Post on 30-Oct-2014
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• Goal: To Define Key Marketing Concepts • Introduction
– Defining the field and scope • Part I: Analytical Foundation • Part II: Critical Value Factors • Part III: Strategic Approach
Contents
DEFINING THE FIELD Introduction
Marketing - the definition
• Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
Source: AMA
The Marketing Mix
Product • Variety, Quality, Design,
Warranty, Packaging, Brand Name, Features
Price • List price, Discounts, Payment
Terms, Credit
Promotion • Advertising, Sales Promotion,
Sales Force, Direct Marketing, Public Relations
Place (Distribution) • Channels, Coverage, Locations,
Assortments, Transportation, Inventory
4Ps
A Specialized Field
Marketing
Start-ups Technology
Our Focus
ANALYTICAL FOUNDATION Part I
H1: Your Business Idea
• The name of your business/product idea? • What kind of problem do you solve? Is
this an important problem? Is there a big potential market?
• How is your competition solving this problem for their customers today?
• Why are you qualified to solve this problem better than your competitors? Is your uniqueness sustainable over time?
“The Chasm”
Are you Disruptive? Gain
Pai
n
Twilight Zone
The Analytical Foundation
• SWOT Analysis – Internal: Strength, Weakness
• Attributes • Capabilities • Assets
– External: Opportunity, Threat • PEST Analysis (Macro) • Industry Analysis (Intermediate) • Market Analysis (Micro)
CRITICAL VALUE FACTORS Part II
Target Customer Ideal
80% of Ideal
60% of Ideal
Customer Pain
• What problem are you solving for your customer?
• Is the customer aware of the problem or is it a latent problem?
• Market Analysis: Customer Needs • C.Christensen: Job-to-be-done • Avoid: Your reason to sell…..
Whole Product
Potential
Expected
Extended
Core Product A
lign
with
sta
ge o
f A
dopt
ion
Cur
ve
Value Proposition
STRATEGIC MARKET APPROACH Part III
• There is always competition! • Presence of choice is competition:
– Economic: Spend the money on other things • Compete for product leadership
– Reference: Spend the money with competitor • Compete through differentiation
– Inertia: Choose not to spend (biggest) • Compete through FUD (or simply wait….)
Competition
BOS: The Art of Differentiation
Source: Kim, W. C. & Mauborgne, R. (2005). Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant.
Partnering & Distribution
Partner • Offers a part that
complements Core Product
• Implicit part of value proposition
• Role of partners change over time
Distributor • Offers an avenue to
customers • Is determined by
complexity of solution • Cost and availability of
channel important factors • In some cases: distributor
and partner is the same.
Potential
Expected
Extended
Core Product
Partnering for Whole Product Solution
Partner
Distribution Model: Software
Pricing Principles
• Basis: Understand the value for your customer. – Nature of Value: One-off or ongoing – Will pay perceived value – not objective value
• Importance of Customer Relationship • Critical for Positioning • Avoid pricing complexity • Be fair
Positioning
• Is in your customer’s mind • What is the most attractive position to
‘own’? • Reflects the sum of your Marketing Mix,
but your marketing communication, price and physical attributes carry the most weight.
Positioning Statement • For… (your target customer or market)
• Who… (the compelling reason to buy)
• Our product is a… (your placement within a new or existing category)
• That provides… (the key benefit that directly addresses your customer’s compelling reason to buy)
• Unlike… (the primary alternatives or competitors)
• We have assembled… (key difference or point of differentiation in relation to your specific target customer)
Example: TiVo
The TiVo Story
• Established 1997 • Created the world's first digital video
recorder (DVR) • Potential to “kill” commercial TV • Launch strategy: “Celebrity Evangelists” • Revenue in Q3-07: $ 133M (peak) • Revenue in Q2-09: $ 106M (down 20%) • Stock price: $ 10.66 (All time high: $ 70)
TiVo: Customer Pain
• Time-shifting (need currently filled by VCR)
• Challenge: People don’t like VCRs because they don’t understand how to use them.
• Solution: Avoid positioning TiVo as alternative to VCR.
TiVo Positioning • Original position:
– “TiVo is like having your own TV network where you get to decide what's on and when"
• Problem 1: “Personal TV Network” – customers have no familiarity with term
• Problem 2: Didn’t solve the customer pain • Problem 3: Wrong type of evangelists • Problem 4: The life cycle too short
Questions?