: www.polar.de
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Innovations based on new technologies
Push effect, Example: Icebreaker
Quelle: www.icebreaker.com
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Innovation as a pull/push process
Direction of action of innovation
Impulses
Pull process
Push process
Institutional/legal
environment
Basic
research
Getting
ideas
Testing
ideas
Applied
research
Development
Product/
service
design
Launch
Growth/
differentiation
Social
environment
Economic
environment
Customer
Technology
Invention
Innovation
Imitation
Schumpeterian
growth
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Innovation for economists according to the
Austrian economist Schumpeter (1912)
According to Schumpeter (1912), innovations are production factors
that are combined in a new way by entrepreneurs and organizations
and implemented in the market.
The new combinations should lead to higher revenues in the market in
the form of monopoly gains. These in turn attract imitations.
Schumpeter differentiated between five innovation types
Product innovation
Criteria
Process innovation
Novelty?
Tapping new markets (market innovation)
Penetration in
Opening up new production factors
the market?
New forms of the organization
Innovation
process?
Source: Schumpeter (1912, 1964), Bieger, Beritelli, Weinert (2010)
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Return on investment in the tension between
innovation and push and pull
Return on innovation =
(Profit from innovation x
Innovations
Push
Innovations
Pull
probability of success)
Investment in innovation
Source: Based on Beritelli et al., 2005, p. 321
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Entrepreneurial functional chain
Idea
generation
Business
plan
HSG Gründergarage
Foundation
Growth
Evtl. exit
START Incubator
Page 206
Contact:
University of St.Gallen
Center for Entrepreneurship
Dufourstrasse 40a
CH-9000 St.Gallen
www.cfe.unisg.ch
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Example of HSG startups
•
•
•
•
•
•
•
•
•
•
•
•
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Shippo
Vimcar
Blacksocks
DeinDeal.ch
getAbstract
Kreditech
Viu
Mornin’Glory
Lock8
Forensity
Gartengold
…
The need for innovation changes depending on
the industry and goods
The need and costs for the innovation process differ by the intensity of
R&D in product innovation and by product or service innovation
Process and
content of
innovation
Innovation requirement
Product innovation
Decision
Decision
R&D-heavy product
innovation
Service
innovation
Time
Getting ideas
Testing ideas
Product/service design
Launch
Source: Füglistaller, 2001, p. 287
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Key factors in innovation
• Core competences as internal resources that
determine the potential capability of an enterprise
• management systems that promote innovation
• Team structures and open cultures that ensure
learning communities
Source: Dubs, Euler, Rüegg-Stürm & Wyss, 2004, p. 109; Winkler, Reinmann-Rothmeier & Mandl, 2000
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Contents of Module 6
1. Marketing controlling
1.1 Properties of marketing controlling
1.2 Developing a controlling concept
1.3 Contribution accounting
2. Innovation
2.1 Definition, types and enablers of innovation
2.2 Innovation in the model
2.3 Directions of innovation
3. Guest lecture
Page 208
The innovation process
Basic
research
Tes-ting
ideas
Applied
research
Developmen
t
Pro-duct/
service
design
Introduction
Growth/
differentiation
Custo-mer
Innovation nature and types
Innovations are novelties in both the output and the process of
economic performance provision. (Dubs et al., 2004)
1) discontinuous vs.
continuous
Product/market success
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Gaining
ideas
Time
discontinuous
2) Market Pull vs.
Technology Push
outside
Product/market success
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3) Type of innovation
Product
out
Service
in
inside
Time
continuous
Market pull
Technology
push
Process innovation
Source: Dubs et al. (2004, vol. 3, p. 100/104);
www.dell.com/ www.benetton.com/ www.sony.com
Page 209
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Conflicts in innovation:
1) continuous vs. discontinuous innovation
Discontinuous
Demo 8 2011
Demo 8 2009
Mountain bikes
Electric car
Business class seats
e-Banking and e-Government
Service
Physical
product
Continuous
Source: Based on Dubs, Euler, Rüegg-Stürm & Wyss (2004), p.100/104
Innovation nature and types
Innovations are novelties in both the output and the process of
economic performance provision. (Dubs et al., 2004)
1) discontinuous vs.
continuous
Time
discontinuous
2) Market Pull vs.
Technology Push
outside
Product/market success
Product/market success
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3) Type of innovation
Product
out
Service
in
inside
Time
continuous
Market pull
Technology
push
Process innovation
Source: Dubs et al. (2004, vol. 3, p. 100/104);
www.dell.com/ www.benetton.com/ www.sony.com
Page 210
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Conflicts in innovation:
2) Technology Push vs. Market Pull
Triggers for innovation ("ideas") can come from the consumers and
buyers (market pull), and from technical and scientific discoveries
(technology push)
Inside-out/Technology push
Market requirements
SMS
Unused
storage capacity
New adhesive that sticks
again and again
Mobile Internet
Technology/production
Source: Based on Dubs et al. (2004, vol. 3, p. 100-104);
www.3m.com
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Inside out / Technologie push innovations
New technologies as a driver of innovations
Nano-, Mikrotechnologien
Source: www.schweizermaschinenmarkt.ch; www.spektrum.de
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Important technologies with potential for basic
innovations
Hype Cycle of Emerging Technologies (2014)
Source: www.gartner.com
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Technological fields for innovation
1. Information and
communications technology
2. Materials technology
«
3. Microtechology
4. Life sciences
Source: Bieger, 2013, 168
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Solar Impulse
«OUR ADVENTURE
2015 will be the year
Solar Impulse has been
working towards: the
attempt of the First
Round-The-World Solar
Flight. Bertrand Piccard
and André Borschberg,
our two Pilots and
Founders, will fly around
the world with no fuel,
rising up to technical,
human and operational
challenges that have
never been faced
before.»
Source: www.solarimpulse.com
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Conflicts in innovation:
Technology Push vs. Market Pull
Outside-in/Market pull
Market requirements
Individualization
"Communities"
Security
Health
Technology / production
Source: Wikipedia, Second Life, innocent smoothie, ABS avalanche airbag, Dell
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Innovation nature and types
Innovations are novelties in both the output and the process of
economic performance provision. (Dubs et al., 2004)
Time
discontinuous
2) Market Pull vs.
Technology Push
3) Type of innovation
Product
out
outside
Product/market success
Product/market success
1) discontinuous vs.
continuous
Service
inside
in
Process innovation
Time
continuous
Market pull
Technology
push
Source: Dubs et al. (2004, vol. 3, p. 100/104);
www.dell.com/ www.benetton.com/ www.sony.com
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3) Innovation types
iPhone
e-paper
Jungfrau region
SkiDirect
iPad
Frequent overlaps/combinations of product, process, service
and business-model innovations.
www.apple.com/www.spiegel.de/ http://online.wsj.com
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Contents of Module 6
1. Marketing controlling
1.1 Properties of marketing controlling
1.2 Developing a controlling concept
1.3 Contribution accounting
2. Innovation
2.1 Definition, types and enablers of innovation
2.2 Innovation in the model
2.3 Directions of innovation
3. Guest lecture
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Innovation cube for the classification of
strategic directions of impact
Process innovation
Degree of innovation in
business processes
Business model innovation
Degree of innovation in the business
model
(Combination of process, market
and product innovation)
Market innovation
Degree of innovation in
market cultivation
Product innovation
Degree of innovation in product
development
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Notes on the innovation cube
Direction of action
Explanation
Example
Product innovation
New products with new features
or a new combination of existing
features.
Apple launches a TV.
Process innovation
The value chain is redesigned.
Nike only does the design and
marketing of its sports items
itself, all other processes are
performed entirely by external
partners.
Market innovation
The type and method of market
cultivation is new.
Samsung decides to completely
abandon traditional advertising
and only to run viral marketing in
future (incl. social media).
Business model innovation
Combination of the above
directions of action.
Brauerei Locher AG decides to
switch its production entirely to
sparkling wines: new product
range, new manufacturing
procedure (processes) and new
markets to be tapped.
Example: Uber
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Management systems and corporate culture as
enablers in the innovation process
Management systems
Corporate management
Incentive systems (e.g. profit-related pay)
Control mechanisms (internal, external reporting)
Training systems
Corporate culture
Shared way of thinking and acting
Ensures automatic coordination of local decisions and making business units more
autonomous
Transfers collective knowledge, attitudes, perceptions and preferences to individuals
as normative principles
Example: Lufthansa "ideas management" and "employees as partners"
Source: http://erlebnis-wissen.lufthansa.com
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Example of innovation…
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Hoverboard
1. What requirements/goals must
marketing controlling meet/achieve?
