Marketing Strategy Framework The Loyalty Effect: Customer loyalty leads to employee &investor loyaltyWhat is Marketing? Create value for customers, company & competition

Customer Analysis – B2C & B2B

ImplementMonitor,Adapt,

& Renew

External Analysis

New ProductsProduct Policy

Channel Choice& Management

Pricing Strategy& Tactics

PromotionCommunication

Product Place Price Promotion

Segmentation/Targeting/Positioning

AnalyzeBuyer

Behavior

IdentifyMarket

Segments

Marketing Program(s)

SelectTarget

Segments

DevelopPositioning & VP Strategy

Consumers, Customers,Competitors: look at 4 P’s, PEST

Goals, Resources& Capabilities

Internal AnalysisSituation Analysis

Market Segmentation, Targeting and Positioning (STP)1. Identify groups who share same desired benefits, and

descriptive characteristics & needs (demographics, psychographics (VALs) & behavior) or behavioral considerations & characteristics but are sufficiently different. Then rate on homogeneity of needs/wants/desires, size, profitability, measurable, substantial, accessible, and differentiable.

2. Cluster groups & develop prototypical customer profiles3. Analyze company and competitors4. Select Targets: Customer, competitive & company

analyses.

1 B2B - Buying Center – similar to decision making unit in B2C,

identify who, their role, what they care about and define Understand the roles of the buying center/buying team. Isolate individual customer benefits. Value Stack - match between benefits and buyer center Create market strategy (sales calls, macomm, incentives,

etc.) by applying customer benefits to specific “players”.

5. Develop Positioning for the brand/product.• Positioning Criteria:

• Product/Market Fit: Revenue/Profit/Market Share considerations

• Product/Company Fit: Fit with company’s resources and skills

• Mental /perceptual map: associations consumer has with brand.

• Perceptions formed by: the market, consumers’ own mindsets and stage in life, competition, and the company’s actions.

• Requires three things:1.Competitive Frame of Reference – brands competing

with(actual and potential/aspirational)2.Identifying optimal Points-of-Difference(POD) & Points-

of-Parity• PODs – attributes/benefits consumers associate with• 3 Criteria: Desirable to consumer, Deliverable by the

company, and Differentiation from competitors3.Creating a brand mantra that summarizes the positioning

Company Analysis – Can we do it?

B2C - Framework to Understanding Customers (3 Dimensions)

Involvement – Involvement in the purchasing process and extent to which the customer feel product is important. If spend a lot of time searching for alternatives, then high likelihood of involvement.

Can be influenced, depends on situation, consumer, & product/service

Benefits: functional (utilitarian) or ego-expression – mix of both usually

3 stages of consumer behavior lead to marketing implications:

Choice (decision making process) Nature of Search/Info Gathering, Decision Sequence, Evaluation of Alternatives, Decision Rules, Role of Price, and the Decision Model in situations

Usage/consumption experience: basis of sat. and loyalty, nature of relationships, and consequence of relationship – consumer missionaries

Post-purchase/consumption: satisfaction with the product and issues relating to how the product is disposed off/reused, extent of service required to enhance consumer satisfaction and loyalty.

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Resources & Capabilities, Integrative SWOT Internal: Strengths & Weaknesses (SW) External: Opportunities & Threats (OT)

1.Collect data on each competitor in five areas: ability to: conceive & design, produce, market, finance, and manage/execute

2.Place in competitor capability matrices: one per segment

3.Need to consider competitive reactions

Meta analysis shows MO focused firms are more successful; increase MO by one unit, increase innovation by .46

Costumer Market Analysis Size, potential, growth, shares, macro part of ‘external’ analysis, PEST : Political, Economic, Social, and Technological aspects

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4

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5 Goals & ObjectivesFinancial and non: perceptions, positioning, awareness

1. Market evolution is the function of: Firm-controlled events (own strategy);Firm-influenced events (competitors’ actions; economy); and Uncontrolled events (demographics; econ.).2. Integration of strategies: coordinating and leveraging

investment, production/manu. and marketing strategies• Experience Curve + High Capital Intensity=> Low cost,

making low price feasible• R&D (Mfg. Qlty.) + Advtg. (Perceived Qlty./Image) + Wide

Dist. => High Unit sales3. Globalization of markets: Extension of manu cost advantage

across markets, experience curve &cross-subsidization4. Role of experimental and adaptability in strategy formulation. “Top-down” versus “learning by doing.”

