marketing planning & strategy
DESCRIPTION
some guidelines towards arriving at and reviewing marketing planning and strategyTRANSCRIPT
MARKETING PLANNING & STRATEGY
Rahul Gandhi
• Congress launched him as their marketing weapon
• He has added a new constituency” the youth “
• Shows freshness , sincerity , positivity – all of which is a rare combination amongst the politicians
• Political scion gifted with a glorious smile
Virgin Mobile
• Decided to target youngistan – focused exclusively on youth
• Focus on communication where the youth “ gets around “ not necessarily rebels ..they find a way
• Introduced many first “ including ..get paid to receive a call” -Cut clutter
• It has achieved a 92 % awareness , and 69 % consideration a year since its launch
Rakhi Sawant
• From an item girl she became the biggest start for NDTV imagine
• As a brand she is brash , crude , willingly flaunts her unsophistication
• Her appeal connected with the masses
•
Sun Tze on Strategy
• “Know your enemy, know yourself, and your victory will not be threatened. Know the terrain, know the weather, and your victory will be complete.”
Strategic Marketing Planning
…is the managerial process of developing and maintaining a strategic fit between the organization's objectives and resources and its changing market opportunities.
Org Objectives Resources
Changing Environment
Strategic Fit
Strategic Marketing
“Marketing Strategy is a series of integrated actions leading to a sustainable competitive advantage.”
John Scully
Corporate Mission
• Broad purposes of the organization• General criteria for assessing the long-
term organizational effectiveness• Driven by heritage & environment• Mission statements are increasingly
being developed at the SBU level as well
Examples of Corporate Mission
SINGAPORE AIRLINES is engaged in air transportation and related businesses. It operates world-wide as the flag carrier of the Republic of Singapore, aiming to provide services of the highest quality at reasonable prices for customers and a profit for the company
Examples of Corporate Mission (cont’d)
MARRIOTT’S Mission Statement:
We are committed to being the best lodging and food service company in the world, by treating employees in ways that create extraordinary customer service and shareholder value
Corporate Culture
• The most abstract level of managerial thinking
• How do you define culture?
• What is the significance of culture to an organization?
• How does marketing affect culture in the organization?
Corporate Objectives & Goals
• An objective is a long-range purpose – Not quantified and not limited to a time period– E.g. increasing the return on shareholders’ equity
• A goal is a measurable objective of the business– Attainable at some specific future date through
planned actions– E.g. 10% growth in the next two years
SMART
STRATEGIC MANAGEMENT
“Insights and hard work deliver results”
• What types of strategies are used by organizations?
• How are strategies formulated and implemented in strategic management?
Investor’s Relations
Business Strategy
PlanSalesforceHR, Training &
Recruiting Plan
FDA Regulations
Marketing Strategy Plan
Certificate Program
Sales
Cap
ital
Infrastructure
Public Offering
Production & Logistics
Legal
Financial Plan
Business Strategy covers all basic goals and objectives of the business
Management
Ope
ratio
ns
Financial Controlling
Project Management
All stakeholders will benefit from the business strategy approach
Bus
ines
s S
trat
egy
Operational Business Plan
Project Management Plan
Interviewing and Briefing of AgenciesMarketing
Strategy Plan
Agency 1
Agency 2
Agency 3
Management Support
Communicating and implementing
Management orders
Structuring business operations
Team
Investors
Customers
Re-sellers
Revenue: Sales and Distribution
Potential Buyers
Salespeople
MarketMarketing Strategy
Plan
Man
agem
ent
Promotion Policy
Product Mix
Pricing PolicyT
actic
s
Sales & Distribution
Momentum
AgencyArtefill Marketing Dept.
Positioning
Branding
Objectives
Target Market
Momentum develops the Marketing Strategy and prepares the tactics to the market
Communication
Marketing Planning is a step-by-step process
Market Research
Communication
Positioning
Branding
Target market Definition
Strategy
Tactics
Marketing Strategy DevelopmentCompetition An.
Bus. Review
The Role of Strategy
CorporateMission &Objectives
Strategy:•Corporate•Business•Functional
Operating Plans
Funnel
Phase One:Where are we now?
Phase ThreeHow will we get there?
Phase Two:Where do you want to be?
Market ScanPortfolios
SWOT/TOWS
Objectives/Financial DecisionsSegmentation
Position
Action PlanControl
Implementation
Figure 1.3: The Marketing Strategy Funnel
Corporate Social Responsibility
Phase FourDid we get there?
PURPOSE OF STRATEGY
To set the future direction for the organisation.
To state how it is to create value to customers.
To identify what product/s and in which markets the firm will invest its resources.
To describe how it is to perform better than competition.
STRATEGY HELPS IN:
Defining the scope of business.
Finding ‘Strategic Fit’ between organisation and its environment.
Identifying a Sustainable Competitive Advantage (SCA).
Guiding the allocation of resources.
HIERARCHY OF STRATEGY
CORPORATE
SBUs
FUNCTIONAL AREAS
3 LEVELS OF STRATEGY
Corporate The overall goals of the business; often expressed in financial terms
Competitive/Business (SBU)How to compete in individual product-markets and support the corporate strategy
Functional Functional strategies for the organisation’s functional areas in support of SBUs and corporate strategies
What is a Strategic Business Unit? (SBU)
• A set of products or product lines – With clear independence from other
products or product lines – for which a business or marketing strategy
should be designed
Types Of Strategies
• Strategy is a comprehensive plan for achieving competitive advantage.
• Organizations use strategy at the corporate, business and functional levels.
• Growth and diversification strategies focus on expansion. • Restructuring and divestiture strategies focus on consolidation. • Global strategies focus on international business initiatives. • E-business strategies focus on using the Internet for business
transactions.
Types Of Strategies• Strategy
– a comprehensive plan guiding resource allocation to achieve long-term organization goals.
• Strategic Intent – focuses organizational energies on achieving a
compelling goal.
