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Marketing Strategy

Marketing Strategy

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Marketing Strategy

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    1. Marketing Strategy

    2. Business plan workshops Matching Products and Services with Markets January 25 Competitive Analysis February 1 Financial Analysis: Using Financial Statements for Management February 15 Financial Analysis: Using Ratio Analysis for Management February 22 Strategy & Business Model March 15 Marketing and Sales Strategies March 22 Management & Ownership March 29 Professional Presentations April 27 Last week tried to get you to think about who might want the product or service you provide -- and how you might serve them. This week, I will try to help you learn some concepts and tools that will help you think about the competitive context in which you will operate. I want to talk about the industry, the environment in which the industry operates, the structure of the industry itself, and your actual competitors Next week, we will turn to strategy and business models...Last week tried to get you to think about who might want the product or service you provide -- and how you might serve them. This week, I will try to help you learn some concepts and tools that will help you think about the competitive context in which you will operate. I want to talk about the industry, the environment in which the industry operates, the structure of the industry itself, and your actual competitors Next week, we will turn to strategy and business models...

    3. Business plan outline www.sbm.temple.edu/IEI/word/planigenttemplateoutline_003.doc Executive Summary Company Description Including product/service & technology/core knowledge Industry Analysis & Trends Target Market Competition Strategy/Business Model Marketing and Sales Plan Production/Operations Plan Were in the midst of working on the context of your business -- on the environment, industry, competition -- on what the world gives you to work with. Before this we looked a little at what you bring to the table: your vision, skills, idea, networks. The next step is to combine the two. To take stock of what the world offers and what you bring and to fit them together into a strategy in which you use your strengths to take advantage of opportunities, shore up weaknesses, stave off threats, etc. Your strategy is summarized as a business model -- the gist of your plan to take advantage of an opportunity. This is the heart of your plan. Once you have the model, its a matter of working out the details of how you will implement the model. And then reassuring the investors that youve thought through the risks.Were in the midst of working on the context of your business -- on the environment, industry, competition -- on what the world gives you to work with. Before this we looked a little at what you bring to the table: your vision, skills, idea, networks. The next step is to combine the two. To take stock of what the world offers and what you bring and to fit them together into a strategy in which you use your strengths to take advantage of opportunities, shore up weaknesses, stave off threats, etc. Your strategy is summarized as a business model -- the gist of your plan to take advantage of an opportunity. This is the heart of your plan. Once you have the model, its a matter of working out the details of how you will implement the model. And then reassuring the investors that youve thought through the risks.

    4. What a firm does, and how, to build and capture wealth for stakeholders. Translates strategic position into a business structure and a set of functional strategies. Includes a trajectory of growth: a timeline, milestones, infusions of capital, growing revenues, growing, changing expenses. Business model

    5. Key to Marketing Knowing the needs & wants of customers Building a strategy to serve customers Know their purchasing habits Buying preferences Demographic informationKnow their purchasing habits Buying preferences Demographic information

    6. Marketing plan Detailed plan of to whom you will sell your product, at what price, through which channels, and with the support of what kinds of sales and advertising. Includes a strategy, a mix, ways of measuring success, attention to staffing, and attention to costs. Summarized in the marketing functional strategy section of the business plan.

    7. I. Marketing strategy Functional strategies are a subset of company strategy Part of building a company is shaping functional strategies to serve the overall strategy But functional strategies also shape company strategy by testing the corporate strategy Marketing strategy is especially important because it ties the company to its customers

    8. Generic marketing strategies Same as corporate strategies -- but focused on products/services/markets Low Cost/Low Price Product Differentiation Market Segmentation (Focus)

    9. Strategies manipulate forces Heres the modelHeres the model

    10. Low-cost/low-price Reduce prices to customers by reducing costs of production Two patterns: Lower margins/higher share (Toys R Us, Walmart) Lower costs/higher margins (private labels, e*trade) Works by scaring off rivals, driving down supplier power, sometimes increasing barriers to entry

