1-1 overview midterm ii discussion marketing plan lecture midterm iii and presentation discussion...

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OverviewOverview

Midterm II Discussion Marketing Plan Lecture Midterm III and Presentation Discussion John Jolliff Presentation

Country Insurance and Financial NPD for Service-based Industry

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Midterm IIMidterm II

Overall Improvement.. 221 and 222 out of 250 Suggestions…

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Positive Comments Pretty good screening Much better assumptions this time around,

much better information (could still use more work here)

More Critical Thinking

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Suggestions for Improvement Make it readable, lead the reader through what is going on,

makes sure that everything is crystal clear at all times Maybe try to explain what you doing, instead of just launching

into it? Send all files to me named in the way that I named them on the

grade sheets (Key - 002) Also, grade sheet issue, send the grade sheet with names entered

into… I'm making comments with voice recognition software, so

sometimes things slip by... if something doesn't make sense, let me know

Additional comments written in hard copy, I talk about these it sometimes in the grade sheet, but sometimes not…

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Suggestions for Improvement You don't get points taken off for when I question your

numbers (forecast, estimates, etc.)... I'm just trying to help out…

Confuse ATAR and test marketing stuff…. Marketing support isn't free... if you tell me that you going

to reach 200 million customers, and then don't talk about how much that's going to cost anywhere else in the paper, that's an issue

Confusion of repeat rate and word-of-mouth in ATAR… Don't make your concept statement a sales tool Make it easy to read…this makes a difference…

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Suggestions for Improvement Adjust screen for your needs Probably error on conservative side with screen

assumptions… or at least give a low, medium, high

Use stuff that's relevant, don't you stuff that isn't Don't apologize for guessing Don't say you are going to outsource this, then go

public, and make millions of dollars… Reverse code appropriate items on screen

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Suggestions for Improvement Multiple screens can be helpful Think of your audience when writing (Bass model detailed

in a easier to understand way) Products don't magically appear on shelves, they come

from personal selling as a part of market requirements Use hyphens Use an intro Footnotes … do this in a way that makes sense and it

makes it easy for me… it's all about me

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Suggestions for Improvement Graphs better, more visible, easier to read, more

legible You can talk to people and get quick and dirty

answers quite easily… dog collar expert kind of idea

Think about the information that people need, and give it to them... Nick's example of the screen

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Midterm IIIMidterm III

Launch Strategic Launch Planning Implementation of Strategic Plan Market Testing Launch Management Plan

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Midterm IIIMidterm III

Presentation Strategic Launch Planning Implementation of Strategic Plan Market Testing Launch Management Plan

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Marketing Planning

11

McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.

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Marketing PlanMarketing Plan

A marketing plan is a written document containing the guidelines for the business center’s marketing programs and allocations over the planning period.

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Time Horizons for Marketing PlansTime Horizons for Marketing Plans

Time Period

Consumer Products

Industrial Products

Services

1 year 62% 45% 65%

3 years 5 5 8

5 years 15 17 3

Long term 4 3 6

Indefinite 0 2 2

Other 14 28 16

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Hierarchy of PlanningHierarchy of Planning

SBU Planning

Annual Marketing (Business) Plan

Corporate Strategic Planning

Group or Sector Planning

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Objectives of a Marketing PlanObjectives of a Marketing Plan

1. Define the current business situation.

2. Define problems and opportunities facing the business.

3. Establish objectives.

4. Define the strategies and programs necessary to achieve the objectives.

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Objectives of a Marketing Plan cont.Objectives of a Marketing Plan cont.

5. Pinpoint responsibility for achieving product objectives.

6. Encourage careful and disciplined thinking.

7. Establish a customer/competitor orientation.

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Frequent Mistakes in the Planning ProcessFrequent Mistakes in the Planning Process

The speed of the Process The Amount of Data Collected Who does the Planning? The Structure Length of the Plan

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Frequent Mistakes in the Planning ProcessFrequent Mistakes in the Planning Process (cont)(cont)

Number of Courses of Action Considered Who Sees the Plan Not Using the Plan as a Sales Document Insufficient Senior Management Leadership Not Tying Compensation to Successful

Planning Efforts Frequency of Planning

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Marketing Planning SequenceMarketing Planning Sequence

Update historical data

Data analysis

Develop objectives, strategies, programs Develop

financial documents Negotiate

final planMeasure progress toward objectives Audit

Collect current situation data

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Marketing Plan SummaryMarketing Plan Summary

I. Executive summary

II. Situation analysisA. Category/competitor definition

B. Category analysis

C. Company and competitor analysis

D. Customer analysis

E. Planning assumptions

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Marketing Plan Summary cont.Marketing Plan Summary cont.

