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  • Our framework for market-opportunity analysis consists of five investigative stages followed by a go/no-go decision. Important these stages are not necessarily sequential.
  • Step:1 – The value system can be thought of as the entire chain of suppliers, distributors, competitors, buyers, and intermediaries that bring an existing offering to market. Value system becomes the ANCHOR for FRAMING THE OPPORTUNITY. FIRST Step: framing the business opportunity is to broadly identify the arena where the new company will participate. The purpose is to declare both what is in and what is out of the business-model consideration set. Value chains are linked within an industry or, in the networked-economy environment, across industries to create a value system.
  • These 4 elements need to align to make a FIT strategy. Trying to sell cars, but have no cars salesmen, lack of activity and resources. Trying to sell cars, but have no cars in car lot, lack of resources. Goal Alignment - strategic and financial goals of the business unit are consistent with the strategic financial, and customer goals specified by the managers of the marketing strategy. Resources Alignment – Whether the resources of the business unit and the resources allocation of the marketing unit are consistent. Business unit delvelops a budget for how resources will be allocated across various activities, functions, and programs. Activity Alignment – Whether the business unit activities reinforce the downstream choice of marketing strategy. Firm’s activities; order fullfillment, market communication, customer service and pricing. Implementation Alignment – It is possible that goals, activities, resources of business-unit strategy and marketing strategy are aligned, but the collective strategies are not EXECUTED well in the market.
  • Either online or offline you have to segment your market. Segmentation is to divide your consumer into segments or groups Mean its meaningful I know my consumers acts, and behavior. Kosher, want to buy kosher food. I know that behavior. ESPN (sports news) Actionable – I can do things, as a company to make things happen within that segment. I can notify them, make them interested, specifically target that segment with my action. Resource allocation and Timing of resource allocation are a function of segment prioritization. Firms allocate their marketing resources based on the priorization of their target segments Kosher Food – Firm unevenly target its marketing resources to different segments. Firm allocation 70% of market resources to its target segment 20% second 10% third
  • Market segmentation analysis must be both actionable and meaningful. Actionable implies that once a segmentation study is completed, management can take clear actions to activate specific segments . Meaningful segmentation implies that management is able to predict customer behavior, motivations, barriers. Segmentation prioritization: tends to be focused on two things: 1-Buyer-Readiness Stage – Goal is to target the segments that are ready to buy , 2-Attitude . Similar to readiness firms target the segments that are most receptive to a product 3-Target opinion/market leaders as a way to jump start their businesses. Trendy nightclubs tend to prioritize “A” list partygoers and attractive models as a strategy to bring in the masses. 4- Willingness to Pay - Instead of targeting the largest interested segments for mazz adoption, a firm may instead target the segments that have the HIGHEST WILLINNESS TO PAY.
  • Pure-Play  All the money you make comes from online transaction: ebay, amazon, Yahoo BAM  different factors While traditional marketing strategy can effectively be used on the Internet by both a purely online (pure play) firm and a traditional BAM firm, the marketing decisions that these two players will face can differ significantly. A pure play that is just beginning its marketing campaign will have more freedom in positioning a product than offline company that is moving its 20-year old brand online. Pure-Play Scenario- Business and marketing strategy formulation process for Internet pure plays such as Yahoo! eBay is left side. Business-unit strategy is defined. Then marketing strategy following the traditional processes of segmentation, targeting, and positioning. Remain the same as for a completely offline business. Brick- and Mortar Scenario – Gap, right side – Gap mist first consider its overall business-unit strategy – mission, goals, competitive, advantage, and revenue model. Firm must develop an integrative marketing plan, on that reflects both the online and offline efforts.
  • Segmentation : involves breaking up a market of customers into large, identifiable groups, or segments. Within a large market of customers, it is likely that there will be several subgroups of customers, each with different needs that one product alone cannot satisfy. Segmentation is the first step in allowing firms to create or market products for specific groups of customers. It reveals potential marketing opportunity and provides firm with clearer guidance for product development and marketing strategy. Meaningful = behavior Actionable = action to make them act in certain way. Example: AGORA – local company – sell information – online magazine – have email list – offer different types of incentives/rebates to different customer or clients. Investment information in there online magazine, can advertise about other investment information that they sell. 40 different online magazine, get you to do something, actionable. For example: Amazon how they personalized, they know who you are, can recommend, offer you more of the same stuff  actionable, buy romance book, they also advertise roses, candles, chocolate. Target: Firms chose among the opportunities that segmentation uncovers. Eg; unmet or underserved needs. Can be potential customers. Evaluate which is more attractive. In evaluating market segments for overall attractiveness, firms looks at three factors above.
