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© 2014 Alexander Chernev About this Slide Deck ✦ This slide deck includes figures from Strategic Marketing Management (8th Edition) by Alexander Chernev ✦ Unless noted otherwise, all figures are copyrighted by the author ✦ Figures are presented in the same order as in the book and are available in both Powerpoint and Keynote formats ✦ All figures are shown on white background; some of the figures are also shown on back background. Some of the figures are animated ✦ All figures are fully editable and can be colored, enlarged, or scaled down based on individual preferences. Some of the key figures are offered in different sizes © 2014 Alexander Chernev Strategic Marketing Management (8th Edition) Book Overview © 2014 Alexander Chernev The Big Picture ✦ ✦ ✦ Chapter 1: Marketing as a Business Discipline Chapter 2: Marketing Strategy and Tactics Chapter 3: The Marketing Plan Company value Customer value OVP Collaborato r value Goal Strategy Tactics Product Service Brand Incentives Price Communication Distribution Marketing Strategy and Tactics (Value-Creation Model) © 2014 Alexander Chernev Implementation Control The Marketing Plan (G-STIC Framework) The Big Picture Chapter 1: Marketing as a Business Discipline Chapter 2: Marketing Strategy and Tactics Chapter 3: The Marketing Plan Company value Customer value OVP Goal Collaborato r value Strategy Tactics Product Service Brand Incentives Price Communication Distribution Marketing Strategy and Tactics (Value-Creation Model) © 2014 Alexander Chernev Implementation Control The Marketing Plan (G-STIC Framework) Marketing Strategy ✦ Chapter 4: Identifying Target Customers ✦ Chapter 5: Creating Customer Value ✦ Chapter 6: Managing Company Value ✦ Chapter 7: Creating Collaborator Value Company Value Company value Value Value Customers Value Value Collaborators Value Customer value OVP Collaborator value Competitors Context Market Analysis (6-V Framework) © 2014 Alexander Chernev Value-Sharing Model (3-V Principle) Marketing Strategy Chapter 4: Identifying Target Customers Chapter 5: Creating Customer Value Chapter 6: Managing Company Value Chapter 7: Creating Collaborator Value Company Value Customers Value Company value Value Value Collaborators Value Value Customer value OVP Collaborator value Competitors Context Market Analysis (6-V Framework) © 2014 Alexander Chernev Value-Sharing Model (3-V Principle) Marketing Tactics ✦ ✦ ✦ ✦ ✦ ✦ Chapter 8: Managing Products and Services Chapter 9: Managing Brands Chapter 10: Managing Price Chapter 11: Managing Incentives Chapter 12: Managing Communications Chapter 13: Managing Distribution Product Service Brand Incentives Value Price Communication Distribution Marketing Tactics (7-T Framework) © 2014 Alexander Chernev Marketing Tactics Chapter 8: Managing Products and Services Chapter 9: Managing Brands Chapter 10: Managing Price Chapter 11: Managing Incentives Chapter 12: Managing Communications Chapter 13: Managing Distribution Product Service Brand Incentives Value Price Communication Distribution Marketing Tactics (7-T Framework) © 2014 Alexander Chernev Managing Growth ✦ ✦ ✦ ✦ Chapter 14: Gaining and defending market position Chapter 15: Managing Sales Growth Chapter 16: Managing New Products Chapter 17: Managing Product Lines © 2014 Alexander Chernev Managing Growth Chapter 14: Gaining and defending market position Chapter 15: Managing Sales Growth Chapter 16: Managing New Products Chapter 17: Managing Product Lines © 2014 Alexander Chernev Marketing Workbooks ✦ Chapter 18: Segmentation and targeting workbook ✦ Chapter 19: Business plan workbook ✦ Chapter 20: Positioning statement workbook © 2014 Alexander Chernev Marketing Workbooks Chapter 18: Segmentation and targeting workbook Chapter 19: Business plan workbook Chapter 20: Positioning statement workbook © 2014 Alexander Chernev Strategic Marketing Management (8th Edition) Figures: Part I © 2014 Alexander Chernev The Role of Frameworks in Marketing Management Framework Typical problem Typical solution Generalize Specific problem Specific solution Trial & error © 2014 Alexander Chernev Apply The Role of Frameworks in Marketing Management Framework Typical problem Typical solution Abstraction Specific problem Specific solution Trial & error © 2014 Alexander Chernev Application Identifying Target Markets: The 5-C Framework Customers