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Microsoft Surface Pro 3 Marketing Plan

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Microsoft Surface Pro 3 Marketing Plan

  1. 1. Marketing Plan Microsoft Surface Pro 3 (SP3) Anthony Seo MRKT 310 Marketing Principles Professor Eusebio Inocencio May 10, 2015 1
  2. 2. Executive Summary  The goal of this marketing plan is to understand the marketplace and customer needs and wants. From this we can design a marketing strategy driven by the customer that will allow the company to provide superior value to the customer. By doing so, the company can build relationships where the company can capture value in return from the customer. (Principles of Marketing, 2014)  Key point: Microsoft makes devices to glue people into their ecosystem not to profit directly from hardware sales. Their goal is to drive customers to purchase their software, where they earn the highest margins. Their goal is to fill a niche that will bring enough customers into their ecosystem to contribute to the growth in sales for their software. (Charles Arthur, 2014). 2[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014 [2] Aurthur, Charles. Digital Wars. New York, 2014
  3. 3. Table of contents 3 A. Current Marketing Situation 1. Market description a. Segmentation b. Marketing targeting strategy c. Value proposition d. Factors influencing behavior e. Buyer decision process 2. Product review a. Levels of product/service b. Type of product/service c. Product/service life cycle d. Benefits/features analysis e. Differentiation f. Branding strategy g. Competitive review 3. Competitive analysis a. Market share b. Competitive positions and roles c. Strategic sweet spot d. Positioning 4. Competitive review a. Supply chain members and roles b. Value-delivery network analysis c. Type of distribution strategy B. SWOT 1. Microenvironment 2. Macroenvironment
  4. 4. Current Marketing Situation Market description and Microsoft’s position in it. 4
  5. 5. Market description • In creating a marketing plan, first there needs to be an understanding of which customers to serve (segmentation and targeting) and what is the products value proposition (differentiation and positioning). • This will allow the company to create value for the targeted customer. 5 [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  6. 6. Segmentation • Behavioral. Microsoft segments its consumers by how they will likely use the device. 6 images source: microsoft.com
  7. 7. Marketing Strategy - Concentrated As a computer software company its largest competitor is Apple. Apple has been able to undercut Microsoft for years by creating its own hardware along with its own software. Microsoft needed to start producing its own hardware to bring down its cost and increase its margins making it competitive with Apple. The Microsoft Surface Pro 3 is the answer to that decision. 7 [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  8. 8. Value proposition - Why should I buy your brand? Consumers juggled a notepad for jotting and sketching, a tablet for general consumption and entertainment, a netbook for light task such as writing emails, and a fully powered PC for heavy tasks such as photo or video editing. The SP3 can do more than any of these devices and cost less than trying to purchase all of these devices. This is a “the more for less price” positioning. Tech Republic’s article validates this. 8[3] Bradley, Tony. “3 reasons to invest in a Surface Pro 3 instead of an iPad Air 2.” Tech Republic. October 2, 2014. http://www.techrepublic.com/article/3-reasons-to-invest-in-a-surface-pro-3-instead-of-an-ipad-air-2/ [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  9. 9. Factors influencing consumer behavior of the primary target market  Cultural – Multiple language interfaces making it a global product.  Social – Windows has an 85% share of the operating system market. Majority of the world has a shared familiarity of the platform on which the SP3 operates and is comfortable with it.  Personal – Attracts middle to upper class users, who are note-takers, content producers, and frequently switch between devices.  Psychological – There is a strong psychological affect of being able to do all of your tasks from a single portable device. 9 [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  10. 10. Buyer decision process of the primary target market  Need recognition – Typical large tablets have a 10 inch screen and the smallest fully featured laptops are 13 inches. Tablets have a weak mobile core processors and laptops are heavy and lack convenient touchscreens. The SP3 at 12 inches is a combination of both device types.  Information search – The SP3 is tablet, but has a detachable keyboard and full operating system which makes it also a laptop. It is cheaper than buying two separate devices but is expensive when compared to any one laptop or tablet by itself.  Evaluation of alternatives – A 128GB iPad Air 2 costs $700. A 256GB MacBook Air cost $1300. That’s a combined cost of $2000. The 256GB SP3 with a equivalent specification costs $1300. Apple has more apps, Microsoft has more supported programs  Purchase decision – It is the most full featured device that serves a multitude of purposes and replaces two devices. It is an overall great buy, packed with value.  Post-purchase behavior – It comes with the number one operating system in the world, ensuring tons of program compatibility. It has a one year warranty and is connected to one of the largest customer support teams in the world. 10 [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  11. 11. Product review 11
