Entrepreneurial Marketing

Elements of the Marketing Mix

EnterPRize Competition
2008
San Juan, Puerto Rico
 Agenda
g

Introduction
Product Life Cycle
M k t Segmentation
Market S t ti
Pricing
g Strategy
gy
Distribution Strategy
Brand Positioning
Q&A
 Myths
y and Pre-Conceptions
p
Not a Marketing Expert; but a Consumer
St d t
Student.
Not a Brand Expert; but a Brand Parent
Your Industry is a Complex,
Cumbersome one;; so its Mine
Brands ≠ Logos or Selling Lines
Y can’t
You ’ ffooll consumers.
 Why the need for Strategic
Marketing
g and Execution?
ƒ New York Times September 28th 2004
ƒ Wall Street beat down stock for missing earnings
targets
g
ƒ Lack of innovation in products, packaging and
marketing
ƒ Little growth predicted in foreseeable future
ƒ Weak bench…leaders
bench leaders unwilling to step up to the
plate
ƒ Business Week December 20th, 2004
ƒ Announced that third-quarter earnings had fallen
24% the worst quarterly drop at Coke
24%,
ƒ "We've got a long way to go," a chastened Isdell
told analysts. "The last time I checked, there was
no silver bullet. That's not the way this business
works "
works.
ƒ "We are not talking about radical change in
strategy. We are talking about a dramatic change
in execution.“
ƒ "They've
They ve been their own worst enemy
enemy, a casualty
of their own success," says Emanuel Goldman, who
has followed Coke as an analyst since the 1970s.
ƒ Share holder returns since 97: Coca-Cola -27%
Pepsi +46%
 The Impact of Strong Execution
(3 years later)

Upgrading to a Buy - A More Aggressive and Innovative Coke = +18%

growth on stock price last 18 months; another 13% expected by year
end
d
Addressing Problems of the Past
Signs
g of Stabilization in “Problem Child” Mark
The major reasons for our conviction that KO will continue to
exceed are the following:
KO is proactively addressing weakness in still beverages.
beverages
Innovation keeps consumers interested in sparkling beverages.
KO is seeing past the "problem child" markets of Japan, the
Phili i
Philippines, and
d India.
I di
Coca-Cola as a system is better aligned.
Valuation is still inexpensive
p based on our new EPS estimates.
More Risk Taking Outside of the Coke Brand.
Coca-Cola is transforming itself into a nimbler, more flexible company.
Consumer Challenges
 Industry Dynamics Triggered
Value Erosion

A change in Industry Structure Transactional Response

E d dV
Eroded Value
l

Threat of New
Entrants
Volume
V l &
Share loss

Intensity Value
Price Erosion Cost
Power of the of Rivalry of Power of the Pressure Cutting
Supplier Buyer System Mentality
Existing Disalignment
Competitors

Restricted
Commoditized Differentiation
Market & Capabilities
Threat of
S b tit t
Substitutes

Complex Tax and Labor

Environment
 Introduction

Product Life Cycle

A concept that provides a

way to trace the stages of a
product’s acceptance, from
its introduction (birth)
to its decline (death).
 Introduction

Product Life Cycle

Introductory Growth Maturity Decline
Stage Stage Stage Stage
Product
Category
Sales
Dollars
s

Product
Category
Profits

Time
 Introduction

Categories of Adopters
entage o
Perce ers
of Adopte

Early Early Late

Innovators Adopters j y
Majority Majority Laggards
2 5%
2.5% 13.5% 34% 34% 16%
Time
 Introduction

Diffusion Process and PLC Curve

Introduction Growth Maturity Decline

Product
life cycle
Sales

curve
cu e
Early majority
Late majority
Early
y adopters
p
Innovators
Laggards
Diffusion
curve
 Introduction
Tools of Marketing Mix
INTRODUCTION GROWTH MATURITY DECLINE

Product Limited models More models Large number Eliminate

Strategy Frequent Frequent
q of models. unprofitable
p
changes changes. models

Distribution Limited Expanded Extensive. Phase out

Strategy Wholesale/ dealers. Long- Margins drop. unprofitable
retail distributors term relations Shelf space outlets

Awareness. Aggressive ads. Advertise. Phase out

Promotion Stimulate Stimulate Promote heavily promotion
Strategy d
demand.Sampling
dS li d
demand d
Higher/recoup Fall as result of Prices fall Prices
Pricing development competition & (usually). stabilize at
Strategy costs efficient produc- low level
level.
tion.
 Market Segmentation
g

What is market segmentation?

