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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?