1. 1-1 Overview  Midterm II Discussion  Marketing Plan Lecture  Midterm III and Presentation Discussion  John Jolliff Presentation  Country Insurance and Financial  NPD for Service-based Industry

2. 1-2 Midterm II  Overall Improvement..  221 and 222 out of 250  Suggestions…

3. 1-3 Midterm II  Positive Comments  Pretty good screening  Much better assumptions this time around, much better information (could still use more work here)  More Critical Thinking

4. 1-4 Midterm II  Suggestions for Improvement  Make it readable, lead the reader through what is going on, makes sure that everything is crystal clear at all times  Maybe try to explain what you doing, instead of just launching into it?  Send all files to me named in the way that I named them on the grade sheets (Key - 002)  Also, grade sheet issue, send the grade sheet with names entered into…  I'm making comments with voice recognition software, so sometimes things slip by... if something doesn't make sense, let me know  Additional comments written in hard copy, I talk about these it sometimes in the grade sheet, but sometimes not…

5. 1-5 Midterm II  Suggestions for Improvement  You don't get points taken off for when I question your numbers (forecast, estimates, etc.)... I'm just trying to help out…  Confuse ATAR and test marketing stuff….  Marketing support isn't free... if you tell me that you going to reach 200 million customers, and then don't talk about how much that's going to cost anywhere else in the paper, that's an issue  Confusion of repeat rate and word-of-mouth in ATAR…  Don't make your concept statement a sales tool  Make it easy to read…this makes a difference…

6. 1-6 Midterm II  Suggestions for Improvement  Adjust screen for your needs  Probably error on conservative side with screen assumptions… or at least give a low, medium, high  Use stuff that's relevant, don't you stuff that isn't  Don't apologize for guessing  Don't say you are going to outsource this, then go public, and make millions of dollars…  Reverse code appropriate items on screen

7. 1-7 Midterm II  Suggestions for Improvement  Multiple screens can be helpful  Think of your audience when writing (Bass model detailed in a easier to understand way)  Products don't magically appear on shelves, they come from personal selling as a part of market requirements  Use hyphens  Use an intro  Footnotes … do this in a way that makes sense and it makes it easy for me… it's all about me

8. 1-8 Midterm II  Suggestions for Improvement  Graphs better, more visible, easier to read, more legible  You can talk to people and get quick and dirty answers quite easily… dog collar expert kind of idea  Think about the information that people need, and give it to them... Nick's example of the screen

9. 1-9 Midterm III  Launch  Strategic Launch Planning  Implementation of Strategic Plan  Market Testing  Launch Management Plan

10. 1-10 Midterm III  Presentation  Strategic Launch Planning  Implementation of Strategic Plan  Market Testing  Launch Management Plan

11. 1-11

12. Marketing Planning 1 McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.

13. 1-13 Marketing Plan A marketing plan is a written document containing the guidelines for the business center’s marketing programs and allocations over the planning period.

14. 1-14 Time Horizons for Marketing Plans Time Period Consumer Products Industrial Products Services 1 year62%45%65% 3 years558 5 years15173 Long term436 Indefinite022 Other142816

15. 1-15 Hierarchy of Planning SBU Planning Annual Marketing (Business) Plan Corporate Strategic Planning Group or Sector Planning

16. 1-16 Objectives of a Marketing Plan 1.Define the current business situation. 2.Define problems and opportunities facing the business. 3.Establish objectives. 4.Define the strategies and programs necessary to achieve the objectives.

17. 1-17 Objectives of a Marketing Plan cont. 5.Pinpoint responsibility for achieving product objectives. 6.Encourage careful and disciplined thinking. 7.Establish a customer/competitor orientation.

