Starting a Marketing Firm by yij43587


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       Firm Keys to Success
               PMBA 623
           Dr. Charles Noble   1
Firm A: Starting Situation
   • High volume producer, but losing market
   • Small, lower feature vehicles at
     aggressive price
   • In Economy, Family and Utility Classes
   • Serves Segments 1-3 (focus on families)
   • Broad distribution of medium quality
   • Medium quality technology profile
   • Competes primarily with Firm D

Firm A: Keys to Success
   • Improve products while maintaining margin. Reposition
     on “value” rather than cheap.
   • Low Cost Generic Strategy – Use upgrades and volume
     to reduce costs
   • Win Family class through Alfa upgrades
   • Develop new class to serve your strong segments
        • Minivan (2M) or Truck (3T/1T)
   • Take advantage of B2B opportunities, especially where
     distribution requirements keeps competition out
   • Watch cost to carry debt (stock / l-t bonds)

Firm B: Starting Situation

    • High end supplier with premium pricing
    • In Family, Sports and Luxury Classes
    • Has monopoly position in Sports Class
    • Exclusive distribution w/ good service,
      but doesn’t have the coverage.
    • Excellent quality technology profile
    • Competes primarily with Firm C

Firm B: Keys to Success
  • Differentiation Strategy
  • Maintain premium price positioning by leveraging tech
    capability advantage, expanding development centers
    (product innovation), and advertising (not promo).
  • Grow sports class through upgrades (major) and
    marketing. Target 4S. Be prepared to defend against
    new entrants.
  • Target 4L with new luxury vehicle and enter other high
    end markets (4M, 4U, 5U, 5T) and/or new platforms
    within existing classes
  • Improve dealer satisfaction and perhaps expand
    dealership coverage but not so much to hurt “exclusive”
    positioning and excellent service
Firm C: Starting Situation

   • Positioned on the higher end with mid-
     premium pricing
   • In Family, Minivan and Luxury Classes
   • Good distribution w/ good service
   • Good quality technology profile
   • Competes primarily with Firm B

Firm C: Keys to Success
   Two Approaches:
   • Differentiation strategy – take over
     technology and distribution quality
       • Opportunities: 4M, 5U, 2 Luxury (4L/5L), 3S
   • Focus / Low Cost strategy – increase
     capacity, expand into family segment and
     enter utility class
       • Opportunities: 2F, 2E, Utility
   • Being conservative will lead to early
     profit, but long-term challenges if B is
     more innovative.
Firm D: Starting Situation

   • Positioned in the largest volume
     segments / classes
   • In Economy, Family, and Truck Classes
   • Unbalanced distribution of poor quality
   • Medium quality technology profile
   • Competes with Firm A + E

Firm D: Keys to Success
  • Low Cost Generic Strategy - Use upgrades and
    volume to improve COGS%
  • Don’t lose leadership in family class (>50% margin)
    while exploring new opportunities.
  • Either leverage vehicle class experience…
       • 1T and 2E
  • …Or, leverage core segment experience
       • 2M, 2E, 1T
  • Improve distribution coverage and quality
  • B2B after expanding distribution coverage
  • Watch cost to carry debt (stock / l-t bonds)

Firm E: Starting Situation

    • Large size / value producer – “Truck
    • Good position in higher growth, higher
      margin markets, but no clear overall
    • Poor technology profile
    • Lower “quality” products
    • Competes with A and D

Firm E: Keys to Success
   • Successfully defend position in utility through
     product improvement and new products for 3U
     and/or 4U
   • New product for 3T and reposition for 1T
   • Reposition Efizz more on value than just cheap
   • Invest in technology for cost and innovation as
     products are improved
   • Explore opportunities in B2B, especially Delivery,
     and expand distribution to qualify
   • Be prepared for sales drop off in larger vehicles if
     gas prices increase. 3T and 3U vehicles can provide
   • Watch cost to carry debt (stock / l-t bonds)
The Value Cycle

 Manage the Performance Dynamic

                            Profit =
          Unit Sales                x     Unit Margin               - FC
    (Demand x Share) x (Sell. Price –                    COGS) - FC

    - Economy       - “Quality”         (MSRP - %)     -“Quality”      - R&D
    - Industry    - Relative $Ad          - Value         - Tech    - Capacity
     Dynamics          - Price                             Cap.        -Tech
                                           - Price
    (products,    -- Distribution        Sensitivity    - Volume     - Distrib.
     adv$,etc.)    - Preference                        - Upgrade       - Adv

Align with strategic positioning model                                  13
(e.g. focused differentiation, etc.)
Past Comments from Participants
• This is hard!!!
  • All the information is inter-related (and changing)
• Clear strategy is very important
  • Tough to stay on strategy
  • Concentrate on what we do best
  • Decision-making easier once we had a basic
    direction on where we wanted to go
• It starts with the customer
  • Understanding customer preferences and needs
    must be a key decision driver
  • If you are making a $100 million decision, spend
    $25K on market research.                       14
Past Comments from Participants

 • You Are Not Alone
   • Never underestimate your competition
   • Watch competitor’s moves and anticipate their
     actions and potential impacts to your business
   • Relative inattention to competitor pricing and
     positioning strategy gets you in trouble
 • Remember the Profit Dynamic
   • Invest in areas that create long-term value that
     you can capture
   • “Any Fool Can Cut Prices” – T.Kinnear
 • Importance of Teamwork and Organization


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