1. MKTG 6201 Overview Company & Competition
Organizational success depends on alignment…
within the internal system and with the external environment. The role of management is to recognize & resolve tensions.
Smith and Lewis 2011
The answer to which strategy is most effective is never…
A is more effective than B, but rather…
A is more effective under Conditions C1 &
B is more effective under Conditions C2.
The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, & still retain the ability to function. F. Scott Fitzgerald 1945
Glenn Voss

2. Case Analysis & Recommendation
In case analysis, you apply frameworks and models to generate insights for solving a real or simulated business problem to achieve organizational success.
You also calculate metrics to assess the likely outcomes associated with various alternatives.
Your recommendation is formulated as a strategy.

3. Case Analysis & Recommendation
Models
Frameworks
Metrics
Concepts & Terminology

4. What is Terminology?
A system of words used to name concepts in a particular discipline.
Examples:
Objectives, Resources & Capabilities
Segmentation, Targeting & Positioning
Product, Price, Promotion-Communication, Place-Channel
Customer Relationship Management
Customer Acquisition & Retention
Customer Satisfaction & Value

5. Terminology An objective is defined as:
The criterion by which the success or failure of the strategy is measured.
Characteristics of well-written objectives:
Lists a quantified standard of performance.
Designates a clear time frame.
States goal in measurable terms.
Should be challenging but realistic.
Objectives frequently require trade-offs; e.g., increasing market share versus increasing profits; acquiring new customers versus retaining current customers.
Samsung: 23% market share & 28% share of profits
Apple: 9% market share & 72% of profits
Worldwide mobile phones

6. We are interested in resources & capabilities that are
Terminology (cont)
Resource: tangible (e.g., equipment, machinery, mail list), intangible (e.g., brand name, customer knowledge), or human asset that the firm currently possesses.
Capability: the ability to deploy individual resources (e.g., patents, know-how, brand names, equipment) to perform a task or activity to produces a desired end result. What the firm can do (i.e., skills) as a result of teams of resources working together.
We are interested in resources & capabilities that are
rare & valuable.

7. Common Job Interview Mistakes

8. What is a Metric?
A measure for quantitatively assessing a complex process or outcome, along with procedures for carrying out and interpreting the measures.
Frequently become objectives, for example:
Market share
Revenue or Unit sales volume
Incremental contribution
Customer lifetime value (CLV)
Growth in any of the above (e.g., % change from last year or quarter)

9. Common Intermediate Objectives (Metrics) Not as compelling as Volume or Financial Objectives
Customer satisfaction
Customer loyalty
Customer acquisition & retention
Customer trial & repeat
Brand awareness
Brand preference
Brand loyalty
Brand equity

10. What is an Analytic Framework?
A structured approach to defining, analyzing or communicating the characteristics of a complex system or process.
Examples:
Comprehensive Metabolic Panel, CBC…
Google’s PageRank Algorithm
Competitive Advantage
SWOT Analysis
Product-Market Growth Strategies

11. Competitive Advantage (Framework)
How to create, communicate, capture, and sustain unique value for the customer:
Cost Leadership – Lowest cost structure (large share & low price)
Marketing Differentiation – providing superior perceived value by developing
Unique image (brand-centric differentiation) achieved through targeting, positioning & communication capabilities (large share, high advert costs)
Close relationships with customers (customer-centric differentiation) achieved through CRM capabilities & customization (higher prices & costs)
Product Differentiation – offering superior economic value by creating superior product/service features & quality through innovation & product development capabilities (small-to-medium share, large profit margins)

12. Other Terminology with Similar Meaning Marketing Differentiation
Cost Leadership
(Operations & Logistics Driven)
Tata/Dell
Operational
Excellence
"A great deal"
"Best price"
"Trouble free basic service"
Product Differentiation
(R&D, Technology & Sales Driven)
Marketing Differentiation
(Brand Advertising or CRM Driven)
Product or Innovation
Marketing Differentiation
Differentiation
Customer Responsive
"Always at cutting edge"
“Great brand"
"High price but worth it"
"Really understands me"
"Constantly renewing and creative"
“Valuable business partner"
Porsche/Apple
GM/IBM
See McKinsey’s “Unbundling the corporation

13. Core Strategy Overview
Cost Leadership -
Operational Excellence
Lowest delivered cost
Reliability/efficiency
Top down – employees directed
Flat structure
Standardized
Logistics/fulfillment
manufacturing
Scale
Production
Supply chain
Price, reliability, access…
Mkt Penetration & exploration
Price & distribution
Marketing Differentiation –
Brand- or Customer-centric
Complete personalized solution
Infomediary
Front-line autonomy
Have it your way mindset based on fine-grained information
Modular operations
Integrated view of customer
Service
Scope
Customer/Collaborator relations
Positioning & Communications
Relationships, customization, full service…
Customer satisfaction & retention
Product proliferation, promotion & lateral collaborators
Product/
Innovation Differentiation
Innovative features
Greater functionality
Decentralized
Team-oriented/ loose-knit
Experimentation
Product development
Market sensing
Speed
Product Innovation
Competitor knowledge
Innovation, design, features…
Product & market exploration
Product innovation & key collaborators at all levels
Thrust of strategy
Organization
Core processes
Economic driver
Critical Capabilities
Value Proposition
Marketing Objectives
Implementation