• Competitive Advantage– operating in successful ways that are difficult to
duplicate
Corporate Strategies• Corporate Strategy
– Sets long-term direction for the total enterprise
• Business Strategy– Identifies how a strategic business unit or division will
compete in its product or service domain
• Functional Strategy– Guides activities within one specific area of
operations
Corporate Strategies
Growth And Diversification Strategies
• Growth Strategy– Expansion through current operations
• Concentration– Expansion within an existing business area
• Diversification– Expansion occurs by entering new business areas
• Vertical Integration– Expansion by acquiring existing suppliers or
distributors
Restructuring and Retrenchment Strategies
• Retrenchment– Changes operations to correct weaknesses– Liquidation
• An extreme form of retrenchment wherein the business closes and sells off its assets
• Restructuring– Reduces the scale or mix of operations
• Downsizing– Decreases the size of operations
• Divestiture– Sells off part of the organization to focus on core
businesses
Global Strategies• Globalization Strategy
– Adopts standardized products and advertising for use worldwide
• Multidomestic Strategy– Customizes advertising and products to best
fit local needs
• Transnational Strategy– Seeks efficiencies of global operations with
attention to local markets
E-Business Strategies• E-Business Strategies
– Focus on Using the Internet for Business Transactions
• B2B Business Strategies – use IT and Web portals to vertically link organizations
with members of their supply chains.
• B2C Business Strategies – use IT and Web portals to vertically link organizations
with members of their customers.
Strategic Management
• Strategy formulation begins with the organization’s mission and objectives.
• SWOT analysis identifies strengths, weaknesses, opportunities, and threats.
• Porter’s five forces model examines industry attractiveness.
• Porter’s competitive strategies model examines business or product strategies.
• Portfolio planning examines strategies across multiple businesses or products.
• Strategic leadership activates organizations for strategy implementation.
Strategic Management
• Strategic management – the process of formulating and implementing
strategies.
• Strategy Formulation – the process of creating strategies
• Strategy Implementation – the process of putting strategies into action.
Strategic Management
Strategy Formulation• Mission Statement
– The reason for the organizations existence in society• Operating Objectives
– Specific results that organizations attempt to achieve
Common Operating Objectives of Organizations •Profitability •Market share •High-quality workforce •Cost efficiency •Product and service quality •Innovativeness •Social responsibility
Market-oriented: Strategy based upon the needs & wants of the
marketplace
Establishes a profitable market
position:
End goal of strategy to make a profit in the for-profit sector or to meet alternate metrics (NFP
sector)
Establishes a sustainable market
position:
Marketing strategy not about one-off transactions. Aim is to find a place in the
market
Forces that determine industry
competition:
Complex mix of ingredients that create the marketing ‘whirlwind’
Continuously creating &
developing CA:
Find a spot where, if need be, the primary challenges can be tackled
Potential sources that exist in a
firm’s value chain:
What value any organisation wants to create using its available marketing resources
STRATEGIC PLANNING MODEL
THE INTER-RELATIONSHIP BETWEEN MARKETING AND CORPORATE
STRATEGY INFORMS DIRECTS GUIDES CONTROLS
ACHIEVES SUPPORTS
OPERATIONALISE
Corporate Strategy• Specifying the
organisation’s mission• Allocating resources• Defining Organisational
objectives
Marketing Strategy• Identifying product market/s to
compete in• Selecting market segments to
target• Developing the marketing mix
OPERATIONAL vs STRATEGIC MARKETING
Operational Marketing• Action-oriented• Existing opportunities• Non-product variables• Stable environment• Reactive behaviour• Day-to-day management• Marketing department
Strategic Marketing• Analysis-oriented• New opportunities• Product market variables• Dynamic environment• Proactive behaviour• Longer range management• Cross-functional
organisation
STRATEGIC MARKETING MANAGEMENT PROCESS
SMM process aims to answer a complete set of strategic questions:
Where are we now?Where we want to go?How might we get there?How can we ensure arrival?
STRATEGIC MARKETING MANAGEMENT PROCESS
STRATEGIC ANALYSIS
Strategic analysis is concerned with understanding the strategic position of the organisation in terms of its external environment, internal resources & competencies, and the expectations and influence of stakeholders
WHERE ARE WE NOW? Analysis of Current Situation
What are the major trends and possible changes in the marketing environment?
Who are our competitors? How can we make ourselves different from competition?
Who are our target customers & what are their needs?
What competitive advantages and core competences do we have?
STRATEGIC CHOICE
Strategic choice involves understanding the underlying bases guiding future
strategy, and generating strategic options for evaluation and selecting from among
them
Johnson and Scholes (1999)
WHERE WE WANT TO GO? Strategic Choice
A set of interrelated strategic decisions about:
Strategic direction (generic strategy) Product/s to offer Market/s to target Competitive stance to take Positioning strategy
STRATEGIC IMPLEMENTATION
Strategic implementation is concerned with the translation of strategy into organisational
action through organisational structure & design, resource planning and the management of strategic change
Johnson and Scholes (1999)
HOW MIGHT WE GET THERE? Plan Marketing Activities
Design the Marketing Mix to support the chosen strategy and achieve strategic objectives.
Decide on tactics for positioning products in the chosen markets.
Define targets & time frame.
Identify who will be responsible for different tactics.
HOW CAN WE ENSURE ARRIVAL?Measure, Evaluate & Control Activities
Methods of control and evaluation.
Not only at the end of the time frame but on a regular basis.
Ease of measurement depends on the types of activities implemented.
Measurement reveals effectiveness of evaluation & helps decide if contingencies must be put in action.
VALIDITY OF SMM MODEL?
Rational, formalized, systematic
Orderly thinking
Deliberate, logical response to changes in the environment
‘Top down’ approach
Think THEN act & formulate THEN implement
Identify actions which need to be undertaken
MARKETING ENVIRONMENT
THINKING FIRST
SEEING FIRST
DOING FIRST
SIMPLE RULES
COMPETITIVEMARKETINGSTRATEGY
4 Main Ways of Approaching Marketing Strategy
ENVIRONMENTAL ANALYSIS
Environmental scanning is the process of gathering information about the various forces in the environment. It involves observation, perusal of secondary sources, such as business, trade, government and general interest publications and marketing research.
Environmental analysis is the process of assessing and interpreting the information gathered through market intelligence and environmental scanning.
MACRO (REMOTE) ENVIRONMENT:
PEST MODELPEST:
Political Factors, Economic Factors, Socio-cultural Factors, Technological Factors
A framework that assists in analyzing the external (remote) environment and identifying the existing opportunities & threats
STRATEGIC FIT
‘Strategic Fit’ is the effective match and management of the environmental
opportunities and threats while taking into account the organisation strengths and
weaknesses
STRATEGIC FIT
Drawing upon the strategic analysis undertaken previously, strategic managers have to:
Find ‘strategic fit’ between what the environment wants and what the organisation has to offer, and between what the organisation needs and what the environment can provide
Identify and assess alternative ways in which their organisation can use its specific strengths to capitalise on opportunities and/or minimise threats, and invest in available opportunities to overcome its weaknesses
SWOT ANALYSIS
Integrates the internal and external environmental analysis Not just a list of SWOT variables!
