Marketing Strategy

Marketing Strategy 任維廉教授 at NCTU, 2012

講師簡介：任維廉 (William) 現職：交通大學管理學院運輸科技與管理系教授學歷：交大管理科學研究所博士經歷：交大運輸科技與管理學系系主任交大傑出教學獎台北市交通局顧問新竹市政府市政顧問中華民國運輸學會理事 PCMPCL, Harvard Business School 2 交通大學管理學院任維廉教授

Outline • 1. Introduction to Marketing Strategy • 2. Positioning Strategy: Target Market Selection and Product Positioning • 3. Tactical Details: The Marketing Mix (4 Ps) • 4. Analysis Underlying Marketing Strategy Formulation • 5. Conclusion • ＊ Basic Marketing Mathematics 3 交通大學管理學院任維廉教授

1.Introduction to Marketing Strategy • There is only one valid definition of business purpose: to create a customer. any business enterprise has only 2 basic functions: marketing and innovation. (Drucker) • Marketing is the process via which a firm creates value for its chosen customers. • Marketing Strategy: sustain this process of creating and capturing value over time. 1. Selecting a target market and determining the desired positioning of the product in target customers’ mind. 2. Specifying the plan for the marketing activities to achieve the desired positioning. 4 交通大學管理學院任維廉教授

Schematic of marketing process 1. Marketing analysis: Customer needs, Company skills, Competition, Collaborators, Context. (5 Cs) 2. Creating value: Marketing segmentation, Target market selection, Product and service positioning. 3. Capturing value, Marketing mix: Product, Place, Promotion, Pricing. (4 Ps) 4. Sustaining value: Customer acquisition, Customer retention. 5. Profits. 5 交通大學管理學院任維廉教授

2. Positioning Strategy (STP) • Market Segmentation • Target Market Selection • Product Positioning 6 交通大學管理學院任維廉教授

2.1 Two Key Questions • Which potential buyers should the firm attempt to serve? Segmentation! • Demographic, Geographic, Life style,…… • How much customization should the firm offer? • Mass market, Market segments, Market Niches, • Individuals. • e.g. 1. 特力屋：易買，易選，樂趣多（友善環境）。 • 2. 路邊鞋攤：專賣沒名氣但好穿的男鞋（衡外　　 • 　　情，量己力）。 7

Example of Segmentation Based on Customer Behavior Survey • User status: nonusers, user • Usage rate: light, medium, heavy user • Benefits sought: performance, price oriented • Loyalty status: none, moderate, strong, totally loyal • Attitude toward product: unsatisfied, satisfied, delight 8 交通大學管理學院任維廉教授

2.2 Target Market Selection • Comparative strengths and weaknesses (vs. competition), • Corporate goals, the fit of the segment with these goals, • Resources necessary to market successfully to the target segment, • Need for appropriate collaborators, • Likely financial returns from the segment. 9 交通大學管理學院任維廉教授

Positioning statements (Fill-in-the-Blank) ____________________ (Our product / brand) is ____________________(single most important claim) among all ___________________ (competitive frame) because __________ (single most important support). 10 交通大學管理學院任維廉教授

3. The Marketing Mix • The 4 Ps: an aggregation, regrouping, easy-to-recall • Product, • Place, • Promotion, • Pricing. • Blend 12 mix elements (Borden): • Merchandising / product planning, Pricing, Branding, Channels of distribution, Personal selling, Advertising, Promotions, Packaging, Display, Servicing, Physical handling, Fact finding and analysis / market research. 11 交通大學管理學院任維廉教授

3.1 Product: Definition • Considered from the point of view of value delivered to the customer. • The physical product itself, • Brand name, • Company reputation, • Presale education provided by sales people, • Postsale technical support, • Repair service, • Financial plans, • Convenient availability, • Word-of mouth references from earlier adopters, • Reputation of the outlet. 12

3.1.1 Product Line Planning Decisions • Product line length: different price points, how many items, e.g. 高價啤酒，低價電腦…… • Product line breadth: desired consistency or similarity, e.g. desktop computer, laptops; men’s golf attire, women’s line; minivan, sport-utility vehicle. (small-motor technology, superior consumer products marketing skills) • Product line depth: how many types, e.g. $100 golf sweater in 5 colors or just 3; or mixed. • 大千世界、芸芸眾生中，能被辨識出來的，總是那些：能比別人早起一步、多做一分、深想一層的，他們看的到機會而且與眾不同。 13 交通大學管理學院任維廉教授

