Transcript Document 7175658

Lecture 4 – “Marketing I”
Steve Montgomery
Introduction To The Business
Environment
● What to do when someone’s not telling you what to do
● Topics covered:
• Course introduction and Overview of corporate structure (1
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•
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2
session)
Fundamentals of business strategy (2 sessions)
Introduction to Marketing (2 sessions)
Overview of Accounting and Finance (2 sessions)
Project Valuation and ROI (2 sessions)
Putting it all together + review (1 session)
5/20/2016
Marketing
● Purpose of Marketing:
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“Create, communicate and deliver unique value to customers so that the
organization can capture a portion back” – D.J. Turner, UW Assoc. Dean
● Why you should care:
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Good marketing = people buy what you have to sell
Bad marketing = people don’t buy what you have to sell
● An effective market strategy is synergistic with your company’s
global strategy - and a way to create a lasting mental link
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Marketing is the design of a psychological construct
You are creating positive associations in buyer’s minds. How do you do
that?
End goal:
Understanding your business and how you
reach customers allows you to pick smart
projects and sell them to management
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Lecture 4: Marketing 1
● Marketing 101:
• The purpose:
Marketing as a design exercise
● How do you identify the unique niche your
product/project occupies?
• The 5 C’s: Context, customers/collaborators,
competitors, company
• The 4 P’s: Product, price, place, promotion
● Springfield Baseball
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Marketing I
Fad Purchasing (From Last Time)
● Needs/wants of customers can be fickle and can shift with
the times
• Fads are a “lens into current social events and values” [1]
– Remember the pet rock!
– The engineer lives in the world of the rational and logical; human
beings can be anything but…rational and logical.
• Fad purchases are the result of:
– A collection of individuals enabling affinity (connection) via a group
(think parents buying the hot Christmas toy)
• Examples: Rubix cube, Cabbage Patch dolls, Pokemon, etc.
– Purchases driven by the status-conscious
• Examples: Clothing, accessories, some cars, seasonal homes
● What are people who buy fad purchases “hiring” the
product to do?
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What Is Marketing?
● Marketing is a design process:
• Subject to assumptions, boundary conditions, safety
factors, costs and specifications
● Just like every other design problem, the above
factors must be balanced and aligned with the
overall program goals
● Good marketing mixes math, customer focus,
and human psychology in equal parts
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What Is Being Designed?
●
What is being designed?
•
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A message, with the aim of imparting positive imagery in a
target buyer’s consciousness
Why design a message?
•
Because, as we’ve seen:
The best technical design doesn’t always win
Customers make buying decisions based on perceived value
1.
2.
●
What does the design target?
•
The sensory and retention systems of one of the most complex
machines on the planet, the human brain
Ideally: Product and message are
co-designed so as to optimize
*both*
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Marketing = More Than
Advertising
● One perception is that marketing is just the process of designing ads
● NO! Marketing:
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…helps identify the needs/wants of customers
…used properly, influences the design process of the product
…creates additional value by establishing the vital perceived value of
products
…determines the value a customer assigns to a product, and thus sets
the price
…and many more
● In short, marketing is a core component of your overall strategic plan.
It’s the voice you use to communicate with the outside world (i.e.,
your customers)
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End Purpose of Marketing?
● Just to repeat:
• “Create, communicate and deliver unique value to customers so
that the organization can capture a portion back in the exchange”
– D.J. Turner, UW Assoc. Dean
● Also:
• “Customers have money. Organizations want it. And marketing—
at its essence—is the approach to getting it.” – D.J. Turner
● And:
• Marketing is “Achieving organizational goals by discovering and
influencing the needs and wants of consumers and delivering the
desired benefits more effectively than competitors.” – E. Stearns,
UW Foster Business School.
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How Does This Relate To You?
● Your companies have to sell the technology you develop
• If you’re not working on things you’re company can’t/won’t make
money on…
● As current or future program/project leaders, your job is
simple:
• Marshal resources and secure funding & support for your
programs and ideas
● One of your primary roles is the program’s evangelist
• If your programs are misaligned with your company’s strategy –or–
you can’t communicate their intent to management, you will fail
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The Big Picture
How Can I Make ‘Better’ Marketing Decisions?
Subject of Today’s
Discussion
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Source: Dan Turner, UW
Marketing 101: The 5 C’s
● All designs need boundary conditions
● In marketing, these conditions are the 5 C’s:
• Context: (The business environment)
• Company/collaborators
• Competitors
• Customers
● The ideal project/product? One that lies at the
intersection of the above (all the above factors
line up so that your product matches up perfectly)
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The 5 C’s of Marketing
Context
Customers
Competitors
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Company &
Collaborators
Zooming In…
Customers
Money
Lost
Here
Get paid
here
Competition
intense here
Competitors
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Company &
Collaborators
Ideally…
Context
Customers,
Company &
Collaborators
Competitors
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● Align your offering with
exactly what your customers
want – maximizing the
exchange for you
● Create a local monopoly (by
offering much more than
anyone else)
• Your offering delivers real and
•
perceived value
Essence of Blue Ocean Strategy
= differentiation
The Five C’s, cont.