SWOT/TOWS Matrix can be helpful
SWOT/TOWS analysis is the alternative ways in which an organisation can use its specific strengths to capitalise on opportunities or to minimise threats and invest in available opportunities to overcome its weaknesses
SWOT (TOWS) MATRIX
STRATEGY FORMULATION
SWOT• SWOT Analysis
– Identifies Organization’s Strengths, Weaknesses, Opportunities, and Threats• Core Competency
– A special strength that gives an organization a competitive advantage
STRATEGY FORMULATION
Porter’s Five Forces
STRATEGY FORMULATION
Porter’s Five Forces
• Porter’s Competitive Strategies – Differentiation Strategy
• Offers products and services that are uniquely different from the competition
– Focused Differentiation Strategy• offers a unique product to a special market segment.
– Cost Leadership Strategy• Seeks to operate at lower costs than competitors
– Focused Cost Leadership Strategy• uses cost leadership and target needs of a special market.
STRATEGY FORMULATION
Porter’s Five ForcesCOMPETITIVE ANALYSIS
STRATEGY FORMULATION
Boston Consulting Group (BCG)• BCG Matrix
– Analyzes business opportunities according to growth rate and market share
Ansoff’s Product-Market Grid
Current products New products
Current Mkts
New Mkts
Mkt penetrationstrategy
Mkt developmentstrategy
Product developmentstrategy
Diversificationstrategy
A way to analyze a company's competitive position in comparison to the offerings of competitors. As with Porter's Generic Strategies, Bowman considers competitive advantage in relation to cost advantage or differentiation advantage. There are six core strategic options
STRATEGIC MANAGEMENT
Strategy Implementation
• Strategic Leadership – the capability to inspire people to successfully
engage in a process of continuous change, performance enhancement, and implementation of organizational strategies.
Marketing at the SBU Level—Strategic Marketing
• Strategic Marketing requires–Detailed understanding of market needs, and
–Proactive use of competitive intelligence at the corporate as well as SBU’s levels
• Strategic Marketing –Focuses on what the firm do best at the SBU level
–To secure and maintain a sustainable competitive advantage
Key Elements of Marketing Strategy Formulation
• The strategic 3 Cs –Customers, Competitors & the Corporation
• Environment analysis -- PEST• Strategic Marketing Decisions
–Where to compete
–How to compete
–When to compete
• Must have a clearly defined market • Must have a good match between
corporate strengths and market needs• Must have significant positive
differentiation in the key success factors of the business
A Viable Marketing Strategy
WHERE WE WANT TO GO? Strategic Decisions
Strategic decisions at the corporate level Developing/re-stating mission statement Directional strategy Resource allocation
Strategic decisions at the SBU level Choosing Generic Strategy:
Cost leadership strategy, Differentiation strategy, Focus strategy: Cost focus & Differentiation focus
Strategic decisions at the functional level Products to offer Market segments to target Market position tactics
DIRECTIONAL (Grand) STRATEGIES
• Growth Strategies– Concentration
• Vertical Growth
• Horizontal Growth
– Diversification• Concentric
• Conglomerate
• Stability Strategies– Pause/Proceed with caution– No Change
– Profit
• Retrenchment strategies – Turnaround– Captive Company– Sell-Out/Divestment– Bankruptcy/Liquidation
The Competitive Environment
Information on Competitors
Competitive Barriers
Competitive Rivals
Competitor Analysis
Kinds of Markets
KeyConcepts
in theCompetitiveEnvironment
What is Competitive Advantage?
• “Competitive advantage is a company’s ability to perform in one or more ways that competitors cannot or will not match.” Philip Kotler
• “If you don’t have a competitive advantage, don’t compete.”
Jack Welch, GE
Other Characteristics of Competitive Advantage
• Substantiality– Is it substantial enough to make a difference?
• Sustainability– Can it be neutralized by competitors quickly?
• Ability to be leveraged into visible business attributes that will influence customers
(Source: Strategic Marketing Management, Aakers)
Seeking Competitive Advantages
• Positions of advantage– Superior customer value– Lower relative total cost
• Performance advantages– Customer satisfaction, Loyalty, Market
Share, Profit
• Sources of advantages– Superior skills & knowledge, Superior
resources, Superior business process
COMPETITIVE POSITION TACTICS
Marketing Strategy
Attacker(smaller)
Defender(bigger)
PositionDefense
PreemptiveDefense
Counteroffensive
ContractionDefense
Flanking Defense
Mobile Defense
Flank Attack
Frontal
Attack
Encirclement
Bypass
Guerilla Attack
Information seeking ?
Emotions , feelings
Truth ,realityCritical thinking
OptimisticForward lookingfuturisticCreative
thinkingOverviewSequence of thinking
goLook aroundStop, exit
CREATIVE THINKING6 HATS6 HATS
TRAFFIC LIGHTSTRAFFIC LIGHTS
Samsung
• Launched 225 products in 2009 against 2000 the year before
• It is closing the gap effectively with technology breakthrough / products customized to Indian needs
• They made an exclusive 32” LED TV for Indian customers as Indians have smaller rooms
• They target to lead in product innovation space & be relevant to consumers
Aircel
• Till 2006 it was just in 2 circles with 2.2 million consumers
• Positioning was on non-voice uses –pay bills/book tickets/network with friends
• Monthly susbscriber additions have doubled from 600,000 6 months ago to 1.4 million
Gajni
Before 25th December
• First Look: Ghajini's marketing started way back from March 20
• when he came out on the premier of RACE with his new BALD look.
• It actually gave the perfect sneak peek at the two looks of Aamir in the movie.
• Notice the jacket and rolled up half sleeves?• Did anyone say Sanjay Singhania?
• And then – in November, this photo shot across leading dailies
and Aamir without even showing his face and his 8 packs instantly became the talk of the town.
• The 8 pack promotion:October 2007 and remember SRK and the ho-hallah around his 6 pack abs.
• It was only around that time that Aamir silently started working on his own, and just to make it better, he added a pair and made it eight!
• The fact that the man now had a 8 pack and a fantastic body, he decided to show the world how he got it!
• Up came the videos with 'Making of Aamir's 8 pack' on all news and entertainment channels.
• Videos similar to this you tube got thousands of visits! He even went a step ahead and called a press conference to introduce his trainer and explain his diet chart!
