MGMT E-6020 Session Three

Agenda Tonight Overview of Ch. 3 & 4 ThoughtWorks case Starbucks assignments returned via email Wed or Thurs For next week: Guest Speaker: Andrew Russell, Director of Corporate Relations, Museum of Fine Arts Chapter 7 A Consultant’s Comeuppance Integrated Marketing Communications Be prepared to discuss the readings

Standing Apart from the Competition “A business must set itself apart from its competition. To be successful it must identify and promote itself as the best provider of attributes that are important to target customers.” George S. Day

Basic Focus Strategies for Services

Ch 3: Focus Strategies for Services Unfocused – wide range of services to a wide range of market segments Market-focused – wide range of services to a narrow market segment Service-focused – narrow range of services to a wide market segment Fully-focused – narrow range of services to a narrow market segment

S-T-P Segment Target Position

Market Segment A group of buyers who share common: Characteristics Goals or needs Purchasing behavior Consumption patterns Segment based on: Benefits sought by customers (customer needs) Observable characteristics of customers Determinant Attributes Source: HBS 9-506-019

Target Market Evaluate attractiveness of market segment Determine which segments to serve and how Customer (market analysis) Company (internal corporate analysis) Competitors (competitor analysis)

Segmentation in Practice: Best Buy Example Early 2000s, Best Buy was “product driven” and faced: Increased competition Eroding margins Difficult economy Source: Gulati, Ranjay (Re)(Organize) for Resilience: Harvard Business Press, 2009.

Best Buy Example (cont.) Customer-Centric Strategy: Figure out which customers make you the most money, segment them carefully, then realign your stores and empower employees to target those favored shoppers with products and services that will encourage them to spend more and come back often. “Angel Customers & Demon Customers” by Larry Selden Source: Boyle, Matthew, “Best Buy’s Giant Gamble.” Fortune April 3, 2006. 10

Best Buy Example (cont.) Identification of Customer Groups Tech fanatics (“Buzz”) Home theater connoisseurs (“Barry”) Family men (“Ray”) Busy moms (“Jill”) Source: Gulati, Ranjay (Re)(Organize) for Resilience: Harvard Business Press, 2009.

Busy Moms Segment: “Jill” Personal shopping assistants Just-for-kids displays Kitchen/laundry zones Practical signage Inspiring atmosphere Source: Gulati, Ranjay (Re)(Organize) for Resilience: Harvard Business Press, 2009.

Concept Store: Jill Segment

Store Display

Best Buy Example (cont.) “Customer-Centric” Implementation Established segment teams Focus groups Lab stores Expanded pilot Segment training Customer-centricity training Employee recruitment & empowerment Source: Gulati, Ranjay (Re)(Organize) for Resilience: Harvard Business Press, 2009. Fetterman, Mindy. “Best Buy gets in touch with its feminine side.” USA Today, 12/20/06.

Positioning A unique selling proposition relative to the competition Who are the customers? What is the set of needs that the service fulfills? Why is this service the best option to satisfy those needs? Source: HBS 9-506-019

Principles of Positioning Avoid trap of investing too heavily in points of differences that are easily copied! What does our firm stand for in the minds of current and potential customers? What customers do we serve now, and which ones would we like to target? What is value proposition for our current service products, and market segments? How does each of our service products differ from competitors’? How well do target customers perceive our service products as meeting their needs? What changes must we make to strengthen our competitive position?

Position Statements Rarely stated in marketing collateral Evolve over time in response to market changes competitive activity technology changes company changes

Positioning Statement (1) Our (product/brand) is (single most important claim) among all (competitive frame) because (single most important support) Source: HBS 9-506-019

Positioning Statement (2) For [target end user] Who wants/needs [compelling reason to buy] The [product name] is a [product category] That provides [key benefit]. Unlike [main competitor], The [product name] [key differentiation]

Harvard Extension School Example For nontraditional students who want high quality, thought-provoking, academic courses, Harvard Extension School is a continuing education school that provides a Harvard experience at a reasonable price. Unlike some continuing education schools, our open-enrollment courses are rigorous, designed for the student who wishes to be challenged.

ThoughtWorks case

Positioning for Thoughtworks (Case A) To Type A firms who need flexible and reliable IT solutions, Thoughtworks is the company that can provide cutting-edge applications that are high quality and quickly deployable because it is the premier innovator in Agile delivery systems.

Positioning for ThoughtWorks (Case B) To senior IT executives and program managers responsible for the delivery of mission-critical projects in Global 1000 companies, ThoughtWorks delivers the business value that you seek faster than any other IT consultancy because only ThoughtWorks combines a team of elite IT professionals with advanced technologies and an enterprise-level Agile approach. ThoughtWorks enables you to achieve the results you need, making you a hero in delivering business value from custom applications.

ThoughtWorks Debriefing Don’t trust your intuition, instead talk to customers In the case of ThoughtWorks, every aspect of the positioning changed after talking to customers