Post on 15-Feb-2022
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THE DIGITAL MARKSTRAT CHALLENGE - INTRODUCTION IIB2C – DURABLE GOODS
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2Introduction to the Markstrat Challenge - Part II
YOUR SUCCESS WILL DEPEND ON YOUR ABILITY TO DEVELOP & POSITION BRANDS
POSITIONING
THROUGH
R&D
POSITIONING
THROUGH
ADVERTISING
PERCEPTUAL
MAP
MODIFYING
AND
LAUNCHING
BRANDS
NEW
DECISIONS
PERIOD 2
CONSUMERS MAKE PURCHASE DECISIONS BASED ON THEIR PERCEPTION OF YOUR BRANDS
3Introduction to the Markstrat Challenge - Part II
Consumers’ perception of brands
Firms’ perception of brands
Attribute 1
Brand
ABrand
BBrand
CBrand
D
Brand
C
Brand
A
?
?
Brand
DBrand
B
Attribute 2
Brand
ABrand
BBrand
CBrand
D
Attribute N
Brand
ABrand
BBrand
CBrand
D
THE PERCEPTUAL MAP IS A VALUABLE TOOL FOR VISUALIZING BRAND POSITIONING
4Introduction to the Markstrat Challenge - Part II
Segment ideal point
Perceived position of TOPS
NEE
D 1
NEED 2NEEDS: Economy, Performance, Convenience, Flexibility …
THE BRAND MAP PLOTS PERCEIVED PHYSICAL CHARACTERISTICS RATHER THAN CONSUMER NEEDS
5Introduction to the Markstrat Challenge - Part II
Segment ideal point
Perceived price and
features of ROLL
SUCCESSFUL POSITIONING DEMANDS LONG-TERM THINKING AND THE ABILITY TO IDENTIFY EVOLVING OPPORTUNITIES
6Introduction to the Markstrat Challenge - Part II
Gen-X
Millennials
Gen-Z
Profs
Changing segment needs
New target segment
Competitor entry
Pressure on margins
THERE ARE TWO KEY WAYS TO RE-POSITION BRANDS IN MARKSTRAT
7Introduction to the Markstrat Challenge - Part II
R&D
Advertising
PerceivedPerformance
PerceivedEconomy
8Introduction to the Markstrat Challenge - Part II
YOUR SUCCESS WILL DEPEND ON YOUR ABILITY TO DEVELOP & POSITION BRANDS
POSITIONING
THROUGH
R&D
POSITIONING
THROUGH
ADVERTISING
PERCEPTUAL
MAP
MODIFYING
AND
LAUNCHING
BRANDS
NEW
DECISIONS
PERIOD 2
POSITIONING WITH ADVERTISING REQUIRES SETTING "PERCEPTUAL OBJECTIVES"
9Introduction to the Markstrat Challenge - Part II
-20
Profs
10
0
20
-10
-20 -10 0 10 20
5
5
11
12
PerceivedEconomy
PerceivedPerformance
CurrentPosition
Target Position
SETTING PERCEPTUAL OBJECTIVES IN MARKSTRAT
10Introduction to the Markstrat Challenge - Part II
1Enter a significant
advertising budget and spend 10% to 15% in advertising research
2
Decide which scales (semantic or MDS) you
want to communicate on
3
Select the dimensionswhich you want to communicate on
4
Input the coordinatesof the point that you
want to reach on the map
2
34
1
34
11Introduction to the Markstrat Challenge - Part II
YOUR SUCCESS WILL DEPEND ON YOUR ABILITY TO DEVELOP & POSITION BRANDS
POSITIONING
THROUGH
R&D
POSITIONING
THROUGH
ADVERTISING
PERCEPTUAL
MAP
MODIFYING
AND
LAUNCHING
BRANDS
NEW
DECISIONS
PERIOD 2
HOW TO MATCH BRAND CHARACTERISTICS TO CONSUMER NEEDS
12Introduction to the Markstrat Challenge - Part II
SOLO Pric
e
Dis
pla
y Si
ze
Pro
cess
ing
Pow
er
Des
ign
No
. of
Feat
ure
s
Bat
tery
Life
CONSUMER NEEDS
Economy Performance Convenience
BRAND CHARACTERISTICS
WHY AND WHEN INTERFACE WITH R&D ?
R&D IS REQUIRED IN SEVERAL CASES:
• To develop and launch a brand in a new market (eg: Vodite)
• To develop and launch a brand in a new segment (eg: Millennials)
• To develop and launch a brand in a segment where you are not yet present
• To modify a brand if its characteristics do not match consumers’ expectations
• To reduce the manufacturing unit cost of an existing product.
13Introduction to the Markstrat Challenge - Part II
HOW TO INTERFACE WITH R&D
14Introduction to the Markstrat Challenge - Part II
1. Choose a meaningful name and enter a description
2. Enter the desired physical characteristics of the future brand
3. Enter the desired Base Cost of the future brand
4. Allocate a budget so that R&D can allocate resources and complete the project
STEP 1 - HOW TO TRANSLATE CONSUMER NEEDS INTO PHYSICAL CHARACTERISTICS ?
