© 2014 Alexander Chernev

About this Slide Deck ✦ This slide deck includes figures from Strategic Marketing Management (8th Edition) by Alexander ChernevStrategic Marketing ManagementAlexander Chernev ✦ Unless noted otherwise, all figures are copyrighted by the author ✦ Figures are presented in the same order as in the book and are available in both Powerpoint and Keynote formats ✦ All figures are shown on white background; some of the figures are also shown on back background. Some of the figures are animated ✦ All figures are fully editable and can be colored, enlarged, or scaled down based on individual preferences. Some of the key figures are offered in different sizes

© 2014 Alexander Chernev Strategic Marketing Management (8th Edition) Book Overview

© 2014 Alexander Chernev The Big Picture ✦ Chapter 1: Marketing as a Business Discipline ✦ Chapter 2: Marketing Strategy and Tactics ✦ Chapter 3: The Marketing Plan Control Goal Strategy Tactics Implementation Customer value Collaborato r value Company value OVP Incentives Service Product Brand Price Communication Distribution Marketing Strategy and Tactics (Value-Creation Model) The Marketing Plan (G-STIC Framework)

© 2014 Alexander Chernev The Big Picture Chapter 1: Marketing as a Business Discipline Chapter 2: Marketing Strategy and Tactics Chapter 3: The Marketing Plan Control Goal Strategy Tactics Implementation The Marketing Plan (G-STIC Framework) Marketing Strategy and Tactics (Value-Creation Model) Incentives Service Product Brand Price Communication Distribution Customer value Collaborato r value Company value OVP

© 2014 Alexander Chernev Marketing Strategy ✦ Chapter 4: Identifying Target Customers ✦ Chapter 5: Creating Customer Value ✦ Chapter 6: Managing Company Value ✦ Chapter 7: Creating Collaborator Value Value Context Collaborators Customers Competitors Company Value Market Analysis (6-V Framework) Customer value Collaborator value Company value OVP Value-Sharing Model (3-V Principle)

© 2014 Alexander Chernev Marketing Strategy Chapter 4: Identifying Target Customers Chapter 5: Creating Customer Value Chapter 6: Managing Company Value Chapter 7: Creating Collaborator Value Market Analysis (6-V Framework) Value Context Collaborators Customers Competitors Company Value Value-Sharing Model (3-V Principle) Customer value Collaborator value Company value OVP

© 2014 Alexander Chernev Marketing Tactics ✦ Chapter 8: Managing Products and Services ✦ Chapter 9: Managing Brands ✦ Chapter 10: Managing Price ✦ Chapter 11: Managing Incentives ✦ Chapter 12: Managing Communications ✦ Chapter 13: Managing Distribution Marketing Tactics (7-T Framework) Service Product Communication Incentives Price Distribution Brand Value

© 2014 Alexander Chernev Marketing Tactics Chapter 8: Managing Products and Services Chapter 9: Managing Brands Chapter 10: Managing Price Chapter 11: Managing Incentives Chapter 12: Managing Communications Chapter 13: Managing Distribution Marketing Tactics (7-T Framework) Service Product Communication Incentives Price Distribution Brand Value

© 2014 Alexander Chernev Managing Growth ✦ Chapter 14: Gaining and defending market position ✦ Chapter 15: Managing Sales Growth ✦ Chapter 16: Managing New Products ✦ Chapter 17: Managing Product Lines

© 2014 Alexander Chernev Managing Growth Chapter 14: Gaining and defending market position Chapter 15: Managing Sales Growth Chapter 16: Managing New Products Chapter 17: Managing Product Lines

© 2014 Alexander Chernev Marketing Workbooks ✦ Chapter 18: Segmentation and targeting workbook ✦ Chapter 19: Business plan workbook ✦ Chapter 20: Positioning statement workbook

© 2014 Alexander Chernev Marketing Workbooks Chapter 18: Segmentation and targeting workbook Chapter 19: Business plan workbook Chapter 20: Positioning statement workbook

