Figures and Graphs

2012 Alexander Chernev

The Role of Frameworks in Marketing Management

Framework

Typical problem
Abstraction Specific problem

Typical solution
Application Specific solution

Trial & error

The 3-V Principle of Managing Value

Company value
OVP

Customer value

Collaborator value

Optimal value proposition

The G-STIC Framework for Action Planning

Goal Strategy Tactics Implementation

Control

Identifying Target Markets: The 5-C Framework

Customers

Customers

Customers

Competitors

Competitors

Competitors

Context

Context

Context

Identifying Target Customers & Developing a Value Proposition

Company value Customers Value

Customer value

Competitors

Collaborator value

Context

Customers

Value

Company value
OVP

Customer value

Competitors

Collaborator value

Context

Designing the Tactics

Product

Service

Brand

Product

Service

Brand

Incentives

OVP

Price Distribution

Incentives

OVP

Price

Communication

Communication

Distribution
Product

Service

Brand

Incentives

OVP

Price

Communication

Distribution

Developing an Action Plan: The Big Picture

Strategy Target market Tactics Product Incentives Service Brand Price Distribution Communication Implementation Organizational infrastructure Business processes Control Performance evaluation Environmental analysis Implementation schedule Value proposition

Goal
Focus Benchmarks

Strategy
Target market Product Incentives Service Value proposition Brand Price Distribution

Tactics
Communication

Implementation
Organizational infrastructure Business processes Implementation schedule

Control
Performance evaluation Environmental analysis

Segmentation, Mass Marketing, & One-to-One Marketing

Offering

Customer Customer Customer Customer Customer Customer

1 2 3 4 5 6

Offering A

Offering B

Customer Customer Customer Customer Customer Customer

1 2 3 4 5 6

Offering A Offering B Offering C Offering D Offering E Offering F

Customer Customer Customer Customer Customer Customer

1 2 3 4 5 6

Mass marketing

Segment-based marketing

One-to-one marketing

Market Segmentation Strategies

Non-segmented market

Segmentation I

Segmentation II

Segmentation III

Strategic Targeting: Selecting Value-Based Segments

Segment A Segment B Segment C

Tactical Targeting: Linking Value and Profile Segments

Demographics Behavior

Geography Psychographics

2006 Alexander Chernev

Tactical Targeting Scenarios

Sniper targeting (perfect fit)

Shotgun targeting (broad)

Oversegmentation (narrow)

Shot-in-the-dark (misaligned)

Value-based segment (unobservable) Profile-based-segment (observable)

2006 Alexander Chernev

Multi-Segment & Single-Segment Product Line Strategies

Target segment C1 Target segment C2 Target segment C2

Segmentation

Targeting Offering 1 Action plan C1 Offering 3 Action plan C3

Offering 2 Action plan C2

The Three Dimensions of Customer Value

Functional value Customer value Monetary value Psychological value

2006 Alexander Chernev

Competitive Advantage: A Source of Customer Value

Irrelevant attributes Irrelevant attributes Strengths Competitive advantage Strengths Weaknesses Competitive parity Shared attributes

Weaknesses Shared attributes

Offering A

Offering B

The Concept of Economic Value Analysis

Functional value Customer value Monetary value

Monetizing functional value Monetizing psychological value

Psychological value

Economic Value as a Function of the Differences in Total Costs

Difference in total cost

Cost of ownership

Cost of ownership

Difference in price Price

Price

Offering X

Offering Y

Attribute-Value Map

Customer value Companys offering k Competitive offering A l Competitive offering B j Competitive advantage k Competitive parity l Competitive disadvantage Attribute 1 Attribute 2 Attribute 3 Attribute 4 Attribute 5

Positioning Map

Attribute 1

Offering A Offering B

Offering C Attribute 2

Offering D

Offering E

The Three Dimensions of Company Value

Monetary value Customer value Functional value Psychological value

Creating Company Value: Profit-Growth Analysis

Volume Revenues Price Net income

New Customers Current customers

New to the category Competitors customers

COGS Costs Marketing

Other

Strategies for Managing Sales Growth

Customers new to the category Sales volume Competitors customers Current customers

Managing adoption Managing usage

The SWOT Framework

Favorable factors Internal factors

Unfavorable factors

Strengths

Weaknesses

Company analysis
Market analysis

Opportunities

Threats

Product-Market Growth Matrix

Current customers New customers Current products New products Market penetration Product development Market development Diversification

Conflicts in Vertical Collaboration

Manufacturer

Manufacturer

Distributor

Distributor A

Distributor B

Customer Vertical channel conflict

Customer
Horizontal channel conflict

Conflicts in Horizontal Collaboration

Company

Collaborator

Customer

Steal-Share Strategy

Current users

Market-Growth Strategy

Current users

New users

Market-Growth Strategy for a Superior Offering

Current users

New users

Market-Innovation Strategy

Current users Current market

New users

New market

Defensive Marketing Strategies

Custome r costs
Do nothin g Move downscale

Move upscale

Launch premium offering Increas e benefits

Launch economy offering

Reduce costs

Customer benefits

The Five Forces of Competition

New entrants 3

Suppliers

Competitors 5

Buyers

4 Substitutes

1 Bargaining power of suppliers 2 Bargaining power of buyers 3 Threat of new entrants 4 Threat of substitutes 5 Rivalry among extant competitors

