Strategic Marketing Management
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Figures and Graphs © 2012 Alexander Chernev The Role of Frameworks in Marketing Management Framework Typical problem Typical solution Abstraction Specific problem Application Specific solution Trial & error The 3-V Principle of Managing Value Company value Customer value OVP Collaborator value Optimal value proposition The G-STIC Framework for Action Planning Goal Strategy Tactics Implementation Control Identifying Target Markets: The 5-C Framework Customers Competitors Customers Competitors Customers Competitors Context Context Context Identifying Target Customers & Developing a Value Proposition Company value Customers Customer value OV P Value Collaborator value Competitors Context Customers Competitors Context Value Company value Customer value OVP Collaborator value Designing the Tactics Product Service Incentives Communication OVP Brand Price Product Service Brand Incentives OVP Price Communication Distribution Distribution Product Service Brand Incentives OVP Price Communication Distribution Developing an Action Plan: The Big Picture Goal Focus Benchmarks Strategy Target market Value proposition Tactics Product Incentives Goal Value proposition Tactics Incentives Service Brand Communication Price Distribution Implementation Organizational infrastructure Business processes Implementation schedule Control Performance evaluation Price Distribution Business processes Implementation schedule Control Performance evaluation Strategy Product Brand Communication Implementation Organizational infrastructure Focus Benchmarks Target market Service Environmental analysis Environmental analysis Segmentation, Mass Marketing, & One-to-One Marketing Offering Customer Customer Customer Customer Customer Customer Mass marketing 1 2 3 4 5 6 Offering A Offering B Customer Customer Customer Customer Customer Customer 1 2 3 4 5 6 Segment-based marketing Offering A Offering B Offering C Offering D Offering E Offering F Customer Customer Customer Customer Customer Customer 1 2 3 4 5 6 One-to-one marketing Market Segmentation Strategies Non-segmented market Segmentation I Segmentation II Segmentation III Strategic Targeting: Selecting Value-Based Segments Segment A Segment B Segment C Tactical Targeting: Linking Value and Profile Segments Demographics Behavior © 2006 Alexander Chernev Geography Psychographics Tactical Targeting Scenarios “Sniper” targeting (perfect fit) “Shotgun” targeting (broad) Oversegmentation (narrow) Value-based segment (unobservable) Profile-based-segment (observable) © 2006 Alexander Chernev Shot-in-the-dark (misaligned) Multi-Segment & Single-Segment Product Line Strategies Target segment C1 Target segment C2 Target segment C2 Segmentation Targeting Offering 1 Action plan C1 Offering 3 Action plan C3 Offering 2 Action plan C2 The Three Dimensions of Customer Value Functional value Customer value Monetary value Psychological value © 2006 Alexander Chernev Competitive Advantage: A Source of Customer Value Irrelevant attributes Irrelevant attributes Strengths Competitive advantage Weaknesses Shared attributes Offering A Strengths Weaknesses Competitive parity Shared attributes Offering B The Concept of Economic Value Analysis Functional value Customer value Monetary value Psychological value Monetizing functional value Monetizing psychological value Economic Value as a Function of the Differences in Total Costs Difference in total cost Cost of ownership Cost of ownership Difference in price Price Price Offering X Offering Y Attribute-Value Map Customer value Company’s offering k j Competitive offering A Competitive offering B l j Competitive advantage k Competitive parity l Competitive disadvantage Attribute 1 Attribute 2 Attribute 3 Attribute 4 Attribute 5 Positioning Map Attribute 1 • Offering A • Offering B • Offering C Attribute 2 • Offering D • Offering E The Three Dimensions of Company Value Monetary value Customer value Functional value Psychological value Creating Company Value: Profit-Growth Analysis Volume Revenues Price Net income COGS Costs Marketing Other New Customers Current customers New to the category Competitors’ customers Strategies for Managing Sales Growth Customers new to the category Sales volume Competitors’ customers Current customers Managing adoption Managing usage The SWOT Framework Favorable factors Unfavorable factors Internal factors Strengths Weaknesses External factors Opportunities Threats Company analysis Market analysis Product-Market Growth Matrix Current customers New customers Current products Market penetration Market development New products Product development Diversification Conflicts in Vertical Collaboration Manufacturer Distributor Manufacturer Distributor B Distributor A Customer Customer Vertical channel conflict Horizontal channel conflict Conflicts in Horizontal Collaboration Company Collaborator Customer Steal-Share Strategy Current users Market-Growth Strategy Current users New users Market-Growth Strategy for a Superior Offering Current users New users Market-Innovation Strategy Current users New users Current market New market Defensive Marketing Strategies Custome r costs Move upscale Do nothin g Move downscale Launch economy offering Launch premium offering Increas e benefits Reduce costs Customer benefits The Five Forces of Competition New entrants 3 Suppliers 1 Competitors 5 4 Substitutes 2 Buyers 1 – Bargaining power of suppliers 2 – Bargaining power of buyers 3 – Threat of new entrants 4 – Threat of substitutes 5 – Rivalry among extant competitors Product/Service Management as a Value-Creation Process Company value Product Service Customer value OV P Collaborator value Context Product Service Company value Customer value OVP