© 2014 Alexander Chernev Strategic Marketing Management (8th Edition) Figures: Part I

© 2014 Alexander Chernev The Role of Frameworks in Marketing Management Typical problem Specific solution Typical solution Specific problem Framework GeneralizeApply Trial & error

© 2014 Alexander Chernev The Role of Frameworks in Marketing Management Typical problem Specific solution Typical solution Specific problem Framework AbstractionApplication Trial & error

© 2014 Alexander Chernev Identifying Target Markets: The 5-C Framework Company Competitors Collaborators Context Customers Company Competitors Context Collaborators Customers

© 2014 Alexander Chernev Identifying Target Markets: The 5-C Framework Company Competitors Collaborators Context Customers

© 2014 Alexander Chernev Identifying Target Markets: The 5-C Framework Company Collaborators Competitors Context Customers Company Collaborators Competitors Context Customers Company Collaborators Competitors Context

© 2014 Alexander Chernev Defining the Value Exchange: The 6-V Framework Value Context Collaborators Customers Competitors Company Value Company value exchange Competitive value exchange

© 2014 Alexander Chernev Defining the Value Exchange: The 6-V Framework Value Context Collaborators Customers Competitors Company Value

© 2014 Alexander Chernev Defining the Value Exchange: The 6-V Framework ValueValue ValueValue Context Collaborators Customers Competitors Company Value Value Company value exchange Competitive value exchange

© 2014 Alexander Chernev Defining the Value Exchange: The 6-V Framework Value Context Collaborators Customers Competitors Company Value

© 2014 Alexander Chernev The Optimal Value Proposition (OVP) Customers value Collaborator value Company value OVP The Optimal Value Proposition

© 2014 Alexander Chernev The Optimal Value Proposition (OVP) Customer value Collaborator value Company value The Optimal Value Proposition (OVP) OVP

© 2014 Alexander Chernev The Optimal Value Proposition (OVP) Customer value Collaborator value Company value The Optimal Value Proposition OVP Customer value Collaborator value Company value OVP

© 2014 Alexander Chernev The 7 Tactics Articulating the Offering's Value Proposition Marketing Mix (7 Ts) Customer value Collaborato r value Company value OVP Incentives Service Product Brand Price Communication Distribution

© 2014 Alexander Chernev The 7 Tactics Articulating the Offering's Value Proposition Marketing Mix (7 Ts) Incentives Service Product Brand Price Communication Distribution Customer value Collaborato r value Company value OVP Strategy Tactics

© 2014 Alexander Chernev The Seven Marketing Tactics (Marketing Mix) Service Product Communication Incentives Price Distribution Brand Value Service Product Communication Incentives Price Distribution Brand Value Service Product Communication Incentives Price Distribution Brand Value

© 2014 Alexander Chernev The Seven Marketing Tactics (Marketing Mix) Service Product Communication Incentives Price Distribution Brand Value Service Product Communication Incentives Price Distribution Brand Value Service Product Communication Incentives Price Distribution Brand Value

© 2014 Alexander Chernev Designing, Communicating, and Delivering Value Delivering value Brand Service Communicating value Price Incentives Product Designing value

© 2014 Alexander Chernev Designing, Communicating, and Delivering Value Delivering value Brand Service Communicating value Price Incentives Product Designing value

© 2014 Alexander Chernev Designing, Communicating, and Delivering Value Designing value Delivering value Product Service Brand Price Incentives Communicating value Service Incentives Designing value Delivering value Product Brand Price Communicating value Product Service Brand Price Incentives Designing value Delivering value Communicating value

© 2014 Alexander Chernev Designing, Communicating, and Delivering Value Distribution Incentives Price Communication Product Brand Service Communicating the offering Delivering the offering Designing the offering Marketing Mix (7 Ts)

© 2014 Alexander Chernev Designing, Communicating, and Delivering Value Communicating the offering Delivering the offering Designing the offering Marketing Mix (7 Ts) Distribution Incentives Price Communication Product Brand Service

