Chapter 6-13 Slides

Five Sources of Customer Heterogeneity

(1) Individual differences: Favorite Colors (2) Life Experiences: Cultural Factors (3) Functional Needs: Features, Affordability (4) Self-Identity/Image (5) Marketing Activities

Stages in a Product Life Cycle

(1) Introductory: Product lacks easy availability. (2) Growth: Sales increase at a progressively faster rate. (3) Shakeout: Growth rate decreases resulting in strong price competition. (4) Mature: Net adoption rate holds steady. (5) Decline: Sales rate declines.

Examples of Questions a Strategic Monitoring System Should Be Able to Answer

(1) What changes in the environment have negatively affected the current strategy? (2) What changes have major competitors made in their objectives and strategies? (3) What changes have occurred in the industry in such attributes as capacity, entry barriers, and substitute products? (4) What new opportunities or threats have derived from changes in the environment, competitors' strategies, or the nature of the industry? (5) What changes have incurred in the industry's key success factors? (6) To what extent is the firm's current strategy consistent with the preceding changes?

Deciding Whom to Attack

- Market share leader within its primary target market - Another follower who has an established position within a major market segment - One or more smaller competitors who have only limited resources - Avoid direct attacks on any established competitor

Dimensions of Product Quality

- Performance - Durability - Conformance with Specifications - Features - Reliability - Serviceability - Fit and Finish - Brand Name

Targeting

- Uses all three "C's" as input: Customer, Company, and Competitors - An ideal target segment should meet six criteria: (1) Based on customer needs (customer care). (2) Different than other segments (little crossover competition). (3) Differences match firm's competences (firm can execute within resource constraints). (4) Sustainable (can keep customers). (5) Customers are identifiable (can find targeted customers). (6) Financially Valuable (valuable in the long term). ** The GE matrix is one analysis tool designed to help managers visualize and select target segments.

Targeting

- What selection criteria would you use to select segments to target? - A market needs to select segments to target based on certain selection criteria: (a) Market Attractiveness: size, growth rate, price sensitivity, etc. (b) Competitive Strength: captures the relative strength of a firm, versus competitors, at securing and maintaining market share in a given segment.

Determinants of Success for Followers

A follower will most likely succeed when: - There are few legal, technological, or financial barriers to inhibit entry - when it has sufficient resources of competencies to overwhelm the pioneer's early advantage

Determinants of Success for Pioneers

A pioneering firm stands the best chance for long-term success in market-share leadership and profitability when: - The new product-market is insulated from the entry of competitors; or, - The firm has sufficient size, resources, and competencies to take full advantage of its pioneering position and preserve it in the face of later competitive entries

Profitability Analysis

Full Costing: Analysis assign both direct, or variable, and indirect costs to the unit of analysis. - Indirect costs.... Involve certain fixed joint costs that cannot be linked directly to a single unit of analysis - Those who use full costing argue that only by allocating all costs to a productor a market can they obtain an accurate picture of its value Direct Costing: Involves use of contribution accounting. - Those favoring this approach can argue there is really no accurate way to assign indirect costs - Since indirect costs are mostly fixed, a product or market may make contribution to profits even if it shows a loss

Organizational Adjustments

Key Drivers: - Customer needs - Informational requirements of the sales and marketing personnel - Ability to motivate and coordinate activities according to market conditions - Available competencies and resources - Costs

Methods of Maintaining a Low-Cost Position

Means for obtaining a sustainable cost advantage: - A no frills product - Innovative product design - Cheaper raw materials - Innovative production processes - Low cost distribution - Reductions in overhead

Growth-Market Strategies for Market Leaders

Two important facts: (1) The dynamics of a growth market make maintaining an early lead in relative market share very difficult. (Increasing number of competitors/Fragmentation of market segments/Threat of product innovation from within and outside the industry) (2) Firm can maintain its current share position in a growth market. (If its sales volume continues to grow)

Niche Strategy

When most segments are expected to decline rapidly, a nice strategy might be viable if one or more substantial segments will either remain as stable pockets of demand or decay slowly. - Continued product and process R&D aimed at product improvement that appeal to target customers - Produce for private labels to maintain volume and hold down unit cost - Focus advertising and sales promotion on customers in target segments - Maintain distribution channels for reaching target segments - Design service programs to address unique concerns of target segments