2. Which controlling indicators are relevant
for a market launch?
3. How does a contribution accounting
analysis for a sports equipment
wholesaler looks like?
4. Why innovating and in which
direction?
5. How can the innovation process be
structured?
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Contents of Module 6
1. Marketing controlling
1.1 Properties of marketing controlling
1.2 Development of a controlling concept
1.3 Contribution accounting
2. Innovation
2.1 Definition, types and enablers of innovation
2.2 Innovation in the model
2.3 Directions of innovation
3. Guest lecture
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Research centers:
Tourism and Transport
Regional Science
Public Management and Governance
Organization Studies
Dufourstrasse 40a
CH-9000 St. Gallen
Phone +41(71)224-2525
Fax +41(71)224-2536
http://www.imp.unisg.ch
Case Study «Weisse Arena»
Image source: www.weissearena.ch
Prof. Dr. Thomas Bieger
Samuel Heer, M.A. HSG, Dipl. Wipäd.
Assessment level fall term 2016
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Contents
2
Contents
Contents ..................................................................................................................................................2
1. Learning objectives...........................................................................................................................3
2. Abstract ..............................................................................................................................................4
3. Embedding the case study in the lecture module .........................................................................5
4. Case description ...............................................................................................................................6
4.1. History of Crap Sogn Gion cableways ....................................................................................6
4.1.1.
Environment....................................................................................................................6
4.1.1.1. Development of alpine tourism and Flims-Laax destination......................................6
4.1.1.2. Emergence of Laax in the 1960s ...............................................................................6
4.1.1.3. Current and future development of alpine tourism ....................................................7
4.1.2.
Pioneering phase ............................................................................................................7
4.1.3.
Merging time ...................................................................................................................8
4.1.4.
Company structure today................................................................................................8
4.1.5.
Financial situation .........................................................................................................10
4.1.6.
Trend scouting ..............................................................................................................12
4.1.7.
Innovation .....................................................................................................................12
4.1.8.
IT in a snow sports area ...............................................................................................13
4.1.9.
Multiplication of acquired core competencies in new areas .........................................14
4.2. Marketing today .......................................................................................................................14
4.2.1.
Target market today......................................................................................................14
4.2.2.
Marketing tools..............................................................................................................14
4.3. Perspectives.............................................................................................................................15
5. Exercises..........................................................................................................................................16
5.1. Basic task .................................................................................................................................16
5.2. Structure of exercise sequence .............................................................................................16
5.3. Modules ....................................................................................................................................17
5.3.1.
Module 1: Goals & organisation of the tutorials............................................................17
5.3.2.
Module 2: Value chain, goals, SWOT analysis.............................................................17
5.3.3.
Module 3: Market segmentation & customer processes ..............................................18
5.3.4.
Module 4: Marketing mix and performance process.....................................................19
5.3.5.
Module 5: Pricing and distribution.................................................................................20
5.3.6.
Module 6: Innovation and marketing controlling ...........................................................20
6. Source materials .............................................................................................................................22
7. Further documents..........................................................................................................................22
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1 Learning objectives
3
1. Learning objectives
With this practical example, students are expected to
• understand the creation of value based on value chains and be able to classify
Strategic
companies into value chains
level
• know the function of “management” in the value creation process
Strategic
level
• develop and explain market analysis by means of a SWOT analysis
Strategic
level
• explain a positioning via market segmentation and target-market decisions
Strategic
level
• describe and explain the concept of the customer process
Strategic
level
• deduce a marketing mix and draw up a plan for the tools used, including specifica-
Operational
tion of costs
level
• create and optimize performance provision processes in the example of service
Strategic
provision
level
• develop a controlling concept and deduce indicators from this
Operational
level
• recognize approaches for innovation processes
Operational
level
Figure 1: Skiing area Flims/Laax/Falera (Source: www.laax.com)
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2 Abstract
4
2. Abstract
"W EISSE ARENA GRUPPE" 1 will hire a consultant to review the existing marketing plan for its snow
sports business. The winning team will be selected in a competitive process based on marketing-plan
proposals submitted by competing teams. Assume you are a member of a marketing consulting team
determined to win the competition with a professionally, convincing, consistent and creative marketingplan proposal.
The W EISSE ARENA GRUPPE is one of the most successful companies in alpine tourism. In fiscal year
2011/2012, it served 900,000 guests during the winter/snow-sport season, generating turnover of 82.7
million Swiss francs. Key success factors include:
market research techniques, e.g. “trend scanning”
clear positioning focused on lead target groups: teenage snowboarders, experience-oriented
singles and people who actively enjoy life. In all segments, early adopters and opinion leaders
are targeted. Example: www.riderspalace.ch
clear branding focusing on the Laax winter-sports brand, including targeted cooperation/joint
ventures with partners new to the industry (Burton, Microsoft, Bründl Sport, Sony 2).
an integrated service supply chain that expands the traditional business boundaries of a
cableway by integrating hotels and restaurants, sports outfitters (New Technology Centers
NTC), entertainment businesses, skiing/snowboarding schools, tourism organizations, call
centers, direct reservation systems etc.
product innovations like the Riders Palace (278 beds), the rocksresort (1,000 beds, CHF 80
million total investment) and the combined season ticket (Topcard) for Flims/Laax/Falera, Davos/Klosters and Lenzerheide. In addition, innovative gastronomy concepts have been
launched with restaurants that are leased or operated by the group.
process innovations like in the NTCs, which try to create an experience chain. An NTC in
Flims already has a ski and snowboard world that offers customers everything from renting to
buying, right up to instruction, from a single source.
financing innovation by establishing Finanz Infra AG, owner of the ski slopes and snowmaking infrastructure, which ultimately leads to favorable financing. Additionally, “rocksresort”, an
apartment hotel with a hybrid financing model 3, was introduced as a blend of renting and full
ownership.
multiplication of core competencies in event management, service management and customer relations management (CRM) via consulting other companies, and taking over management contracts in new areas.
Expansion (market / product innovations) into the summer tourism with i.a. the operation of
the internationally-known bathing lake “Caumasee”, the participation in the world natural heritage “Tektonikarena Sardona” and the positioning of the traditional starched brand “Flims”.
1
Weisse Arena Gruppe is a holding company in the Laax/Flims/Falera area.
2
Because its target groups and positioning broadly match Weisse Arena Gruppe’s, Sony was chosen as a technical partner of
Riders Palace.
3
Apartment owners make them available for rent when they’re not staying in them, thus avoiding vacant apartments and providing owners with a source of income.
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3 Embedding the case study in the lecture module
5
3. Embedding the case study in the lecture module
Module Lecture
1
Case study text
Textbook, chapter 1
Offer-and-market
analysis
SWOT analysis
Systemic Network
Analysis
Reading
Answer exercise questions
Studynet questionnaire
Textbook, chapter 2
Market segmentation
Positioning
Reading
Answer exercise questions
Textbook, chapter 3
Customer process
Performance process
Reading
Answer exercise questions
Learning platform questionnaire
Textbook, chapter 4
Pricing
Distribution
Marketing mix
Reading
Answer exercise questions
Textbook, chapter 5
Innovation
Marketing controlling
Discussing self study
case Locher Bier
Reading
Answer exercise questions
Textbook, chapter 6
Marketing mix 2
Pricing
Distribution policy
Communication
Marketing mix
6
Reading
Answer exercise questions
Studynet questionnaire
Marketing mix 1
Performance process
(physical production, service)
Product design
5
Goals & organisation
of marketing
Marketing strategy
Marketing objectives
Market segmentation
Positioning
Customer processes
4
Readings
Market analysis
Customer behavior and
markets
Objectives of market
research and data generating
SWOT analysis
Systemic Network Analysis
3
Preparation
Business processes
Management with focus
on adding value
Classification of business
processes
Structure and aims
Marketing concept
2
Tutorials
Controlling and innovation
Marketing controlling
Innovations
Guest lecture
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4 Case description
6
4. Case description
4.1. History of Crap Sogn Gion cableways
4.1.1.
Environment
4.1.1.1.
