MB 572 Differentiation and Marketing Innovation

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MB 572 Differentiation and Marketing Innovation

• Key instructors ??. ????????? ?????????
• ??. ?????????? ?????????????
• E-mail suthawan.chi_at_gmail.com
  rojanasak_at_gmail.com
• http//mb572utcc.wikispaces.com

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Course Description

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  ????????????????????????? ????????????????????????
  ?????????????????????????????? (Innovation
  process) ??????????????????? (Differentiation)
  ?????????????????? (Creativity)
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  (Commercialization) ??????????????????????????????
  ??????? (Competitive advantages)

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Objectives

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  (Innovation process) ???????????????????
  (Differentiation) ?????????????????? (Creativity)
  
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Course Evaluation

• Case studies presentation 10
• Quiz, assignments, and class attention 10
• Term paper 50
• Mid-term Examination 30
• Final Examination -

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Main text

• Trott, Paul (2008) Innovation Management and New
  Product Development, 4th Edition, Pearson
  Education Limited, Essex, England.

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The Worlds Most Innovative Companies

• Apple
• Google
• Toyota Motor
• General Electric
• Microsoft
• Tata group
• Nintendo

• PG
• Sony
• Nokia
• Amazon
• IBM
• Research in Motion
• BMW

Source Jena McGregor, Most innovative
companies, Business Week, 2008
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The Worlds Most Innovative Companies

• Hewlett-Packard
• Honda
• Walt Disney
• General Motors
• Reliance Industries
• Boeing
• Goldman Sachs group
• 3M
• Wal-Mart stores
• Target
• Facebook

Source Jena McGregor, Most innovative
companies, Business Week, 2008
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Topics

• Core marketing strategies cost leaderships,
  differentiation, and focus
• Differentiation and competitive advantage
• Differentiation and Blue ocean concept

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Competitive Advantage

• The key superior performance is to gain and hold
  a competitive advantage through differentiation
  of product offering, which provides superior
  customer value or by managing for lowest
  delivered cost.

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Competitive Advantage

• Competitive advantage is the advantage over
  competitors gained by offering greater value
  either through lower prices or by providing more
  benefits that justify higher prices.

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Sources of Competitive Advantage

• Superior skills
• Superior resources
• Core competences
• Value chain

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Core Marketing Strategies

• Competitive strategies
• Cost leadership
• Differentiation
• Cost focus and Differentiation focus

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Cost leadership

• To become the low cost producer in the industry
• A cost leader must achieve parity or at least
  proximity in the bases of differentiation
• Often achieve by economies of scale

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Achieving Cost Leadership

• Economies of scale
• Experience
• Capacity utilization
• Linkages
• Integration
• Timing
• Inter-relationships
• Location

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Differentiation

• To be unique in the industry along some
  dimensions that are widely valued by buyers
• Premium price for product but cannot ignore cost
  position (still should decrease cost)
• Differentiation product/ distribution/ sales/
  marketing/ service/ image, etc.

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Focus

• To be best in a segment or group of segments
• Two variants cost focus differentiation focus

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Achieving Differentiation

• Uniqueness drivers
• Product and/or Service differentiation
• Quality/ packaging/ branding/ service
• Pricing differentiation
• Price war vs. Premium pricing
• Promotional differentiation
• Promotional tools/ message
• Distribution differentiation
• Shopping by phone through TV-based catalogues/
  the Internet
• Brand differentiation
• Unique emotional proposition

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How to Differentiate

• A three- step process
• Defining the customer value model
• Building the customer value hierarchy
• (i.e. a fine restaurant)
• Basic food is edible and delivered
• Expected good china/ tableware/ tablecloth/
  napkin/ flowers/ service/ well-prepared food
• Desired pleasant/ quiet/ interesting great
  food
• Unanticipated complementary sorbet
• Deciding on the customer value package

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Sustaining Competitive Advantage

• Unique and valued products
• Clear, tight definition of market targets
• Enhanced customer linkages
• Established brand and company creditability

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STP Marketing

• Segmentation
• Target market
• size, growth, attractiveness, company objectives
  and resources
• Positioning
• Product position/ positioning map

Competitive differentiation
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Competitive Positioning Strategy

• Advantage-creating resources-
• Contribute to providing value for customers
• Are unique to the firm
• Are hard for competitors to acquire or imitate

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Competing through the New Marketing Mix

• 4Ps
• Product
• Price
• Promotion
• Place

• 4Cs
• Customer needs/ wants
• Cost to satisfy
• Communication
• Convenience to buy

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The Market Offer

• Key product/service concepts
• Product/service choice criteria rational/
  emotional/ lifestyle/ assurance brand
• Product/service differentiation
• Diffusion of innovation
• Managing the product over its life cycle
• The impact of the Internet on market offering

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Marketing Mix Product
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Marketing Mix Product
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Pricing Strategies

• Pricing consideration
• Production costs
• Economic value to the customer
• Competitor price levels
• Desired competitive positioning
• Corporate objectives
• Price elasticity of demand
• Assessing value to the customer
• The effect of the Internet on pricing decisions