• Competitive frame of reference

Competitors

Direct Indirect/ Potential

Consumer (Demand) Side - What other brand will you buy if brand X was not in stock?

Supply Side - What product do, will or have used to satisfy need/want/desire X?

Competitive Analysis: Demand & supply side competition, identify, understand (competitor profiles), and predict.

Customer orientation: quality, loyalty, & satisfaction

Competitor orientation Interfunctional

coordination

Market Orientation Firms must define themselves

from customers’ viewpoint Market orientation - Long

term profit and solution focuses

Strategic Marketing Framework

Pricing – Three keys:• Internal company costs• Competition• Customer Value

Economic Based Approach• Cost-based – average of 35% add – focus is on costs• Positioning based – what will strengthen the price – too low

shifts position• Demand based - Price sensitivity

• Elasticity = % change in quantity demanded/% change in price• Low when high demand or want specific• High when switching costs

• Value-based – based on what customers are willing to payvs. what it costs to make

Psychological Based Approach• Perception of price difference: Weber-Fechner Law: Buyers

perceive price differences in percentage terms not in absolute terms ($400 savings - more if 25% vs. 2.5%

• Reference Price: std of comparison, becomes benchmark• Skimming: high prices then lower to maximize profits• Penetration: low initial price to win market share

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Marketing Research1. Define the ‘Problem’.2. Generate Hypotheses.3. Identify information gaps and information availability.4. Determine research need, design research program, &

decide research sequence/data collection methods.5. Plan Sampling and collect data.6. Analyze and Interpret.7. Report.8. Recommend Marketing Actions.

7 Place/Distribution1.Who has power in the channel? Why?

• Brand vs. Store• Pull (customer demand) vs. Push

2. How can we increase our power in the channel?• Coercion• Reward• Partnership

3. Long term strategy vs. Short term tactics • Hardest marketing mix element to change.

Can be a source of competitive advantage, particular inmaturity and decline phase of the PLC.Channels must mesh with:

• Market conditions• Consumer/segment buying preferences• Competitive issues• Company’s resources/skills/capabilities,• The other 3 Ps, and• Economic considerations.

Promotion – 7 M’s1. Markets: Market, competition2. Motives: Consumers, segments, needs3. Mission: What is the goal of advertising?4. Message: What to say? And how to say it?5. Money: How much?6. Media: Through what media? And when?7. Measures: To what effect?

Brand1. Brand affects customer perception of objective attributes2. Strong brands can command premium prices3. Strong brands facilitate entry into new markets –

extensions, co-branding and licensing/merchandising4. Strong brands reduce cost of launching new products5. Brand simplify decision making6. Command higher loyalty 7. Attract better employees8. Provide leverage with distribution channelsCustomer based brand equity tool Brand Familiarity

Recall Recognition

Brand Associations Perceived Quality Other Associations

Brand Loyalty Purchase loyalty Emotional/Attitudinal Loyalty

To build strong band, consider all of the touch pointsPre- purchase, purchase and post-purchase ex

Customer ServiceCustomer Service

BillingBilling

Loyalty ProgramsLoyalty Programs

Product QualityProduct Quality

Sales ForceSales Force

Point-of-PurchaseDisplays

Point-of-PurchaseDisplays

Product/ServiceAssortment

Product/ServiceAssortment

CollateralCollateral

AdvertisingAdvertising

Web SiteWeb Site

PurchaseExperience

Pre-purchaseExperien

ce

Post-purchaseExperience

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4 P’s - Product Strategy: Product, Promotion, Place & PriceProduct Product Life Cycle• Introduction: one pioneer, high resource costs, few

designs• Growth: differentiation, access, selective demand

Product Design Issues• Multi-attribute model• Product vs. services• Brand and line extensions

• Image• Associations – attributes or benefits (ego, utilitarian)

• Positive or neg?

Product Positioning• Good positioning statements include who the customer

is, the needs fulfilled by the products, and why the product is the best option to satisfy those needs

• Helps define the marketing mixProduct differentiation• Horizontal – different tastes – identify needs to served by

a competitor• Vertical – different willingness to pay for quality• Tools of differentiation – product, price, packaging,

service• Brands – denote and connote

Implementation• Need positive senior mgmt leadership behaviors• Requires some common membership across planning &

implementation teams• Cross-functional supportiveness within the strategic

business units (SBU)• Formalization and sophistication of marketing planning

process• Avoidance of behavioral planning problems• Positive signals from the organizational environment• Regular & thorough follow-up using mutually agreed upon

measures - What gets measured gets done