The process of dividing the market

into similar customers/consumers
and selecting the most appropriate
group(s) and individuals for the
firm to serve.
 Market Segmentation
g

Why do we need to segment the

market?
A single
i l product
d usually
ll will
ill not
appeal to all consumers
Goals,
G l product
d tk knowledge,
l dg iinvolvement,
l t
values, lifestyles vary
It is also too expensive to customize a
product to each and every consumer
But there are groups of consumers who possibly
share similar goals, values, involvement, etc.
 Market Segmentation
g

 A Need State is determined by the combination of a consumer’s physical and

emotional motivators with the specific occasion for which the brand choice
is to be made.
 A consumer need state determines which Brand a user selects
(e.g., coffee and OJ in the morning, wine with dinner, milk before bed).

Where

Why - BRAND
M i i
Motivation Need State
CHOICE

When -
Who Time of
Day
 Market Segmentation
g
Tasks and Types involved in Market
Segmentation
Tasks: We need to understand what consumers are
looking for in our product/ service (consumer product
relationships)
Attributes, benefits, values
Tasks: We need to understand how we can bundle
these attributes, benefits and values
T
Types off M
Market
k t Segmentation
S t ti
Benefit
Psychographic
Person/Situation
Demographic
 Market Segmentation
g
Product Benefit Segmentation
Colgate Sensory Sociable Worrier Independent
Toothpaste Segment Segment Segment Segment

Principal Benefit Flavor, Brightness Decay Price

Package of Teeth Prevention
Demographics
g p
Children Teens, Men
Behavior Young Large Family
Bubble gum Heavy
y users
flavored Smokers Heavy users
Brand favored Cheapest
Colgate Close Up & Crest brand
Whi
Whitening
i
Lifestyle
Hedonistic, Conservative Value-
Fun loving Active oriented
Segmentation –
Marriot International
 Market Segmentation
g

• Size, p
purchasing
g power,
p
Measurable profiles of segments can
be measured.

Substantial • Seg
Segments
e ts must
ust be large
a ge o
or
profitable enough to serve.

• Segments
g can be
Accessible effectively reached and
served.

• Segments must respond

Differential differently to different
marketing mix elements &
actions.

• Must be able to attract and

Actionable serve the segments.
 Pricing
g Strategy
gy

Importance
p of Price
Three variables that determine
profit:

Sales
S l -
Volume
X Price Cost = Profit
 Pricing
g Analysis
y
Example of Mark-Up Pricing by
R t il
Retailers and
d Wh
Wholesalers
l l
 Pricing
g Strategy
gy

The Meaning
g of Price
we generally think of price in monetary
terms
may be more useful to think of what it
costs us to acquire something of value
the costs may be monetary or non-
monetary
we need to think in terms of time and
effort, as well as the monetary costs
the consumer often vows never to go back
because “it’s not worth the _______”
 Pricing
g Strategy
gy

Pricing
g Objectives
j

a firm may
y have several pricing
p g
objectives
to achieve a certain return on sales
to maximize short-term or long-term profits
t increase
to i sales
l tto a certain
t i llevell
to achieve a target share of the market
to maintain price stability in the market
to meet competitors’ prices
 Distribution Strategy
gy

Marketing or Distribution Channel

A set of interdependent
p organizations
g
involved in the process of making a
product or service available for use or
p
consumption by the consumer or
business user.
Define the role of the distribution
channel.
 Distribution Strategy
gy
Consumer and Business Channels
 Brand Positioning
g

Per Philip Kotler,

A product is anything that can be
offered to a market for attention,,
acquisition, use, or consumption that
might satisfy a want or need.
A Brand is a name, term, sign, symbol,
or design intended to distinguish the
goods
d andd services
i off one seller
ll ffrom
another and to differentiate them
from those of competitors.
competitors
Brand Positioning
g
Brand Positioning
g
Brand Positioning
g
After building a great franchise offering a unique; customer
experience, Starbucks diluted its brand when it overexpanded and
offered too many new products. Harvard Business School Prof. John
Quelch thinks the trouble began when the company went public.

