Marketing class 2

Slide 4:
What is marketing?
Marketing is whatever is left after everyone elses jobs have been
defined.
Depends who you work for.
No one ever paid more for something they could get for less
somewhere else.
If you want to win on price, you must be a low cost producer
o Am I innovative, efficient,
We dont really control price.we ride on the coat tails of R&D or
market demands
What if were fighting for market share in an industry where all the
products have exact same quality and price.
Marketing is important in industries where companies are in a
battle of equals.
o P&G, Kraft
When does market size become important?
o Maybe the market is so poor, that theres no room for price
premium
o No cost advantage
Blue ocean strategy
You look for a new user for your technology, or a new technology
to bring to your user.
Strategies
Product Differentiation
Product superiority
Low cost production
Operating efficiency
o Total quality movements
Market share strategies
o Customer intimate
o Market focus- you must focus your efforts to maximize your
Should you be the best? Cheapest? Most focused?
Most important part of marketing is market segmentation
If you cant be one of the top 3 in a market, then you better be
super specialized and appeal to people who have a willingness to
pay
o If youre not top 3.then youre stuck in the middle

Five Mission Critical Matters

Am I selling to the right kinds of customers?
o I need to know the criteria by which my product is being
judged
o Always mention your target market and define the criteria
by which you are being judged!!
Do I have the right competitive advantage
o Standards of performance that we need to beat in order to
become the company of choice
o Can I defend my turf?
o Am I showing customers that I can be THEIR competitive
advantage?
o The most successful new products do not come out of
marketing, but R&D
Why? Because in marketing you conduct market
research, and consumers cant possibly think of or
imagine what that product could be!
Positive attitudePositive intentionPurchase
The best indicator of future behaviour is past
behaviour.
Who are my customers? Where do I compete? Who are my
competitors? How should I compete?
Strategy is a statement of potential, but execution determines
success
o Implementation and project management
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The basis of Marketing objectives:
Customer Analysis: Who buys what, where,when, how and why
1. Determine basis of segmentation
2. Assess Market-company fit Define quality and Identify
segments you can serve
Company Analysis
1. Given your objectives and resources.what can you do, for
whom, where and when?
Competitor Analysis
1. Determine basis of differentiation
2. Assess Produce company fit
a. Evaluate relative quality and identify competitors you can
beat

Develop Product market fit

Does a market exist for your intended Price/Quality level?
If yes: Objectives focus on activities needed to communicate/
deliver/insulate positioning
If No: objectives focus on the implicated remedial actions or
new market entry.

Marketings Mission: Executing the Value Proposition (Positioning)

Should be able to recite in 90 seconds or less
Within 90 seconds of meeting someone, we decide how relevant
someone should be to our lives.
Part 1: What we do (Creative brief):
For:
Target Market
Who Want:
Why are they buying my
product?
The consumption problem
What need do you serve?
Our product is a
Our portion of the solution
How do we want them to think
of us?
(How and when do they think
about you in connection with
that need.)
That Feature
Key benefits provided
(Whats the one or two things
you want them to remember
about you?)
As measured by
How the customer infers
quality
How

do you know if a piece of advertising is good?

Who was the target market for the ad?
Where was it shown?
Did it have a tone that suits the market?
Does it sound genuine and relevant?
Does it communicate our UNIQUE SELLING PROPOSITION (USP)
Frequency or impact?? Do you spend $$ on production or
presentation?
Does it convey our solution?
Does it have a call to action?

IS IT ON STRATEGY?!?!??!
GREAT CREATIVE VS. GREAT CREATIVE THAT SELLS
Part 2: Why We Will Win:
Unlike
Our product provides
As supported by

And protected by

Our main competitors

Key points of difference
What makes our difference
possible
(Why they should believe us
today)
Why the competition cannot easily
overcome it
(Why they should believe us
tomorrow)

The Margin Challenge in an uncertain economy

Lowering price results in INCREMENTAL PRODUCT DEGREDATION
If you cut price first, you are forced to go around and look for
ways to cut costs in other ways.
The only way to create value is to cut costs
Value is a Ratio of Quality-to Price
We can manipulate either the numerator, Quality or the
denominator Price
o Maintain Quality- Reduce Price
Not a good strategy.creates hell
o Reduce Quality a little- Reduce price a lot
Law of diminishing returns
Quality is measured against expectations and
expectations are measured against advertising.
o Increase quality- maintain price
Value added strategies
Instead of dealing with product on a total cost basis
and add services.
Those costs will come back to haunt you.
o Raising quality a lot, raising price a little
Centurion members- you are allowed to book one
free flight per year, the value of the flights can equal
the initiation fees.

Taking money from you in one way and then giving it

back to you in a more valuable way.
If you lower your price, there are no barriers stopping your
competitors to do so as well.
If you took the profit loss and used it instead to give the
customer another feature, it takes longer for companies to
replicate.
o This is your strategic window of opportunity.

Marketing class 3
What do you do if tyour products value cant be quantified?
Its not a diamond, its a symbol of love
Computer as a means of playing games
o Competition: Playstation, apps on your phone, anything
that letsyou play games
o What if it is: an instrument that helps you improve your
productivity, an instrument that helps you get a job
o THE COMPETITION CHANGES AND NOT JUST THE VALUE!
The number one way to sell a product is to solve a probel that no one
else can solve!

