Team expectations Mission of OSBI “To establish OSBI as a premier consulting organization managed by students, to deliver high quality solutions to client problems and to nurture future consultants for the business world.” OSBI Value Leadership Deliver High Quality Solutions to Client Problems Develop Future Consultants for the Business World Consulting Experience Team Building Problem Solving
The context of your project • These are “live” projects with “real” clients • The organization is getting paid for almost all of the projects • There are no “right” answers, but some answers are better than others • You represent not only OSBI Consulting but the College of Business and the University of Illinois
Typical project timeline Action Steps Approximate Timing • Confirm scope and team roles • Develop project workplan • Identify potential information sources/ collection methods • Conduct initial information gathering • Summarize findings and key implications • Determine additional information needs • Collect, analyze and synthesize additional information • Develop recommendations and draft deliverables • Create final deliverable(s) Weeks 1 2 3 4 5 6 7 8 9 10 11 12 Client kickoff meeting Deliverable reviews Summary of key findings and implications • Final presentation Status reports • Client feedback • Engagement reviews • Engagement proposal • Workplan Team reviews with Stig
Where you should be now • Setting up and having first team meetings • all team members must attend all team meetings • All paperwork should be in • Non-disclosure and non-compete forms must be in to your Engagement Managers at your next team meeting. • Engagement Proposal and Work Plan should be in the works
Logistics of the project • Weekly video conferences with the client • Weekly team meetings • All deliverables “approved” by Stig • Realistic goals set on a weekly basis • COMMUNICATION!!! • First Class folders • Team and client meetings
When the Project is Over • Team and Manager Evaluations will be done • Promotion possibilities will be decided • Feedback to EM on the project to help improve the program • Team members assigned to a new project in their new roles
What should you expect- the challenges • Things will NOT go as originally planned • You will NOT be able to find the information that you are looking for in the form you need it in • Your client, at times, may NOT be as responsive as you would like • Team members will NOT contribute at times You need to be comfortable with being uncomfortable!!
What should you expect- the rewards • You WILL get out of the experience what you put into • You WILL better appreciate the concepts learned in class • You WILL understand that cases presented in class are contrived and only partially prepare you for what you will do in the work place • You WILL have a good story to tell to future employers • You WILL have actual consulting experience to reference You STILL need to be comfortable with being uncomfortable!!
Issue decomposition (question pyramids) Purpose: To define the key questions to answer to solve the company’s business issue Question Presenting problem Question Question Mutually Exclusive Collectively Exhaustive ? ? ? ? ? ? ? ? ? ?
How to create a question pyramid • Start by defining the presenting problem in the form of a question • Brainstorm the categories of questions that stem from the presenting problem • Within each issue category ask the following questions to create additional layers: • Why? • How? • What? • When? • Where? • Regroup questions, as required, into the appropriate categories
Presenting problem Should our company launch a new retail concept aimed at enabling elderly and the disabled to stay in their home?
Identify issue categories Is retail concept viable? Target customers? Market penetration required? Appropriate delivery channels? Competition? Organizational infrastructure? Characteristics of target markets? Product/ service mix? Sources of supply? Market positioning?
Add additional layers • Who is the target customer(s)? • What are the demographics/ key characteristics of the target customers? • What segments of the target customers exist? (e.g., buy for themselves, buy for others, etc.) • What are the buying behaviors of the target customers (e.g., where do they buy, how much do they buy, how often, etc.) • How do the buying behaviors differ by customer segment?
Exercise Presenting problem: • How can OSBI increase repeat participation of students?