  12. 12. Levels of product/service 12 [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  13. 13. Core customer value - What is the buyer really buying? Convenience and simplification by only owning one device versus several devices. Cost savings of only buying one device versus multiple devices. The cool new niche technology in a brand new market. The Tesla effect. The Tesla S has the power of a Ferrari under its hood. The SP3 has the power of a full-sized PC. 13 [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  14. 14. Actual Product 14 Features: It has the full feature list of a table and a laptop crammed into a tablet form factor. image source: microsoft.com
  15. 15. Actual Product 15 Design: The thinnest full size PC. Features a unique kickstand, Detachable type cover, and electronic pen. image source: microsoft.com
  16. 16. Actual Product Quality Level: It has the most powerful processor of any tablet, the largest touch and pen interface screen, and it’s the thinnest PC. Brand Name: Microsoft is the most recognizable brand of operating systems with a global market share of 85%. Packaging: It has been modernized its packaging to match its new design language. 16 [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014 images source: techrepublic
  17. 17. Augmented Product: additional consumer services and benefits • Delivery and credit: Library of supported programs and a growing Apps Store. Windows ecosystems. Windows OS, and Office products. • Product support: Experienced and refined support team • After-sale service: Free support and training is offered to all owners at the Microsoft Store. 17 [4] http://www.microsoftstore.com/store/msusa/en_US/pdp/Surface-Pro-3/productID.300190600?WT.mc_id=sp3pdp-appstory
  18. 18. Type of product: Consumer vs Industrial • Consumer Products > Shopping Product • Customer buying behavior: Buying a tablet or PC is an infrequent purchase occurring every few years. There are many competitors and consumers compare them by price, quality, and features. • Price: The price is high and compared to its competitors its one of the highest. • Distribution: It is available for sale in its own Microsoft stores and some electronic stores that deal in higher end electronics such as name brand computers. • Promotion: Mass promotion is done by Microsoft • For these reasons, the SP3 falls under the category of the Shopping Product under Consumer Product. 18 [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  19. 19. Product life cycle 19 The product is past the Product development stage, and Introduction stage. It is currently in the Growth stage. It is quickly seeing market acceptance and increasing profits. Other competitors are rumored to be producing competitive devices. At less than 10% market share for tablets, the SP3 is far from the Maturity or Decline stage. [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  20. 20. Benefits/features analysis 20 Portable Powerful Capable CPU: 1.9GHz Intel Core i5-4300U Graphics: Intel HD Graphics 4400 RAM: 8GB LPDDR3 Screen: 12-inch touch Storage: 256GB SSD USB 3.0, Mini DisplayPort microSDXC card reader 802.11ac Wi-Fi, Bluetooth 4.0 Two 5MP webcams (1080p)Weight: 1.76 pounds Size: 7.93 x 11.5 x 0.36 inches headphone/mic jack FEATURES BENEFITS
  21. 21. Differentiation • There was no product that existed in the space between the PC and the tablet until the SP3. It’s a tablet with a full-size operating system, it full sized ports, expandable memory, a pen interface and a larger screen size. 21 images source: apple.com, microsoft.com PORTABLE CHEAP TOUCH SIMPLE POWERFUL CAPABLE KEYBOARD PEN PORTABLE POWERFUL VALUE PRICED TOUCH PEN ENABLED STYLISH/COOL FACTOR
  22. 22. Branding strategy • Brand Positioning – It concentration on the major differences in this product such as the kickstand, keyboard cover, pen, and operating system. • Brand Name Selection – They created the surface line which includes the tablet but also all there other touchscreen based technologies such as the table and wall mounted displays. • Brand Sponsorship – This is private brand. • Brand Development – They plan to extend this name brand to larger and smaller tablets and also other touch based technologies. 22 [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  23. 23. Competitive review "Surface Pro devices and our PC accessories face competition from computer, tablet, and other hardware manufacturers, many of which are also current or potential partners and customers.” [8] Microsoft SEC Annual Report 2013 23 [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  24. 24. Identify competitors 24 images source: apple.com, samsung.com Apple iPad/Macbook Air Samsung Galaxy Note Tablet
  25. 25. Assess the competitor Apple = rigid design language, slow release, high quality, strong brand Samsung = Fast to react to consumer desires, no design integrity, low quality, confused branding 25 March 2, 2011 IPAD 2 October 22, 2013 IPAD AIR 2013 NOTE 82012 NOTE 10 2014 NOTE 10.1 2014 NOTE PRO 12.2 The iPad mainly remained the same The Note made major changes with each iteration adding the latest technologies
