Business 130:The Principles of Marketing
Instructor
Martin J. Kandes
Copyright iOO Associates 1999
Class 1
What is this Course About?
It’s a Course About How to Think
About Marketing
Copyright iOO Associates 1999
Marketing 130 Introduction / Orientation
• Course Requirements
– Read The Textbook, Be In Class, Professionalism
– View and Understand Video Case Studies
– Do Five (5) Business Case Studies
– Do 3-5 page Book Report From Required List
– Mid Term Examination
– Final Examination
Copyright iOO Associates 1999
Required Textbook
“Basic Marketing”
by
William Perreault and Jerome
McCarthy
Copyright iOO Associates 1999
Required Book Report Selection List
• “The Marketing Imagination” by Theodore Levitt
• “Relationship Marketing” by Regis McKenna
• “Crossing the Chasm” by Geoffrey Moore
• “You are the Message” by Roger Ailes
• “Selling to the Top” by David Peoples
• “The Fifth Discipline” by Peter Senge
• “Made in Japan” by Akio Morita
• “Sacred Hoops” by Phil Jackson
Copyright iOO Associates 1999
Teaching Strategies
• Dialogue based upon Textbook reading
• Lecture and Discussion in Class
• Video Case Presentation / Discussion
• Case Studies
• Examinations
Copyright iOO Associates 1999
Web Site Address
• Http://www.cob.sjsu.edu/facstaff/kandes _m/index.htm
Copyright iOO Associates 1999
Grading
• Personal Profile 15 points
• Case Analysis (5) 50 points
• Mid Term Examination 100 points
• Final Examination 100 points
• Book Report 75 points
Copyright iOO Associates 1999
Grading
• A+ Outstanding
• A Excellent
• A- Exceptional
• B+ Very Good
• B Good
• B- Above Average
• C Average
Copyright iOO Associates 1999
What is the Purpose of Education?
Copyright iOO Associates 1999
“Education is not filing a
bucket but lighting a fire”
William Butler Yeats
Copyright iOO Associates 1999
The Fire
Learning
“A man only learns in two ways, one
by reading, and the other by
association with smarter people”
Will Rodgers
Copyright iOO Associates 1999
What is Learning?
• Learning is a behavior that can influence
our personal growth as individuals and as a
community.
• Each individual has his or her individual
path to sculpting and unlocking their
potential, beginning with their hereditary
roots and their learning behavior.
Copyright iOO Associates 1999
Learning
• Is about improvement of the mind as we
accumulate and enhance data, information,
knowledge, understanding, know-how and
wisdom as we live life and gain experience.
Copyright iOO Associates 1999
Learning is all about Personal Growth!
Learning
Standards S2
S1
Results
S0
Performance Time
Copyright iOO Associates 1999
Personal Growth!
Learning
Peak Performance Results
Practice
Standard
Copyright iOO Associates 1999
Soccer Success!
Learning
Peak Performance Results
Practice
Standard
Copyright iOO Associates 1999
Personal Growth Requires
Individual Accountability
Taking Responsibility for Setting Standards,
Performance, Results and Learning by
Continually Improving the Process of Practice
Prior to Performance
Practice First Perfection Later
Copyright iOO Associates 1999
I Want To Play Better Golf
• Standard:
– Mine
– Worldclass: Tiger Woods
• Performance (Practice / Game)
– Mine
– Worldclass: Tiger Woods
• Results
– Mine
– Worldclass
• Learning
– What’s Right
– What’s Wrong Copyright iOO Associates 1999
I Want To Play Better Golf
Standards
Learning Performance
Results
Copyright iOO Associates 1999
Learning is for You, Incorporated
• You are the CEO of Your Own Business…YOU
• As CEO you are responsible for creating clarity of purpose
and the conviction necessary to grow personally.
• Position Yourself For Personal Growth of You, Inc.
Through Learning
• Learning is a process.
• Learning is about improving your capability, capacity,
creativity, competency, conduct, capital and contacts to
position yourself for the success and happiness of You, Inc.
• What do you need to do to market You, Inc. to others?
Copyright iOO Associates 1999
Marketing as a System
Introduction
Copyright iOO Associates 1999
Marketing as a System
• The “Classic” 4 P’s of Marketing
– Product
– Price
– Promotion
– Place
The is a Course About These P’s and More...
Copyright iOO Associates 1999
The Marketing Strategy of You, Inc
• Product: You (Your Feature and Benefits)
• Price: What You Will Work For
• Promotion: How You Influence Others
• Place: Where and When do You Sell You
But there are P’s other than these…..
Copyright iOO Associates 1999
The Many “P’s” of Marketing
Performance
Promotion Persuasion
Perception
Place People
Price Products
Positioning Package
Copyright iOO Associates 1999
Also the P’s of Product Management
Performance
Promotion Persuasion
Perception
Place People
Price Products
Positioning Package
Copyright iOO Associates 1999
Marketing is about Managing
These “P’s”
Copyright iOO Associates 1999
The Most Important “P”
PEOPLE !
Who You Market To---Your Customers
Copyright iOO Associates 1999
How Does One Manage People?
• Select Employees
• Motivate Employees
• Train Employees
• Coach Employees This is the Classic View
• Appraise Them
of Management
• Organize Them
• Direct Them
• Control Them
Copyright iOO Associates 1999
Marketing is Also About Managing
• Manage One’s Self
– Integrity
– Ethics
Use this as a window
– D,I, K, U, KH, W
to understand others-
– Temperament your customers and
– Thoughts / Thinking what they need from
– Emotions you!
– Actions
Copyright iOO Associates 1999
To Manage One Needs to...
• Look up
• Look Down
• Look Out
Understand, influence,
• Look In
motivate, lead by example
• Look Around
Copyright iOO Associates 1999
To Market To Customers You Need….
To Know a Lot About People!
Copyright iOO Associates 1999
Because Customers are People...
….The Key “P”
• People - They are target of marketing
– What are people from a marketing perspective?
– They have a mind, a body, a spirit
– Complex System of Organs
– Marketing Organ Systems- Brain, Eyes, Ears and
Heart
– People also have beliefs, emotions feelings,
thoughts (past) and thinking (present)
Copyright iOO Associates 1999
The CEO of Human Life
• The Brain of People
– Works like a camera.
– A holographic camera.
– Makes you aware of what is and isn’t.
– It’s a true virtual reality machine. It gives you images
and you decide what the image means.
– Your brain is a multi-purpose picture taking organ
with no owners manual.
– What you learn is what you learn.
– The brain will let you do only what you think about.
Copyright iOO Associates 1999
What controls your brain?
• Your beliefs
• How many of you drove here today?
– Think about where you parked your car.
– Is it there?
– You belief it is.
– The brain gives you the most logical feeling
and an objective reality of the car.
– The brain operates like a holographic
camcorder.
Copyright iOO Associates 1999
People and their Brains
• Left Brain - Logic, Problem Solving
• Right Brain - Images to move the nervous
system
• Image thinkers - mind works like a T.V.
• Concept thinker - mind works like a radio
• How people think and how people’s minds
work effects how you market and sell to
them.
What is this thing called mind?
Copyright iOO Associates 1999
The mind is…...
• Seat of consciousness, thought, volition
and feeling.
• Your mind through your brain directs you
to do, to act.
• Each persons mind is constructed in a
different way by life experiences, cultural
background. education, social norms,
genetics etc.
• You interpret what you see not what is?
Imagine a brick wall.
• The brain gave you an image of a wall.
What are the attributes of the wall?
Copyright iOO Associates 1999
The Mind
• Everything you know is in your mind
• You perceive the world through your mind
• What we create in the material world begins
in the mind as an idea
Copyright iOO Associates 1999
Brain Focus
Left Brain Right Brain
(Newtonian) (Quantum)
Knowing
Wisdom
Sensory Input
Action
Art
Knowledge We use both!
Information Language
Self
Data Tools:
Tools:
•Intellect •Intuition
•Questions •Metaphor
•Dialogue •Senses
•Model •Art
•Logic •Poetry
•Analysis •Myth
Copyright iOO Associates 1999
•Vision
The Brain Within You
• Left Brain • Right Brain
– Discipline – Freedom
– Accountable – Artful
– Scripted – Ad Lib
– Facts and Logic – Feelings and Emotion
– Measurable – Intangible
– Knowledge Based – Intuitive
– Justify – Buy
Copyright iOO Associates 1999
You Are What You Think !
• Left Brain (x cells) • Right Brain (50x cells)
– logical – pattern recognition
– verbal – non verbal processing
– reasoning – visual awareness
– intellectual – intuitive
– analytical – emotional
– linear (sequential) – creative
– time bound – timeless
– analysis – see the whole
– control – synthesis
Copyright iOO Associates 1999
The Brain Has Three States of Emotion
• Positive- Buy
• Negative- Don’t Buy
• Neutral- Learn more
What is emotion?
•Strong mental or instinctive feeling?
•e.g. love, fear
Copyright iOO Associates 1999
Three Kinds of Intelligence
Knowledge
• Mental = Brain (Thoughts)
• Emotional = Heart (Feelings)
• Intuitive = Gut (Beliefs)
The Brain Looks at Product and Services
Through This Lens. That’s why Marketer's
Emotion
Need to Know This
Copyright iOO Associates 1999
Types of Intelligence
• Intellectual
• Emotional
• Spiritual
• Visual
• Kinesthetic
• Musical
• Interpersonal
• Intrapersonal
Copyright iOO Associates 1999
Intelligence
Intellectual Emotional
• IQ • Self awareness
• SAT’s • manage your emotions
• Grades • motivational
• Degrees • empathy
• Knowledge • read feelings of others
• Learning • teamwork
• Intellectual • persuasion
• Skills • relationship development
• Doing • Being
Copyright iOO Associates 1999
Belief, Emotion, Feeling
• Belief- acceptance as truth, it is not truth.
Truth is what you believe not fact. Brain
has seen it before. It’s right from the
perspective of the brain.
• Emotion = the response to something real
or imagined by the brain. A disturbance in
the body.
• Feeling = Responsive awareness or
recognition, a type of emotional state.
Copyright iOO Associates 1999
Class #2
More About the Most Important “P”
People
Copyright iOO Associates 1999
How Many People Are There?
• Creation to 1800 1B
• 1930 2B
• 1960 3B
• 1974 4B
• 1987 5B
• 1999 6B
The Target Market!
Copyright iOO Associates 1999
Markets by Population in 1998
• China 1.2B
• India 989M
• USA 250M
Copyright iOO Associates 1999
People
• The most complex element of any business.
• Know them
• By first knowing yourself
Copyright iOO Associates 1999
People Feel….
• Tension
• Ambivalence
• Conflict
Pay Attention When You
• Fear Feel This way!
• Anxiety
• Excitement
Copyright iOO Associates 1999
People Acquire Facts and Knowledge
• Facts = Objective truth
• Knowledge = The sum of what is known
about something.
But there is more!
Copyright iOO Associates 1999
What is Knowledge?
• Rational • Intuitive
– Scientific Method – Inner Experience
– Objective – Complex
– Events – Holistic
– Linear – Multi-dimensional
– Sequential – Non Linear
– Abstract – Beyond Sense Based
– Symbolic
Copyright iOO Associates 1999
The Continuum of Knowing
• Data
• Information
• Knowledge What Creates Knowing?
• Understanding
• Know-How
• Wisdom
Copyright iOO Associates 1999
Thinking!
Copyright iOO Associates 1999
“Few people think more than two
or three times a year. I’ve made
an international name for myself
thinking once a week.”
………George Bernard Shaw
Copyright iOO Associates 1999
How Often Do You Think?
Space-The Final Frontier……..
To Boldly Go Where No Man Has
Gone Before By Thinking
Copyright iOO Associates 1999
Types of Thinking
• Divergent: Expand The Picture (Right Brain)
• Convergent: Reduce The Picture (Left Brain)
Learn to Think Marketing to do Marketing
Copyright iOO Associates 1999
Thinking is about Creativity
• Initiation
• Incubation 4 Stages of Creativity
• Illumination
• Integration
Copyright iOO Associates 1999
“Creativity is one percent
inspiration and ninety-nine
percent perspiration”
Thomas Edison
Tesla, would say that was Edison’s Problem
Copyright iOO Associates 1999
To Get Creative!