How to create a question pyramid • Start by defining the presenting problem in the form of a question • Brainstorm the categories of questions that stem from the presenting problem • Within each issue category ask the following questions to create additional layers: • Why? • How? • What? • When? • Where? • Regroup questions, as required, into the appropriate categories
Resources available to you • First Class project folder • I- Find (www.osbi.uiuc.edu) • Methodologies • Tools and templates • Past deliverables
The Creation of a Marketing Plan • Phase 1 • Situation Report • Where is the client now? • Phase 2 • Objectives Statement • Where does the client want to be? • Phase 3 • Execution & Implementation • How should the client get there? • Phase 4 • Performance Evaluation • Has the client reached her/his goals? Creative/ Analytical Process 4. 3. 1. 2. Assess Market Environment Formulate Strategies & Set Objectives Structure Evaluative Process Develop Marketing Tactics Written Outputs to Marketing Plan Corporate Strategy Situation Report Key Assumptions Marketing Strategies & Objectives Marketing Tactics Short & Long Term Measures & Goals Executive Summary Consistent Client Interaction & Input
1.0 Assess the Market Environment Sub-Process Conduct External Analysis • Determine the impact of external entities upon the industry (government regulation, social goodwill, etc.) • Identify the relative strengths & weaknesses of existing industry players • Identify existing/ potential voids within the market for possible exploitation • Determine chief economic traits • Identify drivers of change • Identify key success factors Objective • Develop the foundation from which marketing strategies, objectives, and tactics are to be developed • Recognize for implementation the consumer orientation for targeted marketing communications • Define necessary assumptions, both internal & external, upon which further planning can be meaningfully based • Define internal & external assumptions (ie growth rates, advent of regulation, speed of innovation, etc.) using historical data and secondary/ primary research Conduct Internal Analysis • Understand overarching business strategy • Determine the client’s strengths & weaknesses • Earmark areas to be improved for later action • Gather all historical data and secondary/ primary research when appropriate and possible • Evaluate past performance in light of internal goals/ objectives & competitor’s performance where possible • Evaluate past and current positioning for coherence with overarching business strategy Tips & Key ?s Tools Outputs to Written Marketing Plan • Is the industry growing? Is it stable? Does technology play a dominant role? • Are the client’s existing/ potential resources & capabilities coincidental with key industry success factors? • How has the client performed? Is the client well-positioned relative to competitors? • EXTERNAL • Porter’s Five Forces • PESTLE Framework • Structure-Conduct-Performance Articulation • Segmentation Scheme • Competitive Positioning Articulation • Value Mapping • Perceptual Mapping • INTERNAL • SWOT Analysis • Activity Coherence Mapping • A summary of all the external factors which will likely affect the client’s marketing performance in the present & future • A statement of the client’s strengths & weaknesses with relevance to its competition • An exhaustive list of necessary assumptions essential to current & future marketing decisions • ASSUMPTIONS • Historical Trend Analysis • Pareto Affect
1.01 Porter’s Five Forces Model Tool Personal Computer Industry Substitutes: Low to Moderate Increasing competition from hand held/ portable computing devices Process Supplier Power:Very High Intel and Microsoft extract all industry profits. Buyer Power: High and Rising Low switching costs, Less brand loyalty. Resellers and retailers have grip on end users • Assess strength of each of the five competitive forces (Strong? Moderate? Weak? ) • Explain how each force acts to create competitive pressure. What are the factors that cause each force to be strong or weak? • Decide whether overall competition (the combined effect of all five competitive forces) is fierce, strong, normal/moderate, or weak Rivalry: Very High Intense price competition Excess capacity and saturation. Some brand recognition, but PCs thought of as commodities Threat of Entry: Moderate to High Low capital costs of manufacturing Relatively easy to assemble PCs Some brand recognition and loyalty Notes/ Implications • Key questions to better understand the ferocity of competition within the industry: Is price competition vigorous? Active efforts to improve quality? Are rivals competing on customer service? Lots of advertising/sales promotions? Active product innovation? Active use of other weapons (strategic, operational, marketing-related)?
1.02 PESTLE Analysis Tool Scan of the External Macro-Environment Process • Political • Tax policy • Environmental regulations • Trade restrictions & tariffs • Political stability • Deregulation • Privatization • Economic • Economic growth • Exchange rates • Interest rates • Inflation rates • Business cycles • Unemployment • Social • Population demographics • Income distribution • Attitudes towards work & leisure • Social mobility • Health consciousness • Population growth rate • Emphasis on safety • Technological • Automation • Government spending on technology • Information technology development • Speed of technology transfer • Research & Development • Technology incentives • Rate of change • Technological maturity • Legal • Health & safety laws • Employment regulations • Monopolies legislation • Environmental • Pollution control • Noise levels • Waste disposal • Additional requirements on manufacturing processes • Gather information relevant to client’s external environment and analyze for relevance to the client’s strategies • Implications for the client, customers, intermediaries, the market/ industry, competitors, and stakeholders must be considered • Arrange this information into the categories at left for use during both the internal analysis phase and the strategy & objective development phases Notes/ Implications • What influences have been particularly important to the client in the past? • Are any of these more or less significant in the future for the client and her/his competitors? • Which of these are the most important at the present time? In the next few years?
