© 2014 alexander chernev. about this slide deck ✦ this slide deck includes figures from strategic...
TRANSCRIPT
© 2014 Alexander Chernev
© 2014 Alexander Chernev
About this Slide Deck
✦ This slide deck includes figures from Strategic Marketing Management (8th Edition) by Alexander Chernev
✦ Unless noted otherwise, all figures are copyrighted by the author✦ Figures are presented in the same order as in the book and are
available in both Powerpoint and Keynote formats✦ All figures are shown on white background; some of the figures are
also shown on back background. Some of the figures are animated✦ All figures are fully editable and can be colored, enlarged, or scaled
down based on individual preferences. Some of the key figures are offered in different sizes
© 2014 Alexander Chernev
Strategic Marketing Management (8th Edition)
Book Overview
© 2014 Alexander Chernev
The Big Picture
✦ Chapter 1: Marketing as a Business Discipline ✦ Chapter 2: Marketing Strategy and Tactics✦ Chapter 3: The Marketing Plan
Control
Goal
Strategy
Tactics
Implementation
Customer value
Collaborator value
Company value
OVP
Incentives
ServiceProduct Brand
Price
Communication Distribution
Marketing Strategy and Tactics (Value-Creation Model)
The Marketing Plan (G-STIC Framework)
© 2014 Alexander Chernev
The Big Picture
Chapter 1: Marketing as a Business Discipline Chapter 2: Marketing Strategy and Tactics Chapter 3: The Marketing Plan
Control
Goal
Strategy
Tactics
Implementation
The Marketing Plan (G-STIC Framework)
Marketing Strategy and Tactics (Value-Creation
Model)
Incentives
ServiceProduct Brand
Price
Communication Distribution
Customer value
Collaborator value
Company value
OVP
© 2014 Alexander Chernev
Marketing Strategy
✦ Chapter 4: Identifying Target Customers ✦ Chapter 5: Creating Customer Value✦ Chapter 6: Managing Company Value✦ Chapter 7: Creating Collaborator Value
ValueValue
ValueValue
Context
Collaborators
Customers
Competitors
Company
Value
Value
Market Analysis (6-V Framework)
Customer value
Collaborator value
Company value
OVP
Value-Sharing Model(3-V Principle)
© 2014 Alexander Chernev
Marketing Strategy
Chapter 4: Identifying Target Customers Chapter 5: Creating Customer Value Chapter 6: Managing Company Value Chapter 7: Creating Collaborator Value
Market Analysis (6-V Framework)
ValueValue
ValueValue
Context
Collaborators
Customers
Competitors
Company
Value
Value
Value-Sharing Model(3-V Principle)
Customer value
Collaborator value
Company value
OVP
© 2014 Alexander Chernev
Marketing Tactics
✦ Chapter 8: Managing Products and Services✦ Chapter 9: Managing Brands✦ Chapter 10: Managing Price✦ Chapter 11: Managing Incentives ✦ Chapter 12: Managing Communications ✦ Chapter 13: Managing Distribution
Marketing Tactics(7-T Framework)
ServiceProduct
Communication
Incentives Price
Distribution
Brand
Value
© 2014 Alexander Chernev
Marketing Tactics
Chapter 8: Managing Products and Services Chapter 9: Managing Brands Chapter 10: Managing Price Chapter 11: Managing Incentives Chapter 12: Managing Communications Chapter 13: Managing Distribution
Marketing Tactics(7-T Framework)
ServiceProduct
Communication
Incentives Price
Distribution
Brand
Value
© 2014 Alexander Chernev
Managing Growth
✦ Chapter 14: Gaining and defending market position ✦ Chapter 15: Managing Sales Growth✦ Chapter 16: Managing New Products✦ Chapter 17: Managing Product Lines
© 2014 Alexander Chernev
Managing Growth
Chapter 14: Gaining and defending market position Chapter 15: Managing Sales Growth Chapter 16: Managing New Products Chapter 17: Managing Product Lines
© 2014 Alexander Chernev
Marketing Workbooks
✦ Chapter 18: Segmentation and targeting workbook✦ Chapter 19: Business plan workbook✦ Chapter 20: Positioning statement workbook
© 2014 Alexander Chernev
Marketing Workbooks
Chapter 18: Segmentation and targeting workbook Chapter 19: Business plan workbook Chapter 20: Positioning statement workbook