Development of alpine tourism and Flims-Laax destination
Before the modern era, the Alps were primarily a dangerous area that had to be overcome on the way
between northern and southern Europe. However, the Enlightenment fostered a growing interest in
scenic attractions and landscapes, as well as alpine culture. Scholars like Goethe visited the Alps and
drew attention to their attractions in their works. Thus, an active tourism developed at the beginning of
the 19th century, which quickly led to the construction of the first hotels and, as part of the opening of
Switzerland with its first railway network, to the first mountain railways (Europe’s first was Rigibahn,
which was completed in 1871). Alpine tourism reached its first peak in neutral Switzerland during the
so-called Belle Époque that lasted until the beginning of World War I. It was mostly a warm-weather
activity during those early days, but winter tourism with ice skating, skiing and sledding slowly developed shortly before World War I (Switzerland’s first winter-tourism season was in the pioneering locations of Wengen/Mürren around 1912). Although the period between the world wars was challenging
for tourism, it included a touristic and sporting highlight for Switzerland with the first winter Olympics in
St. Moritz in 1928. Tourism boomed after World War II until the mid-90s in both summer and winter. In
the 60s and 70s and up until the 80s, new ski areas were opened in the Swiss Alps. This development
was driven by increasing prosperity, automobile ownership and the development of transport connections in the Alps, as well as by the growing sport and leisure orientation that coincided with a lack of
alternative sports opportunities, especially in winter. But ski sport demand flattened successively and
attention focused on new alternative sports with the emergence of cheap intercontinental flights to
sunny destinations, especially in winter, and with the systematic development of indoor leisure and
sports offers.
Flims/Laax also reached its first tourism peak during the Belle Époque with numerous hotels, especially the flagship Flims-Waldhaus. It developed into a proper resort; Lake Cauma in Flims’ landslide area
was opened with its own cableway. After World War II, winter sports were developed systematically
and targeted. Opened in 1946, the connectable chairlift Flims-Foppa was one of the first modern cableway transportation systems in Europe. Subsequently, the Flims skiing area was systematically expanded and developed further into the municipal area of Laax. The emergence of the second-home
boom and the winter sport boom of the 70s and 80s led to golden days that lasted until the mid-90s. In
addition to the traditional development drivers like municipalities, cableway companies, leading hoteliers and tourism organizations, architects and building companies also systematically developed the
destination further because of demand for second homes.
4.1.1.2.
Emergence of Laax in the 1960s
The Laax community and its terrain, which were in fact very well suited for ski sport, were always
overshadowed by the development of Flims. When Walter Gurtner did not get local support for his
plans for a targeted development of Vorab Glacier, especially for summer tourism directly from Flims,
he started developing his own ski area in Laax on the “ideal” ski mountain, Crap San Gion. That started Laax’s boom phase. The team of Gurtner and Mayor Hangartner (from 1971 on) not only developed the hotel business, but also large second-home projects and local infrastructure. Even today,
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7
Laax has one of the lowest tax burdens in canton Grisons due to its outstanding economic development. Unlike Flims, Laax was primarily developed by those two pioneering entrepreneurs.
4.1.1.3.
Current and future development of alpine tourism
Since the 90s, the developments mentioned above (cheap long-distance flights, emergence of alternative leisure and sports activities) have continued to draw business away from alpine tourism. With this
new competition, the traditionally grown destinations with their complex structures (consider the multitude of participants in Flims’ development, as an example) could not keep pace with the efficient service provision and the convenient services, such as central booking options that were on offer in the
new artificial resorts like leisure and theme parks. The financial and economic crisis emphasized the
challenge even more because traditional market segments, e.g. families from Europe, were less and
less able to afford comparatively expensive mountain holidays. Also, the number of traditional families
is declining in Europe due to demographic reasons. On the other hand, important new markets are
emerging, for example, high-income urban professionals who seek outdoor experiences (but are interested in short-term holidays primarily during excellent conditions), and booming intercontinental tourism markets such as Asia (that are, however, focused primarily on internationally relevant sights and
alpine centers, so far). Thus, alpine tourism is facing an actual restructuring regarding markets and
service provision processes that will have to include a fundamental change in business models, as
well.
4.1.2.
Pioneering phase
The Weisse Arena Gruppe was founded as Bergbahnen CRAP SOGN GION in 1962 by a group of business pioneers that included Dr. Donat Cadruvi, Dr. Luis Maissen and Walter Gurtner (father of the
current president of the board of directors) in the lead. Starting from Laax, the young company opened
the area around CRAP SOGN GION Mountain with relatively simple tourist transportation systems (inexpensive ski lifts). While there was skiing in the nearby village of Flims as early as 1945 with the help of
ski lifts, Laax was built from scratch as a destination. Among other things, supplementary tourism infrastructure and the necessary hospitality capacity had to be created. The early years were difficult. To
begin, the company faced substantial capital requirements to expand at a time when Laax’s tourist
base was still relatively weak. In addition, there was intense competition with the nearby destination,
Flims, over factors like prices and services offered.
The company expanded the Laax snow sports area all the way to the Vorab Glacier by 1980 through a
target-oriented plan guided by what was possible. Thus, Laax developed into one of the largest connected ski areas in Switzerland. In 1978, even before the glacier was developed for skiing, the Laax
and Flims ski areas were connected on Laax municipal property. Due to the intense competition between the two areas, skiers had to buy an additional ticket when crossing from one area to the other.
This changed when one ticket price was established for both areas in 1980.
Because of the strategic development of the area and the ideal topographic conditions, the cableway
company LAAX - CRAP SOGN GION soon became one of the strongest companies in the snow sports
industry. It distinguished itself through a variety of pioneering accomplishments after Reto Gurtner
(lic.oec. HSG, lic.iur.) became managing director in 1983. These included:
Development and complete integration of the gastronomic offer into the Flims/Laax snow
sports area
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Introduction of snowboard camps and snowboard-oriented offers at the beginning of snowboarding sport in 1986
Realization of a future-oriented development policy by systematically reducing the number of
ski lifts, while keeping the developed slope area (several old lifts were replaced by a new one).
The company implemented computer-based planning methods during this redesign of the snow
sports area in the late 1980s. With the help of IT systems, the ideal station points and routes for
ski runs were determined based on exposure to sunlight, hill slope and topographic conditions.
The locations and alignments of restaurants were tested based on the simulated position of the
sun. Weisse Arena Group was the first company in Europe to employ the Ecosign Mountain
Resort Planners system, which was developed in Canada. As a first mover in Switzerland, what
was then Bergbahnen CRAP SOGN GION AG began representing the system in Europe.
Development of the four-star signinahotel as a lead business for the Laax resort. With this
drawing card, important guest groups were tied to the location. With the alpine hotel, CRAP
SOGN GION, an attractive integrated range of services was offered – this at a time when other
cableways had not even integrated the gastronomy.
During the company’s pioneering phase from 1962 to 1989, FIS World Cup ski races were repeatedly
organized and held. The two bids for hosting the World Cup championships failed, not least because
of political reasons. As a result, the company systematically withdrew from ski racing for many years,
even though those events played an important role in profiling the area during the early phase.
At the beginning of the tourism crisis in Switzerland in the early 1990s, Bergbahnen CRAP SOGN GION
was a thriving, modern company. They were thus able to take advantage of the opportunities that
arose from weaknesses of partner companies and strategically realign their business.
4.1.3.
Merging time
The merger with the formerly much stronger and more long-standing Flimser Bergbahnen in 1996 was
a major milestone. In the wake of the merger, the area slope access was again redesigned. Building
an ultramodern lift, Flims Dorf-Plaun-Nagens, allowed the owners to replace four smaller lifts. At the
same time, the two former rivals were able to abandon investment and marketing policies aimed at
cutting each other out in favor of a future-oriented, strategic investment policy. The artificial snowmaking system was extended and one part of the ski area, Foppa/Naraus/Cassons, catered to the needs
of families and, in part, to off-trail skiers.
4.1.4.
Company structure today
The company’s structure changed, too, in the context of the progressing development. After the merger with Bergbahnen Flims, the new cableways LAAX CRAP SOGN GION were promoted under the label
FLIMS/LAAX/FALERA “DIE ALPENARENA”.The area has been marketed as LAAX in winter and as FLIMS in
summer since the 2006-07 winter season.