1.03 Structure-Conduct-Performance Articulation Tool • Structure • Numbers of buyers • Numbers of sellers • Barriers to entry facing new firms • Product differentiation • Vertical integration • Diversification Process • To identify the structure of the industry, the dominant conduct of existing players, and the resulting performance of newer firms • To define the relationships illustrated at right, the following industry conditions must first be considered: • Consumer • Elasticity of demand • Substitutes • Seasonality • Rate of growth • Location • Lumpiness of orders • Method of purchase • Production • Technology • Raw materials • Unionization • Product durability • Location • Scale economies • Scope economies • Conduct • Advertising and marketing • Research and development • Pricing behavior • Plant investment • Legal tactics • Product choice • Collusion • Performance • Profits • Product quality • Production efficiency • Technical progress/ progressiveness • Allocative efficiency • Equity Notes/ Implications • Threat of entry is stronger when…entry barriers are low, a sizable pool of entry candidates exists, incumbents are unwilling or unable to contest a newcomer’s entry efforts, and/or newcomers can expect to earn attractive profits
1.04 Segmentation Scheme Tool Determine Which Segmentation Variables to Use Process Develop Market Segment Profiles • Define distinct customer groups that have problems/ needs which can be solved/ serviced in one or more ways • Establish segment variables that yield mutually exclusive and exhaustive segments • Develop Segment Profiles • Evaluate Segments for their viability and “attractiveness” Evaluate Relevant Market Segments Are acquired segments viable? Segmentation Variables • Measurable • Size, purchasing power, profiles of segments can be measured • Actionable • Must be able to attract and serve the segments • Substantial • Segments must be large or profitable enough to serve • Differential • Segments must respond differently to different marketing mix elements & actions • Accessible • Segments must be effectively reached and served • User-Related • Demographics: Age, Gender, Race, Ethnicity, Income, Education, Occupation, Family Size, Family Life Cycle, Religion • Social Class • Geographic: Region, Urban, Rural, City Size, County Size, State Size, Market Density, Climate, Terrain • Lifestyles & Psychographics • Behavioral • Benefits • Usage • Price • Brand • Situational Notes/ Implications • Segmentation scheming defines potential markets and serves as an essential component of the client’s ultimate marketing mix decisions
Primarily Fortune 500 Quality Management Consortium MBA Consulting Program OSBI Austin Power Center for Experiential Learning Carlson High Student Participation Low Student Participation Business Consulting Network Community Consulting Darden Business Projects The MBA Consulting Project Freeman Consulting Group Primarily Start-up Companies 1.05 Positioning Articulation Tool Student-Staffed Consulting Process • Determine current competitive positioning within the marketplace • Identify holes, potentially representative of untapped markets, for further exploration • Formulate strategies to seize advantage, whether by challenging competitors’ positioning or by seeking “vacant” space Notes/ Implications • With positioning articulated, unfulfilled customer groups or needs can be more readily identified and targeted • Should current positioning prove incoherent with the client’s business strategy, this articulation becomes essential to developing new marketing strategies
Price Value Map of the Toothpaste Industry, 1992 Price Perceived Performance 1.06 Value Mapping Tool Process • Determine the current value-price orientation prevalent in the industry • Define the customer groups to which major competitors cater (price-sensitive or quality-focused) • Identify areas of the existing value orientation scheme within which client could capture value • Formulate strategies to combat competitors or to seize “vacant” space Notes/ Implications • Use the acquired value map to identify holes in the market’s current pricing scheme; where large gaps exist between products on the value line, there is opportunity for new product introduction
Most pleasant fragrance Long-lasting suds Mildness Overall Cleaning 50% Best Value for money 100% Leaves dishes shiny Competitor #1 #2 #3 Cutting Grease Removing baked-on foods 1.07 Perceptual Mapping Tool Liquid Detergent Market Process • Evaluate the current players and their respective abilities in light of all-important consumer perceptions • Formulate strategies to exploit the weaknesses and nullify the strengths of competitors in terms of consumer perception Notes/ Implications • By mapping perceptions, the relative strengths & weaknesses of competitors become more clear and actionable • What are the respective foci of competitors, and how do consumers perceive them in the marketplace?