© 2014 Alexander Chernev
Strategic Marketing Management (8th Edition)
Figures: Part I
© 2014 Alexander Chernev
The Role of Frameworks in Marketing Management
Typical problem
Specific solution
Typical solution
Specific problem
Framework
Generalize Apply
Trial & error
© 2014 Alexander Chernev
The Role of Frameworks in Marketing Management
Typical problem
Specific solution
Typical solution
Specific problem
Framework
Abstraction Application
Trial & error
© 2014 Alexander Chernev
Identifying Target Markets: The 5-C Framework
Com
pany
Competitors
CollaboratorsContext
Customers
Com
pany
Competitors
Context
CollaboratorsCustomers
© 2014 Alexander Chernev
Identifying Target Markets: The 5-C Framework
Com
pany
Competitors
Collaborators
Context
Customers
© 2014 Alexander Chernev
Defining the Value Exchange: The 6-V Framework
ValueValue
ValueValue
Context
Collaborators
Customers
Competitors
Company
Value
Value
Companyvalue exchange
Competitive value exchange
© 2014 Alexander Chernev
Defining the Value Exchange: The 6-V Framework
ValueValue
ValueValue
Context
CollaboratorsCustomers
Competitors
Company
Value
Value
Companyvalue exchange
Competitive value exchange
© 2014 Alexander Chernev
The Optimal Value Proposition (OVP)
Customers value
Collaborator value
Company value
OVP
The Optimal Value Proposition
© 2014 Alexander Chernev
The Optimal Value Proposition (OVP)
Customer value
Collaborator value
Company value The Optimal
Value Proposition (OVP)OVP
© 2014 Alexander Chernev
The 7 Tactics Articulating the Offering's Value Proposition
Marketing Mix (7 Ts)
Customer value
Collaborator value
Company value
OVP
Incentives
ServiceProduct Brand
Price
Communication Distribution
© 2014 Alexander Chernev
The 7 Tactics Articulating the Offering's Value Proposition
Marketing Mix (7 Ts)
Incentives
ServiceProduct Brand
Price
Communication Distribution
Customer value
Collaborator value
Company value
OVPStrategy
Tactics
© 2014 Alexander Chernev
The Seven Marketing Tactics (Marketing Mix)
ServiceProduct
Communication
Incentives Price
Distribution
Brand
Value
ServiceProduct
Communication
Incentives Price
Distribution
Brand
Value
ServiceProduct
Communication
Incentives Price
Distribution
Brand
Value
© 2014 Alexander Chernev
The Seven Marketing Tactics (Marketing Mix)
ServiceProduct
Communication
Incentives Price
Distribution
Brand
Value
ServiceProduct
Communication
Incentives Price
Distribution
Brand
Value
ServiceProduct
Communication
Incentives Price
Distribution
Brand
Value
© 2014 Alexander Chernev
Designing, Communicating, and Delivering Value
Delivering value
Brand
Service
Communicating value
Price
Incentives
Product
Designing value
© 2014 Alexander Chernev
Designing, Communicating, and Delivering Value
Delivering
value
Brand
Service
Communicating
value
Price
Incentives
Product
Designing
value
© 2014 Alexander Chernev
Designing, Communicating, and Delivering Value
Distribution
Incentives Price
Communication
Product BrandService
Communicating the offering Delivering
the offering
Designing the offering
Marketing Mix (7 Ts)
© 2014 Alexander Chernev
Designing, Communicating, and Delivering Value
Communicating the offering
Delivering the offering
Designing the offering
Marketing Mix (7 Ts)
Distribution
Incentives Price
Communication
Product BrandService
© 2014 Alexander Chernev
The 7-T and the 4-P Frameworks
Marketing Mix (7 Ts)
Distribution
Incentives Price
Communication
Product BrandService
PromotionPlace
Product
Price
© 2014 Alexander Chernev
The 7-T and the 4-P Frameworks
Marketing Mix (7 Ts)
Distribution
Incentives Price
Communication
Product BrandService
PromotionPlace
Product
Price
© 2014 Alexander Chernev
Strategies for Generating a Business Model
Marketing Strategy (value analysis)
Bottom-up business model generation
Marketing Tactics (offering design)
Top-down business model generation