Market Objectives for Share Leaders

Share maintenance for a market leader involves two important marketing. objectives. - The firm must retain its current customers, ensuring that those customers remain brand loyal when making repeat or replacement purchases - The firm must stimulate selective demand among later adopters to ensure that it captures a large share of the continuing growth in industry sales

Organizational Structures

Several common organizational designs incorporate differences in both the structural variables and in the mechanisms for resolving interfunctional conflicts: - Functional - Product Management - Market Management - Various types of matrix organizational designs

Niche Penetration Strategy

Similar to but more narrowly focused than mass-market strategy: - Penetrator should keep its marketing efforts clearly focused on the target segment - Internet provides promotional tools that can reach specific segments at relatively low cost

Segmentation Steps

(1) Identify and refine "pool" of potential customers needs and descriptors (qualitative research). (2) Collect data from random assortment of potential customers on "importance" of needs/benefits to purchase decision. (3) Use "needs/benefits" to segment the market into 3 to 7 homogeneous customer groups: # segments based on results, ability to manage, and actionable. (4) Name segments (communication tool).

Mass-Market Penetration

- Increase customers' awareness and willingness to buy - Increase customers' ability to buy

Profitability Analysis

- Requires that analysts determine the costs associated with specific marketing activities to find out the profitability of different market segments, products, customer accounts, and distribution channels. - Limitations: Objectives can best be measured in non financial terms (e.g. customer satisfaction), Profit is a short term measure, Profits can be affected by factors over which management has no control

Niche-Market Strategy

- Serves one or more segments with sufficient number of customers seeking specialized benefits. - Designed to avoid direct competition with larger firms.

Organizational Structures

Adaptiveness and Innovativeness are enhanced when: - Decision making authority is decentralized - Managerial discretion and informal coordination mechanisms replace rigid rules and policies - More specialists are present

Profitable Survivor Strategy

Aggressive alternative for a business with a strong share position and a sustainable competitive advantage. - Graduate decline in market demand or when substantial pockets of continuing demand are likely well into future - Signal competitors that firm intends to remain in the market: Maintain or increase advertising and sales promotion budgets - Introduce line extensions - Lower prices in necessary to increase share - Consider agreements to produce replacement parts

Share Gains Are Worth More

Depends on: - Existence of positive network effets - Future changes in technology or other key success factors - Future competisse structure of the industry - Future fragmentation of the market

Strategies for Maintaining Current Market Share

Fortress defense.. Involves actions: - Aimed at improving customer satisfaction and loyalty. - Intended to encourage and simplify repeat purchasing. **Add flanker brands.** **Niche strategy.. effective when the target segment is too small to appeal to larger competitors.**

Why is positioning important?

Help you to figure out how to stand out in the crowd.

Contraction or Strategic Withdrawal

In some highly fragmented markets, a leader may be unable to defend itself adequately in all segments..... The firm may have to reduce or abandon its efforts in some segments to focus on areas where it enjoys the greatest relative advantages or that have the greatest potential for future growth.

Strategies for Extending Volume Growth

Increased penetration: - Convert current nonusers in target segment into users Extended Use: - Increase frequency of use among current users - Encourage a wider variety of uses among current users Market expansion: - Develop differentiated positioning focused on untapped or undeveloped segments Increase penetration: - Enhance product's value by... adding features, benefits, or services AND including it in the design of integrated systems - Stimulate Addition Primary Demand Extended use: - Move storage of the product closer to the point of end use - Encourage larger volume purchases - Stress basic product benefits for a variety of usage - Develop line extensions - Develop and promote new uses - Encourage new uses through sales promotions Market Expansion: - Develop multiple line extensions - Consider producing for private labels - Design advertising that address specific interests and concerns of potential customers - Build unique distribution channels - Design service programs -> reduce perceived risk - Enter global markets

Flanker Strategy

Involves trading up, where the leader develops a high quality brand offered at a higher price to appeal to the prestige segment of the market. A flanker brand is a lower quality product designed to appeal to a low price segment to protect the leader's primary brand from direct price competition **Always used in conjunction with. position defense strategy.**