Collaborator value Context Managing Products by Streamlining the Marketing Mix Price Brand Service Incentives Product Communication Distribution Price Brand Service Product Distribution Incentives Communication Branding as a Value-Creation Process Company value Customer value OV P Brand Collaborator value Context Company value Brand Customer value OVP Collaborator value Context Managing Brands by Streamlining the Marketing Mix Incentives Service Product Distribution Brand Communication Price Service Product Incentives Brand Price Distribution Communication Pricing as a Value-Creation Process Company value Customer value OV P Price Collaborator value Context Company value Price Customer value OVP Collaborator value Context Managing Price by Streamlining the Marketing Mix Incentives Brand Product Distribution Price Service Communication Incentives Brand Product Price Service Distribution Communication Managing Incentives as a Value-Creation Process Company value Customer value OV P Incentives Collaborator value Context Company value Incentives Customer value OVP Collaborator value Context Managing Incentives by Streamlining the Marketing Mix Brand Service Product Distribution Incentives Communication Price Brand Service Product Incentives Price Distribution Communication Pull and Push Promotion Strategies Push strategy Pull strategy Manufacturer Manufacturer Demand Incentives Communications Retailer Demand Incentives Communications Customer Demand Retailer Demand Customer Incentives Communications Communications as a Value-Creation Process Company value Communication Customer value OV P Collaborator value Context Communication Company value Customer value OVP Collaborator value Context Managing Communications by Streamlining the Marketing Mix Brand Service Communication Product Distribution Incentives Price Brand Service Product Communication Price Distribution Incentives Planning a Communication Campaign Goal Message Media Creative solution Implementation Control Distribution as a Value-Creation Process Company value Customer value OV P Distribution Collaborator value Context Company value Distribution Customer value OVP Collaborator value Context Managing Distribution by Streamlining the Marketing Mix Brand Service Product Incentives Distribution Communication Price Brand Service Product Distribution Price Incentives Communication Distribution Channel Structure Company Wholesaler Customer Direct channel Retailer Retailer Customer Customer Indirect channels Hybrid channel Managing Sales Growth New customers Managing adoption Current customers Managing usage Managing Sales Growth The Adoption Funnel Awareness Understanding Attractiveness Affordability Availability Purchase intent Purchase Identifying Adoption Gaps j All target customers k Aware of the offering’s existence l m Understand Perceive the the offering’s offering to be benefits attractive n Can afford the offering Have access to the offering o p Intend to purchase the offering Purchased the offering Identifying Actionable Goals Offering attractiveness Usage frequency Consumption quantity Usage quantity Replacement frequency Offering availability Identifying Consumption Gaps Satisfaction Usage frequency Usage quantity Replacement frequency Availability The Typical S-Shaped Pattern of New Product Adoption Total adoptions Number of adoptions Speed of diffusion Inflection point Market potential Time Time Managing the Product Life Cycle Sales Introduction Market size Growth Maturity Decline Time Small Moderate Large Moderate/Small Market growth Low High Low Negative Competition Low Moderate High Moderate/Low Extending Product Life Cycle through Innovation Sales revenues Third generation Second generation First generation Time Rogers’ Model of Adoption of Innovation Number of adoptions 2.5% Innovators 13.5% Early adopters (x-2SD) 34% Late majority 34% Early majority (x-SD) (x) 16% Laggards (x+SD) Time Moore’s Technology Adoption Model Number of adoptions The chasm Enthusiasts Visionaries Early market Pragmatists Conservatives Skeptics Mainstream market Time Vertical Extensions Price Upscale offering Downscale offering Benefits Horizontal Extensions Price Offering A Offering B Benefits Managing Product-Line Cannibalization Existing offering s Existing offerings Existing offerings Loss of share due to cannibalization New offering Competitive offerings Single-offering scenario Competitive offerings Dual-offering scenario with cannibalization New offering Competitive offerings Dual-offering scenario with cannibalization The Fighting-Brand Strategy Price Quality Incumbent brand Low-price competitors Fighting brand Time The Sandwich Strategy Price Quality Incumbent brand Premium brand Low-price competitors Fighting brand Time The Good-Better-Best Strategy Price Quality Incumbent brand Best Better Low-price competitors Good Time The Typical S-Shaped Pattern of New Product Adoption Cumulative number of adoptions Speed of diffusion Inflection point Market potential Time The Typical Bell-Shaped Pattern of New Product Adoption Number of adoptions Time Extra Figures and Graphs © 2012 Alexander Chernev Strategic and Tactical Targeting Strategic targeting involves deciding which segments to serve and which to ignore Segmentation Targeting Tactical targeting involves identifying the profile of the already selected target customers Segmentation Targeting (strategic) Targeting (tactical) Identification (communication) (distribution) Developing a Value Proposition and Positioning Benefits Segmentation Group customers into need-based segments Targeting Value proposition Select target segments Create a relevant and identify means to value proposition reach these segments Costs Primary benefit Positioning Identify the primary benefit of the offering