Product/Service Management as a Value-Creation Process

Product Service

Company value
OV P

Customer value

Collaborator value

Context

Product Service

Company value
OVP

Customer value

Collaborator value

Context

Managing Products by Streamlining the Marketing Mix

Brand

Price

Service

Product

Incentives

Distribution

Communication

Brand

Price

Service

Product

Incentives

Distribution

Communication

Branding as a Value-Creation Process

Company value

Customer value
OV P

Brand

Collaborator value

Context

Company value

Customer value
OVP

Brand

Collaborator value

Context

Managing Brands by Streamlining the Marketing Mix

Service

Incentives

Product

Brand

Distribution

Price

Communication

Service

Incentives

Product

Brand

Distribution

Price

Communication

Pricing as a Value-Creation Process

Company value

Customer value
OV P

Price

Collaborator value

Context

Company value

Customer value
OVP

Price

Collaborator value

Context

Managing Price by Streamlining the Marketing Mix

Brand

Incentives

Product

Price

Distribution

Service

Communication

Brand

Incentives

Product

Price

Distribution

Service

Communication

Managing Incentives as a Value-Creation Process

Company value
Incentives
OV P

Customer value

Collaborator value

Context

Company value
Incentives
OVP

Customer value

Collaborator value

Context

Managing Incentives by Streamlining the Marketing Mix

Service

Brand

Product

Incentives

Distribution

Price

Communication

Service

Brand

Product

Incentives

Distribution

Price

Communication

Pull and Push Promotion Strategies

Push strategy Manufacturer Demand Incentives Communications

Pull strategy Manufacturer Demand Retailer Demand Customer

Retailer
Demand Incentives Communications

Incentives Communications

Customer

Communications as a Value-Creation Process

Communication

Company value
OV P

Customer value

Collaborator value

Context

Communication

Company value
OVP

Customer value

Collaborator value

Context

Managing Communications by Streamlining the Marketing Mix

Service

Brand

Product

Communication

Distribution

Price

Incentives

Service

Brand

Product

Communication

Distribution

Price

Incentives

Planning a Communication Campaign

Goal Message Media Creative solution Implementation Control

Distribution as a Value-Creation Process

Company value
Distribution
OV P

Customer value

Collaborator value

Context

Company value
Distribution
OVP

Customer value

Collaborator value

Context

Managing Distribution by Streamlining the Marketing Mix

Service

Brand

Product

Distribution

Incentives

Price

Communication

Service

Brand

Product

Distribution

Incentives

Price

Communication

Distribution Channel Structure

Company

Wholesaler

Retailer

Retailer

Customer
Direct channel

Customer

Customer

Indirect channels Hybrid channel

Managing Sales Growth

New customers
Managing Sales Growth Current customers

Managing adoption Managing usage

The Adoption Funnel

Awareness Understanding Attractiveness Affordability Availability Purchase intent Purchase

Identifying Adoption Gaps

j
All target customers Aware of the offerings existence

m
Can afford the offering

n
Have access to the offering

o
Intend to purchase the offering

Understand Perceive the the offerings offering to be benefits attractive

Purchased the offering

Identifying Actionable Goals

Offering attractiveness

Usage frequency

Consumption quantity

Usage quantity

Replacement frequency

Offering availability

Identifying Consumption Gaps

Satisfaction

Usage frequency

Usage quantity

Replacement frequency

Availability

The Typical S-Shaped Pattern of New Product Adoption

Total adoptions

Number of adoptions

Speed of diffusion

Inflection point

Market potential

Time

Time

Managing the Product Life Cycle

Sales

Introduction Market size Market growth Competition Small Low Low

Growth Moderate High Moderate

Maturity Large Low High

Decline

Time

Moderate/Small Negative Moderate/Low

Extending Product Life Cycle through Innovation

Sales revenues

Third generation

Second generation

First generation

Time

Rogers Model of Adoption of Innovation

Number of adoptions

2.5% Innovators

13.5% Early adopters

34% Early majority

34% Late majority

16% Laggards

Time

(x-2SD)

(x+SD)

Moores Technology Adoption Model

Number of adoptions
The chasm

Enthusiasts

Visionaries

Pragmatists

Conservatives

Skeptics

Time

Early market

Mainstream market

Vertical Extensions

Price

Upscale offering

Downscale offering Benefits

Horizontal Extensions

Price

Offering A

Offering B

Benefits

Managing Product-Line Cannibalization

Existing offering s

Existing offerings

Existing offerings

Loss of share due to cannibalization New offering

New offering

Competitive offerings

Competitive offerings

Competitive offerings Dual-offering scenario with cannibalization

Single-offering scenario

Dual-offering scenario with cannibalization

The Fighting-Brand Strategy

Price Quality

Incumbent brand

Low-price competitors Fighting brand Time

The Sandwich Strategy

Price Quality

Incumbent brand

Premium brand

Low-price competitors Fighting brand Time

The Good-Better-Best Strategy

Price Quality

Incumbent brand

Best Better Low-price competitors Good Time

The Typical S-Shaped Pattern of New Product Adoption

Cumulative number of adoptions

Speed of diffusion

Inflection point

Market potential

Time

The Typical Bell-Shaped Pattern of New Product Adoption

Number of adoptions

Time

Extra Figures and Graphs

2012 Alexander Chernev

Strategic and Tactical Targeting

Strategic targeting involves deciding which segments to serve and which to ignore

Segmentation

Targeting

Tactical targeting involves identifying the profile of the already selected target customers

Segmentation

Targeting (strategic)

Targeting (tactical)

Identification (communication) (distribution)

Developing a Value Proposition and Positioning

Benefits

Costs

Primary benefit

Segmentation
Group customers into need-based segments

Targeting

Value proposition

Positioning
Identify the primary benefit of the offering

Select target segments Create a relevant and identify means to value proposition reach these segments