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Figures and Graphs

2012 Alexander Chernev


The Role of Frameworks in Marketing Management

Framework

Typical Typical
problem solution

Abstraction Application

Specific Specific
problem solution

Trial & error


The 3-V Principle of Managing Value

Company Customer
value value
OVP

Optimal value
Collaborator proposition
value
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 Customer
value value
OV
Value
Customers P

Collaborator
Competitors value

Context

Company Customer
value value
Value OVP
Customers

Collaborator
Competitors value

Context
Designing the Tactics

Product Service Brand Product Service Brand

Incentives OVP Price

Incentives OVP Price


Communication Distribution

Communication Distribution

Product Service Brand

Incentives OVP Price

Communication Distribution
Developing an Action Plan: The Big Picture

Goal

Bench-
Focus
marks
Strategy

Target Value
market proposition
Tactics
Product Service Brand Price
Incentives Communication Distribution

Goal Implementation

Organizational Business Implementation


infrastructure processes schedule
Focus Bench- Control
marks
Performance Environmental
evaluation analysis
Strategy
Target Value
market proposition
Tactics
Product Service Brand Price
Incentives Communication Distribution
Implementation
Organizational Business Implementation
infrastructure processes schedule
Control
Performance Environmental
evaluation analysis
Segmentation, Mass Marketing, & One-to-One Marketing

Customer 1 Customer 1 Offering A Customer 1


Customer 2 Offering A Customer 2 Offering B Customer 2
Customer 3 Customer 3 Offering C Customer 3
Offering
Customer 4 Customer 4 Offering D Customer 4
Customer 5 Offering B Customer 5 Offering E Customer 5
Customer 6 Customer 6 Offering F Customer 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 Geography

Behavior Psychographics

2006 Alexander Chernev


Tactical Targeting Scenarios

Shotgun targeting Oversegmentation Shot-in-the-dark


Sniper targeting
(broad) (narrow) (misaligned)
(perfect fit)

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 3
Offering 1 Action plan C3
Action plan C1

Offering 2
Action plan C2
The Three Dimensions of Customer Value

Functional
value

Customer Monetary
value value

Psychological
value

2006 Alexander Chernev


Competitive Advantage: A Source of Customer Value

Irrelevant
attributes
Irrelevant
attributes
Strengths
Competitive Strengths
advantage

Weaknesses Weaknesses
Shared Competitive Shared
attributes parity attributes
Offering A Offering B
The Concept of Economic Value Analysis

Functional
value Monetizing
functional value
Customer Monetary
value value
Monetizing
Psychological psychological value
value
Economic Value as a Function of the Differences in Total Costs

Difference in
total cost

Cost of
Cost of ownership
ownership

Difference in
price
Price

Price

Offering X Offering Y
Attribute-Value Map

Customer
value

Companys offering
k
Competitive offering A

Competitive offering B
j l
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 Functional
value value

Psychological
value
Creating Company Value: Profit-Growth Analysis

New to the
New category
Customers
Volume Competitors
Revenues Current customers
Price customers

Net income
COGS

Costs Marketing

Other
Strategies for Managing Sales Growth

Customers new to
the category
Managing
Sales volume Competitors adoption
customers

Managing
Current customers
usage
The SWOT Framework

Favorable Unfavorable
factors factors

Internal Company
Strengths Weaknesses
factors analysis

External Market
Opportunities Threats
factors analysis
Product-Market Growth Matrix

Current customers New customers

Current Market Market


products penetration development

New Product
products Diversification
development
Conflicts in Vertical Collaboration

Manufacturer Manufacturer

Distributor Distributor A Distributor B

Customer Customer

Vertical channel conflict 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 New users

Current market New market


Defensive Marketing Strategies

Custome Launch
r costs Move premium
upscale offering

Do
nothin Increas
g e
Move benefits
downscale

Reduce
Launch
costs
economy
offering

Customer
benefits
The Five Forces of Competition

New entrants
3

1 Competitors 2
Suppliers Buyers
5

4 1 Bargaining power of suppliers


2 Bargaining power of buyers
Substitutes 3 Threat of new entrants
4 Threat of substitutes
5 Rivalry among extant competitors
Product/Service Management as a Value-Creation Process