  26. 26. Select competitors to attack Apple is the easiest to go after and it the past has proven to be the winning strategy. This was the case with the original windows operating system which elevated the company in the first place. 26 Apple does not allow for their operating system to be used on non- Apple hardware which created an opportunity for Microsoft to distribute their hardware agnostic operating system to any hardware developer. In present day Apple will not distribute its mobile operating system allowing for Microsoft and now also Google to distribute their mobile operating systems. [5] http://www.netmarketshare.com
  27. 27. Market share • According International Data Corporation (IDC), The SP3 has less than 10% of the tablet market versus the market leader (Apple iPad) with over 50%. 27[6] Tushneem. “Microsoft needs to up the ante with the Surface RT to gain market share.” Mobinett. February 4, 2013. http://www.mobinett.com/2013/02/04/microsoft-needs-to-up-the-ante-with-surface-rt
  28. 28. Competitive positions and roles • The Surface Pro 3, it is fairly new to the tablet market and technically it is in a new category of its own. Due to the fact that is a non- traditional product with a very little market share in the tablet or the PC market it is is best categorized as a Market Nicher. • Unfortunately Microsoft is using Market challenger strategies, such as attack ads against Apple, which have since backfired 28[7] Bott, Ed. “How Microsoft’s Surface Pro 3 marketing push backfired.” ZD Net. June 19, 2014. http://www.zdnet.com/article/how-microsofts-surface-pro-3-marketing-push-backfired/
  29. 29. Strategic sweet spot • Owning a SP3 equates to owning a laptop, a tablet, and a digital notepad. This means buying and maintaining only one device which decrease the cost to consumer. • These are advantages geared toward Students, Families, Professionals and Creators. 29
  30. 30. Positioning • Microsoft is positioning itself between categories thus able to take market share from competitors in the tablet market and PC market thus doubling this opportunity to attract customers. 30
  31. 31. Distribution review 31
  32. 32. Current supply chain members and roles Microsoft has internalized many components of the manufacturing process by producing their own hardware. Microsoft still has to purchase several subcomponents for its product such as processors, memory storage and displays. 32 [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014 images source: microsoft.com
  33. 33. Value-delivery network analysis • Microsoft has internalized much of the manufacturing, distribution and sales. • By manufacturing the hardware, developing the software and selling directly to the consumer, Microsoft is further decreasing the cost of delivering its products at competitive price. • This decrease in dependency decreases the risk that an external component of the network will negatively affect the companies ability to deliver the product it wants and when it wants it. 33
  34. 34. Current type of distribution strategy Microsoft has moved to a strategy in which they create its own stores where they can educate its potential customers and deliver its product directly to the consumer. However Microsoft is still establishing its store and thus still heavily dependent on third party deliverance of its offerings which adds to cost. 34 MICROSOFT’S OLD STRATEGY MICROSOFT’S NEW STRATEGY [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  35. 35. Strengths, Weaknesses, Opportunities, and Threats Analysis (SWOT) 35
  36. 36. Microenvironment - INTERNAL 36 STRENGTHS  Company – Microsoft’s overall goal is to get people to use its operating system and services. Selling the SP3 is also for the purpose of this goal and not to dominate the tablet market. They design and manufacture the hardware which ensures their software developer can customize programs to the specification of the device thus producing the best user experience.  Suppliers – Microsoft is shedding some of its dependence of device makers and developing its own through relationship with the parts suppliers. This gives them better control over supply and supply cost.  Marketing intermediaries – Buy creating their own physical stores and selling online, Microsoft is less dependent on Marketing intermediaries to help the company promote, sell, and distribute its products to final buyers.  Competitors – They have a unique offering that is competitive with the competition.  Publics –  Financial publics: Microsoft is a large company with large cash reserves able to push development and sale further than its competition.  Government publics: Microsoft is a huge enterprise partner with U.S. government at all levels.  Customers – The surface is an attempt to target to the consumer electronics market, where Microsoft does not have a strong relationship. However most consumers are familiar with the brand and is likely experienced with the companies product through work or its other devices. This means there is a less of a hurdle to the customer than a company has no previous relationship with the consumer at all..
