1. Advanced Models in High-Tech Marketing Day 5- Lock_in Pricing and Bundling modelos avançados em marketing de alta tecnologia

2. Course Objectives Review of advanced models in high-tech marketing Implementation of these models by the participants in a unique project Implementação Único Projeto Copyrights reserved to Ronen Arbel 20122

3. Course Rational Innovation Diffusion of Innovation Positioning/ Branding Revenues Copyrights reserved to Ronen Arbel 20123

4. Course Rational inovação difusão da inovação Posicionamento/ Gestão de Marcas receita Copyrights reserved to Ronen Arbel 20124

5. Day 5 Objectives Lock_In Pricing and Bundling Summary Case Study Copyrights reserved to Ronen Arbel 20125

6. Customer Satisfaction – Is it enough? In many cases, higher customer satisfaction does not lead to higher customer loyalty The opposite is also true – customer loyalty can be retained with low customer satisfaction – For Example- MicroSoft Copyrights reserved to Ronen Arbel 20126

7. Limitations of Customer Satisfaction Why, then, do even highly satisfied consumers defect? Why is CS a bad predictor of a buyer’s intention to allocate business to a certain supplier? Why do so many customer-relationship management (CRM) projects fail? Copyrights reserved to Ronen Arbel 20127

8. What is Lock in? a customer dependent on vendor for products and services unable to use another vendor without substantial switching costs Copyrights reserved to Ronen Arbel 20128

9. Customer Loyalty Customer loyalty in industries with significant switching costs is much higher. In extreme cases, customers become the economic hostage of original brand selection. Copyrights reserved to Ronen Arbel 20129

10. Examples of Lock-in Copyrights reserved to Ronen Arbel 201210 SatisfactionLock-inLoyaltyExample High Gmail LowHigh Microsoft HighLowMedCell Phones

11. What is the problem? If product elements relevant to customer satisfaction can easily be copied by competitors, their long- term competitive advantage is zero. Copyrights reserved to Ronen Arbel 201211

12. Example - Hotels 50% of Hilton’s revenues are from 3% of their customers Copyrights reserved to Ronen Arbel 201212

13. Example - Airlines Copyrights reserved to Ronen Arbel 201213 What happens if you switch to another airline?

14. Example - HP Copyrights reserved to Ronen Arbel 201214 What happens if we switch Printer?

15. Why Are we Locked In? Copyrights reserved to Ronen Arbel 201215

16. Why Are we locked-in to Gmail? Copyrights reserved to Ronen Arbel 201416

17. Pricing

18. Pricing Strategy First question – What are you selling ?  A product ? The Printer  A consumable – the ink  A service – printed material Second Question – From which of the above will you gain the most profits?

19. Price of Printer vs. Ink Copyrights reserved to Ronen Arbel 201419

20. Price of Ink Copyrights reserved to Ronen Arbel 201420

21. Value Based Pricing Copyrights reserved to Ronen Arbel 201421

22. Pricing Strategies Cost + Premium pricing Demand-based pricing Price Discrimination Copyrights reserved to Ronen Arbel 201422

23. Price vs. Value/Quality Copyrights reserved to Ronen Arbel 201423

24. Selling different products in a single package – Content Subscriptions to cable TV, to magazines CDs (bundle of songs) Software: ‘office suite’ – Infrastructure Computer systems Audio equipment (mixed bundling) Photocopier (machine + maintenance) Introduction Bundling - Introduction

25. CheckPoint Case Study Copyrights reserved to Ronen Arbel 201425

26. CheckPoint Mission Copyrights reserved to Ronen Arbel 201426 worldwide leader in securing the Internet.

27. CheckPoint Blue Ocean Copyrights reserved to Ronen Arbel 201427 Internet very new at 1993 Built the first firewall

28. CheckPoint Global Brain Copyrights reserved to Ronen Arbel 201428

29. CheckPoint Innovator’s Dilemma Copyrights reserved to Ronen Arbel 201429

30. CheckPoint Early Adopters Copyrights reserved to Ronen Arbel 201430

31. CheckPoint Chasm Copyrights reserved to Ronen Arbel 201431

32. Mainstream Adopters - SMBs Copyrights reserved to Ronen Arbel 201432

33. CheckPoint Positioning Copyrights reserved to Ronen Arbel 201433 worldwide leader in securing the Internet

34. CheckPoint Branding Copyrights reserved to Ronen Arbel 201434

35. CheckPoint Network Effect Copyrights reserved to Ronen Arbel 201435 Has achieved a critical mass of users : – 100% of Fortune 100 companies – 98% of Fortune 500 companies Pre-Critical mass -

36. CheckPoint Lock-In Copyrights reserved to Ronen Arbel 201436 Exit Barriers for checkpoint customers

37. Checkpoint – Pricing and Bundling Copyrights reserved to Ronen Arbel 201437