Customers Competitors Competitors Context © 2014 Alexander Chernev Context Identifying Target Markets: The 5-C Framework Customers Competitors Context © 2014 Alexander Chernev Defining the Value Exchange: The 6-V Framework Company Value Value Company value exchange Value Customers Value Value Value Competitors Context © 2014 Alexander Chernev Collaborators Competitive value exchange Defining the Value Exchange: The 6-V Framework Company Value Value Company value exchange Value Customers Value Value Value Competitors Context © 2014 Alexander Chernev Collaborators Competitive value exchange The Optimal Value Proposition (OVP) Company value Customers value OVP Collaborator value The Optimal Value Proposition © 2014 Alexander Chernev The Optimal Value Proposition (OVP) Company value Customer value © 2014 Alexander Chernev OVP The Optimal Value Proposition (OVP) Collaborator value The 7 Tactics Articulating the Offering's Value Proposition Company value Customer value Product OVP Collaborato r value Service Brand Incentives Price Communication Distribution Marketing Mix (7 Ts) © 2014 Alexander Chernev The 7 Tactics Articulating the Offering's Value Proposition Company value Customer value Product OVP Strategy Collaborato r value Service Brand Incentives Price Communication Distribution Marketing Mix (7 Ts) © 2014 Alexander Chernev Tactics The Seven Marketing Tactics (Marketing Mix) Product Service Brand Incentives Value Price Communication Product Service Brand Incentives Value Price Communication © 2014 Alexander Chernev Distribution Distribution Product Service Brand Incentives Value Price Communication Distribution The Seven Marketing Tactics (Marketing Mix) Product Service Brand Incentives Value Price Communication Product Service Brand Incentives Value Price Communication © 2014 Alexander Chernev Distribution Product Service Brand Incentives Value Price Communication Distribution Distribution Designing, Communicating, and Delivering Value Designing value Product Service Brand Price Incentives © 2014 Alexander Chernev Communicating value Delivering value Designing, Communicating, and Delivering Value Designing value Product Service Brand Price Incentives © 2014 Alexander Chernev Communicating value Delivering value Designing, Communicating, and Delivering Value Designing the offering Product Communicating the offering Brand Service Incentives Price Communication Distribution Marketing Mix (7 Ts) © 2014 Alexander Chernev Delivering the offering Designing, Communicating, and Delivering Value Designing the offering Product Communicating the offering Brand Service Incentives Price Communication Distribution Marketing Mix (7 Ts) © 2014 Alexander Chernev Delivering the offering The 7-T and the 4-P Frameworks Product Product Brand Service Incentives Price Price Communication Distribution Place Promotion Marketing Mix (7 Ts) © 2014 Alexander Chernev The 7-T and the 4-P Frameworks Product Product Promotion Brand Service Incentives Price Price Communication Distribution Place Marketing Mix (7 Ts) © 2014 Alexander Chernev Strategies for Generating a Business Model Marketing Strategy (value analysis) Top-down business model generation Bottom-up business model generation Marketing Tactics (offering design) © 2014 Alexander Chernev Strategies for Generating a Business Model Marketing Strategy (value analysis) Top-down business model generation Bottom-up business model generation Marketing Tactics (offering design) © 2014 Alexander Chernev The Five Forces of Competition New entrants Suppliers Competitors Buyers Substitutes © 2014 Alexander Chernev Source: Porter, Michael E. (1979), “How Competitive Forces Shape Strategy,” Harvard Business Review, 57 (March–April), 137–145 The Five Forces of Competition New entrants Suppliers Competitors Buyers Substitutes © 2014 Alexander Chernev Source: Porter, Michael E. (1979), “How Competitive Forces Shape Strategy,” Harvard Business Review, 57 (March–April), 137– 145 The G-STIC Framework for Market Planning and Analysis Goal Strategy Business model Tactics Implementation Control © 2014 Alexander Chernev The G-STIC Framework for Market Planning and Analysis Goal Strategy Business model Tactics Implementation Control © 2014 Alexander Chernev The G-STIC Action-Planning Flowchart The ultimate criterion for success Goal Benchmarks Focus The logic of the value-creation model Strategy The specifics of