Strategi Marketing 2020

MARKETING STRATEGY.
UPH
2017
Dr. Jorge Mongay-Hurtado
www.gmongay.com Notes reproduced under the
permission of Dr. Roger J. Best, 2012.
Market Based Management
Customer Focus, Customer
Performance, and Profit Impact
Unit 1. Building a
Customer-Focused
Organization
In this section we will look at how customer-focused

organizations not only outperform their competition over
the long term by consistently delivering higher levels of
customer satisfaction, they also realize higher profits
over the short run.
Copyright Roger J. Best, 2012

Underwhelming Customers
Little or no customer focus translates into an unfocused competitive position and

minimal customer satisfaction. The result is a vicious circle of poor performance.

Top Performers Produce Higher
Investor Returns
Apple, Southwest Airlines, and Clorox would be a part of the top performers in the
graph above. Their average stock price index started at 100 and 10 years later
was 300. Poor performers started at 100 and 10 years later were still at 100.
Customer-Focused Organization
• Senior Mgmt Leadership

•Employee Customer
Training
• Customer Involvement
• Customer Experiences
• Customer Solutions
• Customer Complaints
• Customer Satisfaction
• Customer Retention
• Customer Loyalty
How would this model work differently in Bank of America

vs. Southwest Airlines?
Benchmarking Customer Satisfaction
American Customer Satisfaction Index - University of Michigan (www.theACSI.org)
ACSI studies have shown that Customer Satisfaction is a leading indicator of company
financial performance. The ACSI database reports all companies by industry.

Customer Focus, Customer
Performance, and Profit Impact
Measuring Customer
Performance
In this section we will look at how companies that use

customer performance metrics are able to identify their
unprofitable customers. For any business, knowing which
customers not to attract is just as important as knowing
which customers to attract.

Customer Satisfaction MBM6
A Key Performance Metric Chapter 1
Very
Satisfied
100
Satisfied
80
Somewhat
Satisfied
60
Somewhat
Dissatisfied
40
Dissatisfied
20
Very Dissatisfied
0
To determine the CSI for a sampling of customers, simply compute the average
of the customers’ satisfaction ratings. Customer satisfaction is a forecast of
future revenues and profits.
MBM6
Customer Satisfaction – Wide-Angle View Chapter 1
De-averaging CSI provides a wide-angle view of customer satisfaction and allows

managers to see more completely the opportunities for improvement.

Marketing
Profit Impact of Very Satisfied Customers Performance
Tool 1.1
De-averaging CSI is critical to understanding customer profitability
“Very satisfied” customers not only buy more, they often buy
higher-margin products and services, which results in a
higher percent margin on total sales.

MBM6
Profitability of Satisfied Customers Chapter 1
When we chart customer profitability against customer satisfaction,

we see that the “very satisfied” customers are the ones who
drive profitability.
Marketing
Complaint Behavior and Retention Performance
Tool 1.2
Dissatisfied customers often do not complain, but they do walk and they do talk.
Each year, the business above loses 22,400 customers who are
dissatisfied, but do not complain.
Customer Dissatisfaction and MBM6
the Use of Social Media Chapter 1
Facebook as an Outlet for Customer Dissatisfaction

An individual’s car was towed despite being legally parked with a
valid parking sticker. The individual created a Facebook page to
express his dissatisfaction with the towing company.
More than 10,000 supporters, some using other social media, also
expressed their dissatisfaction with the towing company.
Many related their own bad experiences, and 20 formal

complaints were filed over a 3-year period as a result .

MBM6
Estimating Customer Retention Chapter 1
How likely are you to buy this product or brand

again on your next purchase?
To estimate retention rates, businesses can use a customer survey as outlined above.

MBM6
NetFlix Customer Retention Chapter 1
The Customer Lifetime Value increases exponentially with increases in Customer Retention.
How will the radical price increase of 60% in 2011 impact NetFlix’s customer retention?

MBM6
Customer Performance and Profit Impact Chapter 1
Profit impact of
customer retention
and customer loyalty.
In this section we will look at how loyal customers

have a longer customer history, are more committed
to the company brand, buy more, and are more
likely to recommend the brand to others.

MBM6
Assessing Customer Loyalty Chapter 1
Loyal customers have a long customer history, buy at an above-average

purchase amount, have a high desire to repurchase, have strong product
preferences for the company’s products and would recommend the company’s
products to friends, relatives, and co-workers.

MBM6
Managing Customer Loyalty Chapter 1
Loyal Customers – High performance in all five aspects of customer loyalty

Repeat Customers – Great customers that buy often but score lower on purchase
amount, product preference, and customer recommendation.
Captive Customers – Have a long customer history and average purchase amount but
would leave if they could, as they are dissatisfied captive customers.
New Customers – Score low on all aspects of customer loyalty as they do not yet
have the customer history to assess their customer loyalty.
Unprofitable Customers – Score low on all aspects of customer loyalty.

Marketing
Customer Lifetime Value Performance
Tool 1.3
The average credit card customer for this company has a customer life of 5
years. It costs the company $51 to acquire a new customer and by year 5
they produce $55 in customer profit.
The lifetime value using a 10% discount rate is $111.70, the net present
value of the customer cash flow over 5 years.

