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Subject Module - Elective CIAKL II - Class 07


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Subject Module - Elective CIAKL II - Class 07

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Subject Module - Elective CIAKL II - Class 07

  2. 2. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 2 Benchmarking Quality management has introduced the notion of good practices implementation. Good practices are those that have proven to provide results. How can we learn about good practices? We do it internally (monitoring internal processes provides information about the results and the best practices that led to them). The other way to learn is through benchmarking. “Benchmarking is the art of learning from companies that perform certain tasks better than other companies”.1 Benchmarking means selecting: • Which functions to benchmark • Which key performance variables to measure • Which companies to study And then implement and monitor results. Market research Market research approaches: observation, focus groups, survey research, behavioural data, and experiments. The customers • Characteristics and behavioural analysis: cultural, social and personal factors (age, occupation and economic circumstances, personality and lifestyle values); • Early adopters (primary demand) or later users (secondary demand) • How often and in what quantities they will buy the product/service. • How much they will pay for it The competitors • Determine the business competition: competitors of identical size and location, identical products and services; • Study their objectives, competitive advantages and weaknesses; • Assume a defensive or attack strategy toward competitors; • Predict their reaction to a new competitor; determine how to be a step ahead; • Exercise benchmarking at all times Product/service 1 Kotler, Philip, Keller, Kevin, Marketing Management 12 edition, 2006
  3. 3. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 3 Understanding customers and having a great knowledge of the competitor’s standpoint is crucial to sales success, as well as a starting point to setting our own product or service strategy. It’s also useful to keep in mind classification, characteristics and differentiation of products and services. Product/service levels • Core benefit: the service or benefit the consumer is really buying • Basic product: the product that only provides the benefit • Expected product: it has the attributes the customers expects • Augmented product: exceeds customers expectation (brand positioning) • Potential product: differentiation takes place Product/service classifications • Durability: tangible endurable (one or a few uses) and durable goods (survive many uses) • Tangibility: services are intangible and require more quality control and supplier credibility • Use: convenience, shopping, speciality and unsought goods Product differentiation • Form: shape, size, physical structure • Features: supplements to the basic product function • Performance • Conformance quality: meeting the promised specifications • Durability • Reliability: probability that the product won’t fail in a specific time period • Reparability • Style Service characteristics • Intangibility • Inseparability: services are produced and consumed simultaneously • Variability: services depend on who provides them, when and where they are provided • Perishability: in a traditional point of view, services cannot be stored. However, if we can understand VOD, SMART TV APPS, and other kind of cloud services, we may consider a new perspective for the perishability of services, because they can have a time limit to be consumed. Managing service quality • Customers’ expectations: avoiding gaps between consumer expectation and management perception or service delivery • Service quality model: reliability, responsiveness, assurance and empathy
  4. 4. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 4 • Monitoring services regularly and taking corrective measures when needed in order to top the competitors offer. • Satisfying customer’s complaints • Satisfying employees provides strong positive attitudes and excellent services Product/service value chain; Development and production requirements • Components, sub-products • Equipment • Human resources • Other resources • Suppliers • Sub-contractors • Packaging • Distribution Product/service in entertainment industry special factors • Unusually extended time frame between original idea, production and delivery • Unusual number of players and stakeholders in the development and production process • A product may also be a sub-product which may rely on other independent sub-products • A product could be the final result of several independent sub-products, which makes it liable to uncontrolled delays • Distribution channels often involve/comprise different entities SWOT The SWOT analysis is a well-known technique for evaluating existing elements and factors in the market. The entrepreneur should try to identify the Strengths, and Weaknesses of his business, and also identify the main Opportunities and Threats to face. This tool is helpful to analyze the market, to define the strategic planning, and to set objectives for the organization. When using this tool it’s important to consider that Strengths and Weaknesses are relative to the organization/business and Opportunities and Threats are relative to the market. • Strengths: characteristics of the business/project team that represent an advantage over others • Weaknesses (or Limitations): are characteristics that give the team a disadvantage regarding other competitors
  5. 5. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 5 • Opportunities: external opportunities to improve performance (e.g. make greater profits) in the environment • Threats: external elements in the environment that could mean trouble for the business/project Identify Market Opportunities. The graphic helps to identify Market Opportunities in three steps and it’s also a simplified view of how entrepreneurs should develop their analysis with the purpose of identifying gaps between supply and demand, and to have a first impression on how the Business Model Definition can be developed.