the market offering Tactics Product Service Price Communication Distribution The process of evaluating goal progress Control © 2014 Alexander Chernev Value proposition Brand Incentives Evaluate performance Target market Monitor the environment The logistics of developing the offering Implementation Organizational infrastructure Business processes Implementation schedule The G-STIC Action-Planning Flowchart The ultimate criterion for success Goal Benchmarks Focus The logic of the value-creation model Strategy The specifics of the market offering Tactics Product Service Price Communication Distribution The process of evaluating goal progress Control © 2014 Alexander Chernev Value proposition Brand Incentives Evaluate performance Target market Monitor the environment The logistics of developing the offering Implementation Organizational infrastructure Business processes Implementation schedule The Marketing Plan Executive summary Situation analysis Goal Strategy Business model Tactics Implementation Control Exhibits © 2014 Alexander Chernev Action Plan (G-STIC Framework) The Marketing Plan Executive summary Situation analysis Goal Strategy Business model Tactics Implementation Control Exhibits © 2014 Alexander Chernev Action Plan (G-STIC Framework) Strategic Marketing Management (8th Edition) Figures: Part II © 2014 Alexander Chernev Segment-Based Targeting Segment A (target) Segment B (nontarget) Segment C (nontarget) Unsegmented market © 2014 Alexander Chernev Segment-based target identification Segment-Based Targeting Segment A (target) Segment B (nontarget) Segment C (nontarget) Unsegmented market © 2014 Alexander Chernev Segment-based target identification The Key Targeting Principles Company resources Company goals Company analysis © 2014 Alexander Chernev Target attractiveness Target compatibility Customer needs Customer resources Customer analysis The Key Targeting Principles Company resources Company goals Company analysis © 2014 Alexander Chernev Target attractiveness Target compatibility Customer needs Customer resources Customer analysis The Resource Advantage Principle Unutilized company resources Company resources The company's optimal target customers Competitive wasteland Target Unmet customer needs Customer needs Competitor resources Competitors' optimal target customers © 2014 Alexander Chernev Unutilized competitor resources Intense competition The Resource Advantage Principle Unutilized company resources Company resources The company's optimal target customers Competitive wasteland Target Unmet customer needs Customer needs Competitor resources Competitors' optimal target customers © 2014 Alexander Chernev Unutilized competitor resources Intense competition The Customer Identification Process © 2014 Alexander Chernev Strategic targeting Tactical targeting Value-based analysis Channel-based analysis The Customer Identification Process © 2014 Alexander Chernev Strategic targeting Tactical targeting Value-based analysis Channel-based analysis Strategic and Tactical Targeting: Linking Customer Value and Profile Target attractiveness Value Target customers Important Unobservable Not actionable Target compatibility Strategic targeting Value-based identification Identification (linking value & profile) Demographic factors Profile Observable Actionable Less important Behavioral factors Tactical targeting Profile-based identification © 2014 Alexander Chernev Strategic and Tactical Targeting: Linking Customer Value and Profile Target attractiveness Value Target customers Important Unobservable Not actionable Target compatibility Strategic targeting Value-based identification Identification (linking value & profile) Profile Observable Actionable Less important Demographic factors Behavioral factors Tactical targeting Profile-based identification © 2014 Alexander Chernev Targeting Efficiency Correct “Sniper” targeting (perfect fit) Incorrect “Shotgun” targeting (broad) Oversegmentation (narrow) Value-based segment (unobservable) Profile-based-segment (observable) © 2014 Alexander Chernev Shot-in-the-dark (off base) Targeting Efficiency “Sniper” targeting (perfect fit) “Shotgun” targeting (broad) Oversegmentation (narrow) Value-based segment (unobservable) Profile-based-segment (observable) © 2014 Alexander Chernev Shot-in-the-dark (misaligned) Targeting Multiple Segments Segment A (target) Segment B (target) Segment