Marketing
MBM6
Customer Loyalty & Customer Profitability Performance
Chapter
Tool 1.4 1
Loyal customers play an important role in company profitability.

How would management of customer loyalty improve profits?

MBM6
Marketing Metrics and Marketing Profitability Chapter 2
UNIT 2. MARKETING
METRICS
In this section we will look at financial performance and the

role marketing metrics play in providing a broader view of
overall company performance.

MBM6
Company Performance Chapter 2
How would you rate this company’s performance over the last 3 years?
Good, average, or poor?

MBM6
The Importance of Marketing Metrics Chapter 2
Marketing metrics provide a different view of company performance. How would

you rate the marketing performance shown above? Good, average, or poor?

MBM6
External Market Performance Chapter 2
The market is growing faster than company sales. This means the company is losing
market share, but is likely unaware without utilizing these market metrics.

MBM6
The Importance of Marketing Metrics Chapter 2
Analytics: The measurement devices or data used to create metrics.

Metrics: The specific measures of performance.
For Example: The measurement system used to measure customer satisfaction is a Marketing
Analytic. A Customer Satisfaction Index of 72 and % Very Satisfied of 20% are Marketing Metrics.

MBM6
A Well-Balanced Performance Profile Chapter 2
Internal View of Performance External View of Performance
Financial Metrics: These are internal performance metrics. Why are both
Marketing Metrics: These are external performance metrics. Important?

MBM6
Profit Impact of Marketing Metrics Chapter 2
Most marketing metrics

have high correlation
with profitability.
Businesses that
perform well on these
marketing performance
metrics are
considerably more
profitable.
Why would a business

with higher relative
service quality be more
profitable?

MBM6
Measuring Marketing
Profitability
and Marketing ROI
In this section we will look at how to

measure Marketing Profitability (NMC) and
Marketing ROI.

MBM6
Adding Marketing Profits to Performance Chapter 2
Why is Net Marketing Contribution a reasonable

measure of marketing profits?

MBM6
Marketing ROI and Marketing ROS Chapter 2
$125
$100
$75
NMC is 24%
of sales
$50
$25
Marketing Return on Sales (ROS)
= Net Marketing Contribution/Sales X 100% $0

= $30 million/ $125 million x 100% Sales NMC
= 24% $125 mil. $30 mil.
This marketing profitability metric tells us what portion of sales

are marketing profits.
MBM6
Marketing ROI and Marketing ROS Chapter 2
$125
NMC is:
$100
NMC = Gross - Marketing &
Profit Sales Exp.
$75 ($48.5M) (*$18.5M)
$50
$25 Mktg. &

Marketing Return on Investment (ROI) Sales
Expenses
$18.5M
= NMC/Mktg & Sales Exp. X 100% $0
= $30 million/ $18.5 million x 100% Sales Gross Profit NMC
= 162% $125M $48.5M $30M
In this case, for every $1 invested in Marketing & Sales Expenses, the
company produces $1.62 in marketing profits.
MBM6
Managing Marketing
Profitability
In this section we will look at Santa Fe Sportswear

with respect to how to use marketing profitability
in marketing management

Marketing
MBM6
Drop Casual Shorts From Product Line Performance
Chapter
Tool 2.1 2
Marketing Strategy: The Finance Manager wants to drop the Casual Shorts product line to improve profits!
Good decision or bad decision? How should the marketing manager and product manager respond?
* Marketing Performance Tool 2.1 can be used in analysis of this product line.

Managing the Khaki Pants MBM6
Product Line Marketing Profits Chapter 2
A more systematic view of what drives marketing profits in

the Khaki Pants product line.
MBM6
Marketing Profitability Product Portfolio Chapter 2
Product Portfolio
Using Marketing
ROS-RET ON SALES
and Marketing ROI
we can create a
portfolio view of
product
performance.
How important is the

Classic Polo product
line to the overall
performance of
Santa Fe
Sportswear?

Marketing
MBM6
Segment View of Marketing Profitability Performance
Chapter
Tool 2.2 2
Marketing Strategy: If Santa Fe Sports Wear had one more dollar to invest in
marketing and sales expenses, where should they invest it? * Marketing Performance
Tool 2.2 can be used for further analysis of this data.
MBM6
Strategies for Growing Marketing Profits Chapter 2
We can breakdown a measure of Net Marketing Contribution into

the model above which provides marketing and product
managers with strategic tools to grow marketing profits.

MBM6
Managing the Traditional Buyer Segment Chapter 2
A more systematic view of what drives marketing profits in the

Traditional Buyer market segment.
MBM6
Benchmarking Company
Marketing ROI
and Profit Impact
In this section we will look at marketing

profitability metrics with respect to competitors
and a sample of Fortune 500 companies.

Marketing
MBM6
Competitor Benchmarking Performance
Chapter
Tool 2.4 2
Competitor
Benchmarking
This allows us to see

Apple Performance
when compared to
competitors in their
industry.
What is your
interpretation of
Dell’s marketing
profitability?
* Marketing
Performance Tool
2.4 can be used to
analyze any five
companies.