The W EISSE ARENA GROUP runs and markets the winter resort FLIMS/LAAX/FALERA and has five fully
owned subsidiaries. Four of these are service providers. These businesses are:
Cableways, slopes and emergency medical services, Weisse Arena Bergbahnen AG
Hotel business and gastronomy, Weisse Arena Gastro AG
Ski-and-snowboard rent and sales, Weisse Arena Leisure AG
Skiing-and-snowboarding instruction, Mountains Adventures AG
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The fifth subsidiary, MOUNTAIN VISION AG, combines all the key management control processes.
These include marketing, sales and communication and other services for the subsidiaries, like human
resources and accounting.
The holding-company structure makes it possible to realize an integrated service operation for the
whole group of companies with minimal coordinating effort. This fulfillment strategy, or “one-stop shop”
strategy, allows guests to experience their entire stay – from arrival, to equipment-and-slope use to
catering and accommodation through to the after-ski party – as provided by a single source. It is a
strategic core competency for Laax that clearly differentiates the company from its competitors.
Figure 2: Structure and holdings of Weisse Arena Gruppe (source: www.weissearena.ch)
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4 Case description
4.1.5.
10
Financial situation
Development in recent years led to a high capital demand and a correspondingly higher level of debt,
but from fiscal year 2002-03 until 2011, debt was steadily reduced. In 2012, borrowed capital increased due to new investments. Profitability as measured by total cash flow or cash flow in relation to
invested capital is at a high level for the industry (compare figure 4).
Figure 3: Balance of accounts of Weisse Arena Gruppe per April 30, 2015 (financial results 2015/16
not yet available at time of preparation, annual report only in german available).
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Figure 4: Financial results of Weisse Arena Gruppe per April 30, 2015 (financial results 2015/16 not
yet available at time of preparation, annual report only in german available).
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4 Case description
4.1.6.
12
Trend scouting
After the cableways merger in 1996, the combined resources could be focused even better on developing new market potentials and new unique services. The background of the whole development was
systematic trend scanning by entrepreneur Reto Gurtner, one of the first cableways managers to learn
how to snowboard. From 1996-98, he was president of the International Snowboarding Federation
(ISF) and was thus able to keep in touch with that scene. Every year, he spends at least four weeks in
the US, Sweden and Great Britain to observe emerging consumer trends in snow sports, as well as
general lifestyle trends.
4.1.7.
Innovation
Leveraging his expertise in trends, Gurtner created an attractive offer for snowboarders, including
fashionable venues in the snow sports area. With bars, discos, various restaurants, an attractive
climbing wall, a halfpipe etc., the summit station on CRAP SOGN GION became a major attraction and
regional hot spot. For several years, there were scene parties in the gondola garage at the Laax base
station. Internationally known DJs and popular bands were flown in. In one noteworthy example of the
area’s appeal, Microsoft used Laax’s slope layout in the virtual game “Amped Champ” for its Xbox
gaming console.
Various innovations inside the company also coincided with the merger period. In 1996, for example, it
opened the first modular hotel in Switzerland for a trial. It is made of pre-fab standard modules that
can be built on top of or next to each other. They contain hotel rooms with a modest infrastructure, but
a high standard of cleanliness and hygiene. Based on lessons learned with this concept, the company
developed and built the well-known RIDERS PALACE. It hardly needs mentioning that this hotel is filled
to capacity with snow sports enthusiasts, especially on weekends. The hotel registered 10,000 guest
nights in its first year and 20,000 in its second year.
Also in 1996, W EISSE ARENA GRUPPE began setting up New Technology Centers (NTC) and Boarderworlds. There are now several of these integrated leasing centers in the snow sports area, with five
NTCs and two Boarderworlds 4. Customers can rent the equipment they need as they follow a marked
route. Special emphasis was put on meticulous process organization. In the neatly arranged centers,
customers are guided through the different departments, where they select the appropriate piece of
equipment, and where they can receive advice. At the checkout counter, equipment selections and
customer data are entered in the IT system. Sophisticated loyalty cards simplify this process for regular customers. Since winter 2003-04, the centers are being re-launched. The main center in Flims, for
example, was decorated as a tropical garden. Thanks to the NTCs and the Boarderworlds, it was possible to offer entirely new services and products. For example, bundled packages that include equipment rental and a ski-day pass were introduced. New offers that enable customers to exchange
equipment in the different centers of the area during the day were created. It is possible, for example,
to start the day on all-round carving skis, switch to a more curved or harder ski version around noon,
ride a skwal (mono-ski) for a change in the afternoon and tackle the downhill run in the evening on a
snowboard. In addition, the skiing and snowboarding schools were integrated into the NTCs and
Boarderworlds, creating another step towards “experience and expertise from a single source”.
ROCKSRESORT is one of the group’s new projects. It is a unique hotel resort that was developed close
to the lower terminus in Laax. It comprises eleven buildings with 1,000 new beds, divided into 75 hotel
rooms and 120 apartments. The resort, which also offers restaurants, bars and shops, is designed to
ensure the accessibility of all services within walking distance. Additionally, 700 parking spaces were
4
In Flims and Laax, those two units are separate.
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provided inside a three-story underground car park. The development also features a new hybrid,
financing model: in addition to owning holiday apartment, buyers make their units available to other
guests. Off-season, owners have unlimited access to their apartments; they get three weeks during
peak season. During the remaining time in that busy period, the apartments are let to third parties via
Weisse Arena Gruppe’s call center. This “buy to use and let” concept avoids empty beds and provides
an additional source of income for the owners. The project is especially interesting to prospective foreign regular visitors because the acquisition is exempt from the “Lex Koller” 5. The selling of apartments near the lower terminus started in March 2008. In January 2010, the unique design of rocksresort was honored with an award by the renowned British magazine “Wallpaper”.
Since December 2012, Weisse Arena Gruppe also has offered an indoor freestyle hall near the Laax
lower terminus. Unique in Europe, this indoor facility offers freestyle sports such as snowboarding,
skateboarding and biking year-round. The Freestyle Academy of the tourism region Flims/Laax/Falera
organizes various courses and camps for these sports in the indoor facility and outdoors, thus broadening the area’s product range with another attractive offer. The roughly 1,000-square-meter area
hosts a Big Air jump with foam pit, mini ramp and trampoline for sports enthusiasts. With this facility,
Weisse Arena Gruppe aims to offer younger visitors especially an opportunity to improve their ability at
their sport. However, this practice facility gives beginners and advanced athletes alike their money’s
worth.
In a more recent development, the LAAX shuttle runs daily during winter season, offering visitors rapid
transport between the Zürich, Friedrichshafen and Memmingen airports and the ski area. Visitors can
book a ride online via the resort website. Weisse Arena Gruppe aims to appeal to new target groups
with this shuttle.
4.1.8.
IT in a snow sports area
In addition to allowing systematic controls, continuous improvements in IT capabilities opened an entirely new dimension in customer relation management (CRM), which is a priority for the company.
Through its CRM systems, Weisse Arena Gruppe systematically tries to turn as many customers as
possible into club-card holders. For example, special rates for children and seniors are offered through
club cards targeting those age groups.
This is the basis for collecting customer data and later for the systematic optimization of the range of
services and development of offers aimed at “customer connectivity”. For instance, specific customer
profiles can be developed by recording visitors’ choices, and customers can be clustered (divided into
market segments according to their preferences). Today, W EISSE ARENA GRUPPE has more than
250,000 customer profiles.
The company also is a leader in Switzerland in the area of communication technology. The cableways
of W EISSE ARENA GRUPPE were the first in the industry to introduce payment via mobile phone. This
allows customers to buy virtual tickets via their phones on the way to the cableway, and avoid lines at
the ticket counters.
For the development of the corresponding know-how and the software, the group works with international IT and CRM companies (e.g. PeopleSoft). As with initiatives to optimize its offerings in the
mountain and snow areas, the company also aims to sell this expertise to other companies in the
same line of business at a future date.
5
A law that restricts the purchase of land in Switzerland by people who live abroad. (BewG, SR 211.412.41)
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4 Case description
4.1.9.
14
Multiplication of acquired core competencies in new areas
The ability to design high-entertainment locations was also systematically developed. W EISSE ARENA
GRUPPE recently was awarded a contract for the operational management of the public bathing beach
on Lake Cauma (Flims), which is the first time it has managed a property it doesn’t own. Music, adventure, sports and a full-service package together with suitable customer positioning and developing an
attractive scene are formulas for success here.
