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7/30/2019 Session 8,9,10,11
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Tracking Competitors
Strategies
Industrial Products
Product sales literature
The companys own sales forceTrade advertising
Consumer Products
Tracking Ads
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Comparing Value Chains
Firms Infrastructure
Inbound
Logistics
Human Resources Management
Technology Development
Procurement
Operations Outbound
Logistics
Marketing
And Sales
Service
Support
Activities
Primary
Activities
M
AR
G
I
N
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Product Entry Decisions
Decision R&D Marketing Timing
First State-of-the- Stimulating Early-entry
To Market art Primary Demand in the PLC
Second Advanced, Differentiating Entry Early inTo Market Responsive the Product PLC Growth
Next Ability in Market Entry During
to Market Applications Segmentation PLC Growth
Late Skill in Process Minimizing Selling Entry Late in
To Market Development and Distribution PLCGrowth Cost
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Competitive Product Analysis
Matrix
Marketing Competitor A Competitor B
Mix Brand A Brand B
Product 1 Product 2
1. Product
Targeted Segment
2. Price
3. Promotion
Advertising4. Place
5. Technology Strategy
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Differential Advantage Analysis
Capabilities Matrix
Ability To Firm/Product Own
A B C Product
Conceive/Design
Produce
Market
Finance
Manage
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Differential Advantage Analysis
Success Matrix
Critical Success Firm/Product Own
Factors A B C Product
12
3
4
5
Overall Rating
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Assessing A Competitors
Will
A strong competitor can be overcome
A weak competitor can cause damage
Assess:
How crucial is this product to the firm?
How visible is the commitment to themarket?
How aggressive are the managers?
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Predicting Future Strategies
Competitor signals with an announcement
Use historical information to forecast:
Competitors Strategy dependent
variableCapabilities and Resource independent
variable
Extrapolate that the trend may continueLink Capabilities/Resources with Strategy
Simulate by Role-Play
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3. Customer Analysis
What we need to know about current and potentialcustomers:
1. Who buys and uses the product?
2. What customers buy and how they use it?
3. Where customers buy?4. When customers buy?
5. How customers choose?
6. Why customers prefer a product?
7. How customers respond to marketingprograms?
8. Will customers buy it (again)?
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Segmentation Variables for
Consumer Markets
1. Who buys and uses the product?
Demographics
Age, gender, geographic location
Socio-graphicsIncome, education, occupation, social
class
Personality
traits ambitious, extrovert Psychographics and Value
lifestyle activities, interests, opinions
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Lifestyle Topology
Who buys and uses it?
Strivers
Achievers Pressured
Adapters
Traditionalists
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Value Topology
Who buys and uses it? Self-respect Security
Warm relationship with others Sense of accomplishment Self-fulfillment Sense of belonging
Respect for others Fun and enjoyment Excitement
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Segmentation Variables for
Business Markets
Who buys and uses it? Demographics
Industry, company size, location Operating Variables
Customer technology, use status, service Purchasing Approaches
Structure, power, purchasing criteria Situational Factors
Size of order, just-in-time delivery Personal Characteristics
Attitude to risk, loyalty to supplier
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Benefits
2. What customers buy and use?
The Firm Produces Features
The Customer Purchases Benefits Technology Firms User friendly
Drill Manufacturer Sells holes, not drills
Product Manager Understand thebenefits customers are seeking in the
market segment
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Purchase Pattern
What customers buy and use ? Database Marketers use three criteria for
evaluating and segmenting customers in theirdatabases
Recency how recently has the customerbought brand?Frequency How many different productsdoes the customer buy, and what are thetime intervals?Monetary Value What is the value of thecustomers purchases in terms of profits?
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Potential Customers
What customers buy and use ?
Continuum Relating to the Product
UnawareAware
Accepting Willing to use the product
Attracted Positive towards theproduct
Active Buy and/or plan to buy
Advocates - Encourage others to buy
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Product Assortment
What customers buy and use ?
Different Brands Purchased by the
Customers for the category in the
Segments
Create Switching Tables
Different Vendors used by BusinessesIndustrial products
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Use
What customers buy and use?
Sweets Festivals
Rainwear Rainy season Sunscreen Summer
Customer Suggestions Baking soda to
deodorize drains Lime juice to clean
cooking range
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Channels of Distribution
3. Where customers buy?
Customers Migrate to Other Channels
Specialty retailer to DiscountDiscount to Department Store
Neighborhood to Superstore
Small Retailer to Large-Volume retailerBrick-and-Mortar to Internet
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Timing Issue
4. When customers buy?
Sales or Price Breaks and Rebates
Fast-Food Breakfast, lunch, snack,dinner
Woolens Winter
Capital Equipment Near fiscal year end Cold Remedies Before and during winter
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Customers Compare
Alternatives
5. How customers choose? Information
Media AdvertisementsIn-store personnelWord-of-MouthInternet
Decision ProcessEmotionalImpulseRational
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Multi-attribute Model
How customers choose?