  7. 7. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 2 What is STP Marketing? STP Marketing, also known as Segmentation, Targeting and Positioning is a marketing process with chronological steps based on customer behavior, needs and expectations, in order to identify the most attractive markets, or the most attractive parts of one market. We may look at it as a slicing process that splits the market in homogeny groups/clusters, with the same needs, expectations and life style, along with many other criteria, that can be more or less appropriate depending on the marketing objectives. To understand the problems and needs of people/organizations, whether we are focused on B2C (business to consumer) or B2B (business to business), in every segment of the market we can determine exactly which benefits are more suitable and therefore design affordable products and services to each one, trying to be increasingly profitable and adapted to customer satisfaction. This process, if done properly, creates a competitive advantage as we are creating a marketing plan designed specifically for costumers who’ll most likely buy our products or services. Segmentation Break the market down into separate segments composed with customers with similar claims, needs and buying habits as well as geographic locations, or any other kind of criteria, depending on the objectives and evidences the market displays. Targeting After the segment or segments are identified, targeting the market is the next step of the STP process. It’s important to identify who are the consumers and to determine the segment attractiveness considering its growth potential, and after that, try to grab a major part of the market share, or in the case of a small segment, all of it.
  8. 8. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 3 Positioning Positioning is a process meant to define a territory in the market, but specially, to create a space in the consumer’s mind that merges the values and purposes of the organization, defining and creating a brand that collects and aggregates all verbal and distinctive features through an image that allows the public to place the product in a universe of similar ones and enables the public to distinguish them from each other. When positioning a product, it's important to understand and identify the marketing mix to ensure that you’re putting the right product in the correct place, pricing it competitively, and promoting it to the right segment. It’s also very important to consider the different geographic locations and regions as well as the respective public’s needs and expectations. Criteria for evaluating market segments To ensure the market segments are correctly delimited by the organization, merged with the objectives, or even which objectives must be defined, it’s important to use the basic guidelines and criteria to split the market in segments to evaluate which will turn out to be usable and available as potential target markets.
  9. 9. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 4 Criteria for Segmentation EVALUATION CRITERIA WHAT IS IT? WHY IS IT IMPORTANT? Homogeneous This means that the consumers allocated to each segment should be similar in some relevant way This is the basis of market segmentation – that the consumers in each segment are similar in terms of needs and/or characteristics Heterogeneous Each segment of consumers should be relatively unique, as compared to the other segments that have been assembled This demonstrates that the consumers in the overall market have been effectively divided into sets of differing needs Measurable Some form of data should be available to measure the size of the market segment Measurements are very important to evaluate the overall attractiveness of each segment Substantial The market segment should be large enough, in terms of sales and profitability, to warrant the firm’s possible attention Each firm will have minimum requirements for the financial return from their investment in a market, so it’s necessary to only consider segments that are substantial enough to be of interest Accessible The market segment should be reachable, particularly in terms of distribution and communication Each segment needs to be able to be reached and communicated with, on an efficient basis Actionable practical The firm needs to be able to implement a distinctive marketing mix for each market segment The range of segments identified generally needs to be defined according to the capabilities and resources of the organization, so segments that are very specialized may not be appropriate Responsive Each market segment should respond better to a distinct marketing mix, rather than a generic offer The key outcome of the STP process is to develop a unique marketing mix for a specified target market, if the segment will not be more responsive to a distinct offering, then the segment can probably be combined with another similar segment
  10. 10. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 5 Evaluate the attractiveness of each segment In order to make a decision with low risk about which market and segment you must choose, it’s important to evaluate the attractiveness of each one and to gather information to take strategic and profitable decisions. The following four steps allow you to identify important information to evaluate the general attractiveness of a segment, and provide some support to make a decision. Four steps to evaluate segment attractiveness Segmentation based in Consumer Behavior Other criteria to segment the market is to use considerations based in consumer behavior. There are many factors and premises that we can use to focus our segmentation in our costumer/user, as they are who we want to satisfy. The following chart, have 14 main questions and some factors and criteria that you may consider using on your segmentation process. Questions Factors 1 Who is our consumer? How can he be characterized? Gender Age Group Income Level Professional Category Social Class Level Education / School Other 2 Geography/location where the purchase and consumption are due Region Country City Village