1.08 SWOT Analysis Tool • Weaknesses • List internal weaknesses • Converse of suggested strengths (ie lack of brand awareness, lack of access to resources) • May sometimes be the “flip-side” of a strength (ie large manufacturing capacity, while generating low per-unit costs, might also inhibit flexibility/ adaptability) • Opportunities • List external opportunities • An unfulfilled customer need • Arrival of new technologies • Relaxation of regulations • Dissolution of pre-existing trade barriers • Threats • List external threats • Emergence of substitutes • Tightening of applicable regulations • Institution of new trade barriers • Shifts in consumer preferences away from client’s offerings • Strengths • List internal strengths • Brand awareness • Patents/ trademarks • Cost advantages • Proprietary knowledge • Exclusivity of resources • Preferential distributive access Process • Gather relevant information and list all issues, external & internal, that have or will likely have impact upon the client’s activities • Use this information in conjunction with the findings of the external analysis (specifically the PESTLE) to develop a thorough understanding of the client’s reality Notes/ Implications • Compiled strengths should be considered potential points of competitive advantage for the client and her/his activities • This information is useful in the immediate to better understand the current environment, and will again prove essential during the strategy formulation & recommendation stages of the plan
1.09 Activities Map Tool Southwest Airlines No assigned seats No connections No transfers Process No meals Limited Passenger Amenities • Evaluate the existing strategic coherence of the client’s current activities • Identify the higher-level activities and then list those actions undertaken and policies adopted to support main actions/ initiatives Point-to-Point flights Frequent Departures Limited use of travel agents Standard fleets 15 min. turnaround Automatic Ticketing machines Flexible Union contracts Low prices Lean and productive crew High employee compensation High aircraft utilization Employee Stock ownership Notes/ Implications • The more relationships/ linkages that exist among current activities, the more coherent and integrated is the client’s strategy • Planned activities for the future can herewith be evaluated prior to adoption/ implementation for coherence with existing activities
Most Recent 10-Years: 10,000 Increasing Annually at $256B 9,000 8,000 Billions of '96 $s 7,000 6,000 5,000 4,000 3,000 Long-term: Trending 2,000 positively with annual increases of $118B 1,000 0 1929 1939 1949 1959 1969 1979 1989 1999 1.10 Historical Trend Analysis Tool Trends in US GDP Growth Process • Acquire historical data and establish relevant time periods for examination (ie similar in duration, behavior, conditions, etc) • Examine data for statistical relevance and significance, being careful to adjust for seasonality where appropriate • Extrapolate forward into the future for periods of appropriate relevance to the client Notes/ Implications • While long-term trends are often beneficial in establishing the broad perspective, it is often more insightful to limit trend analysis to a more current term given that influential factors/ conditions can change dramatically over time. Examining the past for periods of similar observable behavior to that of the current period can prove useful in predicting upcoming movements.
1.11 The Pareto Effect (80/20 Rule) Tool Observed Pareto Effect in the Capital Industrial Goods Market Process • To quickly estimate with demonstrated accuracy the importance of existing customer segments • This “effect” is generally applicable across industries and basically states that approximately 80% of a firm’s sales are attributable to only 20% of same firm’s customers • With this tool, marketing efforts can be better focused/ targeted to generate maximum impact with respect to stated goals % of client’s current sales Customer Group A accounts for 75% of sales and represents only 25% of total customer base Customer Group C accounts for 5% of sales and represents 20% of the total customer base Customer Group B accounts for 20% of sales while comprising 55% of customer base % of client’s existing customer base Notes/ Implications • While this tool is useful in a general sense, it is static and therefore must be used carefully. Customers with the greatest potential may well be within the 80 percent, or within a heretofore untapped segment of the market.