The process of how customers make
decisions
Attributes used by customer to define
the product
Perceptions amount of attributes
possessed by each brand or productin the category
Importance Weights weights given by
customer for each attribute
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Attributes
How customers choose?
Identifying the relevant set is not easy
Managerial judgment alone can cause
misestimates
Collect information:
Focus-Groups
Survey/Questionnaire Open-ended or
close-ended
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Perceptual or Positioning
Map Bank
Courteous Personnel
F A
DInconvenient
Convenient
C B ATMLocations
Un-courteous
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Importance Weights
Direct Questioning
On a scale of 1-to-7 with 7 being very
important and 1 not important, how
important is the attribute .. in your
purchase decision
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Decision Making by Manager
for Each Brand
Segment 1 Segment2
Attribute A Weight x Rating =Score
Attribute B
Attribute C
Attribute D
Segment Score
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Rules Available to the Product
Manager
Compensatory Rule Multivariate Model
All attributes are considered and
weakness in one can be compensated for
by strength in another
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Lexicographic Rule
Compares the products on the most
important attributes alone and eliminates
those which are not at the top
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Conjunctive Rule
Assumes the customer sets minimum
cutoffs on each dimension and rejects a
product if it has any attributes below the
cutoff
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Conjoint Analysis
An alternative to weights, conjoint analysis
permits the product manager to infer the
importance of different product attributes
in terms of importance
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Conjoint Analysis
Laptops Computers
Three Attributes
Weight 1 kg or 2 kg
Battery Life 2 hr or 4 hrBrand HP or LG
Task:
Rank in order the followingcombinations from 1 = most preferred to 8
= least preferred
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Customer Response
Laptop ComputersCombination Rank
1 kg, 2 hr, HP 4
1 kg, 2 hr, LG 2
1 kg, 4 hr, HP 3
1 kg, 4 hr, LG 1
2 kg, 2 hr, HP 8
2 kg, 2 hr, LG 6
2 kg, 4 hr, HP 7
2 kg, 4 hr, LG 5
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Analysis
Laptop Computers Preference
1 kg, 4 hr, LG with rank 1 most
2 kg, 2 hr, HP with rank 8 least
Average Ranking:
1 kg option = 2.5 = (1 + 2 + 3 + 4)/4
2 kg option = 6.5 = (5 + 6 + 7 + 8)/4
2 hr option = 5.0
4 hr option = 4.0
HP = 5.5
LG = 3.5
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Difference in the Average Ranks:
Weight = 4.0 (6.5 2.5)
Battery Life = 1.0 (5 4)Brand = 2.0 = (5.5 3.5)
The most important attributes to this
customer is weight, followed by brand, andthen battery life
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Customer as Problem
Solver
Extensive Problem Solving First-time
buyers or high-technology products
Limited Problem Solving Customer
understands functioning and competitors,
evaluates on small number of attributes
Routine Response Behavior routine
purchases with low or high price tag
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Customer Value
6. Why customers prefer a product?
Critical Component of Customer Analysis
BenefitCustomers perspectiveCost price, maintenance
Sources of Customer Value
EconomicFunctional
Psychological
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Manifestation of Customer
Value
Pricefirms assessment of the products
value
Price Sensitivity sales change with price
Satisfaction Indicated in surveys used as
standard practice
Complaints and Compliments Number
Word-of-Mouth Difficult to track
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Margin/Profit Contribution Higher
margins
Sales Value assessed by the market
Competitive Activity New-product
introductions
Repeat Purchase Rate High loyalty
indicates high brand value
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Assessing Value of the
Product Category
Determine the uses of the product
Estimate the importance of the uses
List competing products for the uses Determine the relative effectiveness of the
product category in each usage situation
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Assessing the Value of he
Brand/Product/Service
Assessing the total value of a brand can
be done indirectly
A high-value brand has:
High Market Share
High Repeat Purchase Rate
Low Elasticity with respect to PriceLimited Competitive Brand Shopping
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Using customer responses to estimate the
value of a brand directly:
Ratings for competing products
Constant sum ratings across brands
Graded paired comparisons
Conjoint analysis
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Customer Response
7. How customers respond to marketing programs
Sensitivity and Preference Varies by Customer:
To Price and to means of payment
Distribution and Availability including the
effect of
direct marketing
AdvertisingPromotion
Service
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Assessing Sensitivity
Expert Judgment using knowledge ofmanagers, sales-force
Customer Survey including both direct
questioning and more subtle approachesas conjoint analysis
Experiments both controlled settings and
actual market segments Analyses of Past Data across marketsegments or individual customer records