18. 1-18 Frequent Mistakes in the Planning Process  The speed of the Process  The Amount of Data Collected  Who does the Planning?  The Structure  Length of the Plan

19. 1-19 Frequent Mistakes in the Planning Process (cont)  Number of Courses of Action Considered  Who Sees the Plan  Not Using the Plan as a Sales Document  Insufficient Senior Management Leadership  Not Tying Compensation to Successful Planning Efforts  Frequency of Planning

20. 1-20 Marketing Planning Sequence Update historical data Data analysis Develop objectives, strategies, programs Develop financial documents Negotiate final plan Measure progress toward objectives Audit Collect current situation data

21. 1-21 Marketing Plan Summary I.Executive summary II.Situation analysis A.Category/competitor definition B.Category analysis C.Company and competitor analysis D.Customer analysis E.Planning assumptions

22. 1-22 Marketing Plan Summary cont. III. Objectives IV. Product/brand strategy V. Supporting marketing programs VI. Financial documents VII. Monitors and controls VIII. Contingency plans

23. 1-23

24. Marketing Planning 1 McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.

25. 1-25 Bases of Competition I.Customer-oriented Who they are – competition for same budget When they use it Why they use it- benefits sought II.Marketing-oriented: advertising and promotion Theme/copy strategy Media Distribution Price

26. 1-26 Bases of Competition cont. III.Resource-oriented Raw materials Employees Financial resources IV.Geographic

27. 1-27 Levels of Competition Diet lemon limes Baseball cards Fruit flavored colas Coffee Diet Coke Diet Pepsi Diet-Rite cola Bottled water Lemon limes Regular colas Beers Juices Wine Fast food Tea Video rentals Ice cream Product form competition: Diet colas Product category competition: Soft drinks Generic competition: Beverages Budget competition: Food and entertainment

28. 1-28 Levels of Competition: Implications for Product Strategy Budget Generic Product Category Product Form Competitive Level Convince Customers that the Brand is Better than Others Convince Customers that the Product Form is Best in the Category Convince Customers that the Product Category is the Best Way to Satisfy Needs Convince Customers that the Generic Benefits are the Most Appropriate Way to Spend their Money Product Management Task

29. 1-29 Energy Bar Competition Odwalla Power Bar Balance Bar Clif Energy Bars Snack/Health Bars Healthy Snacks Other Snacks Nutrigrain Bars Slimfast Bars Granola Bars Fruits Nuts Juice Crackers Chips Candy

30. 1-30 PDA Competition Level of Competition DefinitionCompetitorsNeed Satisfied Product form POAsFull-features Palm Pilot VII Compaq Aero Casioplus integrated communication Cassio Poeia Personal information management plus Product categoryPIMs Palm III Royal Casio PV-100 PIM only Generic computers Notebook/ subnotebook Paper-based solutions IBM Toshiba Many others Rolodex Day Timer Other solutions to the above BudgetBusiness items costing $100-$1,000 Fax machines Personal copiers Cellular phones Furniture (e.g. Steelcase)

31. 1-31 Managerial Judgment of Competition MarketsSameDifferent Product/Services Same Different A C B D

32. 1-32 Defining Competition with Brand Choice Data Regular All brands RegionalNational Diet Family brand 1 Family brand 2 Cola Non-Cola

33. 1-33 Defining Competition with Perceptual Mapping Moist Needs refrigeration Tapioca pudding mix Local mix Pudding mix Chocolate torte mix Dzer ta Jell-O Canned pudding Individual pie Hostess cupcakes Quick bread mix Good for a coffee break As a formal dessert Homemade cake Bakery cake Homemade cookies Cheese cake mix “Snackin’ Cake” mix Frozen cake Layer cake mix “ Stir’n Frost cake mix Takes a long time to prepare Bundt cake mix Custard mix Boston crème pie mix “Light Style” cake mix Coffee cake mix Bakery cookies Pillsbury cookie dough Cookie mix Easy to carry with me In my school work lunch Between meal snack Pepperidge Farm cookies Oatmeal cookies Frozen pie Homemade pie Date bar mix Brownie mix

34. 1-34 Methods Versus Competition Levels and Information Required

35. 1-35

36. Marketing Planning 1 McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.

37. 1-37 Aggregate Category Factors  Category size  Category growth  Stage in product life cycle  Sales cyclicity  Seasonality  Profits