MBM6
Benchmarking Apple Marketing ROI Chapter 2
Apple is above average in Marketing ROI but there are other

Fortune 500 companies with even better performance.
MBM6
Airline Competitor Marketing Profitability Chapter 2
As shown above, none of the airlines do particularly

well in Marketing ROS or Marketing ROI. United
Airlines had the lowest customer satisfaction and
Marketing ROI. GUESS WHY???
MBM6
Airline Industry Marketing ROI Chapter 2
The Airline Industry is well below average in Marketing ROS and Marketing
ROI and near the bottom when compared to other Fortune 500 companies.
Customer Focus, Customer MBM6
Performance, and Profit Impact Chapter 3
UNIT 3. Defining Market

Space and Estimating
Market Potential
In this section we will look at how the greatest threat to

a business’s survival—and a major cause of missed
market opportunities—is a narrow focus on existing
product-markets.

MBM6
Product-Market Structure Chapter 3
Forty years ago, several of these products did not exist, while
others had not yet reached their tipping point.
MBM6
Personal Computer Market Demand Chapter 3
Knowing the maximum number of units that can be consumed by the defined
market is of great strategic importance to a business: After a market reaches
its full potential and saturates, new customers will be hard to find.

Marketing
MBM6
Estimating Market Potential - PCs Performance
Chapter
Tool 3.1 3
The first step is to define the geographical boundaries and the consuming
units. The consuming units could be defined in terms of individuals, families,
households, businesses, or other purchasing entities.
MBM6
Innovation and Market Potential Chapter 3
New technology application essentially goes unnoticed until it reaches a tipping

point, then develops more rapidly through continuous innovation.
In order for the market to develop further, there must be a disruptive

innovation or a discontinuous innovation.
Customer Focus, Customer MBM6
Performance, and Profit Impact Chapter 3
Understanding Dynamics
of Market Demand
Throughout the Product
Lifecycle
In this section we will look at how

understanding market demand over time is an
important aspect of market planning and
strategy development.

MBM6
Factors of Market Development Chapter 3
Many new markets and most global markets are well below
their market potentials because large numbers of potential
customers have not yet entered them.
Product Life Cycle, Market MBM6
Demand, and Profits Chapter 3
In the early stages of the product life cycle the net marketing
contribution (NMC) is negative. As the product moves through the
lifecycle, NMC will reach break-even, grow, peak, flatten, and begin
to decline as market demand decreases.
The Customer Experience MBM6
and Value Creation Chapter 4
UNIT 4.
Understanding the
Customer Experience
In this section we will look at different

ways companies work to understand the
customer experience.
Copyright Roger
Copyright Roger J.J. Best,
Best, 20112012
MBM6
The Customer Experience Chapter 4
K'Nex Rippin' Rocket Roller Coaster Customer (Parent) Experience:

One of the year's hottest toys.
After 40 minutes of trying, I quit, having
completed only a few pages of the 80-
page instruction manual.
Design & Usability Testing Center (*)
At the lab, we observe people putting

stuff together and then they try to help
manufacturers simplify their
instructions.
"We're used to being tortured by
products," said Bill Gribbons, who runs
the lab.
He says companies often design

products for their own convenience,
rather than consumers.
* Bentley College, Massachusetts

MBM6
Empathic Design Chapter 4
Honda uses Empathic Design by video taping women shoppers putting

groceries in and taking them out a trunks.
How does this help Honda better understand the customer experience
and improve their trunk design?
MBM6
Understanding the Customer Experience Chapter 4
Same product, different experiences. What would you learn from

understanding all aspects of each customer’s product experience?
MBM6
Why Focus on Lead Users? Chapter 4

MBM6
Improving the Customer Experience Chapter 4
How well does Bank of America manage customer touch points?

How does their performance impact their brand image?
Measuring Customer
Value in Dollar Savings
In this section we will look at different ways companies

can assess the dollar value they create in customer
savings relative to competitors.

Southwest Airlines MBM6
Total Cost of Purchase Chapter 4

Creating Customer Value MBM6
Chapter 4
at a Higher Price
Weyerhaeuser saved
manufacturer’s
millions of dollars
with a product that:
 Eliminated the
lamentation process
 Extended the life of
saw blades
This enabled the
company to charge a
premium price and
still create
considerable
customer savings.

MBM6
Sources of Value Creation Chapter 4

Marketing
AirCap Total Cost per Shipment Performance
Tool 4.1
Customer Application: Shipping a $500 electronic instrument
How can AirCap charge $0.25 more for packaging

material per shipment than their competitor?
Lowering Disposal Costs as MBM6
Chapter 4
A Source of Value Creation

Marketing
Company Performance Performance
Tool 4.2
Canon A590
How does the Value Map help the Canon A590 management team interpret
the competitor position and value of competing products?
MBM6
Sport Utility Vehicle Value Map Chapter 4
How would you evaluate the Toyota Highlander value based on these results?
(Data Source: “Best and Worst New and Used Cars,” Consumer Reports (2011): 43.)
Lexus Customer Experience MBM6
and Value Strategy Chapter 4
Lexus sets a desired price and then seeks to add product improvements based on
customer suggestions. These customer interviews are done one-on-one with
customers and Toyota engineers and marketing professionals.
Measuring Perceived
Customer Value
Customer perceptions shape assessments of customer

value. However, some aspects of value, like brand
reputation, can’t be measured in terms of savings.