  37. 37. Microenvironment - INTERNAL 37 WEAKNESSES  Company – There weakness as a company they have difficulty rallying the entire company under one brand. It is difficult to get the company departments to communicate and support each other. It is also a weakness that Microsoft is new to hardware development and direct consume sales.  Suppliers – Microsoft has a long history as a licensing company and they are new to developing relationships and negotiating with parts manufacturers. Bad relationships could results in delayed products or shortages.  Marketing intermediaries – Microsoft is inexperienced at operating its own physical stores with less dependence on marketing intermediaries to help the company promote, sell, and distribute its products to final buyers, it takes the risk of not being able to do this well and hurting its sales during the learning process.  Competitors – Technology competitors are fast and a product could be released tomorrow making the Surface inferior and dead in the eyes of the consumer.  Publics  Financial publics: Though it has large cash reserves, Microsoft is also controlled by its shareholders who may refuse to continue to finance the Surface product.  Government publics: Apple as recently teamed up with IBM to target government contracts.  Citizen-action publics: Microsoft has long been a target of antitrust violation thus have difficult entering new markets with the speed of smaller competitors.  General public. Microsoft has been long considered a productivity and enterprise company but as a tablet it needs to garner the reputation of a company that can produce a portable, easy to use and fun to use consumer product.  Customers – The surface is an attempt to target to the consumer electronics market, where Microsoft has historically been weak. The SP3 however also targets the business and government markets where it has been very successful. However this is a very different product than what Microsoft usually markets to its business and government markets.
  38. 38. Macro environments - EXTERNAL 38 THREATS  Demographics - There has been a decline in PC sales and Laptop sales for the past few years as more and more people adopt mobile device. A cross platform device like the SP3 may be affected next.  Economic – If the economic stops improving, the first products to suffer will be niche items like the SP3  Natural – Scarcity of resources such as lithium ion will drive up cost and scare away buyers.  Technological – Technology is innovating at an increasing rate and the SP3 could be lost overnight by a single announcement of a new better product by a competitor  Political – If countries like China and India suddenly close their doors it will eliminate a huge demand.  Cultural – If a company in china produces its own copy cat device, cultural Chinese may adopt the domestic product over a heavily taxed import. [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  39. 39. Macro environments - EXTERNAL OPPORTUNITIES  Demographics – The millennial generation was raise on today’s tech and wants more of it faster than the last generation. This grows the market for others to gain profits.  Economic – Economies around the world is improving and thus more money is being spent on personal technology  Natural – The SP3 minimize the number of electronics thus eventual waste. Its notepad replacement feature decrease paper waste.  Technological – Technology is innovating at an increasing rate where companies that go from idea to product to sale, all in house can keep up with demand.  Political – As countries like China and India opens their doors it will create a new demand for technology.  Cultural - Millennials understand the need for a simplification of technology to one device. 39 [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  40. 40. Part 1 Endnotes Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014 [1] Aurthur, Charles. Digital Wars. Kogan, 2012 [2] Bradley, Tony. “3 reasons to invest in a Surface Pro 3 instead of an iPad Air 2.” Tech Republic. October 2, 2014. http://www.techrepublic.com/article/3-reasons-to-invest-in-a-surface-pro- 3-instead-of-an-ipad-air-2/ [3] Microsoft.com. Warranty Information. http://www.microsoftstore.com/store/msusa/en_US/pdp/Surface-Pro- 3/productID.300190600?WT.mc_id=sp3pdp-appstory [4] Operating System Market Share. http://www.netmarketshare.com [5] Tushneem. “Microsoft needs to up the ante with the Surface RT to gain market share.” Mobinett. February 4, 2013. http://www.mobinett.com/2013/02/04/microsoft-needs-to-up- the-ante-with-surface-rt [6] Bott, Ed. “How Microsoft’s Surface Pro 3 marketing push backfired.” ZD Net. June 19, 2014. http://www.zdnet.com/article/how-microsofts-surface-pro-3-marketing-push-backfired/ [7] Microsoft Annual Report 2013 [8] 40
  41. 41. Part 2 Marketing Plan 41
