BA530 Class 3 Marketing Basics

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BA530 Class 3Marketing Basics DELL Computer

• John A. Hengeveld

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Agenda for Today

• Finish up the HEB case
• Marketing Basics Note on Marketing
  Strategy(Thanks to Brian McCarthy for some
  slides)
• Grant Chapter 4
• DELL Computer Presentations
• DELL Computer Discussion and Wrapup

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Marketing Analysis (The 5Cs)
CreatingValue
MarketSegmentation
Target MarketSelection
Product/ServicePositioning
Marketing Mix (The 4Ps)
CapturingValue
Product Service
Place/Channel
Promotion
Pricing
SustainingValue
CustomerAcquisition
CustomerRetention
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Must decide what business you are in.
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Market definitions are superior to product
definitions
Theodore Levitt
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Gain understandingMacro-environmental scan

• Demographic forces
• Economic forces.
• Natural forces.
• Technological forces.
• Political/Legal forces.
• Social/Cultural forces.

Understanding these illuminates the terrain upon
which the firm may be deployed
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Examples of Consumer Market Segments

• Region
• Household size
• Lifestyle
• Benefits sought
• Usage rate
• Age
• Sex
• Income
• Lifestyle

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Example of business market segments

• Location
• Vertical market
• By industry
• Horizontal market
• By product usage
• Size of account
• Purchase method

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Five Steps in segmenting and targeting markets

• Steps
• Form prospective buyers into segments
• Form products to be sold into groups
• Develop a market-product grid and estimate size
  of markets
• Select target markets
• Take marketing actions to reach target markets

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Criteria for picking target segments

• Size
• The estimated size of the market to determine
  whether or not it is worth going after.
• Expected growth
• The size of the market may be small, but if it is
  growing significantly it may be worth going
  after.
• Competitive position
• The less competition the more attractive the
  market.
• Cost of reaching the segment
• Compatibility with organizations objectives
  resources
• Bottomline can we be successful there?

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From Grant for a minute
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A Framework for Competitor Analysis
OBJECTIVES What are competitors current
goals? Is performance meeting there goals? How
are its goals likely to change?
STRATEGY How is the firm competing?

• PREDICTIONS
• What strategy changes
• will the competitor
• initiate?
• How will the competitor
• respond to our strategic
• initiatives?

ASSUMPTIONS What assumptions does the
competitor hold about the industry and itself?
RESOURCES CAPABILITIES What are the
competitors key strengths and weaknesses?
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Segmentation Analysis The Principal Stages

• Identify key variables
• and categories.
• Construct a segmentation matrix
• Analyze segment attractiveness
• Identify KSFs in each segment
• Analyze benefits of
• broad vs. narrow scope.

Identify segmentation variables Reduce to 2 or 3
variables Identify discrete categories for each
variable
Potential for economies of scope across
segments Similarity of KSFs Product
differentiation benefits of segment focus
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The Basis for Segmentation Customer and Product
Characteristics
Size Technical sophistication OEM/replacemen
t
Industrial buyers
Characteristics of the Buyers
Demographics Lifestyle Purchase occasion
Household buyers
Size Distributor/broker Exclusive/
nonexclusive General/special list
Distribution channel
Opportunities for Differentiation
Geographical location
Physical size Price level Product
features Technology design Inputs used (e.g.
raw materials) Performance characteristics Pre-s
ales post-sales services
Characteristics of the Product
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Segmenting the European Metal Can Industry
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Segmenting the World Automobile Market
REGION US Canada W.Europe
E.Europe Asia Lat America Australia
Africa Luxury Cars Full-size sedans Mid-size
sedans Small sedans Station wagons Passenger
minivans Sports cars Sport-utility Pick-up
trucks
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Vertical Segmentation Industry Profit
Pools The US Auto Industry
25





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Service repair
Leasing
Operating margin