14. SWOT Analysis Incorporating the 5 Cs
Company1 Strengths
Identify valuable & rare resources & capabilities that the company1 currently possesses.
Opportunities
Relevant opportunities w/respect to customers2, collaborators3, competitors4 & the overall socioeconomic, technology, legal context5.
Company1 Weaknesses
Identify valuable & rare resources & capabilities that the company1 currently lacks.
Threats
Relevant threats with respect to customers2, collaborators3, competitors4 & the overall socioeconomic, technology, legal context5.
See the Primer on SWOT Analysis

15. What is a Model?
A hypothetical or simple description of a complex system or process.
Effective strategies rely on insightful or valid models.
Examples:
Aristotle’s Geocentric Model
Newton’s Model of Classical Mechanics
Marketing Strategy Formulation & Implementation
Product Life Cycle Model
Demand Elasticity Models
accounted for all observations of the movement of the sun and the moon, and the planets, and the stars;
good predictor of future positions of celestial bodies (i.e., verifiable)
simplicity (Principle of Parsimony) - as few assumptions or rules as possible & no contradictions.

16. Porter’s Value Chain Model Competitive Advantage in the Value Chain
Product Differentiation
Marketing Differentiation
Cost Leadership

17. Marketing Process Model
SWOT Analysis
Company
Customers
Competitors
Collaborators
Context
Market Segmentation
Selection & Targeting
Product/Service Offering Positioning
Product/Service Offering
Promotion/ Communication
Pricing
Place/ Channel
Create Value
Communicate & Capture Value
Sustain Value
Customer Relationship Management
Customer
Acquisition
Customer Retention/Expansion
Revenue & Profits

18. Marketing Strategy Model Formulation & Implementation
Objective(s)
Target Customers – Segment, Profile & Target
Segmentation & Targeting define product market , competitors & product-market growth strategy.
Objective(s)
Target Customers – Segment, Profile & Target
Key Competitors – Objectives, target customers, strategy, strengths & weaknesses
Core Strategy – Competitive advantage; market penetration, market development, product development, or diversification; & positioning
Marketing Mix Implementation
Product Strategy
Pricing Strategy
Channel Strategy
Communications Strategy
CRM Strategy

19. Segmentation Variable Framework
Demographic
Age
Family size
Family life cycle
Gender
Social class
Income
Occupation
Education
Race
Generation
Geographic
Country/Region/Culture
Urban/rural
Climate
Psychological
Lifestyle
Personality traits
Expertise & awareness
Attributes/Benefits sought
Behavioral (esp. w/CRM)
Usage rate & loyalty
Occasions
Purchase patterns
For working professionals in North Texas seeking career advancement, the Cox PMBA is a part-time program that…

20. VALS Psychographic Groups (Framework)
Use in the Flare Case to Develop Customer Descriptions
self-expression, ideals & achievement determine customers’ product/brand orientation
Take the VALS survey at:

21. Marketing Strategy Model Formulation & Implementation
Objective(s)
Target Customers – Segment, Profile & Target
Key Competitors – Objectives, target customers, strategy, strengths & weaknesses
Core Strategy – Competitive advantage; market penetration, market development, product development, or diversification; & positioning
Marketing Mix Implementation
Product Strategy
Pricing Strategy
Channel Strategy
Communications Strategy
CRM Strategy

22. Competitor Analysis See Market Evolution
The first thing to note about the competitive environment is the number of competitors. As the number of competitors increases (decreases):
Competitive market is more fragmented (concentrated),
Barriers to entry are lower (higher),
Supply and demand are more heterogeneous and dynamic,
Competitive advantage focuses more on product-centric innovation (downstream brand-centric or customer-centric differentiation or cost leadership)
Growth focuses more on revenues (profits) & customer acquisition (retention).

