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    Marketing Strategy Graduate School of Business Yonsei ... Marketing Strategy Graduate School of Business Yonsei ... Document Transcript

    • Marketing Strategy Graduate School of Business Yonsei University July 2007 OVERVIEW, COURSE REQUIREMENTS, CLASS SCHEDULE This module presents an integrative, dynamic view of competitive marketing strategy. Modern marketing is synonymous with two key developments. First is segmentation, targeting, and positioning. Segmentation and targeting are concerned with who you go after, and positioning with how you go after your target customers. The second key development in marketing, strongly associated with positioning, is branding and creating product differences and establishing unique brand associations through brand name, product attributes, pricing, packaging, distribution, advertising, customer service, etc.1 Both aspects of marketing are dynamic and change over the life of a product. It is not enough, of course, to design strategy. Flawless execution is crucial. Thus, this course focuses on both developing and executing marketing strategy. An important distinction we will make in the course is the difference between customer advantage and competitive advantage. A framework for developing marketing strategies that yields a distinctive customer advantage based on customer and competitor analysis will be presented and applied in various situations throughout the module. The driving principles of this course are: 1. an effective understanding of the market through opportunity analysis, 2. which leads to segmentation, targeting, and positioning, 3. with the objective of achieving Customer Advantage! (deliver customer benefits better than anyone else) 4. by implementing the marketing mix (pricing, communication, distribution, and customer service) in a seamless integrated manner 1 Product, place (distribution), price and promotion (which included advertising) were the original “4P’s” of marketing formulated by Kotler.
    • 2 Material is presented using a mix of cases and lectures. Your consistent contribution to these sessions is essential to achieving the objectives of the course. The quality of the discussion is, in large part, your responsibility. So, please come fully prepared for either a case or class discussion. We have limited time in this module, so we will concentrate on "product" and "price" among the "4P's." A case packet consisting of presentation overheads, cases and articles has been made available. If necessary, additional readings will be provided during the course. CASES We will uses several cases in this course. Each has been selected with care with a particular learning objective in mind. The time frame of the case or the particular product or service that is the focus of the case is not important. Depending on your background, you may or may not associate with the product or service described in the case. What is important is the learning and the generalizations that you take away from the case. How can you apply them to the particular situation that you are facing? It is important in evaluating a case to put yourself in the state of mind of the protagonists at the time of the case. You may know what happened afterwards or may have some unique information about the case, either through personal experience or otherwise, that is not available in the case itself as given to you. Ignore that. Hindsight is always 20/20. Based on the facts available, what is your best course of action? I only want you to focus on the information available in the case. You should not seek information that is not provided in the case. Do not look up the web for updated information! The first case is Calyx & Corolla. This is a good example of an entrepreneur thinking outside-the-box in approaching the flower purchasing/delivery business. You are asked to evaluate the advantages/disadvantages of the concept, and conduct a segmentation analysis to understand which segments would value the C&C model the most. Of course, a key issue in all such up start-up businesses concerns how to grow. You are asked to evaluate and recommend growth options. The second case is FreeMarkets Online. The company has created an online reverse auction model for intermediate components. The critical issue for the company is how to charge for the value they are creating. Another question is what growth strategies to pursue. The third case is Barco Projection Systems (A). Barco is the leader in the graphics segment of the projection market and the innovator in technology. As the leader they had segmented the market into video, data, and graphics segments based on scan rate. Sony was a bigger player in the video market and in the lower end of the data market. To
    • 3 Barco’s big surprise, Sony announced the launch of the 1270 “Superdata” projector which threatens Barco’s position as the leader. How should Barco respond? The fourth case is Aqualisa Quartz: Simply a better shower. The company believes it has introduced a breakthrough product in the English shower market. Sales, however, have been disappointing so far. The chief executive is considering a range of options. You are asked to evaluate the options. The fifth and final case is Rohm & Haas. Rohm & Haas has introduced a new product, Kathon MWX. The product is doing poorly in the market. You are asked to evaluate the market environment, the customers, and competition to understand why the product is not doing well. Next, you have to outline the options that are available to Rohm & Haas, and recommend a course of action that the company can follow. COURSE ADMINISTRATION AND TEXTS I can be reached by e-mail at laksh@kellogg.northwestern.edu. Philip Kotler, A Framework for Marketing Management, latest edition (Prentice Hall) Walker, Boyd, Mullins and Larreche (WBML), Marketing Strategy (McGraw Hill/Irwin 2005, 5th edition) Both are useful books for your bookshelf and can serve as a reference. The Kotler book is a condensed version but still provides a comprehensive view of marketing. The WBML book is a good book on marketing strategy. CLASS PREPARATION As the course is fast paced, you may not be able to read the chapters assigned from the books. That is OK. However, please make sure you prepare the cases and come prepared to discuss the cases in class. HONOR CODE 1. When preparing the cases you should only have access to information that is presented in the cases. You should not access the web or any written material from any source to find information about the cases used in this course. This applies to any trade books or articles written about the specific matters in these cases. You should also not discuss these cases with students who may have knowledge of these cases from prior classes. 2. This is the honor code requirement. This requirement must be strictly followed to maintain the integrity of the course.