    11. Pitfalls of low-cost strategy Entry of even lower-cost competitors Cost of keeping costs down especially for small firms Reduced flexibility Finding markets where there is space for a low-cost competitor

    12. Product / service differentiation Differentiate what is sold Branding, quality, innovation, style and image Two common patterns: High margins/low share (Mercedes): focus on status, production efficiencies less important Slightly lower margins but high share (many branded items like Coca-Cola, Nike) Works by reducing rivalry, substitutes & buyer power

    13. Pitfalls of product differentiation Slide down the cost/quality ladder Jaguar vs Lexis Shifts in what matters Department stores vs big box Perils of imitation Sharper Image, Royal Crown colas, fake designer labels, less complete enterprise systems Missing the point Designing the great widget no one wantsConcretec

    14. Pitfalls of product differentiation Blowing the branding: Alu-Fanny foil wrap (France) Atum Bom tuna (Portugal) Crapsy Fruit cereal (France) Happy End toilet paper (Germany) Mukk yogurt (Italy) Plopp chocolate (Scandinavia) Pschitt lemonade (France) Zit lemonade (Germany)

    15. Market segmentation/focus Serve a small segment Focus refers to following the whims of an audience, differentiation to focusing on the product/service itself Focused differentiation: Oshkosh emergency trucks, Two-Ten Health, specialty steel, micro breweries Focused low-cost/low-price: AFG specialty glass for microwave doors, Srugo nutsche, Jindal Works by reducing rivalry, reducing substitutes

    16. Pitfalls of market segmentation Attracting larger competitors Blue Mountain Arts vs. Hallmark Independent record labels Dependence on a single segment Demographic shifts in books AIT and armaments buying Focused mostly -- activist niche Differentiate to fit nichebut not really a premium product Hurt us as audience & channels changed...Focused mostly -- activist niche Differentiate to fit nichebut not really a premium product Hurt us as audience & channels changed...

    17. Exercise: Choose an defend a marketing strategy Low Cost/Low Price Product Differentiation Market Segmentation (Focus) Your ownwhy? Focused mostly -- activist niche Differentiate to fit nichebut not really a premium product Hurt us as audience & channels changed...Focused mostly -- activist niche Differentiate to fit nichebut not really a premium product Hurt us as audience & channels changed...

    18. II. Marketing plan Product WHAT? Price HOW MUCH? Placement/distribution WHERE? Promotion WHY?

    19. Product / Service Means of delivering benefits to customers Possible ways to provide value: Variety Quality Design Brand Packaging -- sizes, wrapping, labeling Warranties, follow-up services, returns Attention, special knowledge Example: Freds Mt Airy Motors Once you have set your strategyneed to work through the implications Product Price Place Promotion start with product/service... Standard sizes -- 6x9 = serious, certain promise of style (activist, practical, easy to read), paperback (affordable), standard but strict returnsOnce you have set your strategyneed to work through the implications Product Price Place Promotion start with product/service... Standard sizes -- 6x9 = serious, certain promise of style (activist, practical, easy to read), paperback (affordable), standard but strict returns

    20. Value proposition Clear statement of benefits that give a customer reason to buy a product or service Starts with precise definition of customer! And their needs Includes: Unique selling points Quantification of the value to the customer of those points Examples Riskforce - CYA Once you have set your strategyneed to work through the implications Product Price Place Promotion start with product/service... Standard sizes -- 6x9 = serious, certain promise of style (activist, practical, easy to read), paperback (affordable), standard but strict returnsOnce you have set your strategyneed to work through the implications Product Price Place Promotion start with product/service... Standard sizes -- 6x9 = serious, certain promise of style (activist, practical, easy to read), paperback (affordable), standard but strict returns