© 2014 Alexander Chernev
Strategies for Generating a Business Model
Marketing Strategy (value analysis)
Bottom-up business model generation
Marketing Tactics (offering design)
Top-down business model generation
© 2014 Alexander Chernev
The Five Forces of Competition
Competitors
New entrants
Buyers
Substitutes
Suppliers
Source: Porter, Michael E. (1979), “How Competitive Forces Shape Strategy,” Harvard Business Review, 57 (March–April), 137–145
© 2014 Alexander Chernev
The Five Forces of Competition
Competitors
New entrants
Buyers
Substitutes
Suppliers
Source: Porter, Michael E. (1979), “How Competitive Forces Shape Strategy,” Harvard Business Review, 57 (March–April), 137–145
© 2014 Alexander Chernev
The G-STIC Framework for Market Planning and Analysis
Control
Goal
Strategy
Tactics
Implementation
Business model
© 2014 Alexander Chernev
The G-STIC Framework for Market Planning and Analysis
Control
Goal
Strategy
Tactics
Implementation
Business model
© 2014 Alexander Chernev
Goal
Focus Benchmarks
The G-STIC Action-Planning Flowchart
Strategy
Target market
Valueproposition
DistributionCommunication
Service BrandProduct
PriceIncentives
Tactics
Organizational infrastructure
Implementation
Business processes
Implementation schedule
Evaluate performance
Control
Monitor theenvironment
The logistics of developing the offering
The ultimate criterion for success
The logic of the value-creation model
The specifics of the market offering
The process of evaluating goal progress
© 2014 Alexander Chernev
Goal
Focus Benchmarks
The G-STIC Action-Planning Flowchart
Strategy
Target market
Valueproposition
DistributionCommunication
Service BrandProduct
PriceIncentives
Tactics
Organizational infrastructure
Implementation
Business processes
Implementation schedule
Evaluate performance
Control
Monitor theenvironment
The logistics of developing the offering
The ultimate criterion for success
The logic of the value-creation model
The specifics of the market offering
The process of evaluating goal progress
© 2014 Alexander Chernev
The Marketing Plan
Executive summary
Situation analysis
Action Plan (G-STIC Framework)
Control
Goal
Strategy
Tactics
Implementation
Exhibits
Business model
© 2014 Alexander Chernev
The Marketing Plan
Executive summary
Situation analysis
Action Plan (G-STIC Framework)
Control
Goal
Strategy
Tactics
Implementation
Exhibits
Business model
© 2014 Alexander Chernev
Strategic Marketing Management (8th Edition)
Figures: Part II
© 2014 Alexander Chernev
Segment-Based Targeting
Segment A (target)Segment B (nontarget)Segment C (nontarget)
Unsegmented market
Segment-based target identification
© 2014 Alexander Chernev
Segment-Based Targeting
Segment A (target)Segment B (nontarget)Segment C (nontarget)
Unsegmented market
Segment-based target
identification
© 2014 Alexander Chernev
The Key Targeting Principles
Customer needs
Customer resources
Target compatibilityCompany
goals
Company resources
Target attractiveness
Company analysis Customer analysis
© 2014 Alexander Chernev
The Key Targeting Principles
Customer needs
Customer resources
Target compatibilityCompany
goals
Company resources
Target attractiveness
Company analysis Customer analysis
© 2014 Alexander Chernev
The Resource Advantage Principle
Customer needs
Unutilized competitor resources
Competitive wasteland
The company's optimal target customers
Unmet customer needs
Unutilized company resources
Competitors' optimal target customers
Intense competition
Company resources
Competitor resources
Target
Company resources
© 2014 Alexander Chernev
The Resource Advantage Principle
Customer needs
Unutilized competitor resources
Competitive wasteland
The company's optimal target customers
Unmet customer needs
Unutilized company resources
Competitors' optimal target customers
Intense competition
Competitor resources
Target
© 2014 Alexander Chernev