Early Entry

Necessary for high-tech industries: - Critical for staying abreast of technology - Experience gained in developing the first generation of products helps in develop next generation of superior products

Needs-Based Segmentation

Needs: Customers are grouped together based on their similarities of needs and benefits desired by customers for your offering. - Needs - Wants - Lifestyles - Behavior **Customers in segment "X" highly value prestige, peace of mind, and are not price-sensitive (bases). Descriptors: Observable customer characteristics that help you find and classify customers (e.g. gender, age, income, size, education, etc.). **The segment is mostly composed of men with high income who have been loyal customers for more than 3 years (descriptors).

Ch. 8 Marketing Strategies for New Market Entries Product Life Cycle

Offers important insights into how decision making -- for the product itself and for other elements of the marketing mix -- is likely to evolve. **Many products do not go through the product life cycle curve because a high percentage are aborted after an unsatisfactory introductory period.** **Fads sometimes enter suddenly, experience strong and quick enthusiasm, peak early, and enter the decline stage shortly thereafter.**

Nearly Everything You Do Impacts Your Positioning

Place (Channel): Samsung dropping Kmart. Price: No discounts at Tiffany. Promotion: Tiger Woods at Nike, Starbucks. Product: Bose, Apple.

Strategic Monitoring Systems

Strategic monitoring is concerned with evaluating a firm's SBU-level strategies. Such a system is difficult to implement because there is usually a substantial amount of time between strategy formulation and when a strategy takes hold and results are evident. Decisions for Monitoring Systems: - Identifying key variables - Tracking and monitoring: use strategic plan as an early-warning system, monitor industry sales regularly, examine relevancy accuracy and cost of obtaining needed measures - Strategy reassessment

Marketing Strategies for Mature Markets

Strategies for maintaining current market share: - Fortress defense - Flanker brands - Niche strategy Strategies for extending volume growth: - Increased penetration strategy - Extended use strategy - Market expansion strategy

Positioning Statement Must Address Three Key Questions:

(1) Who are the customers? (2) What is the set of needs that the product or service fulfills? (3) Why is this product/service the best option to satisfy your needs (relative to competition or substitute; support for why)? **This statement is the roadmap for a plethora of implementation decisions involved in marketing a product (both inside and outside the company).

Why Segment?

- A company deals with hundreds, thousands, even millions of customers/prospects every day. - You cannot treat them all the same way: The have different needs, wants, profiles, profit potential. The "one fits all" era is gone. - You cannot treat them all differently: There are too many. A company rarely has enough resources/capabilities to customize everything (product, offer, price, communication) with everyone.

Market Expansion

- A more aggressive and proactive version of the flanker strategy - Here the leader defends its relative market share by expanding into a number of market segments.... Primary objective is to capture a large share of new customer groups who may prefer something different from the firm's initial offering, protecting the firm from future competitive threats from a number of directions.

The Contingency Planning Process

- All strategies and the action plans designed to implement them are based on assumptions about the future, they are subject to considerable risk. - Managers often follow a contingency planning process.

Mass-Market Strategy

- Captures sufficient volume to gain economies of scale and a cost advantage - Requires: (1) Substantial resources (2) Production capacity (3) Good mass marketing capabilities **Differentiated Marketing: Design separate products and marketing programs for differing segments.

Ch. 10 Strategies for Mature and Declining Markets Strategic Challenges

- Challenges in mature markets: Sustaining a meaningful competitive advantage. - Challenges in declining markets: Maximize cash flow and profit over the product's remaining life.

Characteristics of the Transition Period

- Competitive turbulence: Begins approximately when half of the potential customers have adopted the product. - Market is still growing, but the rate of growth starts to decline. - Occurs simultaneously with other changes in the market and competitive environment: Appearance of excess capacity, Increased difficulty of maintaining product differentiation, Increased intensity of competition, and growing pressures on costs and profits.