  42. 42. Table of Contents C. Objectives and Issues 1. Statement of marketing objective(s) (for first year only) 2. Issues that may hinder marketing objectives D. Marketing Strategy Recommendations 1. Positioning strategy 2. Product/Branding strategy 3. Pricing strategy 4. Distribution strategy 5. Marketing Communications objectives 6. Marketing Research E. Action Programs 1. IMC 2. Message design, content, and structure 3. Media choices 4. Promotion mix tools F. Budgets 1. Objective/task method G. Controls 1. Metrics needed to monitor marketing plan progress 42
  43. 43. Objectives and Issues 43
  44. 44. Statement of marketing objectives (year one) • Microsoft’s objective of selling the Surface Pro 3 is to bring new customers into the Microsoft eco-system. They know this will increase their overall profits through up selling. • First they need to determine what is the break even point. How many units does Microsoft have to sell before they are able to offset the cost of manufacturing, distribution and sale? • Secondly, how much will the sale of the SP3s contribute to the overall sale of all of its products. • Thirdly, will the overall sales increase combined with the sale of the SP3 result in a loss or a profit. 44 [1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
  45. 45. Issues that may hinder marketing objectives • There already more established products in the tablet market to whom Microsoft is attempting to sway to buy the SP3. • Microsoft is new the hardware market and many people are waiting to see if their products will become more mainstream before deciding to buy • The Tablet/PC hybrid market is a new market that is very niche and unproven 45
  46. 46. Marketing Strategy Recommendations 46
  47. 47. Positioning strategy Microsoft is using a more for less positioning and currently is alone in this market. As this market grows other competitors may enter the market and Microsoft should be pre-planning for this possibility. One strategy may be to split the product line into even further niches with one leaning toward more the laptop side (13 inch screen with a better video processors) and one leaning more to the tablet side (10 inch screen with a smaller processor, but longer battery life). By maintaining a shifting position, competitors are trying to keep up with Microsoft instead of Microsoft trying to keep up with everyone else. Microsoft would still be providing more for less but at slightly different levels within that position. 47
  48. 48. Positioning 48 Microsoft’s goal should be to move from being “full of features” to “full of benefits.” They need to bring their price point down to closer to the market leader’s prices to be more attractive. Removing features cuts cost which lets them reduce prices and combined with the addition of more benefits adds to the overall value.
  49. 49. Feature to remove • Remove the 5 MP rear camera • No one should be taking a picture with a 12 inch device • No one should be taking a picture with a 5 MP camera period • Remove it and pass on the savings. 49 [2] Photo. Man Taking picture with a pink iPad. http://technews.wpengine.netdna-cdn.com/wp-content/gallery/ipad-photos/pink.jpg
  50. 50. Benefits to Add SP3 iPad The SP3 cannot be opened for repairs, but the iPad can be easily opened Using screws instead of glue adds benefits without increasing cost. cracked nice [3] IFixIt. Microsoft Surface Pro 3 Teardown. https://www.ifixit.com/Teardown/Microsoft+Surface+Pro+3+Teardown/26595
  51. 51. Benefits to Add • Add a removable battery. • It can be hidden behind the kickstand and would double the battery life with a hot-swap-able battery. • Stop with the glue; make it upgradeable; this is a secret benefit that dominates the word-of-mouth community 51 [3] IFixIt. Microsoft Surface Pro 3 Teardown. https://www.ifixit.com/Teardown/Microsoft+Surface+Pro+3+Teardown/26595
  52. 52. Product Strategy • Strategy Decision • Positioning • Attribute - This should receive the least attention as the specifications are only important to the minority hardcore consumer • Benefits – Continue to express the benefits as this is how the majority of the potential consumer will relate to the product. This should be done through storytelling. Messages should try to think out the 24 hour use by a student, professional or a parent. • Values – Donate SP3 regularly to schools, hospitals and other non- profits, in order to create an emotional connection to the brand 52[4] GSMArena. 2 May 2011. Mobile phone usage report 2011: The things you do. http://www.gsmarena.com/mobile_phone_usage_survey-review-592p3.php
  53. 53. Product Strategy Augmented product layer: • Increasing warranties and services well above the norm will result in greater confidence in the product. • Apple products are not higher quality. They have better warranties so when one does break, complainers don’t hit the message boards because Apple just replaces it. • This means fewer people end up knowing about the bad apples. 53[5] Apple. Apple Care Products. http://www.apple.com/support/products/