The Customer Identification Process
Strategic targeting
Tactical targeting
Value-based analysis
Channel-based analysis
© 2014 Alexander Chernev
The Customer Identification Process
Strategic targeting
Tactical targeting
Value-based
analysis
Channel-based
analysis
© 2014 Alexander Chernev
Strategic and Tactical Targeting: Linking Customer Value and Profile
ImportantUnobservableNot actionable
ObservableActionable
Less important
Target compatibility
Target attractiveness
Value
Profile
Identification (linking value & profile)
Behavioralfactors
Demographicfactors
Strategic targeting
Tactical targeting
Value-based identification
Profile-based identification
Target customers
© 2014 Alexander Chernev
Strategic and Tactical Targeting: Linking Customer Value and Profile
ImportantUnobservableNot actionable
ObservableActionable
Less important
Identification (linking value &
profile)
Strategic targeting
Tactical targeting
Value-based identification
Profile-based identification
Target customers
Target attractiven
ess
Profile
Value
Demographic
factors
Behavioralfactors
Target compatibilit
y
© 2014 Alexander Chernev
Targeting Efficiency
Oversegmentation(narrow)
“Sniper” targeting(perfect fit)
Value-based segment (unobservable)Profile-based-segment (observable)
IncorrectCorrect
“Shotgun” targeting(broad)
Shot-in-the-dark(off base)
© 2014 Alexander Chernev
Targeting Efficiency
Value-based segment (unobservable)Profile-based-segment (observable)
“Shotgun” targeting(broad)
Oversegmentation(narrow)
Shot-in-the-dark(misaligned)“Sniper” targeting
(perfect fit)
© 2014 Alexander Chernev
Targeting Multiple Segments
Offering BOffering A
Segment A (target)
Segment B (target)Segment C (nontarget)
© 2014 Alexander Chernev
Targeting Multiple Segments
Offering BOffering A
Segment A (target)
Segment B (target)Segment C (nontarget)
© 2014 Alexander Chernev
Segmentation as a Process of Differentiation and Agglomeration
Mass market (unsegmented)
Agglomeration
Idiosyncratic market (Unsegmented)
Differentiation
Segmented market
© 2014 Alexander Chernev
Segmentation as a Process of Differentiation and Agglomeration
Mass market (unsegmented)
Agglomeration
Idiosyncratic market (Unsegmented)
Differentiation
Segmented market
© 2014 Alexander Chernev
Segmentation and Targeting: The Big Picture
Tactical targeting(profile-based)
Decide how to reach target customers to communicate
and deliver the offering
Strategic targeting(value-based)
Decide whom to target
Strategic segmentation(value-based)
Divide customers into segments based on their
needs and resources
Identify customers' demographic and behavioral profile
Tactical segmentation(profile-based)
Channel C
Channel B
Channel A
© 2014 Alexander Chernev
Segmentation and Targeting: The Big Picture
Tactical targeting(profile-based)
Decide how to reach target customers to communicate
and deliver the offering
Strategic targeting(value-based)
Decide whom to target
Strategic segmentation(value-based)
Divide customers into segments based on their
needs and resources
Identify customers' demographic and behavioral profile
Tactical segmentation(profile-based)
Channel C
Channel B
Channel A
© 2014 Alexander Chernev
Key Segmentation Principles: Relevance
Correct(relevant)
Incorrect(irrelevant)
© 2014 Alexander Chernev
Key Segmentation Principles: Relevance
Correct(relevant)
Incorrect(irrelevant)
© 2014 Alexander Chernev
Key Segmentation Principles: Similarity
Correct(homogeneous)
Incorrect(heterogeneous)
© 2014 Alexander Chernev
Key Segmentation Principles: Similarity
Correct(homogeneous)
Incorrect(heterogeneous)
© 2014 Alexander Chernev
Key Segmentation Principles: Exclusivity
Correct(mutually exclusive)
Incorrect(non-exclusive)
© 2014 Alexander Chernev
Key Segmentation Principles: Exclusivity
Correct(mutually exclusive)
Incorrect(non-exclusive)
© 2014 Alexander Chernev
Key Segmentation Principles: Comprehensiveness