23. Competitor Analysis See Product Market Definition
Philosophy
which is related to
Objectives
Strategy
Strengths & Weaknesses
Offensive or Defensive
Leader or Follower
Growth (revenue/market share) or profit related objectives?
Competitive advantage
Cost leadership
Marketing differentiation
Product differentiation
Targeted customers
Offering position
Resources & capabilities to:
Develop & produce superior products
Communicate & distribute offering
Manage customer relationships

24. Marketing Capabilities
Product Management: develop & deliver superior-quality or customized goods & services.
Communications Management and Brand-building: create and manage customer value perceptions leading to high levels of brand equity, using effective: positioning, advertising message delivery, personalized communications, & integrated marketing communications
Pricing Management: extract the optimal revenue & profit from customers through price discrimination tactics, e.g., using sophisticated yield management capability; unrelated to charging a high (product or marketing differentiation) or low (cost leadership) price.
Channel Management: establish and manage channels of distribution that effectively and efficiently deliver value to end-user customers
Customer Relationship Management: identify profitable customers and prospects and initiate, maintain, and leverage relationships with these customers to create superior customer- level profits. Requires data collection & interpretation for individual customers, individual customer targeting capability, and personalized communications capability.
Market Sensing & Customer Insights: Ability to learn about customers, competitors, channel members and the broader market to develop actionable market intelligence and customer segmentation and targeting schema
Marketing Planning & Implementation: conceive and implement marketing strategies that optimize the match between the firm’s resources (including multiple product lines and brands) and the marketplace to achieve superior sales and profits

25. Marketing Strategy Model Formulation & Implementation
Objective(s)
Target Customers – Segment, Profile & Target
Key Competitors – Objectives, target customers, strategy, strengths & weaknesses
Core Strategy – Competitive advantage; market penetration, market development, product development, or diversification; & positioning
Marketing Mix Implementation
Product Strategy
Pricing Strategy
Channel Strategy
Communications Strategy
CRM Strategy

26. Product-Market Growth Strategy Framework K&P pp. 7-12
Markets
Existing
New
Market Penetration
Expand share and/or size of current customer wallet
Market Development
Acquire new customer markets
Existing
Offerings
Product Development
Develop new offering features/attributes
Diversification
Develop totally new offerings targeting new markets
New

27. Product & Market Exploration Capabilities
Markets
Existing
New
Cost Leadership: Google and Amazon mostly compete by building scale to exploit their digitally-delivered data management and search capabilities
Exploitation
with incremental refinement of current product & market capabilities
Market exploration
Adapt current offering to create new market (& capabilities); e.g., new geographic market or new therapeutic use for existing drug
Existing
Amazon “good at making everything as low-cost as possible.”
Google’s “cloud services will cost 50% less than competing products.”
Offerings
Product exploration
Create new product features & capabilities that enhance offerings’ appeal to current markets
Product & Market exploration
Create entirely new product-market categories & capabilities;
New
Can Amazon’s Kindle compete effectively in the tablet market?
Can Google X deliver “world-changing moonshots”?

28. Product & Market Exploration Capabilities
Markets
Samsung has repositioned itself as a competitive consumer brand, exploiting existing capabilities, developing new product (features &) development capabilities, & spending “$3 billion on ads, compared with Apple’s $933 million and Microsoft’s $1.9 billion.”
Existing
New
Exploitation with incremental refinement of current product & market capabilities
Market exploration
Adapt current offering to create new market (& capabilities); e.g., new geographic market or new therapeutic use for existing drug
Existing
Samsung “built its business around producing & selling components to … Apple, Sony & Hewlett-Packard…” & doubles Apple’s investment in equipment
Apple’s strength has been in creating or establishing entirely new product-markets (i.e., radical or disruptive innovation) in rapid succession (i.e., speed) but has not delivered since Jobs’ departure.
Offerings
Product exploration
Create new product features & capabilities that enhance offerings’ appeal to current markets
Product & Market exploration
Create entirely new product-market categories & capabilities;
New
Apple (Jobs): “Consumers don’t know what they want.”
iPod, iPhone, iPad…
Samsung: “We get most of our ideas from the market.”

29. Marketing Strategy Model Formulation & Implementation
Objective(s)
Target Customers – Segment, Profile & Target
Key Competitors – Objectives, target customers, strategy, strengths & weaknesses
Core Strategy – Competitive advantage; market penetration, market development, product development, or diversification; & positioning
Marketing Mix Implementation
Product Strategy
Pricing Strategy
Channel Strategy
Communications Strategy
CRM Strategy
Internal consistency between objectives, target customers & competitors, core strategy, and marketing mix implementation is the single-most important criterion for grading case recommendations.