– Television appearancesWith the TV channels filled with Ghajini promos, Aamir went into overdrive with his interviews, which came in by the day on every news and entertainment channel. Not to forget the guest appearances on reality shows, which is now a sort of a norm.
– Offline Promos at Theaters
– 'Theater personnels with Ghajini hair cut' act that he did on the release on Rab neBana di Jodi.Simply Fantastic. Imagine going to a cinema hall to watch RNBDJ and you watch all these Aamir Khan look alikes and his life size cut outs. You almost wish that you had come to watch Ghajini!
Co branding
• Tata Sky started running Ghajini “specials” complete with behind-the-scenes stories of the upcoming film. Samsung launched special Ghajini edition mobile phones of L700 and M200 models. These handsets have preloaded with Ghajini ringtones, pictures and songs.Tata Indicom started with a outbound dialer service with Khan's pre-recorded voice.
Co branding
• Van Heusen launched Ghajini's apparels in their stores all across India and is backing it with in-store campaigns and giant posters of Khan dressed in formal attire.Van Heusen also organized a fashion show wherein models along with Aamir sported the Ghajini look.Add a little big of jig and a bit of Guzarish and he had all the TV
channels beaming again!
Viral SMS campaign
• Remember the chain SMS which threatened to reveal what could possibly be the climax of the film? For those who were not on the mailing list, here it goes...“Someone killed Aamir’s girlfriend and he lost his memory. Then he tries to find out the killer. Suspense… Aamir himself is the killer. Now enjoy Ghajini!”
• I bet this one was proposed by someone at Tata Indicom!!!
Digital Promotion• With so much happening offline, something had to be done online
to. • And Ghajini makers had that well covered.
• Websites like www.rememberghajini.com, www.findghajini.com and www.wallofsuspects.com were built to drive curiousity levels around the movie and provide a movie like experience on the Internet.Add to that a 3D PC game and a number of mobile games and applications, and you have the digital space busy.
Not to forget that he has his own popular blog, which was a constant source of dope for all those waiting for Ghajini to release.
Final Week Controversy
• Just to cap it all, we had this 'Ghajini Release Stayed' court notices which threatened to stop the release of the immensely anticipated film a day before 25th December. Naturally, this became breaking news with minute to minute tracking on the latest updates. And after much drama, when the permission was granted, it was like a whole nation had taken a sigh of relief and they could all breath again!
10 month Campaign, where we saw Aamir from 8 pack fighting machine to turning in to a barber on the streets of Delhi, is a real case study in motion picture marketing.
• To hear from the horse's mouth :
With Ghajini we've opened with the highest number of screens ever. So the marketing needed to have depth and width, so we needed to be very aggressive with the marketing of the film.
After 25th December:
• 100% opening day collections with over 1500 prints
• Over 90 crore business by the end of first Sunday
• Expected 120 crore by end of first week
• Best Ever Opening
• Top film of 2008 already
The end result
• It raked in Rs 90 crores in the ist weekend of its release
• Marketing cost was Rs 7.5 crore and the global box office off-take Rs 260 crore
• They honestly told the consumers – what to expect through a major use of IMC – Aamir’s
physical appearance , the haircut , the in cinema visibility ; ushers having a similar haircut
– The audience was prepared for what they were going to see
The Marketing ConceptThe Marketing Concept
ProfitProfit
CustomerSatisfaction
CustomerSatisfaction
Total CompanyEffort
Total CompanyEffort
TheMarketingConcept
Utility and MarketingUtility and MarketingFrom Production
From Marketing
FormForm
TaskTask
TimeTime
PlacePlace
PossessionPossession
UtilityValue that comesfrom satisfyinghuman needs
UtilityValue that comesfrom satisfyinghuman needs
Customer ValueCustomer Value
CostsCosts BenefitsBenefits
• One customer’s views may vary from another customer’s view, so firm may not be able to satisfy everybody
• Customer value concept takes the customer’s point of view, but customers may not explicitly weigh costs and benefits
• One customer’s views may vary from another customer’s view, so firm may not be able to satisfy everybody
• Customer value concept takes the customer’s point of view, but customers may not explicitly weigh costs and benefits
The Marketing Management The Marketing Management ProcessProcess
Whole-CompanyStrategic
ManagementPlanning
Whole-CompanyStrategic
ManagementPlanning
MarketingPlanning
MarketingPlanning
Implement MarketingPlan(s) and Program
Implement MarketingPlan(s) and Program
Control MarketingPlan(s) and Program
Control MarketingPlan(s) and Program
Adjust PlansAs Needed
The Four Ps of the Marketing MixThe Four Ps of the Marketing Mix
Product Place
Price Promotion
C
ProductPhysical GoodsServiceFeaturesQuality LevelAccessoriesInstallationInstructionsWarrantyProduct LinesPackagingBranding
PlaceObjectivesChannel TypeMarket ExposureKinds of
MiddlemanKinds and
Locations of Stores
How to Handle Transporting and Storing
Service LevelsRecruiting
MiddlemenManaging
Channels
PromotionObjectivesBlendSalespeople Kind Number Selection Training MotivationAdvertising Targets Kinds of Ads Media Type Copy Thrust Who Prepares?Sales PromotionPublicity
PriceObjectivesFlexibilityLevel over PLCGeographic
TermsDiscountsAllowances
Strategy Decision AreasStrategy Decision Areas
Marketing Strategy Planning ProcessMarketing Strategy Planning Process
Customers
Company
Competitors
S.W.O.T.