Suspend The Left Side Explore the Right:
• Jog
• Shower
• Driving
• Nap Where do you think best?
• Wine
• Flying
• Walk
Copyright iOO Associates 1999
Think Deeper
• Taste
• Touch
• Sight Think In 5 Senses!
• Smell
• Sound
Copyright iOO Associates 1999
The Five Senses of……….
• Christmas
• Thanksgiving
• London
Can you relate?
• Hawaii
• Hard Rock Café
• World Cup
Copyright iOO Associates 1999
What is your Personal Style?
How about others?
Copyright iOO Associates 1999
Carl Jung (1875-1961)
• Perceiving (Take In) • Judging (Organize)
– Sensing (S) – Thinking (T)
– Intuition (N) – Feeling (F)
Theory of Psychological Type
Copyright iOO Associates 1999
Myers-Briggs Type Indicators
• Katherine Cook • Isabel Briggs Myers
Briggs (1875-1968) (1897-1980)
• Mother • Daughter
Elaborated Jung’s Ideas and Applied
Them to Human Interaction
Copyright iOO Associates 1999
Four Approaches To Life
• How are you energized, (Extrovert / Introvert)?
• What do you pay attention to, (Sensing / Intuition)?
• How do you make decisions, (Thinking / Feeling)?
• How do you live and work, (Judgement / Perception)?
Copyright iOO Associates 1999
How Are You Energized?
• Extrovert (E) • Introvert (I)
– Attuned Externally – Draw To Inner World
– Prefer Talking – Prefer Writing
– Learn By Doing – Learn By Reflection
– Learn By Discussing – Private
– Talk First – Under control, contained
– Reflect Next – Concentration / Focus
– Sociable Expressive – Depth
Copyright iOO Associates 1999
How Do You Pay Attention?
• Sensing (S) • Intuition (N)
– Focus on Real – Sixth Sense
– 5 Senses – Big Picture
– Concrete / Factual – Future Oriented
– Present Focused – Imagination / Insight
– Practical – See Patterns
– Trust Experience – Trust Inspiration
– Detailed – Leap of Faith
– Sequential – Novelty
Copyright iOO Associates 1999
How You Make Decisions?
• Thinking (T) • Feeling (F)
– Analytical – Heart
– Logical – Value Based
– Cause and Effect – Harmony
– Objective – Empathy
– Critique – Compassionate
– Reason – Mercy
– Firm / Fair – Accepting
– Tough Minded
Copyright iOO Associates 1999
How Do You Live and Work?
• Judgement (J) • Perception (P)
– Plan – Flow
– Goals – Let Life Happen
– Methodical – Open To Change
– Closure – Flexible / Adaptive
– Decisive – Casual
– Organized – Energized By Changes
– Scheduled – Spontaneous
Copyright iOO Associates 1999
The Shadow Side
• Introvert • Extrovert
• Sensing • Intuitive
• Thinking • Feeling
• Judging • Perceiving
Creative people seem to have integrated their shadow side into their light side
Copyright iOO Associates 1999
Know Thy Self
Know Your Colleagues
Know Your Customers
Know Your Competitors
Copyright iOO Associates 1999
Know Your Customers
Economic Buyer User Buyer
*Final Approval *What’s For Me
*Controls $ *Impacts Job
*Veto Power
Influence Buyer Gatekeeper
*Experience *Can’t Say Yes
*Knowledge *Can Say No
*Vested Interest
Copyright iOO Associates 1999
Behavioral Styles
• Driven • Analytical
– Decisive – Deliberate
– Independent – Exacting
– Self-Directed – Structured
– Wants It Yesterday – Detailed
– Risk Taker – Needs Proof
– Fast Decisions – Planned
– Action Oriented – Risk Averse
– Just The Facts – Detached
Copyright iOO Associates 1999
Behavioral Styles
• Amiable • Expressive
– People Oriented – Inspiring
– Relationship Oriented – Persuasive
– Feelings Focused – Creative
– Customer Focused – Innovative
– Avoids Conflict – Big Picture
– Listener – Spontaneous
– Supportive – Energized
– Personable – Intuitive
Copyright iOO Associates 1999
Which One Are You?
Which One Is Your Customer?
Copyright iOO Associates 1999
Famous Names
Analytical Drivers
Amiable Expressive
Copyright iOO Associates 1999
Marketing as a System
• The 4 P’s of Marketing
– Product
– Price
– Promotion
– Place
Copyright iOO Associates 1999
The P’s of Product Management
Performance
Promotion Persuasion
Perception
Place People
Price Products
Positioning Package
Copyright iOO Associates 1999
Marketing as a System
Performance
Promotion Persuasion
Perception
Place People
Price Products
Positioning Package
Copyright iOO Associates 1999
The Purpose of All Companies is...
Profitable Financial Growth
Copyright iOO Associates 1999
Marketing Myopia
• Every major industry was once a growth
industry.
• In every case growth is threatened and is
because of a failure of management.
• Defining what business you are in is
important to growth.
• Customer oriented not product oriented.
Copyright iOO Associates 1999
What is Marketing Myopia
• Seeing the market in a nearsighted (short
term, short sighted way).
• Focus on building product not customer
need, wants and demands.
• Focus on Selling not Marketing
Copyright iOO Associates 1999
What Business Are You In?
• Penn Central
• Disney
• ATT
• NEC What do you think?
• Sony
• B of A
• Charles Schwab
Copyright iOO Associates 1999
What Business Are You In?
• Penn Central • Transportation
• Disney • Entertainment
• ATT • Communications
• NEC • C&C
• Sony • Entertainment
• B of A • Financial Service
• Charles Schwab • Financial Service
Copyright iOO Associates 1999
Introduction to Case Analysis
Copyright iOO Associates 1999
Relevance
2 3 4 Reach Dog
Growth Cow
Insight The Idea The Unmet Need Relate
Retain ?
Revenue Market Share
Feelings
P Beliefs Market Penetration
1 5
Emotions
Thoughts
Market Development
Product Development
Thinking Diversification
Rethink Target Market Segmentation / Size Mergers
Acquisitions
Foresight Redirect
Reorganize 6 Strengths
Weaknesses
Reposition
Rebuild
The Unique Solution Opportunities
Performance
7 Strengths
Infrastructure capital
(“Best Results”)
Strategy
Structure Implementation Human Capital
Intellectual Capital
Skills
Style
8 Attention Capital
Product Packaging Performance
Marketing Mix Price
Shareholders 9 Promotion Positioning Perception
Place Persuasion
Suppliers
Employees
Customers
Value Creation/Wealth Innovation
New Business Models
Relative Advantage 10 Reengineering
Compatibility
Complexity
Adoption Quality
Cost Reduction
Divisibility
Communicability
Results 11
Profitable Growth Revenue
ROS, ROE,
Standards EPS
Copyright iOO Associates 1999 Stock Price
(“Best Practice)
Class 3
Copyright iOO Associates 1999
Review Case Method and Process
Copyright iOO Associates 1999
Relevance
2 3 4 Reach Dog
Growth Cow
Insight The Idea The Unmet Need Relate
Retain ?
Revenue Market Share
Feelings
P Beliefs Market Penetration
1 5
Emotions
Thoughts
Market Development
Product Development
Thinking Diversification
Rethink Target Market Segmentation / Size Mergers
Acquisitions
Foresight Redirect
Reorganize 6 Strengths
Weaknesses
Reposition
Rebuild
The Unique Solution Opportunities
Performance
7 Strengths
Infrastructure capital
(“Best Results”)
Strategy
Structure Implementation Human Capital
Intellectual Capital
Skills
Style
8 Attention Capital
Product Packaging Performance
Marketing Mix Price
Shareholders 9 Promotion Positioning Perception
Place Persuasion
Suppliers
Employees
Customers
Value Creation/Wealth Innovation
New Business Models
Relative Advantage 10 Reengineering
Compatibility
Complexity
Adoption Quality
Cost Reduction
Divisibility
Communicability
Results 11
Profitable Growth Revenue
ROS, ROE,
Standards EPS
Copyright iOO Associates 1999 Stock Price
(“Best Practice)
Personal Growth!
Learning (Results)
Peak Performance Results
Bad, Good, Excellent, Outstanding
Standard (Who’s The Best)
Copyright iOO Associates 1999
“Then I asked: Does a firm
persuasion that a thing is so, make it
so? He replied: All poets believe that
it does and in all ages of imagination
this firm persuasion removed
mountains; but many are not capable
of firm persuasion of anything”.
William Blake
1793
Copyright iOO Associates 1999
What is Marketing?
• A business function that identifies
customer needs and wants.
• A business function that determines the
target market the organization can best
serve.
• a business function that designs products,
services and programs to serve the market.
• A philosophy of delivery of customer
satisfaction for a profit
Copyright iOO Associates 1999
Selling versus Marketing
• Selling • Marketing
– Focus on needs of – Focus on needs of buyer
the seller – Focus of satisfying
– Focus on converting customer
product to cash – Create Value that
– Create orders/sales customers want
– Takes cues from – Takes cue from the
business owner customer
– Sell what you have – Find market
– Exchange cash for – Value that the exchange is
product about
Copyright iOO Associates 1999
Needs , Wants and Demands
• Need = Necessity, Requirement,
Essential, Pre-requisite
– A state of felt deprivation.
• Want = Aspiration, Desire, Wish
– The form shaped by a human need by culture
and personality
• Demand = Wants that are backed buy
buying power
Copyright iOO Associates 1999
Needs + Wants = Demands
D,I,K,U,KH, W
Marketing Strategist
Product Creativity Service
Copyright iOO Associates 1999
Satisfiers of Needs and Wants
• Products - anything • Services - activities
that can be offered to or benefits offered
a market for for sale that are
attention, essentially intangible
acquisition, use or and don’t result in
consumption and the ownership of
that might satisfy a anything.
need or want.
Copyright iOO Associates 1999
How Customers Make a Choice
• Customer Value - benefit that the customer gains
from owning and using a product compared to
the cost of obtaining the product.
• Customer Satisfaction - depends on the product’s
perceived value versus expectations.
Copyright iOO Associates 1999
Marketing Management Philosophies
• Consumers favor products that are
Production Concept available and highly affordable
•Improve production and distribution
•Consumers favor products that offer
Product Concept the most quality, performance, and
innovative features
•Consumers will buy products only if
Selling Concept the company promotes/ sells these
product
•Focuses on needs/ wants of target
Marketing Concept markets & delivering satisfaction
better than competitors
•Focuses on needs/ wants of target
Societal Marketing markets
Concept Associates 1999 & delivering superior value
Copyright iOO •Society’s well-being
The Cornerstone to Effective Marketing
Customer Needs / Wants
Knowledge
Copyright iOO Associates 1999
What Marketing is Not
• It is not the art of selling.
• What is selling?
Copyright iOO Associates 1999
What is Selling?
• Make over or dispose of for money.
• Betray for money or other award.
• Promote, advertise, publish the merits of.
• Persuade or convince of value or
importance.
• Cause to be sold.
Copyright iOO Associates 1999
Marketing versus Selling
Starting
Point
Selling Profits
Existing
Factory and through
Products
Promoting Volume
The Selling Concept
Profits
Customer Integrated
Market through
Needs Marketing
Satisfaction
Copyright iOO Associates 1999
The Marketing Concept
Selling
• Strategic
– Emotional Approach First
– Knowledge Based
• Tactical
– Knowledge First
Copyright iOO Associates 1999
Types of Selling Approach
• Intellectual • Emotional
– Knowing – Finding Out
– Answers – Questions
– Winning/Losing – Sharing/Partnering
– Inequality – Equality
– Power/Manipulate – Respect
– Prove Points – Explore Possibilities
Copyright iOO Associates 1999
Effective Strategic Selling
• From • To
– Problem – Opportunity
– Circumstance – Purpose
– Control – Adaptive
– FUD – Confidence and Trust
– WIN – WIT
Copyright iOO Associates 1999
Marketing’s Goal
• Create customer satisfaction profitably.
• Build value laden relationships.
• To know what to make or provide to create
and keep customers.
What are these entities called customers?
Copyright iOO Associates 1999
How Does Marketing Influence Customers?