30. Strategic Marketing Problems Cases: Cases in course packet
MKTG 6201 Course Materials
Textbook:
Strategic Marketing Problems
Roger Kerin & Robert Peterson (K&P)
Cases:
Cases in course packet
Lectures and Discussions:
In conjunction with cases & handouts of slides

31. MKTG 6201 Course Learning Outcomes
At the end of this course, you should be able to:
Understand how company strengths & weaknesses & external opportunities & threats influence the success of a marketing strategy;
Develop and communicate marketing action plans that effectively target, attract, and retain profitable customer segments; &
Conduct basic quantitative analyses to evaluate the outcomes associated with alternative marketing programs.
Qualitative Analysis
Recommendation
Metrics/Quantitative Analysis

32. Assessment & Grade Distribution
Group Homework (5 × 4) 20
Final Examination
Total 40
Cox Recommended Grade Distribution
A/A- 40%
B/B+ 50%
B-… 10%

33. Sample Grade Sheet Topic Poor Fair Good Excellent Financial Comparison
What assumptions are required to make the next-best alternative better?)
.25 .5
.75 1
Economic Value Analysis and
Consistency with price elasticity estimates
Comparative advantage analysis
Summary marketing strategy
TOTAL

34. Financial Analysis in Marketing K&P Chapter 2
Marketing Pro Formas
Breakeven Analysis
Customer Lifetime Value (CLV)
Sales Forecasts
Economic Value Analysis
Channel Margin Calculus
Demand Elasticity

35. Developing Pro Forma & B/E Analyses
Traditional Line Items Revenues Cost of Goods Sold Gross Margin (Profit) Operating Expenses (e.g., SG&A) Operating Margin (Profit)
Dollars Price * Quantity COGS/unit * Quantity GM/unit * Quantity Variable (VC) & Fixed (FC) Revenue–COGS–VC–FC %
100%
COGS%
GM%
Can vary
Net Income Before Tax
Income Tax
Net Income After Tax -
See the South Delaware Coors Pro Forma
To conduct breakeven analysis for a proposed change, group variable costs
VC = COGS & Variable Operating Expenses
And then focus on Incremental Fixed Expenses

36. Organizing for Effective B-E Analysis
Traditional Income Statement
Sales revenue
Cost of goods sold
= Gross margin (profit)
Selling expenses
Depreciation
Administrative overhead
= Operating margin (profit)
Interest expense
= Pretax profit…
Incremental Costing
Sales revenue
Incremental, avoidable VC
= Total (Gross) contribution ($)
Incremental, avoidable FC
= Net contribution (profit)
Other fixed or sunk costs
= Pretax profit…
Contribution Margin % (CM%) = Total Contribution / Sales revenue
Contribution Margin $ ($CM) = Total Contribution / Sales volume
or $ Contribution per unit

37. Breakeven (BE) Analysis
To calculate Incremental Sales Revenue required to breakeven (BER) for a given level of incremental fixed costs (FC):
Net Contribution = Incremental Revenue – VC – FC
Net Contribution = Incremental Revenue – VC – FC
0 = (Q * P) – (Q * VC/unit) – FC
= Q (P – VC/unit)
0 = (Q * P) – (Q * VC/unit) – FC
+ FC
– FC
+ FC
FC/(P – VC/unit) = Q required to break even (BEQ)
BER = BEQ * P
VC = Incremental Variable Cost
Q = Incremental Quantity
P = Incremental Price
CM = P – VC/unit
See also

38. Calculate Breakeven for the Following Opening a New Office
Variable Costs
Fixed Costs/Year
COGS 20% Direct Operating Costs 20% Total Variable Costs 40%
Fixed salaries 160,000 Depreciation 50,000 Utilities & phone 12,000 Insurance 10,000 Interest 20,000 Property Taxes 10,000 Maintenance/Janitorial 5,600 Miscellaneous 2,400 TOTAL $270,000
Selling Price =
$25
BEQ =
FC/(P – VC/unit)
BEQ =
BER =

39. Review Questions What does organizational success depend on?
What are the 5 Cs and how do they relate to a SWOT analysis?
What are three approaches to achieving competitive advantage? Which are most relevant to marketing?
What are some key marketing resources & capabilities?
What are the 5 steps in the marketing strategy formulation & implementation model?
What are the 4 key growth strategies?
What are the 5 marketing mix elements (4 Ps + 1)?

40. Chris Millican, Boston Consulting Group
Next Week
Chris Millican, Boston Consulting Group
South Delaware Coors Case
This is a practice case that addresses whether an MBA student should invest in a Coors distributorship in South Delaware. The initial decision focuses on which marketing research to purchase in order to assess the viability of the distributorship. You will have ten minutes during class to make that decision as a group. After purchasing the research, you will have 20 minutes to develop a pro forma and recommendations for the Coors distributorship (see the Coors Excel spreadsheet).
If you need more background on breakeven analysis, review the Breakeven Tool. To complete the spreadsheet, fill in the key assumptions that are highlighted in yellow. The spreadsheet should fill in as you enter these numbers. Note that constructing spreadsheets in this manner is extremely important because it allows you to conduct “What-if” analyses by simply changing your assumptions.
To prepare for class, read the case carefully, review the Coors Excel spreadsheet, and think about the following questions.