    21. Exercise: Value proposition List unique selling point(s) Articulate the benefit referred to by each USP Quantify or otherwise capture the value of each benefit for the client Test, review, refine Once you have set your strategyneed to work through the implications Product Price Place Promotion start with product/service... Standard sizes -- 6x9 = serious, certain promise of style (activist, practical, easy to read), paperback (affordable), standard but strict returnsOnce you have set your strategyneed to work through the implications Product Price Place Promotion start with product/service... Standard sizes -- 6x9 = serious, certain promise of style (activist, practical, easy to read), paperback (affordable), standard but strict returns

    22. Price Price determines and reflects the amount of value customers perceive. Value is a customers subjective estimate of a products ability to satisfy their needs or desires. Issues: List price (healthcare) Discount policies (books) Terms (printers) Signals sent (Two-Ten) $50 vs $25 Institutional vs retail price$50 vs $25 Institutional vs retail price

    23. Pricing strategies General pricing strategies Mark-up pricing Competitive pricing Perceived value Psychological pricing Entry pricing strategies Penetration Low price Skimming High price

    24. Price setting: A make or break decision Assess demand How sensitive will customers be to price changes? Analyze competition Whats the going price? Will competitors respond to a price cut? Set pricing objectives Target return, market share, long-term profits, quick investment recovery, etc. Cover costs! Including hidden ones. Automsoft, Jindal, Monthly Review 8x multiplierbased on costs we could control and calculate (production)set to cover discount, royalties, editorial costs, etc 7x if lower royalties, lower editorial costs (rights deal) or reprint with little overhead8x multiplierbased on costs we could control and calculate (production)set to cover discount, royalties, editorial costs, etc 7x if lower royalties, lower editorial costs (rights deal) or reprint with little overhead

    25. Exercise: Positioning

    26. Placement/Distribution Ways of reaching customers Channels Direct mail, distributor, retail, value added reseller, cooperatives, vertical Issues/norms: Timing of sales cycle (time of year, length) Expected materials, order forms, support, etc Sales force implications Coverage: Geographic, cultural Fees Logistics Example: Baker & Taylor timing, discounts, catalog, personal connection vs Ingramlonger lead, less connection, pure service (pull, no push)Example: Baker & Taylor timing, discounts, catalog, personal connection vs Ingramlonger lead, less connection, pure service (pull, no push)

    27. Effective distribution Complementary, strategic channels Clear objectives for each channel that facilitate measures of success Increase number of stores carrying our product by 25% Keep 90% of our current customers this year Increase sales volume to 100 largest accounts by 20% Budget & timeline Detailed outline of required logistics. Sensitive measures of success, and methods for absorbing and adjusting to data Riverside Farm: Deep Root vs CSA

    28. Sales team People Experience, reach Team structure Support structure Sales plan Marketing intelligence Incentives Materials Logistics

    29. Exercise: Placement/ Distribution How will you deliver your product or service to your customers? Channels Sales support Marketing support Logistics Costs Measures of success/feedback loops Once you have set your strategyneed to work through the implications Product Price Place Promotion start with product/service... Standard sizes -- 6x9 = serious, certain promise of style (activist, practical, easy to read), paperback (affordable), standard but strict returnsOnce you have set your strategyneed to work through the implications Product Price Place Promotion start with product/service... Standard sizes -- 6x9 = serious, certain promise of style (activist, practical, easy to read), paperback (affordable), standard but strict returns

    30. Promotion Any form of persuasive communication designed to inform consumers about a product or service and influence them to purchase these goods or services. Direct selling -- mail, internet, sales representatives Promotions -- try it, youll like it Advertising -- direct response, targeted, blanket Public relations -- word of mouth (events), media coverage, editorial content Marketing communications Networking structural holes

    31. Sales promotions Coupons & Discounts Free giveaways Key chains, mugs, calendars etc. Trade Shows Samples Contests

    32. Advertising Newspapers, magazines, radio, internet, television, yellow pages, direct mail Analyze the strengths & weaknesses of the medium Which medium will target your customers? What is your advertising budget? What is the cost per million (CPM)?

