1 Objectives and Strategy

2 Product Life Cycle ODI Dell FedEx Jones Blair AA

3 Generic Problem 1: New Product Strategies Customer adoption Opinion leaders Awareness and trial

4 ODI Case Will the right customers adopt this product? What is the feasible introduction strategy? How to implement the introduction strategy? EVC Diffusion process (advantage, complexity, compatibility, observability, risk, divisibility) Success of the product depends not only on EVC but also on barriers to adoption

5 ODI Case Will the right customers adopt this product? What is the feasible introduction strategy? How to implement the introduction strategy? Innovators and opinion leaders Company resources Regional approach

6 ODI Case Will the right customers adopt this product? What is the feasible introduction strategy? How to implement the introduction strategy? Awareness and trial Targeted promotions Company-sponsored experiment(s) Cash flow issues

7 Generic Problem 2: Formulating Growth Strategies Customers Product Old New Market Penetration Market Development DiversificationProduct Development

8 Dell Case Are Dell’s online growth objectives feasible? How to achieve those growth objectives? How to implement growth strategies? Industry dynamics Dell’s competitive advantage Online growth Will Dell sustain its advantage in the online market?

9 Dell Case Are Dell’s online growth objectives feasible? How to achieve those growth objectives? How to implement growth strategies? Online channel Product focus Geographic focus Customer focus Prioritize the strategic options based on growth potential, economics, and competitive advantage

10 Dell Case Are Dell’s online growth objectives feasible? How to achieve those growth objectives? How to implement growth strategies? Key to implementation is “Premium Pages” Sales force issues

11 Generic Problem 3: Strategies for Mature Markets Customer segmentation Targeting Managing marketing mix

12 Jones Blair Case What are market segments? Which segment(s) should JB target? What are the strategies for targeted segment(s)? Why segment How to segment Segment Characteristics Key to success in mature industries is better segmentation

13 Jones Blair Case What are market segments? Which segment(s) should JB target? What are the strategies for targeted segment(s)? Segment attractiveness (growth, price sensitivity, appreciation for quality, competition…) Company strength (distribution, premium positioning, resources) Key to strategic choice is to select the attractive segment(s) where company is strong and competitors are weak

14 Jones Blair Case What are market segments? Which segment(s) should JB target? What are the strategies for targeted segment(s)? Play up strength (distribution) Play down weakness (price) Assess cost-benefit of programs

15 Generic Framework Situation Analysis 3 C’s Implementation 4 P’s Assess: Customer needs Company’s strengths Competitor’s position Marketing programs: Product Price Promotion Place Target segments Competitive position Alternative strategies (e.g.. retention, acquisition, expansion) Strategic Choices

16 Strategic Options

17 Conclusion Strategy formulation key issues strategic options programs 3C’s strategic choices 4P’s Key issues and appropriate strategies depend on –stage of the product lifecycle –company size and resources –short and long run objectives of the company –nature of competitive environment

18 Citibank Case: Preparation Questions Should Citibank launch the credit card? –Consider qualitative factors –Consider the economics of launching cards, that is, how many customers do we need in order to be profitable? (Use the available revenue, fixed cost, and variable cost numbers in the case. Calculate acquisition cost per customer from information in Table A.) –Is this number reachable? (what % does it represent of your selected target segment.) Feasible for Citibank? Who should be target segment (type of customer)? How should the card be positioned? Which countries to enter and in what order? –Consider country attractiveness (size of target market, card penetration, competition, etc.) vs. Citibank strength How will you acquire customers (direct mail, direct sales, take-ones, bind-ins) How will you design the product? What price will you set?