MBM6
Measuring Perceived Product Performance Chapter 4
1 2
Business Rating - Competitor Rating
3
Indexing Competitive Advantage
Relative Comp. Comp. Comp. Relative Comp. Comp. Comp. Rel.
Product Performance Importance A B C Product Performance Importance A B C Adv.(*)
Machine Uptime 40 1 3 2 Machine Uptime 40 0 40 40 27
Print Speed 30 1 4 4 Print Speed 30 1 4 4 20
Image Quality 20 0 0 1 Image Quality 20 0 0 1 0
Ease of Use 10 -2 -3 -2 Ease of Use 10 -2 -3 -2 -10
100 100 37
When the business is rated 2 or more over a competitor it gets the relative
importance points. If it is 2 or more points lower, it loses the relative importance
points. Between -1 and +1 no points are won or lost.
Service Quality & Brand Reputation MBM6
Perceptions Are Indexed that Same Way Chapter 4

MBM6
Overall Performance Chapter 4
Because each core area of performance could

have different importance to customers, these
area are assigned a Relative Importance.
The overall performance is a weighted average of

the relative advantage and relative importance for
the three core areas of performance.
In this case the overall performance is 123.

MBM6
Brand Personality Chapter 4
How would you describe the Abercrombie & Fitch brand personality?
Why would it be effective with their target market?
Market Segmentation MBM6
and Segmentation Strategies Chapter 5
UNIT 5.
Needs-Based Market
Segmentation
In this section we will focus on needs-based

segmentation and why customer needs should
be the first step in the process.

MBM6
The Millennials Segment Chapter 5
Millennials is a needs-based segment defined by age (18-24). View this video to

better understand this segment: We All Want To Be Young, http://vimeo.com/16638983
Why should this segment important to marketers of consumer products

such as sunglasses, clothing, and food preferences?
MBM6
Companies Targeting Millennials Chapter 5
 P&G -Herbal Essences repositioned

an aging mass-market brand to
appeal to socially active young adult
women 20-35.
 Target has geared its message by

focusing on affordable prices, stylish
products, and socially correct values.
One ad features two college
roommates dancing and decorating
their dorm room with Target
products…“Happy together, design
together, save together.”
 Grape Nuts’ advertising and its Recognized Brands include:

Web site reflect the Gen Y theme of Apple Facebook Herbal Essences
“give it to me straight but don't Scion Red Bull Target
bore me.” Converse Jamba Juice Grape Nuts

MBM6
Toyota Targeting Millennials Chapter 5
Toyota is launching a TV campaign for the

Yaris model featuring singer Gaz Coombes.
MBM6
Customer Needs & Customer Identity Chapter 5
Segment B Segment A
How do customer
needs correspond with
differences in customer
demographics?

Marketing
PC Customer Needs & Price Performance

Tool 5.1
Why would different customers select different options?

Marketing
What Drives Customer Needs? Performance

Tool 5.2

Marketing
Toothpaste – Needs-Based Segments Performance
Tool 5.4

MBM6
Business Customer Needs Chapter 5
Industrial, commercial and hi-tech customers needs are also shaped

by company demographics, company culture and usage behaviors.

Building Needs-Based
Market Segments
In this section we will focus on how to build

a needs-based market segment.

MBM6
The Segmentation Process Chapter 5

Steps 1 & 2 - Segment Core Needs MBM6
and Segment Identification Chapter 5

MBM6
Step 3 – Segment Attractiveness Chapter 5
P
,G,
S
Segment attractiveness can vary from one segment to

another based on market demand, competitive intensity and
access to customers.
MBM6
Market Segment Profile Chapter 5
Health Insurance Company
How would this market

segmentation help this
company improve sales and
profits?

Marketing
Step 4 – Segment Profitability Performance
Tool 5.3
Silicon Sealants
How would this segment

profitably help segmentation
help this company improve
sales and profits?

MBM6
Step 5 – Segment Positioning Chapter 5
Kevlar: Same product, two segment applications and positioning strategies.

Segmentation
Strategies
In this section we will focus on a variety of

market segmentation strategies.

MBM6
Segmentation Strategies Chapter 5
Why would different banks use different segmentation strategies?

MBM6
Market Segmentation of Gasoline Market Chapter 5
How would a local gas station select and segment and position its gas station?

Marketing
Customer Relationship Marketing Performance
Tool 5.5
There are
three levels of
Customer
Relationship
Marketing
Mass
Personalization
Mass Customization
Customer
Relationship
Management

Examples of Customer MBM6
Relationship Marketing Chapter 5
Mass Personalization Mass Customization Relationship Marketing

(Airline Mileage Programs) (Car Manufacturers) (Financial Services)

Competitive Position & MBM6
Sources of Advantage Chapter 6
UNIT 6.
Understanding Competitive
Advantage, Customer Value,
and Profitability
In this section we will look at how a competitive

advantage results in some level of superior customer
value based on a customer’s preference for
performance benefits, the cost of the purchase, and
the ease of the purchase.