C (nontarget) Offering A © 2014 Alexander Chernev Offering B Targeting Multiple Segments Segment A (target) Segment B (target) Segment C (nontarget) Offering A © 2014 Alexander Chernev Offering B Segmentation as a Process of Differentiation and Agglomeration Mass market (unsegmented) Segmented market Differentiation © 2014 Alexander Chernev Idiosyncratic market (Unsegmented) Agglomeration Segmentation as a Process of Differentiation and Agglomeration Mass market (unsegmented) Segmented market Differentiation © 2014 Alexander Chernev Idiosyncratic market (Unsegmented) Agglomeration Segmentation and Targeting: The Big Picture Strategic segmentation (value-based) Tactical segmentation (profile-based) Divide customers into segments based on their needs and resources Identify customers' demographic and behavioral profile Channel A Channel C Channel B Strategic targeting (value-based) Decide whom to target © 2014 Alexander Chernev Tactical targeting (profile-based) Decide how to reach target customers to communicate and deliver the offering Segmentation and Targeting: The Big Picture Strategic segmentation (value-based) Tactical segmentation (profile-based) Divide customers into segments based on their needs and resources Identify customers' demographic and behavioral profile Channel A Channel C Channel B Strategic targeting (value-based) Decide whom to target © 2014 Alexander Chernev Tactical targeting (profile-based) Decide how to reach target customers to communicate and deliver the offering Key Segmentation Principles: Relevance Correct (relevant) © 2014 Alexander Chernev Incorrect (irrelevant) Key Segmentation Principles: Relevance Correct (relevant) © 2014 Alexander Chernev Incorrect (irrelevant) Key Segmentation Principles: Similarity Correct (homogeneous) © 2014 Alexander Chernev Incorrect (heterogeneous) Key Segmentation Principles: Similarity Correct (homogeneous) © 2014 Alexander Chernev Incorrect (heterogeneous) Key Segmentation Principles: Exclusivity Correct (mutually exclusive) © 2014 Alexander Chernev Incorrect (non-exclusive) Key Segmentation Principles: Exclusivity Correct (mutually exclusive) © 2014 Alexander Chernev Incorrect (non-exclusive) Key Segmentation Principles: Comprehensiveness Correct (collectively exhaustive) © 2014 Alexander Chernev Incorrect (not exhaustive) Key Segmentation Principles: Comprehensiveness Correct (collectively exhaustive) © 2014 Alexander Chernev Incorrect (not exhaustive) Identifying Target Customers, Developing a Value Proposition, and Positioning Primary benefit Value Identifying target customers © 2014 Alexander Chernev Developing a value proposition Positioning Identifying Target Customers, Developing a Value Proposition, and Positioning Primary benefit Value Identifying target customers © 2014 Alexander Chernev Developing a value proposition Positioning Value as a Function of Customer Needs and Offering Attributes Customer needs © 2014 Alexander Chernev Customer value Company offering Value as a Function of Customer Needs and Offering Attributes Customer needs © 2014 Alexander Chernev Customer value Company offering Dimensions of Customer Value Customer value © 2014 Alexander Chernev Functional value Functional benefits Functional costs Monetary value Monetary benefits Monetary costs Psychological value Psychological benefits Psychological costs Dimensions of Customer Value Customer value © 2014 Alexander Chernev Functional value Functional benefits Functional costs Monetary value Monetary benefits Monetary costs Psychological value Psychological benefits Psychological costs Reference-Point Dependence Perceived value Gains Reference point Actual performance Losses © 2014 Alexander Chernev Reference-Point Dependence Perceived value Gains Reference point Actual performance Losses © 2014 Alexander Chernev Loss Aversion Perceived value Value of a gain Actual performance Value of a loss © 2014 Alexander Chernev Loss Aversion Perceived value Value of a gain Actual performance Value of a loss © 2014 Alexander Chernev Diminishing Marginal Value Utility (perceived value) Attribute performance © 2014 Alexander Chernev Diminishing Marginal Value Utility (perceived value) Attribute performance © 2014 Alexander Chernev The Value Function Perceived value Actual performance Source: Kahneman, Daniel and Amos Tversky (1979), “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, 