Correct(collectively exhaustive)
Incorrect(not exhaustive)
© 2014 Alexander Chernev
Key Segmentation Principles: Comprehensiveness
Correct(collectively exhaustive)
Incorrect(not exhaustive)
© 2014 Alexander Chernev
Identifying Target Customers, Developing a Value Proposition, and Positioning
Value
Developing a value proposition
Identifying target customers
Positioning
Primary benefit
© 2014 Alexander Chernev
Identifying Target Customers, Developing a Value Proposition, and Positioning
Developing a value proposition
Identifying target customers
Positioning
Primary benefitValue
© 2014 Alexander Chernev
Value as a Function of Customer Needs and Offering Attributes
Customer needs
Company offering
Customer value
© 2014 Alexander Chernev
Value as a Function of Customer Needs and Offering Attributes
Customer needs
Company offering
Customer value
© 2014 Alexander Chernev
Dimensions of Customer Value
Functional value
Monetary value
Psychological value
Psychological benefitsPsychological costs
Monetary benefitsMonetary costs
Functional benefitsFunctional costs
Customer value
© 2014 Alexander Chernev
Dimensions of Customer Value
Functional value
Monetary value
Psychological value
Psychological benefitsPsychological costs
Monetary benefitsMonetary costs
Functional benefitsFunctional costs
Customer value
© 2014 Alexander Chernev
Reference-Point Dependence
Perceived value
Actual performance
Reference point
Gains
Losses
© 2014 Alexander Chernev
Reference-Point Dependence
Perceived value
Actual performance
Reference point
Gains
Losses
© 2014 Alexander Chernev
Loss Aversion
Perceived value
Actual performance
Value of a gain
Value of a loss
© 2014 Alexander Chernev
Loss Aversion
Perceived value
Actual performance
Value of a gain
Value of a loss
© 2014 Alexander Chernev
Diminishing Marginal Value
Attribute performance
Utility(perceived value)
© 2014 Alexander Chernev
Diminishing Marginal Value
Attribute performance
Utility(perceived
value)
© 2014 Alexander Chernev
The Value Function
Perceived value
Actual performance
Source: Kahneman, Daniel and Amos Tversky (1979), “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, 47 (March), 263–91
© 2014 Alexander Chernev
The Value Function
Perceived value
Actual performance
Source: Kahneman, Daniel and Amos Tversky (1979), “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, 47 (March), 263–91
© 2014 Alexander Chernev
Creating Superior Customer Value
Customer value
Functional value Monetary value
Competitive advantage
Value Value
© 2014 Alexander Chernev
Creating Superior Customer Value
Customer value
Functional value Monetary value
Competitive advantage
Value Value
© 2014 Alexander Chernev
Competitive Value Map
Competitive parity
Attribute 1 Attribute 2 Attribute 3 Attribute 4 Attribute 5
Company’s offeringCompetitive offering ACompetitive offering B
Customer value
Competitive advantage
Competitive disadvantage
© 2014 Alexander Chernev
Competitive Value Map
Competitive parity
Attribute 1 Attribute 2 Attribute 3 Attribute 4 Attribute 5
Company’s offeringCompetitive offering ACompetitive offering B
Customer value
Competitive advantage
Competitive disadvantage
© 2014 Alexander Chernev
Single-Benefit Positioning
Benefit 1
+Benefit 2
Benefit 3Benefit 4
Benefit 5
Primary benefit
Secondarybenefits
Reason to choose
© 2014 Alexander Chernev
Single-Benefit Positioning
Benefit 1
+Benefit 2
Benefit 3Benefit 4
Benefit 5
Primary benefit
Secondarybenefits
Reason to choose
© 2014 Alexander Chernev
Dual-Benefit Positioning
Benefit 1
+
Benefit 2
Benefit 3Benefit 4
Benefit 5
Primary benefits
Secondarybenefits
Reason to choose
© 2014 Alexander Chernev
Dual-Benefit Positioning
Reason to choose
Benefit 1
+
Benefit 2
Benefit 3Benefit 4
Benefit 5
Primary benefits
Secondarybenefits
© 2014 Alexander Chernev
Holistic Positioning
Benefit 1
Benefit 2
Benefit 3Benefit 4
Benefit 5
Overall benefit
Reason to choose