● Context:
• Is the operating environment
• What kind of industry is this?
• What shape is it in?
• What are the regulatory hurdles?
• What relationships exist between players?
• Porter’s 5 Forces live here
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Meet S3+ & Janet!
● You work for Shredder SnowSports (S3+), Inc. (The CEO says, “Our
products are a + over everybody else’s”)
● S3+ makes world-class skis, going head-to-head with K2, Salomon,
etc.
● S3+ is known for technical innovation, as they are located near a large
university known for its research prowess and proximity to mountains
(lots of collaboration with profs who like to ski)
● Mid-size market cap; known as a premium niche brand, but would like
to grow into a full-spectrum firm offering a range of products
● Janet is the VP of new products:
•
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Janet: “I heard from Steve (another VP) that you are a great strategist! I
read your Blue Ocean report and I need some help with our newest
launch – The Shredder Primo Snowboard!”
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More On The Shredder Primo
● Janet: “One of our biggest ski stars is
switching sports! Zedd Primo (über-cool
extreme skier) is going to do extreme
snowboarding next year and he wants us to
build the board he’ll ride. He’s going to
take on the most extreme terrain he can
find!”
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Context
● What’s the context of this market?
• (Operating environment, What kind of industry
is this?, What shape is it in?, What are the
regulatory hurdles?, What relationships exist
between players?, Porter’s 5 Forces)
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Building The 5 C’s
Context
●Recreational market
●International
competition
●Fun-type
(discretionary)
product
●Customers spending
less
●Subject to economic
cycles
●Seasonal/regional
●Very risky
●High buyer power
●Some gov exposure
●Limited # of places to
go
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Competition
Comp.&
Collaborators
Customers
The 5 C’s, cont.
● Competitors:
• Who are they?
• What are their relative strengths and
weaknesses?
• What connections do they have with
customers?
• What are their product offerings, either directly
or indirectly relevant to yours?
• SWOT lives here
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Janet On The Competition
● Janet says, “Well, lots of other companies
have been making boards for a long time.
Burton, Ride, Salomon, a whole lot of them.
We’re relative newcomers to this.”
● What should we do to characterize the
competition? (And provide input to our
product engineering team?)
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Building The 5 C’s
Context
●Recreational market
●International
competition
●Fun-type
(discretionary)
product
●Customers spending
less
●Subject to economic
cycles
●Seasonal/regional
●Very risky
●High buyer power
●Some gov exposure
●Limited # of places to
go
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Competition
● Offer a full range of
solutions
● Been in the game
longer than us
● Brand recognition
● Good at building
boards
● Existing disti
channels
● Contracts with ski
lifts
● Lots of
endorsements
● Have manfucturing
already
● Economies of scale
● Multiple suppliers
● Ski industry
● IP protection
Comp.&
Collaborators
Customers
The 5 C’s, cont.
● Company & Collaborators:
• Who are they?
• What are their relative strengths and
weaknesses?
• What connections do they have with
customers?
• What products do you offer?
• SWOT also lives here
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Janet on Company And
Collaborators
● She says, “We have a longstanding relationship
with Blingin’ Bindings. In fact, they’re our
exclusive partner for ski bindings. Their stuff is
well-matched to what our products are asked to
do, as Zedd works with them as well as us.”
● Do we have the internal resources to build this
board? Are we lined up with the right people?
Are they lined up with the right people?
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Building The 5 C’s
Context
●Recreational market
●International
competition
●Fun-type
(discretionary)
product
●Customers spending
less
●Subject to economic
cycles
●Seasonal/regional
●Very risky
●High buyer power
●Some gov exposure
●Limited # of places to
go
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Competition
● Offer a full range of
solutions
● Been in the game
longer than us
● Brand recognition
● Good at building
boards
● Existing disti
channels
● Contracts with ski
lifts
● Lots of
endorsements
● Have manfucturing
already
● Economies of scale
● Multiple suppliers
● Ski industry
● IP protection
Comp.&
Collaborators
●
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●
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●
Blingin’ binders
Zedd Primo
University partners
Students  feedback
Access to University
tech
Good engineering staff
Decent Marketing
presence in ski industry
Suppliers/manufacturer
s
Ski resorts/local shops
Distribution channel
Other endorsements
Well-known brand
Customers
The 5 C’s, cont.
● Customers:
• Who are they?
•
•
•
(Demographics, population, individuals,
segments)
What do they want?