47 (March), 263–91 © 2014 Alexander Chernev The Value Function Perceived value Actual performance Source: Kahneman, Daniel and Amos Tversky (1979), “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, 47 (March), 263–91 © 2014 Alexander Chernev Creating Superior Customer Value Functional value Value Value Customer value © 2014 Alexander Chernev Monetary value Competitive advantage Creating Superior Customer Value Functional value Value Value Customer value © 2014 Alexander Chernev Monetary value Competitive advantage Competitive Value Map Customer value Competitive advantage Attribute 1 © 2014 Alexander Chernev Attribute 2 Competitive parity Attribute 3 Company’s offering Competitive offering A Competitive offering B Competitive disadvantage Attribute 4 Attribute 5 Competitive Value Map Customer value Competitive advantage Attribute 1 © 2014 Alexander Chernev Attribute 2 Competitive parity Attribute 3 Company’s offering Competitive offering A Competitive offering B Competitive disadvantage Attribute 4 Attribute 5 Single-Benefit Positioning Reason to choose Primary benefit Benefit 1 + Benefit 2 Secondary benefits Benefit 3 Benefit 4 Benefit 5 © 2014 Alexander Chernev Single-Benefit Positioning Reason to choose Primary benefit Benefit 1 + Benefit 2 Secondary benefits Benefit 3 Benefit 4 Benefit 5 © 2014 Alexander Chernev Dual-Benefit Positioning Reason to choose Primary benefits Benefit 1 Benefit 2 + Secondary benefits Benefit 3 Benefit 4 Benefit 5 © 2014 Alexander Chernev Dual-Benefit Positioning Reason to choose Primary benefits Benefit 1 Benefit 2 + Secondary benefits Benefit 3 Benefit 4 Benefit 5 © 2014 Alexander Chernev Holistic Positioning Reason to choose Benefit 1 Benefit 2 Benefit 3 Benefit 4 Benefit 5 © 2014 Alexander Chernev Overall benefit Holistic Positioning Reason to choose Benefit 1 Benefit 2 Benefit 3 Benefit 4 Benefit 5 © 2014 Alexander Chernev Overall benefit Positioning Map Attribute 1 Offering A Offering B Offering C Attribute 2 Offering D Offering E © 2014 Alexander Chernev Positioning Map Attribute 1 Offering A Offering B Offering C Attribute 2 Offering D Offering E © 2014 Alexander Chernev The Three Dimensions of Company Value Monetary value Company value Functional value Psychological value © 2014 Alexander Chernev Monetary goals Strategic goals The Three Dimensions of Company Value Monetary value Company value Functional value Psychological value © 2014 Alexander Chernev Monetary goals Strategic goals Creating Company Value: The Key Profit Drivers Price Revenues Current customers Volume New customers Net income Cost of goods sold Costs Research and development Marketing Other costs © 2014 Alexander Chernev New to the category Competitors’ customers Creating Company Value: The Key Profit Drivers Price Revenues Volume Net income Costs Cost of goods sold Research and development Marketing Other costs © 2014 Alexander Chernev Current customers New customers New to the category Competitors’ customers Strategies for Growing Sales Volume New customers Customers new to the category Sales volume Competitors’ customers Current customers © 2014 Alexander Chernev Market-growth strategy Steal-share strategy Market-penetration strategy Economic Value Analysis Monetary value Company value Functional value Psychological value Strategic value © 2014 Alexander Chernev Monetizing functional value Monetizing psychological value Conflicts in Vertical Collaboration Manufacturer Distributor Manufacturer Distributor B Distributor A Customer Customer Vertical channel conflict Horizontal channel conflict © 2014 Alexander Chernev Conflicts in Horizontal Collaboration Collaborator Company Customer © 2014 Alexander Chernev Strategic Marketing Management (8th Edition) Figures: Part III © 2014 Alexander Chernev Product and Service Management as a Value-Creation Process Company Customers Product Service Competitors Collaborators Customer value OVP Collaborator value The Optimal Value Proposition Context Factors to consider © 2014 Alexander Chernev Company value Decision criteria Branding as a Value-Creation Process Company Customers Brand Competitors Collaborators Customer value OVP Collaborator value The Optimal Value Proposition Context Factors to consider © 2014 Alexander Chernev Company value Decision criteria Vertical Brand Extensions Price Upscale extension Price tier A Price tier B Price tier C Core offering Downscale