Competitive Advantage, Customer MBM6
Value, & Profitability Chapter 6
Superior customer value results in superior profits
To achieve above-average profits, a business has to develop some

source of competitive advantage that provides target customers with
positive customer value.
MBM6
Sources of Competitive Advantage Chapter 6

Marketing
MBM6
Unit Cost & Experience Curve Performance
Chapter
Tool 6.1 6
As volume increases, the cost

per unit generally decreases.
Scale Effect: larger unit volume

allows for production and purchasing
economies that lower the per-unit
manufacturing cost of a product.
Scope Effect: a business can lower

the average unit cost of all products by
adding products that have similar
manufacturing processes and that are
made of the same materials as its other
products.
Learning Effects: each unit produced

provides additional learning and the
opportunity to build the next unit more
efficiently.

MBM6
Service Differentiation Advantage Chapter 6
By tracking its service performance each day, FedEx is able to

create greater overall customer satisfaction with fewer errors,
lower costs, and greater profits for shareholders.
MBM6
Brand Advantage & Profitability Chapter 6
The stature of brand names adds a dimension of appeal that is an

important customer benefit for many less price-sensitive, more
image-conscious consumers.
Marketing
MBM6
Market Share Advantage & Profits Performance
Chapter
Tool 6.3 6
The more dominant the share leader is with regard to market share
compared with its top three competitors, the greater are the share
leader’s profits.
Marketing
MBM6
Product Line Advantage Performance
Chapter
Tool 6.3 6
Microbrew Segment
Import Position
A broad product line gives a business more prospective
customers and the potential to sell more to each
customer—translating into more sales and higher levels
of profitability.
Low-Cal, Low-Carb

Marketing
MBM6
Channel Advantage Performance
Chapter
Tool 6.3 6
A business that has exclusive access to

distributors can control channels in a given
market and, to some degree, can control
market access.
Discovering Sources of
Competitive Advantage
In this section we will look at how a competitive

advantage requires that (1) the area of relative
advantage be meaningful to target customers, and (2)
the relative advantage be sustainable (not easily copied
by competitors).

MBM6
Knowing When a Competitor is in Trouble Chapter 6

MBM6
Competitor Analysis Chapter 6

MBM6
Competitor Analysis Chapter 6
This competitor analysis is broken down into two categories: market-

based performance and operating performance.
MBM6
Competitive Benchmarking Chapter 6

Assessing Industry
Attractiveness and Forces
In the final section we will briefly look at how we need

to engage in a detailed analysis of competitors to
understand the degree to which a business has a
position of competitive advantage.

Marketing
MBM6
Industry Forces and Profit Potential Performance
Chapter
Tool 6.4 6

Product Positioning, Branding MBM6
and Product Line Strategies Chapter 7
UNIT 7.
Product Positioning
& Positioning
Strategies
In this section we will focus on

different approaches to product
positioning.

MBM6
Starbucks Brand Strategy Chapter 7
Core Brand
Branded Product Lines
The new logo frees Starbucks from a pure coffee brand and
allows for other products to evolve under the new brand logo.

MBM6
Black & Decker Positioning Strategy Chapter 7

Marketing
Repositioning Strategy Performance
Tool 7.1
Loctite Quick Metal

MBM6
Nike Product Positioning Chapter 7
Product positioning has many elements.

Explain how each play a role in Nike’s
product position and market share.

MBM6
Samsung – Repositioning Strategy Chapter 7

GE Appliance Product Line MBM6
Chapter 7
Positioning Strategy
What is the logic behind GE’s

Product Line Strategy?

MBM6
Branding Strategies Chapter 7
Cessna Citation CJ1+

MBM6
Toyota Brand Strategy Chapter 7
Why did Toyota introduce the Lexus brand?

MBM6
Brand Name Strategies Chapter 7

MBM6
Product Line Breadth & Profitability Chapter 7
Why would companies with broader

product lines be more profitable?

Honda Branding and MBM6
Chapter 7
Product Line Strategy
How does the Honda name and image

help sell their extensive product line?
Value-Based Pricing MBM6
and Pricing Strategies Chapter 8
UNIT 8:
Value Pricing
Strategies
& Customer Value
This section focuses on different

approaches to value pricing.

Pre-Launch
How Much Would Price Research
You Pay for an iPad? Mac Users
• 41% would pay over

$800.
• 32% would not pay

over $600.
PC Users
• Only 20% would pay

over $800.
• 64% would not pay

over $600.

MBM6
Apple iPad Pricing Strategy Chapter 8
Six price-performance iPads

cover customer price
preferences.

MBM6
Cost-Based vs. Market-Based Pricing Chapter 8
Cost-Based Pricing: Starts with cost and desired margin and is marked up along the
channel to a customer selling price of $940
Market-Based Pricing: Price is set based on competitive advantage and value ($1000)
and discounts and costs deducted to arrive at a company margin.

MBM6
Cost of Car Ownership Chapter 8
Assume the price of a new Honda Civic is $20,000 and is owned for 3 years.
What are the ownership costs a buyer should consider in buying this car?
Marketing
Value In-Use Pricing Performance
Tool 8.1
The company price its product 10% higher

than their competitor.
Why would a customer pay more for this

product?