  54. 54. Branding strategy • Brand equity • Conduct polls, analyze reviews and determine the differential effect of the brand. Determine how to increase its positive brand equity. • Mainly tech sites do the work for you and you just have to take a look • Looking at the poll here you see that the price is a large hit to the brand. They did fail to see the value; Microsoft failed to show them the value. 54[6] Phone Arena. 22 May 2014. Poll results: What did you think of the Microsoft Surface Pro 3? http://www.phonearena.com/news/Poll-results-What-did-you-think-of-the-Microsoft-Surface-Pro-3_id56382
  55. 55. Pricing strategy Market-penetration pricing – Since the company’s objective as a new to market, niche product, it makes the most sense to go with a market- penetration pricing. Setting a lower initial price will lead to faster adoption of the product thus a higher chance of upselling to other Microsoft products. Since the main competitor Apple uses a Market-skimming pricing strategy, this will help the market-penetration strategy as their will be potential Apple customers that have not purchased yet and could then be converted into Microsoft customers. 55
  56. 56. Pricing strategy 56 Market-penetration pricing has the added benefit of looking like you are beating out your competitors. The news do not see the pricing strategy, they just see units sold. [7] The Motley Fool. October 29 2014. Why Microsoft's Surface Pro 3 Sales Soared as Apple's iPad Sales Plunged. http://www.fool.com/investing/general/2014/10/29/why-microsofts-surface-pro-3-sales-soared-as-apple.aspx
  57. 57. Distribution strategy - exclusive distribution • As a niche product it doesn’t make sense to use an intensive distribution strategy. It makes more sense to pursue an exclusive distribution as this will decrease distribution costs due to the decrease channels of distribution. • Ideally, Microsoft should build more physical locations and handle sales themselves and also conduct sales online. Using their own sales teams ensure the best, most knowledgeable and focused attention for their product. This also benefits the customer as they received better information to make their decisions. 57 [8] Techsaucer Blog. August 24 2012. Microsoft opens its retail store – Trying to compete Apple? https://techsaucer.wordpress.com/2012/08/24/microsoft-opens-its-retail-store-trying-to-compete-apple/
  58. 58. Distribution strategy - selective distribution • If by chance the demand ramps up too quickly, Microsoft may need to consider the selective distribution strategy to handle the increased demand. • Best Buy is a strong avenue. 58 [9] iSpot. Best Buy Commercials. http://www.ispot.tv/brands/7c_/best-buy
  59. 59. • Microsoft should embrace more word of mouth and social media campaigns. There should be several dozens of video reviews on YouTube and blogs talking about the product from the point of view of multiple different demographics. • Seeing a person who a consumer can relate to, speak about the SP3 will have a strong effect on that consumer’s desire to buy. 59 Marketing Communications objectives [10] Youtube. 10 May 2015. Search results for "Microsoft Surface Pro 3 Reviews". https://www.youtube.com/results?search_query=microsoft+surface+pro+3+review The Top 4 videos have 2.5 million views. That’s 2.5 million potential customers.
  60. 60. Marketing Research • Exploratory research should be used to determine whether all of the features are being used. If there are unused features, they can be removed and the savings can reduce the prices and increase sales. • If sales are less than expected, descriptive research should be conducted to determine what the marketing problems are. • Cause-and-effect of removing and adding features should be identified through casual research. 60
  61. 61. Action Programs 61
  62. 62. Integrated Marketing Communications (IMC) • Utilize all of the available channels such as Advertising, Personal Selling, Public Relations, Direct Marketing, and Sales Promotion. • However concentrate on low cost methods as this is still a niche product. • It will be difficult to have all marketing channels processed through a central office so an alternative would be to have a central office push out to the other channels preapproved concepts that guide the messages that are being communicated out. This could be logos, mottos, stories, focused ideas such as “sustainable manufacturing.” • This will ensure integration and coordination between the many communication channels “to deliver a clear consistent compelling message about the organization and products” 62