The hotel business was systematically extended. Five years ago, a new hotel opened that caters to an
IT-enthusiastic clientele, especially singles. In cooperation with a global hardware partner (compare
Riders Palace powered by Sony), a unique full-range offer was created in the hotel and the rooms,
encompassing a wide range of information, entertainment and gaming possibilities.
4.2. Marketing today
4.2.1.
Target market today
All the described measures for the optimization of the service chain and product-and-market innovation are geared to a specific target market strategy. The company wants to offer a platform to active,
young and young-at-heart customers. Target markets are young seniors, young families, teenagers,
families and singles and divorcées. Increasingly, it also wants to reach people who enjoy an active life
in their prime. With the brand “Laax”, W EISSE ARENA GRUPPE focuses marketing on the winter activities
around the mountain. The marketing of the summer offer is mainly led by the tourism organization
FLIMS/LAAX/FALERA TOURISMUS AG via the brand “Flims”. The target segments addressed with the two
brands overlap less than 5 percent. Geographically, Switzerland and southern Germany are the target
market for the winter sports area Laax.
4.2.2.
Marketing tools
As mentioned above, the main emphasis in marketing is database management and direct marketing
for regular customers. Within the buying cycle, emphasis is thus on retaining existing customers (customer connectivity). To this end, regular customer clubs and communities are specifically established.
Since January 2009, there has been a unique partnership with Star Alliance’s “Miles & More” program
that facilitates an integration of both customer connectivity programs.
New customers (canvassing for customers) are approached by a specific database management and
via PR and events. On the one hand, the company organizes events, like the Burton European Open,
the Swatch European Free Ski Open or the Fat Tire Festival and thus pointedly cultivates the premier
position among snowboard-lifestyle winter sports areas. On the other hand, it offers events like skiand-snowboard testing weekends via partners like sports stores and clubs.
Besides the traditional marketing tools, W EISSE ARENA GRUPPE mainly relies on the Internet portal
www.laax.com. Clearly focusing on selling, the multilingual portal enables holiday visitors to book their
entire holiday in a few easy steps – from the airport shuttle service to hotel room and skiing instructor
through to the return transport.
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4 Case description
15
4.3. Perspectives
Right now, W EISSE ARENA GRUPPE is one of the largest alpine sports companies in Switzerland. In the
last about four years, since its 50th anniversary in 2012, the Weisse Arena Gruppe has remodeled the
skiing area with new lifts, long-term planned and following a concept of the Canadian ski area planner
Paul Mathews. The Weisse Arena offers now one of the most attractive ski resort with modern facilities.
Compared to international standards, the company is still somewhat less than ideal size. Revenue
growth is necessary to ensure that it maintains and attracts qualified management and future investments in the development of competencies and IT. The question is whether this new scale can be
reached by further integration in the value chain. This would entail incorporating more tourism services
in the region through vertical integration via a regional expansion. Other options include further integration of similar companies in the wider region within the scope of a horizontal expansion or diversification into other business segments (for example, sector-independent marketing of service and event
competencies).
Inside the traditional business, quality has to be optimized continually and the possibilities for further
process optimization, for increasing productivity, have to be developed. The awareness and the demand of attractive lead target segments are maintained through product innovation. To enlarge the
demand potential, it is necessary to seize opportunities for developing new market segments and create tools for an even more systematic retention of the existing core audience.
A special challenge is the decline of the Swiss snow sports market since almost five years (see the
development of the skier days on the webpage of Seilbahnen Schweiz, www.seilbahnen.org), which is
caused by structural reasons (see the presentation from Thomas Bieger at the annual meeting from
Jungfraubahnen 2015, www.jungfrau.ch). Now it’s important to initiate innovations on company level to
be successful in the long-term despite the declining overall market. Conceivable are market innovations such as the development of new international markets (e.g. through participation in a ski hall or
offering direct bus routes from airports to the destination), process innovations such as increasing
productivity (e.g. through new service concepts or digitalisation / IT innovations for capacity control) or
product innovations such as the reinforcement of summer tourism (e.g. through the operation of bathing lakes like the “Caumasee”, the construction of a new railway to the “Cassonsgrat” to make the
UNESCO world natural heritage “Tektonikarena Sardona” accessible, the strengthening of the traditional summer brand “Flims” or expansion of accommodation offers).
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5 Exercises
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5. Exercises
5.1. Basic task
With the total renewal the Weisse Arena Gruppe has reached an important milestone, although important decisions still hanging in the air. As part of a fictitious preliminary competition for a consultancy
mandate of the Weisse Arena Gruppe, the students have to answer and present in groups different
questions about the strategic development and the marketing of the Weisse Arena Gruppe.
5.2. Structure of exercise sequence
The exercises follow the structure of the marketing concept used in the textbook and during the lecture.
Figure 5: Structure of exercise sequence (source: Bieger, 2015)
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5 Exercises
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5.3. Modules
5.3.1.
Module 1: Goals & organisation of the tutorials
The module is a kick-off event, there are no tasks to process.
5.3.2.
Module 2: Value chain, goals, SWOT analysis
Module 2 is structured according to following diagram:
Figure 6: Structure of Module 2
Exercises
Give an overview of the Value chain and develop an offer and market analysis on the basis of the
SWOT analysis by working through the following questions:
2a) How does the value creation of the destination Laax looks like? Develop a value chain of the
destination and classify the company “Weisse Arena” into it. To which type of value configuration (see Fig. 22 in the text book) does the “Weisse Arena” correspond?
2b) Which of the general company goals are relevant for the business processes of the Weisse
Arena?
Define relevant goals for the business processes from the perspective of…
… a profit-oriented, short-term investor
… a representative of the government of the region
… a customer
2c) List at least six social mega-trends, and deduce relevant demand trends for snow sports areas from them. For this, use the reports on StudyNet and other publications.
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2d) Assess the opportunities and threats for Weisse Arena Gruppe using the trends you identified for question 2c).
2e) Choose three competitor areas that offer similar products and aim at the same target markets, and collect information relevant to their offer (suggestions for competitor areas: Jungfraubahnen, Engelberg/Titlis, Lenzerheide, Davos/Klosters).
2f) Deduce a list of six criteria for a strength/weaknesses analysis (competition analysis) from
the trends worked out for question 2c) and the general demands of snow sports customers.
2g) Assess the strengths and weaknesses of Weisse Arena Gruppe compared to the competitor
areas chosen for question 2e) and including the criteria defined in 2f).
2h) Identify the crucial unique selling propositions (USP) and the achilles heels/problem areas
for Weisse Arena Gruppe.
5.3.3.
Module 3: Market segmentation & customer processes
Module 3 is structured according to following diagram:
Figure 7: Structure of Module 3
Exercises
Develop a positioning of Weisse Arena Gruppe by completing the following steps (also see solutions
template in section 7):
3a) Assess the applicability of the three most important forms of segmentation for Weisse Arena
based on the segmentation requirements criteria.
3b) Develop a suggestion for a market segmentation of the snow sports market based on the
form of segmentation you have chosen.
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5 Exercises
19
3c) Choose the most attractive target market for the snow sports business of Weisse Arena
Gruppe based on relevant criteria.
3d) Write a positioning statement of the snow sports business for Weisse Arena Gruppe. Express it verbally and through a diagram of a two-dimensional positioning matrix. Also include
the competitors evaluated for exercise 2 in the matrix.
3e) Suggest concrete measures for customer processes (customer acquisition, customer retention, customer development) for working on the target market chosen in exercise 3c. Justify
your decisions.
5.3.4.
Module 4: Marketing mix and performance process
Module 4 is structured according to following diagram:
Figure 8: Structure of Module 4
Exercises
Develop an overview of the marketing mix and the performance processes by working through the
following questions.
4a) Assess the individual marketing tool groups (4Ps) in terms of their importance for working
on the target market for Weisse Arena chosen in exercise 3c. In doing so, differentiate the
phases of the buying cycle (compare figure 19 in the text book). Briefly explain your assessment. Consider your responses in exercise 3e.
4b) Draw up ideas for a one-year marketing plan that shows which concrete marketing tools will
be used at what time of the year. Note the phases of the buying cycle (compare question 4a)
when applying the tools. You have 1.5 million Swiss francs at your disposal. Explain your marketing-plan proposal.