It begins with Communications
Copyright iOO Associates 1999
What Are Some Marketing Words
That We Use To Communicate?
Copyright iOO Associates 1999
Marketing Words
• Attitude, Action • Integrity, Influence
• Beliefs • Judging
• Creative, Conceptual • Knowledge
• Dialogue, • Learning, Logical
Differentiation • Motivational
• Emotional • Need, Noble
• Feeling, Felts • Opinion
• Good, Great • Process
• Honesty • Quality
Copyright iOO Associates 1999
Marketing Words
• Relationship
• Strategic, Systems
• Tactical, Targeted
• Unified
• Value, Vision
• Winning, Worthy
• Xeno
• You, Yourself
• Zest, Zeal,Zen
Copyright iOO Associates 1999
The Marketing Iceberg
Telling,
Selling
Advertising
Price
Product
Promotion
Place
Copyright iOO Associates 1999
Strategic Planning
The - S-Curves of Business
Copyright iOO Associates 1999
“The Future Ain’t What It Use To Be”
Yoggi Berra
Prediction Is a “Probletunity”
Copyright iOO Associates 1999
Change Is Faster Than Ever
• Information Float
– It took centuries to move information about smelting to
bring about the Iron Age
– It took 1.4 seconds to see a man on the moon
– Information moves quickly today
• Life Float
– First life forms 5B years ago on earth
– Cells about 2.2B years
– Reptiles .5B years
– Complex Mammals 100M years
Copyright iOO Associates 1999
How Many of You Use Float?
How About Your Checking Account
Copyright iOO Associates 1999
The Time Between What is and
What Will be is Shorter!
The past, present and the future gets closer
Copyright iOO Associates 1999
How Does One Plan in This Environment ?
Copyright iOO Associates 1999
Planning in Business: Strategic Planning
The Process :
1. Defining a Mission: Statement of an organization’s
purpose; should be market oriented.
2. Setting Company Objectives: Supporting goals and
objectives to guide the entire company.
3. Designing a Business Portfolio: Collection of
businesses and products that make up the company.
4. Planning Functional Strategies: Detailed planning
for each department designed to accomplish strategic
objectives.
Copyright iOO Associates 1999
Value and Profitable Business
Growth are a Function of….
• Strategy
• Structure
• Skill
• Style
Lets Discuss Strategy
Copyright iOO Associates 1999
What is Strategy?
Copyright iOO Associates 1999
Envisioning the Changing Landscape
of Business…..
...And Doing Something About It.
That’s Strategy.
Copyright iOO Associates 1999
Strategic Vision…...
• Some People See Further…..They Have
Strategic Vision
– Newton
– Edison
– Ford
– Einstein
– Gandhi
– Deming
– Jobs
– Berners-Lee What They Have In Common is…..
Copyright iOO Associates 1999
They Have Foresight That Creates New Insights That
Transform the Landscape…...
Value /
Growth
Inflection Point
Time
Copyright iOO Associates 1999
New Insights Create Inflection Points…...
Value /
Growth
Einstein
Newton Inflection Point
1600 1905 1988 2000 2020
Copyright iOO Associates 1999
Year
For Example……
...The Internet Transforms Everything
Tim Berners-Lee
Value/
Growth
Internet
Inflection Point
1968 1972 1980 1988 1998 2000 2020
Copyright iOO Associates 1999
Year
What is a Strategic Inflection Point ?
• A Time in Life When the Fundamentals Change
– Horse Power to the Internal Combustion Engine
– Newtonian Physics to Quantum Physics
– Mini Computers to Microprocessors
– Television to Cable Television
– One Phone Company to Many Phone Companies
– Conventional Networking to the Internet
– Traditional Phone to Wireless Phone
– Commerce to e-Commerce
– Medicine to Molecular Based Medicine.
Copyright iOO Associates 1999
Strategic Inflection Points Create
Opportunity or Problems
(Probletunities)
Copyright iOO Associates 1999
What Causes Inflection Points
• Innovation and Technological Change
• The Nature of Competition
• The Nature of Regulation Changes
• People Change in Demographics
• Fear, Uncertainty and Doubt
Copyright iOO Associates 1999
How Does It Feel To Experience the Inflection ?
• Its like going from the green ski run to the
double black diamond.
• Its like going from class 1 rapids to class 4
rapids.
• Feel the change. Its turbulent its forceful.
The force be with you!
…you’ll need it.
Copyright iOO Associates 1999
Six Forces Effecting Business
according to Michael Porter
• Competition (Current and New)
• Customers
• Complementors
• Chain of Supply
• Conversion (Substitution)
Companies Needs a Strategy to Deal With Each
Copyright iOO Associates 1999
Class 4
Copyright iOO Associates 1999
Relevance
2 3 4 Reach Dog
Growth Cow
Insight The Idea The Unmet Need Relate
Retain ?
Revenue Market Share
Feelings
P Beliefs Market Penetration
1 5
Emotions
Thoughts
Market Development
Product Development
Thinking Diversification
Rethink Target Market Segmentation / Size Mergers
Acquisitions
Foresight Redirect
Reorganize 6 Strengths
Weaknesses
Reposition
Rebuild
The Unique Solution Opportunities
Performance
7 Strengths
Infrastructure capital
(“Best Results”)
Strategy
Structure Implementation Human Capital
Intellectual Capital
Skills
Style
8 Attention Capital
Product Packaging Performance
Marketing Mix Price
Shareholders 9 Promotion Positioning Perception
Place Persuasion
Suppliers
Employees
Customers
Value Creation/Wealth Innovation
New Business Models
Relative Advantage 10 Reengineering
Compatibility
Complexity
Adoption Quality
Cost Reduction
Divisibility
Communicability
Results 11
Profitable Growth Revenue
ROS, ROE,
Standards EPS
Copyright iOO Associates 1999 Stock Price
(“Best Practice)
They Have Foresight That Creates New Insights That
Transform the Landscape…...
Value /
Growth
Inflection Point
Time
Copyright iOO Associates 1999
Growth
The Power of Inflection…..It Transforms
the Very Essence of Business
Decline
Value/
Growth
Copyright iOO Associates 1999
What’s Marketing’s Role?
• Rely of Instinct and Personal Judgement to
Recognize the Beginning of a Strategic
Inflection Point
• Convince Others That it is real and Its Time
to Wake Up and Listen. Cant’ Wait Until
You Know.
• Develop a Transition Plan To Act- A
Strategy to Take Advantage of the Insight
Copyright iOO Associates 1999
A Strategic Inflection Point
The Computer Industry
Copyright iOO Associates 1999
1982 Vertical Structure of Computer Industry
IBM DEC Sperry Wang
Sales/ Place I D S W
Applications I D S W
Operating System I D S W
Computer I D S W
Architecture I D S W
Copyright iOO Associates 1999
Going Horizontal in 1995
Sales/ Place Stores Superstores Dealers Mail Order
Applications Word WordPerfect PowerPoint Excel
Operating System Dos/Windows OS/2 Mac Unix
Computer IBM Compaq Apple Dell
Architecture Intel AMD Motorola Risc
Copyright iOO Associates 1999
This Inflection Point Changed the...
• Strategy
• Structure
• Skills
• Style
Of All Companies in The Computer Industry
Copyright iOO Associates 1999
The Old Rules Change
• The First Mover Has An Opportunity to
Gain, e.q. Dell Computer and Order By
Mail.
• Distinction Through Innovative Products
and Services Creates Differentiation
Copyright iOO Associates 1999
Strategic Planning Is Supposed to...
• Help detect, define and determine a strategy
and tactics to create profitable growth for
the business.
• To See The Strategic Inflection Point
Coming
It Rarely Does
Copyright iOO Associates 1999
A Tool: The BCG Matrix
Market Growth / Share Grid
Invest More
Build, Takes
Cash
High
?
Growth
Cash Cows Dogs
Low
Low Growth
High Share Low ,profit, share
Produces Cash Copyright iOO Associates 1999
Another Tool
Product Market Expansion Grid
Existing Products New Product
Existing
Product
Markets Market Penetration
Development
New Markets Market
Development Diversification
Copyright iOO Associates 1999
The Product Market Expansion Grid Strategies
• Market Penetration: increase sales to present customers with current
products. How? Cut prices, increase advertising,
get products into more stores.
• Market Development: develop new markets with current products.
How? Identify new demographic or geographic
markets.
• Product Development: offering modified or new products to current
customers. How? New styles, flavors, colors,
or modified products.
• Diversification: new products for new markets. How? Start up or buy
new businesses.
Copyright iOO Associates 1999
Marketing’s Job #1 in Strategic Planning
– Market Segmentation: determining distinct groups of buyers
(segments) with different needs.
– Market Targeting: evaluating and selecting which target segments
to enter.
– Market Positioning: products distinctive and desirable place in the
minds of target segments compared to
competing products.
– Sense the Inflection Points: This is probably the most important job.
Copyright iOO Associates 1999
Marketing Strategies
•Market-Leader
•Market Challenger
•Market-Follower
•Market-Nicher
Copyright iOO Associates 1999
Market Analysis and Management
Marketing Planning
Marketing
Develop Marketing Implementation
Strategies to Control
Achieve Marketing Turn Marketing Plans
Objectives Measure
into Results
Action Plans
Develop to Achieve Evaluate
Marketing Marketing Results
Plans & Budget Objectives
Take
Corrective
Action
Copyright iOO Associates 1999
Creating Strategic Inflection Points
Copyright iOO Associates 1999
Innovation
• Disney
• Nissan Design Institute
• VISA
Copyright iOO Associates 1999
Innovation Drives Business
• Steam Engine 1800’s
• Automobile 1900’s
• Computer 1960’s
• Internet and Information 1990’s
• Biotechnology and Genetics 2000’s
People Drive Innovation
Copyright iOO Associates 1999
Innovation Has Phases
• Innovative Companies Launch Products
– Ford
– Apple
– Netscape
• Rivals Move Into Market and Creates Competition
– GM, Chrysler, Honda
– IBM, Sun, HP, Microsoft, Dell, Gateway
– Explorer, DSL
• Prices Fall, Growth Stalls, Seek Lower Cost
Manufacturing
Copyright iOO Associates 1999
Business Evolution and Revolution
• The Industrial Revolution • The Information Revolution
– Electricity – Microprocessors
– Internal Combustion – Computers
– Air Travel – Application Software
– Telecommunications – Databases
– Pharmaceuticals – Internet
– Chemicals – Cell Phone
– Wireless
– Biotechnology
Copyright iOO Associates 1999
The Walt Disney Company
• The competition is anyone the customer
compares you with.
• Attention to Detail.
• Everyone walks the talk.
• Everything walks the talk.
• Customers are heard through many ears.
• Reward, Recognize, and Celebrate
• Xvxryonx Makxs a Diffxrxncx
Copyright iOO Associates 1999
The E’s of Walt Disney Company
Copyright iOO Associates 1999
The E’s of Walt Disney Company
• Everyone
• Energy
• Edge
• Enthusiasm
• Emotion
• Excitement
• Excellence
• Exemplary
• Experience
• Entertainment
Copyright iOO Associates 1999
Copyright iOO Associates 1999
Copyright iOO Associates 1999
Vision
Current Reality Opportunity Organization
Options Operations
Individual
Innovation Copyright iOO Associates 1999
“Out of the Box at Disney”
• Displayed Thinking
• Category Note Taking
• Thinking In All Senses
– Conscious
– Unconscious
• Working In Color
Copyright iOO Associates 1999
Nissan Design Institute
Dialogue, Debate and Distinctive Design
Copyright iOO Associates 1999
Nissan Creates Designs that produce personal
commitment through participation.
• Be Involved.
• Understand the details.
• Explore the interactions.
• Imagine the potential.
• Dissect it.
• Criticize it.
• Support it.
• Implement it.
Copyright iOO Associates 1999
Define a Shared Vision of The Product
Collaborative Design
Joint Experimentation
Shared Insight
Public Reflection
Copyright iOO Associates 1999
Create an Organization where process and
relationships are key to success.
• Structure comes and goes to support
process.
• Structure supports relationships.
• Structure creates the interactions we need.
• Structure is created to fit the moment.
• Structure is created to suit the task.