  • Porter 5 forces Model: All connected, into a chain. Middle: where you are You have direct competition to sell your product, whatever it is. Digital Camera: Sony, canon.. New Entrance: like Panasonic, other companies trying to get into this market.. Substitutes: Digital camera to expensive use a substitute instead of digital use regular camera. If you don’t have butter, get margarine. Customers: they control, not enough customer.. Law of supply and demand.. Low customer, low price… increase customers.. High prices. Supplier: Get your supplies on time..
  • Differentiating yourself someway being unique Positioning: Once market have been segmented and targeted, positioning becomes the next step in marketing strategy. Amazon selling a book for 50$, and you are selling it for 50$, what is the difference? I know Amazon, I trust them, why should I go with you. Selling it for 45$, price differentiate yourself. Differentiate between yourself and them based on price or quality or service. 1-Actual – i sell flower online 35$ NEXT DAY 2-Ieal – want to deliver same day or sell it for 25$, compete with stores BAM 3-Strategies --Actual –> ideal – may find out not possible, might I get closer to the ideal idea. New position a little closer 4-Implement 5-Can’t do it for 25$ but 30 so have to go over the steps again.
  • Identify the new market, actual, ideal how do we go from here to here…
  • 2 different dimensions with 4 different scenarios: Some kind of characteristics that define that segmentation No change: Kosher supermarket online information no change. GBMC information site. Market Expansion: Same Kosher store SHIPS, what happens people in San Diego can order “ Increased my SIZE” Market Reclassification: Rare where, you reclassified yourself but not increased your size. Reclassified Expansion: Trader Joe interested to sell my kosher food. Now selling to other business. Jewish supermarket, but also to other businesses different segments. Jewish caters, now they can order my food. Within in a large market of customers, it is likely that there will be several subgroups of customers, it is likely that there will be several subgroups of customers, each with different needs, that one product alone cannot satisfy. Segmentation is the first step in allowing firms to create or market products for specific groups of customers. It reveals potential marketing opportunity and provides a firm with clearer guidance for product development and marketing strategy.
  • Different scenarios: Blanket Targeting = No change, segment didn't change, no customer gained. Schwab investment companies, Wall street journal online or offline pay for the subscription. Legg Mason .. Web make it more convenient but the same segment Food distributor in Baltimore, distribute whole sale food to local market. They go online so you can make the order online. No new customer, same segment. Beachhead Targeting = same segment, same customers, but SOME OF THE TRANSACTIONS ARE ONLINE. Borders.com or B&N. Some of the book selling happens online Bleed-Over Targeting = New segments is the maternity store GAP online New-Opportunity = Kosher market online local BAM and wide area of customers online to order and ship
  • Blanket Targeting = Reinforce what you are doing. Legg Mason, investment information, reinforce it. Beachhead Targeting = borrow from offline, easier to do it online, saves money and time Bleed-Over Targeting = Advertise my new stuff. Dual positioning b/c I have BAM and online customer New Opportunity Targeting = Gap new opportunity targeting, reposition entirely
  • How one company target different segments, different segments, that is there portion on online autions Where should there most resources go towards
  • COMPLEX ones, many segments of the market. Employee all kinds of strategies
  • Ebay sells a service doesn’t produce anything. Ebay can’t compete with Retail stores because ebay doesn’t make anything. Retail GAP, Dell, ebay doesn’t control that.