Segmentation& Targeting
Differentiation& Positioning
Product Place
PromoPrice
Narrowing down to focused strategy with screening criteria
External Market Environment
TargetMarket
External Factors
StrategyPlanning
Internal Factors
Strengths Opportunities
Weaknesses Threats
SWOT Analysis
Segmentation Targeting Positioning Perceptual Mapping
STP
Steps in Market Segmentation, Targeting, and Positioning
1. Identifysegmentationvariables andsegment themarket
2. Develop profiles ofresultingsegments
MarketSegmentation
3. Evaluateattractivenessof eachsegment
4. Select thetargetsegment(s)
MarketTargeting
5. Identifypossible
positioningconcepts foreach target
segment
6. Select,develop, andcommunicate
the chosenpositioning
concept
MarketPositioning
Basic Market-Preference Patterns
(a) Homogeneous(a) Homogeneouspreferencespreferences
SweetnessSweetness
Cre
amin
ess
Cre
amin
ess
(c) Clustered(c) Clusteredpreferencespreferences
Cre
amin
ess
Cre
amin
ess
SweetnessSweetness
(b) Diffused(b) Diffusedpreferencespreferences
Cre
amin
ess
Cre
amin
ess
SweetnessSweetness
Market Aggregation – The Strategy of Mass Marketing
• Advantages & Disadvantages
• Product Differentiation
Step 1. Market SegmentationLevels of Market Segmentation
Mass MarketingSame product to all consumers
(no segmentation)
Mass MarketingSame product to all consumers
(no segmentation)
Segment MarketingDifferent products to one or more segments
(some segmentation)
Segment MarketingDifferent products to one or more segments
(some segmentation)
MicromarketingProducts to suit the tastes of individuals and locations
(complete segmentation)
MicromarketingProducts to suit the tastes of individuals and locations
(complete segmentation)
Niche MarketingDifferent products to subgroups within segments
(more segmentation)
Niche MarketingDifferent products to subgroups within segments
(more segmentation)
Local Marketing
Tailoring brands/ promotions to local customer groups
Individual Marketing
Tailoring products/ programs to individual customers
Steps in the Market Segmentation Process
• Determine Market Boundaries
• Decide Which Segmentation Variables to Use
• Collect and Analyze Segmentation Data• Develop a Profile of Each Segment
• Target Segments to be Served
• Design a Marketing Plan
Bases for Segmenting Consumer Markets
Occasions, Benefits, Uses, or Attitudes
Behavioral
GeographicRegion, City or MetroSize, Density, Climate Demographic
Age, Gender, Family size and Fife cycle, Race, Occupation, or Income ...
Lifestyle or PersonalityPsychographic
Step 1. Market SegmentationBases for Segmenting Business
Markets
Basesfor Segmenting
BusinessMarkets
Basesfor Segmenting
BusinessMarkets
DemographicsPersonalCharacteristics
SituationalFactors
OperatingCharacteristics
PurchasingApproaches
Measurable Measurable
AccessibleAccessible
SubstantialSubstantial
DifferentialDifferential
• Segments must be large or profitable enough to serve.
• Segments can be effectively reached and served.
ActionableActionable
• Size, purchasing power, profiles of segments can be measured.
• Segments must respond differently to
different marketing mix elements & actions.
• Must be able to attract and serve
the segments.
Effective Segmentation
Descriptive Bases
• Age
• Gender• Income• Occupation• Education
• Family Size or Family Life Cycle
• Religion or Nationality
Geographic Bases
• Region
• Density
• Climate
• Population
Behavioral Bases
• User Status & Brand Loyalty
• Personality/Lifestyle• Social Class
• Occasion• Readiness to Buy• Benefits Sought• Usage Rate
Step 2. Market TargetingEvaluating Market Segments
Segment Size and GrowthAnalyze sales, growth rates and expected
profitability for various segments.Segment Structural Attractiveness
Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers.
Company Objectives and ResourcesCompany skills & resources relative to the segment(s).Look for Competitive Advantages.
Five Patterns of Target Market Selection
Single-segmentconcentration
Productspecialization
M1 M2 M3 P1
P2
P3
Selectivespecialization
M1 M2 M3 P1
P2
P3
M1 M2 M3
Full marketcoverage
P1
P2
P3
Marketspecialization
M1 M2 M3 P1
P2
P3
P1
P2
P3
M1 M2 M3
P = ProductM = Market
Step 2. Market TargetingMarket Coverage Strategies
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
CompanyMarketing
Mix
CompanyMarketing
Mix
CompanyMarketing
Mix
CompanyMarketing
Mix
CompanyMarketing Mix 1
CompanyMarketing Mix 1
CompanyMarketing Mix 2
CompanyMarketing Mix 2
CompanyMarketing Mix 3
CompanyMarketing Mix 3
MarketMarket
A. Undifferentiated Marketing
B. Differentiated Marketing
C. Concentrated Marketing
Step 2. Market TargetingChoosing a Market-Coverage
StrategyCompany Resources
ProductVariability
Product’s Life-Cycle Stage
Market Variability
Competitors’Marketing Strategies
Positioning is the act of designing the company’s
offering and image to occupy a distinctive
place in the the target market’s mind. P 298
The BCG CompetitiveAdvantage Matrix
Volume
FragmentedStalemated
Specialized
Siz
e o
f th
e A
dva
nta
ge
SmallSmall
LargeLarge
Number of Approachesto Achieve Advantage
FewFew ManyMany
Product Differentiation
FormFea-
turesPerfor-mance
QualityConform-
anceQuality
Dura-bility
Relia-bility
Repair-ability
Style Design
DeliveryDelivery
Services Differentiation
OrderingEase
OrderingEase
Maintenance& Repair
Maintenance& Repair
CustomerTraining
CustomerTraining
InstallationInstallation CustomerConsulting
CustomerConsulting
Miscellan
eou
sS
ervices
Differentiation
• Personnel
• Channel
Media Atmosphere
Symbols
Events
Image Differentiation
Differences WorthDifferences WorthEstablishingEstablishing
AffordableAffordable SuperiorSuperior
ProfitableProfitable
PreemptivePreemptive
DistinctiveDistinctive
ImportantImportant
Perceptual Map
0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2
1.01.0
0.80.8
0.60.6
0.40.4
0.20.2
-0.2-0.2
-0.4-0.4
-0.6-0.6
-0.8-0.8
MagicMagicMountainMountain
JapaneseDeer Park
BuschBuschGardensGardens
Knott’sKnott’sBerryBerryFarmFarm
LionLionCountryCountrySafariSafari
MarinelandMarinelandof theof thePacificPacific
DisneylandDisneyland
Economical
Fun ridesExercise
FantasyGood food
Easy to reach
Educational,animals
Little waitingLive shows
Positioning Strategies
• Product Attributes
• Benefits, Problem Solutions & Basic Needs• Price & Quality
• Specific Use
• Against Other Products
• Product User• Against a Competitor
Push-Pull Strategies
WholesalerPromotion
Push
WholesalerPromotion
Push
RetailerPromotion
Push
FinalConsumer
Pull
BusinessCustomer
Pull
Pro
mo
tio
n t
oB
us
ine
ss
Cu
sto
me
rsP
rom
otio
n to
Fin
al C
usto
mers
Promotion toChannel Members
Producer’s Promotion BlendPersonal Selling, Sales Promotion, Advertising, Publicity
A Model of Buyer Behavior
5-5
Purchase ReasonTimeSurroundings
PurchaseSituation
MotivationPerceptionLearningAttitudePersonality/Lifestyle
PsychologicalVariables
FamilySocial ClassReference GroupsCulture
SocialInfluence
Problem-Solving Process
Person Does or Does Not Purchase (Response)
Marketing Mixes All Other Stimuli
PersonMakingDecision
5-6
The PSSP Hierarchy of Needs
Physiological Needs
Safety Needs
Social Needs
PersonalNeeds
Purchase SituationSocial InfluencesPsychological
Variables
Need-want Awareness
Information Search
Set Criteria
Decide on Solution
Purchase Product
Routinized Response
Postpone Decision Postpurchase
Evaluation
Feedback ofinformationas attitudes
Person making decision
Marketing mixes All other stimuli
5-13
The Consumer Problem Solving Process
Levels of Problem Solving
Extensive Problem Solving
Limited Problem Solving
Routinized Response Behavior
Involvement Continuum
Low Involvement High Involvement
Low involvementFrequently purchasedInexpensiveLittle riskLittle information needed
High involvementInfrequently purchasedExpensiveHigh riskMuch information desired
Brand identity
Brand equity
Brand relationship
spectrum
Unique characteristics of services
Markup chainin channels
17-
Key Factors That Influence Price Setting
Pricing objectives
Discounts andallowances
Legal environment
Price flexibility
Geographicpricing terms
Demand
Cost
Price of otherproducts in the line
Competition
Pricesettin
g
SuccessfulPricing
Variationsin Value
ReverseCost-Plus
POS
PriceSensitivity
Individual?Bundled?
