MB 572 Differentiation and Marketing Innovation

1. MB 572 Differentiation and Marketing Innovation Key instructors: ดร. สุทธาวรรณ จีระพันธุ ดร. โรจนศักดิ์ โฉมวิไลลักษณ์ E-mail: suthawan.chi@gmail.com rojanasak@gmail.com http://mb572utcc.wikispaces.com

2. Course Description แนวคิดหนึ่งที่มีความสำคัญต่อการแข่งขันทางการตลาดในปัจจุบัน คือ การสร้างความแตกต่าง และการสร้างนวัตกรรม ดังนั้น การศึกษาวิชานี้ นักศึกษาควรได้รับความรู้ ความเข้าใจ และมีโอกาสประยุกต์ความรู้ เพื่อให้ทักษะเกี่ยวกับกระบวนการและวิธีการพัฒนานวัตกรรม (Innovation process) การสร้างความแตกต่าง (Differentiation) การก่อกำเนิดแนวคิด (Creativity) การพัฒนาแนวคิดต่างๆดังกล่าวไปสู่เชิงพาณิชย์ (Commercialization) และเพื่อสร้างความได้เปรียบเชิงแข่งขัน (Competitive advantages)

3. Objectives • เพื่อทราบและเข้าใจแนวคิด และทฤษฎีพื้นฐานที่สำคัญเกี่ยวกับกระบวนการและวิธีการพัฒนานวัตกรรม (Innovation process) การสร้างความแตกต่าง (Differentiation) การก่อกำเนิดแนวคิด (Creativity) • เพื่อศึกษาและฝึกทักษะ โดยการประยุกต์ความรู้ความเข้าใจแนวคิด และทฤษฎีพื้นฐานดังกล่าว โดยการวิเคราะห์และสังเคราะห์ สร้างหรือออกแบบ แบบจำลองงานนวัตกรรมของส่วนประสมการตลาดเชิงพาณิชย์และเพื่อการสร้างความได้เปรียบเชิงแข่งขัน

6. Course Evaluation • Case studies presentation 10% • Quiz, assignments, and class attention 10% • Term paper 50% • Mid-term Examination 30% • Final Examination - %

7. Main text • Trott, Paul (2008) Innovation Management and New Product Development, 4th Edition, Pearson Education Limited, Essex, England.

8. Apple Google Toyota Motor General Electric Microsoft Tata group Nintendo P&G Sony Nokia Amazon IBM Research in Motion BMW The World’s Most Innovative Companies Source:Jena McGregor, ‘Most innovative companies’, Business Week, 2008

9. The World’s Most Innovative Companies • Hewlett-Packard • Honda • Walt Disney • General Motors • Reliance Industries • Boeing • Goldman Sachs group • 3M • Wal-Mart stores • Target • Facebook Source:Jena McGregor, ‘Most innovative companies’, Business Week, 2008

10. Topics • Core marketing strategies: cost leaderships, differentiation, and focus • Differentiation and competitive advantage • Differentiation and Blue ocean concept

11. Competitive Advantage The key superior performance is to gain and hold a competitive advantage through differentiation of product offering, which provides superior customer value or by managing for lowest delivered cost.

12. Competitive Advantage • Competitive advantage is the advantage over competitors gained by offering greater value either through lower prices or by providing more benefits that justify higher prices.

13. Sources of Competitive Advantage • Superior skills • Superior resources • Core competences • Value chain

14. Core Marketing Strategies • Competitive strategies • Cost leadership • Differentiation • Cost focus and Differentiation focus

15. Cost leadership • To become the low cost producer in the industry • A cost leader must achieve parity or at least proximity in the bases of differentiation • Often achieve by economies of scale

16. Economies of scale Experience Capacity utilization Linkages Integration Timing Inter-relationships Location Achieving Cost Leadership

17. Differentiation • To be unique in the industry along some dimensions that are widely valued by buyers • Premium price for product; but cannot ignore cost position (still should decrease cost) • Differentiation: product/ distribution/ sales/ marketing/ service/ image, etc.