extension Benefits © 2014 Alexander Chernev Horizontal Brand Extensions Price Extension Core Extension A offering B Benefits Category Category Category A B C © 2014 Alexander Chernev Pricing as a Value-Creation Process Company Customers Price Competitors Collaborators Customer value OVP Collaborator value The Optimal Value Proposition Context Factors to consider © 2014 Alexander Chernev Company value Decision criteria Incentives as a Value-Creation Process Company Customers Incentives Competitors Collaborators Customer value OVP Collaborator value The Optimal Value Proposition Context Factors to consider © 2014 Alexander Chernev Company value Decision criteria Pull and Push Promotion Strategies Push strategy Pull strategy Manufacturer Manufacturer Demand Incentives Communications Retailer Demand Incentives Communications Customer © 2014 Alexander Chernev Demand Retailer Demand Customer Incentives Communications Communication as a Value-Creation Process Company Customers Communication Competitors Collaborators Customer value OVP Collaborator value The Optimal Value Proposition Context Factors to consider © 2014 Alexander Chernev Company value Decision criteria Developing a Communication Plan Goal Strategy Message Media Creative solution Implementation Control © 2014 Alexander Chernev Tactics Distribution as a Value-Creation Process Company Customers Distribution Competitors Collaborators Customer value OVP Collaborator value The Optimal Value Proposition Context Factors to consider © 2014 Alexander Chernev Company value Decision criteria Distribution Channel Structure Company Wholesaler Customer Direct channel Retailer Retailer Customer Customer Indirect channels Hybrid channel © 2014 Alexander Chernev Strategic Marketing Management (8th Edition) Figures: Part IV © 2014 Alexander Chernev Steal-Share Strategy Current users New users © 2014 Alexander Chernev Market-Growth Strategy Current users New users © 2014 Alexander Chernev Market-Growth Strategy for a Superior Offering Current users New users © 2014 Alexander Chernev Market-Innovation Strategy Current users Current market © 2014 Alexander Chernev New users New market Defensive Marketing Strategies Customer costs Move upscale Do nothing Launch premium offering Increase benefits Move downscale Launch economy offering Reduce costs Customer benefits Source: Hoch, Stephen J. (1996), “How Should National Brands Think about Private Labels?” Sloan Management Review, 37 (2), 89–102 © 2014 Alexander Chernev Product-Market Growth Matrix Current customers New customers Current products Market penetration Market development New products Product development Diversification Source: Ansoff, H. Igor (1979), Strategic Management. New York, NY: John Wiley & Sons. © 2014 Alexander Chernev The SWOT Framework Internal factors External factors © 2014 Alexander Chernev Favorable factors Unfavorable factors Strengths Weaknesses Opportunities Threats Company analysis Market analysis Managing Sales Growth New customers Managing adoption Current customers Managing usage Managing Sales Growth © 2014 Alexander Chernev The Adoption Funnel Awareness Attractiveness Affordability Availability Purchase © 2014 Alexander Chernev Identifying Adoption Gaps Attractiveness gap Affordability gap Purchase gap All target customers © 2014 Alexander Chernev Aware of the offering’s existence Perceive the offering to be attractive Perceive the Have access to Purchased the offering to be the offering offering affordable Key Factors Influencing Consumption Quantity Satisfaction Usage frequency Purchase Usage quantity Replacement frequency Availability Consumption variables © 2014 Alexander Chernev Repurchase Identifying Consumption Gaps Usage quantity gap Replacement frequency gap Purchased the offering © 2014 Alexander Chernev Satisfied with the offering Use the offering frequently Use large quantity per occasion Replace the Repurchase offering the offering frequently New Product Adoption Individual adoptions Total adoptions Inflection point Speed of diffusion Inflection point Market potential Time Time Individual adoptions over time © 2014 Alexander Chernev Cumulative number of adoptions over time New Product Adoption Individual adoptions Total adoptions Inflection point Speed of diffusion Inflection point Market potential Time Time Individual adoptions over time © 2014 Alexander Chernev Cumulative number of