Copyright iOO Associates 1999
NDI Results
• Pathfinder
• Pulsar
• Sentra
• Maxima
• 300 ZX
• The “New” 300ZX
Copyright iOO Associates 1999
Getting People to Play The Game
• Baseball • Basketball
– Set Position – Shifting Movements
– Slow – Speed
– Time (3 hours) – Time (48 minutes)
– 9 Members – 5 Members
– Individual (Hit, Pitch, Field) – Collaborative (Pass, Shoot,
– T.E.A.M Rebound)
– T.E.A.M.
Product Development Is More Like Basketball
Copyright iOO Associates 1999
Class 5
Copyright iOO Associates 1999
Innovative Service Products
The VISA Story
Copyright iOO Associates 1999
VISA International
The Ultimate “Chaordic” Organization
Copyright iOO Associates 1999
Company Results
• Since 1970 it has grown 10,000%
• It continues to expand 20% per year
• It operates in 200 countries
• It serves 0.5 Billion customers
• It annuals sales volume is over a trillion
dollars
That’s Profitable Growth!!!
Copyright iOO Associates 1999
Do you Know This Company
• How many of you can tell me who owns
Visa?
• Where is it headquartered?
• Where can I buy shares?
• Who’s in charge?
• How is it structured and governed?
Copyright iOO Associates 1999
The Landscape at the Beginning
• Bank of America Introduced a plastic card
in 1966 called BankAmericard
• In response, 5 California Banks jointly
launched MasterCharge
• B of A franchised their card
• Soon every bank was issuing plastic cards
• By 1968 things were out of control-chaos
• Multi-million dollar losses and growing
Copyright iOO Associates 1999
What Happened?
• Credit Card Orgy
• Banks Massed Mailed Pre-Approved Cards
• Children, Felon, Pets Got Cards
• Fraud Was Rampant.
• The Banks Were Badly in the Red Ink.
Not Good!!!
Copyright iOO Associates 1999
B of A Called a Meeting of it’s
Licensees in 1968 to Do Something!
Dee W. Hock
was at that meeting!
Who is Dee Hock?
Copyright iOO Associates 1999
Dee Hock
• 38 Years of Age VP of a Seattle Bank
• The Youngest of Six Children
• Of Parents With Just Eight Years of
Education
• Ceased the Opportunity to Change The
Landscape of Commerce Throughout the
World
How?
Copyright iOO Associates 1999
Iconoclastic Innovation
• Went To Work For A Small Bank in Seattle
• Was Assigned to Manage the Credit Card Program
• Dee Was Assigned To The Committee to Look At
All The Problems
• When the Music Stopped He was Left Without a
Chair and was made Chair of the Committee
Copyright iOO Associates 1999
What Happened?
• By June 1970
• Visa International Was Created
• Dee W. Hock was named CEO
• The New Company was very different
How?
Copyright iOO Associates 1999
How Was Visa Different?
• A non-stock company
• for profit membership corporation
• Ownership was non-transferable
• Structure
– Highly Decentralized
– Highly Collaborative
– Action Pushed to the Periphery to the Members
Copyright iOO Associates 1999
The Members
• The banks were the members
• They issued the cards
• They were very competitive with one
another
• They had to collaborate because
participating merchants had to take any
banks card anywhere.
A Unique Blend of Cooperation and Competition!
Copyright iOO Associates 1999
The Idea
• Reinvent the concept of money, credit and bank
• Insight: Money was nothing more than
guaranteed, alpha-numeric data recorded on paper
or metal
• Credit Card: A device to exchange value in the
form of electronic signals
• Structure: What organizational form could
guarantee electronic exchange of
value
Copyright iOO Associates 1999
The Borderless Organization for
the Exchange of Value
• It must be owned by all participants
• Power and function must be distributed
• Governance must be distributed
• It must be malleable and durable
• It must embrace diversity and change.
Copyright iOO Associates 1999
Visa International
Born
June 1970
Copyright iOO Associates 1999
Visa International Today
• Comprised of 23,000 financial institutions
• They create products
• The 23,0000 members are part of regulated
industries, but they are not regulated as Visa
• It is not a privately traded company, You
can’t buy stock in Visa
• If it were public it’s market value would be
$150B
Copyright iOO Associates 1999
Visa International Today
• Visa transcends politics, religion, language,
custom etc.
• It has no less than 20% and as much as 50%
compounded annual growth for a quarter of
a century
• Its products a universal and used worldwide
• Staff of 3000 in 13 countries, 21 offices
Copyright iOO Associates 1999
How Much Money Does Visa Make
• $1.75 Trillion per year
• 1,100 transactions per second at a penny
each
• Its employees have no stock options
• The prototype of the communications
system used today was done in 90 days for
$25,000
Copyright iOO Associates 1999
What’s is Visa’s Product?
• What does it provide?
• Why is it paid?
• What is the service Visa provides?
C- - -d - - -t - - -!
Copyright iOO Associates 1999
COORDINATION!
As A Business Model for Success
Copyright iOO Associates 1999
That’s Innovation!
Dialogue and Competition
Copyright iOO Associates 1999
What’s the Next VISA?
The VISA of your time!
Copyright iOO Associates 1999
“It is no failure to fall short of realizing
all that we might dream. The failure is to
fall short of dreaming all that we might
realize”
Dee Hock
Chairman Emeritus
Visa International
Copyright iOO Associates 1999
Relationship Marketing and
Management
How to Build Relationships with the
Target Market
Copyright iOO Associates 1999
Relationship Building with the Target Market
• Connections
– School
– Church
– Hobbies
What is the purpose?
• Connectors
– Family
– Friends
– Mentors
Copyright iOO Associates 1999
To Influence the Perception of
the Target Market Toward
Your Purpose or Product
Copyright iOO Associates 1999
The Architecture of Relationship
(influence) Building
• Dialogue
• Share Mental Models
• Develop Shared Vision of Purpose
• Think Systemically
• Act Together
• Learn Together
Copyright iOO Associates 1999
Dialogue To Build Relationships
•Conversation Is The Medium of Organizational Creativity
•Conversation Enables Divergence and Diversity of Thinking
•Conversation Is Shaped By Beliefs, Feelings and Emotions
•Conversation Can Be “Boundaryless” (Internet)
•Conversation Sets Boundaries (Tasks, Progress,Questions)
•Conversation Facilitates Listening
How Does One Do This In Markets?
Copyright iOO Associates 1999
Mental Model to Build Relationships
•Our Assumptions About How The/Our World Works
•What’s Important
•Image of What’s Right and Wrong
•Image of Success and Failure
•Beliefs, Feelings, Emotions
•What We Think and Why We Think What We Think
•Frame Of Our History and Stories
•I’ll Believe It When I See It (How we make a choice)
•I’ll See It When I Believe It
Copyright iOO Associates 1999
Shared Vision of the Market for
the Product
•The Common View Of The Now
•The Common View Of The Future
•T.E.A.M. (Together Each Achieves More)
•Individual Talent / Group Dynamic
•Independent / Interdependent
•Interconnected Insight
•Display Your Thoughts and Thinking
Copyright iOO Associates 1999
Shared Vision Of People
• Japanese Car’s 1970’s-90’s
• Vince Lombardi
• U.S. Army
Copyright iOO Associates 1999
Class 6
Copyright iOO Associates 1999
Marketing as a System
Performance
People
Price Products
Copyright iOO Associates 1999
What are some types of Products?
• tangible (own)
– hardware
– software
– people
– activities
– places
• intangible (no ownership)
– hotel
– airlines
– medicine
– legal
Copyright iOO Associates 1999
Product Markets
• Consumer
• Business
Copyright iOO Associates 1999
Consumer Product Success?
• Disney Land
• Disney World
• Euro Disney
• Disney Land Japan
Copyright iOO Associates 1999
Can You Predict Success?
• France • Japan
– There is the culture – Emulated U.S. in ‘50’s
– French is the language – Taught Children
– Foreign Words English
(cheeseburger) – Come to U.S.
– Legislate U.S. Films – U.S. Kareoke
– Fast Food – Love Baseball
– Great art, music, and – Fastest Growing Fast
architecture Food in Japan MD’s
Copyright iOO Associates 1999
Transformational Marketing
• Idea
• Unmet Need
• Unique Solution To Unmet Need
• SWOT of Solution
• Execution Plan
– Product (Performance, Price, Package)
– Promotion (Positioning, Perception)
– Place (Persuasion)
• Target Customer / Market
– People
Copyright iOO Associates 1999
Case (Idea) Analysis
• Idea - What is it?
• Unmet Need - Who does it serve? Target Market
• Unique Company Solution - How does it serve?
• Customer - Why will they buy?
• Company Goals - How are they achieved?
– Market Growth, Market Share, Profits
– Market Penetration
– Product Development
– Market Development
– Diversification (Product / Market)
Copyright iOO Associates 1999
Case (Idea) Analysis
S.W.O.T.
•What are the key Strengths of the Idea /Solution?
•What are the key Weaknesses of the Idea / Solution?
•What are the key Opportunities for the Idea / Solution?
•What are the key Threats to the Idea / Solution?
Copyright iOO Associates 1999
Case (Idea) Analysis
• Marketing Plan (The P’s of Marketing)
– Product, Packaging, Performance, Price
– Promotion, Positioning, Perception
– Place, Persuasion
– People (The Target Customer) Who are They?
• Beliefs
• Emotions
• Feelings
• Thoughts
• Thinking
Copyright iOO Associates 1999
Relevance
2 3 4 Reach Dog
Growth Cow
Insight The Idea The Unmet Need Relate
Retain ?
Revenue Market Share
Feelings
P Beliefs Market Penetration
1 5
Emotions
Thoughts
Market Development
Product Development
Thinking Diversification
Rethink Target Market Segmentation / Size Mergers
Acquisitions
Foresight Redirect
Reorganize 6 Strengths
Weaknesses
Reposition
Rebuild
The Unique Solution Opportunities
Performance
7 Strengths
Infrastructure capital
(“Best Results”)
Strategy
Structure Implementation Human Capital
Intellectual Capital
Skills
Style
8 Attention Capital
Product Packaging Performance
Marketing Mix Price
Shareholders 9 Promotion Positioning Perception
Place Persuasion
Suppliers
Employees
Customers
Value Creation/Wealth Innovation
New Business Models
Relative Advantage 10 Reengineering
Compatibility
Complexity
Adoption Quality
Cost Reduction
Divisibility
Communicability
Results 11
Profitable Growth Revenue
ROS, ROE,
Standards EPS
Copyright iOO Associates 1999 Stock Price
(“Best Practice)
Tiger Woods (People)
• Standard:
– Jack Nicklaus (records)
– Arnold Palmer (charisma)
– Bobby Jones (legacy grand slam)
• Foresight:
– Father decides to try and build a golf champion
– Change the face of golf globally
Copyright iOO Associates 1999
Tiger Woods (People)
• Insight:
– People will appreciate excellence in any face
• Idea:
– Create and perpetuate a personal image of
excellence that dominates and transcends the
sport of golf
– Perfecting the implausible today, even though it
was impossible yesterday
Copyright iOO Associates 1999
Tiger Woods (People)
• Target Market:
– Originally golf novices and young adults. Now multi-cultural /
national fans of life that share his competitive spirit for athletic
achievement and excellence.
• Beliefs: Need for icon that crosses the boundaries of their conforming niche
• Emotions: Lack of an everybody’s American hero after M.J.’s
• Feelings:An increasing desire for a quality character to market to the world
• Thoughts: We can’t find hero’s at home, in local arenas and politics so we
look to athletes
• Thinking: Benefits come to us when we allow others to “raise the bar”
regarding personal standards.
Copyright iOO Associates 1999
Tiger Woods (People)
• The Unmet need:
– The present void for the newest, latest, greatest, truly
all-American hero.