Product Life-Cycle
Pricing Strategies
This section focuses on different

pricing strategies for different stages of
the product life-cycle.

MBM6
Why is a skim pricing

strategy often used
during the early
growth phase of the
product life cycle?

MBM6
How is a Single
Segment price
strategy different
than a Skim price
strategy?

MBM6
Why would a
company pursue a
penetration (low
price) strategy during
the early growth
stage of the product
life cycle?

MBM6
What is the
difference between a
Low-Cost Leader
pricing strategy and
Penetration pricing
strategy?

MBM6
Mac Price Elasticity Chapter 8
Price Elasticity = % Change Volume = 10% Change Volume = -2.55

% Change Price -3.9 % Change Price
When the percent change in volume is greater than the

percent change in price, we have an elastic price.
MBM6
Price Elasticity and Profit Impact Chapter 8
Inelastic Prices: Never lower price when a price is inelastic. A lower price will result in
lower sales and lower profits.
Elastic Prices: Use caution when lowering prices when prices are elastic. If percent margins
are low, a lower price will increase sales but often result in lower profits.
MBM6
Breakeven Market Share Chapter 8
Breakeven Analysis
• Volume where zero

profits occur is 24 million
units.
Breakeven Volume:
= Fixed Expenses
(Price – Unit Cost)
Breakeven Market Share:

= Breakeven Volume
Market Demand
Why is breakeven market

share a better marketing
profitability metric?

Marketing Communications, Social Media, MBM6
and Customer Response Chapter 10
UNIT 9. Marketing
Communication Objectives
In this section we will look at how most marketing

communications can be placed in one of three broad
categories according to their objectives—brand-
image, brand-information, or brand-action
communications.

 The Force was posted 4 days

prior to Super Bowl XLV. Prior to
the game, there were over 10
million views, 10,000 comments,
and 62,000 “likes.”
 The Force aired during the

Super Bowl, gaining an
estimated 100 million
impressions.
 During the week following the

game, another 18.5 million
people viewed The Force on
YouTube.
How effective do you think this tactic was for VW? Do you think that this will
change the way marketers think about traditional media spend?

MBM6
Brand Communication Objectives Chapter 10
■ Brand-Image Communications—designed to trigger

an emotional response that builds a strong connection
between the brand and the image the company wants
to create among its target customers.
■ Brand-Information Communications—designed to
create interest and offer information in order to achieve
high recall among target customers of key product
attributes that differentiate the brand.
■ Brand-Action Communications—designed to
stimulate potential customers to take action, such as
contacting the company, visiting the company’s web
site, obtaining a free sample, and trying or buying the
company’s product.

MBM6
Brand-Image Communication Chapter 10
What impact does this Nike brand-image marketing communication have

on you? Does it solicit an emotional response and form a positive
association between the brand and performance?
MBM6
Brand-Information Communication Chapter 10
What information does Kyocera want you to take away from this print ad?

MBM6
Brand-Action Communication Chapter 10
What action would the Feynman Group like you to take after reading this email?
Digital Marketing
Communications
In this section we will look at how the explosion in digital

and social media marketing has been the most
significant change in marketing communications since
the pre-television era—and what that means for
marketers.

Digital Communication and MBM6
Performance Metrics Chapter 10
The figure below shows the results of an e-mail campaign that was designed to
generate leads by targeting managers at Fortune 500 companies.
This digital campaign resulted in 161 responses from recipients. How would
you characterize this level of performance?
Digital Communication and MBM6
Performance Metrics Chapter 10
This is an example of an email

campaign intended to
motivate recipients to
participate in a webinar.
Web traffic spiked after the e-

mail was sent, resulting in 63
click-throughs that led to 42
actual registrations.
Of the 42 registrants, 35
participated (83%), and
several attended a
subsequent face-to-face fee-
based workshop on the topic.

Social Media Marketing MBM6
Objectives and Outcomes Chapter 10
■ Brand Building—Deepen customer

relationships and engage in
conversations with the brand
community.
■ Information Exchange—Share
experiences and exchange information
to encourage word-of-mouth and to
better understand product usage and
benefits.
■ Problem Solving—Gather customer

feedback, provide customer service, and
resolve customer complaints.

MBM6
Cessna – Leveraging Facebook Chapter 10
Why should a business like Cessna engage their customers on various

social media platforms?
MBM6
Lenox - YouTube Brand-Building Chapter 10
What is the benefit of using a YouTube Channel for Lenox Tools? Are there any
potential downsides? Does it vary by industry?
MBM6
Alaska Air – Leveraging Twitter Chapter 10
What could other companies or industries learn from Alaska Air’s use of Twitter?

MBM6
HeadBlade – Leveraging Apps Chapter 10
To build brand awareness, HeadBlade created an iPhone app to

engage curious prospective customers by letting them see photos of
themselves with a shaved head.
MBM6
Old Spice – Viral Videos Chapter 10
Sales of Old Spice Body Wash were up 27 percent following the Super
Bowl in 2010, up 55 percent in the 3 months following the game, and up
107 percent in July 2010 when the YouTube videos aired.
Marketing Communications
and Customer Response
In this section we will look at the broader issue of the

effectiveness of marketing communications, regardless
of the marketing venue used.