The Marketing Audit

- Control and planning mechanism to review total marketing efforts - Conducted across all products and business units - Covers the SBU's: Objectives and strategy/Plan of action for each product market entry - Provides an assessment of each SBU's overall competitive position - A longer view of marketing performance

Customer Heterogeneity: A Fundamental Assumption of Marketing Strategy

- Customer heterogeneity is a fundamental "problem" that all firms must address when developing an effective marketing strategy - Customer heterogeneity may be latter or hidden: (a) Customers vary on some underlying preferences, but no firms are supplying offerings that fit their desires, so those preferences are not evident (b) Customers might not even know of their diverse preferences, because they have no options to evaluate - Assuming all customers are the same is a recipe for failure, at least in the long term, as competitors will better satisfy subsegments with more aligned offerings, leading to a downward spiral in which the firm has fewer, less profitable customers that are more costly to serve **All customers differ and an effective marketing strategy must manage ever-present customer heterogeneity**

Product Management Organizations

- Decentralizes decision making - Must rely on persuasion and compromise - Improved coordination of functional activities within and across product markets, and increased attention to smaller product market entries

Reducing Attractiveness of Switching

- Develop a product line with appealing features - Develop multiple line extensions - Meet or beat lower prices

Head-to-Head Positioning Against Competitive Offerings

- Develop a product line with more features - Make product modifications - Meet or beat lower prices - When resources are limited consider withdrawing from smaller segments

Differentiated Positioning Against Competitive Offerings

- Develop multiple line extensions - Build unique distribution channels - Design multiple advertising

Success in Mature Markets

- Development of a well-implemented business strategy to sustain: A competitive advantage, Customer satisfaction, and Loyalty. - Flexible and creative marketing programs geared to: Pursue growth or profit opportunities.

A Good Segment Is...

- Distinct - Homogeneous - Identifiable: If you can't identify/target members of a segment, its value is low. - Substantial: Not necessarily in terms of numbers of customer. - Informative: How can it help my marketing strategy? **There is no such thing as an optimal segmentation. But some segmentations are good and appropriate for some specific purposes.**

Encouraging/Simplifying Repeat Purchase

- Expand production capacity in advance - Improve inventory control and logistics systems - Continue to build distribution channels - Consider negotiating long-term requirements contracts - Consider developing automatic reorder systems

Strategic Traps During a Shakeout Period

- Failure to anticipate transition from growth to maturity - No clear competitive advantage as growth slows - Assumption that an early advantage will insulate firm from price or service competition - sacrificing market share in favor of short-run profit

Evaluation and Reward Systems

- For defenders in relatively mature markets, operating efficiency and profitability tend to be the most important objectives - Basing too large a portion of managers' rewards on current profitability may cause problems for prospectors - Systems that place more emphasis on sales volume or market share objectives, or on the percentage of volume generated by new products, may be more appropriate for prospectors

Ch.9 Strategies for Growth Markets Opportunities and Risks in Growth Markets

- Gaining share is easier (Potential new users can be easily attracted by a new competitor/Established competitors are less likely to react aggressively to market-share erosion) - Share gains are worth more - Price competition is likely to be less intense - Early entry is necessary to maintain technical expertise

Marketing Strategy and Objectives in Declining Markets

- Harvest: Maximize short term cash flow. - Maintenance: Maintain market share for the short-term. - Profitable Survivor: Increase share of the declining market. - Niche: Strengthen share position in one or a few segments.

Segmenting, Targeting, and Positioning (STP) Approach

- In order to better match heterogeneous customer needs, firms focus their efforts on small "homogenous" customer groups. - Segmenting: Dividing market into groups of similar customers (slice the pie into pieces). - Targeting: Selecting best customer group to sell to (picking the slice to eat). - Positioning: Improve your relative advantage in the minds of your targeted customers (by building SCA).