18. Focus • To be best in a segment or group of segments • Two variants: cost focus & differentiation focus

19. Achieving Differentiation • Uniqueness drivers • Product and/or Service differentiation • Quality/ packaging/ branding/ service • Pricing differentiation • Price war vs. Premium pricing • Promotional differentiation • Promotional tools/ message • Distribution differentiation • Shopping by phone through TV-based catalogues/ the Internet • Brand differentiation • Unique emotional proposition

20. How to Differentiate A three- step process • Defining the customer value model • Building the customer value hierarchy (i.e. a fine restaurant) • Basic –food is edible and delivered • Expected – good china/ tableware/ tablecloth/ napkin/ flowers/ service/ well-prepared food • Desired – pleasant/ quiet/ interesting & great food • Unanticipated – complementary sorbet • Deciding on the customer value package

21. Sustaining Competitive Advantage • Unique and valued products • Clear, tight definition of market targets • Enhanced customer linkages • Established brand and company creditability

22. STP Marketing • Segmentation • Target market • size, growth, attractiveness, company objectives and resources • Positioning • Product position/ positioning map Competitive differentiation

23. Competitive Positioning Strategy • Advantage-creating resources;- • Contribute to providing value for customers • Are unique to the firm • Are hard for competitors to acquire or imitate

24. 4Ps Product Price Promotion Place 4Cs Customer needs/ wants Cost to satisfy Communication Convenience to buy Competing through the New Marketing Mix

25. The Market Offer • Key product/service concepts • Product/service choice criteria: rational/ emotional/ lifestyle/ assurance brand • Product/service differentiation • Diffusion of innovation • Managing the product over its life cycle • The impact of the Internet on market offering

26. Marketing Mix: Product

27. Marketing Mix: Product

28. Pricing Strategies • Pricing consideration • Production costs • Economic value to the customer • Competitor price levels • Desired competitive positioning • Corporate objectives • Price elasticity of demand • Assessing value to the customer • The effect of the Internet on pricing decisions

29. Pricing Strategies • Pricing methods • Cost plus pricing • Going rate pricing, based on prevalent market price • Perceived value pricing • Promotional pricing • Special events • Cash rebates • Low interest finance • Psychological pricing

30. Marketing Mix: Price

31. Communication Strategies The communications process • A basic communications model • Awareness • Interest • Desire • Action

32. Communication Strategies • Communications decisions • What message to convey • What communications tools to use • How to translate the message in copy • Which media to use • How much to spend on communications

33. Communication Strategies • Communications tools • Advertising • Public relations • Sales promotions • Personal selling • Direct marketing • Sponsorship

34. Communication Strategies • The use of the Internet for marketing communications • Banner advertising and pay-per-click • Viral marketing • Pre-launch promotion • Advertising audience measurement

35. Marketing Mix: Promotion

36. Marketing Mix: Promotion

37. Some Aspects of Marketing Innovation • Viral Marketing • Word of Mouth Marketing • Digital Marketing Innovation

38. Viral Marketing • Viral Marketing is the key to success. • marketing techniques that use social networks to produce increases in brand awareness or to achieve other marketing objectives (such as product sales) through self-replicating viral processes, analogous to the spread of computer viruses. • It can be word-of-mouth delivered or enhanced by the network effects of the Internet. • Viral promotions may take the form of video clips, advergames, text messages.

39. Word of Mouth Marketing • Different possibilities to create a big effect with small budget: • Word of mouth marketing is a highly valued marketing tool for advertisers • The receiver of word-of-mouth referrals tends to believe that the communicator is speaking honestly. The receiver relies on the information. • A very successful word-of-mouth promotion creates BUZZ.

40. Word of Mouth Marketing • Four different rules to produce good word of mouth marketing; • Be interesting • Smart idea: is always a key successful business • Find a megaphone: via Blogs, YouTube, email • Build trust: through emotional and excellent service & CRM

41. Digital Marketing Innovations • One way to maintain competitive edge • Online communications • Search gets local (i.e. Google Maps) • Doing more with banners • In-game advertising (esp. FMCG) • Pay-per-text • E-mails with personality • Corporate blogging (more personal and informal) • Opening conversations among managers, staffs, teams, suppliers and customers. • Owning PR message • Promote CSR through Blogs

42. Examples of Marketing Innovation Axe Fantasy

43. Examples of Marketing Innovation Stop & Grow

44. Examples of Marketing Innovation Fiat Ducato

45. World Water Day

46. Bergmann Funeral Services

47. Distribution Strategies • Channels of distribution • Effects of the Internet on distribution strategies

48. Marketing Mix: Distribution

49. Extended Marketing Mix- 8Ps • People • Job design/ job description • Selection • Training appraisal • Processes • Customer relationship management • Physical evidence • Partners

50. Zappos • Online: Shoes, Bags, Accessories, etc • Deeply engage with customers and employees • Started in San Francisco (IT)  move to Las Vegas (Hospitality) • Now current employees is 1,600 • Pay employees to quit $1,000 (starting from $100  $500 and now $1,000) • Company is bigger & bigger keep quality • 10% of new recruits quit • 4- week: company culture/ value/ stress/ commitment/ customer service training • One more week in Kentucky for warehouse and shipping • If not the right fit, company pays $1,000 bonus to quit • Extraordinary customer service