© 2014 Alexander Chernev
Holistic Positioning
Reason to choose
Benefit 1
Benefit 2
Benefit 3Benefit 4
Benefit 5
Overall benefit
© 2014 Alexander Chernev
Positioning Map
Attribute 1
Attribute 2
Offering A
Offering E
Offering C
Offering D
Offering B
© 2014 Alexander Chernev
Positioning Map
Attribute 1
Attribute 2
Offering A
Offering E
Offering C
Offering D
Offering B
© 2014 Alexander Chernev
The Three Dimensions of Company Value
Monetary value
Functional value
Psychological value
Company value
Strategic goals
Monetary goals
© 2014 Alexander Chernev
The Three Dimensions of Company Value
Monetary value
Functional value
Psychological value
Company value
Strategic goals
Monetary goals
© 2014 Alexander Chernev
Creating Company Value: The Key Profit Drivers
Net income
Costs
Revenues
Competitors’customers
Current customers
New customers
New to the category
Research and development
Other costs
Marketing
Cost of goods sold
Volume
Price
© 2014 Alexander Chernev
Creating Company Value: The Key Profit Drivers
Net income
Costs
Revenues
Competitors’customers
Current customers
New customers
New to the category
Research and development
Other costs
Marketing
Cost of goods sold
Volume
Price
© 2014 Alexander Chernev
Strategies for Growing Sales Volume
Market-growth strategy
Market-penetration strategy
Sales volume Steal-share strategy
New customers
Current customers
Customers new to the category
Competitors’ customers
© 2014 Alexander Chernev
Economic Value Analysis
Monetary value
Functional value
Psychological value
Company value
Monetizing functional value
Monetizing psychological value
Strategic value
© 2014 Alexander Chernev
Conflicts in Vertical Collaboration
Vertical channel conflict Horizontal channel conflict
Manufacturer
Distributor
Customer
Manufacturer
Customer
Distributor BDistributor A
© 2014 Alexander Chernev
Conflicts in Horizontal Collaboration
Customer
CollaboratorCompany
© 2014 Alexander Chernev
Strategic Marketing Management (8th Edition)
Figures: Part III
© 2014 Alexander Chernev
Product and Service Management as a Value-Creation Process
Product
Context
Customers
Competitors
Company
Collaborators Customer
valueCollaborator value
Company value
The Optimal Value
Proposition
Factors to consider Decision criteria
ServiceOVP
© 2014 Alexander Chernev
Branding as a Value-Creation Process
Brand
Context
Customers
Competitors
Company
Collaborators Customer
valueCollaborator value
Company value
The Optimal Value
Proposition
Factors to consider Decision criteria
OVP
© 2014 Alexander Chernev
Vertical Brand Extensions
Price
Benefits
Upscale extension
Downscale extension
Core offering
Price tier A
Price tier B
Price tier C
© 2014 Alexander Chernev
Horizontal Brand Extensions
Price
Benefits
Extension B
Core offering
Extension A
CategoryA
CategoryB
CategoryC
© 2014 Alexander Chernev
Pricing as a Value-Creation Process
Price
Context
Customers
Competitors
Company
Collaborators Customer
valueCollaborator value
Company value
The Optimal Value
Proposition
Factors to consider Decision criteria
OVP
© 2014 Alexander Chernev
Incentives as a Value-Creation Process
Incentives
Context
Customers
Competitors
Company
Collaborators Customer
valueCollaborator value
Company value
The Optimal Value
Proposition
Factors to consider Decision criteria
OVP
© 2014 Alexander Chernev
Pull and Push Promotion Strategies
Manufacturer
Retailer
Customer
Incentives Communications
Incentives Communications
Demand
Demand
Push strategy
Manufacturer
Retailer
Customer
Incentives Communications
Demand
Demand
Pull strategy
© 2014 Alexander Chernev
Communication as a Value-Creation Process
Commu-
nication
Context
Customers
Competitors
Company
Collaborators Customer
valueCollaborator value
Company value
The Optimal Value
Proposition
Factors to consider Decision criteria
OVP
© 2014 Alexander Chernev
Developing a Communication Plan
Goal
Tactics
Implementation