• Unique Solution:
– Idea: Squeaky clean performer and personality
– Concept: Raise the roof, continual personal
improvement
– Product: One narrow gauged, now broad appeal beyond
golf
– Service: To satisfy the public’s appetite for great sports
entertainment
Copyright iOO Associates 1999
Tiger Woods (People)
• Unique Solution (Continued)
– Rethink: Could be more than just a golfer
– Redirect: Stay the course, be a golfer first then more
– Reorganize: As we become more, we are able to do
more
– Reposition: Golf is primary, more than Nicklaus,
Palmer and Jones combine
– Rebuild: Multi-national / cultural marketing to the mass
media
Copyright iOO Associates 1999
Tiger Wood (People)
• S.W.O.T. of Solution:
– Strengths: Name Recognition. Tiger-a prominent
animal, dominant animal. Cross sport appeal
– Weaknesses: Getting over stuffed on prey and
becoming lackadaisical. Living golf 24/7/365. Allow
people to manage him beyond his values.
– Opportunities: To remain king of the jungle for two
generations
– Threats: Future Focus. Don’t let original motives get
lost in the B.S.
Copyright iOO Associates 1999
Tiger Woods (People)
• Marketing Plan:
– Product: A master Jedi of the modern art of golf
– Performance: Radiant, brilliant, mythical, dreamlike
– Price: Free spirit burned into our minds, watch out for
the hidden packaging costs
– Packaging: An Olympian without the Olympics
– Promotion: The talk of the town, Media spotlight
– Positioning: Youthfulness, like-ability, skill,
marketability
– Perception: Destiny. Sent from golf heaven
– Place: Elite clubhouses and tree houses too
– Persuasion: Be better than your best. Better than you
are Copyright iOO Associates 1999
Tiger Woods (People)
• Implementation:
– Strategy: To remain one step ahead of his ego during a
game and life. Control brand in the market.
• Tactics:
– Cultivate image of ‘every man”
– High Profile Wins
– Focused endorsements
– Structure: A prodigy. Star Child
– Skills: Multi-talented, multi-tasking, Worldclass putter,
driver, irons and thinking
– Style: Be yourself, work hard, body and mind working
a a team. Copyright iOO Associates 1999
“Chance Favors the Prepared Mind”
...Louis Pasteur
The question is what is that mind prepared
to perceive?
Copyright iOO Associates 1999
The Probability of Product Success
P1 P2 P3
• Foresight 0.9
• Insight 0.9
• Idea 0.9
• Unique Solution 0.9
• Implementation 0.9
90% probability
• Price 0.9 of success individually
• Product Function 0.9 is only 39%
• Place 0.9
collectively!
• Brand 0.9
Total= 0.39
Copyright iOO Associates 1999
Marketing Thinking…..
...And Product Success
Copyright iOO Associates 1999
What Is The Product Management
Mental Model?
What is a mental model?
What do we manage about the product?
Copyright iOO Associates 1999
Mental Model
•Our Assumptions About How Our World Works
•What’s Important
•Image of What’s Right and Wrong
•Image of Success and Failure
•Beliefs, Feelings, Emotions
•What We Think and Why We Think What We Think
•Frame Of Our History and Stories
•I’ll Believe It When I See It
•I’ll See It When I Believe It
Copyright iOO Associates 1999
The Mental Model of Coaching Sports
For Example
Pro Sports Youth Sports
• Paid Professional • Amateur (For the Love
of the game)
• Entertainment for • Fun for Participants
Viewers
• Goal is to Win • Double Goal
– Win
– Character /Life Lessons
Copyright iOO Associates 1999
What do we manage about the product?
• Price
• Product (Features, Benefits) How about R’s?
• Promotion How about S’s?
• Place
• Positioning (Brand)
• Packaging Lets stick with P’s for now!
• Performance (Function)
• Perception (Brand)
• Persuasion (Market / Sell)
Copyright iOO Associates 1999
Lets Discuss The Product Management
Of Product YOU!
Copyright iOO Associates 1999
The Product YOU!
(Personal Mastery!)
•“Mastery Is Inside- “The Inner Game”
•Mastery Is Multi-dimensional Competence You as a
•Know Thy Self (Awareness) Product!
•Self #1 The critic of our self
•Self #2 The positive coach of our self
•The “Beginners Mind” (Learning) Develop It!
•Continuous Improvement (Process)
•Learn More When Things Go Wrong
•Value beyond victory
•Competition Is From Within
Copyright iOO Associates 1999
Etc.
The Inflection Points of One’s Life…...
Kids
Marriage
Work
Grad School
College
High School
Every Effort in Mastery Follows The S-curve
Grammar School Strategic Inflection
Birth Year
Copyright iOO Associates 1999
Entertainer
In The Zone as a Product
Mastery
(Better Product)
You Inc.
Michael Jordon Practice, Practice, Practice
Joe Montana Staying Power
Tiger Woods Strong Beliefs
Tina Turner Just Do It, I Can
Elton John
Copyright iOO Associates 1999
Individual Mastery
Peak
Performance
Arousal Control
Enjoyment
Challenge Anxiety
Energy Relaxation
Possibility
Worry Character
Character
Bridge
Boredom
Apathy
Skill / Capability Adapted From Mihaly Csikszentmilalyi
Copyright iOO Associates 1999
Systems Thinking in Marketing
•Non-Linear Leaps Of Thinking
•See The Whole Not Just The Parts
•Can’t Redesign The Whole By Dividing It Into Parts
•Sees Events, Patterns, Behavior and Mental Models
•HyperLinks / Hypertex / HyperLoops
•Causal Loop Diagrams
Innovations Begin Here!
Copyright iOO Associates 1999
What They Forgot to Teach Me
at Yale, Harvard and Golden Gate!
What you need to create successful products and
business success!
Copyright iOO Associates 1999
Three Stages of Any Business
• Starting It
• Growing It
• Selling It
At Each Stage You Need………..?
Copyright iOO Associates 1999
Why are Companies Started?
The Answer is……..
Copyright iOO Associates 1999
Money !
What You Need to Know About Money
Copyright iOO Associates 1999
"The only thing money gives you is
the freedom not to worry about
money."
--
Johnny Carson
Copyright iOO Associates 1999
What is Money?
• A medium of exchange.
• An agreement between two parties
• A relationship between members of a
community.
• An asset to be used.
Copyright iOO Associates 1999
Is Money, Money on a Deserted Island?
Copyright iOO Associates 1999
Where is Money Born?
• Money is born in the banking system.
• It lives between the bank and you.
• It takes two to tango with Money
Copyright iOO Associates 1999
Five Things You Need to Know
About Money!
• How To Make It
• How To Grow It
• How To Save It
• How To Spend It
• How to Give It Away
Copyright iOO Associates 1999
How Do You Make Money?
You Change The World!
Copyright iOO Associates 1999
Some World Changers!
• Nicola Tesla
• Steve Jobs
• Bill Gates They all saw something
• Warren Buffet that didn’t exist, but was
• Hewlett- Packard ready to emerge or unfold.
• Dee Hock They saw the underlying
• The Beatles
future!
• Richard Branson
Copyright iOO Associates 1999
“Never doubt that a small
number of committed people can
change the world; indeed it’s all
that ever has…….
Margaret Mead
Copyright iOO Associates 1999
Remember!
Money is just the result of creating
products and services people are
willing to but.
Copyright iOO Associates 1999
To Make Money You Need
to Understand This
Income
Expenses
Assets Liabilities
Copyright iOO Associates 1999
Positive Cash Flow
Income
Expenses
Assets Liabilities
Copyright iOO Associates 1999
How People Make Money
Income
Job Paycheck
Expenses
Taxes, Car
Food, Rent
Clothes, Fun
What about Savings? Assets Liabilities
What About Growth?
What About Giving it Away? Mortgage
Loans
Credit Cards
Copyright iOO Associates 1999
Wealth Creation Process
Income
Job Paycheck
Interest
Rental Income
Royalties
Expenses
Taxes, Car
Food, Rent
Clothes, Fun
Assets Liabilities
Savings
Bonds Mortgage
Stocks Loans
Real Estate Credit Cards
Intellectual
Property
Copyright iOO Associates 1999
Negative Cash Flow
Income
Bye! Bye!
Expenses
Assets Liabilities
Copyright iOO Associates 1999
How Do Companies Make Money?
Income
Do Business Sales Revenue
Royalties
Rent
Expenses
Taxes, Rent
Utilities
Assets Liabilities
New Orders
Backlog Orders Down Payments
Royalties I&W
What about EBIT? Real Estate Rent Itl’Commissions
What About Growth? Brand
What About Giving it Away? Stock
Copyright iOO Associates 1999
Three Key Courses To Take at SJSU !
• Presentation and Communications Skills
• Psychology
• Negotiation Skills
• How to be a Parent
– Kids, perhaps your most important product.
Copyright iOO Associates 1999
What You Should Know About Yourself!
• Strengths and Weaknesses
• To Focus on Strengths To Improve
• To T.E.A.M. with others to Minimize your
Weaknesses
• How You Spend The Most Valuable Thing
You Have Next to Health…….. Time
Copyright iOO Associates 1999
Class 7
Copyright iOO Associates 1999
Information is Power in Marketing
Information Separates Events From
Trends in the Market
Copyright iOO Associates 1999
Marketing Information Systems
• Consists of people, equipment, and procedures to gather,
sort, analyze, evaluate and distribute needed, timely, and
accurate information to marketing decision makers.
• Function: Assess, Develop and Distribute Information.
• Data, Information, Knowledge, Understanding, Know
How, Know What, Know Why, Know When, and
Wisdom.
Copyright iOO Associates 1999
Functions of a MIS:
Developing Information
Obtains Needed Information for Marketing Managers
From the Following Sources
Internal Data
Collection of Information from Data Sources Within the Company
From: Accounting, Sales Force, Marketing, Manufacturing, Sales
Marketing Intelligence
Collection and Analysis of Publicly Available Information about
Competitors and the Marketing Environment
From: Employees, Suppliers, Customers,
Competitors, Marketing Research Companies
Marketing Research
Copyright iOO
Design, Collection, Analysis, and Associates 1999of Data about a Situation
Reporting
Marketing Research Process
Step 2. Develop the Research Plan
Determine the Specific Information Needed
Secondary Primary
Information that has Information collected
been previously for the specific purpose
collected. at hand.
Both Must Be:
Relevant
Accurate
Copyright iOO Associates 1999
Current
Primary Data Collection Process
Step 1. Research Approaches
Observational Research
Gathering data by observing people,
actions and situations
(Exploratory)
Survey Research
Asking individuals about
attitudes, preferences or
buying behaviors
(Descriptive)
Experimental Research
Copyright iOO Associates 1999 Using groups of people to
New Product Development
How to think about creating new Products
and services.
Copyright iOO Associates 1999
How Do Companies Create Assets?
• Create New Products
– orders
– sales
• Create New Services
– orders
– sales
• Sell Stock
Copyright iOO Associates 1999
Lets Build A Globally Appealing Car
• Porsche
• Volvo
• Volkswagen Beetle
• Jeep
• Benz What’s The Pattern?
• BMW
Copyright iOO Associates 1999
"You can observe a lot by watching.”
Yogi Berra
Copyright iOO Associates 1999
What Customers Don’t Ask For
• Cellular Telephones
• Fax Machines
• Mini Vans
• SUV’s “You can learn from yours customers,
but don’t expect them to lead you.”
• Beanie Babies
• ATM’s
• Pump Your Own Gas
Copyright iOO Associates 1999
Technology: Positive Energy Saver
• Pony Express • E-mail
• Horse • Space Shuttle
• Map • GPS
• Library • Internet
• Telegraph • Cell Phone
• Wells Fargo Bank • Online Banking (ATM)
• Wall Street • E-Trade
A Continuum of Capability
Copyright iOO Associates 1999
Imagine You Are The Product
Manager of These Products
• Television
• Medicine
• Yale University What’s the Next Product?
