1. DR. DAWNE MARTIN MKTG 241 FEB. 24, 2011 Innovation, Value & Positioning

2. Administrative Stuff Customer/Competitor Analysis: Thursday, Feb. 23 Tuesday, Feb. 28: Quiz 2 – Chap 4 – 6, Business Model Thursday: Chapter 6 & Business Model Development Learning Objectives  To review value creation and map out your value proposition  To investigate and design a product positioning strategy.  To reassess what you need to know about customers and customer perceptions of competitors in your marketing research.

3. © 2009 Prentice Hall Rethinking Marketing, 1st Edition 5-3 Three Simultaneously Challenges Anticipate and respond to change Leverage core competencies to exploit new market realities Learning faster and innovating better to explore new territory

4. © 2009 Prentice Hall Rethinking Marketing, 1st Edition 5-4 Creative Destruction: The Kissing Cousin of Opportunity Entrepreneur is the innovator who  “Shocks” and disturbs economic equilibrium  Exploiting and creating uncertainty  Creative destruction  Old replaces the new

5. © 2009 Prentice Hall Rethinking Marketing, 1st Edition 5-5 7 Outcomes of Entrepreneurial Creativity ? Wealth Employment Growth New ventures Change New markets Innovation (products, service, processes) Value

6. © 2009 Prentice Hall Rethinking Marketing, 1st Edition 5-6  In curve A, and B the optimal time period during which to pursue an opportunity with a given business concept is during the shaded area.

7. © 2009 Prentice Hall Rethinking Marketing, 1st Edition 5-7 i. Ikea discovered its “flat-pack” furniture concept when an employee, Gillis Lundgren, cut the legs off a bulky table he had just purchased because it would not fit into the trunk of his car. ii. Wal-Mart store manager in Crowley, Louisiana, tried to scare off shoplifters by introducing “store greeters” rather than security guards — this new perspective soon became a signature of Wal-Mart stores. iii. American Express Travelers Checks were born out of the frustration of an Amex executive who tried unsuccessfully to cash his letters of credit while on holiday in Europe. iv. Skip Yowell & JanSport - http://www.jansport.com/skip_yowell_collection/js_ski p_yowell_collection.html Examples of Great Ideas

8. © 2009 Prentice Hall Rethinking Marketing, 1st Edition 5-8 Company perspective  Value must be captured or appropriated Market perspective  Value with innovation, called “value innovation”  Southwest Airlines offers outstanding customer service and rock-bottom prices, defies traditional marketing logic Customer perspective  Meeting needs  Solving problem better than competitor  Innovative products and services that were initially rejected by consumers: the microwave, CNN, the Sony Walkman, and Boeing’s 747 Value

9. © 2009 Prentice Hall Rethinking Marketing, 1st Edition 5-9 Company perspective  Value must be captured or appropriated Market perspective  Value with innovation, called “value innovation”  Southwest Airlines offers outstanding customer service and rock-bottom prices, defies traditional marketing logic Customer perspective  Meeting needs  Solving problem better than competitor  Innovative products and services that were initially rejected by consumers: the microwave, CNN, the Sony Walkman, and Boeing’s 747

10. Economic Benefits and Value Creation

11. Differentiation and Customer Value

12. Positioning Strategy Study and understand the market Critical strategic decisions  Choice of the target segment.  Determine specifications to meet the target segment’s needs  Determine the product or service’s competitive positioning from the customer’s perspective Copyright ©1997 Harcourt Brace & Company. All Rights Reserved.

13. Segment Positioning Value Proposition: all the key elements of the situation and benefits the target customer is looking for in purchase Segment Positioning Strategy: product features, relative price, added value through channels and promotion. Acid Test of Positioning – storyboard target slogan, benefits and products – participants select storyboards based on their needs – Do they match?

14. Mapping Competitive Positions Perceptual Mapping: two-dimensional map to compare the consumer’s image of competing products on two critical performance features  Product position relative to competitors  Product position relative to ideal points Uses for perceptual mapping  Unique product differentiation & positioning  Image differentiation  New product or service Copyright ©1997 Harcourt Brace & Company. All Rights Reserved.

15. Effectiveness (efficacy) Gentleness (side effects) Demand void Private-label aspirin Anacin Bayer Buffering Advil Generic acetaminophen Segment cluster 1 Age=5+5 Use: fever Segment cluster 2 Age=70+10 Use: arthritis Segment cluster 3 Age=30+10 Use: aches Extra-Strength Tylenol Tylenol Datril Copyright ©1997 Harcourt Brace & Company. All Rights Reserved. An Intuitive Map of the Analgesic Market

16. Oldsmobile Buick Chrysler Mercedes Cadillac Lincoln BMW Pontiac Porsche Datsun Toyota VW Plymouth Dodge Ford Chevrolet #1 #3 #5 #2 #4 Mercedes Porsche??? Toyota Nissan VW Honda Mazda Chevrolet Pontiac Oldsmobile Buick Cadillac The Planned Repositioning of Pontiac High price Upscale Luxurious Low price Practical Very practical Gives good gas mileage Affordable Expressive Sporty- oriented Conservative Family- oriented Conservative looking Appeals to older people Spirited performance Sporty looking Fun to drive Appeals to young people Has a touch of class A car I’d be proud to own Distinctive looking Source: Adapted from John Koten, “Car Makers Use ‘Image’ Map as Tool to Position Products,” The Wall Street Journal, March 22, 1984, 31. Copyright ©1997 Harcourt Brace & Company. All Rights Reserved.

17. Major Sources of Competitive Advantage

18. Defining your Value Proposition and Positioning Identify the market Identify the key issues/desires of that market as they relate to your product Identify the key benefits your product/service will provide Identify product/service characteristics that will provide those benefits

19. Defining your Value Proposition and Positioning Investment Program A  How to Beat Inflation and Higher Taxes  Key Benefits  Capital Appreciation  Minimal Taxation  Products  Growth Stocks  Municipal Bonds  Growth Funds Investment Program B  Special Help for Women with Special Money Problems  Key Benefits  Growth/Appreciation  Safety  Products  Growth Mutual Funds  Blue-Chip Stocks  High-Grade Bonds