What do they value the most in the things they want?
(Feature sets, price, service, etc.)
What trade-offs do they make among offerings?
– Remember the strategic groups pathway in BOS!
• Is there a way to have your cake and eat it, too?
• Are there any underserved populations?
• How much are they willing to pay?
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Janet on Our Customers:
● She pauses, then says: “We’ve always sold skis
to elite racers and those crazy terrain guys.
Some of them are really wild people.”
● What kinds of features might these people want
to buy?
● What does this features list tell your engineering
team? Will it affect your design decisions?
● What kind of demographics are these people
likely to be? How could we find out?
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Building The 5 C’s
Context
Competition
●Recreational market
●International
competition
●Fun-type
(discretionary) product
●Customers spending
less
●Subject to economic
cycles
●Seasonal/regional
●Very risky
●High buyer power
●Some gov exposure
●Limited # of places to
go
● Offer a full range of
solutions
● Been in the game
longer than us
● Brand recognition
● Good at building
boards
● Existing disti
channels
● Contracts with ski
lifts
● Lots of endorsements
● Have manfucturing
already
● Economies of scale
● Multiple suppliers
● Ski industry
● IP protection
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●
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●
●
●
●
●
●
●
Comp.&
Collaborators
Customers
Blingin’ binders
Zedd Primo
University partners
Students  feedback
Access to University
tech
Good engineering staff
Decent Marketing
presence in ski industry
Suppliers/manufacturer
s
Ski resorts/local shops
Distribution channel
Other endorsements
Well-known brand
●Smaller fraction of
the boarding
community
●Fit
●More cash to
spend
●Passionate buyer
●Willing to spend big
% of income
●Well-informed
●Maybe more tech
driven
●Maybe loyal to
skis?
●“Dare to be
different” demo
The 5 C’s: Summarized
● The 5 C’s represent your collective intelligence
on:
• What you’re building
• Why you’re selling it
• Who you’re selling it to
• What environment you’re selling it into
• Where you’d sell your product
● And also provides insight into:
• Engineering decisions you’ll make
• How you’ll approach the market with your offering
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The Big Picture
How Can I Make ‘Better’ Marketing Decisions?
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Source: Dan Turner, UW
The 4 P’s
● The 4P’s are:
• Product
• Price
• Place
• Promotion
● The 4P’s represent the ‘Marketing Mix’
● Or, in other words, once you’ve identified context,
customer, company & collaborators, and competitors, how
do you actually take the product to market?
● What is your market implementation strategy?
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The 4P’s, cont.
● Primary purpose of the 4Ps is to solidify the
underlying marketing strategy:
• Make the target customer believe the
positioning
• Set a price that will maximize profits
• Deliver the marketing objectives.
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Product
● The easiest (or is it?) of the 4 P’s
• Ideally, the product design wound up at the
intersection of the 5C’s
• If it didn’t, you could be neglecting a subset of
customers, misreading your market, or giving
your competition a window to exploit
● In all of the above, you’re leaving $$$$ on
the table
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Product, Cont.
● The product is more than just the
physical item
● It’s the sum of:
• The item or service itself
• The customer’s search for the
item/service
• The experience while making the
purchase
• The use of the item/service
• Follow through/customer care
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All these
attributes
contribute
to the
‘Brand’
Product, cont.
● Products may be staggered to achieve
greater differentiation
• Product lines have width (number of offerings)
• Product lines have depth (number of products
per line)
● Example: Cars
• ‘Sport Coupe’
• ‘Special Edition’
• ‘Turbo GT’
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Janet Weighs In
● Janet: “So we know the context, our
customers, our collaborators, our
competition, and our company. What
should we do now?”
● Answer: Translate the 5 C’s into design
requirements, just like in any engineering
problem
● Some requirements are…
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Building The 4 P’s
Product
●Toughness/durability
●Light weight
●Low maintenance
●Cool/customizable
graphics
●Repairable
●Long Warranty/no
questions asked
●Packaging health
care?
●Emergency locator
compatible
●Special bindings
●Share extreme videos
●Camera mount
●Good backend
support
●Look for mil
applications
●Ease of
setup/versatility
●Complements
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●“Air” telemetry
Price
Place
Promotion
Price
● Another key component. How much to charge?
• What will the market bear?
• Can you offset your cost targets to get an acceptable
•
ROI?
What can your competition do?
● Note that supply and demand is in play
• Charge too much, you’ll sell fewer units
• Charge too little, you’ll move more units, but
complements can suffer (See Springfield Baseball
Case)
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Janet on Price
● Janet: “Wow, we’ve got a long list of technical
requirements here. This could get expensive to
develop. Should we charge at an entry level or go
for a premium?”
● Go back to what this product is intended to do –
what should be the price point?
● Should we consider our company’s history here?