© 2014 Alexander Chernev The 7-T and the 4-P Frameworks Marketing Mix (7 Ts) Distribution Incentives Price Communication Product Brand Service Promotion Place Product Price

© 2014 Alexander Chernev The 7-T and the 4-P Frameworks Marketing Mix (7 Ts) Distribution Incentives Price Communication Product Brand Service Promotion Place Product Price

© 2014 Alexander Chernev Strategies for Generating a Business Model Marketing Strategy (value analysis) Bottom-up business model generation Marketing Tactics (offering design) Top-down business model generation

© 2014 Alexander Chernev Strategies for Generating a Business Model Marketing Strategy (value analysis) Bottom-up business model generation Marketing Tactics (offering design) Top-down business model generation

© 2014 Alexander Chernev The Five Forces of Competition Competitors New entrants Buyers Substitutes Suppliers Source: Porter, Michael E. (1979), “How Competitive Forces Shape Strategy,” Harvard Business Review, 57 (March–April), 137–145

© 2014 Alexander Chernev The Five Forces of Competition Competitors New entrants BuyersSubstitutesSuppliers Source: Porter, Michael E. (1979), “How Competitive Forces Shape Strategy,” Harvard Business Review, 57 (March–April), 137– 145

© 2014 Alexander Chernev The G-STIC Framework for Market Planning and Analysis Control Goal Strategy Tactics Implementation Business model

© 2014 Alexander Chernev The G-STIC Framework for Market Planning and Analysis Control Goal Strategy Tactics Implementation Business model

© 2014 Alexander Chernev Goal Focus Benchmarks The G-STIC Action-Planning Flowchart Strategy Target market Value proposition Distribution Communication Service Brand Product Price Incentives Tactics Organizational infrastructure Implementation Business processes Implementation schedule Evaluate performance Control Monitor the environment The logistics of developing the offering The ultimate criterion for success The logic of the value-creation model The specifics of the market offering The process of evaluating goal progress

© 2014 Alexander Chernev Goal Focus Benchmarks The G-STIC Action-Planning Flowchart Strategy Target market Value proposition Distribution Communication Service Brand Product Price Incentives Tactics Organizational infrastructure Implementation Business processes Implementation schedule Evaluate performance Control Monitor the environment The logistics of developing the offering The ultimate criterion for success The logic of the value-creation model The specifics of the market offering The process of evaluating goal progress

© 2014 Alexander Chernev G-STIC Action-Planning Pyramid Control Strategy Implementation Goal Tactics Organizational infrastructure Implementation schedule Business processes Value proposition Target market Environmental analysisPerformance evaluation Focus Bench- marks Product Service Brand Price IncentivesCommunicationDistribution Action plan Value-creation model Market offering

© 2014 Alexander Chernev Environmental analysis Performance evaluation Focus Bench- marks Value proposition Target market Implementation schedule Organizational infrastructure Business processes Control Strategy Implementation Goal Tactics Environmental analysis Performance evaluation Control Implementation schedule Organizational infrastructure Strategy Implementation Goal Focus Bench- marks Tactics Value proposition Target market Business processes G-STIC Action-Planning Pyramid Product Service Brand Price IncentivesCommunicationDistribution ProductServiceBrandPrice IncentivesCommunicationDistribution

© 2014 Alexander Chernev The Marketing Plan Executive summarySituation analysis Action Plan (G-STIC Framework) Control Goal Strategy Tactics Implementation Exhibits Business model

© 2014 Alexander Chernev The Marketing Plan Executive summary Situation analysis Action Plan (G-STIC Framework) Control Goal Strategy Tactics Implementation Exhibits Business model

© 2014 Alexander Chernev Strategic Marketing Management (8th Edition) Figures: Part II

© 2014 Alexander Chernev Segment-Based Targeting Segment A (target) Segment B (nontarget) Segment C (nontarget) Unsegmented market Segment-based target identification