2.0 Formulate Strategies & Set Objectives Sub-Process • Develop cohesive marketing strategies to best approach the client’s environment now and into the future • Establish broad objectives applicable to these marketing strategies and to the client’s overarching wants/ needs (ie target ROI, improved image, social responsibility) • Translate the broad objectives into key result areas (ie market penetration, sales growth rate) commensurate with key industry success factors • Create sub-objectives necessary for the accomplishment of the broad objectives (ie sales volume goals, geographical expansion, product line extension) Objective • Develop marketing strategies and associated objectives based upon the environmental assessment • Translate into concrete form the needs, hopes, & desires of the client with respect to her/his business performance Outputs to Written Marketing Plan Tips & Key ?s Tools • This process must be one of continuous review, as the strategies and associated objectives need to be evaluated forwards and backwards for coherence. • Ansoff Matrix • TWOS Matrix • A set of overarching marketing strategies relevant to the client’s environment • A definitive statement of the client’s objectives replete with associated complementary sub-objectives
2.1 Ansoff’s Matrix of Growth Strategies Process • Conceptualize the client’s competitive situation within two dimensions only: products and markets (ie what is offered and to whom it is offered) • Develop marketing strategies for which specific objectives can be defined and later measured Notes/ Implications • This tool is useful as it allows for the simplification of even the most complicated industry. By reducing complexities along two dimensions, the client has only to consider four broad growth strategies.
2.2 TWOS Matrix Tool Process • Analyze most relevant information from SWOT in an attempt to maximize strengths and minimize weaknesses • Complete the matrix as shown, with careful focus upon the actionable recommendations arising from the analysis Notes/ Implications • This model, while seemingly academic in nature, is one of the essential elements of strategy formulation and the written Marketing Plan.
3.0 Develop Marketing Tactics Sub-Process: Use of Marketing Tactics to Attain Objectives • Product • Policies & decisions related to client’s offerings: line extensions/ retractions, feature modifications, branding, etc. • Determine where within the Product Life Cycle the client’s offering is currently, as the maturity of the offering will determine much of the MM Objective • Develop the overall route to be followed for the achievement of stated objectives • Determine the appropriate Marketing Mix, with special emphasis upon relevant & coherent Communications • Revisit marketing strategies to ensure coherence with defined objectives and associated tactics Adjust the Marketing Mix as appropriate to pursue objectives • Promotion (Communication) • Impersonal: advertising, POS displays, public relations • Personal: face-to-face selling on- & off-site • Price • Skimming & penetration policies • Cost & value approaches • Refine objectives as necessary and adjust strategies accordingly; this process is one for continuous review & modification • Place (Distribution) • Agent, retailer, wholesaler, direct, etc. • Issues associated with the physical movement of goods Tips & Key ?s • Any and all Marketing Mix decisions (especially those to do with product & pricing) must be made with due consideration for competitive positioning • Communication means & messages are largely dependent upon the complexity of client’s offering • Each aspect of the MM should correspond to definite, measurable, and attainable objectives Outputs to Written Marketing Plan Tools • Product Life Cycle Articulation • Elements of Environmental Assessment • Definite marketing tactics formulated specifically to attain established objectives • Associated expenditure requirements and estimated results of each strategy relevant to stated objectives (to be coordinated with Evaluation Phase)
3.1 Product Life Cycle Articulation Tool Introduction Product: establishment of branding & quality level; acquisition of trademarks/ patents Price: low penetration pricing to build share or high skim pricing to recover development costs Place: selective distribution until demonstrated acceptance Promotion: targeting innovators/ early adopters; message is education & awareness Growth Product: maintenance of quality; addition of functionality/ support Price: static pricing Place: addition of channels to serve growing customer base Promotion: broad message to widening audience Maturity Product: enhancement of features to pursue differentiation Price: decreased price due to competition Place: “incentivize” existing channels to gain preference over competitors Promotion: strong emphasis on differentiation Decline Maintain: continue operations with a desire to retain competitive position Improve: rejuvenate product with additional features, new issues, or alternative customers Harvest: reduce costs and target loyal/ niche customers Exit: discontinue offering and liquidate inventory to end-users or competitors Enter: develop new products/ services (usually for a new customer group or market) Process • Determine where within the life cycle the client’s offering is currently • Formulate marketing mix strategies using the accepted PLC as a guide Notes/ Implications • The appropriate Marketing Mix is heavily dependent upon where within the life cycle the product/ service currently is. As the product/ service matures and demonstrates profit potential, competitors are likely to enter and influence the client’s tactics, objectives, & strategies. Product Sales Time