    • 4 Class Schedule Class 1 (Monday, July 2, 9 a.m. - noon): Session 1 : Introduction to the module Segmentation, Targeting & Positioning to Achieve Customer Advantage! (lecture notes will be handed out in class) Articles: Seybold, “Get Inside the Lives of Your Customers,” Harvard Business Review, May 2001 What is the key point of this article? Envision the customer’s experience and make that experience as painless and simple as possible. Focus on how to create value for the customers and yourself. Gouillart & Sturdivant, "Spend a Day in the Life of Your Customers," Harvard Business Review, 1994 What is the key point of this article? Pay attention to all your customers, not just the next entity in the distribution channel. Understand the customers' problems and see if you can find solutions to their problems. Treat customers as partners in a quest for mutual benefit. Think differentiation, not commodity. Text book readings: Skim, Kotler, ch. 1, 5, 6, 8 Session 2: Segmentation, Targeting & Positioning to Achieve Customer Advantage! (contd.) Articles: Treacy & Wiersema, "How Market Leaders Keep their Edge," Fortune, February 6, 1995 What is the key point of this article? You must have a point of difference, a value proposition that is unmatched by competition. There are three value disciplines: product leadership, customer intimacy, and operational excellence. The authors argue that you should be excellent in at least one, and exceed or be at the industry average in
    • 5 the other two. Even though some of the company examples in this article are dated, the core idea regarding “value disciplines” is still quite insightful. Porter, "What is Strategy?" Harvard Business Review, 1996 What is the key point of this article? Positioning is key to successful strategy. You must make trade-offs. You must have consistency. You must align the different parts of the company to deliver on the positioning that you have adopted for the company. Text book readings: Skim, Kotler, ch. 7 Class 2 (Tuesday, July 3, 9 a.m. - noon): Session 3: Case: Calyx & Corolla (in case packet) Preparation questions for the Calyx & Corolla case. 1. Describe the C&C model. How does it differ from the FTD model? From the 1-800-Flowers model? A flow diagram of each of these models separately would be helpful. Clearly label the different components. 2. What are the strengths and weaknesses of the Calyx & Corolla approach (left hand column for strengths and right hand column for weaknesses)? 3. Segment on usage occasions as follows: • Personal • At home • casual use (have flowers at home occasionally or often) • holiday/entertainment (could be casual entertainment, for example, have a few friends over vs. say, a major catered party) • Away from home • sending a gift to someone who is not in the local vicinity (so your local florist cannot be used) • planning for weddings/funerals (not sending flowers to someone's wedding, or to the funeral home) • Commercial/business • Short duration • e.g., conferences, seminars, trade shows, etc. • long duration • e.g., hotels, restaurants, apartment building lobbies, corporate lobbies, etc.