  11. 11. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 6 Questions Factors 3 Consumer behavior and socio-psychological characteristics? Lifestyle Sociocultural attitudes Behavior Patterns Reference Group Individual contexts Group contexts Professional contexts 4 Who's Buying? Customer (himself) Mother / Father spouse Professional Buyer Agent 5 Who In�luences the purchase? Prescriber Consultant Opinion leader Experts Social group Reference group Friends 6 What is the frequency of use and / or purchase? Daily Weekly Monthly Quarterly Annual Occasional 7 What needs, interests, desires and likes to satisfy? Basics Rationals Security Affection Statute Pro�it Economic Financial Ef�iciency Other 8 Which parameters of choice and preference the purchaser uses? Price Quality Functionality Usability Con�idence Routine Attributes / Features speci�ic Other 9 What is the nature of the relationship between buyer and supplier? Loyalty Buyer Unstable Competition / Call Social group other
  12. 12. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 7 Questions Factors 10 What type of buying behavior makes the consumer / buyer? Impulsive Convenience Comparative Default 11 How big are the consumers / buyers? Large =?% Medium =?% Small? =?% % per volume Value per volume Value per purchase Number of purchasing’s % per purchase continued 12 What is the average value of purchases? (in €) By act By period By customer dimension 13 What is the degree of trust and brand in�luence? Strong Preferential Weak 14 What is the degree of dif�iculty to access and address the Customer? large small direct indirect
  13. 13. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 8 Ansoff matrix Every business seeks profit, which usually means resorting to sustainable efficient management and growth strategies. The Ansoff matrix helps to define market and product growth strategy • Market penetration: Increased market share in an existing market with an existing product. Possible case scenarios are taking advantage in some competitor’s exit or responding to an increasing demand. • Market development: Using an existing product in a new market, as for example, in international expansion • Product development: Using an existing gap in the market to develop and offer a new product in that already existing market. Customer oriented companies usually take customers suggestions and develop products to satisfy their needs. • Product/Market diversification: New product in a new market, for example, entering a new segment with a new product. It could be the case of vertical integration where the corporation buys a suppliers company, hence entering in a new market.
  14. 14. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 9 Branding Brand A brand is an idea, the summing up of the product or service experience in the mind of the consumer – it’s a perception. • Positioning Brands have transformed the process of marketing into one of perception-building. That is to say that image is now everything. Consumers make the buying decisions based around the perception of the brand rather than the reality of the product. • Value proposition and promise A brand includes a value proposition and a promise of quality/satisfaction. The branding cycle is complete only after the consumer experiences it and confirms the validity of the proposal. • Positioning Branding is conquering and maintaining territory in the mind of the consumer. • Emotion Branding offers a response at the most emphatic and perennial level in the relationship with the consumer: the power of great ideas and emotion. The objective is to create lovemarks, an emotional attachment that often has little to do with the quality of the product. The power of branding is “loyalty beyond reason” (Kevin Roberts 20…). • Brands model A brand evaluation model developed by Millward Brown and WPP, related to brand strength, which involves a serious of steps for the brand development: o Presence: Do I know about it? o Relevance: Does it offer me something? o Performance: Can it deliver? o Advantage: Does it offer something better than others? o Bonding: Nothing else beats it • Brand Resonance Brand building can be viewed as an ascending, sequential series of steps, from bottom to top: 1. Association of the brand with a specific product or need set in the customer’s mind 2. Firmly establishing the brands meaning and association with tangible/intangible set of brands
  15. 15. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 10 3. Linking the right feelings and judgements of the costumers with the brand 4. Create and intensify a loyal bond between brand and customer Brand element choice criteria o Memorable How easily is the brand remembered or recognized? Short names help. o Meaningful To what extent does the brand suggest something about the product or the person who might use it o Likeability Is it likeable visually, verbally and in other ways? o Transferable Can the brand be used to introduce new products in the same or different categories? o Adaptable and updatable to new ages and behaviors o Protectable with trademark rights and not easily copied
  16. 16. EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES 11 Vision and mission: where and how For new companies the starting point for strategy setting is some underlying idea of why the business exists. Disney’s core purpose is to make people happy, not to make movies or build theme parks. Nokia’s mission is connecting people, not to produce cell phones. A distinction is sometimes made between vision statements and mission statements. A vision statement is an articulation of what the company wishes to become or where it seeks to go. A mission statement is the definition of corporate purpose, an achievement guide, and often defines the area of business in which it’ll compete. Some companies have separate statements of mission and vision. Success key drivers Key drivers can be defined as main attributes and resources that the corporation has or processes that enable her to improve business and guaranty success. They should be applicable, relevant and verifiable. Corporations may define success key drivers for global improvement or specific processes of the organization: customer relation, leadership, profitability. An example of key drivers for excellence is given by Five Star: • Focused and aligned leaders • Skilled and motivated workforce • Integrated talent management system • Continuous improvement • Enabling technologies