Dr. Dawne Martin
MKTG 241
February 28, 2012

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Rethink Tool #7: Think holistically by approaching marketing as a system with various ecosystems.
Identifying the uses for a Business concept, a business model and the product
Identify the components of the product and how it defines the business
Analysis the internal and external fit in your business model
Prentice Hall © 2009
Rethinking Marketing, 1st
Edition 7-2

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Creating new ventures, either from scratch or within an existing company, three sequential challenges
◦ Come up with a new product or service
◦ Translate these products or services into a unique business concept
◦ Develop an original business model around the innovative concept
Prentice Hall © 2009
Rethinking Marketing, 1st
Edition 7-3

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Core value of firm may come from
◦ Product
◦ Way product is sold
◦ How it is distributed
◦ Manner it is priced or sold
Concise statement that centers on what is really being done for customer
◦ CNN — “instant information, anytime, from anywhere”
◦ Starbucks: core value proposition is defined more by the environment and experience they create
◦ Proactiv, which sells acne and related skin treatment products, additional value comes from selling directly to customers.
Prentice Hall © 2009
Rethinking Marketing, 1st
Edition 7-4

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Common characteristics
◦ Challenge existing assumptions and ways of doing things
◦ Beyond responding to customers in existing markets
◦ Create entirely new market spaces
◦ Lead customers instead of follow
Companies that created new market spaces
 Starbucks
 Dell Computer
 Swatch
 Amazon.com
Prentice Hall © 2009
Rethinking Marketing, 1st
Edition 7-5

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A simplified abstraction of a real situation
Captures key aspects of a sustainable new venture
More than business concept less than business plan
Concise representation of interrelated variable interacts to create sustainable competitive advantage
Prentice Hall © 2009
Rethinking Marketing, 1st
Edition 7-6

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Helps ensure fairly logical and internally consistent approach to design and operation
It represents the architecture for identifying key variables that can be combined in unique ways
Vehicle for demonstrating the economic attractiveness of the venture
A guide to ongoing company operations
Mapping it can help facilitate necessary modifications as conditions change over time
Prentice Hall © 2009
Rethinking Marketing, 1st
Edition 7-7

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Well formulated model must address six key questions
◦ How will firm create value?
◦ For whom will the firm create value?
◦ What is the firm’s internal source of advantage?
◦ How will the firm differentiate itself?
◦ How will the firm make money?
◦ What are the entrepreneur’s time, scope, and size ambitions?
Prentice Hall © 2009
Rethinking Marketing, 1st
Edition 7-8

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◦ Products are tangible, services are not
◦ Great challenge with any product or service
 Build in enough uniqueness such that the item can be differentiated from the offerings of competitors
◦ Creative marketers tend to view their product or service differently than others do
 Apple is more than a computer, it is an artistic tool
 Snap-on Tools not a tool made of metal but an extension of the hand of an auto mechanic
Prentice Hall © 2009
Rethinking Marketing, 1st
Edition 7-9

Figure 7.1: Seeing Products as Creative Variables
Prentice Hall © 2009
Rethinking Marketing, 1st
Edition
7-
10

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Core product
 Primary benefit
Tangible product
 Company and product presentation
 Styling
 Physical design
 Options
 Quality and reliability
 Features
 Packaging
Prentice Hall © 2009
Rethinking Marketing, 1st
Edition
7-
11

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Products as Creative
Variable
Augmented product
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Communicated product
◦ Delivery
◦ Product positioning
◦ Installation
◦ System interaction
◦ Product brand name
◦ Sales terms and warranty
◦ Product logo
◦ Product image
◦ Technical support
◦ Product bundling
◦ Maintenance and repair
◦ After-sale service
◦ Customer training
Prentice Hall © 2009
Rethinking Marketing, 1st
Edition
7-
12

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Superior Advantage: Customers perceive product to be superior to existing alternatives
Compatibility: Aligned with values, attitudes, norms or behaviors
Simplicity: Easy to understand and use
Observability: Innovative characteristics that customer can “see” or can be easily communicated
Trailability: Customer can try or “trial” product
Low Perceived Risk: Customer perceives risk to be low through return policy, guarantees or warranties
Intellectual Property Protection: patent, trademark or copyright to protect sustainable competitive advantage

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Process of acceptance and continuous use
Adoption Process
◦ Awareness
◦ Interest
◦ Evaluation
◦ Trial
◦ Adoption or rejection
Diffusion: Manner in which customers accept a new product/service

Early
Adopters
13.5%
Early
Majority
34%
Late
Majority
34%
2.5%
Time
Laggards
16%
Profit

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Superior Advantage
Simplicity (ease of use)
Compatibility
Price
Distribution
Promotion (create awareness)
Trial
Niche (Crossing the Chasm)
Leveraging Opinion Leadership (buss or viral marketing
Publicity
Educational programs
Free (trial)

Introduction Growth Maturity Decline
Industry
Sales
Industry
Profit
Marketing
Objective
Target
Market
Low
Low
Awareness
Innovators
Increasing
Increasing
High/Stable
Decreasing
Decreasing
Decreasing
Differentiation Brand Loyalty Harvest/
Delete
Early Adopters
Early Majority
Early/Late
Majority
Product
Price
One
Promotion High
Distribution Limited
Competition Little
More versions Full line
High (or Low) Decreasing
High
Expanded
Growing
Lower
Decreasing
Maximum
Many
Late Majority
Laggards
Best sellers
Low
Low
Fewer
Reduced

Geoffery A. Moore, Crossing the Chasm, Harper Business,
1991.
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Target specific niche markets through technology enthusiasts and visionary
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Broaden niche to cross chasm
◦ Develop a must have value-statement
 Capability to ensure competitive advantage
 Improves productivity
 Reduces operating costs
◦ Choose a niche
 Application niche
 Thematic niche: portability across incompatible hardware platforms
Bowling Alley & Main Street Issues
Inside the Tornado

Prentice Hall © 2009
Rethinking Marketing, 1st
Edition
7-
21

Prentice Hall © 2009
Rethinking Marketing, 1st
Edition
7-
22

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Internal fit
◦ Includes both consistency and reinforcement within and between the six components of the models
◦ Each component affects and is affected by every other component
External fit
◦ Consistency between choices in each of the six areas of the model and conditions in the external environment
◦ As conditions change, model may require adaptation or wholesale change
Prentice Hall © 2009
Rethinking Marketing, 1st
Edition
7-
23

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Process of trial and error
Mental model becomes some aspect of written model
Intuitive sense of how firm must operate to make money
As competencies are developed keener insight emerges
Entrepreneur may have fair picture of the foundation level, limited notion of some proprietary level
Develop rules to guide operation and ongoing development
Prentice Hall © 2009
Rethinking Marketing, 1st
Edition
7-
24

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Continuous Innovations: minor improvements of existing products: little disruptive influence on consumptions
Dynamically Continuous
Innovations : New approach but not new technologies – mildly disruptive
Discontinuous Innovation:
Major technological innovations & cause disruptions in the way customers buy – new markets and education required
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Major Service
Innovations: New
Concept
Major Process
Innovations: New ways to deliver services that create new value
Service Line
Extensions: Adding new services
Supplementary Service
Innovations: Adding new elements or improving existing supplemental service