15
Warranty
Aftermarket parts

Auto manufacturing
10
Auto rental
Auto insurance
Auto loans
New car dealers
5
Used car dealers
0
Gasoline
100
0
Share of industry revenue
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Segmentation and Key Success Factors in the U.S.
Bicycle Industry
SEGMENT
KEY SUCCESS FACTORS
Low-costs through global sourcing of components
low-wage assembly. Supply contract with
major retailer. Leading competitors Taiwanese
Chinese assemblers, some U.S manufacturers, e.g.
Murray Ohio, Huffy
Low price bicycles sold primarily through
department and discount stores, mainly under the
retailers own brand (e.g. Sears Free Spirit)
Cost effieciency through large scale operation
and either low wages or automated
manufacturing. Reputation for quality
(durability, reliability) through effective
marketing to dealers and/or consumers.
International marketing distribution. Leading
competitors Raleigh, Giant, Peugeot, Fuji
Medium-priced bicycles sold primarily under
manufacturers brand name and distributed mainly
through specialist bicycles stores
Quality of components and assembly, Innovation
in design (e.g. minimizing weight and wind
resistence). Reputation (e.g. through success in
racing, through effective brand
management). Strong dealer relations.
High-priced bicycles for enthusiasts.
Childrens bicycles (and tricycles)
sold primarily through toy retailers (discount
toy stores, department stores, and specialist
toy stores).
Similar to low-price bicycle segment.
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Strategic Group Analysis

• A strategic group is a group of firms in an
  industry following the same or similar strategy.
  

• Identifying strategic groups
• Identify principal strategic
• variables which distinguish
• firms.
• Position each firm in relation
• to these variables.
• Identify clusters.

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Strategic Groups in the World Automobile Industry
Broad
GLOBAL, BROAD-LINE PRODUCERS e.g., GM, Ford,
Toyota, Nissan, Honda, VW, Daimler Chrysler
REGIONALLY-FOCUSED BROAD-LINE PRODUCERS e.g.
Fiat, PSA, Renault,
GLOBAL SUPPLIERS OF NARROW MODEL RANGE e.g.,
Volvo, Subaru, Isuzu, Suzuki, Saab, Hyundai
NATIONALLY FOCUSED, INTERMEDIATE LINE PRODUCERS
e.g. Tofas, Kia, Proton, Maruti
PRODUCT RANGE
LUXURY CAR MANUFACTURERS e.g., Jaguar, Rolls
Royce, BMW
NATIONALLY- FOCUSED, SMALL, SPECIALIST PRODUCERS
e.g., Bristol (U.K.), Classic Roadsters (U.S.),
Morgan (U.K.)
PERFORMANCE CAR PRODUCERS e.g., Porsche,
Maserati, Lotus
Narrow
National
GEOGRAPHICAL SCOPE
Global
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Strategic Groups Within the World Petroleum
Industry
INTERNATIONAL UPSTREAM COMPANIES
INTEGRATED OIL MAJORS INTERNATIONAL UPSTREAM, REGI
ONALLY FOCUSED DOWNSTREAM
Premier Oil
Enterprise
Kuwait Petroleum
PDVSA
INTEGRATED DOMESTIC OIL COMPANIES
NATIONAL PRODUCTION COMPANIES
Iran NOC
0 0.5 1.0 1.5 2.0
Exxon -Mobil
Statoil
BP-Amoco
Vertical Balance
INTEGRATED INTERNATIONAL MAJORS
Chevron
Petronas
Pemex
Royal Dutch -Shell Gp.
Phillips ENI Elf-Fina-Total Repsol
YPF
Indian Oil
Phillips
Petrobras
Texaco
ENI
INTERNATIONAL DOWNSTREAM OIL COMPANIES
Repsol
Nippon
E.g. Neste
Tosco
0 10 20 30 40 50 60 70 80
NATIONALLY-FOCUSED DOWNSTREAM COMPANIES
Geographical Scope
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The Four Ps of Marketing
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Product
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Product Line Planning Decisions

• Product Line Breadth Consistency or Similarity
  between categories
• Product Line Length Different price points
  within a category
• Product Line Depth Varieties at a price point.

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Product Development Process(Classic Version)

• Opportunity Identification
• Design
• Testing
• Product Introduction
• Life Cycle Management

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The Product Life Cycle
Revenue
Time
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Place
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Price
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Promotion
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Promotion
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Product Life Cycle
Revenue
Time
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Dell Computer Case

• Agenda Presentations by Teams
• Discussion
• Wrapup