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Pricing Strategies

• Pricing methods
• Cost plus pricing
• Going rate pricing, based on prevalent market
  price
• Perceived value pricing
• Promotional pricing
• Special events
• Cash rebates
• Low interest finance
• Psychological pricing

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Marketing Mix Price
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Communication Strategies

• The communications process
• A basic communications model
• Awareness
• Interest
• Desire
• Action

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Communication Strategies

• Communications decisions
• What message to convey
• What communications tools to use
• How to translate the message in copy
• Which media to use
• How much to spend on communications

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Communication Strategies

• Communications tools
• Advertising
• Public relations
• Sales promotions
• Personal selling
• Direct marketing
• Sponsorship

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Communication Strategies

• The use of the Internet for marketing
  communications
• Banner advertising and pay-per-click
• Viral marketing
• Pre-launch promotion
• Advertising audience measurement

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Marketing Mix Promotion
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Marketing Mix Promotion
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Some Aspects of Marketing Innovation

• Viral Marketing
• Word of Mouth Marketing
• Digital Marketing Innovation

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Viral Marketing

• Viral Marketing is the key to success.
• marketing techniques that use social networks to
  produce increases in brand awareness or to
  achieve other marketing objectives (such as
  product sales) through self-replicating viral
  processes, analogous to the spread of computer
  viruses.
• It can be word-of-mouth delivered or enhanced by
  the network effects of the Internet.
• Viral promotions may take the form of video
  clips, advergames, text messages.

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Word of Mouth Marketing

• Different possibilities to create a big effect
  with small budget
• Word of mouth marketing is a highly valued
  marketing tool for advertisers
• The receiver of word-of-mouth referrals tends to
  believe that the communicator is speaking
  honestly. The receiver relies on the information.
• A very successful word-of-mouth promotion creates
  BUZZ.

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Word of Mouth Marketing

• Four different rules to produce good word of
  mouth marketing
• Be interesting
• Smart idea is always a key successful business
• Find a megaphone via Blogs, YouTube, email
• Build trust through emotional and excellent
  service CRM

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Digital Marketing Innovations

• One way to maintain competitive edge
• Online communications
• Search gets local (i.e. Google Maps)
• Doing more with banners
• In-game advertising (esp. FMCG)
• Pay-per-text
• E-mails with personality
• Corporate blogging (more personal and informal)
• Opening conversations among managers, staffs,
  teams, suppliers and customers.
• Owning PR message
• Promote CSR through Blogs

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Axe Fantasy
Examples of Marketing Innovation
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Stop Grow
Examples of Marketing Innovation
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Fiat Ducato
Examples of Marketing Innovation
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World Water Day
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Bergmann Funeral Services
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Distribution Strategies

• Channels of distribution
• Effects of the Internet on distribution strategies

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Marketing Mix Distribution
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Extended Marketing Mix- 8Ps

• People
• Job design/ job description
• Selection
• Training appraisal
• Processes
• Customer relationship management
• Physical evidence
• Partners

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Zappos

• Online Shoes, Bags, Accessories, etc
• Deeply engage with customers and employees
• Started in San Francisco (IT) ? move to Las Vegas
  (Hospitality)
• Now current employees is 1,600
• Pay employees to quit 1,000 (starting from 100
  ? 500 ?and now 1,000)
• Company is bigger bigger? keep quality
• 10 of new recruits quit
• 4- week company culture/ value/ stress/
  commitment/ customer service training
• One more week in Kentucky for warehouse and
  shipping
• If not the right fit, company pays 1,000 bonus
  to quit
• Extraordinary customer service

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Zappos

• Grow successfully because of Frontline
• Lots responsibilities
• No scripts
• No time limit
• Authorized from company to make customers satisfy
  

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Zappos

• Viral Marketing customer service
• One customer bought 15 pairs of shoes for her
  mothers, 2 weeks return/refund policy.
• Customer service sent e-mail to remind.
• Found out that her mom was sick, and no time to
  send them back (UPS).
• Customer service sent UPS to pick up with flowers
  and card for her mom
• The customer post her appreciation on internet
  blog, within a week? viral
• Brilliant PR

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Blue Ocean Strategy

• The reason of the appearance of the Blue Ocean
  Strategy
• Increasing numbers of industries and supply
  exceeds demand
• globalization
• accelerated commoditization of products and
  services
• increasing price wars
• shrinking profit margins
• brands are becoming more similar? select based
  on price

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Red Ocean VS. Blue Ocean
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BOS Logic Reconstruct market boundaries
Boundaries of Competition
Creating New Market Space
Head-to-Head Competition
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Value innovation

• It is a new way of thinking about and executing
  strategy that results in the creation of a blue
  ocean and a break from the competition.
• The value-cost trade-off
• either create greater value to the customers at
  higher cost or create reasonable value at a lower
  cost.
• BOS pursues differentiation and low cost
  simultaneously.

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Value Innovation

• Four elements
• Eliminate
• Reduce
• Raise
• Create