Maintaining/Improving Satisfaction and Loyalty

- Increase attention to quality control as output expands - Continue product modification and improvement - Focus advertising on stimulation of selective demand - Increase salesforce's servicing of current accounts - Expand post-sale service capabilities

Return on Marketing Investment

- It is being insisted that marketing managers do a better job of measuring the return their marketing programs deliver on the investment therein - For many kinds of marketing spending, including many brand building efforts, it can be difficult to make clear connection between the investment and the short term and long term impact it has on revenue and brand equity, because a host of other variables can also play significant role

Market Management Organizations

- Manager has overall responsibility for: Planning and implementing a national marketing program for the product - Popular with consumer goods companies

Confrontation Strategy

- Often, a leader may have no choice but to confront the competitive threat directly: If the leader's competitive intelligence is good, it may decide to move proactively and change its marketing program before a suspected competitive challenge occurs. - A confrontational strategy is more commonly reactive. - The leader can avoid the problems of a confrontation strategy by reestablishing the competitive advantage eroded by challengers' frontal attacks,

Describe the Key Segment(s) (Profiling)

- Often, surveys include additional information about respondents, not related to their needs, but informative, called descriptors. - They do not describe what they want or why they buy, they describe who they are and how they can be reached. **B2C: Age, Sex, Profession, Income, Number of Children, Magazines they read, TV shows they watch, etc. **B2B: Industry, Revenues, Sales, Number of Employees, etc. **Segments should not be formed on these variables!!**

Recent Trends in Organizational Design

- Organizations will increasingly emphasize the managing of business processes in contrast to functional areas - Managing processes will make the organization essentially horizontal flat and lean versus a vertical or hierarchical model - The use of self managing teams is increasing - In the future many companies will use teams as the basis for collaborative networks that link thousands of people together with the help of a variety of new technologies

Ch. 13 Measuring and Delivering Market Performance Setting Standards of Performance

- Performance standards derive largely from the objectives and strategies set forth at the SBU and individual product market entry level - Performance based measures are often tied to the compensation of those individuals responsible for attaining the specified goals - There is a shift from primarily using financially based performance measures to treating them as part of a broader array of marketing metrics: Balanced scorecard is a widely used approach - The SMART acronym (Specific, Measurable, Attainable, Relevant, and Timebound) is a useful framework for setting performance standards

Business-Unit Autonomy

- Prospectors are likely to perform better on the critical dimensions of new product success with higher levels of autonomy - Decentralized decision making allows the managers closest to the market to make more major decisions on their own - High levels of autonomy and independence can lead to coordination problems across business units

Skimming Strategy

- Require relatively high price to increase margins and revenues - Focus on relatively upscale customers - Critical element: Nature of the firm's continuing product development efforts

Functional Organizations

- Simplest and most bureaucratic - Heavy reliance on standard rules and operation procedures - Conflicts are resolved in a hierarchical manner

Shared Programs and Facilities

- Some firms attempt to avoid the trade-off between efficiency and adaptability by designing relatively small, narrowly focused units, but then having two or more units share functional programs or facilities - Sharing resources can pose a problem for prospector business units - Functional independence facilitates good performance for prospector businesses

Marketing Actions and Strategies to Achieve Share-Growth Objectives

- Steal away some of the repeat purchase or replacement demand from: Competitors' current customers - Attracting a larger share of potential new customers

Dimensions of Service Quality

- Tangibles - Reliability - Responsiveness - Assurance - Empathy

Growth-Market Strategy

- Targets one or more fast-growth segments - Favored by smaller companies to avoid direct confrontations - Requires strong R&D and marketing capabilities

The Aspects of Corporate-Business Unit Relationship that can affect the SBU's Success in Implementing a Particular Strategy

- The degree of autonomy provided to each business unit manager - The degree to which the business unit shares functional programs and facilities with other units - The manner in which the corporation evaluates and rewards the performance of its SBU managers

Matrix Organizations

- The least bureaucratic or centralized and the most specialized type of organization - Brings together two or more different types of specialists within a participative coordination structure - Suits prospector businesses and the management of new product development projects within analyzer participative decision making - Inefficient participative decision making

Fortress, or Position Defense, Strategy

- The most basic defensive strategy is to continually strengthen a strongly held current position (to build an impregnable fortress capable of repelling attacks by current or future competitors) - This strategy is nearly always part of a leaders share maintenance efforts - Actions to improve customer satisfaction and loyalty - Actions to encourage and simply repeat purchasing

Customer Satisfaction

- Understanding and measuring the criteria used by customers to evaluate relationship quality - Some companies ask a simple question: How likely is it that you would recommend us to a friend or a colleague? - Face to face approaches - Using customer relationship management data to measure lifetime value of customers

Strategic Marketing Programs for Pioneers

A pioneer might choose from one of three different types of marketing strategies: **- Mass-Marker Penetration: The ultimate objective of a mass-market penetration strategy is to capture and maintain a commanding share of the total market for the new product. **- Niche Penetration: Can help the smaller pioneer gain the biggest bang for its limited bucks and avoid direct confrontations with bigger competitors. **- Skimming and Early Withdrawal: Involves setting a high price and engaging in only limited advertising and promotion to maximize per-unit profits and recover the product's development costs as quickly as possible.