III. Objectives

IV. Product/brand strategy

V. Supporting marketing programs

VI. Financial documents

VII. Monitors and controls

VIII. Contingency plans

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Marketing Planning

11


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Bases of CompetitionBases of Competition

I. Customer-orientedWho they are – competition for same budgetWhen they use itWhy they use it- benefits sought

II. Marketing-oriented: advertising and promotion

Theme/copy strategyMediaDistributionPrice

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Bases of Competition cont.Bases of Competition cont.

III. Resource-orientedRaw materialsEmployeesFinancial resources

IV. Geographic

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Levels of CompetitionLevels of Competition

Diet lemon limes

Baseball cards

Fruit flavored

colas

Coffee

DietCoke

DietPepsi

Diet-Rite cola

Bottled water

Lemon limes

Regularcolas

Beers

Juices

Wine

Fast food

Tea

Video rentals

Icecream

Product form competition: Diet colas

Product category competition: Soft drinks

Generic competition: Beverages

Budget competition: Food and entertainment

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Levels of Competition: Implications for Product StrategyLevels of Competition: Implications for Product Strategy

Budget

Generic

Product Category

Product Form

Competitive Level

Convince Customers that the Brand is Better than Others

Convince Customers that the Product Form is Best in the

Category

Convince Customers that the Product Category is the Best

Way to Satisfy Needs

Convince Customers that the Generic Benefits are the Most

Appropriate Way to Spend their Money

Product Management Task

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Energy Bar CompetitionEnergy Bar Competition

Odwalla Power Bar

Balance BarClif

Energy Bars

Snack/Health Bars

Healthy Snacks

Other Snacks

Nutrigrain Bars Slimfast Bars Granola Bars

FruitsNutsJuice

CrackersChipsCandy

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PDA CompetitionPDA Competition

Level of Competition

Definition Competitors Need Satisfied

Product form POAs Full-features Palm Pilot VIICompaq AeroCasioplus integrated communicationCassio Poeia

Personal information management plus

Product category PIMs Palm IIIRoyalCasio PV-100

PIM only

Generic computers Notebook/subnotebook

Paper-based solutions

IBMToshibaMany othersRolodexDay Timer

Other solutions to the above

Budget Business items costing $100-$1,000

Fax machinesPersonal copiersCellular phonesFurniture (e.g. Steelcase)

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Managerial Judgment of CompetitionManagerial Judgment of Competition

Markets Same Different

Product/Services

Same

Different

A

C

B

D

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Defining Competition with Brand Choice DataDefining Competition with Brand Choice Data

Regular

All brands

RegionalNational

DietFamilybrand 1

Family brand 2

Cola Non-Cola

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Defining Competition with Perceptual MappingDefining Competition with Perceptual Mapping

•Moist •Needs refrigeration

•Tapioca pudding mixLocal mix •

Pudding mix

Chocolate torte mix •

Dzer ta • •Jell-O

•Canned pudding

•Individual pie

•Hostess cupcakes

•Quick bread mix

Good for a coffee break •

As a formal dessert•

Homemade cake •Bakery cake

•

Homemade cookies

• Cheese cake mix

“Snackin’ Cake” mix •

• Frozen cake

• Layer cake mix

• “Stir’n Frost cake mix

Takes a long time to prepare •

Bundt cake mix •

Custard mix

Boston crème pie mix“Light Style” cake mix

Coffee cake mix •

Bakery cookies •Pillsbury cookie dough •

Cookie mix •

•

•Easy to carry with meIn my school work lunch •

• Between meal snack

•Pepperidge Farm cookies• Oatmeal cookies

• Frozen pie

• Homemade pie

Date bar mix •

Brownie mix •

••

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Methods Versus Competition Levels Methods Versus Competition Levels and Information Requiredand Information Required