CompetitorReaction
EmotionCustomer
Costs
Strategic Pricing Options
Pricing Objectives
Dollar or UnitSales Growth
Growth in Market Share
TargetReturn
MaximizeProfits
MeetingCompetition
NonpriceCompetition
PricingObjectives
SalesOriented
ProfitOriented
Status QuoOriented
Strategy Planning for Price
Pricingobjectives
TargetMarket
PricePromotionPlaceProduct
Geographicterm —
who paystransportation
and how
Discounts andallowances—to whom and
when
Price levelsover product
life cycle
Priceflexibility
Distribution Options*
Direct
•Internet•Telephone
•Mail•Catalogue
•Own channel
Salesforce
•Own•Another firm’s
•Contract
Intermediary•Franchise
•Wholesaler•Agent/Merchant
•Distributor•Partner
*More limited for services
The Transporting Function
Modesof
Transportation
Water
Air
RailTruck
Pipeline
Conven-tionalofferings
Single- andlimited-linestores
Expandedassortmentand service
Specialty shops anddepartment stores
Expandedassortmentand/or reducedmargins/service
Supermarkets, discounthouses, mass-merchandisers,supercenters
Added conveniencehigher marginsless assortment
Telephone/mail order,vending machines,door-to-door, conveniencestores, electronic shopping
Expandedassortmentreduced marginsmore information
Internet
Types of Retailers
Types of WholesalersDoes wholesaler own
the products?
Limited-functionmerchant
Wholesalers
Servicemerchant
wholesalers
Agent middlemen
How many functions does the wholesaler
provide?
All the functions
Some functions
Yes (merchant wholesaler) No (agent middleman)
Four Examples of Basic Channels of Distribution for Consumer Products
Manufacturer or producer
Consumer
Procter &Gamble
DelMonteNissanCitibank
Wholesaler
Wholesaler
Retailer
Wholesaler
RetailerRetailer
1) Identifying a Target Market
2) Selecting a Product Strategy
3) Selecting a Customer Service Strategy
4) Selecting a Pricing Strategy
5) Choosing a Location
6) Building a Promotional Strategy
7) Creating a Store Atmosphere
1) Identifying a Target Market
2) Selecting a Product Strategy
3) Selecting a Customer Service Strategy
4) Selecting a Pricing Strategy
5) Choosing a Location
6) Building a Promotional Strategy
7) Creating a Store Atmosphere
How Retailers
Compete
Market Leader•Distribution in place•Price main weapon
•Premium price•Variety of options
Market Niche•Stay with markets
•Add niches•Premium price
•Selective distribution
Market Challenger•Focus on flanks
•Direct or indirect attack
Market Follower•‘Cloning’
•Set lower prices
Price and Distribution Strategies
Marketing Information Systems
MarketResearchStudies
InternalData
Sources
ExternalData
Sources
DatabasesDecisionSupportSystem(DSS)
MarketingManager
DecisionsOutcomes
MarketingModels
InformationTechnologySpecialists
Inputs?
AnswersN
ew I
nfo
rmat
ion
Feedback
Information
Sources
Questionsand
Answers
Decision
MakerResult
s
Product Development
• Overestimation of Market Size• Product Design Problems• Product Incorrectly Positioned, Priced or Advertised• Costs of Product Development• Competitive Actions
• To create successful new products, the company must:– understand it’s customers, markets and
competitors – develop products that deliver superior value to
customers.
PRODUCT DEVELOPMENT
New Product Development Process
• Idea Generation and Screening
• Concept Development and Testing
• Marketing Strategy
• Business Analysis
• Product Development
• Test Marketing
• Commercialization
Systematic Search for New Product Ideas
Internal sources
Customers
Competitors
Distributors
Suppliers
• Process to spot good ideas and drop poor ones
• Criteria– Market Size– Product Price– Development Time & Costs– Manufacturing Costs– Rate of Return
Definingthe
Problem
Analyzingthe
Situation
GettingProblem-Specific
Data
Inter-preting
Data
Solvingthe
Problem
EarlyIdentification
ofSolution
Feedback to Previous Steps
Marketing Research Process
SecondaryData
Sources
Inside Company
Outside Company
Observation
Questioning
PrimaryData
Sources
AllData
Sources
Sources of Data
1. Develop Product Ideas into Alternative
Product Concepts
1. Develop Product Ideas into Alternative
Product Concepts
2. Concept Testing - Test theProduct Concepts with Groups
of Target Customers
2. Concept Testing - Test theProduct Concepts with Groups
of Target Customers
3. Choose the Best One3. Choose the Best One
Part Two - Short-Term:Product’s Planned Price
DistributionMarketing Budget
Part Two - Short-Term:Product’s Planned Price
DistributionMarketing Budget
Part Three - Long-Term:Sales & Profit Goals
Marketing Mix Strategy
Part Three - Long-Term:Sales & Profit Goals
Marketing Mix Strategy
Marketing Strategy Statement Formulation
Part One - Overall:Target Market
Planned Product PositioningSales & Profit Goals
Market Share
Part One - Overall:Target Market
Planned Product PositioningSales & Profit Goals
Market Share
Business Analysis
Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives
Business Analysis
Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives
If Yes, Move to Product Development
If Yes, Move to Product Development
If No, Eliminate Product Concept
If No, Eliminate Product Concept
StandardTest Market
Full marketing campaignin a small number of representative cities.