• Home Telephone
• Mainframe Computers
• Desktop PC’s
• Book Stores
Copyright iOO Associates 1999
You Are The Product Manager
• Television • Cable
• U.S. Mail • E-mail
• Medicine • Managed Care
• Yale University • Co-Education
• Home Telephone • Cellular Telephones
• Mainframe Computers • Mini-computer
• Desktop PC’s • Mobil Internet PC
• Book Stores • Amazon.com
Copyright iOO Associates 1999
Shopping Continuum
• Main Street
• Malls
• Mini Malls
• Internet
• e-malls
• v-malls
Copyright iOO Associates 1999
Ways to Innovate Products
• Product Extension
• Pattern Reversal
• Strange Attractors
• Distinction that Make a Difference
Copyright iOO Associates 1999
Product Extension
• Elaboration: modify or perfect what exists
– Disney
– Sony Walkman
– Virgin Atlantic
• Recycle: Bring back the old (revered)
– POGS
– Vests, Wide Ties, Cuff Links, Suspenders
– Bell Bottom Jeans
– Titanic
– Snow White
Copyright iOO Associates 1999
Pattern Reversals
• Burgers • Veggie Burgers
• Fancy Coffee (Starbucks) • Fancy Juice (Jamba Juice)
• Women's Business Suits • Victoria Secrets
• Soda • Fruit Juice
Copyright iOO Associates 1999
Strange Attractors (Paradox)
• Beanie Babies
• Teenage Mutant Ninja Turtles (Names)
• Star Wars
• Star Trek
• G.I. Joe
• Barbie Dolls
• LL Bean Outwear
Copyright iOO Associates 1999
Distinctions That Make A Difference
• Products • Process
– Books – Reading
– Exercise Equipment – Exercise
– Education – Participation
– Golf Clubs – Practice
– Winning – Effort
Copyright iOO Associates 1999
What is Price?
• The amount of money charged for the
product or service.
• The sum of the values exchanged for the
benefits of having or using a product or
service.
Copyright iOO Associates 1999
What is Performance
• Meet customer expectations.
• Delight customers with your product or
service. Do something satisfying.
• Sustaining customer satisfaction.
• Customer value = difference the value
gained and the cost to acquire.
• TQM = Total Quality Management
• Exchange (trade value) versus Transaction
( build relationship)
Copyright iOO Associates 1999
Class 8
Copyright iOO Associates 1999
Product Development Strategies
“Architecting” the Unmet Need
Copyright iOO Associates 1999
Strategies to Obtain New Product Ideas
• Acquire Companies
• Acquire Patents
• Acquire Licenses
• Innovate New Original Unique Products
• Product Improvements
• Product Modifications
• Create New Brands
Copyright iOO Associates 1999
Why New Products Sometimes Fail
• Design Problems
• Missed the Unmet Need
• Missed the Target Market
• Missed the Target Market Size
• Bad P’s
• Time To Market was too Long
• Competition Beat You to the Punch
Copyright iOO Associates 1999
The Five Phases of the
Product Development Process
• Idea Phase
– Generate and Screen Ideas
– Market Size, Development Time Cost, ROI
• Demonstration Phase
– Concept Development and Testing
– Prototype Development and Testing
• Execution Phase
– Business Analysis
– Marketing Strategy
– Design, Build and Test
Copyright iOO Associates 1999
– Commercialization
The Five Phases of the
Product Development Process
• Adjustment Phase
– Find out What Works Fix what Doesn’t
• Learning Phase
– Lessons Learned Review
– Development Learning Histories
Copyright iOO Associates 1999
Marketing Strategy Development
• Describe
– Target Market and Size, Is it Worth It? Can We
Win?
– What are the P’s Strategy
– Sales and Profit Goals and Objectives
– Commercialization
• When
• Where
• To Whom
• How
Copyright iOO Associates 1999
Product Life Cycle M
• Birth: Product Development + Introduction
• Growth
• Maturity G
• Decline
• Death Show Me The Money!
B Copyright iOO Associates 1999
Goals of Product Life Cycle By Phase
• Birth +Introduction
– Low Sales
– High Costs
– Negative Profits
– Marketing is Focused on Awareness
– Product is First Version Minimal Features
– Price to Build Early Adopters Luminaries
Copyright iOO Associates 1999
Goals of Product Life Cycle By Phase
• Growth Phase
– Sales Increase
– Profits Increase
– Goal is to Penetrate Market and Get Share
– Product Has More Features and Benefits
– Price to Penetrate Market to Build Share
– Expand Distribution (Place)
– Promote to Generate Mass AIDA
Copyright iOO Associates 1999
Goals of Product Life Cycle By Phase
• Maturity Phase:
– Sales Peak
– Low Cost Structure
– High Profits
– Maximize Profits and Defend Share
– Product Diversification
– Price to best Competitors
– Build More Distribution (Place)
– Promotion to Stress Differentiation and Benefits
Copyright iOO Associates 1999
What Happens in the Decline and
Death Phase?
Bad Stuff!
Don’t go there without a plan to be
re-borne!
Copyright iOO Associates 1999
Product Mix = Product Lines Offered
• Product Line Width
– Number of different product lines
• Product Line Length
– Total number of items in the line
• Product Line Depth
– Number of different versions of each product
A company can expand Width, Length and Depth!
Copyright iOO Associates 1999
Key Goal of New Product
• Customer Awareness
• Customer Interest
• Customer Evaluation
• Customer Trial
• Customer Adoption
The Faster the Better!
Copyright iOO Associates 1999
Speed of Adoption is Influenced By
• Communicability
• Relative Advantage
• Compatibility
• Complexity
• “Tri-ability”
Copyright iOO Associates 1999
Adoption By Whom?
The Target Market
Copyright iOO Associates 1999
Market Targeting starts with...
• Segmentation Evaluation
– Size and Growth Potential
– Attractiveness
– Can We Win?
• Do we have the resources to attack?
• Are we positioned to attack?
• Do we have unique competitive advantages?
• Are their substitute strategies
Copyright iOO Associates 1999
Market Targeting and ends with...
• Market Positioning
– Developing positioning for each segment
• Who are the potential customers?
• How do they think about us?
• How do they think about the competitors?
• What are their IDEAL offerings?
– Develop marketing mix (P’s) for each segment
• Differentiation
• Distinction that make a difference
Copyright iOO Associates 1999
Types of Market
• Business Markets
• Consumer Markets
Copyright iOO Associates 1999
Business Market are Unique
• Fewer, larger buyers
• Fluctuating demand
• More professional buyers
• More complex decision process
– more people involved
– more formal, e.g. bids, RFQ’s
– long term relationship oriented
Copyright iOO Associates 1999
Business Buyer Players
• Gatekeepers
• User Buyer
• “Influencers”
• Financial Buyer
• Decision Maker
Copyright iOO Associates 1999
Class 9
Mid Term Examination
Copyright iOO Associates 1999
Class 10
Mid Term Examination Review
Copyright iOO Associates 1999
Class 11
Place: Distribution and Logistics
Copyright iOO Associates 1999
Distribution
• A Distribution Channel
– A set of inter-dependent organizations
– Intermediaries
– Purpose: involved in the process of a product or
service available for use by the
consumer
– Also called a channel
Copyright iOO Associates 1999
The Purpose of Intermediaries
• Greater ability to get goods to the target
market
• Intermediaries have
– capability (experience)
– capacity(resources available)
– contacts
– capital
Copyright iOO Associates 1999
What do Intermediaries do?
• Provide Information
• Provide Promotion
• Provide Contacts
• Provide Capital
• Provide Physical Movement of Goods
• Negotiate Sales Process
Copyright iOO Associates 1999
Types of Marketing Channel
• Direct: Manufacture to Consumer
• Indirect: Manufacturer to Retailer to Consumer
• Other: Manufacturer to Wholesaler to
Retailer to Consumer
Copyright iOO Associates 1999
Channels Can Be Conflicted
• Horizontal Conflict:
– Firms at the same level
• Vertical Conflict
– Firms at different levels of the same level
• Examples
Copyright iOO Associates 1999
Vertical Marketing Systems
• Corporate Direct
• Contractual Less Direct
– Wholesaler
– Retailer
– Franchise
• Manufacturer Sponsored Retailer
• Manufacturer Sponsored Wholesaler
• Service Firm Sponsored
• Administered Indirect
Copyright iOO Associates 1999
Horizontal Marketing Systems
• Two or More Companies Involved
• Companies at the same channel level join
forces to explore marketing opportunity
• Examples
– B of A Banks and Albertson’s Grocery
– Starbucks and Barnes and Noble
Copyright iOO Associates 1999
Channel Design and Management
• Selection of Partner Alternatives
• Non Exclusive or Non-exclusive Contract
• Motivation
– Financial
– Non-financial
– Quotas
– Minimums
• Performance Evaluation
Copyright iOO Associates 1999
The Purpose of Logistics
• Get right product to the right customers,
right time and the right place
• A key to creating and keeping customers
• Information technology has created
opportunities for distribution efficiencies
– Snyder Trucking
– Lands End
Copyright iOO Associates 1999
The Goals of Logistics
• Provide Customer Delivery Service at Least
Cost
• Maximize Profits by Cost Optimization
Copyright iOO Associates 1999
The Functions of Logistics
• Order Processing
• Warehousing, Storage and Distribution
• Inventory Management (JIT)
• Transportation (Land, Sea and Air)
• Cost Reduction
• Customer Satisfaction
Copyright iOO Associates 1999
Transportation Methods
• Air: High Cost, Good for Low Bulk Items
• Truck: Cost Effective, Flexible and Efficient
• Sea: Lowest Cost, Slowest
• Rail: Cost Effective, Good for Bulk Items
• Pipelines: Oil, gas chemicals, costly
Copyright iOO Associates 1999
Transportation Selection Criteria
• Speed
• Dependability
• Capability
• Availability
• Cost
Copyright iOO Associates 1999
Integrated Logistics Management
• Cross Functional and Cross Geographic
Teams
• Channel Partner Cooperation
• Third Parties
– Shipping Agents and Freight Forwarders
– Insurance Companies
– Shipping Companies
Copyright iOO Associates 1999
What is Retailing?
• All activities involved in selling goods and
services to the ultimate end user for their
personal non-business use
• Examples
– Home Depot
– Sears
– Victoria Secrets
– Nike
Copyright iOO Associates 1999
Retailers Can Be Classified By:
• Amount and Degree of Service
• Length and Breadth of Product Lines
• Pricing Structure
• Type of Organization
Copyright iOO Associates 1999
Classification By Product Line
• Specialty Stores:Narrow Line Deep Assortment
• Department Stores: Wide Variety, Assortment
• Supermarkets: Wide Variety, Household Items
• Convenience: Limited Line High Turnover
• Superstores: Large Assortment, Routine Items
• Category Killer: Giant Specialty Store
Copyright iOO Associates 1999
Retailer Organization Types
• Corporate Chains
• Retailer Cooperatives
• Voluntary Chains
• Franchises
• Merchandising Conglomerates
Copyright iOO Associates 1999
Non Store Retailing
• Direct Marketing
• Direct Selling
• Automatic Vending Machines
• Catalogues and Direct Mail All Must Use
• TV Shopping Shoes The ‘P’s” for
• Online Shopping Success!
• Home and Office Parties
Copyright iOO Associates 1999
What is Wholesaling?
• All the activities involved in selling goods
and services to those buying for resale or
business use.
Copyright iOO Associates 1999
What Wholesalers Do!
• Selling and Promotion
• Providing Assortment
• Bulk Purchases
• Warehousing of Goods
• Transportation of Goods
• Financing the Purchase of Goods
• Market Information
• Management and Administration
Copyright iOO Associates 1999
Types of Wholesalers
• Manufacturers
• Brokers and Agents
• Merchants
Copyright iOO Associates 1999
What is Place?
• Distribution channel
• Direct Marketing / Selling
• E-Marketing / Selling
• Dealer Organizations
• Franchise organizations
• Retail Organizations
Copyright iOO Associates 1999
What is Packaging?
• Product
• Service
• Education / Training
• Financing
• Selling Approach
– Emotionally Based
– Knowledge Based
Copyright iOO Associates 1999
Marketing as a System
Persuasion
Place People
Package
Copyright iOO Associates 1999
Class 12
Integrated Marketing Communications
Copyright iOO Associates 1999
Integrated Marketing Communications
• Advertising: A paid form of non-personal presentation by a sponsor
• Personal Selling: Personal Presentation by a companies sales force
• Sales Promotion: Short term incentives to increase sales
• Public Relations: Unpaid publicity with public
• Direct Marketing: Direct communications with people and
immediate response
Copyright iOO Associates 1999
Communication
• With Whom? The Target Market
• Why? Create Awareness, Knowledge, Preference, Purchase
• What Purpose? Stimulate Attention, Interest, Desire, Action
• How? Personal and Non-personal Media
Copyright iOO Associates 1999
The Promotion Mix
• Advertising: Reach, Expressive, Impersonal
• Personal Selling: Relationships, Costly
• Sales Promotion: Short lived incentives
• PR: Economical and Effective
• Direct Mail: Customized, Immediate
Copyright iOO Associates 1999
The Types of Promotion Strategy
• Push: Pushes the product through the channel
• Pull: Induces or pulls the customer to the product
• Which to use depends on:
– Type of product and market
– Buyer readiness stage
– Product life cycle stage
Copyright iOO Associates 1999
Marketing as a System
Promotion
Perception
People
Positioning
Copyright iOO Associates 1999
What is Promotion?