  63. 63. Message design, content, and structure 1. Design a. Get attention – “It’s a Tablet will replace your Laptop” b. Hold interest – Show that it is different from the competition. c. Arouse desire – Focus on the benefits. d. Obtain action – Link to the online store or provide directions to the nearest store 2. Content a. Rational Appeal – Make the consumer ask themselves, “Why pay for so many devices and proceed to carry around and switch between these devices?” Then pose to them it is more reasonable to buy one device that does it all. b. Relate to the audience’s self-interest – Show the consumers the benefits of having that one device that can do all of these tasks typically done across multiple devices. 3. Structure a. Draw a conclusion - due to the fact that it is a niche product in a new market, it is necessary to draw the conclusion for the consumer b. Present the strongest arguments first – There are so many features and benefits that its best to go right into them. c. One-sided argument: All technology has trade-offs and are subjective thus it should be up to the consumer to make those judgements. 4. Format a. This product should be presented in online media types, such as online news sites, blogs, YouTube, and other avenues that can display the SP3’s long list of features. 63
  64. 64. Media choices Personal communication channels Face to face – Microsoft Store employees Internet chat – On the Microsoft website Online reviews – Encourage customers to leave product review Word of mouth – Leverage a potential customer’s neighbors, friends, family members, associates, or other consumers. Non-personal communication channels Broad news agencies – Times and Wall Street Journal Specialty news agencies – CNET, Engagdet, and Techcrunch Social Media stars - Bloggers and YouTube reviewers 64
  65. 65. 65 Advertising Feature in Film & TV Feature in Sports Personal Selling Build more Microsoft Stores Public Relations National News Agency Specialty News Agencies Social Media Celebrities Direct Marketing Sell from on Microsoft.com Sales Promotion Have a trade in offer: A MacBook for a SP3 discount All of these strategies decrease marketing cost which fits a niche market product Promotion mix tools
  66. 66. 66 Public Relations National News Agency Specialty News Agencies Social Media Celebrities Conduct Product Announcements and Press Releases to the major online news outlets. This is a tech product and thus is market audience likely uses online news rather than print news. Give away free devices to be reviewed by top specialty news sites, blogs and YouTube channels. We demonstrated earlier how just the top for YouTube videos yielded 2.5 million views.
  67. 67. 67 Personal Selling Build more Microsoft Stores Having a dedicated Personal Selling platform results in the highest engagement with the customer with the product.
  68. 68. 68 Sales Promotion Have a trade in offer: A MacBook for a SP3 discount Discounts can be seen as a sign of product weakness. Instead, offer a trade in deal for competitor products. Even if only a few participate in the trade in this is a powerful message to rest of the potential consumers. “These people switched and so should you”
  69. 69. Direct Marketing Sell from on Microsoft.com Selling directly through the website results in the lowest overhead. Advertising for this product should be given space on Microsoft’s main landing page with a redirect to the Microsoft Store.
  70. 70. 7070 Advertising Feature in Film & TV Feature in Sports Product placement in Film, TV, and sports demonstrates to the public, actual use cases that will further drive market acceptance.
  71. 71. Budgets 71
  72. 72. 1. Defining specific promotion objectives: a. Refer to the marketing objectives slide. 2. Determining the tasks needed to achieve these objectives a. Educate salesman at the Microsoft store and set quotas b. Conduct a press release to major news outlets and observe reception c. Give test units to specialty sites, such as CNET or Engadget and check the reviews d. Feature on the Microsoft site with links to buy and analyze conversion of views-to-sales. 3. Estimating the costs of performing these tasks. a. How much of the cost of operating the Microsoft stores is focused on the sale of the SP3. b. The largest cost is related to giving away the product to as many people as needed to get a good word of mouth campaign going. 4. Lastly, the sum of these costs is the proposed promotion budget. a. It is suggested that majority of the budget should go to product awareness and in teaching the consumer about the benefits of the product. Flat advertisement would be wasted as it would not convey the complexity of the problem that the SP3 solves. 72 Objective/task method
  73. 73. Controls 73
  74. 74. Metrics needed to monitor marketing plan progress • Set goals: • Refer to the marketing objectives slide • Marketing goals should be at 40% since this is a niche product and we plan to pursue a low cost strategy. Focusing on inexpensive strategies should yield higher ROIs for marketing. • Measure • Observe on a quarterly basis to see if sales of the SP3 and connected products are increasing, decreasing, or staying the same • Evaluate • Determine whether it is being affected by external factors. For example, a snow storm could slow sales in a particular area. Examining a competitors sales could be used to adjust expected vs actual performance. • Corrective action • Adjust the marketing plan as needed, such as decreasing price, changing the message, or the message channel. • Use the Operating control method to check performance regularly and take corrective action as necessary. 74