“Starbucks is now a mass brand attempting to command a premium

price for an experience that is no longer special”; Starbucks'
announcement that it will close 600 stores in US is a long-overdue
admission that there are limits to growth.
Brand Positioning
g
 Brand Positioning
g
Types of Brand Positioning
Positioning by Attributes
Price vs Quality,
Quality 33-blade
blade razor vs Disposable
Positioning by Usage Situation
Campbell Soup
Positioning by Product User
Baby Shampoo, Lady Speed Stick
Positioning by Product Class
Silk Soy Milk, I Can’t Believe it’s not Butter
Superior Positioning
Most frequently used “I’m better than you”
Harley Davidson
 Brand Positioning
g

Positioning
g Maps
p

A visual depiction of consumers

perceptions
ti off competitors
tit
Constructed by surveying consumers
about
b t various
i product
d t attributes
tt ib t
Uses of positioning maps:
Represent the market structure of a product
category as perceived by customers
Helps
p marketers to identifyy closest competitors
p
Help identify unique positioning for an existing or a
new product
 Brand Positioning
g
Positioning Map of Automobiles
HAS A TOUCH OF CLASS
LINCOLN

CADILLAC
PORSCHE
MERCEDES

CHRYSLER BMW
BUICK
OLDSMOBILE PONTIAC

CONSERVATIVE LOOKING CHEVROLET SPORTY LOOKING

FORD
DATSUN

TOYOTA

DODGE
VW
PLYMOUTH

PROVIDES GOOD GAS MILEAGE

 Brand Positioning
Key Challenges

1.Relevant Differentiation
Key Challenges
 Brand Positioning
Key Challenges

1.Relevant Differentiation

2 Media Fragmentation
2.Media
 Brand Positioning
Key
y Challenges
g
Media Fragmentation
“C
“Communication
i ti SSpending
di g b
by P
People
l ((movies,
i video
id ggames, recorded
d d
music, cable TV, web sites) surpassed Ad Spending for the 1st Time”
“P&G
P&G is recognizing that the first step in any marketing program is to
understand who the consumer is, and how they might be reached,
g be said to them”
rather than what might
“Teen Males are spending more time playing Video Games than
watching TV”
“Ad budgets are the same, but now they need to be spread among a
wider media range to get through to hard-to-reach consumers”
“Traditional media will have to make adjuntsments to keep up …”

Source: Press, PR Industry Caribbean Business 9/9/04

 Brand Positioning
Key
y Challenges
g
Media Fragmentation

“ 1 in every 2 Teens have his own website”

Avg. US Teen performing up to 4 tasks at once (TV,

Radio Cellular
Radio, Cellular, Studying
Studying, Eating
Eating, Video Game)

Instant Messaging
g g = 300mm/per
p dayy … 4 times US

Mail

Only 14% TV Engagement Level among US Teens

Source: SMG (media consumption habits 18 +, except video games)
 Brand Positioning
Key
y Challenges
g
Media Fragmentation
Item Consumption in Consumption in Change in the
1992 (hours p/y) 2004 (hours p/y) period (%)

TV 1,510 1,571 4
Radio 1,150 1,056 -8
Recorded music 233 269 15
N
Newspaper 172 154 -10
10
Books 100 96 -4
g
Magazines 85 80 -6
Home Video 42 55 30
Video games 19 43 126
Internet 2 43 2,050
Total 3,324 3,380 1.7%
Source: SMG (media consumption habits 18 +, except video games)
 Traditional Mass Media Has Fragmented

Reach
1960’s: 80% - 3 Now: 80% – 100+ channels
channels
Prime Time Today: Prime Time – 25MM
1977: Prime Time viewers
– 51MM viewers
DVR Penetration 2009: 50%
Today – 20%
Newspaper Readership 2002: 55%
1964: 81% HH