The FOUR LEVELS OF DIFFERENTIATION

Solve a problem no one else can solve
Sole the problem in a unique way
o Features value added services bundling solutions
experiences/emotions
Same problem and solution, better real quality
Same problem, solution and real quality, better perceived quality
o E.g. selling perfume, that smells different on every person
Associate it with a personality, a lifestyle etc.
If we look at marketing expenditures as a percentage
of total sales, they are lowest when demand is high,
and highest when demand is low
High demand generally comes with products
that are revolutionary, technologically
advanced and superior to others
Until you have an alternative, you will not need
to spend on marketing

Imagine another one comes onto the market, so now

that there is competition
theyll all get you better, but ours is more
effective.

The Viagra Rule- your value proposition

o People DO NOT buy products or services, they buy
solutions to problems.
o Customer willingness to pay a premium price increase.
With the importance of the problem being solved
The complexity of work
The more complex the problem that your
solving, the less competition that youre going
to find
Complex problem= complex integrated
solutions
E.g. ou would pay a different amount for your
lawn to be cut if it was a 20 ft square vs. a 3
acre property with unleveled ground.
Great advertising for complex products talks
about
The number of alternative suppliers
o Do NOT TELL PEOPLE WHAT YOU DO- create an association
with the PROBLEM YOU SOLVE
o LOOK FOR GROWTH by offering products/services tied to
the same problem.

EXAMPLE
Viagra was first investigated as a heart healthcare
product.
Launched as a heart medication:
Entering the largest market in the world
With the babyboomers reaching maturity, the
market was going to grow substantially, but the
competition would also increase.
Some of the competition in heart medication
were just lifestyle changes, and had no price at
all.
So intensely competitive, that they thought
they could only sell it for $3
Launched as an erectile dysfunction product:
No competitors
They could charge $30/pill

They can sell to a very small market, and still

make as much money if not more than in the
heart medication market.
o If Im in the business of selling knowledge, and I want to
raise the price 20x, Id logically have to increase the
amount of learning by 20x
This is not the case!
Just become more effective in communicating the
benefits that MATTER.
o We dont buy products or services, we buy solutions to
problems
o EXAMPLE
Vaseline
Sell in large tub for putting on a babies bottom
and it sells for $4
Sell in tiny bottle to put on lips and it sells for
3x that!

How does something gain importance in the eye of the

consumer?
o What needs are currently not being satisfied within
society? Build a product to solve this.

Dont Commoditize Your Value

The Telephone Rule
People are creatures of habit and convenience- your task is to
make it their habit to think of doing business with you.
Key Question: What is the problem the customer is looking
to solve when they pick-up the phone and choose to call?
o Knowing the problem lets you know where to advertise,
where to sell the product.
If the need is generic, your prices will be too!
Do you build an association with distinctive problems OR are
you trying to be all things to all people?

You can sell 4 things to a customer

o Low Price
Focus on efficiency/low cost/volume
Invest in production/sourcing
Call to action advertising
o Product

Focus on superiority
Invest in Innovation
Rational Advertising
o Concept/Idea
Focus on being different
Invest in communication
Emotional advertising
o Experience
Focus on people/culture
Invest in training/values
Influencer/social media
All products or business arenas are centers around one of four of
these concepts.
Once you know which one youre going with, your tone,
communication, operations etc. will follow.

Customer Value versus Technical Quality:

You want to beat walmart, you cant compete on price.
o You must sell on some other standard
o You must become the gold-standard of retail
o Create a customer-experience
How to improve the retail experience
o Personalize everything
o Help the customer find their way
o Explain product differences
o Show them you care
o Show them why the get what they pay for
Three cardinal sins of marketing:
1. Dont make the customer unhappy
2. Spending money and time making the customer unhappy
3. Leaving a lot of money on the table
The four kinds of buyers that exist in every market
Markets are not homogenous
Low quality for low price, or high price and high quality
o Both customers are getting good value, but in very
different ways
Price buyer/ compliance buyer
Just give me something that works
Not buying a product, but a compliance with a requirement
Buys lowest cost product with minimum acceptable quality

 E.g. buys balloons in a dollar store

Convenience buyer
2 classic moves that has an immediate impact on the bottom line:
Drop unprofitable products
Renegotiate with suppliers to lower costs
When you create a dollar through a non cost mechanism, the value is
always worth less than a dollar.
Relationship Buyer
Customer, I dont want just greater market share, I want a
greater share of your wallet.
Building loyalty is not about selling your product to more people,
its about selling more product to the customers you already
have.
Share of wallet is as important as market share
Loyalty is not about doing the same things over and over again,
its about re-engineering it to increase the value for both parties.
If youre in a relationship with a buyer, am I doing anything that
goes beyond what my competition could do on a first date with
this customer.
The same factors that drive us in human relationships also drives us in
commercial relationships.
If you want to sell at a premium price, you have to spend time
qualifying the account, finding out why their buying, not what their
buying.