© 2014 Alexander Chernev Segment-Based Targeting Segment A (target) Segment B (nontarget) Segment C (nontarget) Unsegmented market Segment-based target identification

© 2014 Alexander Chernev The Key Targeting Principles Customer needs Customer resources Target compatibility Company goals Company resources Target attractiveness Company analysisCustomer analysis

© 2014 Alexander Chernev The Key Targeting Principles Customer needs Customer resources Target compatibility Company goals Company resources Target attractiveness Company analysisCustomer analysis

© 2014 Alexander Chernev The Resource Advantage Principle Customer needs Unutilized competitor resources Competitive wasteland The company's optimal target customers Unmet customer needs Unutilized company resources Competitors' optimal target customers Intense competition Company resources Competitor resources Target

Company resources © 2014 Alexander Chernev The Resource Advantage Principle Customer needs Unutilized competitor resources Competitive wasteland The company's optimal target customers Unmet customer needs Unutilized company resources Competitors' optimal target customers Intense competition Competitor resources Target

© 2014 Alexander Chernev The Customer Identification Process Strategic targeting Tactical targeting Value-based analysis Channel-based analysis

© 2014 Alexander Chernev The Customer Identification Process Strategic targeting Tactical targeting Value-based analysis Channel-based analysis

© 2014 Alexander Chernev Strategic and Tactical Targeting: Linking Customer Value and Profile Important Unobservable Not actionable Observable Actionable Less important Target compatibility Target attractiveness Value Profile Identification (linking value & profile) Behavioral factors Demographic factors Strategic targeting Tactical targeting Value-based identification Profile-based identification Target customers

© 2014 Alexander Chernev Strategic and Tactical Targeting: Linking Customer Value and Profile Important Unobservable Not actionable Observable Actionable Less important Identification (linking value & profile) Strategic targeting Tactical targeting Value-based identification Profile-based identification Target customers Target attractiveness Profile Value Demographic factors Behavioral factors Target compatibility

© 2014 Alexander Chernev Targeting Efficiency Oversegmentation (narrow) “Sniper” targeting (perfect fit) Value-based segment (unobservable) Profile-based-segment (observable) IncorrectCorrect “Shotgun” targeting (broad) Shot-in-the-dark (off base)

© 2014 Alexander Chernev Targeting Efficiency Value-based segment (unobservable) Profile-based-segment (observable) “Shotgun” targeting (broad) Oversegmentation (narrow) Shot-in-the-dark (misaligned) “Sniper” targeting (perfect fit)

© 2014 Alexander Chernev Targeting Multiple Segments Offering BOffering A Segment A (target) Segment B (target) Segment C (nontarget)

© 2014 Alexander Chernev Targeting Multiple Segments Offering BOffering A Segment A (target) Segment B (target) Segment C (nontarget)

© 2014 Alexander Chernev Segmentation as a Process of Differentiation and Agglomeration Mass market (unsegmented) Agglomeration Idiosyncratic market (Unsegmented) Differentiation Segmented market

© 2014 Alexander Chernev Segmentation as a Process of Differentiation and Agglomeration Mass market (unsegmented) Agglomeration Idiosyncratic market (Unsegmented) Differentiation Segmented market

© 2014 Alexander Chernev Segmentation and Targeting: The Big Picture Tactical targeting (profile-based) Decide how to reach target customers to communicate and deliver the offering Strategic targeting (value-based) Decide whom to target Strategic segmentation (value-based) Divide customers into segments based on their needs and resources Identify customers' demographic and behavioral profile Tactical segmentation (profile-based) Channel C Channel B Channel A

© 2014 Alexander Chernev Segmentation and Targeting: The Big Picture Tactical targeting (profile-based) Decide how to reach target customers to communicate and deliver the offering Strategic targeting (value-based) Decide whom to target Strategic segmentation (value-based) Divide customers into segments based on their needs and resources Identify customers' demographic and behavioral profile Tactical segmentation (profile-based) Channel C Channel B Channel A