4.0 Structure Evaluative Process Sub-Process Objective • Predict the outcomes associated with each defined tactic and the marketing plan as a whole to better align stated objectives with reality • Evaluate in progress and in retrospect the successes/ failures of the marketing plan Complete projections associated with each tactic and evaluate against budgeted expenditures Employ test markets when appropriate and where possible to evaluate the paper plan in the “real world” prior to full-scale implementation Evaluate observed successes/ failures against stated objectives (ie did advertising expenditures create desired awareness levels?) Examine the external environment for events that may have contributed positively/ negatively to observed outcomes Tips & Key ?s • Where will the client be if she/he adopts the recommended actions? • In retrospect, has the client reached her/his stated objectives within the parameters established? If not, why not? • Did the marketing efforts have the desired effect or even cause the observed effect? • Evaluate all phases of the planning process for validity and improvement Outputs to Written Marketing Plan Tools • Sales Trend Analysis (with & without control markets) • Growth Rate of Improvement Analysis • Structured process for predicting success in the “pre-period,” analyzing progress in the “test period,” and measuring success in the “post period” • List of measures (ie sales growth, brand awareness, penetration rate, market share, etc.) and associated goals for each
Corporate Strategy Executive Summary 2. 1. Key Assumptions Situation Report 4. 3. Marketing Tactics Marketing Strategies & Objectives 7. 5. Conclusion Short & Long Term Measures & Goals 9. 8. The Written Marketing Plan Marketing Plan Inclusive of Defined Analyses Objective • Develop for articulation a coordinated plan that translates stated marketing strategies into actionable objectives and associated tactics, replete with a process for evaluation Tips & Key ?s • Answer with the Marketing Plan these four questions: Where is the client now?; Where does the client want to be?; How should the client get there?; Did the client reach stated goals? • Be concise and keep in mind the end-audience for this marketing plan • Obtain “buy-in” from all levels of management, while maintaining overarching strategies & objectives and rejecting biased, individualistic goals
Market Feasibility Study • Phase 1Target Market Identification • Phase 3 • Implementation Planning • Phase 2Prospective Positioning 1. Define Customer Needs Conduct Competitive Analysis 4. 8. 7. Define Potential Markets Evaluate Financial Viability Determine Target Market Plan Value Optimization 3. 6. 2. Conduct Internal Analysis Evaluate Industry Environment 5. Data Gathering Analysis & Evaluation Consistent Client Interaction & Input
1. Define Customer Needs Sub-Process Define the benefit to be provided or the void to be filled with the new alternative Translate perceived benefit into necessary features & attributes Rank the measurable attributes by their respective importance to customer Evaluate client’s product performance in terms of weighted attributes Objective • Evaluate alignment of provided benefit with the needs of customers Briefly examine the level of customer satisfaction provided by existing alternatives Consider the relative customer risks and costs of switching from existing benefit-provisionary source, if any, to new alternative Make preliminary judgments as to the product’s overall attractiveness in light of existing alternatives Tips & Key ?s Tools Outputs • Approach this objectively—avoid a “client bias” • Is this a B2B or B2C situation? • What do customers want? Does this new product give it to them? • Does this new alternative better serve their needs? • Interest/ Needs Survey • Laddering Interviews • Prototyping • Perceived benefit desired/ required by customer • Product attributes associated with said benefit & relative importance to customer • Early determination of client product’s marketability (attractiveness to customer)