Company Customer
value value
Product OV
P
Service

Collaborator
value

Context

Company Customer
value value
Product OVP

Service

Collaborator
value

Context
Managing Products by Streamlining the Marketing Mix

Brand Price

Service Incentives
Product

Distribution Communication

Brand Price

Service Incentives
Product

Distribution Communication
Branding as a Value-Creation Process

Company Customer
value value
OV
Brand P

Collaborator
value

Context

Company Customer
value value
Brand OVP

Collaborator
value

Context
Managing Brands by Streamlining the Marketing Mix

Service Incentives

Product Distribution
Brand

Price Communication

Service Incentives

Product Distribution
Brand

Price Communication
Pricing as a Value-Creation Process

Company Customer
value value
OV
Price P

Collaborator
value

Context

Company Customer
value value
Price OVP

Collaborator
value

Context
Managing Price by Streamlining the Marketing Mix

Brand Incentives

Product Distribution
Price

Service Communication

Brand Incentives

Product Distribution
Price

Service Communication
Managing Incentives as a Value-Creation Process

Company Customer
value value
OV
Incentives P

Collaborator
value

Context

Company Customer
value value
OVP
Incentives

Collaborator
value

Context
Managing Incentives by Streamlining the Marketing Mix

Service Brand

Product Distribution
Incentives

Price Communication

Service Brand

Product Distribution
Incentives

Price Communication
Pull and Push Promotion Strategies

Push strategy Pull strategy

Manufacturer Manufacturer

Demand Incentives
Communications Demand

Incentives
Retailer Retailer
Communications
Incentives
Demand Demand
Communications

Customer Customer
Communications as a Value-Creation Process

Company Customer
value value
Commu- OV
P
nication

Collaborator
value

Context

Company Customer
value value
Commu- OVP
nication

Collaborator
value

Context
Managing Communications by Streamlining the Marketing Mix

Service Brand

Product Commu- Distribution


nication

Price Incentives

Service Brand

Product Commu- Distribution


nication

Price Incentives
Planning a Communication Campaign

Goal

Message

Media

Creative solution

Implementation

Control
Distribution as a Value-Creation Process

Company Customer
value value
OV
Distribution P

Collaborator
value

Context

Company Customer
value value
OVP
Distribution

Collaborator
value

Context
Managing Distribution by Streamlining the Marketing Mix

Service Brand

Product Incentives
Distribution

Price Communication

Service Brand

Product Incentives
Distribution

Price Communication
Distribution Channel Structure

Company

Wholesaler

Retailer Retailer

Customer Customer Customer

Direct channel Indirect channels

Hybrid channel
Managing Sales Growth

New Managing
customers adoption
Managing
Sales Growth
Current Managing
customers usage
The Adoption Funnel

Awareness

Understanding

Attractiveness

Affordability

Availability

Purchase intent

Purchase
Identifying Adoption Gaps

j k l m n o p

All target Aware of Understand Perceive the Can Have Intend to Purchased
customers the the offerings offering to be afford the access to purchase the offering
offerings benefits attractive offering the offering the offering
existence
Identifying Actionable Goals

Offering
attractiveness

Usage frequency

Consumption
Usage quantity
quantity

Replacement
frequency

Offering availability
Identifying Consumption Gaps

Satisfaction Usage Usage Replacement Availability


frequency quantity frequency
The Typical S-Shaped Pattern of New Product Adoption

Total
adoptions Number of
adoptions

Speed of diffusion Inflection Market


point potential

Time Time
Managing the Product Life Cycle

Sales

Introduction Growth Maturity Decline Time

Market size Small Moderate Large Moderate/Small


Market growth Low High Low Negative
Competition Low Moderate High 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% 13.5% 34% 34% 16% Time


Innovators Early Early Late Laggards
adopters majority majority

(x-2SD) (x-SD) (x) (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 Existing Existing


Loss of share due
offering offerings offerings
to cannibalization
s

New New
offering offering

Competitive Competitive Competitive


offerings offerings offerings

Single-offering
- scenario Dual-offering scenario Dual-offering scenario
with cannibalization with cannibalization
The Fighting-Brand Strategy

Price
Quality
Incumbent
brand

Low-price
competitors
Fighting brand

Time
The Sandwich Strategy

Price
Quality
Incumbent
Premium brand
brand

Low-price
competitors
Fighting brand

Time
The Good-Better-Best Strategy

Price
Quality
Incumbent Best
brand

Better

Low-price
competitors
Good

Time
The Typical S-Shaped Pattern of New Product Adoption

Cumulative
number of
adoptions

Speed of diffusion Inflection Market


point 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 Targeting


(strategic) (tactical)
Identification
(communication)
(distribution)
Developing a Value Proposition and Positioning

Costs Primary
Benefits
benefit

Segmentation Targeting Value proposition Positioning


Group customers Select target segments Create a relevant Identify the primary
into need-based and identify means to value proposition benefit of the offering
segments reach these segments

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