© 2014 Alexander Chernev Key Segmentation Principles: Relevance Correct (relevant) Incorrect (irrelevant)

© 2014 Alexander Chernev Key Segmentation Principles: Relevance Correct (relevant) Incorrect (irrelevant)

© 2014 Alexander Chernev Key Segmentation Principles: Similarity Correct (homogeneous) Incorrect (heterogeneous)

© 2014 Alexander Chernev Key Segmentation Principles: Similarity Correct (homogeneous) Incorrect (heterogeneous)

© 2014 Alexander Chernev Key Segmentation Principles: Exclusivity Correct (mutually exclusive) Incorrect (non-exclusive)

© 2014 Alexander Chernev Key Segmentation Principles: Exclusivity Correct (mutually exclusive) Incorrect (non-exclusive)

© 2014 Alexander Chernev Key Segmentation Principles: Comprehensiveness Correct (collectively exhaustive) Incorrect (not exhaustive)

© 2014 Alexander Chernev Key Segmentation Principles: Comprehensiveness Correct (collectively exhaustive) Incorrect (not exhaustive)

© 2014 Alexander Chernev Identifying Target Customers, Developing a Value Proposition, and Positioning Value Developing a value proposition Identifying target customers Positioning Primary benefit

© 2014 Alexander Chernev Identifying Target Customers, Developing a Value Proposition, and Positioning Developing a value proposition Identifying target customers Positioning Primary benefit Value

© 2014 Alexander Chernev Value as a Function of Customer Needs and Offering Attributes Customer needs Company offering Customer value

© 2014 Alexander Chernev Value as a Function of Customer Needs and Offering Attributes Customer needs Company offering Customer value

© 2014 Alexander Chernev Dimensions of Customer Value Functional valueMonetary value Psychological value Psychological benefits Psychological costs Monetary benefits Monetary costs Functional benefits Functional costs Customer value

© 2014 Alexander Chernev Dimensions of Customer Value Functional value Monetary value Psychological value Psychological benefits Psychological costs Monetary benefits Monetary costs Functional benefits Functional costs Customer value

© 2014 Alexander Chernev Reference-Point Dependence Perceived value Actual performance Reference point Gains Losses

© 2014 Alexander Chernev Reference-Point Dependence Perceived value Actual performance Reference point Gains Losses

© 2014 Alexander Chernev Loss Aversion Perceived value Actual performance Value of a gain Value of a loss

© 2014 Alexander Chernev Loss Aversion Perceived value Actual performance Value of a gain Value of a loss

© 2014 Alexander Chernev Diminishing Marginal Value Attribute performance Utility (perceived value)

© 2014 Alexander Chernev Diminishing Marginal Value Attribute performance Utility (perceived value)

© 2014 Alexander Chernev The Value Function Perceived value Actual performance Source: Kahneman, Daniel and Amos Tversky (1979), “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, 47 (March), 263–91

© 2014 Alexander Chernev The Value Function Perceived value Actual performance Source: Kahneman, Daniel and Amos Tversky (1979), “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, 47 (March), 263–91

© 2014 Alexander Chernev Creating Superior Customer Value Customer value Functional value Monetary value Competitive advantage Value

© 2014 Alexander Chernev Creating Superior Customer Value Customer value Functional value Monetary value Competitive advantage Value

© 2014 Alexander Chernev Competitive Value Map Competitive parity Attribute 1Attribute 2Attribute 3Attribute 4Attribute 5 Company’s offering Competitive offering A Competitive offering B Customer value Competitive advantage Competitive disadvantage

© 2014 Alexander Chernev Competitive Value Map Competitive parity Attribute 1Attribute 2Attribute 3Attribute 4Attribute 5 Company’s offering Competitive offering A Competitive offering B Customer value Competitive advantage Competitive disadvantage

© 2014 Alexander Chernev Single-Benefit Positioning Benefit 1 + Benefit 2 Benefit 3 Benefit 4 Benefit 5 Primary benefit Secondary benefits Reason to choose