1.1 Interest/ Needs Survey Tool 1. Please rate the importance of the following attributes in your selection of a retail store by circling the appropriate number. Not At Extremely All Important Important Price 1 2 3 4 5 6 7 Product selection 1 2 3 4 5 6 7 Operating hours 1 2 3 4 5 6 7 Payment methods 1 2 3 4 5 6 7 Merchandise quality 1 2 3 4 5 6 7 Product Refundability 1 2 3 4 5 6 7 Customer service 1 2 3 4 5 6 7 Location 1 2 3 4 5 6 7 Representative questions from a recent survey pertaining to Target vending machines Process • Develop for distribution and reclamation a survey targeted for the informational needs of the team • Assign appropriate and meaningful metrics for ready compilation • Accumulate and interpret acquired data without bias The Objective: to determine a target market need for vending machines of this nature, as well as consumer receptiveness to vending machines of this nature 16. The following is a list of items that can be purchased from a Target vending machine. Please rate the likelihood that you would purchase these products from the vending machine by circling the appropriate number. Not at All Extremely Likely to Purchase Likely to Purchase Sun block 1 2 3 4 5 6 7 Aspirin 1 2 3 4 5 6 7 Lip balm 1 2 3 4 5 6 7 Hand Lotion 1 2 3 4 5 6 7 Mouthwash 1 2 3 4 5 6 7 Toothpaste 1 2 3 4 5 6 7 Toothbrush 1 2 3 4 5 6 7 Soap bar 1 2 3 4 5 6 7 Music CD 1 2 3 4 5 6 7 CD carrier 1 2 3 4 5 6 7 Notebook 1 2 3 4 5 6 7 Disposable Camera 1 2 3 4 5 6 7 Camera Film 1 2 3 4 5 6 7 Notes/ Implications • Be careful during survey creation not to inadvertently formulate or include questions that may contain a bias • Collecting data is important, but the analytical interpretation is essential to the engagement
1.2 Laddering Interviews Tool Representative interview questions (posed to Diet Coke champion) Hierarchical Value Map: Diet Coke (1 champion/ 2 attributes) Process ACCOMPLISHMENT SELF ESTEEM SOCIAL ACCEPTANCE • Interviewer elicits as many product attributes from the respondent as possible and then probes further… • Interviewer: You indicated that you enjoy Diet Coke because it doesn’t have calories. Why is this important to you? • Respondent: I like to stay fit. • Staying fit is important to you? • Sure, I like to look good. • Why is looking good important to you? • I want to look good; people are judged by their appearance. I care what others think o f me. • Do you feel that you are being judged? • Of course! People are constantly judging me; and as a woman it is all about appearance. • What specifically about appearance do you think is important? • For women? Weight is the biggest issue. • 1-on-1 interviewing technique capable of establishing key consumer associations between product attributes and meaningful values • By repeatedly asking probing questions of consumers, a value map specific to the relevant provided benefit can be developed that associates attributes to consequences, and consequences to values • This probing allows greater understanding of consumer behaviors, wants, and needs • The resulting ladder of perceptual orientations is useful for distinguishing between products in a given product class Reward / Compensation Self-evaluation determined by appearance Weight is key determinate of social acceptance for women Immediate fulfillment of need Gain respect of others through physical appearance Society values youthful appearances Available almost anywhere Bright, energetic, youthful appearance Ready-to-transport containers Desire to be athletic and attractive No Caloric Content Bottle Notes/ Implications • Key Questions: “Why do people not buy my product?” & “Why do people buy my product?” • It is most beneficial to conduct multiple interviews, with both non-users and product champions to acquire the most valuable insights into consumer motivations and behaviors
1.3 Customer Prototypes Tool Not-For-Profit Adult English-Language Education--segment-specific customer Process Horacio Castro has just entered the United States illegally at the age of seventeen. Crossing the border with the aid of an established smuggling organization, Mr. Castro is eager to recover his US$3,500 cost of entry into America. Mr. Castro has settled in Chicago to reap the benefits of the city’s large labor market, and to utilize his existing familial ties within the city. Mr. Castro is here primarily to earn money, the vast majority of which will be sent to his rural home in the Durango Province of Mexico. In Mexico, his mother and five younger siblings will use the money to improve the drainage of their small field and purchase those necessities which they cannot provide for themselves. Horacio’s motivations are clear: earn as much money as possible to facilitate a quick return to his Mexican homeland. He has chosen this path as opportunities in Mexico are limited for a man lacking formal education and familial influence. Learning the meat-packing trade from his uncle, Horacio has secured a position in the same plant in which his uncle has labored for twelve years. While his expenses are low (he lives with his uncle’s family free of charge), Horacio recognizes the economic advantages associated with English abilities. His supervisor is a bilingual immigrant from Mexico City, valued for his ability to understand and communicate the motivations of