KEY LEARNINGS FROM THE FIRST THREE CASES – MM3

I. Barista Coffee Company Limited

The case primarily discussed about the concept of experience economy. It explains how
experiences are a distinct economic offering from services, as services are from goods. The
pricing-competitive position framework discusses how a commodity can be converted into
goods, then services, and to an experience by differentiating, all while the pricing moves from
market to premium. Barista was offering the coffee as an experience, rather than coffee as a
product. This concept was not novel. It was already implemented by Starbucks. Starbucks
wanted to be a third place for people, like was their home and office.
We discussed some key decisions that Barista should have taken moving forward:
a. Pricing model: Barista positioned itself as fine café with an experiential coffee. Lowering the
prices while operating in an asset heavy model makes barista vulnerable to new competition.
Hence, Barista should focus on the Upper Middle Class and Upper class and maintain the brand
exclusivity by keeping premium prices.
b. Product mix: If we increase the food menu in the stores, Barista’s positioning looks less like a
café and more like a fast-food restaurant. With Coca cola entering the coffee market with two
ready-to-drink products, competition with a fast-food restaurant with Coca cola offerings is not
desirable at the current stage.
c. Company owned outlets vs Franchise: The per store capital for a Barista store was 10-15 lakhs
higher than the rival companies. Hence lesser franchise owners will come forward. Also, the
control over the stores’ operations dilutes in the franchise model of expansion leading to lower
quality and customer service levels, hence it is best to expand via the company owned outlets
itself.

II. SKF Bearings Series

This case discusses about the concept of marketing orientation. SKF was a bearings
manufacturer. Bearings found applications in automotive and machinery OEMs, and industrial
and vehicle aftermarket. The industrial customers who were majorly (80%) supplied through the
distributor network sought to minimize the downtime and maximize recovery speed since the
cost of standstill was much higher for them compared to the cost of bearings itself.
We discussed that the downtime was affected by the longevity of bearings which in turn depends
on:
1. Quality of bearings
2. Installation
3. Protection from Environment
4. Maintenance
Except the first one the remaining three are services and are out of the control of SKF in the
current product offering model. So, we discussed about moving from selling product to selling
total solution approach.
We discussed about the implementation plan for the same where each of installation,
maintenance and protection were dealt with as follows:
Installation – Easily understandable manuals and charts
Maintenance and Protection – Identify good maintenance practices and provide them beforehand.
Train the staff of the industries by charging for it. Dedicated support centres that tend
immediately for important customers and more.
We finally concluded that SKF should offer a kit instead of bearings as a product alone. The kit
should contain a large product assortment based on the application and the geographic location.
The idea was to provide the product + service as a package. So, the kit would also contain
installation manuals as discussed above.

III. TiVo
This case discusses product life cycle issues and how to make appropriate marketing mix to
address them. TiVo was an offering which provided customers the option of recording TV shows
and watching it later at their own convenience. The product was however priced quite high.
There were about 42000 subscribers after 14 months of the launch of the product in a market
size of 102 million. TiVo was in big trouble because of the following reasons:

 Feature presentation, unclear proposition - Position

 High price - Price
 Not user friendly - Product
 Inadequate customer education – Promotion
 Salespeople – Place
As it is mentioned above there were problems across all 4 Ps of the marketing mix of the
product.
Source: http://blog.zilicus.com/success-of-innovation-role-of-early-adopters/

As it can be seen from the above framework, TiVo was still a new product and its customers
belonged to the early-adopters segment at the time. They should have served as the opinion
leaders for TiVo. But it did not work as expected since the opinions were highly fragmented.

We also discussed about the concept of Disruptive products and Incremental products. Even
though TiVo seems like a radical product due to the perception that it completely changes the
habits of TV viewers and has a considerable amount of impact on networks and advertising
industry, VCRs were still able to serve many of the purposes that TiVo would. Also, TiVo was not
a perfect substitute for VCRs and people were required to have both of them to serve all the
purposes. Hence many perceived TiVo box as a super VCR and not as a completely new/radical
product.
Source: https://www.thestreet.com/markets/commodities/product-life-cycle-14882534

In the above Product Life Cycle framework, the company saw the product to be in the
introduction phase and was anticipating the growth phase. They saw the TiVo box as a radical
product. But the market saw it as an incremental product. The perspective is important since it
has major impact on the marketing strategy. If marketer misunderstands the product is a
radical innovation while the market thinks it is incremental, then marketer invests a lot and the
takeoff never happens. The investment becomes a sunk cost. Also, all radical innovations won’t
go blockbuster.

Features – Benefits – Value

Features Benefits Value

Thumbs up, Thumbs down Recommendations Content
Auto recording
Fast forward Skip ads Content
Live pause Time
Recording Live pause Time
Build own channels
“Watch what you want to watch. Watch when you want to watch” – Tagline of TiVo in line with
the value it is providing in terms of content and flexibility in time.
8 to 11 pm is primetime. Most people watch TV during this time. Networks adjust programs
according to this. 80-90% people can watch these popular shows. We addressed the question if
there was really a gap that TiVo should address?
Also, the investment of $1000 on a add-on for TV which costed more than the TV itself was an
aspect that made TiVo a hard sell for most of the customers. TiVo could have built its own
channel to provide more value, but it would require effort and time. Rather better
recommendations to the users of TiVo from existing channels would be better appreciated.