● How do the five C’s influence the pricing
decision?
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Building The 4 P’s
Product
●Toughness/durability
●Light weight
●Low maintenance
●Cool/customizable
graphics
●Repairable
●Long Warranty/no
questions asked
●Packaging health
care?
●Emergency locator
compatible
●Special bindings
●Share extreme videos
●Camera mount
●Good backend
support
●Look for mil
applications
●Ease of
setup/versatility
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●Complements
Price
●Premium price
●Maybe charge
a lower for a
reduced
product
Place
Promotion
Place
● Now that you have a product, into what
market do you sell it?
• Foreign?
Domestic? Specialty outlets? Big
Box department stores? Online?
● Where is it targeted? And to whom?
• Demographic group?
Target customer?
● Place represents the marketplace in which
you will sell your product
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Janet on Place
● Janet: “Normally we sell our products in specialized shops
here in the Pacific NW. We get a lot of business from
Canadians coming down, too.”
● Is this sufficient or should we consider somewhere else?
● Where can we put this product so our target audience has
access to it?
• Remember, where are the eyeballs?
● Should we continue with what we’ve always done, or look
someplace else?
• Remember to consider the company’s overall strategy
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Building The 4 P’s
Product
●Toughness/durability
●Light weight
●Low maintenance
●Cool/customizable
graphics
●Repairable
●Long Warranty/no
questions asked
●Packaging health
care?
●Emergency locator
compatible
●Special bindings
●Share extreme videos
●Camera mount
●Good backend
support
●Look for mil
applications
●Ease of
setup/versatility
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●Complements
Price
Place
●Premium price
●Maybe charge
a lower for a
reduced
product
● Online?
● Online complement for
search and accessory
buying
● Monitor click through
● Ski shops
● No Wal-Mart, big box
● Ski towns
● Go to Canada
● Ski resorts
● Other US ski/board
locations like CO
● Trade shows,
conventions
● NW Snow Sports Expo
● Give away to extreme
boarders – mobile sales
● Open own store?
● University ski team
● Mobile sales
Promotion
Promotion
● Once you have a product, understand the
market, and have a price in mind, how do
you communicate the value to your
customers?
● Big subject of our next lecture…
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Janet Says…
● Janet: “Our previous ad campaigns have
been so-so. I’m not sure we’ve been
effectively using our ad budget.”
● What kind of data do we need to determine
how to spend our ad dollars?
● Is there some insight we can gain from one
of the C’s?
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Summary, cont.
● Why should you care about Marketing?
• Marketing, used properly, becomes another set of inputs and
•
boundary conditions for your product design team
Products that aren’t designed correctly, placed to draw the most
eyeballs, priced out of reach of potential customers (or too low),
and inadequately promoted either fail or leave $$$ on the table
● The right marketing strategy promotes and enforces your
company’s overall strategy
● Use strategic marketing to feed data into the your
strategic toolsets (i.e. BOS, SWOT, etc.) to help create
localized monopolies, i.e. Blue Oceans
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Summary, cont.
● Why should you care about Marketing?
• You’re in charge of a product or a technology. You have two
responsibilities:
– First, management needs to understand it and give your resources to
execute it (short term)
– Secondly, somebody needs to consume your product/technology and
you need to understand how to incorporate anything that will affect
your design earlier rather than later (long term)
● The principles of marketing are the same no matter whom
it is you’re facing. Only the audience and the relative
parameters (context, collaborators, etc.) change.
● If you understand how your company markets its existing
products, you can gauge how well received your
technology will be
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Springfield Baseball:
5C’s and 4P’s
Springfield Baseball
● What is the context of the product? In other words:
•
•
Is it the ticket to the game, or something else?
What kind of experience should your customer have at the game?
● Where are your revenue streams? (Hint: complementary products)
•
Think about Porter’s Five Forces here
●
●
●
●
Who are your customers?
Who are your collaborators?
Who are your competitors?
What kinds of things do minor league baseball teams do to promote their
products? Should you consider any of those here? (Do some Googling to
look at other teams)
● Where would you advertise your product? Who is your target audience?
● What kind of price point should you hit? (Don’t give me a specific dollar and
cent number. Just indicate a range or something relative to your competitors)
● What message would you deliver to potential customers about your offering?
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Building The 5 C’s
Context
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Competition
Comp.&
Collaborators
Customers
Building The 4 P’s
Product
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Price
Place
Promotion
Next Time
● Homework:
• None, but keep thinking about Springfield Baseball. You’ll be
designing a Made to Stick Campaign for them.
● Read:
• Either:
– Made to Stick (whole book)
• Or:
– Heath Idea Habitats paper
– Emotional Reaction to Crisis paper
– Credible Sources Paper
• None of these seem to have made it into your course pack – Steve
will forward.
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