adoptions over time The Stage-Gate Approach for Minimizing Risk in New Product Development Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Idea generation Concept development Business analysis Product development Market testing Commercial deployment Gate 1 Idea screening © 2014 Alexander Chernev Gate 2 Concept screening Gate 3 Business review Gate 4 Product review Gate 5 Market review 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 Source: Levitt, Theodore (1965), “Exploit the Product Life Cycle,” Harvard Business Review, 43, (November–December), 81–94. © 2014 Alexander Chernev Extending Product Life Cycle through Innovation Sales revenues Third generation Second generation First generation Time Source: Christensen, Clayton (1997), The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business School Press © 2014 Alexander Chernev Rogers’ Model of Adoption of Innovation Number of adoptions Innovators (2.5%) Early adopters (13.5%) Early majority (34%) Late majority (34%) Laggards (16%) Time (x) (x-SD) (x-2SD) © 2014 Alexander Chernev (x+SD) Source: Rogers, Everett M. (1962), Diffusion of Innovations. New York, NY: Free Press Rogers’ Model of Adoption of Innovation Number of adoptions Innovators (2.5%) Early adopters (13.5%) Early majority (34%) Late majority (34%) Laggards (16%) Time (x) (x-SD) (x+SD) (x-2SD) Source: Rogers, Everett M. (1962), Diffusion of Innovations. New York, NY: Free Press © 2014 Alexander Chernev Moore’s Technology Adoption Model Number of adoptions The chasm Enthusiasts Visionaries Early market Pragmatists Conservatives Skeptics Time Mainstream market Source: Moore, Geoffrey A. (1991), Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers. New York, NY: HarperBusiness © 2014 Alexander Chernev Moore’s Technology Adoption Model Number of adoptions The chasm Enthusiasts Visionaries Early market Pragmatists Conservatives Skeptics Time Mainstream market Source: Moore, Geoffrey A. (1991), Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers. New York, NY: HarperBusiness © 2014 Alexander Chernev Product-Line Positioning Map Attribute 1 Offering A Target A Offering B Offering C Target C Target B Offering D Target D Offering E Target E © 2014 Alexander Chernev Attribute 2 Product-Line Attribute Value Map Value Attribute 1 Attribute 2 Attribute 3 Attribute 4 Offering A (Target A) © 2014 Alexander Chernev Offering B (Target B) Offering C (Target C) Offering D (Target D) Offering E (Target E) Product line Vertical Product-Line Extensions Upscale extension Price Core offering Downscale extension Benefits © 2014 Alexander Chernev Horizontal Product-Line Extensions Price Extension Core Extension A offering B Benefits © 2014 Alexander Chernev Product-Line Cannibalization Existing offerings Existing offering A A Existing offering New offering A' Loss of share due to cannibalization C B' B Competitive offerings Single-offering scenario - © 2014 Alexander Chernev Competitive offerings Dual-offering scenario without cannibalization Competitive offerings Dual-offering scenario with cannibalization New offering Product-Line Cannibalization and the Price-Benefit Tradeoff Price Value-equivalence line A D B C F E Benefits © 2014 Alexander Chernev The Fighting Brand Strategy Price Quality Incumbent brand Low-price competitors Fighting brand Time © 2014 Alexander Chernev The Sandwich Strategy Price Quality Incumbent brand Premium brand Low-price competitors Fighting brand Time © 2014 Alexander Chernev The Good-Better-Best Strategy Price Quality Incumbent brand Best Better Low-price competitors Good Time © 2014 Alexander Chernev Strategic Marketing Management (8th Edition) Figures: Part V © 2014 Alexander Chernev The Business Model as a Value-Creation Process Company value Customer value © 2014 Alexander Chernev OVP Collaborato r value Customer value model Collaborator value model Company value model Strategy Tactics Strategy Tactics Strategy Tactics Customer Value Model Customer value Value proposition Product © 2014 Alexander Chernev Service Brand Incentives Price Communication Distribution Collaborator Value Model Collaborator value Value proposition Product © 2014 Alexander Chernev Service Brand Incentives Price Communication Distribution Company Value Model Company value Value proposition Product © 2014 Alexander Chernev Service Brand Incentives Price Communication Distribution © 2014 Alexander Chernev
