CITM360

1
CITM360 Week 8

• Steven A. Gedeon, PhD, MBA, PEng

2
This Weeks Agenda

• Review of Interim Presentations
• Focus on Competitor / Differentiation /
  Strategic Maps
• Workshop on Strategic Maps for Each Group
• Case Study Presentations
• The Marketing Plan
• Product
• Price
• Place
• Promotion

3
Room Change

• DATE Monday March 14, 2005
• TIME 3 - 5pm
• ROOM KHS329
• One Day Only Double Class

4
Review of Interim Presentations

• Tremendous Improvement Over Assignment 1
• In Virtually All Cases, I Graded Higher than the
  Class
• All Ave Class Scores were 6-8 with No Exceptions,
  Even When the Subject was Skipped or Excellent
• Very Few Grammatical/Spelling Mistakes
• Still Some Major Weaknesses
• Customer Segmentation (and Who is the Customer)
• Differentiation and Positioning Strategy
• Business Model
• Value Chain and Space
• Key Success Factors

5
Customer

• Anyone Who Pays You Money is a Customer!
• Connectix, RU3, eWed
• Most Groups Still Vague over the Concept of
  Customer Segmentation and Characteristics
• Buying Characteristics
• Market Stats to Validate the Size, Ability and
  Willingness to Buy
• Addressable Market
• Becomes Very Important during Market Plan!

6
Sample Customer Questions

• Students Do they own DVD Players? Dont they do
  P2P instead? How much do they spend on DVDs?
  Whats their discretionary income? How much do
  they spend on convenience items?
• 24-32 Yr Old Daters How many in any given
  region? Do they have 3D graphics cards? How many
  are using dating sites or VR sites today?
• Business who Print Who makes the buying decision
  within the company? Does their Marketing Firm
  make the decision?
• Advertisers to Brides What do they spend now and
  where? Local vs National Chains? What are you
  Offering them (in contrast to what you offer to
  Brides)?

7
Value Prop Customer Pain

• Ideally 1-2 Focused Statement(s) (in Contrast to
  a List of Features)
• Can use 2 Slides Here if Needed
• Difference Between Value (Seeking a Positive) and
  Pain (Avoiding a Negative)

8
Competition gt Differentiation gt Strategic Map

• Must Connect Competition to Differentiation to
  the Strategic Map
• The Strategic Map Tells You if You Can Sustain
  Your Differentiating Advantage
• If NOT, Then Start Over Again!
• The Key is Picking the Correct Axes
• How Well do you Understand Your Key Sustainable
  Differentiation and How the Customer Compares
  you?
• Generic Axes did not Add to Understanding!

9
What are Key Differentiators?(Good Axes to Pick
on Map)

• Strong
• Price, Quality, Speed, Customization, Support,
  Design (remember these?)
• Exclusive Channels or Partnerships
• Customer Segment Only IF Barriers to Entry
• special knowledge required, special needs, hard
  to reach
• Weak
• Features (unless very hard to replicate)
• Geography, Language
• Customer Segment IF simple to enter
• Narrow vs Broad (Unless Creates Barriers to Entry)

10
Strategic Mapping Workshop

• Lets Discuss Each Group in Detail

11
Business Model

• Tremendous Confusion and Disagreement over this
  Term
• Not the Same as Porter or Revenue Model
• Credit Given for Most Aspects of How do you
  Deliver Value
• Only Three Groups Actually Showed This Properly
  (as it was described in class)
• RU3, OPP, Campus Express

12
Value Chain Space

• Some Groups did a Great Job on This
• OPPrint and Campus Express
• Tremendous Confusion Over Value Chain if Selling
  B2B
• The Value Chain for Who you Sell to and The Value
  Chain for How You Deliver Value to Your Clients
  (only 1 Value Chain in B2C)
• You MUST Engage in ALL Aspects of Your Own Value
  Chain. The Question is What Parts are you going
  to Do Better Than Anyone Else?
• Space is Related to Your Clients Value Chain
  in B2B and/or Porter 5 Forces Environment

13
Revenue Generation

• Dont Need to Complicate This
• Many Groups Put a Lot of Non-Revenue Related Info
  on these Slides
• Must be Crystal Clear on Details of Revenues vs
  Expenses for Financial Plan

14
Key Success Factors

• Most Groups were Surprisingly Weak Here
• Cannot Be Excellent at Everything!
• This Violates the Concept of Differentiation
• Lowest Cost, Best Quality, Fastest, Custom
• Key Word Here is KEY
• Since Each Business is Unique, I Cannot Give
  Generic Comments Here

15
Presentation

• Slides and Graphic Quality were Good
• Pace and Length were Good
• Dont Read
• Use Bullets as Talking Points
• Dont Turn Your Back While Speaking
• Add Introduction Slide (You Never Know Who will
  get a Copy of your Slides!)
• Add Contact Info ( )
• Be Consistent! Pick a Key Theme and Stick to It

16
The Marketing Plan

• Product
• Price
• Place (Distribution Channels)
• Promotion
• People Organization Plan
• Profits Financial Plan

17
Product

• Core Product
• e.g. transportation (affects who your competition
  will be in the future)
• Actual Product
• e.g. the car itself, its features, quality
• Augmented Product
• e.g. services, warranty, ease of purchase,
  prestige associated with owning a Porsche

18
Services as the Product

• Characteristics of Services not the same as
  selling a product
• Intangibility Can you touch and feel?
• offset by stressing competence, professionalism,
  and experience
• Inseparability Delivered by people
• Its the person you trust
• Highly perishable
• Timing is important (you cannot inventory a
  haircut)
• Quality control issues/standardization
• Difficult to standardize people dependent
• Rely on repeatable/well documented processes
• Customer involvement
• The customer must be present to get a haircut

19
Features into Benefits

• Customers value products and services not for
  what they are but for what they do. Concentrate
  on benefits!
• Turn features into benefits
• For example credit card
• Compact size -gt Easy to take anywhere
• One monthly bill -gt Saves time
• A single feature may offer different benefits to
  different audiences, so have a particular target
  market in mind.