3.1.1 Product Line Planning Decisions • Considerations: satisfy target customer wants, profitable for the firm, differentiation from competitors, impact on the rest of the line (complement, not substitute), or brand (company’s reputation). 14 交通大學管理學院任維廉教授

3.1.2 Individual Item Decisions • Delete an item from the line. • Reposition an existing product within the line. • Improve the performance of an existing product to strengthen its positioning. • Introduce a new product within an existing line. • Introduce a product to establish a new line. 15 交通大學管理學院任維廉教授

3.1.3 The New Product Developing Process: 5 Steps Sequential Process 1. Opportunity identification: both product-market fit and product-company fit. 2. Design. 3. Testing: survey, taste test, simulated test markets, actual test markets. 4. Product introduction: geographic markets, same time or sequentially over time. 5. Life cycle management: repositioning or marketing mix change in a dynamic process, continually learning from environment change (customer reaction, competition, technology). 16 交通大學管理學院任維廉教授

3.2 Place: Marketing Channels • 8 generic channel functions: • Product information, product customization, product quality assurance, lot size, product assortment, availability, after-sale service, logistics. • Eliminate a layer in the chain? • The functions done by the middlemen now have to be done by someone else. • The 2 major decisions: 1. Channel design 2. Channel management 17 交通大學管理學院任維廉教授

3.2.1 Channel Design • Directdistribution (IBM blue suits sales force), indirect (3rd party under contract or independently), dual (own sales force, direct mail, Web site; distributers, retail outlets). • Account concentration: jet engines (few, DD); toothpaste (ID). • Control and direct customer contact. (e.g. 法藍瓷). • Limit(high-end, e.g. Infinite); Intensively distribute (more well known, customer convenience, e.g. Coke, PC). 18 交通大學管理學院任維廉教授

3.2.1 Channel Management • Conflict between partners in a distribution system: • Lack of congruence in goals. e.g. 長期聲譽 vs.短期獲利 • Lack of consensus on who is doing what. e.g. 售後服務誰負責 • Day to day work-on-it (not solve-it-once): • Proper design of contracts, • Good communications (feedback) 19 交通大學管理學院任維廉教授

3.3 Promotion: Marketing Communications • 6 Ms model: • Market: to whom? • Mission: what is the objective? • Message: what are the specific points? • Media: which vehicles? • Money: how much will be spent? • Measurement: how well impact be assessed? • Potentially expensive: • Personal selling, • Nonpersonal elements. 20 交通大學管理學院任維廉教授

3.3.1 Nonpersonal Vehicles • Advertising in media: • awareness, features, usage situations, distinguishing from competitors, point of purchase, brand image. • Sales promotion event: actually close, • trade promotion (advertising allowance); consumer (cents-off coupon); retail (discount). • Direct marketing to household: • customized direct mail. • Public relations: nonpaid, but less controllable, • press releases, speeches at industry seminars, appearance on radio on TV programs. • Others: packaging, trade shows…… 21 交通大學管理學院任維廉教授

3.3.2 Personal Selling • Interaction to potential customer: • Take an order, providing technical support… e.g. 新藥銷售業務拜訪醫師 • Recruiting, selecting, training programs; evaluation, compensation, motivation plans. • Integrated communication plans: • People involved in decision-making unit (DMU) • different issues. 22 交通大學管理學院任維廉教授

3.3.3 Constructing the Communications Mix • Proper allocation of dollars • Push strategy: retailer, Pull strategy: end consumer • Options: event sponsorship, telemarketing, own (others) Web site, infomercials 23 交通大學管理學院任維廉教授

3.4 Pricing • Maximum price: • Combination of product, place, promotion determine the customer’s perception value of the firm’s product in a given competitive context. • Cost should act as a floor on pricing • Effective pricing: • Pricing objectives, • Price customization, • Price leadership. 24 交通大學管理學院任維廉教授

