Presentation Agenda

1
Presentation Agenda

• Introduction / Executive Summary
• Initial Market Conditions
• Decisions/Impacts (Rounds 2-7)
• Future Decisions

2
Distinctive Capabilities

• Thus, one of the critical management tasks is to
  decide which capabilities to emphasize, which is
  dictated by how they chose to compete.

The Capabilities of Market-Driven
Organizations George S. Day
3
Executive Summary

• Target market recognition as well as competitive
  analysis
• Analyzer strategy
• a. Fast follower / product awareness
• b. 2nd largest in marketplace in terms of
  overall revenues
• c. Synergy sources (Product development/shared
  resources)
• d. Target consumer segments as ideal values
  change (Dynamic)

4
Flanker (Analyzer?)

• Protect against loss of specific segment of
  current customers by developing a 2nd entry that
  covers a weakness in original offering improve
  ability to attract new customers with specific
  needs or purchase criteria different from those
  of early adopters.

Marketing Objectives and Strategies For Share
Leaders in Growth Markets, Exhibit 17.10
5
Initial market position

• Two products
• SULI
• Contribution 98.5 gt Cow product
• Main characteristics high price, high quality
• Target Pros and High Earners
• SUSI
• Few contribution in the revenues 1.5
• Main characteristics low price, low quality
• Target Others

6
Initial market position

• Competition
• For SULI SYCA and SOLD
• Strengths
• Lower retail price and lower base cost
• Higher power and frequency
• Weaknesses
• poorer design
• For SUSI SIRO and SAMA
• Strengths
• Lower base cost
• Weaknesses
• Poorer purchasing intention
• Lower quality

7
Initial market position

• SWOT analysis
• Internal Strengths
• High revenues thanks to SULI
• High brand awareness for SULI
• Internal Weaknesses
• Poor purchase intention for SUSI
• All revenues depend only on one product
• External Opportunities
• Five very different and well defined segments
• Vodite market
• External Threats
• Competitive market
• Cost of RD

8
Constant Improvement

• They stress that while new product development
  is critical, resources should be directed toward
  a few winners and improved versions of existing
  products.

Marketing News Aug. 28, 2000 Steve Jarvis
9
Team U Periods 1 2
Existing Products - SULI Higher end product
targeted at HiEarners and Pros. Product is a good
fit to Pro demands. Focused on increasing sales
and had success SUSI Low end product targeted
to Others and Singles. Increasing advertising
and sales force did not help low purchase
intentions and sales. Results - Profits rose
significantly due to success of SULI,
marketing/sales push Next Steps - Executive Team
decided to follow an analyzer strategy. Try to
influence perception regarding design of both
products
10
Team U Periods 3 4
Existing Products - SULI still successful, SUSI
continues to lose market share. Dropped SUSI 2
New Products - SUSA targeted as replacement for
SUSI, SUMO created for primarily for the
HiEarners market. Started to investigate new
Vodite marketplace. Results - Profits dropped due
to high RD and Marketing costs for new products.
Next Steps - Continue promotion of three Sonite
Products. Will create products targeted towards
followers in the Vodite market.
11
Dangers of RD

• Another big danger to a firms continued growth
  arises when top management is wholly transfixed
  by the profit possibilities of technical research
  and development.

Harvard Business Review July-Aug. 1960 Theodore
Levitt
12
Team U Periods 5 6
Existing Products - SULI still the leading
product. SUMO ramping up but SUSA is struggling.
Decided to drop SUSA and focus on the high-end
market only. New Products - Vodite product in RD
but no new products launched. Results - Profits
increased dramatically due to no special RD or
Brand Awareness costs, reaping benefits of
existing products Next Steps - Focus product mix
towards higher end market, continue with analyzer
strategy and launch Vodite when the time is right.
13
Product Sequencing

• Both core and integrative knowledge can lead to
  economies of scope. Core knowledge reduces joint
  costs of production via sharing of intangible
  assets such as technological know how

Product Sequencing Co-Evolution of Knowledge,
Capabilities, and Products Constance E. Helfat
and Ruth S. Raubitschek
14
Team U Period 7
Existing Products - SULI and SUMO are now in the
early maturity phase. New Products - New Sonite
product, SUNG, launched for the singles market.
Same project as for SUMO, so no additional RD
costs incurred. Vodite product VUFF
launched. Results - Profits dropped due to
marketing costs for two new products. However,
both products are poised to hit growth in the
next few periods Next Steps - Increase presence
in Vodite market. Continue refining SULI and SUMO
for their respective markets.
15
Lessons Learned Periods 1-7

• Spend less - RD fewer products and keep
  portfolio smaller as it is extremely costly to
  RD, advertise, and increase sales force for new
  products.
• Competitive Analysis - model products more
  closely after successful competitor products.
  Pay attention to consumer brand awareness,
  benchmarking, and consumer intent to buy.
• Follow more closely with Analyzer strategy, (ex
  Vodite Launch)
• Brand awareness takes time and investment when
  releasing a new
• product.

16
Operational Effectiveness

• Operational effectiveness (OE) means performing
  similar activities better than rivals perform
  them.

Harvard Business Review Nov-Dec. 1996 Michael E.
Porter
17
Future Direction / Strategy

• Retain the Analyzer Strategy
• Already starting focusing on the higher end
  analyzer segment
• Products getting established
• Find the next SULI in the Vodite Market
• VUFF is well positioned, can use the project
  expertise to launch cost-effective variants
• Increased focus on managing product mix
• Launching products in groups caused spikes and
  troughs in profits
• Grow number of marketed products along with
  overall revenue growth

18
Forecast Periods 8-10

• Sonite Market
• SULI will be refined to keep up to expectation of
  Pros
• SUNG has had a very strong ramp-up in the Singles
  segment
• SUMO will be refined to meet needs of HiEarners
• Vodite Market
• VUFF had a strong first year in a competitive and
  fragmented market
• Gives us launching pad to create cost-effective
  variants to target the large and high-margin
  adopter and follower markets
• Summary
• Period 8 should be similar to Period 5 high
  profit growth
• Period 9 will incur some limited RD costs
• Should be on track for gt 10 yearly profit growth
  Periods 8-10