Transcript

  • 1. Review
  • 2. Cell 4 Cell 2 Cell 3 Cell 1 Location of Revenue Stream Bricks-and- Mortar Online Marketing Resource Allocation Offline Online Internet Marketing Impact Exhibit 1.1: Assessing the Impact of Internet Marketing
  • 3. Exhibit 1.2: The Seven-Stage Cycle of Internet Marketing Step 2 Formulating the Marketing Strategy Step 3 Designing the Customer Experience Step 4 Crafting the Customer Interface Step 5 Designing the Marketing Program Step 6 Leveraging Customer Information Through Technology Step 7 Evaluating the Marketing Program Step 1 Framing the Market Opportunity
  • 4. Framework for Market Opportunity
    • Influenced by the New Economy
      • Competition occurs across industries rather than within industries
      • Competitive behavior occurs at unprecedented speed
      • Competition occurs between alliances of companies rather than between individual companies
      • Easier to influence customer behavior because still in early stages of being defined
      • Industry value chains are being reconfigured
    Seed Opportunity in Existing New Value System Identify Unmet and Underserved Need(s) Identify Target Segment(s) Declare Company’s Resource-Based Opportunity for Advantage Assess Competitive, Technical, and Financial Opportunity Attractiveness Make “Go / No Go” Assessment
  • 5. Exhibit 2.1: Framework for Market Opportunity
  • 6. Exhibit 3.1: Assessing Business-Unit and Marketing Strategy Fit Fit Implementation Alignment Resource Alignment Goal Alignment Activity Alignment
  • 7. Segmentation
    • Divide into subunits of consumers who are similar in what they value within the product category
      • Actionable : clear actions to activities specific segments
      • Meaningful : Able to predict customers behaviors, motivations, and barriers.
    • Prioritization
    • Resource Allocation
    • Timing (when to do what!)
  • 8. Exhibit 3.4: Prioritizing Segments Buyer Readiness Stage Attitude Willingness to Pay Segmentation Prioritization Trend/Market Leaders
  • 9. Exhibit 3.6: Marketing-Strategy Formulation for Pure-Play vs. BAM Online Business-Unit Strategy Marketing Strategy for Online Business Business-Unit Strategy
      • Overall
      • Online
      • Offline
    Integrated Marketing Strategy Marketing Strategy for Offline Business Marketing Strategy for Online Business
    • Choices
    • 1. Segmentation
    • 2. Target market selection
    • 3. Positioning
    • Choices
    • 1. Same vs. different segment
    • 2. Same vs. different target market
    • 3. Same vs. different positioning
    Pure-Play Bricks-and-Mortar
  • 10. Internet Marketing Strategy:Pure Plays
    • 1- Segmentation for Pure Plays
      • Bases for Segmentation; Demo, Geo, Psycho, etc
      • Effective Segmentation;Meaningful, actionable, financially attractive.
    • 2- Target Market Selection for Pure Plays
      • Segment Size and Growth ; worth financially?
      • Structural Attractiveness: Current and future attractive- Porter
      • Company Objectives and Resources – Not consistent with the firms own goals and resources
  • 11. New entrants Suppliers Customers Substitutes Industry competitors Intensity of rivalry Bargaining power of suppliers Bargaining power of customers Threat of new entrants Potential development of substitute products Porter’s Five-Forces Model
  • 12. Internet Marketing Strategy:Pure Plays
    • 3- Positioning for Pure plays
      • Differentiating yourself
    • Positioning Plan: Paley’s 5 steps creating a plan
      • 1- Identify actual product positioning
      • 2- Determine ideal product position
      • 3- Develop alternative strategies for achieving ideal product position
      • 4- Select and implement
      • 5- Compare new actual position with ideal position
  • 13. Exhibit 3.7: Perceptual Map for the Online Automobile Industry
  • 14. Exhibit 3.8: Perceptual Map with Customer Preference Clusters
  • 15. Exhibit 3.9: Bricks-and-Mortar Segmentation Scenarios No Market Expansion No Yes Yes Reclassified— Expansion Market Reclassification No Change
    • Change in Segmentation Characteristics
    • Due to Internet
    • Changes in Size of
    • Market Segments
  • 16. Exhibit 3.11: Bricks-and-Mortar Targeting Scenarios
  • 17. Exhibit 3.9: Bricks-and-Mortar Positioning Scenarios and Guidelines Porrtions of a Segment
    • Blanket Targeting
    • Borrow heavily from existing offlline positioning
    • Tout basic advantages of the Internet – convenience and accessibility
    Same Customers Different Customers Entire Segment
    • New Opportunity Targeting
    • Reposition entirely
    • Position differentiations which cater to the new segment
    • Bleed-Over Targeting
    • Use dual positioning
    • Leverage existing positioning
    • Position added benefits, such as augmented offerings via the Internet (e.g., increased product customizability)
    • Beachhead Targeting
    • Also borrow from offline positioning
    • Focus more, however, on needs of the smaller group
    • Stress value-added advantages of the Internet
    • Customer Similarity
    • Focus of Effort
  • 18. Exhibit 3.13: Breakdown of EBay’s Gross Merchandise Listed
  • 19. Exhibit 3.17: EBay’s Business-Unit Strategies
  • 20. Exhibit 3.18: Offering-Based Segmentation of Auction Market