    33. Advertising comparison

    34. Publicity Articles in newspaper Interview on radio or television Coverable events Newsletters White papers Speaking engagements & white papers Volunteer (boards & local committees) FREE, powerful, hard to control

    35. Marketing communications Logos Brochures Catalogs Business cards Business plans White papers Annual report

    36. Networking Chambers of commerce Business associations Trade associations Customer groups Volunteer work

    37. Effective promotions Clear plan to move recipients Ignorance >> indifference >> awareness >> interest >> comprehension >> conviction >> action Concrete, measurable objectives Stimulate inquiries Encourage trial Encourage repurchase Build traffic Generate word-of-mouth support

    38. Effective promotions Coordination Complementary pieces Close timing Budget & timeline Detailed outline of required logistics. Clear, sensitive measures of success, and methods for absorbing and adjusting to data

    39. Exercise: Sales & Promotion Sketch a sales plan including targets, sales cycle, people needed, support required Sketch a promotional plan to support sales with promotions, advertising, publicity, communications and/or networking Include measures of success List types of costs Once you have set your strategyneed to work through the implications Product Price Place Promotion start with product/service... Standard sizes -- 6x9 = serious, certain promise of style (activist, practical, easy to read), paperback (affordable), standard but strict returnsOnce you have set your strategyneed to work through the implications Product Price Place Promotion start with product/service... Standard sizes -- 6x9 = serious, certain promise of style (activist, practical, easy to read), paperback (affordable), standard but strict returns

    40. III. Marketing mix The right mix of product, price, distribution and promotion... That supports your strategy. Fits your capabilities. Doesnt break your budget. Shared advertising Public relations Networking

    41. Marketing mix implications Staffing Partners Timing Costs Testing, tracking, measuring

    42. Values-led marketing mix Values-led marketingpromotes products and brands by integrating social benefits into many different aspects of a business enterprise. - Ben & Jerrys Product: Organic ingredients purchased from alternative suppliers; creative, recyclable packaging Pricing: Premium with lots of giveaways & donations Placement: Regional, country stores, youth scoop shops Promotion: Music festivals, free samples, advocacy, public relations

    43. Guerilla marketing mixes Often used when a small business attacks a larger one Targeted, low-cost strategies that change the rules of the game Examples: Product: Midwifery, punk music both embedded in movements Price: Free web services (to drive advertising) Promotion: Anita Roddicks rose petals Place (distribution): Milliner on the web, CD tables, craft shows

    44. Effective marketing strategy Appropriate mix of product, price, distribution and promotion...that sells benefits to a target market of customers Consistent with company strategy Fits company capabilities Doesnt break the budget.

    45. Bibliography Verna Allee, Reconfiguring the Value Network, The Journal of Business Strategy, 21 (4), PP 36-39. R Boulton, B Libert, S Samek, A Business Model for the New Economy, The Journal of Business Strategy, 21 (4), July-August 2000, pp 29-35. Tony DiBennedetto lecture notes, 1998. Jeffrey Dobkin, How to Market a Product for Under $500 Pankaj Ghemawat, Strategy and the Business Landscape (Prentice Hall, 2001). Robert Hamilton, E. Eskin, M. Michael, "Assessing Competitors: The Gap between Strategic Intent and Core Capability", International Journal of Strategic Management-Long Range Planning, Vol. 31, No. 3, pp. 406-417, 1998 TL Hill lecture notes, 1999, 2001. J. D. Hunger & T.L. Wheelan, Essentials of Strategic Management (Prentice Hall, 2001). Philip Kotler, Marketing Management, 9th Edition, (Prentice Hall, 1997). B. Mahadevan, Business Models for Internet-based E-Commerce, California Management Review, 42 (4), Summer 2000, pp 55-69. Henry Mintzberg & James Brian Quinn, Readings in the Strategy Process, 3rd Edition (Prentice Hall, 1998). Michael Porter, Competitive Advantage (Free Press, 1985). Michael Porter, What is Strategy?, Harvard Business Review, November-December 1996. Pearl Wang-Herrara lecture notes, 2001.