© 2014 Alexander Chernev Single-Benefit Positioning Benefit 1 + Benefit 2 Benefit 3 Benefit 4 Benefit 5 Primary benefit Secondary benefits Reason to choose

© 2014 Alexander Chernev Dual-Benefit Positioning Benefit 1 + Benefit 2 Benefit 3 Benefit 4 Benefit 5 Primary benefits Secondary benefits Reason to choose

© 2014 Alexander Chernev Dual-Benefit Positioning Reason to choose Benefit 1 + Benefit 2 Benefit 3 Benefit 4 Benefit 5 Primary benefits Secondary benefits

© 2014 Alexander Chernev Holistic Positioning Benefit 1 Benefit 2 Benefit 3 Benefit 4 Benefit 5 Overall benefit Reason to choose

© 2014 Alexander Chernev Holistic Positioning Reason to choose Benefit 1 Benefit 2 Benefit 3 Benefit 4 Benefit 5 Overall benefit

© 2014 Alexander Chernev Positioning Map Attribute 1 Attribute 2 Offering A Offering E Offering C Offering D Offering B

© 2014 Alexander Chernev Positioning Map Attribute 1 Attribute 2 Offering A Offering E Offering C Offering D Offering B

© 2014 Alexander Chernev The Three Dimensions of Company Value Monetary value Functional value Psychological value Company value Strategic goals Monetary goals

© 2014 Alexander Chernev The Three Dimensions of Company Value Monetary value Functional value Psychological value Company value Strategic goals Monetary goals

© 2014 Alexander Chernev Creating Company Value: The Key Profit Drivers Net income Costs Revenues Competitors’ customers Current customers New customers New to the category Research and development Other costs Marketing Cost of goods sold Volume Price

© 2014 Alexander Chernev Creating Company Value: The Key Profit Drivers Net income Costs Revenues Competitors’ customers Current customers New customers New to the category Research and development Other costs Marketing Cost of goods sold Volume Price

© 2014 Alexander Chernev Strategies for Growing Sales Volume Market-growth strategy Market-penetration strategy Sales volume Steal-share strategy New customers Current customers Customers new to the category Competitors’ customers

© 2014 Alexander Chernev Economic Value Analysis Monetary value Functional value Psychological value Company value Monetizing functional value Monetizing psychological value Strategic value

© 2014 Alexander Chernev Conflicts in Vertical Collaboration Vertical channel conflict Horizontal channel conflict Manufacturer Distributor Customer Manufacturer Customer Distributor B Distributor A

© 2014 Alexander Chernev Conflicts in Horizontal Collaboration Customer Collaborator Company

© 2014 Alexander Chernev Strategic Marketing Management (8th Edition) Figures: Part III

© 2014 Alexander Chernev Product and Service Management as a Value-Creation Process Product Context Customers Competitors Company Collaborators Customer value Collaborator value Company value The Optimal Value Proposition Factors to considerDecision criteria Service OVP

© 2014 Alexander Chernev Branding as a Value-Creation Process Brand Context Customers Competitors Company Collaborators Customer value Collaborator value Company value The Optimal Value Proposition Factors to considerDecision criteria OVP

© 2014 Alexander Chernev Vertical Brand Extensions Price Benefits Upscale extension Downscale extension Core offering Price tier A Price tier B Price tier C

© 2014 Alexander Chernev Horizontal Brand Extensions Price Benefits Extension B Core offering Extension A Category A Category B Category C

© 2014 Alexander Chernev Pricing as a Value-Creation Process Price Context Customers Competitors Company Collaborators Customer value Collaborator value Company value The Optimal Value Proposition Factors to considerDecision criteria OVP

© 2014 Alexander Chernev Incentives as a Value-Creation Process Incentives Context Customers Competitors Company Collaborators Customer value Collaborator value Company value The Optimal Value Proposition Factors to considerDecision criteria OVP