38. 1-38 Attractiveness of Market Variables

39. 1-39 Category Attractiveness over the Product Life Cycle Stage of product life cycle Category size Category growth Category attractiveness Introduction Small Low Growth Moderate High Maturity Large Low Low/high Decline Moderate Negative Low Sales Time

40. 1-40 Category Factors  Threat of new entrants  Bargaining power of buyers  Bargaining power of suppliers  Current category rivalry  Pressure from substitutes  Category capacity

41. 1-41 Environmental Factors  Technological  Political  Economic  Regulatory  Social

42. 1-42 Factors in Assessing the Structure of Industries  Threat of new entrants  Bargaining power of buyers  Bargaining power of suppliers  Amount of intracategory rivalry  Threat of substitute products or services

43. 1-43 Buyer Bargaining Power is High When:  Product bought is a large percentage of the buyer’s cost.  Product bought is undifferentiated.  Buyers earn low profits.  Buyer threatens to backward integrate.  Buyer has full information.  Substitutes exist for the seller’s product or service.

44. 1-44 Supplier Bargaining Power is High When:  Suppliers are highly concentrated, that is, dominated by a few firms.  There is no substitute for the product supplied.  Supplier has differentiated its product or built in switching costs.  Supply is limited.

45. 1-45 Major Characteristics of Categories Exhibiting Intensive Rivalries  Many or balanced competitors  Slow growth  High fixed costs  Lack of product differentiation  Personal rivalries

46. 1-46 Impact of Category Factors on Attractiveness

47. 1-47 Conceptualizing Political Risks

48. 1-48 Projected Change in U.S. Population 1995-2005

49. 1-49 U.S. Income Inequality

50. 1-50 Share of Food Purchases

51. 1-51 Energy Bars: Category Attractiveness Summary Aggregate Market Analysis Category Size $504 mm energy bar category in 2001 Attractiveness ++ Energy bar category contains four primary brands, plus their sub- brands and over 100 smaller players

52. 1-52 Energy Bars: Attractiveness Summary (cont) Aggregate Market Analysis Category Growth Average annual growth rate of 57% between 1997 and 2001 Attractiveness ++ U.S. energy bar category sales forecasted at $750 mm in 2003 for a continued expected growth of 22% IIndustry reports suggest current annual growth for the energy bar market 25%-30% CCategory expanding: new competitors are entering, existing brands are expanding with new products and flavors, market penetration and usage occasion is increasing

53. 1-53 Energy Bars: Attractiveness Summary (cont) Aggregate Market Analysis Product Life Cycle Both the category and Odwalla Bars specifically are both securely in early stages of growth phase Attractiveness ++

54. 1-54 Energy Bars: Attractiveness Summary (cont) Aggregate Market Analysis Sales Cyclicity While energy bars are premium- priced for their convenience and nutrient level, the base dollar point of $1-$3 per bar is low such that they are not directly impacted by GDP variations Attractiveness +

55. 1-55 Energy Bars: Attractiveness Summary (cont) Aggregate Market Analysis Seasonality Year-round sales Attractiveness ++ Category overall may experience a slight sales increase in the spring and summer month during “race season” and as users are engaged in more outdoor activities and desire quick, portable energy.

56. 1-56 Energy Bars: Attractiveness Summary (cont) Aggregate Market Analysis Profits As most major competitors are within the product portfolios of larger consumer goods companies, it is difficult to benchmark profitability within the energy bar category specifically. Nevertheless, the recent acquisition of the leading competitors reflects an expectation for strong profit potential. Attractiveness + Increased category competitiveness may lead to lower pricing and profits

57. 1-57 Energy Bars: Attractiveness Summary (cont) Category Analysis Threat of New Entrants/Exits Strong potential for new competitors given that the category is profitable, fairly easy to enter, and increasingly relevant to consumers. Attractiveness - FFurther, with the “big three” brands strongly in place [PowerBar, Clif (including Luna), and Balance], it is most likely that small competitors will enter through the natural foods channel, creating more direct competition with Odwalla bars.