4c) Outline the service chain of a typical day skier. In your opinion, where is the biggest potential
for gaps in quality?
4d) How can these quality gaps be closed through improvements to the service-provision process?
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5 Exercises
5.3.5.
20
Module 5: Pricing and distribution
Module 5 is structured according to following diagram:
Figure 9: Structure of Module 5
Exercises
Develop an overview of pricing and distribution by working through the following questions.
5a) Analyse the relevant criterions in the yield management of the Swiss International Airlines
(e.g. travel purpose -> duration of the stay). Which learnings do you take for the Weisse Arena?
5b) To what extent would you use a flexible pricing system in the Weisse Arena (in which ways
would you differentiate the prices and how)? Discuss the advantages and disadvantages and
develop a pricing concept.
5c) Develop two alternative distribution concepts for the Weisse Arena (e.g. internet, retail
trade in travel agencies or roadhouses etc.). Assess these concepts regarding the marketing
goals.
5.3.6.
Module 6: Innovation and marketing controlling
Module 6 is structured according to following diagram:
Figure 10: Structure of Module 6
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5 Exercises
21
Exercises
Give an overview of the process of innovations and marketing controlling by working through the following questions.
6a) Name the four innovations that, in your view, are most important and correlate them with the
innovation cube (compare figure 93 in the text book).
6b) Building on the strategic directions of impact of innovations (market, process, product innovation), develop your own innovation project ideas (if possible with focus on summer tourism).
6c) Discuss whether your innovation ideas are continuous or discontinuous and whether they
are driven inside-out (technology-push) or outside-in (market-pull).
6d) Choose at least four target indicators for monitoring marketing success for the Weisse
Arena case and explain your choices. In doing so, keep the marketing plan developed in exercise 4b) in mind.
6e) Explain the impact dynamic of the target indicators you have chosen.
6f) Additional exercise: Structure a rough tool application concept for “developing customer potentials” and define the relevant indicators for monitoring success.
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6 Source materials
22
6. Source materials
Bieger, Th. (2015): Marketing Concept – The St. Gallen Management Approach. Bern: Haupt.
Bieger, Th. (2013): Das Marketingkonzept im St. Galler Managementmodell. Bern: Haupt.
Bieger, Th. (2001): Management von Destinationen, 6. Auflage, München, Oldenbourg Wissenschaftsverlag GmbH.
Bieger, Th., Gurtner R. (2000): Informations- und Leistungsnetzwerke im Dienstleistungsbereich - das
Fallbeispiel Weisse Arena Gruppe. In: Belz Christian, Bieger Thomas: Dienstleistungskompetenz
und innovative Geschäftsmodelle, Verlag Thexis, FAH-HSG, St.Gallen.
Websites used:
http://www.weissearena.ch
http://www.laax.com
http://www.riderspalace.ch
http://www.rocksresort.com
7. Further documents
Interview with Reto Gurtner, CEO & president of the board of directors of Weisse Arena
Gruppe (on StudyNet)
Links on StudyNet (further newspaper articles)
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Competence centres:
Tourism and Transport
Regional Science
Public Management and Governance
Organization Studies
Dufourstrasse 40a
CH-9000 St. Gallen
Fon +41(71)224-2525
Fax +41(71)224-2536
http://www.imp.unisg.ch
Case Study «Appenzeller Beer»
Production and innovation
Source: Brauerei Locher AG
Prof. Dr. Thomas Bieger
Samuel Heer, M.A. HSG, Dipl. Wipäd.
Assessment level fall term 2016
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1 Learning objectives
1. Learning objectives
The objective of the “Appenzeller Beer” case study is to examine the market-analysis process in a
manufacturing plant. It is thus an ideal complement to the “Weisse Arena” case study, which focuses
on a services company.
With this practical example, students will be expected to
apply and describe concepts and steps of production correctly
make and justify decisions about innovation by Brauerei Locher
acquire structuring assistance by using the solution templates
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2 Background
2. Background
2.1.
Introduction
Brauerei Locher, the sole remaining brewery in Appenzell, was founded in 1810. It is also the
only surviving regional brewery in Switzerland and is known nationwide for its specialty beers. Its success stems from its focus on quality, diligence and the individual character of its beers, as well as
market awareness of the name “Appenzell”. The brewery’s ultimate objective is to satisfy the customer, which is why Brauerei Locher offers specialty beers for every taste.
2.2.
Summary of the beer market in Switzerland
There are a large variety of breweries in Switzerland. This mix is dominated by big breweries
that produce from 100,000 to approximately 2 million hectoliters (hl) of beer annually, and also includes numerous small and medium-size businesses along with some “hobby” breweries that sporadically produce insignificant amounts of beer. In 2015, 623 (+237 compared to 2012!) breweries reported sufficient production to make them subject to the country’s beer tax. Beer drinkers paid 320 million
Swiss francs in beer and sales taxes in 2015.
In Switzerland, 4,623,709 hectoliters of beer were consumed in 2015, a per capita consumption of
55.3 liters. Thereof, Swiss breweries produced 3,438,047 hectoliters. Beer imports from 95 countries
around the globe accounted for 1,185,661 hectoliters of the total. It is worth noting that Swiss beers
accounted for 74.4% of consumption in 2015. Switzerland exported 60,216 hectoliters of beer to 33
countries in 2015.
Development of the Swiss beer market since 1990/91
(excluding alcohol-free beer)
National production 2)3) Imports 2)
Year 1)
(in hl)
(in hl)
Overall consumption
(in hl)
Per-capita consumption 4)5)
(in Liter)
1990/91
4,183,358
661,422
4,844,780
71.0
1995/96
3,596,388
708,885
4,305,273
60.6
1999/00
3,613,986
580,718
4,194,704
58.3
2002
3,493,536
633,897
4,127,433
56.6
2003
3,665,888
668,486
4,334,374
58.7
2004
3,560,825
701,723
4,262,548
57.3
2005
3,416,991
715,064
4,132,055
54.8
2006
3,494,309
793,713
4,288,022
56.5
2007
3,531,828
838,094
4,369,922
57.1
2008
3,625,293
863,766
4,489,059
58.0
2009
3,554,884
925,540
4,480,424
57.2
2010
3,538,606
987,811
4,526,417
57.3
2011
3,546,333
1,079,727
4,626,060
57.9
2012
3,514,819
1,107,690
4,622,509
57.3
2013
3,369,938
1,225,258
4,595,196
56.5
2014
3,431,928
1,225,252
4,657,180
56.3
2015
3,438,047
1,185,661
4,623,709
55.3
Calendar year
1)
Respectively from 1 October-30 September
2)
Source: Swiss Federal Customs Administration
3)
Including foreign brands brewed in Switzerland under license; excluding exports
4)
Total population living in Switzerland and Liechtenstein (including women and children)
5)
2008: includes influence of EURO 08
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2 Background
4
Swiss beer market 2015 by the numbers
(Basis: hl; excluding non-alcoholic beers; data refer to calendar year)
By segments
Swiss beers
(excluding alcohol-free beers
and exports*)
3,438,047 hl
74.4 %
Swiss
beers
Imports
Imports
1,185,661 hl
Total consumption
4,623,709 hl 100.0 %
* Exports
25.6 %
60,216 hl
In Switzerland, there is an emphasis on eco-sensitive, reusable containers. About 41% of the beer
reaches the consumer in barrels and deposit bottles.
Barrels
By containers
Barrels
24.5 %
Deposit bottles
16.1 %
One-way bottles
24.9 %
Cans
34.6 %
Total
100.0 %
Deposit
bottles
Cans
One-way
bottles
The main types of Swiss trademark beers are lager beers (79.2%); pilsner beers (10.9%) and specialty beers (9.9%). Dark beer types, which account for only 1%, are of lesser importance.
Specialty beers
By types (Swiss trademark beers)
Lagerbier
79.2 %
Special beer (a pilsner-style beer)
10.9 %
Specialty beers **
Total
Special
beer
Lagerbier
9.9 %
100.0 %
** light, luxury, corn, wheat, spelt, amelcorn, multi-grain and other specialty
ty beers
(Source: Swiss Brewers Association)
2.3.
