2 Agenda Tonight Overview of Ch. 3 & 4 ThoughtWorks case Starbucks assignments returned via Wed or ThursFor next week:Guest Speaker: Andrew Russell, Director of Corporate Relations, Museum of Fine ArtsChapter 7A Consultant’s ComeuppanceIntegrated Marketing CommunicationsBe prepared to discuss the readings
3 Standing Apart from the Competition “A business must set itself apart from its competition. To be successful it must identify and promote itself as the best provider of attributes that are important to target customers.”George S. Day
5 Ch 3: Focus Strategies for Services Unfocused – wide range of services to a wide range of market segmentsMarket-focused – wide range of services to a narrow market segmentService-focused – narrow range of services to a wide market segmentFully-focused – narrow range of services to a narrow market segment
7 Market Segment A group of buyers who share common: Characteristics Goals or needsPurchasing behaviorConsumption patternsSegment based on:Benefits sought by customers (customer needs)Observable characteristics of customersDeterminant AttributesSource: HBS
8 Target Market Evaluate attractiveness of market segment Determine which segments to serve and howCustomer (market analysis)Company (internal corporate analysis)Competitors (competitor analysis)
9 Segmentation in Practice: Best Buy Example Early 2000s, Best Buy was “product driven” and faced:Increased competitionEroding marginsDifficult economySource: Gulati, Ranjay (Re)(Organize) for Resilience: Harvard Business Press, 2009.
10 Best Buy Example (cont.) Customer-Centric Strategy:Figure out which customers make you the most money, segment them carefully, then realign your stores and empower employees to target those favored shoppers with products and services that will encourage them to spend more and come back often.“Angel Customers & Demon Customers” by Larry SeldenSource: Boyle, Matthew, “Best Buy’s Giant Gamble.” Fortune April 3, 2006.10
11 Best Buy Example (cont.) Identification of Customer GroupsTech fanatics (“Buzz”)Home theater connoisseurs (“Barry”)Family men (“Ray”)Busy moms (“Jill”)Source: Gulati, Ranjay (Re)(Organize) for Resilience: Harvard Business Press, 2009.
12 Busy Moms Segment: “Jill” Personal shopping assistantsJust-for-kids displaysKitchen/laundry zonesPractical signageInspiring atmosphereSource: Gulati, Ranjay (Re)(Organize) for Resilience: Harvard Business Press, 2009.
15 Best Buy Example (cont.) “Customer-Centric” ImplementationEstablished segment teamsFocus groupsLab storesExpanded pilotSegment trainingCustomer-centricity trainingEmployee recruitment & empowermentSource: Gulati, Ranjay (Re)(Organize) for Resilience: Harvard Business Press, 2009.Fetterman, Mindy. “Best Buy gets in touch with its feminine side.” USA Today, 12/20/06.
16 Positioning A unique selling proposition relative to the competition Who are the customers?What is the set of needs that the service fulfills?Why is this service the best option to satisfy those needs?Source: HBS
17 Principles of Positioning Avoid trap of investing too heavily in points of differences that are easily copied!What does our firm stand for in the minds of current and potential customers?What customers do we serve now, and which ones would we like to target?What is value proposition for our current service products, and market segments?How does each of our service products differ from competitors’?How well do target customers perceive our service products as meeting their needs?What changes must we make to strengthen our competitive position?
18 Position Statements Rarely stated in marketing collateral Evolve over time in response tomarket changescompetitive activitytechnology changescompany changes
19 Positioning Statement (1) Our(product/brand)is(single most important claim)among all(competitive frame)because(single most important support)Source: HBS
20 Positioning Statement (2) For [target end user]Who wants/needs [compelling reason to buy]The [product name] is a [product category]That provides [key benefit].Unlike [main competitor],The [product name] [key differentiation]
21 Harvard Extension School Example For nontraditional students who want high quality, thought-provoking, academic courses, Harvard Extension School is a continuing education school that provides a Harvard experience at a reasonable price.Unlike some continuing education schools, our open-enrollment courses are rigorous, designed for the student who wishes to be challenged.
23 Positioning for Thoughtworks (Case A) To Type A firms who need flexible and reliable IT solutions, Thoughtworks is the company that can provide cutting-edge applications that are high quality and quickly deployable because it is the premier innovator in Agile delivery systems.
24 Positioning for ThoughtWorks (Case B) To senior IT executives and program managers responsible for the delivery of mission-critical projects in Global 1000 companies, ThoughtWorks delivers the business value that you seek faster than any other IT consultancy because only ThoughtWorks combines a team of elite IT professionals with advanced technologies and an enterprise-level Agile approach. ThoughtWorks enables you to achieve the results you need, making you a hero in delivering business value from custom applications.
25 ThoughtWorks Debriefing Don’t trust your intuition, instead talk to customersIn the case of ThoughtWorks, every aspect of the positioning changed after talking to customers