Flanker Strategy

A shortcoming of a fortress strategy is that a challenger might simply choose to bypass the leader's fortress and try to capture territory where the leader has not yet established a strong presence: - To defend against an attack directed at a weakness in its current offering, a leader might develop a second brand to compete directly against the challenger's offering

Strategies for Maintaining Competitive Advantage

Both analyzers and defenders can attempt to sustain a competitive advantage in established product markets: - Through differentiation of their product offering: A business can attempt to differentiate its offering from competitors' by offering either superior product quality, superior service or both. - By maintaining a low cost position.

Ch. 12 Organizing and Planning for Effective Implementation Aspects of a Strategic Fit

Competitive and marketing strategies must fit: - Needs and desires of its target customers - Competitive and technological realities of the marketplace To implement strategies effectively, Organizational Fit: Fit between a business's competitive and marketing strategies and: - Organizational structures, policies, processes - Plans necessary to effectively implement those strategies

Types of Audits

Marketing Environment: Requires an analysis of the firm's present and future environment.... Identifies significant trends. Objectives and Strategy: Calls for an assessment of the internal factors. Planning and Control System: Evaluates adequacy of the systems and the firm's new development procedures. Organization: Deals with firm's overall structure.....Organization of marketing department/Extent of synergy between the various marketing units. Marketing Productivity: Evaluates the profitability of the company's... Individual products/Markets/Key Accounts. Marketing Functions: Examines the marketing mix elements. Ethical: Evaluates the extent to which the company engages in ethical and socially responsible marketing. Product Manager: Determines whether product managers are channeling their efforts in the best ways possible.

Share-Growth Strategies for Followers

Marketing objectives for followers: - Some competitors may seek to build a small, but profitable business within a specialized segment of the larger market that earlier entrants have overlooked - Many followers often seek to displace the leader or at least to become a powerful competitor within the total market

Customers' Satisfaction and Loyalty are Crucial for Maximizing Their Lifetime Value

Measuring customer satisfaction: - To gain the knowledge necessary to continually improve the value of their offerings to customers, firms must understand how satisfied existing and potential customers are with their current offerings. Improving customer retention and loyalty: - This is especially true as markets mature because loyal customers become more profitable over time. Characteristics of loyal customers: - Concentrated purchases.. larger volume and lower selling and distribution costs. - Provide positive word of mouth and customer referrals. - Willing to pay premium prices. Are all customers equally valuable? - The ability of firms to tailor different levels of service and benefits to different customers based on each person's potential to produce a profit has been facilitated by the growing popularity of the Internet. - Increased stratification of consumer society... This raises ethical and strategic questions.

Market Positioning Analysis

Measuring customers' preferences and locating them in the product space along with their perceptions of the positions of existing brands.

Ch. 6 Targeting Attractive Customer Segments All Customers Differ

Most basic issue facing managers, as they make strategic marketing decisions for their firms is that all customers differ. Customer Heterogeneity: Variation among customers in terms of their needs, desires, and subsequent behaviors. In response, firms are targeting smaller & smaller segments: - Mass marketing -> niche marketing -> 1 to 1 marketing - Competitive race as firms target smaller segments - But it is hard to effectively compete in all segments Drivers: - Matches inherent customer desires (real, perceived) - Faster response to customer trends and changes - Technology enabled (more economical to target/customize) - Only limited to tradeoff in efficiency (cost) versus benefit of better match to need (solution)

Strategies for Declining Markets

Most products eventually enter a decline phase in their life cycles: As sales decline, express capacity once again develops.

Ch.7 Differentiation and Brand Positioning Positioning

Positioning is not what you do to product..Positioning is what you do to the customer's mind.