MBM6
Global Media Spending 2006-2010 Chapter 10
As a percentage of sales, spending on nearly all forms of advertising

declined somewhat from 2008 to 2010, with digital advertising a notable
exception. How do you think the dynamic will shift in the future?

MBM6
Ad Frequency and Awareness Chapter 10
In order for a marketing communication to have any chance of

achieving its customer-response objective, it must have some
level of message frequency.
Marketing
MBM6
Advertising and Customer Response Performance
Chapter
Tool 10.110
The customer response index is based on the performance scores along

the top of the customer response tree. Where should this business
focus its efforts, given the results above?
MBM6
Causes of Low Customer Response Chapter 10
To reach target customers effectively, a business has to have a good

understanding of the media habits of its target customers.
MBM6
Advertising and Customer Response Chapter 10
For any level of

awareness among
potential customers,
the levels of
comprehension,
intention, and purchase
are successively lower.
Sustained profitability
depends on customer
retention, and each
step in the hierarchy of
customer response is a
step toward
profitability.

MBM6
Message Frequency and Awareness Chapter 10
A target customer is
exposed to only a fraction
of the total number of
messages in an
advertising campaign.
Nearly all marketing

communications send
more messages than the
target audience receives,
as illustrated in the table.

MBM6
Message Reinforcement Strategies Chapter 10
What are examples of situations when you would want to

use each of the different approaches to frequency?
MBM6
Push-Pull Communications Chapter 10
Customer-directed marketing communications are pull communications.

Push communications are directed at channel intermediaries.
MBM6
Sales-Advertising Relationship Chapter 10
The 0.94 correlation

between advertising
expenditures and
sales for apparel
company Hart
Schaffner Marx is
very high.

Marketing
MBM6
Advertising and Sales Carryover Performance
Chapter
Tool 10.310

Marketing
MBM6
Promotional Price Elasticity Performance
Chapter
Tool 10.210
The promotional price elasticity of all three products increased

significantly with the use of advertising. For cat litter, this effect was very
dramatic, almost doubling the promotional price elasticity.
MBM6
Retail Promotion Price and Sales Chapter 10
The idea is that the price incentive will motivate intermediaries to push
the product. In many instances this strategy backfires, as intermediaries
run down their inventories before a promotion and then buy more at a
lower price during the promotion.

Portfolio Analysis MBM6
and Strategic Market Planning Chapter 11
UNIT 10.
Portfolio Planning
Models
In this section we will review different

approaches to Portfolio Analysis.

and Strategic Market Planning Chapter 11
Yum Brands
Store-Brand Portfolio Chapter 11 Objectives
 Portfolio Analysis
Models
 Portfolio Position and

Strategic Market Plan
 Portfolio Planning and

Portfolio Performance
Note: Sales in proportion to circle size

MBM6
Yum Brands Portfolio Strategy Chapter 11
 Invest to Grow – Kentucky Fried Chicken,

Taco Bell and Pizza Hut.
 Divest – A&W and Long John Silver’s

were sold in 2011.
 New Market Investment: - The cash freed

up from divesting was used to invest
growing their 3 core brands internationally.
2011
$12.6
$1.82
$14.4%

MBM6
Toyota Product Portfolio Chapter 11
1964 Toyota Corolla
How has the Toyota Product Portfolio evolved

and contributed to sales and profitable growth?
Portfolio Model I Marketing
Performance
Product Lifecycle Portfolio Tool 11.1
Let’s assume these are two separate companies. Which would be

a better long term investment with respect to a stock purchase?

MBM6
Apple Mac vs. iPad Chapter 11
How does market

attractiveness and
competitive position
differ for these two
Apple products?
62%
Market Share (%)

Market Demand
Mac
iPad
6%
Time Mac iPad
Market Growth as a Measure MBM6
of Market Attractiveness Chapter 11
Market Growth is often used as a measure

of Market Attractiveness. Why?
Market Share Development Index MBM6
Chapter 11
As a Measure of Competitive Position
The Market Share Development index is a good measure of

competitive position for strategic management. Why?
Portfolio Model II: Marketing
Performance
Market Growth vs. Share Development Tool 11.2
Product Portfolio
Product A: Slow growth

near full share development
Product B: No growth 65%

of share potential.
Product C: 10% growth

rate and 50% of share
potential.
Product D: 20% growth

potential,
Product E: 23% growth

potential
What would be the right investment strategy for each product?
MBM6
Product Portfolio Share Strategy Chapter 11
Product Portfolio
Product A: Hold Share
Product B: Harvest Share.
Product C: Growth Share.
Product D: Growth Share,
Product E: Hold Share
What is the logic

underlying these
share strategies?