20
Price

• Customers goal is to obtain the most benefit for
  the price paid for a product or service.
• Your goal is to obtain the most price for the
  benefits.
• What are your pricing objectives?
• Market share?
• Maximizing profits?
• What price do you need to be profitable? To break
  even?
• High demand, few alternatives? Able to charge
  higher price inelastic demand
• Less demand, high volume of substitutes and
  plenty of alternatives elastic demand.
• What information do you need to determine your
  break even point?
• Dont compete on price if you can help it Find
  other alternatives.
• What are other alternatives?

21
Pricing Decisions

• Cost Plus Pricing
• Fixed vs Variable Costs
• Marginal Cost Pricing
• Demand Based Pricing
• Price Segmentation between User Groups
• Competitor Based Pricing

22
Additional Price Considerations

• Commissions or Referral Fees
• Discounts, Specials, Incentives
• Flexible Pricing, Bundles
• Account for Cost of Returns
• Sometimes Premium Pricing Conveys Superior
  Quality
• Opportunity Costs (Should you Bother Selling This
  or Focus on Primary Product?)

23
Alternatives to Price Competition

• Customization
• Personalization
• Specialization (niche focus)
• Increased convenience
• Additional service enhancements
• Demonstrated quality

24
Place/Distribution

• Direct Sales
• Sales Staff
• Sales Funnel Management
• Company Website
• Traffic Generation
• Indirect Sales
• Reps, Agents, Distributors
• Affiliate Websites

25
Promotion

• Getting the word out communicates availability
  and desirability of your offering
• Positioning
• Image of company is distinct to customer
• About finding or creating a dimension in which
  you can become known as the best
• Reflects personality based on
• Advertising
• Customers experiences
• Web site
• Should be consistent
• Building a brand (extension of positioning)
• Association/expectations that come to mind when
  exposed to a name, logo or package.
• Conveys credibility

26
Promotion Mix

• Prospecting (e.g. cold calling)
• Trade Shows
• Public Relations
• Magazine Articles, Stories, TV appearances
• Advertising
• Direct Marketing (Mail, eMail)
• Word of Mouth

27
Promotional Campaigns

• Build Brand
• Highlight Products/Services
• Communicate Value Proposition
• Drive Website Traffic
• Generate Life-time Value

• Increase Revenue
• New Customer Acquisition
• Drive More Business from Core Customers
• Build Long Term Customer Value/Relations

Increase awareness while improving ROI.
28
Promotion

• Getting people to your site
• Search marketing - Directories e.g. Yahoo! and
  Search engines e.g. Google
• Email Marketing
• Other PR strategies
• Advertising Branding
• Forrester Research in UK suggests 81 of British
  internet users find sites using a search engine
  or directory

29
Search Engine Marketing

• Different search engines search on different
  parts of web sites (e.g. titles, words on page)
• How to get Ranked by Search Engines?
• Titles, Metatags
• Keywords
• Other sites pointing to you
• Paid placements
• Will Google bring you business?
• Cost of search vs. Revenue per customer
• Monitor traffic, keywords used, pages visited,
  how much time spent
• For search engine submissions tips, see
  http//searchenginewatch.com/webmasters/index.php
  

30
Email Marketing
Dont Spam Your Customers! Provide Value Get
Permission Unsubscribe Easily
31
Shifting to email
Dont Spam Your Customers! Provide Value Get
Permission Unsubscribe Easily
32
Sales conversion process
Aware of you
Comprehend your offering
Convinced of the superiority of your offering
Buying
33
Other PR Strategies

• Newsgroups/Forums
• Affiliate programs
• Exchanging links
• Web rings
• Word of mouth
• Traditional PR methods press releases,
  contributions to trade publications, speeches at
  conferences/industry events

34
Traditional Media

• Put URLs and e-mail address on all publications
• Other places for ads?
• T-shirts/clothing
• Posters
• Etc.

35
Affiliate Programs

• Allows non-transaction based sites to refer
  customers to site that will sell specific goods
• Referrer site gets a fee from the sales site
• E.g. amazon.com Associates program
• You earn up to 15 in referral fees

36
Exchanging Links

• Links complementary web sites
• You dont have control over how other sites
  incorporate/display your link
• May be difficult to get your link removed from
  other sites

37
Internet Advertising

• Banner ads (e.g. doubleclick)
• Sponsored links in search engines
• Advertising glossary
• Internet advertising links
• thestar.com (see link on left for online ads)
• Marketitright.com

38
Strategic Alliances

• Cant be an expert at everything
• Source of leads
• Dont give away too much
• Trust is key

39
Key Issues

• Consistency in the Marketing Plan
• How do you reach the different customer segments
  for your business?
• What do you think is the best strategy to get
  people to your site?
• What promotional techniques are likely to be most
  effective for your business?