Follower Strategy

Possible advantages of follower strategy are: - Ability to take advantage of the pioneer's positioning mistakes, product mistakes, and marketing mistakes - Ability to take advantage of the latest technologies - Ability to take advantage of the pioneer's limited resources

Pioneer Strategy

Potential sources of competitive advantage available to pioneers are: - First choice of market segments and positions - The pioneer defines the rules of the game - Distribution advantages - Economies of scale and experience - High switching costs for early adopters - Possibility of positive network effects - Possibility of preempting scarce resources and suppliers

Positioning

Process of improving your relative advantage in the minds of your targeted customers: - Changing both your actual (e.g. innovation) and perceived offerings (e.g. branding, relationships) - Uses all three "Cs" as inputs: Customer, Company, Competitors Perceptual Maps: Analysis tool to aid in positioning decisions. Repositioning: Process by which a firm shifts its target market.

Determinants of Success for Pioneers

Regardless of the industry involved, pioneers able to maintain their preeminent position well into the market's growth stage had supported their early entry with the following marketing strategy elements: - Large entry scale - Brand product line - High product quality - Heavy promotional expenditures

Marketing Actions to Achieve Share-Maintenance Objectives

Retain current customers by: **- Maintaining/ Improving satisfaction and loyalty - Encouraging/ Simplifying repeat purchase - Reducing attractiveness of switching** Stimulate selective demand among later adopters by: **- Head-to-Toe positioning against competitive offerings - Differentiated positioning against competitive offerings**

Categories of New Products

Six categories of new products based on their degree of newness: (1) New-to-the-World Products (2) New Product Lines (3) Additions to Existing Product Lines (4) Improvements In or Revisions of Existing Products (5) Repositionings (6) Cost Reductions **The marketing challenge here is to build primary demand.**

Organizational Structures

Structural variables that are important in shaping an SBU's and its marketing department's performance within the context of a given competitive strategy. Formalization: Degree to which formal rules and standard policies and procedures govern decisions and working relationships. Centralization: Location of decision authority and control within an organization's hierarchy. Specialization: Division of tasks and activities across positions within organizational unit. Large number of specialists perform narrowly defined set of activities.

Factors Related to the Successful Implementation of Business Strategies

Successful implementation of a given strategy depends on: - Functional competencies of the SBU - Resource allocation across functions - Decision making influence and participation - SBU's organizational structure - Functional coordination and conflict resolution

Determinants of Perceived Service Quality

The key to a differentiation strategy based on providing superior service quality is to meet or exceed target customers' service quality expectations and to do it more consistency than competitors.

Segmentation

The process of categorizing customers into groups (aka segments, clusters) in a way that: - Customers within group have very similar needs - Customers across groups have different needs

Strategic Implications of the Product Life Cycle

The product life cycle model is a framework that signals the occurrence of opportunities and threats in the marketplace and the industry, thereby helping the business better anticipate change in the product's strategic market objective, its strategy, and its marketing program.

Limitations of the Product Life Cycle Framework

The product life cycle model's major weakness lies in its normative approach to prescribing strategies based on assumptions about the features or characteristics of each stage. **It fails to take into account that the product life cycle is, in reality, driven by market forces expressing the evolution of consumer preferences (the market), technology (the product), and competition (the supply side).** **Length of the life cycle and the market and competitive conditions at each stage can vary: across different product and service offerings.**

Price Competition Is Likely To Be Less Intense

When demand exceeds supply: - Market exerts little pressure on prices initially When demand may not exceed supply: - Penetration strategy is adopted and its initial prices are set relatively low

Maintenance Strategy

When future volume trends are highly uncertain, and the business has a leading share. - Design service programs - Continue product and process R&D expenditures - Continue maintenance levels of advertising and sales promotion - Continue trade promotion - Focus salesforce efforts - Lower prices in necessary to maintain share

Harvesting Strategy

Works best when the markets decline is inevitable, but likely to occur at relatively slow and steady rate and when rivalry among remaining competitors is not likely to be very intense. - Eliminate R&D expenditures and capital investments - Reduce marketing and sales budgets - Reduce production costs - Raise price if necessary to maintain margins - Hold the business's volume and share declines to a relatively slow and steady rate