© 2014 Alexander Chernev Pull and Push Promotion Strategies Manufacturer Retailer Customer Incentives Communications Demand Push strategy Manufacturer Retailer Customer Incentives Communications Demand Pull strategy

© 2014 Alexander Chernev Communication as a Value-Creation Process Commu- nication Context Customers Competitors Company Collaborators Customer value Collaborator value Company value The Optimal Value Proposition Factors to considerDecision criteria OVP

© 2014 Alexander Chernev Developing a Communication Plan Goal Tactics Implementation Strategy Message Media Creative solution Control

© 2014 Alexander Chernev Distribution as a Value-Creation Process Distri- bution Context Customers Competitors Company Collaborators Customer value Collaborator value Company value The Optimal Value Proposition Factors to considerDecision criteria OVP

© 2014 Alexander Chernev Distribution Channel Structure Direct channelIndirect channels Hybrid channel Company Wholesaler Retailer Customer Retailer Customer

© 2014 Alexander Chernev Strategic Marketing Management (8th Edition) Figures: Part IV

© 2014 Alexander Chernev Steal-Share Strategy Current users New users

© 2014 Alexander Chernev Market-Growth Strategy Current users New users

© 2014 Alexander Chernev Market-Growth Strategy for a Superior Offering Current users New users

© 2014 Alexander Chernev Market-Innovation Strategy Current users New users Current market New market

© 2014 Alexander Chernev Defensive Marketing Strategies Do nothing Customer costs Customer benefits Move upscale Increase benefits Reduce costs Move downscale Launch economy offering Launch premium offering Source: Hoch, Stephen J. (1996), “How Should National Brands Think about Private Labels?” Sloan Management Review, 37 (2), 89–102

© 2014 Alexander Chernev Product-Market Growth Matrix Current products New products Current customersNew customers Market penetration Product development Market development Diversification Source: Ansoff, H. Igor (1979), Strategic Management. New York, NY: John Wiley & Sons.

© 2014 Alexander Chernev The SWOT Framework Favorable factors Unfavorable factors Market analysis Company analysis External factors Internal factors OpportunitiesThreats StrengthsWeaknesses

© 2014 Alexander Chernev Managing Sales Growth Current customers New customers Managing adoption Managing usage

© 2014 Alexander Chernev The Adoption Funnel Purchase Awareness Attractiveness Affordability Availability

© 2014 Alexander Chernev Identifying Adoption Gaps All target customers Aware of the offering’s existence Perceive the offering to be attractive Perceive the offering to be affordable Have access to the offering Purchased the offering Attractiveness gap Affordability gap Purchase gap

© 2014 Alexander Chernev Key Factors Influencing Consumption Quantity Satisfaction Usage frequency Usage quantity Replacement frequency Availability PurchaseRepurchase Consumption variables

© 2014 Alexander Chernev Identifying Consumption Gaps Purchased the offering Satisfied with the offering Use the offering frequently Use large quantity per occasion Repurchase the offering Replace the offering frequently Usage quantity gap Replacement frequency gap

© 2014 Alexander Chernev New Product Adoption Individual adoptions Time Inflection point Individual adoptions over time Time Total adoptions Inflection point Market potential Speed of diffusion Cumulative number of adoptions over time

© 2014 Alexander Chernev New Product Adoption Individual adoptions Time Inflection point Individual adoptions over time Time Total adoptions Inflection point Market potential Speed of diffusion Cumulative number of adoptions over time

© 2014 Alexander Chernev The Stage-Gate Approach for Minimizing Risk in New Product Development Concept development Idea generation Business analysis Product development Market testing Commercial deployment Stage 2 Stage 1 Stage 3 Stage 4 Stage 5 Stage 6 Gate 1 Idea screening Gate 2 Concept screening Gate 3 Business review Gate 4 Product review Gate 5 Market review

© 2014 Alexander Chernev Managing the Product Life Cycle IntroductionGrowthMaturityDecline Sales Time Market size Market growth Competition Small Moderate Large Moderate/Small Low High Low Negative Low Moderate High Moderate/Low Source: Levitt, Theodore (1965), “Exploit the Product Life Cycle,” Harvard Business Review, 43, (November–December), 81–94.