StandardTest Market
Full marketing campaignin a small number of representative cities.
SimulatedTest Market
Test in a simulated shopping environment
to a sample of consumers.
SimulatedTest Market
Test in a simulated shopping environment
to a sample of consumers.
Controlled Test Market
A few stores that have agreed to carry newproducts for a fee.
Controlled Test Market
A few stores that have agreed to carry newproducts for a fee.
Time
The Adoption CurveP
erce
nt
Ad
op
tio
n
Innovators(3-5%)
EarlyAdopters(10-15%)
EarlyMajority
(34%)
LateMajority
(34%)
Laggards/Nonadopters
(5-16%)
05
20
50
90
The Adoption CurveThe Adoption Curve
• Innovators: – First to Adopt, Eager to Try– Young, Well-Educated, Mobile– Seek Info from non-salesperson Sources
• Early Adopters– Opinion Leaders– Greater Contact with Salespeople– Word-of-Mouth
The Adoption CurveThe Adoption Curve
• Early Majority: – Avoid Risk, Try Only if Others Have Usually
are Not Opinion Leaders
• Late Majority:– Cautious About New Ideas, Older and More
Set in Their Ways– More Subject to Peer Pressure
The Adoption CurveThe Adoption Curve
• Laggards:– Suspicious of New Ideas– Do Things the Way that They Have Always
Been Done
The Product Life Cycle
Total IndustryProfit
MarketIntroduction
MarketGrowth
MarketMaturity
SalesDecline
Time
Total IndustrySales
PlaceProduct PricePromotion
Brand
Type of Brand:Individual or family
Manufacturer or dealer
ProductIdea
Physicalgood/service
FeaturesQuality levelAccessoriesInstallationInstructionsProduct line
Warranty
None, full, orlimited
Package
Protection,Promotion,
or both
Target Market
Defining “Product”
Strategy Planning for Advertising
SalesPromotion
Mass Selling
PersonalSelling
Target Market
PricePricePromotionPromotionPlacePlaceProductProduct
Copy thrustMedia typesKind of advertising
Target audience
Who will do the work?
PublicityAdvertising
Basic Promotion Methods
TargetMarketTargetMarket
PricePricePromotionPromotionPlacePlaceProductProduct
SalesPromotion
SalesPromotion
PersonalSelling
PersonalSelling
PublicityPublicityAdvertisingAdvertising
MassSellingMass
Selling
PESTLEPESTLE
CompetitorsCompetitors
SWOTSWOT
Strategic Intent/ObjectivesStrategic Intent/Objectives
Segment/TargetSegment/Target
PositionPosition
PropositionProposition
Creative ExecutionCreative ExecutionMedia ClassesMedia Classes
Media ExecutionMedia Execution
ContingencyContingencyPost-TestPost-Test
Pre-TestPre-Test
AUDIT
STRATEGY
OPERATIONS
InternationalInternational
MARCOMS Strategic Process
KeyReward
Values
Benefits
Features Preference, but not loyalty
Relationship & loyalty
Personality
Core of the claim
Brand Wheel
The Task
Isolate, in a simple statement why the advertising will have worked:
•Increase sales•Generate leads•Increase/maintain share•Stop decline•Justify price•Announce/Launch•Corporate reputation
Expand the Problem to a Higher Level
• Product Definition:– Make the central benefit salient (again?)
• Performance Superiority:– Solve a problem or better fulfill a desire
• Emotional:– Help brand matter to the consumer
• Cultural Identification:– Make the brand part of consumer’s
world
• Paradigm Shift:– Alter the consumer’s definition of
category
Types of MARCOMS Objectives
• “Exposure message to ...”• “Create 40% awareness amongst...”• “Create attitude/opinion that...”• “Increase preference amongst...”• “Encourage trial amongst...”• “Re-enforce loyalty amongst..”
Exposure
• The desired level of frequency (OTS = Opportunity to See) and coverage to achieve the advertising objectives
• Most agencies seek an average of 2-3 OTS’s amongst the target market in order to give advertising a chance to work
Describe Who We’re Talking To
• A person, not a “target”
• Beyond reports - talk to customers
• Paint a personal picture
• What’s really important to them?
Sources of a Proposition
• product characteristics• user characteristics• ways of using the product• how product is made• surprising points about the product• price characteristics• image characteristics• satisfying psychological/physiological needs• product heritage• disadvantages of non-use• direct comparisons with rivals• product comparisons• newsworthiness• generic benefits
What Proposition Will Do This?
• Specific core benefit brand delivers
• Key emotion, reason or blend
• Keep it singular
A good proposition
• Gives creatives an ‘angle’ or way in• Forces a strategic choice• Is single-minded not all encompassing• Is based on a truth (Rational or Emotional)• Is original, or expressed in an original way• Is liberating not limiting• Isn’t an end-line
MEDIUM DEFINITION HORIZON FORM SCOPE
ADVERTI SI NG A paid for communication by an identified sponsor with the aim of informing and influencing one or more people.
Mainly long-term TV, press, posters, radio, web, cinema, digital, SMS.
Awareness, attitudes
DI RECT MARKETI NG
The recording, analysis and tracking of customers’ direct responses in order to develop loyalty.
Short and long-term Direct mail, DRTV & radio, telemarketing, press, inserts, leaflets, web, digital, SMS.
Mainly retention but also acquisition
PR The formulation, execution and sustained effort to establish and maintain goodwill and mutual understanding and reciprocal goodwill between an organisation and its stakeholders.
Short and long-term Community relations/CSR, corporate advertising, crisis management, events, internal communications, investor relations, media relations, public affairs, lobbying, sponsorship, web, digital.
Credibility, visibility and reputation
SALES PROMOTI ONS
An incentive for the customer, sales force or distributor to make an immediate purchase.
Mainly short-term Consumer: Coupons, contests, trial, mail-in offers/refunds, group promotions, self- liquidations, in-store promotions, point-of-sale, web, digital, SMS. Trade: Dealer merchandise; contests’ advertising, allowance, trade allowance/ staff incentive, web.