    • 6 • corporate tie-ins • Corporate gift giving (the corporation arranges for flowers to be sent to corporate executives, guests/clients of the corporation, etc.) What are the benefits desired by each usage occasion segment? Among the different channels available (retail channels such as grocery stores/ supermarkets and florists, wire-line delivery services such as 1-800, and FTD, and Calyx & Corolla) who can best deliver the benefits? • Specify the benefits in a logical order, starting with the most important or relevant ones first. • In specifying which channel is more appropriate, first pick the one which is dominant or better overall. If you identify more than one, be clear as to which benefits are best served by which channel. For item 3, you can divide up the page into three columns; the first for the segments, the second for the desired benefits, and the third for which channel can best deliver the benefits. 4. Based on the segmentation analysis, which are the best growth options for the company? Session 4: Product Strategies in New Markets (lecture notes will be handed out in class) Text book readings: WBML, ch. 9 Class 3 (Thursday, July 5, 9 a.m. - noon): Session 5: Product Strategies in New Markets (continued) Session 6: Case: FreeMarkets OnLine Assignment: This is a case for class discussion. Preparation Questions: FreeMarkets Online 1. What is the basic FreeMarkets model? What market characteristics makes such a model viable? How large is the market opportunity?
    • 7 2. How does FreeMarkets create value for its customers? Evaluate the consulting/outsourcing aspect and their role as a distribution intermediary. 3. Evaluate the company’s business model. What are the sources of revenue? 4. Evaluate the following alternatives that the company can pursue to scale up: • Horizontal market expansion or vertical market dominance? • Technology and user support subscription licensing? 5. Are there other alternatives? Class 4 (Friday, July 6, 9 a.m. - noon): Sessions 7 &8: Product Strategies in Established Markets (lecture notes will be handed out in class) Articles: Stalk, Pecaut & Burnett, “Breaking Compromises, Breakaway Growth,” HBR (Sept-Oct 1996) Chan Kim & Mauborgne, “Value Innovation: The Strategic Logic of High Growth,” HBR (Jan-Feb 1997) Chris Zook & James Allen, “Growth Outside the Core,” HBR (December 2003) Chan Kim & Renee Mauborgne, “Blue Ocean Strategy,” HBR (October 2004) Text book readings: Skim, Kotler, ch. 9-10 WBML, ch. 9 Class 5 (Monday, July 9, 9 a.m. - noon): Session 9: Case: Barco Projection Systems (A) Assignment: This is a case for class discussion. Preparation Questions: Barco Projection Systems 1. What kind of a company is Barco Projection Systems? 2. Evaluate Barco’s product line strategy. What has been their launch strategy over time? (see Exhibit 4)
    • 8 3. Describe the structure of the market and growth prospects. 4. Compare Sony to Barco. 5. Explain Sony’s attack with the 1270. What are Sony’s objectives? How should Barco respond? Focus both on product and price options. Session 10: Marketing Strategies for Mature & Declining Markets (lecture notes will be handed out in class) Articles: Rangan, "Beating the Commodity Magnet," Harvard Business Review, 1994 Text book readings: WBML, chapter 10 Class 6 (Tuesday, July 10, 9 a.m. - noon): Session 11: Marketing Strategies for Mature & Declining Markets (contd.) Session 12: Case: Aqualisa Quartz: Simply a Better Shower Assignment: This is a case for class discussion. 1. Conduct a situation analysis: a. Customers (segmentation, characteristics; defined as those who do not re-sell) b. Channel (products sold, primary customers, channel characteristics) c. Competition (who are the key players) d. Company & market environment (the Aqualisa company and the nature of the market) 2. What is the Quartz shower value proposition to: a. consumers Quantify the benefit to consumers of the Quartz shower with pump relative to the Aqualisa 609 mixer shower with pump. 3. What is the Quartz shower value proposition to: a. plumbers Is the plumber better or worse off if he installs the new Quartz shower? How can Aqualisa convince the plumber that he would be economically better off with the Quartz shower?