© 2014 Alexander Chernev Extending Product Life Cycle through Innovation Sales revenues Time First generation Second generation Third generation Source: Christensen, Clayton (1997), The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business School Press

© 2014 Alexander Chernev Rogers’ Model of Adoption of Innovation InnovatorsEarly adoptersEarly majorityLaggards Number of adoptions Time Late majority (x-2SD) (x-SD) (x) (x+SD) (2.5%)(13.5%)(34%)(16%)(34%) Source: Rogers, Everett M. (1962), Diffusion of Innovations. New York, NY: Free Press

© 2014 Alexander Chernev Rogers’ Model of Adoption of Innovation InnovatorsEarly adoptersEarly majorityLaggards Number of adoptions Time Late majority (x-2SD) (x-SD) (x) (x+SD) (2.5%)(13.5%)(34%)(16%)(34%) Source: Rogers, Everett M. (1962), Diffusion of Innovations. New York, NY: Free Press

© 2014 Alexander Chernev Moore’s Technology Adoption Model EnthusiastsVisionariesPragmatistsSkeptics Early marketMainstream market Conservatives Time Number of adoptions The chasm Source: Moore, Geoffrey A. (1991), Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers. New York, NY: HarperBusiness

© 2014 Alexander Chernev Moore’s Technology Adoption Model EnthusiastsVisionariesPragmatistsSkeptics Early marketMainstream market Conservatives Time Number of adoptions The chasm Source: Moore, Geoffrey A. (1991), Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers. New York, NY: HarperBusiness

© 2014 Alexander Chernev Product-Line Positioning Map Attribute 1 Attribute 2 Offering A Offering E Offering C Offering D Offering B Target A Target C Target B Target E Target D

© 2014 Alexander Chernev Product-Line Attribute Value Map Offering AOffering BOffering COffering DOffering E Attribute 1 Attribute 2 Attribute 3 Value (Target A)(Target B)(Target C)(Target D)(Target E) Product line Attribute 4

© 2014 Alexander Chernev Vertical Product-Line Extensions Price Benefits Upscale extension Downscale extension Core offering

© 2014 Alexander Chernev Horizontal Product-Line Extensions Price Benefits Extension B Core offering Extension A

© 2014 Alexander Chernev Product-Line Cannibalization Dual-offering scenario with cannibalization Loss of share due to cannibalization New offering Competitive offerings Existing offering A' C B' Single-offering scenario - Existing offerings Competitive offerings A New offering Competitive offerings Existing offering Dual-offering scenario without cannibalization A B

© 2014 Alexander Chernev Product-Line Cannibalization and the Price-Benefit Tradeoff Price Benefits A B C DE F Value-equivalence line

© 2014 Alexander Chernev The Fighting Brand Strategy Price Quality Time Incumbent brand Fighting brand Low-price competitors

© 2014 Alexander Chernev The Sandwich Strategy Price Quality Time Incumbent brand Fighting brand Premium brand Low-price competitors

© 2014 Alexander Chernev The Good-Better-Best Strategy Price Quality Time Incumbent brand Good Better Best Low-price competitors

© 2014 Alexander Chernev Strategic Marketing Management (8th Edition) Figures: Part V

© 2014 Alexander Chernev The Business Model as a Value-Creation Process Customer value Collaborato r value Company value OVP Strategy Tactics Customer value model Strategy Tactics Collaborator value model Strategy Tactics Company value model

© 2014 Alexander Chernev Customer Value Model Incentives Service Product Brand Price Communication Distribution Customer value Value proposition

© 2014 Alexander Chernev Collaborator Value Model Incentives Service Product Brand Price Communication Distribution Collaborator value Value proposition

© 2014 Alexander Chernev Company Value Model Incentives Service Product Brand Price Communication Distribution Company value Value proposition

© 2014 Alexander Chernev