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Marketing Planning

11


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Aggregate Category FactorsAggregate Category Factors

Category size Category growth Stage in product life cycle Sales cyclicity Seasonality Profits

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Attractiveness of Market VariablesAttractiveness of Market Variables

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Category Attractiveness over Category Attractiveness over the Product Life Cyclethe Product Life Cycle

Stage of product life cycle

Category size

Category growth

Category attractiveness

Introduction

Small

Low

Low

Growth

Moderate

High

High

Maturity

Large

Low

Low/high

Decline

Moderate

Negative

Low

Sales

Time

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Category FactorsCategory Factors

Threat of new entrants Bargaining power of buyers Bargaining power of suppliers Current category rivalry Pressure from substitutes Category capacity

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Environmental FactorsEnvironmental Factors

Technological Political Economic Regulatory Social

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Factors in Assessing the Structure Factors in Assessing the Structure of Industriesof Industries

Threat of new entrants Bargaining power of buyers Bargaining power of suppliers Amount of intracategory rivalry Threat of substitute products or

services

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Buyer Bargaining Power is High When: Buyer Bargaining Power is High When:

Product bought is a large percentage of the buyer’s cost.

Product bought is undifferentiated. Buyers earn low profits. Buyer threatens to backward integrate. Buyer has full information. Substitutes exist for the seller’s product or

service.

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Supplier Bargaining Power is High When: Supplier Bargaining Power is High When:

Suppliers are highly concentrated, that is, dominated by a few firms.

There is no substitute for the product supplied.

Supplier has differentiated its product or built in switching costs.

Supply is limited.

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Major Characteristics of Categories Major Characteristics of Categories Exhibiting Intensive RivalriesExhibiting Intensive Rivalries

Many or balanced competitors Slow growth High fixed costs Lack of product differentiation Personal rivalries

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Impact of Category Factors on AttractivenessImpact of Category Factors on Attractiveness

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Conceptualizing Political RisksConceptualizing Political Risks

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Projected Change in U.S. Population 1995-2005Projected Change in U.S. Population 1995-2005

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U.S. Income InequalityU.S. Income Inequality

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Share of Food PurchasesShare of Food Purchases

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Energy Bars: Category Attractiveness SummaryEnergy Bars: Category Attractiveness Summary

Aggregate Market Analysis

Category Size •$504 mm energy bar category in 2001

Attractiveness++

Energy bar category contains four primary brands, plus their sub-brands and over 100 smaller players

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Energy Bars: Attractiveness Summary Energy Bars: Attractiveness Summary (cont)(cont)


Category Growth

•Average annual growth rate of 57% between 1997 and 2001

Attractiveness++

U.S. energy bar category sales forecasted at $750 mm in 2003 for a continued expected growth of 22%•IIndustry reports suggest current annual growth for the energy bar market 25%-30%

•CCategory expanding: new competitors are entering, existing brands are expanding with new products and flavors, market penetration and usage occasion is increasing

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Product Life Cycle

•Both the category and Odwalla Bars specifically are both securely in early stages of growth phase

Attractiveness++

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Sales Cyclicity •While energy bars are premium-priced for their convenience and nutrient level, the base dollar point of $1-$3 per bar is low such that they are not directly impacted by GDP variations

Attractiveness+

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Seasonality •Year-round sales

Attractiveness++

•Category overall may experience a slight sales increase in the spring and summer month during “race season” and as users are engaged in more outdoor activities and desire quick, portable energy.

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Profits •As most major competitors are within the product portfolios of larger consumer goods companies, it is difficult to benchmark profitability within the energy bar category specifically. Nevertheless, the recent acquisition of the leading competitors reflects an expectation for strong profit potential.

Attractiveness+

Increased category competitiveness may lead to lower pricing and profits

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Category Analysis

Threat of New Entrants/Exits

•Strong potential for new competitors given that the category is profitable, fairly easy to enter, and increasingly relevant to consumers.