Portfolio Model III: GE-McKinsey MBM6
Multi-Factor Portfolio Model Chapter 11
GE-McKinsey Model
Market Attractiveness
Attractiveness based on several
factors such as Market Size, Market
Growth, Competitive Intensity.
Each is weighted according to

importance and then rated based on
Market Attractiveness.
Competitive Position
Position based on several factors
such as Market Share, Product
Performance, Brand Reputation.
Each should be weighted

according to importance and then
rated based on Competitive Position.
Intel uses this portfolio approach to prioritize new product investment projects.
GE-McKinsey Model MBM6
Chapter 11
One approach is to create three major dimensions of

Market Attractiveness and then specify a subset of
performance metrics for that dimension.

Marketing
Assessing Market Attractiveness Performance
Tool 11.3
Usage Process
1.Select three dimensions of market
attractiveness and weight each such
the total adds to 100%.
2.For each dimension identify three

areas of measureable market
attractiveness.
3.For each dimension weight the

performance metrics such that the total
adds to 100%.
4.Rate each performance metric on a

scale fro 0 (very unattractive condition)
to 100 (extremely attractive condition).
5.An overall score (61) is produced

along with three dimension scores.

GE-McKinsey Model MBM6
Chapter 11
Create three major dimensions of Competitive

Position and then specify a subset of performance
metrics for that dimension.

Marketing
Assessing Competitive Position Performance
Tool 11.3
Usage Process
1.Select three dimensions of
Competitive Position and weight each
such the total adds to 100%.
2.For each dimension identify three

areas of measureable competitive
position..
3.For each dimension weight the

performance metrics such that the total
adds to 100%.
4.Rate each performance metric on a

scale fro 0 (very weak competitive
position) to 100 (extremely strong
competitive position).
5.An overall score (55) is produced

along with three dimension scores.

MBM6
GM Portfolio Strategy Chapter 11
GM Portfolio Strategy
Before 2010
Hold – Brands with average
market attractiveness and
average to good competitive
position were retained.
Divest – The 4 brands with

weak market attractiveness
and poor competitive positions
were divested.
2010.
Hold – The new portfolio
retained 8 GM brands with
average to good strategic
positions.
Invest – Volt was added to the
portfolio.
How did the GM Portfolio

Strategy impact sales and
profits?
Chapter 11
and Strategic Market Planning
Portfolio Position and

Strategic Market Plan
In this section we will focus on

different portfolio strategies.

MBM6
Offensive vs. Defensive Strategies Chapter 11
A business may pursue an Offensive Strategy or Defensive Strategy

based on portfolio analysis and business performance objectives.
MBM6
Offensive vs. Defensive Plans Chapter 11

Product Portfolio Position MBM6
Chapter 11
and Portfolio Strategies
How did GM apply the various portfolio

strategies to it’s 2010 portfolio?
MBM6
Selecting A Portfolio Strategy Chapter 11
A business may have to look at a defensive strategy when it would prefer

an offensive strategy when faced with limited resources.
As the product manager for this consumer electronics product,

which portfolio strategy would you prefer to pursue?
Portfolio Diversification MBM6
Chapter 11
& Performance Variance
Diversified Portfolios
These are portfolios in which

individual Product-Markets
operate independent from
one another.
Performance Variance
The overall performance

variance in sales (6%) is
much smaller than the
individual performance
variance of the individual
product-markets (17% to
57%)…..Why?

Chapter 11
and Strategic Market Planning
Portfolio Planning &

Portfolio Performance
In this section we will focus on the

performance impact of portfolio planning.

Portfolio Strategy to MBM6
Chapter 11
Grow Sales and Profits

Portfolio Strategy MBM6
to Grow Sales Chapter 11
C A
Current (Base Year)
Plan (Year 3)

Portfolio Strategy MBM6
Chapter 11
to Grow Marketing Profits
Current (Base Year)
Plan (Year 3)

Strategi Marketing 2020

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MARKETING STRATEGY.

In this section we will look at how customer-focused

Copyright Roger J. Best, 2012

Little or no customer focus translates into an unfocused competitive position and

Copyright Roger J. Best, 2012

• Senior Mgmt Leadership

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Copyright Roger J. Best, 2012

Copyright Roger J. Best, 2012

In this section we will look at how loyal customers

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Loyal customers have a long customer history, buy at an above-average

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Loyal Customers – High performance in all five aspects of customer loyalty

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Copyright Roger J. Best, 2012

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Copyright Roger J. Best, 2012

In this section we will look at financial performance and the

Copyright Roger J. Best, 2012

Copyright Roger J. Best, 2012

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Copyright Roger J. Best, 2012

Analytics: The measurement devices or data used to create metrics.

Copyright Roger J. Best, 2012

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Copyright Roger J. Best, 2012

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Copyright Roger J. Best, 2012

In this section we will look at how to

Copyright Roger J. Best, 2012

Why is Net Marketing Contribution a reasonable

Copyright Roger J. Best, 2012

= Net Marketing Contribution/Sales X 100% $0

This marketing profitability metric tells us what portion of sales

$25 Mktg. &

In this section we will look at Santa Fe Sportswear

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A more systematic view of what drives marketing profits in

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Copyright Roger J. Best, 2012

We can breakdown a measure of Net Marketing Contribution into

Copyright Roger J. Best, 2012

A more systematic view of what drives marketing profits in the

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Copyright Roger J. Best, 2012

This allows us to see

Copyright Roger J. Best, 2012