3.4.1 Pricing Objectives • Skim(吸脂)strategy : maximize short-term profit, top of the market with high value. • e.g. hardcover books at $30 initially. • Penetration (滲透)strategy : maximize market penetration, sets a lower price to generate lots of sales quickly. • Consumers are sensitive to price, economies of scale are important, adequate production capacity, threat of competition . • Difficult to increase prices later (referent point). 25 交通大學管理學院任維廉教授

3.4.2 Price Customization • Charging different customers different prices: • yield management (airlines, car rental) • Consideration: • Quantity discounts, • lower price only in a certain locations, • Product line (hardcover / softcover), • buyer characteristics (upgraders / new customer) 26 交通大學管理學院任維廉教授

3.4.3 Price Leadership • Any price decision has to reflect anticipated competitive reaction: • Avoid price cutting, legal and price leadership : • High fixed but low variable costs, • Little differentiation among competitors’ product, • Industry growth rate is low, • There are barriers to capacity adjustment • Economies of scale are important. 27 交通大學管理學院任維廉教授

4.Analysis Underlying Marketing Strategy Formulation • Marketing analysis: (the 5 Cs) • Customers needs, • Company skills, • Competition, • Collaborators, • Context. 28 交通大學管理學院任維廉教授

4.1 Customers Analysis 1. Who is involved in the process? 2. What role does each play? 29 交通大學管理學院任維廉教授

5 Roles in DMU • Initiator(s): search product • Decider(s): final decision • Influencer(s): have input into it • Purchaser(s): transaction • User(s): consume 30 交通大學管理學院任維廉教授

Example of Purchase a Computer for the home • Initiator: oldest child • Decider (brand): a relative with computer knowledge • Influencers: parents and all children • Purchaser: decider • Users: all family members 31 交通大學管理學院任維廉教授

Decision Making Process? • Is there a search for information? • How is that search being conducted? • What criteria are used to evaluate alternatives? • How important are the various attributes? • How do DMU members interact? • Others: where to buy, how is used…… 32 交通大學管理學院任維廉教授

4.2 Company Analysis • Assessing comparative strengths and weaknesses (vs. competition), • Assessing product-company fit (vs. Product-market fit): • Finance, • R&D capability, • Manufacturing capability, • Other assets. • 人無我有，人有我優，人優我轉 vs. 其他公司的機會 33 交通大學管理學院任維廉教授

4.3 Competitive Analysis • Both current and potential competitors’ strengths and weaknesses : • Seeks differentiation possibilities. 藍海策略 • Assess competitors’ objectives and strategies: • Predict and shape competitive reactions. 動態競爭 34 交通大學管理學院任維廉教授

4.4 Collaborators Analysis • Partners in the marketing system: 1. Downstream retailers: • Cost structure, • Expectations about margins and allocation of tasks, • Support and training requires, • Relationship with the firm’s competitors. 2. Upstream suppliers: • Their ability to supply quality product on a reliable basis, • How much lead time is required? 35 交通大學管理學院任維廉教授

4.5 Context Analysis • Spotting important changes in context before competitor:Context is always changing. • Consider and monitor for signs of disruption: • Technology: Web’s disruption, • Culture: trends and fashions, • Politics, regulation, law, social norms are not fixed. 36 交通大學管理學院任維廉教授

5. Conclusion: Terms to Know • Marketing analysis: Customer needs, Company skills, Competition, Collaborators, Context. (5 Cs) • Creating value: Marketing segmentation, Target market selection, Product and service positioning. (STP) • Capturing value, Marketing mix: Product, Place, Promotion, Pricing. (4 Ps) • Sustaining value: Customer acquisition, Customer retention. • Profits. 37 交通大學管理學院任維廉教授

6. Basic Marketing Mathematics (1) Types of Cost Dollars Dollars Total volume produced Total volume produced (a) Constant variable cost per unit (b) Decreasing variable cost per unit 38 交通大學管理學院任維廉教授

(2) Profit Drivers 39 交通大學管理學院任維廉教授

(3) Break-even Volume 40 交通大學管理學院任維廉教授

(4) Formula of Price ……(1) ……(2) ……(3) ……(4) 41 交通大學管理學院任維廉教授

Alvin J. Silk, What Is Marketing? Harvard Business Press, 2006/10/1 42

Marketing Strategy