Attractiveness-

•FFurther, with the “big three” brands strongly in place [PowerBar, Clif (including Luna), and Balance], it is most likely that small competitors will enter through the natural foods channel, creating more direct competition with Odwalla bars.

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Category Analysis

Economies of Scale

•Competitors within the broader category of snack bars would likely experience economies of scale with a relatively easy entry into the energy bar market

Attractiveness-

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Category Analysis

Capital Requirements

•Within the mainstream energy bars, differentiation is largely through brand, taste, and flavor variety. With the exception of targeted nutrition products like protein- or carbohydrate-specific products, nutritional levels are largely at parity.Attractivenes

s-

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Category Analysis

Switching Costs

•Switching costs are very low, opening the door to potential competitors

Attractiveness-

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Energy Bars: Attractiveness SummaryEnergy Bars: Attractiveness Summary (cont)(cont)

Aggregate Market

Analysis

Distribution •As there are not specialty requirements for distribution (refrigeration, etc.), it would be very easy for any of the “center of the store” consumer food companies to enter the category and add on to their existing distribution structure. This is particularly true for companies that have an established relationship with the category buyer.

Attractiveness- Shelf life

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Aggregate Market

Analysis

Bargaining Power of Buyers

•Lots of competitors with relatively similar options distinguished by brand and taste keeps retailer power strong

Attractiveness-

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Aggregate Market

Analysis

Bargaining Power of Suppliers

•As the suppliers of raw inputs for energy bars are largely agricultural, the commodity nature of agriculture keeps prices and supplier power low. While still relatively low, supplier power will be higher for nutrient supplement suppliers

Attractiveness+

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Aggregate Market

Analysis

Pressure from Substitutes

•Considerable

Attractiveness-

•Fresh fruit, cereal bars, smoothies, candy bars, etc. are all suitable portable substitutes for the mainstream energy bar consumer. True athletes are most likely to substitute with higher nutrient level energy bars

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Aggregate Market

Analysis

Category Capacity

•Appears to be high given current scenario of more than 100 manufacturers and many more products. But, still, it is too early to determine true capacity

Attractiveness+

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Aggregate Market

Analysis

Current Category Rivalry

•Very high. Differentiation largely by taste and flavor variety, and by targeting unique market segments

Attractiveness-

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Environmental

Analysis

Technological •Technology could play a significant role with respect to manufacturing efficiencies and taste profiles

Attractiveness+

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Environmental

Analysis

Economic •While premium priced, energy bars have so far seemed to fair the recession well. Still, however, if economic conditions persist, consumers may opt for less expensive alternatives like fresh fruit or non-energy snack bars

Attractiveness+

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Environmental

Analysis

Political/ Regulatory

•The energy bar category is regulated by the FDA as are other food products. There are not to our knowledge, however, additional regulations directed toward the energy bar category.

Attractiveness0

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Environmental

Analysis

Social •As lives get busier and mealtimes shrink, energy bars will continue to be an acceptable meal replacement.

Attractiveness++

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PDA: Category Attractiveness AnalysisPDA: Category Attractiveness Analysis

Aggregate Market Factors Attractivenes

s

Market Size $2.3 billion

Market Growth

Product Life Cycle

0%-40% +

+

+Growth

Profits

Sales CyclicityGood

one

Sales Seasonality

one

+/0

+

+

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PDA: Category Attractiveness AnalysisPDA: Category Attractiveness AnalysisCategory Factors Attractivenes

sThreat of New Entrants

•Moderate; R&D required, distribution

Bargaining Power of BuyersBargaining Power of Suppliers

Low, high switching costs +

0

0Moderate; PCs use similar components

Category Rivalry

Pressure from Substitutes

Intense

High

Category Capacity

Not a problem for now

-

-

+

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PDA: Category Attractiveness AnalysisPDA: Category Attractiveness Analysis

Environmental Factors: Attractivenes

s

Technological •Very sensitive

Political/ Regulatory

Economic

Telecommunications deregulation

+

-

+Relatively inexpensive

Social More work done on the road

+

1-1 overview midterm ii discussion marketing plan lecture midterm iii and presentation discussion...

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