  75. 75. Metric 1 Break-Even Price • Determine a reasonable break even price using this formula: • Unit cost / (1 – Desired Return on sales) • For example if the unit cost is $500 and the desired return on sales is 40% then the markup price would be $833.33. • Since the goal of this product is to bring in customers in order to upsell them on other products this is an important metric to monitor. 75
  76. 76. Metric 2 Return on Marketing Investment • Determine the ROI price using the following formula • Unit cost + ((ROI x Investment)/(unit sales)) • For example if the unit cost is $500 and we want a 50% ROI and the company is investing 50 million dollars and expects to sell 5 million units, then the ROI price would be $505. • Carefully consider this in connection to the break even calculation. 76
  77. 77. Metric 3 Inventory Turnover • Inventory Turnover is an important metric that lets you know if you estimated demand properly, and whether there is the expected acceptance of the product. • Calculate this using this formula • Cost of goods sold / average inventory at cost • For example, if cost of goods sold for the last quarter was 10 million and the average inventory at cost was 8 million then the turnover rate would be 1.25. This number should be compared to industry averages to give it context. • Higher numbers typically indicate faster turnover which means there is an efficient use of capital. 77
  78. 78. Part 2 Endnotes • Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014 [1] • Photo. Man Taking picture with a pink iPad. http://technews.wpengine.netdna-cdn.com/wp- content/gallery/ipad-photos/pink.jpg [2] • IFixIt. Microsoft Surface Pro 3 Teardown. https://www.ifixit.com/Teardown/Microsoft+Surface+Pro+3+Teardown/26595 [3] • GSMArena. 2 May 2011. Mobile phone usage report 2011: The things you do. http://www.gsmarena.com/mobile_phone_usage_survey-review-592p3.php [4] • Apple. Apple Care Products. http://www.apple.com/support/products/ [5] • Phone Arena. 22 May 2014. Poll results: What did you think of the Microsoft Surface Pro 3? http://www.phonearena.com/news/Poll-results-What-did-you-think-of-the-Microsoft-Surface-Pro-3_id56382 [6] • The Motley Fool. October 29 2014. Why Microsoft's Surface Pro 3 Sales Soared as Apple's iPad Sales Plunged. http://www.fool.com/investing/general/2014/10/29/why-microsofts-surface-pro-3-sales-soared-as-apple.aspx [7] • Techsaucer Blog. August 24 2012. Microsoft opens its retail store – Trying to compete Apple? https://techsaucer.wordpress.com/2012/08/24/microsoft-opens-its-retail-store-trying-to-compete-apple/ [8] • iSpot. Best Buy Commercials. http://www.ispot.tv/brands/7c_/best-buy [9] • Youtube. 10 May 2015. Search results for "Microsoft Surface Pro 3 Reviews". https://www.youtube.com/results?search_query=microsoft+surface+pro+3+review [10] 78
  79. 79. BIBLIOGRAPHY Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014 Aurthur, Charles. Digital Wars. Kogan, 2012 [2] Bradley, Tony. “3 reasons to invest in a Surface Pro 3 instead of an iPad Air 2.” Tech Republic. October 2, 2014. http://www.techrepublic.com/article/3-reasons-to-invest-in-a-surface-pro-3-instead-of-an-ipad-air-2/ [3] Bott, Ed. “How Microsoft’s Surface Pro 3 marketing push backfired.” ZD Net. June 19, 2014. http://www.zdnet.com/article/how-microsofts-surface-pro-3-marketing-push-backfired/ [7] Tushneem. “Microsoft needs to up the ante with the Surface RT to gain market share.” Mobinett. February 4, 2013. http://www.mobinett.com/2013/02/04/microsoft-needs-to-up-the-ante-with-surface-rt [6] Operating System Market Share. http://netmarketshare.com [5] Microsoft Annual Report 2013 [8] IFixIt. Microsoft Surface Pro 3 Teardown. https://www.ifixit.com/Teardown/Microsoft+Surface+Pro+3+Teardown/26595 [3] GSMArena. 2 May 2011. Mobile phone usage report 2011: The things you do. http://www.gsmarena.com/mobile_phone_usage_survey-review-592p3.php [4] Phone Arena. 22 May 2014. Poll results: What did you think of the Microsoft Surface Pro 3? http://www.phonearena.com/news/Poll-results-What-did-you-think-of-the-Microsoft-Surface-Pro-3_id56382 [6] The Motley Fool. October 29 2014. Why Microsoft's Surface Pro 3 Sales Soared as Apple's iPad Sales Plunged. http://www.fool.com/investing/general/2014/10/29/why-microsofts-surface-pro-3-sales-soared-as-apple.aspx [7] Techsaucer Blog. August 24 2012. Microsoft opens its retail store – Trying to compete Apple? https://techsaucer.wordpress.com/2012/08/24/microsoft-opens-its-retail-store-trying-to-compete-apple/ [8] 79
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