how to use frameworks

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PuttingitallTogether:HOWTOUSEFRAMEWORKSTOSOLVEMARKETINGCASES1

Thechallengethatisnotsoobvious

Ihaveobservedseveralstudentsstrugglewithmarketingframeworks.Marketingframeworks,ontheonehand,canseemdeceptivelysimple;theSTPframework,the4Psframework,the3Csframeworkandthelikesarequitestraightforwardandcanbecomprehendedatfirstglancewithoutmuchdifficulty.Ontheotherhand,whenpresentedwithrealworldcasestudies,withrichqualitativeandquantitativeinformationaboutthemarketsize,marketgrowthrate,consumerbuyinghabits,marketsharesofincumbentbrands,thegrossmarginsthatacompanycanhopetoexpect,andpotentialtechnologyinnovations,evengraduatestudentswithbusinessexperienceareoftenstumpedabouttheapplicabilityoftheframework.Thechallengingpartofmarketingframeworksisnotreallyinknowingorcomprehendingtheseframeworks;thechallengeisinbeingabletousetheseframeworkswhenpresentedwithacomplexrealworldcase.

Ihaveencounteredtwotypesofquestions.Thefirstonepertainstothestartingpointoftheanalysis:WhereshouldIstart?WhichframeworkshouldIusefirst?Thesecondonepertainstotheintegrationoftheseframeworks:Howdotheseframeworksrelatetoeachother?Thepurposeofthisnoteistoofferanoverviewofthevariousframeworksthatcanbeusedforaprototypicalmarketingcase.Ihaveschematicallydepictedthehowmostrelevantmarketingframeworksconnecttoeachotherinfigure1.Thereadermightwanttotakealookattheschematicdepictiontogetanoverviewbeforereadingfurther.Beginwithtargeting&growthstrategy

Ithinkthefirststepinsolvingamarketingcaseistoidentifythemostattractivemarketingstrategyfortheproduct.AsIwillexplainlater,strategicdecisionsaredistinctfromtacticaldecisions.Themarketingstrategyforaproductcomprisesoftwoelementstheproductspositioningstatementanditsgrowthstrategy.TheframeworkthatismostlikelytohelpstudentsarriveattheproductstrategyistheSTP(segmentationtargetingpositioning)framework.So,agoodplacetobeginisbyaskingthequestionwhatarethedifferenttypesofconsumersinthismarket?Theanswertothisquestionshouldrevealthesegmentsthatexistinthemarket.Fromthere,thestudentwouldbeabletodiscernthemotivationofeachsegmentWhyisaparticularsegmentbuyingthecategory?Whatbrandaretheycurrentlybuying?Isthereasegmentthatisdissatisfiedwiththecurrentofferingsinthemarket?Armedwiththeseconsumerinsights,thestudentcanthenproceedtocraftapositioningstatementfortheirownproduct.Thepositioningstatementwillidentifywhoisyourtargetsegment(who),whatisshecurrentlybuying(competition)andwhyshouldshebuyyourproduct(commonlyreferredtoasUSPuniquesellingpropositionorvalueproposition).TheUSPorthevaluepropositionreferstothe1PreparedsolelyforthepurposeofclassdiscussionbyManojThomas,CornellUniversity.Pleasedonotcirculatewithoutpriorpermission.

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distinctivebenefitsthatyourproductoffers(usuallyitisoneormoreofthefollowingthreegenericcompetitiveadvantages:costadvantage,functionaldifferentiationoremotionaldifferentiation).Thepositioningstatementalsoidentifiesthesegmentsthatwillbemostresponsivetoyouroffering.

Thesecondpartofyourstrategyspecifieshowyouwillgetgrowthintheidentifiedsegment:whetherthegrowthintheidentifiedsegmentisgoingtocomebyincreasingpenetration(newcustomers),byincreasingfrequency(existingcustomers)orthroughinnovations(offeringnewproducts).

Identifyingthebeststrategy:Usevolumeprojectionsandfinancialanalysis

Usually,severaldifferentviableoptionswillemergeatthisstage.Thestudentstaskatthisstagewouldbetoassessthefinancialattractivenessofeachoption.Aneffectivemarketersendgoalistoprofitablymanagehisorherbusiness2;itisaboutthedollarsanddimesthatthebusinessgenerates.Unlikethecommonmyth,marketingisnotjustaboutthesonganddancethatgoesintopersuadingaprospectivecustomer.Themostrelevantcriteriatoevaluatevariousproductstrategiesaresales,revenuesandprofits.Whenyouhaveidentifiedthemostprofitablesegmentandyourpositioningandgrowthstrategyinthatsegment,youhaveamarketingstrategyinplace.WhendoItalkabout4Ps?