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Decision to Purchase
8. Why customers buy it again?
Critical Issue whether new or current
customer will purchase the product in the
future
Quality Program satisfy and retain
customers
Relationship Marketing long-term,
lifetime, value of a customer
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Quality - Satisfaction
Quality is ultimately measure in terms ofcustomer satisfaction
Satisfaction has a strong relative component
to qualityAre customers of the product category
more or less satisfied than those of adifferent but potentially substitutable one?
Are customers of the companys productmore or less satisfied than customers of acompetitors?
M t f
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Measurement of
Satisfaction
Three Key Aspects
Expectations of Performance/Quality
Perceived Performance/Quality
The Gap between Expectations and
Performance
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Indirect Measures
Word-of-Mouth Comments
Complaints
Compliments
Repeat purchase or lack thereof
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Why Satisfaction?
Leads to Loyalty
Customer Retention
Intention to Purchase
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Satisfied but No Repurchase
Due to Poor Product Supply
Variety Seeking or Multiple Sourcing
Large Promotional Deals
Unsatisfied but Continue to Purchase
MonopolyConvenience
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Segmentation
Each Customer is Unique
Mass Marketing is Generic
Each Customer Strategy
Time-Consuming
Not Very Profitable
Group Customers into Segments A Compromise
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Insights into Different Kinds of Customer
Behavior
Makes Marketing Programs more Efficient
With IT one-to-one Marketing is Viable
But Segmentation is the Norm
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Criteria for Segmentation
Sizeable
Identifiable
Reachable
Respond Differently
Coherent
Stable
M th d f M k t
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Methods for Market
Segmentation
Simple to Apply, Easy-to-Use software,
and require Descriptive and Behavioral
Data
Cluster Analysis
Tabular Analysis
Regression Analysis
Latent Class Analysis
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Cluster Analysis
Examines the values of the variables for
each respondent , from a sample of
customers, and then groups the
respondents with similar valuesPurchase
Quantity
Age
A
B
C
Cluster
Cluster
Cluster
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Phone company employed Cluster Analysisto understand its regional customers
Six segments based on clustering
householdsLow Income/Blue Collar Fledglings
Frugal/Retired Thrifties
Contended Middle Class Contenteds
Aspiring M-C Status Seekers Climbers
TechnologyDriven Strivers Techies
Contended Upper Middle-Class -
Executives
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Industrial-products company segmented itsnational accounts based on trade-offs betweenprice and service to form four segments
Programmed Buyers small customer, routine
purchasesRelationship Buyers small buyers, loyal, pay lowprices and obtain high service levels
Transaction Buyers large buyers, obtain pricediscounts, expect high service levels, switchsuppliersBargain Hunters large buyers, lowest prices,highest service levels
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Tabular Analysis
This analysis uses categorical variablesbased on customer responses
Descriptor Variables related to attitude,
independent variablesConvenience Oriented
Enthusiastic
Disinterested
Behavioral Variables dependent variables
Small/Light, Medium, Large/Heavy
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Regression Analysis
Is used when the product manager can
specify an explicit relationship between
behavioral, dependent variable, and one
or more descriptor, independent variable However, unlike tabular analysis it
assumes a continuously measured
dependent variable, quantity rather thancategory of usage
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Usage = f (price, convenience oriented,
enthusiastic, disinterested, low, medium,
high income)
Regression performed using regressioncoefficients to represent the regression
model in an equation form
U = aP + bC + cE + eD + fL + gM + hH
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Results may suggest:
Price sensitivity depends on various
service characteristics quality, support
Price responsiveness exists across
counties and continents segmentation
based n responsiveness rather than
country boundaries are useful for globalmarketing
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Latent Class Segmentation
Begins with the market as a whole and
then determines what segmentation
pattern best trades off few segments and
the ability to explain behavior The previous methods begin with
individuals and then aggregate them
Is recent, intriguing, requires sophistication not widely used
Judgment Based
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Judgment-Based
Segmentation
Useful because segments are readily
identifiable and reachable
Heavy, Light, Non-Users
Can be used as a basis for comparison
with results of computer-based analysis
Segments based on intuition may exist
only in the mind of a manager and not in
the market