OPTION 1 – COPY THE LEADER• Adjust dimensions if the leader is not perfectly
positioned
• In this example, you can copy ROOT to target Millennials as this brand is very well positioned in Performance (Display Size & Proc. Power)
15Introduction to the Markstrat Challenge - Part II
OPTION 2 - INTERPOLATE
16Introduction to the Markstrat Challenge - Part II
This graph is available in the Semantic Scales study.
This example suggests that around 60 gigaflops would match the need of Shoppers in term of Processing Power.
Learn more about this graph in the handbook.
STEP 1 - HOW TO TRANSLATE CONSUMER NEEDS INTO PHYSICAL CHARACTERISTICS ?
• In the case of the Vodite market, no competitive offerings are available to copy and/or interpolate
• For each physical attribute, the available information includes:
• In the Semantic Scale study: the expected ideal value : I
o In the handbook: the minimum and maximum level : CMin and Cmax
• Use the formula below to calculate the “ideal” attribute
17Introduction to the Markstrat Challenge - Part II
7
I
C
1
CMin CMax
C = CMin + (CMax – CMin) x (I – 1)(7 – 1)
STEP 1 - HOW TO TRANSLATE CONSUMER NEEDS INTO PHYSICAL CHARACTERISTICS ?
Option 1 – Choose a Base Cost that:• Is in line with the base cost of comparable competitive products; see the market report
• Provides you with a good Unit Margin: Unit Margin = Retail Price – Distribution Margin – Base Cost
Option 2 – Ask R&D to “Develop this project at the lowest possible base cost”• You will get the required product at the lowest possible unit cost
• The project will be more expensive to develop.
18Introduction to the Markstrat Challenge - Part II
STEP 2 - HOW TO DECIDE ON THE DESIRED BASE COST?
Option 1 – Run an online query• R&D will tell you the budget needed to develop the project• R&D will also provide you with the project Minimum Base Cost• You do not have to allocate the entire budget in 1 year: you may complete the project
in 1, 2 or even 3 years• Beware: budgets given by online queries are usually overestimated
Option 2 – Run a Feasibility Study• The budget needed is $100,000• The project will not be completed • After one year, R&D will tell you: (1) the budget needed to develop the project; (2)
what the project Minimum Base Cost is• Quite useful to investigate various options for the new Vodite market
19Introduction to the Markstrat Challenge - Part II
STEP 3 - DETERMINE HOW MUCH BUDGET IS NEEDED TO DEVELOP THE PROJECT
20Introduction to the Markstrat Challenge - Part II
POSITIONING
THROUGH
R&D
POSITIONING
THROUGH
ADVERTISING
PERCEPTUAL
MAP
YOUR SUCCESS WILL DEPEND ON YOUR ABILITY TO DEVELOP & POSITION BRANDS
MODIFYING
AND
LAUNCHING
BRANDS
NEW
DECISIONS
PERIOD 2
A COMPLETED R&D PROJECT MAY BE USED TO MODIFY EXISTING BRANDS OR INTRODUCE NEW ONES
21Introduction to the Markstrat Challenge - Part II
Increase performance of SOLO
Introduce new brand SOCCER
HOW TO INTRODUCE NEW BRANDS
22Introduction to the Markstrat Challenge - Part II
1. Click here to launch a new brand
2. Choose a name
4. Choose the base R&D project
3. Enter the role of the new brand …
HOW TO MODIFY AN EXISTING BRAND
23Introduction to the Markstrat Challenge - Part II
1. Click here to modify a brand
2. Keep the same name
4. Select MODIFY
3. Enter a new role
5. Choose the new R&D project for this Brand
BRINGING SUCCESSFUL R&D PROJECTS ONTO THE MARKET MAY RESULT IN OBSOLETE INVENTORY
24Introduction to the Markstrat Challenge - Part II
Brandmodification
Brandwithdrawal TRADING COMPANY
I'll buy any inventoryat a given % of its
cost
Obsolete inventory
COST REDUCTION PROJECTS SHOULD BE WEIGHED AGAINST EXPERIENCE CURVE EFFECTS
25Introduction to the Markstrat Challenge - Part II
Transfer cost
Cumulative production
26Introduction to the Markstrat Challenge - Part II
YOUR SUCCESS WILL DEPEND ON YOUR ABILITY TO DEVELOP & POSITION BRANDS
POSITIONING
THROUGH
R&D
POSITIONING
THROUGH
ADVERTISING
PERCEPTUAL
MAP
MODIFYING
AND
LAUNCHING
BRANDS
NEW
DECISIONS
PERIOD 2
NEW DECISIONS INTRODUCED IN PERIOD 2
27
MARKETING
MIX
• Setting perceptual objectives
Introduction to the Markstrat Challenge - Part II
BRAND
PORTFOLIO
• Launching new brands
• Upgrading or withdrawing existing brands
R&D
• Initiating new projects
• Continuing or shelving uncompleted projects
28Introduction to the Markstrat Challenge - Part II
FROM HERE ON, IT'S DOWN TO YOUR STRATEGY...