58. 1-58 Energy Bars: Attractiveness Summary (cont) Category Analysis Economies of Scale Competitors within the broader category of snack bars would likely experience economies of scale with a relatively easy entry into the energy bar market Attractiveness -

59. 1-59 Energy Bars: Attractiveness Summary (cont) Category Analysis Capital Requirements Within the mainstream energy bars, differentiation is largely through brand, taste, and flavor variety. With the exception of targeted nutrition products like protein- or carbohydrate-specific products, nutritional levels are largely at parity. Attractiveness -

60. 1-60 Energy Bars: Attractiveness Summary (cont) Category Analysis Switching Costs Switching costs are very low, opening the door to potential competitors Attractiveness -

61. 1-61 Energy Bars: Attractiveness Summary (cont) Aggregate Market Analysis Distribution As there are not specialty requirements for distribution (refrigeration, etc.), it would be very easy for any of the “center of the store” consumer food companies to enter the category and add on to their existing distribution structure. This is particularly true for companies that have an established relationship with the category buyer. Attractiveness - Shelf life

62. 1-62 Energy Bars: Attractiveness Summary (cont) Aggregate Market Analysis Bargaining Power of Buyers Lots of competitors with relatively similar options distinguished by brand and taste keeps retailer power strong Attractiveness -

63. 1-63 Energy Bars: Attractiveness Summary (cont) Aggregate Market Analysis Bargaining Power of Suppliers As the suppliers of raw inputs for energy bars are largely agricultural, the commodity nature of agriculture keeps prices and supplier power low. While still relatively low, supplier power will be higher for nutrient supplement suppliers Attractiveness +

64. 1-64 Energy Bars: Attractiveness Summary (cont) Aggregate Market Analysis Pressure from Substitutes Considerable Attractiveness - Fresh fruit, cereal bars, smoothies, candy bars, etc. are all suitable portable substitutes for the mainstream energy bar consumer. True athletes are most likely to substitute with higher nutrient level energy bars

65. 1-65 Energy Bars: Attractiveness Summary (cont) Aggregate Market Analysis Category Capacity Appears to be high given current scenario of more than 100 manufacturers and many more products. But, still, it is too early to determine true capacity Attractiveness +

66. 1-66 Energy Bars: Attractiveness Summary (cont) Aggregate Market Analysis Current Category Rivalry Very high. Differentiation largely by taste and flavor variety, and by targeting unique market segments Attractiveness -

67. 1-67 Energy Bars: Attractiveness Summary (cont) Environmental Analysis Technological Technology could play a significant role with respect to manufacturing efficiencies and taste profiles Attractiveness +

68. 1-68 Energy Bars: Attractiveness Summary (cont) Environmental Analysis Economic While premium priced, energy bars have so far seemed to fair the recession well. Still, however, if economic conditions persist, consumers may opt for less expensive alternatives like fresh fruit or non-energy snack bars Attractiveness +

69. 1-69 Energy Bars: Attractiveness Summary (cont) Environmental Analysis Political/ Regulatory The energy bar category is regulated by the FDA as are other food products. There are not to our knowledge, however, additional regulations directed toward the energy bar category. Attractiveness 0

70. 1-70 Energy Bars: Attractiveness Summary (cont) Environmental Analysis Social As lives get busier and mealtimes shrink, energy bars will continue to be an acceptable meal replacement. Attractiveness ++

71. 1-71 PDA: Category Attractiveness Analysis Aggregate Market Factors Attractiveness Market Size $2.3 billion Market Growth Product Life Cycle 0%-40% + + + Growth Profits Sales Cyclicity Good one Sales Seasonality one +/0+/0 + +

72. 1-72 PDA: Category Attractiveness Analysis Category Factors Attractiveness Threat of New Entrants Moderate; R&D required, distribution Bargaining Power of Buyers Bargaining Power of Suppliers Low, high switching costs + 0 0 Moderate; PCs use similar components Category Rivalry Pressure from Substitutes Intense High Category Capacity Not a problem for now - - +

73. 1-73 PDA: Category Attractiveness Analysis Environmental Factors: Attractiveness Technological Very sensitive Political/ Regulatory Economic Telecommunications deregulation + - + Relatively inexpensive Social More work done on the road +