• Advertising
• Public Relations
• Direct Marketing
• Personal Selling
• Sales Promotions
• Education
This is the mix of marketing communications
Copyright iOO Associates 1999
What is Advertisement?
• Non personal presentation of ideas, goods
and services by an identified sponsor
• US advertisers spend over $200B each year.
Copyright iOO Associates 1999
Advertising Objectives
• Build Primary Demand for Products and Services
• Build Selective Demand
• Comparison of one Brand to Another Brand
• Reminder of Product Features, Benefits etc.
Copyright iOO Associates 1999
Advertising Spending Depends on...
• Product Life Cycle Stage
• Market Growth
• Market Share
• Competitive Differentiation / Clutter
• Frequency
Copyright iOO Associates 1999
Advertising Strategy Requires...
• An Idea or Creative Concept
• Message Development
• Meaningful to the Target Market
• Believable by the Target Market
• Easily Differentiated by the Target Market
Copyright iOO Associates 1999
Continue Class 13
Advertising
Copyright iOO Associates 1999
Types of Advertising Messages
• Testimonial
• Evidenced Based
• Technically Based
• Personality Based
• Mood / Image
• Fantasy
• Lifestyle
• Slice of Life
Copyright iOO Associates 1999
Advertising Media Selection Criteria
• Reach, Relevance, Frequency, Impact
• Media Type (TV, Radio Print)
• Media Vehicle (Forbes Magazine=Print)
• Media Timing (Quarterly, Annually etc.)
Copyright iOO Associates 1999
What is Sales Promotion?
• Short Term Incentives
– Samples
– Coupons
– Refunds
– Contests
– Sweepstakes
– Games
Copyright iOO Associates 1999
Objectives of Sales Promotions
• Pull Consumers to New Product
• Pull Customers from Competitors
• Reward Loyal Customers
• Build Relationships with the Target Market
• Promote the Brand
• Stimulate Purchase
• Motivate Sales People (Spiffs)
Copyright iOO Associates 1999
What is Public Relations?
• Build Good Relationships
• Press Relationships
• Lobbying
• Investor Relations
• Public Affairs
• Product Publicity
Copyright iOO Associates 1999
Public Relations Tools
• Special Events
• Speeches
• Corporate Materials (Videos, Annual Report)
• News and TV
• Web-sites
• Editorials
• White Papers
Copyright iOO Associates 1999
Apple Computer Promotion
• iMac
– Edison
– Einstein
– Bob Dylan
– Ansel Adams
– Frank Sinatra
Copyright iOO Associates 1999
Building Business Vision, Strategy and Tactics
• What business should we be in?
• What technologies should we focus on?
• What customer segments should we focus
on?
• What is our strategic vision?
• What performance dimension should we
focus on?
• What are our performance targets?
Copyright iOO Associates 1999
Building Business Vision, Strategy and Tactics
• What is the time frame for each target?
• How can we achieve higher growth?
• Can growth be attained by current product
extensions?
• Will we need to diversify to achieve
growth?
• How should we allocate our resources to
produce growth and high return?
Copyright iOO Associates 1999
Building Business Vision, Strategy and Tactics
• Of the alternative strategies which will
produce greatest return?
• What operational resources can we leverage
to increase efficiency?
• What competencies and knowledge can we
leverage to achieve time to market?
Copyright iOO Associates 1999
Excellence: Takes Time Peak
Performance
Arousal Control
Enjoyment
Challenge Anxiety
Energy Relaxation
Possibility
Worry Character
Character
Bridge
Boredom
Apathy
Skill / Capability
Copyright iOO Associates 1999
The Continuum of Time
• Before
• Now
• After
Copyright iOO Associates 1999
“The Artist Is The Antennae of the Race”
………..Ezra Proud
Copyright iOO Associates 1999
What is Perception?
• Perception is about what we notice
• How we select out the signal from the
background noise
• Customers make choices on perceived
value.
• Satisfaction is determined by perceived
performance.
• Meet or exceed expectations
Copyright iOO Associates 1999
Perception is Influenced by:
• Beliefs
• Ideas
• Values
• Interest
• Attitudes
• Emotions
• Thinking
• Thoughts
• State of Mind
Copyright iOO Associates 1999
Perception
• The Ladder of Inference
– From A Wealth of Information
– Select data
– Add meaning based upon what we believe
– Make assumption about meaning
– Adapt Belief or Value
– Take Action
Copyright iOO Associates 1999
Perception
• Private: What we think or thought
• Public: What society thinks or thought
Collective Mind: What we as individuals accept
(shared vision), unified perception
Copyright iOO Associates 1999
Creating Perception is about
Conveying Meaning
• Sentence: String of words trying to convey
meaning
• Pictures: Visual image trying to convey
meaning
• Meaning: Poems, music, dance, art, books
Copyright iOO Associates 1999
Listening
• Listening = the doorway through which
we allow the world to enter.
– How we listen
– To whom we listen
– Assumptions we listen with
• Learning = new ways of thinking that
changes perception and actions
Perception of Reality
Copyright iOO Associates 1999
What is Positioning?
• Image of products, services or company
– Coke: It’s the real thing.
– Nike: Just Do It, I Can.
– Apple: Think Different.
– Intel: Intel inside of everything.
– Sun: The network is the computer.
– G.E.: We bring good things to life.
Copyright iOO Associates 1999
Swoosh
Corporate Image
(The Real Me)
Michael Jordon Tiger Woods
Ken Griffey Jr. Jim Courier
ME
Jackie Joyner Kersee
Michael Johnson
Be Like Mike!
Nike Promotes Sports (the goal), Not Sales (desired outcome)
Copyright iOO Associates 1999
U.S. Army
• Command and Control • Adaptive Management
• Regiment • Flexibility
• Give Orders • Team Work
• Take Orders • Participation
• Follow Orders • Judgement
• Heroes • International Citizen
• Soldier / Employee • Self Esteem
A Transforming Product
Copyright iOO Associates 1999
What is Persuasion?
• Selling
– Strategic
– Tactical
• Customer Opinion
• J.D. Powers
• Consumer Reports
• Luminary Sites
Copyright iOO Associates 1999
Class 13
Branding
Copyright iOO Associates 1999
Branding
It’s the Brand Stupid!
Copyright iOO Associates 1999
“If you want to get rich, find something
no one wants any more and make
it valuable by what you do to it.”
………………………….Walt Disney
Copyright iOO Associates 1999
So What Makes a Brand?
Copyright iOO Associates 1999
The World’s Top Twenty Brands
• 1. McDonalds • 11. IBM
• 2. Coca-Cola • 12. Nike
• 3. Disney • 13. J&J
• 4. Kodak • 14. Visa
• 5. Sony • 15. Nescafe
• 6. Gillette • 16. Kellogg's
• 7. Mercedes-Benz • 17. Pepsi Cola
• 8. Levi’s • 18. Apple Computer
• 9. Microsoft • 19. BMW
• 10. Marlboro • 20. American Express
Copyright iOO Associates 1999
30 Most Reputable Companies in America
• Johnson & Johnson • Amazon.com
• Coca-Cola • IBM
• Hewlett-Packard • Sony
• Intel • Yahoo
• Ben&Jerry’s • AT&T
• Wal-Mart • FedEx
• Xerox • Proctor&Gamble
• Home Depot • Nike
• Gateway • McDonald’s
• Disney • Southwest Airlines
• Dell • America Online
• General Electric • DaimlerChrysler
• Lucent • Toyota
• Anheuser Busch • Sears
• Microsoft • Boeing
Copyright iOO Associates 1999
Top Global Ad Spenders ($MM)
• Proctor & Gamble • $4,693
• General Motors • 4,108
• Unilever • 3,698
• Ford • 2,422
• Daimler-Chrysler • 2,090
• Philip Morris • 2.025
• Nestle • 1,909
• Intel • 1,700
Copyright iOO Associates 1999
Brand
A unique identity that sets the
product, person, place apart and
makes them / it stand out.
Copyright iOO Associates 1999
Brand is About…...
• Expectation
• Performance
• Feelings
• Emotion
• Beliefs
• Relationships
• Value
• Depth of Product Offering
• Reduced Risk
• Relevance
Copyright iOO Associates 1999
Brand Creates
• Awareness
• Recognition
• Preference
• Insistence
• Loyalty
• Relationship
• Equity / Value
Copyright iOO Associates 1999
The Dimensions of Brand
• Brand Weight: Relevance (Influence)
• Brand Length: Reach (Connection)
• Brand Breadth: Range (Appeal)
• Brand Depth: Respect (Loyalty)
Brand is what you / the company stands for.
Copyright iOO Associates 1999
People as Brands
• Ronald Reagan
• Jesse “The Body” Ventura
• Jewel Kilcher
• Colin Powell
• Bill Graham
• Wolfgang Puck
• Madonna
• Tiger Woods
Copyright iOO Associates 1999
Places as Brands
• Disneyland
• Las Vegas
• Vail
• Hawaii
• Paris
• Yosemite
• Pebble Beach
Copyright iOO Associates 1999
Products as Brands
• Lexus
• Big Mac
• Dockers
• Fubu
• Rolex
• K2
• Pings
Copyright iOO Associates 1999
Building Brand Strategy By
• Line Extension
– Current brand names extended to new forms,
sizes and flavors of current product category
• Brand Extension
– Current brand name extended to new product
categories
• Multi-brands
– New brand names in the same product category
• New Brands
Copyright iOO Associates 1999
Product Brand Expansion Grid
Existing Product Category New Product Category
Existing
Brands Line Extension Brand Extension
New Brands Multi-brands New Brands
Copyright iOO Associates 1999
What’s Brand Got To Do With It?
Everything!
Everything is a Brand
Copyright iOO Associates 1999
Advertising Spending for Media
Media 1999 Spending Households $/Household
• Newspapers • $46.6B 60m $776
• Broadcast TV • $41.0B 100m $410
• Radio • $16.9B 99m $171
• Cable • $9.8B 65m $151
• Internet • $4.6B 50m $92
Copyright iOO Associates 1999
Online and Direct Marketing
• Purpose
– Direct Targeted
– Customer Databases
– Deepening Customer Loyalty
Copyright iOO Associates 1999
Forms of Direct Marketing Communications
• Direct Mail
• Catalogue Marketing
• Telemarketing
• Direct Response TV Marketing
• Kiosk Marketing
• Online Marketing
• Customer Facing Selling
Copyright iOO Associates 1999
Types of Online Marketing
• Online Services (AOL, CompuServe, Yahoo)
• The Internet (e-Bay, Amazon.com)
Copyright iOO Associates 1999
Benefits of Online Marketing
• Consumers • Companies
– Convenient – Relationship Building
– Private – Cost Reduction
– D,I,K, U, KH,W – Efficiency
– Interactive – Flexibility
– Immediate – Global Reach
Copyright iOO Associates 1999
Online Marketing Channels
• Electronic Storefront
• Online Advertising
• Forums
• Exchanges
• Webcasting
Copyright iOO Associates 1999
Class 14
Personal Selling
Copyright iOO Associates 1999
• “Then I asked: Does a firm
persuasion that a thing is so, make
it so? He replied: All poets believe
that it does and in all ages of
imagination this firm persuasion
removed mountains; but many are
not capable of firm persuasion of
anything”.
William Blake
1793
Copyright iOO Associates 1999
What is Personal Selling?