    • 9 4. Who should Aqualisa target? consumers directly, or target the DIY market or target developers or plumbers or showrooms? Evaluate the pros & cons of targeting each of these groups. Next, briefly describe an action plan to target the particular target which you recommend. Class 7 (Thursday, July 12, 9 a.m. - noon): Session 13: Building Brand Equity (lecture notes will be handed out in class) This lecture will focus on a four step process to building brand equity, starting with: 1. Brand Identity (who are you?) 2. Brand Meaning (what are you?) 3. Brand Response (what about you?) 4. Brand Resonance (what about you & me?) Text book readings: Skim, Kotler, ch. 11 Session 14: Pricing Strategies & Tactics (lecture notes will be handed out in class) Articles: Dolan, "How do you know when the price is right?" HBR (95501) Sept-Oct, 1995 Text book readings: Kotler, ch. 12 Class 8 (Friday, July 13, 8 a.m. – 11 a.m.): !!! IMPORTANT: Note change of class start and end times !!! Session 15: Pricing Strategies & Tactics (continued) Session 16: Case: Rohm & Haas Preparation questions (see “Notes” below the questions for clarification) 1. First, identify the factors that led to the failure of MWX (bullet point of the factors with a brief description).
    • 10 2. Next, briefly describe or diagram the segmentation of the biocide market. After that, conduct an analysis of the K886 and MWX products, focusing on the differences between the K886 and MWX customers in terms of their buying behavior, differences between the two products, and the nature of competition. You can do this as a side by side comparison, with K886 on the left hand side of the page and MWX on the right hand side. This comparison could be done using bullet points. This comparison will help crystallize the issues that you need to focus on for MWX. 3. Focus on the channel structure used to distribute MWX. What implications does the channel structure have for the success of MWX? 4. Focus on pricing: • First, what is the current price structure (you should answer this question also)? • Next consider three alternative pricing methods: • competitive based • customer value based • channel incentive pricing • Establish an approximate end-user price using each method independently. • For competitive based pricing, you can ignore Dowicil and focus on Tris- Nitro. Assume that a 2 oz. packet of MWX works for a 25 gallon tank, and a single 2 oz. tablet of Tris Nitro also works for a 25 gallon tank. • For the customer based pricing assume that a tank is 50 gallons and 1 packet of MWX is required for 25 gallons (or two packets of MWX for 50 gallons). • For computing channel incentive pricing, you can work out the channel incentive price at the formulator level. Note that there is no information regarding channel margins for metal working fluid. Basically you are asked to compute a price for a packet of MWX that will provide an incentive for the formulator to sell the biocide. 5. What actions can Rohm & Haas take to increase the likelihood of success for MWX? Which are short term? long term? Notes: • Remember, 16 ounces equals a pound! Also, footnote in Exhibit 6 mentions a dilution ratio of 1:24. This means that a 50 gallon tank will contain 2 gallons of metal working fluid and 48 gallons of water.
    • 11 • On Page 3 of the case it is mentioned that regular treatment extends fluid life almost indefinitely and does not require a complete flushing of the fluid tank (therefore no or minimal waste disposal). Also, information in Exhibit 4 regarding addition of metal working fluid as well as the amount of biocide to be added and at what interval is not consistent with information in Exhibit 6! • Therefore, for the case analysis, assume that the metal working fluid will last 4 weeks in the absence of any biocide. A biocide can be added, say at the end of 4 weeks, to extend life of the metal working fluid and different biocides have different levels of effectiveness. • Exhibit 6 indicates that a small shop discards fluid every four weeks and by using MWX they could keep the fluid 2 - 5 weeks longer (or, say, an average of 4 weeks longer, that is (2+5)/2 =3.5 weeks rounded up to 4 weeks). Assume that after the first 4 weeks, two packets of MWX will be added to a 50 gallon tank and this will allow the metal working fluid to last an additional 4 weeks. This implies that a small shop discards (or flushes the system) after a total of 8 weeks. • Use the information in these notes and in Exhibit 6 and IGNORE the statement that "regular treatment extends fluid life indefinitely," as well as the specific information in Exhibit 4 regarding the biocide.