Strategy
Message
Media
Creative solution
Control
© 2014 Alexander Chernev
Distribution as a Value-Creation Process
Distri-bution
Context
Customers
Competitors
Company
Collaborators Customer
valueCollaborator value
Company value
The Optimal Value
Proposition
Factors to consider Decision criteria
OVP
© 2014 Alexander Chernev
Distribution Channel Structure
Direct channel Indirect channels
Hybrid channel
Company
Wholesaler
Retailer
Customer
Retailer
CustomerCustomer
© 2014 Alexander Chernev
Strategic Marketing Management (8th Edition)
Figures: Part IV
© 2014 Alexander Chernev
Steal-Share Strategy
Current users
New users
© 2014 Alexander Chernev
Market-Growth Strategy
Current users
New users
© 2014 Alexander Chernev
Market-Growth Strategy for a Superior Offering
Current users
New users
© 2014 Alexander Chernev
Market-Innovation Strategy
Current usersNew users
Current market New market
© 2014 Alexander Chernev
Defensive Marketing Strategies
Do nothing
Customer costs
Customer benefits
Move upscale
Increase benefits
Reduce costs
Move downscale
Launch economy offering
Launch premium offering
Source: Hoch, Stephen J. (1996), “How Should National Brands Think about Private Labels?” Sloan Management Review, 37 (2), 89–102
© 2014 Alexander Chernev
Product-Market Growth Matrix
Current products
New products
Current customers New customers
Market penetration
Product development
Market development
Diversification
Source: Ansoff, H. Igor (1979), Strategic Management. New York, NY: John Wiley & Sons.
© 2014 Alexander Chernev
The SWOT Framework
Favorable factors
Unfavorable factors
Market analysis
Company analysis
External factors
Internal factors
Opportunities Threats
Strengths Weaknesses
© 2014 Alexander Chernev
Managing Sales Growth
Managing Sales Growth
Current customers
New customers Managing adoption
Managing usage
© 2014 Alexander Chernev
The Adoption Funnel
Purchase
Awareness
Attractiveness
Affordability
Availability
© 2014 Alexander Chernev
Identifying Adoption Gaps
All target customers
Aware of the offering’s existence
Perceive the offering to be
attractive
Perceive the offering to be
affordable
Have access to the offering
Purchased the offering
Attractiveness gap
Affordability gap
Purchase gap
© 2014 Alexander Chernev
Key Factors Influencing Consumption Quantity
Satisfaction
Usage frequency
Usage quantity
Replacement frequency
Availability
Purchase Repurchase
Consumption variables
© 2014 Alexander Chernev
Identifying Consumption Gaps
Purchased the offering
Satisfied with the offering
Use the offering
frequently
Use large quantity per
occasion
Repurchase the offering
Replace the offering
frequently
Usage quantity
gap
Replacement frequency
gap
© 2014 Alexander Chernev
New Product Adoption
Individual adoptions
Time
Inflection point
Individual adoptions over time
Time
Total adoptions
Inflection point
Market potential
Speed of diffusion
Cumulative number of adoptions over time
© 2014 Alexander Chernev
New Product Adoption
Individual adoptions
Time
Inflection point
Individual adoptions over time
Time
Total adoptions
Inflection point
Market potential
Speed of diffusion
Cumulative number of adoptions over time
© 2014 Alexander Chernev
The Stage-Gate Approach for Minimizing Risk in New Product Development
Concept development
Idea generation
Business analysis
Product development
Market testing
Commercial deployment
Stage 2Stage 1 Stage 3 Stage 4 Stage 5 Stage 6
Gate 1 Idea
screening
Gate 2 Concept
screening
Gate 3 Business review
Gate 4 Product review
Gate 5 Market review
© 2014 Alexander Chernev
Managing the Product Life Cycle
Introduction Growth Maturity Decline
Sales
Time
Market size
Market growth
Competition
Small Moderate Large Moderate/Small
Low High Low Negative
Low Moderate High Moderate/Low
Source: Levitt, Theodore (1965), “Exploit the Product Life Cycle,” Harvard Business Review, 43, (November–December), 81–94.
