7-1
7
Developing
Marketing
Strategy
McGraw-Hill/Irwin
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
A Successful Strategy:



Helps achieve coordination among
functional areas of the organization.
Defines how resources are to be
allocated.
Leads to a superior market position.
7-3
Elements of a Product Strategy
1. Statement of the objective(s) the product
should attain
2. Selection of strategic alternative(s)
3. Selection of customer targets
4. Choice of competitor targets
5. Statement of the core strategy
6. Description of supporting marketing mix.
7. Description of supporting functional
programs
7-4
Hierarchy of Objectives
Company Mission/Vision
Level 0
Corporate objectives
Level I
Corporate strategies
Divisional objectives
Level II
Divisional strategies
Product/brand objectives
Level III
Brand strategies
Program objectives
Level IV
Tactics
7-5
Strategic Alternatives
Longterm
profits
Efficiency,
short-run
profits
Growth in sales
or market share
Market
development
Market
penetration
Decrease
inputs
Increase
outputs
New
segments
Existing
customers
Reduce
costs
Increase
price
Improve
asset
utilization
Improve
sales mix
Competitors’
customers
Convert
nonusers
New product
development
7-6
Criteria for Evaluating Strategic Alternative Options
 Size/growth of the segment
 Opportunities for obtaining
competitive advantage
 Resources available to penetrate the
segment
7-7
Target Segments for Handspring
7-8
Positioning Decision Steps
1. Identify alternative positioning themes by
consulting the advertising account team, the
product team, and past marketing plans.
2. Screen the alternatives according to whether
each is (a) meaningful to customers, (b) feasible
given the firm and product resources and
customer perceptions, (c) competitively sensible,
or (d) helpful for meeting the product objective
3. Select the position that best satisfies these
criteria and can be sold to the marketing
organization
4. Implement programs (e.g., advertising)
consistent with the product position selected
7-9
Total Product Concept
Potential
product
Generic
product
Expected
product
Augmented
product
7-10
Five Areas for Differentiation
1.
2.
3.
4.
5.
Quality
Status and Image
Branding
Convenience and Service
Distribution
7-11
Joint Space for Colas
Cola
Segment
3
Diet •
Pepsi
•
Diet
Rite •
Diet
•
Tab
•
RC
Cola
•
Pepsi
•
•
Segment
2
•
•
Nondiet
Segment
Dr
1
Peppe
r
•
Coke
•
7-Up
Fresca
Noncola
7-12
Brand Equity
Reduced marketing
costs
Trade leverage
Brand
Brand
loyalty
loyalty
Attracting new
customers
• Create awareness
• Reassurance
Time to respond to
competitive threats
Anchor to which
other associations
can be attached
Brand
Brand
awareness
loyalty
Familiarity-liking
Provides value to
customer by
enhancing
customer’s:
• Interpretation/
processing of
information
• Confidence in the
purchase decision
• Use satisfaction
Signal of substance/
commitment
Brand to be
considered
Brand
Brand
equity
loyalty
7-13
Brand Equity cont.
Reason-to-buy
Brand
Brandequity
loyalty
Differentiate/position
Perceived
Brand loyalty
quality
Price
Channel member
interest
Extensions
Provides value to
firm by
enhancing:
• Efficiency and
effectiveness of
marketing programs
• Brand loyalty
Help process/
retrieve information
Brand
Brand loyalty
associations
Reason-to-buy
Create positive
attitude/feelings
• Prices/margins
• Brand extensions
• Trade leverage
• Competitive
advantage
Extensions
Other
proprietary
Brand loyalty
brand assets
Competitive
advantage
7-14
Some Brand Attribute and Image Dimensions
Attributes
• Flavor/taste
• Caffeine
content
• Price
• Packaging
• Size
• Calories
• Brand name
• Sweetness
• Weight
• Warranty
• Durability
• Convenience
• Color
• Style
• Comfort
• Freshness
• Construction
material
• Availability
• Serviceability
• Compatibility
• Energy efficiency
• Instructions
• Automation
• Ease of Use
Image Dimensions
Reliable—unreliable
Old—young
Technical—nontechnical
Sensible—rash
Interesting—boring
Creative—noncreative
Sentimental—nonsentimental
Impulsive—deliberate
Trustworthy—untrustworthy
Conforming—rebellious
Daring—cautious
Forceful—submissive
Bold—timid
Sociable-unsociable
7-15
Ten Guidelines for Building Strong Brands
1. Brand Identity
 Each brand should have an identity, a personality. It can be
modified for different segments.
2. Value Proposition
 Each brand should have a unique value proposition.
3. Brand Position
 The brand’s position should provide clear guidance to those
implementing a communications program.
4. Execution
 The communications program needs to implement the identity
and position, and it should be durable as well.
5. Consistency Over Time
 Product managers should have a goal of maintaining a consistent
identity, position, and execution over time. Changes should be
resisted.
7-16
Ten Guidelines for Building Strong Brands (cont.)
6.
Brand System
 The brands in the portfolio should be consistent and synergistic.
7.
Brand Leverage
 Extend brands and develop co-branding opportunities only if the
brand identity will be both used and reinforced
8.
Tracking
 The brand’s equity should be tracked over time, including
awareness, perceived quality, brand loyalty, and brand
associations.
9.
Brand Responsibility
 Someone should be in charge of the brand who will create the
identity and positions and coordinate the execution.
10. Invest
 Continue investing in brands even when the financial goals are
not being met.
7-17
IBM Notebook Computers:
Purchase vs. Positive Opinion
7-18
Basic Customer Strategies
1.
2.
3.
4.
Customer acquisition
Customer retention
Customer expansion
Customer deletion
7-19
Strategy Over the Life Cycle
7-20
Linked Strategy Issues
7-21
Illustration: Odwalla Energy Bar
Objective:
Grow 10 percent faster than the category
Customer Targets:
Existing juice customers
Health conscious and on-the-go
Sports enthusiasts
Health purists
Nutrition-seeking families
Competitive Targets:
Clif Bars and Clif Luna
Kashi Go Lean
Balance (Outdoor, Plus, Oasis)
Core Strategy:
Increase distribution to 80 percent ACV in
mainstream grocery stores
Focus on natural health
Leverage brand name, Minute Maid resources
7-22
Illustration: Handspring
Objective:
To capture 15 percent of the PDA market by the end of year 2
Customer Targets:
Price-conscious professionals
Nonbusiness professionals
Nonprofessionals
Competitive Targets:
Palm
Sharp
Core Strategy:
Simplicity/convenience
Low price
Expandability (via expansion slot)
7-23