both laborers and management. Horacio wants to emulate this successful supervisor and not his uncle, who having never learned English is still a laborer. In his mind, Horacio struggles with the barriers: he has little educational training, no English-speaking acquaintances, little disposable income with which to procure an education, no knowledge of the available educational opportunities, and little available time with which to take any classes. Horacio is discouraged by the barriers, but he feels there must be a way to learn English. • Imagine and define people within specific target segments in an attempt 1) to gain a multi-dimensional view of the customer for whom the client will provide benefit and 2) to gain insight into the unarticulated needs of said customer • Base profile on certain key ?s: Why does she/he use require this benefit? How does this person see her/himself? What is important to her/him? What are her/his ambitions? Who does she/he want to impress? What is her/his idea of the perfect vacation? • Repeat this process until customer profiles begin to overlap, and then compile common characteristics/ goals/ values for client’s marketing mix Notes/ Implications • The results of this profile-layering have significant importance to the client’s ultimate marketing strategy
2. Evaluate Industry Environment Sub-Process Determine chief economic traits of the industry (growth rates, trends) Identify the drivers of change within the industry Determine the impact of external entities upon the industry (government regulation, social goodwill, etc.) Identify barriers to entry, if any, & evaluate them with respect to client’s strengths/ weaknesses Objective • Determine the client’s ability to enter and compete within the industry • Identify potential opportunities for further exploration Identify the relative strengths & weaknesses of existing industry players Identify key success factors within industry Make a judgment as to overall industry attractiveness Tips & Key ?s Tools Outputs • Do existing industry players actively discourage new entrants? • Is the industry growing? Has the industry been stable? Is growth likely to continue? • Is technology an issue? If so, where along the curve are current alternatives? • Structure-Conduct-Performance Articulation • Porter’s Five Forces Model • Externalities Mapping • List of industry players ranked according to strength/ position • Clear understanding of resources & capabilities required for industry success
2.1 Structure-Conduct-Performance Articulation Tool • Structure • Numbers of buyers • Numbers of sellers • Barriers to entry facing new firms • Product differentiation • Vertical integration • Diversification Process • To identify the structure of the industry, the dominant conduct of incumbents, and the resulting performance of firms • To define the relationships illustrated at right, the following industry conditions must first be considered: • Consumer • Elasticity of demand • Substitutes • Seasonality • Rate of growth • Location • Lumpiness of orders • Method of purchase • Production • Technology • Raw materials • Unionization • Product durability • Location • Scale economies • Scope economies • Conduct • Advertising and marketing • Research and development • Pricing behavior • Plant investment • Legal tactics • Product choice • Collusion • Performance • Profits • Product quality • Production efficiency • Technical progress/ progressiveness • Allocative efficiency • Equity Notes/ Implications • Threat of entry is stronger when…entry barriers are low, a sizable pool of entry candidates exists, incumbents are unwilling or unable to contest a newcomer’s entry efforts, and/or newcomers can expect to earn attractive profits
2.2 Porter’s Five Forces Model Tool Personal Computer Industry Substitutes: Low to Moderate Increasing competition from hand held/ portable computing devices Process Supplier Power:Very High Intel and Microsoft extract all industry profits. Buyer Power: High and Rising Low switching costs, Less brand loyalty. Resellers and retailers have grip on end users • Assess strength of each of the five competitive forces (Strong? Moderate? Weak? ) • Explain how each force acts to create competitive pressure. What are the factors that cause each force to be strong or weak? • Decide whether overall competition (the combined effect of all five competitive forces) is brutal, fierce, strong, normal/moderate, or weak Rivalry: Very High Intense price competition Excess capacity and saturation. Some brand recognition, but PCs thought of as commodities Threat of Entry: Moderate to High Low capital costs of manufacturing Relatively easy to assemble PCs Some brand recognition and loyalty Notes/ Implications • Key questions to better understand the ferocity of competition within the industry: Is price competition vigorous? Active efforts to improve quality? Are rivals racing to offer better customer service? Lots of advertising/sales promotions? Active product innovation? Active use of other weapons of rivalry?