Itisimportanttohighlightthedistinctionbetweenstrategicdecisionsandthetacticaldecisions.Strategicdecisionsshouldalwaysprecedethetacticaldecisions.Tacticaldecisionsmightchangefromyeartoyearormarkettomarket,butstrategicdecisionsdonotchangefrequently.Asnotedearlier,strategicdecisionsentailarticulatingyourpositioningstatement(whoisyourtarget,whatisshebuying,andwhyshouldshebuyyourproduct),andwhetherthegrowthisgoingtocomebyincreasingpenetration(newcustomers),byincreasingfrequency(existingcustomers)orthroughinnovations(offeringnewproducts).Oncethestudentidentifiesthemostprofitableproductstrategy,shecanthenproceedtodecisionsaboutthetacticalelementsdecidingproductattributes,price,promotionsanddistributionplans.Acommonmistakethatmanyamateurmarketersmakeisjumpingtothetactics(Iwillrunacoolad,orIwillreducetheprice)withoutgivingmuchthoughttothesegmentationandpositioningissues.WhendoItalkaboutbranding?

Brandingdecisionsalsoemanate(oratleastitshouldemanate)fromthestrategy.Brandingistheartofeffectivelycommunicatingyourmessage,andbuildinganemotionalconnectionwiththe2Ishouldaddherethatagoodmarketingmanagershouldmanagehisprofitswithoutcompromisingonconsumerwelfareortheorganizationsintegrity;butIreservethediscussionontheissueofethicsinmarketingforadifferentnote.

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customer.Itisusefultothinkofbrandingascreatinganetworkofconceptualassociationsinconsumersminds.Forexample,SteveJobshasmanagedtobuildassociationssuchascreative,coolandinnovativeinconsumersminds(seewww.brandtags.net).Sometimes,theseassociationscanelicitspontaneousaffectiveresponsesandthuschangeconsumersevaluationsandpreferences.Infact,evenbrandassociationsthatareunrelatedtotheproductcanchangeconsumersperceptionsofproductattributesand/oritcanchangetheimportancethattheyplaceofvariousattributes.Brandingismoreimportantissomeindustries(e.g.,Coke)thaninothers(e.g.,Cisco).Onceagain,brandingissuescannotbethoughtofinisolationwithoutconsideringtheproductstrategy.Toknowwhatbrandassociationswillhelpyourbusiness,andwhatbrandassociationswillhurtyourbusiness,youshouldhaveaclearideaaboutyourtargetmarket,competitivesetandyourgrowthstrategy.Whatistheroleofquantitativeanalysis?

Itisimportanttounderstandhowsomeofthequantitativeanalysistoolsrelatetothiswayofthinking.Quantitativedataandanalyticaltoolsenableyoutoempiricallytestsomeofthesehypothesesthatunderlieyourmarketingdecisions.Forexample,conjointanalysisisusefulindecidingwhatcombinationofproductattributeswouldconsumerspreferthemost.Factoranalysisandperceptualmappingcanbeusedtoempiricallytestyourpositioningstatement.ATAR(AwarenessTrailAvailabilityRepeat)modelsareusefulinmakingvolumetricforecasts.TheBassmodelofdiffusionwouldtellyouhowthepaceofproductdiffusioncanchangethesizeofthecategoryandthustheattractivenessofthemarket.Empiricalvalidationisnotonlyhelpfulinidentifyingthebeststrategicdecision,italsohelpfulinpersuadingyourstakeholders.ACEOismorelikelytobewillingtogiveyoutheresourcethatyouseekwhenyourplanissupportedbyempiricaldata.However,empiricalanalysiscanbeusedonlytovalidateyourdecisionsortestyourhypothesis.Thestrategywillnotspontaneouslyspringfromtheempiricalresults.Norcanempiricalresultsbeasubstituteforyourjudgment.Youwillhavetointerprettheempiricalresultsanduseyourjudgmenttoarriveatthemostoptimaldecision.

Theiterativenatureoftheanalysis

Finally,acaveatalthoughIrecommendthatyoubeginyouranalysiswithstrategicdecisions,Iamnotsuggestingthatyourdecisionmakingprocesswillmovelinearlyfromproductstrategyto4Psandbranding.Theprocessislikelytobeiterative;basedonyourconsiderationsoftacticsandbrandingstrategy,youmayhavetorevisitandchangeyourproductstrategy.Thatiswhysomeofthearrowsinthefigure1arebidirectional.

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FIGURE1

S.T.P.Framework WHOISBUYING?

WHY

ISSH

EBUYING?

Segment1Segment

2Attribute/Benefit1 Important

NotImportant

Attribute/Benefit2

NotImportant

Important

Volumetric

Analysis

&B

reak

Even

Analysis

TARGETING&GROWTHSTRATEGYPOSITIONINGSTATEMENT

Tocustomerswhoarelookingfor____________,brand________isbetterthan__________because__________________(costbenefit,functionaldifferentiation,oremotionaldifferentiation)

GROWTHSTRATEGY

Increasepenetration Increasefrequency Innovation

BRANDINGDECISIONS Brandextensionvs.newbrand Brandname Brandassociations Brandpersonality Brandelements(logo,color,font)

TACT

ICAL

DECIISIONS

4Ps

ProductDecisions Mainbenefit Attributeconfiguration Packaging

PricingDecisions MSRP Penetrationorskimming Perceivedqualityimplications EDLPorSeasonalpromotions

DistributionDecisions Directsaleorthroughchannels Exclusiveormassmarket Channelmargins Distribution&inventorycosts Salesforceplanning&incentivesPromotionDecisions Promotionalmessage(Creativebrief) Mediastrategy(online/offline/print/electronic) Advertisingbudget