Brauerei Locher Summary
The brewery was incorporated as Brauerei K. Locher AG in 1963. In 1996, the current manag-
ing directors, Raphael Locher-Diem and Karl Locher, took over, representing the fifth generation of
family management. Master brewer Hans Sonderegger joined the brewery in 1997, becoming the first
non-member of the Locher family to join the management team. As a brewer with many years of experience in small and medium-size breweries, and as a former manager of a large brewery, Sonderegger
has played an important role in Locher’s success of the past ten years.
The brewery’s objective is to satisfy customers and maintain personal contact. Consistent management over the years has built trust in the Appenzeller Beer brand. Also, beer output increased from
13,800 hl in 1994 to 140,000 hl in 2012. Competitors in the Swiss market are local breweries such as
Schützengarten, Sonnenbräu and Löwengarten. Quality and taste are similar, due in part to imitation.
Beyond Switzerland, exports to 10 countries make up Locher’s most important market. The
brewery calls “being able to lay hands on everything” (K. Locher) a great strength. The excellent quali-
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2 Background
5
ty of the raw materials and the freedom to try out new things are also central. The focus on innovation
has resulted in a wide range of beers, as well as productive uses for brewery by-products. Locher is
committed to maintaining the values of “naturalness”, “originality”, “authenticity” and “sustainability”.
The strategic business activities of the family business can be grouped into “beer”, “beverage store”,
“spirits” and “others”.
Brauerei Locher is known for its specialty beers and, today, Appenzeller Beer is a wellrecognized regional beer. But the brewery also supplies niches throughout Switzerland and some
foreign markets with various specialties. For example, it produces beer for Swiss International Airlines
and for some tourist areas.
Innovative specialty beers for niches in Switzerland include “Appenzeller Naturperle”, the first
Swiss organic beer with the “Knospe” label, and “Vollmond-Bier”, brewed only during a full moon. The
naturally cloudy “Quöllfrisch” continues to ferment in the flip-top bottle. “Leermond”, a unique, naturally
cloudy, non-alcoholic beer, and “Hanfblüte”(“hemp blossom”) characterize the brewery’s eagerness to
experiment. “Quöllfrisch” and “Säntis Kristall” are beer types popular on the local market. “Castégna”
(chestnut beer) is brewed with chestnuts and is produced mainly for the Ticino market.
In addition to its wide diversity of beers, Brauerei Locher also produces a whiskey, “Säntis Malt”,
and a liqueur, “Säntis Cream”, for the spirits market.
(Source: Brauerei Locher)
2.3.1. Product range and awards
The product range lists are not exhaustive. The current range is listed on www.appenzellerbier.ch.
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2 Background
6
Name
Type
Color
Taste
Alc. content
Container
Quöllfrisch
Lager beer, naturally cloudy
Naturally cloudy, full
Heady, yeasty,
fruity
4.8
50cl and 33cl fliptop bottle
Naturperle
Lager beer, pilsner
style, organic,
“Knospe” label
Naturally cloudy, full
Heady, yeasty,
mild
4.8
50cl flip-top bottle
Hanfblüte
Pilsner style with
hemp, naturally
cloudy
Pale, naturally cloudy
Light, sweet,
hemp
5.2
50cl flip-top bottle,
33cl crown cork
disposable bottle
Weizenbier
Pilsner style with
wheat, naturally
cloudy
Light brown, naturally
cloudy
Full-flavored,
tasty, touch of
cinnamon
5.2
50cl flip-top bottle
Vollmondbier
Pilsner style,
organic, “Knospe”
label, naturally
cloudy
Full, naturally cloudy
Light, fruity
5.2
50cl flip-top bottle
Köhler Bier
Märzenbier Lager
(naturally cloudy)
Amber
Malty, dry sweetness, nutty
4.8
50cl and 33cl fliptop bottle
Holzfass-Bier
Pilsner style
Amber, naturally
cloudy
Heady, oak, nutty
5.2
33cl flip-top bottle
Vollmond Bier
Pilsner style, lager
beer, organic
Full, filtered
Light, fruity
5.0
33cl crown cork
bottle
Vollmond Bier
Pilsner style,
organic “Knospe”
label
Full, filtered
Light, fruity
5.2
33cl crown cork
bottle, reusable and
disposable
Leermond Bier
Alcohol-free pilsner
Light brown, naturally
cloudy
Malty, sweet,
round
0
33cl crown cork
bottle
Flauder Panache
Alcohol-free pilsner
Golden yellow
Mild, fizzy, balm
and elderflower
flavor
0
50cl crown cork
bottle
Sonnwendig
Alcohol-free pilsner
Full, golden yellow
Malty, sweet,
round
0
50cl and 33cl crown
cork bottle, reusable
and disposable
Légère
Lager
Crystal yellow
Hoppy, subtle
2.6
33cl crown cork
bottle
Säntis Kristall
Pilsner
Full, golden yellow
Heady, fullflavored, slightly
lemony
5.2
33cl crown cork
bottle
Birra da Ris
Pilsner
Slightly golden yellow
Pure and lean
with a dry aftertaste
5
33cl crown cork
bottle
Schwarzer Kristall
Pilsner
Thunderstorm-black
Heady, chocolate, coffee,
blueberries
6.3
33cl crown cork
bottle
Appenzeller
Lagerbier (hell)
Lager
Pale, golden yellow
Smooth, mild,
clean, light
4.8
50cl and 33cl crown
cork bottle
Quöllfrisch (hell)
Lager, filtered
Full
Heady, fruity
4.8
50cl and 33cl can,
disposable, crown
cork disposable
bottle
Appenzeller
Lagerbier dunkel
Lager, dark
Dark, black
Smooth, sweet,
malty
4.8
50cl crown cork
disposable bottle
Swiss Mountain
Lagerbier
Lager, filtered
Pale, golden yellow
Smooth, mild,
clean, light
4.8
33cl crown cork
disposable bottle
Naturperle
Lager
Full
Heady, mild
5
33cl crown cork
disposable bottle
Castégna
Pilsner with chestnuts
Blond, full
Chestnuts, sweet,
round
5
33cl crown cork
disposable bottle
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2 Background
7
340 Beers at the “Asia Beer Awards” in Singapore –
Single Gold Medal Goes to Appenzell!
Brauerei Locher has discovered the value of important beer spin-off products with a whole series of cosmetics named “Ninkasi”. In partnership with thermal bath spas, it offers Appenzeller Beer
cures. It offers beer byproducts like spent malt grain, brewer’s yeast and beer fore-run in the form of
“kabier” for the production of high-quality beef. The brewery also helped develop a master-brewer ham
with black-beer marbling.
Feeding and care
In cooperation with the agricultural school in Flawil, a feeding schedule was developed to offer the animals food that is as
balanced as possible. The basis of feeding is the beer byproducts: spent malt grains, brewer’s yeast and beer fore-run. The
food is supplemented with hay, wheat bran and a mix of cereal. For this, we buy whole grains and crack them on our farm
so we know what our animals eat. Naturally, the animals get plenty of fresh water. Even though the feed contains some
alcohol, the cattle show a blood alcohol level of zero. According to the Zurich Veterinary Clinic, this is possible because
cattle are ruminants and break down the alcohol in their rumen.
Our calves and cattle get a massage twice a day, alternately with a mix of beer fore-run and brewer’s yeast or with Swiss
rapeseed oil. With this, we achieve optimum grooming and increase the animals’ wellbeing. Through this personal contact,
the cattle also become very trusting and are less prone to stress.
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Marketplace: Master-brewer ham
A new delicacy from Appenzell: master-brewer ham with black-beer marbling
The Ernst Sutter company has recently introduced a new culinary creation into the market: the Appenzell master- brewer
ham with black-beer marbling.
The large meat-processing company Ernst Sutter AG has
developed a novel ham, the Appenzell master-brewer
ham. Brauerei Locher AG from Appenzell was key to this
success. The master-brewer ham originated from the
combined knowhow of the meat specialist and the local
independent brewery.
Under the direction of the Suttero meat specialists, a
partnership was accomplished, which perfectly emphasizes regional strengths on a production level. Meat and
black beer were combined to create not only a modified
ham flavor, but a new product, as well.
Not all beer drinkers love black beer, which has a small
circle of admirers due to its intense and unique taste. But
Ernst Sutter AG has taken advantage of these special
characteristics and, together with the traditional brewery,
has introduced a novel ham. The commercial launch is in
full swing and early consumer responses show that the
fusion of ham and black beer is promising.
