Lecture 5 Jan 19, 2012

Today’s Events HW Presentations Lecture

3 Marketing 101 The 4 Ps

4 What is Marketing? 4 Ps of Marketing Product Promotion Pricing Place (or distribution system) What follows is necessary for Business Plan but not for next Tuesday Homework

Product What is your product? Describe in terms of benefit to the customer – As you understand customers needs the product definition evolves Product packaging (is this relevant?) – For e-product consider GUI – Discuss form-factor, pricing, look, strategy Summarize Cost of Goods and high-level Bill of Materials – Shipping issues – Customs issues – Website issues

Promotion Direct marketing – Overview of strategy, vehicles & timing – Overview of response targets, goals & budget Third-party marketing – Co-marketing arrangements with other companies Marketing programs – Other promotional programs Social Networking?

Pricing – Summarize specific pricing or pricing strategies – Compare to similar products or compare to doing nothing Strategy – Summarize strategy relevant to understanding key pricing issues

Placement (Distribution) Distribution strategy Channels of distribution – Summarize channels of distribution Distribution by channel – Show plan of what percent share of distribution will be contributed by each channel -- a pie chart might be helpful Discuss fulfillment issues

Vertical Markets/Segments Vertical market opportunities – Discuss specific market segment opportunities – Address distribution strategies for those markets or segments – Address use of third-party partner role in distribution to vertical markets

Placement (International) International distribution – Address distribution strategies – Discuss issues specific to international distribution International pricing strategy Localization issues – Highlight requirements for local product variations

Marketing Summary Some good references Marketing – Marketing Triangle – Market Segmentation – Technology Adoption Curve – Interview Process – Forming Hypotheses – Creating a Vision Statement – 4 Ps

Strategy and Competition What is your company’s plan for gaining competitive advantage?

Tools and Models Business – Creation of Models – Ecosystem – Porter’s Forces – SWOT – Differentiation – Disruptive Technologies

Business models Examples

A Business Ecosystem Think of the business as a occupying an ecological niche in a rapidly changing environment What are some of the ways you could characterize this environment? – Competitors – Suppliers – Customers – Government – Others?

Six Forces Diagram to Determine how Competitive a Company is (after Porter) Your Business Power, Vigor and Competence of Existing Competitors Power, Vigor and Competence of Customers Power, Vigor and Competence of Complementors Power, Vigor and Competence of Suppliers Power, Vigor and Competence of Potential Competitors Possibility that what your business is doing can be done in a different way

The intensity of competitive rivalry (known) – number of competitors – rate of industry growth – intermittent industry overcapacity – exit barriers – diversity of competitors – informational complexity and asymmetry – brand equity – fixed cost allocation per value added – level of advertising expense

The threat of new entrants – the existence of barriers to entry Have a hub IP Gov license Limited market R&D costs Economies of scale Factory Knowing market – Economies of product differences – Brand equity – switching costs – capital requirements – access to distribution – absolute cost advantages – learning curve advantages – expected retaliation – government policies

Discussion Is it a good thing to have competition in your market? – Existing – New entries?