Source: http://www.backchannelmedia.com/newsletter/20040728/04
 Brand Positioning
Key Challenges

1.Relevant Differentiation

2 Media Fragmentation
2.Media

3.Connection and Continuity

Consistent Full Year Innovative Community
CSoL Communication Marketing Programs

Proximity Marketing

Win key Holidays Maximize Key

Maximize p
Properties/Assets
Celebrations
Stock-Up
Programs

CSM OMOTF
Merchandising
Rally

COMMERCIAL FRANCHISE
LEADERSHIP Integrated Coke Side of Life Marketing Plan LEADERSHIP
Always
y Keep
p Your Promise
Mars US Announces Support for Current Chocolate Standard of
Identity
Chocolate Leader Opposes Proposal to “Lower
Lower the Bar
Bar” on Chocolate by Allowing
For Cocoa Butter Substitutes

“Changing the definition of what chocolate is would be a

mistake. The bottom line is that we’re not going to change our
chocolate. Today, Mars US chocolate products are pure, authentic
chocolate and they’re going to stay that way,” said Todd R.
Lachman, president, Mars Snackfoods US. “Even though we
could save millions of dollars, we simply won’t
won t compromise
the purity and authenticity of our chocolate by diluting it with a
cocoa butter substitute. This company was built on quality – it's
one of our core principles – and we will not lower the bar on
chocolate
h l t quality.
lit ”
“At Mars, the consumer is our boss, and American consumers
are passionate about chocolate. They don’t want anyone to change
th chocolate
the h l t th
they’ve
’ enjoyed
j d ffor generations,”
ti ” said
id L
Lachman.
h “A
“As
a privately held company, we have the freedom to invest in the
highest quality chocolate and deliver what consumers want.”
 IF you
y Don’t …
Mattel Recalls 19 Million Toys Sent From
China – NY Times
CEO apologizes for Fisher-Price
Fisher Price recall – USA
Today
“represents close to 19MM toys and a
+$30MM in Operating Income...”
Mattel CEO: 'Rigorous standards' after
massive toy recall – CNN
Mattel recalling 11 million toys in
foreign countries, 9.5 million in U.S.
Mattel CEO says he's sorry for the
situation
Barbie, Polly Pocket toys being
recalled
ll d b
because off small
ll magnets
t
U.S. probes Mattel disclosures before
recall - MSNBC
Report: Consumer watchdog
investigates timing of announcements
 Brand Pillars
Are we setting ourselves apart from everyone
else?
How appropriate, meaningful, and valuable is
our p
point of difference?
Do we know how much esteem our target has
for us?
How well do customers understand and believe
in our point of difference?
H
How iis their
h i esteem vis-à-vis
i à i their
h i understanding
d di
In summary, do we know/agree on what makes
us Different,
Different Unique,
Unique and Special?
 Evaluating our Branded Experience –
scoring our “Feelings Business”?

Have we asked what is important for our

target – like / dislike? Their perception?
What are our WOWs from this Branded
Experience
p – are theyy D/U/S?
Do we understand what our guests are really
buying – what will be the ideal experience
from first contact – goodbye?
What feelings we want our guests to Guest will ALWAYS
have a Branded
experience
i d
during
i g th
their
i stay?
t ? Experience
Do we have a clear idea of what our Everything
employees / stakeholders believe? communicates !!!!
 The Power of a Brand
“You can Fool Some People Some of the Time
– Until they
the Have
Ha e a Bad E
Experience
perience with
ith Yo
Yourr
Brand.”

Those That Make Good on their Promises, Will

be Rewarded with a More Loyal Consumer.

Brand is not an Abstract Concept, it’s a

Treasured Asset.
Thank You

51
 Brand Positioning

Key Objective is to form a particular Brand Image in

consumers’ mind by making the differentiation
meaningful
gf

Differentiation: Creation of tangible

g or intangible
g
differences on one or two key dimensions
between a focal product and its main competitors.

Positioning: The set of strategies that firms develop

to ensure that these key differences occupy a
distinct and important position in the minds of
customers.