About Suttero
Founded almost 100 years ago as a village meat shop in
Appenzell, Suttero is one of the leading meat producers in
Switzerland today. When Otto and Frieda Sutter took over
the business and the restaurant Ochsen in Teufen, Appenzell Outer-Rhodes, in 1909, 90 percent of the revenue
came from over-the-counter sales. Great-grandfather
Sutter would be amazed if he toured the business in
Gossau today.
From Brauerei Locher:
In Appenzell at the foot of the Alpstein, the Locher family
has been brewing premium-quality beers for five generations. For more than 200 years, all Locher beers have
been brewed by a traditional, technical method. Finest
malt and hops varieties and pure mountain water from
Appenzell are the natural answer to the high standards of
gourmets throughout Switzerland. This holds true for our
Appenzell black beer, too. (Source: Fleisch+Feinkost)
(Source: Brauerei Locher)
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3. Documentation of the production process
3.1.
Information flow
The whole planning system is based on a specifically devised program that includes all pro-
cesses, such as human resource planning, raw materials, production and distribution. Automated decision making also is a large part of planning.
Brewery status
Apart from planning purposes, the updated daily brewery status helps coordinate and control
the different production stages. This means that when one action has been completed and recorded
by a staff member, a series of required actions follows for the next employee.
Examples:
A supply of 25 tons of malt has arrived, an action for processing is passed on.
The bottle-filling department has registered an action, which automatically passes on an order for
a quality test to the laboratory.
The laboratory performs additional automated quality samples on a weekly and monthly basis.
Traceability
Every bottle has an identification number, which makes it possible to trace when, where and
by whom a bottle has been filled. Traceability extends to tank numbers (pressure tank, storage tank,
fermentation tank) and resources of raw materials.
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Traceability
Energy statistics
Because every production step is recorded, these records are the basis for the environmental
report, for CO2 compensation measures and for internal adaptation. Appenzeller Beer is produced in a
carbon-neutral manner all the way to the consumer, meaning the whole process, including transport.
“It cannot be economical if it is not sustainable (…) We look forward 20 years” (K. Locher). The goal is
to reduce energy use in the plant, which by implication requires new installations. For example, the
brewery switched from oil burning to wood burning, which means there are still some CO2 emissions
but they are offset eventually. In addition, solar cells have been installed. Since glass cannot be manufactured in a carbon-neutral way, the brewery invests in wind farms in Turkey.
3.1.1. Order clarification
Order clarification occurs in conversations between the sales department and the customer.
Because they are usually about standard products, there is no “production” step here.
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3.1.2. Planning process (production planning and scheduling)
Capacity planning per product
Capacity planning and material scheduling
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There are production statistics for every product over the years (winner/loser statistics). The
material scheduling is also determined by past consumption.
Capacity planning and staff planning
Staff planning follows a specially designed system. This schedule shows the different areas
(bottle filling, production, storing place, laboratory) in different colors, their collective workweek and
work processes updated time-wise. (Source: Brauerei Locher)
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Physical production process at a glance
Purchaising
Distribution
Malt silos
Our special composites are produced out
of ten malt silos.
Types: organic malt,
Pilsner malt, Munich
type, Cara etc.
Production
Barrel filling
In the barrel filling
department, the
barrels are washed
meticulously and
refilled with beer
immediately afterwards.
Barrel filling
Malt silos
Malt-mill
The malt composite is
crushed and cracked in
the malt-mill before
being mashed with
water in the
brewhouse.
Bottling
Bottles are filled with
beer in the bottling
department. They are
washed, checked,
filled, labeled and put
into crates.
Malt mill
Hops
Water
Brewhouse
Malt components are
separated into watersoluble and insoluble
forms. The resulting
wort is boiled and hops
are added.
Filling
Quality control
Brewhouse
Whirlpool
The hot wort is
pumped into the
whirlpool where solids
and proteins sink to the
floor. The clear wort is
ready for cooling.
Whirlpool
Wort heat exchanger
The wort is cooled from
98 degrees Celsius to
6-8 degrees.
Wort and oxygen are
added. Fermentation
begins.
Wort heat exchanger
Yeast
Air
Fermenting vat
Primary fermentation
Primary fermentation,
during which the yeast
metabolizes the malt
sugar to carbon dioxide and alco-hol, takes
about 7 days. Afterwards, the yeast
settles and slowly
continues to ferment.
Filtration cellar
In addition to the
unfiltered naturally
cloudy beer, like our
organic beer, for
example, we also
produce filtered beer.
This is cleared by
means of a diatomite
filter
Bottle filling
Beer filtration unit
Storage cellar
The green beer is
transferred to the
storage cellar, where it
matures, aerates and
clears for several
months at 0 degrees
Celsius in steel tanks
or even wooden
barrels
Maturation tanks
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3.2.1. Purchasing
Malt delivery
Quality control
Quantity control
Delivery order control
Malt silos
Raw/auxiliary materials - Packaging
Carbon dioxide
Quality control
Quantity control
Delivery order control
Quality control
Water, CO2
Storage
Raw- and
auxiliary
materials
Packaging
Storage
Raw- and auxiliary
materials
Packaging
Conformity and
quality control
Goods receiving
department
Reception of
goods/delivery order
control
Storage
Beer production
(Source: Brauerei Locher)
During the purchasing phase, the necessary raw materials (malt types, hops, rice, yeast cells,
water) of regional origin and the packaging are purchased from Swiss suppliers. Their quantity, conformity and quality are controlled. Brauerei Locher places high value in the local production of raw
materials (“as close as possible”), which come primarily from Switzerland, but also from France and
Germany. Thus, the brewery maintains close contact with its suppliers.
Purchasing decisions are based on concern for quality and sustainability. The brewery, which is
the biggest buyer of hops in all of Switzerland, has cultivation contracts with 30 farmers who plant at
elevations as high as of 1,700m (normally: 300-400m). The plants are more resistant, despite the
shorter growth period and slower growth. The pure spring water comes from the Appenzell Highlands.
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Spring Water
Hop plant
Hops
Yest cells
Hops
Malt
3.2.2. Production
When the malt from the silos goes through the malt mill and to the brewhouse, the watersoluble part is separated from the insoluble part. The resulting mixture (wort) is boiled and mixed with
hops.
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In the whirlpools, solid matter and proteins sink to the bottom. The clear wort is cooled down from
-
and oxygen is added. Fermentation starts.
During primary fermentation, which lasts about a week, the yeast converts the malt sugar to carbon
dioxide and alcohol. The yeast settles and continues to ferment.
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The barrels are washed and immediately refilled with beer.
3.2.3. Quality testing
Quality control at the laboratory includes technical (color, CO2) and biological samples, which
are tested for foreign organisms, bacteria, detergents and contamination.
3.2.4. Filling
The filling process is automated. First, the bottles are washed, then filled, provided with different kinds of tops (crown corks or flip-tops) and, finally, packaged.
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3.2.5. Shipping
In inaccessible terrain, the brewery resorts to traditional means of transportation during shipping. Thus, donkeys are used in addition to motorized vehicles.
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(Source: Brauerei Locher)
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4 Exercises
4. Exercises
Develop an overview of the production process and innovations process by working through the following questions:
a) How would you describe the business type (based on the criteria given in the lecture)?
b) How would you assess the production breadth and depth? Draw Locher’s position into a twodimensional matrix.
c) What advantages/disadvantages does the production strategy applied by Brauerei Locher
have? In your opinion, where is the biggest potential for improvements?
d) What are the most important types of information which have to flow during production scheduling from material disposition, capacity management and range management (see solution
assistance)?
e) Describe the different kinds of innovation of Brauerei Locher AG in terms of the dimensions of
the innovation cube (see solution assistance).
f)
Identify the most important drivers for innovations of Brauerei Locher and develop four own
concrete innovation ideas for the brewery (see solution assistance).
g) Discuss whether your own innovation ideas are continuous or discontinuous and whether they
are driven inside-out (technology push) or outside-in driven (market pull).
5. Solution assistance
5.1.
Solution assistance for exercise d
Input
Planning of the requirements of production factors
Throughput
Planning the implementation
Output
Planning the production
range
material disposition
Capacity management
Range management
5.2.
Solution assistance for exercise e
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Solution assistance for exercise f
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