• Prospecting for Business
• Communicating
• Information Gathering
• Order Taking
• Relationship Building
Copyright iOO Associates 1999
What is the Role of the Sales Person
• Probe Customer Problems
• Build Relationships
• Serve Unmet Needs
• Negotiate T’s and C’s
Copyright iOO Associates 1999
The Function of Sales Management
• Recruitment and Selection
• Sales Structure
• Sales Strategy
• Sales Training
• Sales Commissions / Compensation
• Sales Supervision
• Sales Evaluation
Copyright iOO Associates 1999
Sales Force Strategy and Structure
• Territories / Geography Focused/ Regions
• Product Focused
• Customer / Industry Focus
• Team Selling
Copyright iOO Associates 1999
What Makes a Good Sales Person
• Enthusiasm
• Self Confidence
• Persistence
• Initiative
• Aptitude
• Analytical and Organization Skills
• Personality
Copyright iOO Associates 1999
Sales Training
• Product Features and Functions
• Company Strategy / Vision
• Competition Strategy
• Presentation Skills
• Influence Management Skills
• Relationship Building Skills
Copyright iOO Associates 1999
Sales Management and Motivation
• Sales Budget (Orders, Sales, Profitability)
• Incentives (Orders, Sales, Profitability)
• Sales Team Awards and Recognition
– Plaques
– Award Trips
– Bonus
– Merchandise
Copyright iOO Associates 1999
Sales Time / Task Management
• Telephone 21%
• Travel 20%
• Customer Facing 30%
• Service Calls 20%
• Administration 17%
Copyright iOO Associates 1999
Sales Compensation
• Base Salary
• Performance Based Bonus / Commissions
• Benefits (Car, Expense Account, Freedom)
Copyright iOO Associates 1999
Sales Force Metrics
• Orders, Sales, Profitability
• Share
• New Customer Orders
• Customer Retention
• Call Rate
• Monthly Activity Report
• Expense Reports
• Local Meetings
Copyright iOO Associates 1999
The Selling Process
• Lead Prospecting and Qualification
• Sales Strategy
• Presentation / Demonstration
• Handling Objections
• Close the Business
• After Order Follow-up to Build Relationships
Copyright iOO Associates 1999
Pricing
Class 15
Copyright iOO Associates 1999
What is Price?
• The amount of money charged for the
product or service.
• The sum of the values exchanged for the
benefits of having or using a product or
service.
Copyright iOO Associates 1999
Pricing Strategy Decision Criteria
• Internal Factors
– Marketing Objectives
– Marketing Mix Strategy
– Cost Structure
– Organizational Goals
Copyright iOO Associates 1999
Pricing Strategy Decision Criteria
• Marketing Objectives
– Survival: low, cover variable costs
– Maximum Profit:
– Market Share: low as possible price
– Quality Leader: High Performance
Copyright iOO Associates 1999
Pricing Strategy Decision Criteria
• Marketing Mix Variables that Affect
Pricing
– Product Design and Quality
– Distribution Strategy
– Promotion Strategy
Copyright iOO Associates 1999
Pricing Strategy Decision Criteria
• Cost Structure
– Fixed Costs (salaries, rent etc.)
– Variable Costs (raw materials)
– Total Costs=FC+VC
Copyright iOO Associates 1999
External Factors Affecting Pricing Strategy
• Competition (What are they doing)
• Market Place (What’s the Expectation)
• Current Demand (High or Low)
• Economic Conditions (Recession)
• Social Conditions (Unemployment)
• Government Actions (War)
Copyright iOO Associates 1999
Types of Market Condition
• Pure Competition: Many Buyers and Sellers
Price Has Little Effect
• Monopoly: Single Seller, Sets Market Price
• Oligopoly: Few Sellers, Each Sensitive to
the others Price Strategy
Copyright iOO Associates 1999
Types of Demand in the Market
• Inelastic Demand:
– Demand hardly changes with a small change in
price
• Elastic Demand
– Demand changes with a small change in price
Copyright iOO Associates 1999
Types of Pricing Approach
• Value Based Thinking • Cost Based Thinking
– Customer First – Product First
– Value – Cost
– Price – Price
– Cost – Value
– Product – Customer
Which do you prefer?
Copyright iOO Associates 1999
Competitive Forms of Pricing
• Set Based on the Competition
• Set Based on What is Expected in the Market
• Sealed Bid or RFQ, price is set on what you
think the competition will bid
Copyright iOO Associates 1999
Pricing Strategy Expansion Grid
High Price Low Price
High
Quality Premium Good Value
Low Overcharging Economizing
Quality
Copyright iOO Associates 1999
New Product Pricing Approaches
• Market Penetration
– Set low price
– Attract customers to build share
• Marketing Skimming
– Set high price
– maximize revenues and profits
Copyright iOO Associates 1999
Pricing Scenarios
• Product Line Pricing (Steps in line)
• Optional Add On (Automobiles)
• Captive Pricing (Razor / Blades)
• Bundling: (Personal Seat License / Tickets)
Copyright iOO Associates 1999
Ways to Reduce Price
• Trade In Allowance (Cars)
• Seasonal Discount (Cars)
• Functional Discount
• Quantity Discount
• Cash Discount
• Provide another product or service in
addition, i.e. more value
Copyright iOO Associates 1999
Price Justification Strategies
• Promotion Based (We are running a promo)
• Psychologically Based (Price going up)
• Location Based (FOB origin, CSF Brazil)
• International
Copyright iOO Associates 1999
Relationship Marketing
Class 16
Copyright iOO Associates 1999
What is Value?
• Product
• Service
• Image
• Brand
• Relationships
Copyright iOO Associates 1999
What is Customer Satisfaction?
• When a company’s performance fulfills the
buyer’s expectations
• Expectations are based on:
– Past experience
– Opinions of others
– Promises
Why is it Important?
Copyright iOO Associates 1999
Because…..
• Satisfied Customers are:
– Less price sensitive
– More Loyal, are retained by the firm
– Promote the company and it’s products
– Buy more
– Create more profits
Copyright iOO Associates 1999
What is Relationship Marketing?
• Creating Customers
• Maintaining and Enhancing Relationships
by offering
– Financial Benefits
– Social Benefits
– Structural Ties
Copyright iOO Associates 1999
The Value Chain
• Inbound Logistics (Vendors,Raw Materials)
• Operations (Producer adds value)
• Marketing and Sales (the P’s)
• Outbound Logistics (Clean, pack, ship)
• Service (Installation and Warranty)
Where profit margins are created!
Copyright iOO Associates 1999
Competitive Analysis (S.W.O.T)
• Who are your competitors?
• What are their:
– Objectives
– Current Strategies
– Strengths and Weaknesses
– Patterns and Practices
• Where might they go from here?
• When could they move?
Copyright iOO Associates 1999
The Ways Companies Compete
• Innovation or Product Leadership
– Foresight, Ideas, Implementation
• Operational Excellence
– Quality Focus
– Flexible Production
– Teamwork
• Customer Intimacy
– Customer Focus
– Relationship Marketing
Copyright iOO Associates 1999
Competitive Position Strategies
• Market Leader • Expand Market / Share
• Challenger • Attack the Leader
• Follower • Do as the Leader Does
• Nichers • Focus and Serve
Copyright iOO Associates 1999
Companies Can Be Either….
• Product Oriented
• Customer Oriented
• Competitor Oriented
• Market Oriented
Which is best?
Copyright iOO Associates 1999
The Challenges of Being Global
• Exchange Rates and Hedging Strategy
• Tariffs and Trade Barriers
• Corruption
• Language
• Customs and Culture
• Laws and Business Practices
Copyright iOO Associates 1999
Why Go Global?
• Profitable Growth Opportunities
• Current Domestic Market Shrinking
• Market Diversification
• Competition Attacking Domestic Market
Copyright iOO Associates 1999
How to Enter Global Markets
• Go Direct
• Use Representatives or Distributors
• Joint Venture Partnerships
• OEM to Locally Connected Company
Copyright iOO Associates 1999
Globalization of the Product
• Language
• Features and Function Changes
• Local Laws and Standards
• Export and Import Regulations
• Design Changes (120/240v)
Copyright iOO Associates 1999
The Tao of Product Management
Copyright iOO Associates 1999
Management
• Derived From the Italian (maneggio) and
the French (manege)
• The meaning is the training, handling and
riding of a horse.
Who’s the horse?
Copyright iOO Associates 1999
Management’s Past
• Command
• Control
• Set Direction
• Taming the horse
• Willingness of people to be managed
Copyright iOO Associates 1999
Management’s Future
Copyright iOO Associates 1999
Tao Te Ching
The Classic Way and It’s Virtue
(The essential nature, to go straight to the heart)
Copyright iOO Associates 1999
Tao Te Ching
• Tao • Te
– Dynamic – To Go
– Patterns – Straight
– Awareness – To The Heart
– Cycles – Character
– Flow (challenge, skill) – Integrity
Copyright iOO Associates 1999
The 21st Century
Leadership Requirements
• Structure Around Process Rather Than
Functions
• Key Figure a Self Directed Worker Rather Than
Administrative Manager
• Basic Work Unit a T.E.A.M. Rather Than The
Department
• Style is One of Learning Rather Than Analysis
• Leader as Coach / Steward / Mentor / Enabler
Rather Than Manager / Controller / Scorekeeper
/ Director
• Leadership is Everywhere or Nowhere
Copyright iOO Associates 1999
The C’s of Change in Business
• Content Change
• Context Change
• Conduct Change
• Capacity Change
• Capability Change
How Do We Transform With It?
Copyright iOO Associates 1999
Implications for Product Management
Role, Responsibility, Relationships
Copyright iOO Associates 1999
The New Way and It’s Virtue
• Commitment
• Collaboration
• Communication
• Responsibility
• Accountability
Copyright iOO Associates 1999
Commitment
• Definition:
– A process of continued effort by individuals or teams to
focus on and to achieve their goals and objectives.
• Attributes:
– Foster, participation, active optimism, constructive
questioning and positive critique in the decision
process.
– Foster a climate of cooperation and collaboration.
– Foster informal communication with those who have
different views.
– Foster a positive assumption about what is and
patience with what may be.
– Foster convergence and alignment by reconciling
diverse views
Copyright iOO Associates 1999
Commitment
"Until one is committed, there is hesitancy, the chance to draw back, always
ineffectiveness. Concerning all acts of initiative and creation, there is
one elementary truth the ignorance of which kills countless ideas and
splendid plans: that the moment one definitely commits oneself, then
providence moves too. All sorts of things occur to help one that would never
otherwise have occurred. A whole stream of events issues from the decision,
raising in one's favor all manner of unforeseen incidents, meetings and
material assistance which no man could have dreamed would have come his way.
Whatever you can do or dream you can, begin it. Boldness has genius, power
and magic in it. Begin it now. "
--Johann Wolfgang Von Goethe
Copyright iOO Associates 1999
Collaboration
• Definition:
– A process of influence by individuals or teams to
motivate a group to strive to accomplish objectives.
• Attributes:
– Influence others by ideas.
– Rise above organizational boundaries and jurisdiction
to influence
– Facilitate coalition building.
– Collective capability building
Copyright iOO Associates 1999
Communication
• Definition:
– A process of dialogue by individuals or teams to listen
and learn from each other in the pursuit of shared
goals.
• Attributes:
– Be Open
– Seek first to understand others.
– Seek to be understood.
– Be supportive.
Copyright iOO Associates 1999
Responsibility
• Definition:
– A feeling of caring by individuals or teams pursuing
shared goals.
• Attributes:
– To Be the best you can be.
– To Do your best you can
– Be responsible to colleagues and customers
Copyright iOO Associates 1999
“Concerning all acts of initiative, there is one
elementary truth the ignorance of which kills
countless ideas and splendid plans: the moment
one definetly commits oneself, then Providence
moves too. All sorts of things occur to help one
that would never otherwise have occurred. A
whole stream of events issues from the decision,
raising in one’s favor all manner of unforeseen
incidents and meetings and material assistance
which no man could have dreamed would come
his way. Whatever you can do or dream you can
do, begin it. Boldness has genius, power and
magic in it. Begin it now.
Johann Wolfgang von Goethe
Copyright iOO Associates 1999
Vision
Values Mission Strategy 7C’s
S,F,I,I,US,I,MM,V,A,PG
Copyright iOO Associates 1999