Consumer: Trial, re-trial, extended trial, build database Trade: Gain a listing, increase distribution, increase inventory, improve shelving space/position
MARCOMS Overview
Media Scheduling
1. Reach
2. Creative Scope
3. Media History
4. Location
5. Distribution Channels
6. Budget
Budgeting
1. JUDGEMENTAL METHODS• Arbitrary• Affordable
2. OBJECTIVE and TASK3. MEASUREMENT
• ROI• Incremental
•Quantitative Models4. PERCENTAGE OF SALES
• % Last Year’s Sales• % Anticipated Sales• Unit Sales
5. SHARE OF VOICE• Competitive Absolute• Competitive Relative
Marketing Audit
“Marketing audit is a comprehensive, systematic, independent, and periodic examination of a company’s—or business unit’s—marketing environment, objectives, strategies, and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the company’s marketing performance” Philip Kotler
Characteristics of Marketing Audit
• Comprehensive– Must cover all marketing areas
• Systematic– Sequential diagnostic steps
• Independent– Internal & external auditors
• Periodic– Performed at regular intervals
Marketing Audit Procedure
• Marketing environment audit• Marketing strategy audit• Marketing organization audit• Marketing system audit• Marketing productivity audit• Marketing function audit• Marketing excellence review• Ethical and social responsibility review
Basic Steps in Control
1. Set standards of performance (these are typically in the form of goals or objectives)
2. Evaluate the reality of what occurs against these steps
3. Take corrective or reinforcing action where required
1. Set Standards
e.g. Marketing Objective is to
attain 25% market share
2. Evaluate Standards
Against Reality
Possible Outcome 1:
15% market share
Possible Outcome 2:
35% market share
3. Take Action
CorrectiveAction
ReinforcingAction
Steps in the Control Process
Nature of Control
• Annual Plan control looks at the objectives set in the annual marketing plan, evaluates these against the actual results achieved, and takes corrective or reinforcing action when necessary
• Financial or Expense control considers the financial parameters and objectives set by a firm in its annual marketing plan, and the corrective or reinforcing actions needed to attain these
• The purpose of strategic control is to ensure that the organization is maximizing the opportunities that exist in its business environment. Strategic control often takes the form of a marketing audit
Marketing Strategy Formulation-Implementation Grid
StrategyFormulation
StrategyImplementation
Poor
Poor
Adequate
Adequate
Success
Failure Rescueor Ruin
Trouble
Figure 13.2: The Marketing Strategy Formulation-Implementation Grid
Barriers
The marketing strategy is implicit, not explicit, and peoplecannot implement what they don’t know
The marketing strategy is developed in isolation – and people cannot implement what they do not understand
Not everyone is a good strategic marketing thinker
The marketing strategy is developed by an external consultant
The marketing strategy has unanticipated consequences
(Robert, 1991)
Figure 13.3: A Process Model of Competitive Advantage (Day and Wensley, 1988)
Sources
• Superior Skills
• Superior Resources
Sources
• Superior Skills
• Superior Resources
Outcomes
• Customer satisfaction
• Customer Loyalty
• Market Share
• ROI
Reinvestment
Process Model
Loop in the Model
• “Hard” – expressed in numbers that can easily be calculated, compared and tracked
• However they are historical – a good way of tracking the past, but a rather inadequate indication of the future
• They are not good diagnostics of strategic health• By comparison measures of customer satisfaction and loyalty are
“soft,” and impression based but they are about the future• The astute firm will reinvest the financial outcomes of competitive
advantage in the sources of competitive advantage itself, namely superior skills and/or superior resources
• This activity closes the loop in the model, and suggests that managing for competitive advantage is indeed a process that is continually renewed, revived and refreshed
Customer Equity
• The outcomes of ROI and Market Share are hard but historical
• The outcomes of Customer Satisfaction and Customer Loyalty are future-oriented but soft
• The ideal marketing control variable would be a single outcome that is both hard (a number that can be expressed financially) and future (customer) oriented
• Customer Lifetime Value (CLTV), which in turn leads to Customer Equity, is that single appropriate outcome
Y E A R Y E A R Y E A R Y E A R Y E A RR e ve nue 1 2 3 4 5C u sto m e rs 1 0 0 0 4 0 0 1 8 0 9 0 5 0R e te n tio n R a te 4 0 .0 0 % 4 5 .0 0 % 5 0 .0 0 % 5 5 .0 0 % 6 0 .0 0 %A ve A n n S a le s 1 5 0 1 5 0 1 5 0 1 5 0 1 5 0T o ta l R e ve n u e 1 5 0 0 0 0 6 0 0 0 0 2 7 0 0 0 1 3 5 0 0 7 4 2 5C o s tsC o st% 5 0 .0 0 % 5 0 .0 0 % 5 0 .0 0 % 5 0 .0 0 % 5 0 .0 0 %T o ta l C o s ts 7 5 0 0 0 3 0 0 0 0 1 3 5 0 0 6 7 5 0 3 7 1 3P ro fitsG ro ss P ro fit 7 5 0 0 0 3 0 0 0 0 1 3 5 0 0 6 7 5 0 3 7 1 3D isco u n t R a te 1 .0 0 1 .2 0 1 .4 4 1 .7 3 2 .0 7N P V P ro fit 7 5 0 0 0 .0 0 2 5 0 0 0 .0 0 9 3 7 5 .0 0 3 9 0 6 .2 5 1 7 9 0 .3 6C u m N P V P ro fit 7 5 0 0 0 1 0 0 0 0 0 1 0 9 3 7 5 1 1 3 2 8 1 1 1 5 0 7 2C L T V 7 5 .0 0 1 0 0 .0 0 1 0 9 .3 8 1 1 3 .2 8 1 1 5 .0 7
F ig u re 1 3 .4 : A S im p le S p r e a d s h e e t fo r th e C a lc u la t io n o f C L T V
Customer Lifetime Value
Increasing CLTV
• Increasing retention rate, or increasing customer life (i.e. the number of years a customer can remain a customer)
• Increasing Sales to a Customer, either by increasing the firm’s share of the customer’s purchases, or by increasing the customer’s referral rate
• Cutting the Costs of serving a customer
Corporate Culture
• The Clan culture, which emphasises teamwork and cooperation
• The Adhocracy culture, which emphasizes entrepreneurship and creativity
• The Hierarchy culture, which emphasizes order, regulations and rules
• The Market culture, which emphasizes competitiveness and goal achievement
(Deshpande, Farley and Webster, 1993)