© 2014 Alexander Chernev
Extending Product Life Cycle through Innovation
Sales revenues
Time
First generation
Second generation
Third generation
Source: Christensen, Clayton (1997), The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business School Press
© 2014 Alexander Chernev
Rogers’ Model of Adoption of Innovation
Innovators Early adopters Early majority Laggards
Number of adoptions
TimeLate majority
(x-2SD)
(x-SD)
(x)
(x+SD)
(2.5%) (13.5%) (34%) (16%)(34%)
Source: Rogers, Everett M. (1962), Diffusion of Innovations. New York, NY: Free Press
© 2014 Alexander Chernev
Rogers’ Model of Adoption of Innovation
Innovators Early adoptersEarly majority Laggards
Number of adoptions
TimeLate majority
(x-2SD)
(x-SD)
(x)
(x+SD)
(2.5%) (13.5%) (34%) (16%)(34%)
Source: Rogers, Everett M. (1962), Diffusion of Innovations. New York, NY: Free Press
© 2014 Alexander Chernev
Moore’s Technology Adoption Model
Enthusiasts Visionaries Pragmatists Skeptics
Early market Mainstream market
Conservatives Time
Number of adoptions
The chasm
Source: Moore, Geoffrey A. (1991), Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers. New York, NY: HarperBusiness
© 2014 Alexander Chernev
Moore’s Technology Adoption Model
Enthusiasts Visionaries Pragmatists Skeptics
Early market Mainstream market
Conservatives Time
Number of adoptions
The chasm
Source: Moore, Geoffrey A. (1991), Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers. New York, NY: HarperBusiness
© 2014 Alexander Chernev
Product-Line Positioning Map
Attribute 1
Attribute 2
Offering A
Offering E
Offering C
Offering D
Offering B
Target A
Target CTarget B
Target E
Target D
© 2014 Alexander Chernev
Product-Line Attribute Value Map
Offering A Offering B Offering C Offering D Offering E
Attribute 1Attribute 2Attribute 3
Value
(Target A) (Target B) (Target C) (Target D) (Target E)
Product line
Attribute 4
© 2014 Alexander Chernev
Vertical Product-Line Extensions
Price
Benefits
Upscale extension
Downscale extension
Core offering
© 2014 Alexander Chernev
Horizontal Product-Line Extensions
Price
Benefits
Extension B
Core offering
Extension A
© 2014 Alexander Chernev
Product-Line Cannibalization
Dual-offering scenario with cannibalization
Loss of share dueto cannibalization
New offering
Competitive offerings
Existing offering
A' C
B'
Single-offering scenario-
Existing offerings
Competitive offerings
ANew offering
Competitive offerings
Existing offering
Dual-offering scenario without cannibalization
A
B
© 2014 Alexander Chernev
Product-Line Cannibalization and the Price-Benefit Tradeoff
Price
Benefits
A
B
C
D E
F
Value-equivalence line
© 2014 Alexander Chernev
The Fighting Brand Strategy
Price Quality
Time
Incumbent brand
Fighting brand
Low-pricecompetitors
© 2014 Alexander Chernev
The Sandwich Strategy
Price Quality
Time
Incumbent brand
Fighting brand
Premium brand
Low-pricecompetitors
© 2014 Alexander Chernev
The Good-Better-Best Strategy
Price Quality
Time
Incumbent brand
Good
Better
Best
Low-pricecompetitors
© 2014 Alexander Chernev
Strategic Marketing Management (8th Edition)
Figures: Part V
© 2014 Alexander Chernev
The Business Model as a Value-Creation Process
Customer value
Collaborator value
Company value
OVP
StrategyTactics
Customer value model
StrategyTactics
Collaborator value model
StrategyTactics
Company value model
© 2014 Alexander Chernev
Customer Value Model
Incentives
ServiceProduct Brand
Price
Communication Distribution
Customer value
Value proposition
© 2014 Alexander Chernev
Collaborator Value Model
Incentives
ServiceProduct Brand
Price
Communication Distribution
Collaborator
value
Value proposition
© 2014 Alexander Chernev
Company Value Model
Incentives
ServiceProduct Brand
Price
Communication Distribution
Company value
Value proposition
© 2014 Alexander Chernev