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 1 Putting it  all Together: HOW TO USE FRAMEWORKS TO SOLVE MARKETING CASES 1  The challenge that is not so obvious I have observed several students struggle with marketing frameworks. Marketing frameworks, on the one hand, can seem deceptively simple; the STP framework, the 4P’s framework, the 3 C’s framework and the likes are quite straightforward and can be comprehended at first glance without much difficulty. On the other hand, when presented with real‐world case studies, with rich qualitative and quantitative information about the market size, market growth rate, consumer buying habits, market shares of  incumbent brands, the gross margins that a company can hope to expect, and potential technology innovations, even graduate students with business experience are often stumped about the applicability of  the framework. The challenging part of  marketing frameworks is not really in knowing or comprehending these frameworks; the challenge is in being able to use these frameworks when presented with a complex real world case. I have encountered two types of  questions. The first one pertains to the starting point of  the analysis: Where should I start? Which framework should I use first? The second one pertains to the integration of  these frameworks: How do these frameworks relate to each other? The purpose of  this note is to offer an overview of  the various frameworks that can be used for a prototypical marketing case. I have schematically depicted the how most relevant marketing frameworks connect to each other in figure 1. The reader might want to take a look at the schematic depiction to get an overview before reading further. Begin with targeting & growth strategy I think the first step in solving a marketing case is to identify the most attractive marketing strategy for the product. As I will explain later, strategic decisions are distinct from tactical decisions. The marketing strategy for a product comprises of  two elements  – the  product’s  positioning statement  and its growth strategy . The framework that is most likely to help students arrive at the product strategy is the STP (segmentation‐targeting‐positioning) framework. So, a good place to begin is by asking the question  – what are the different types of  consumers in this market? The answer to this question should reveal the segments that exist in the market. From there, the student would be able to discern the motivation of  each segment  – Why is a particular segment buying the category? What brand are they currently buying? Is there a segment that is dissatisfied with the current offerings in the market? Armed with these consumer insights, the student can then proceed to craft a positioning statement for their own product. The positioning statement will identify who is your target segment (who), what is she currently buying (competition) and why should she buy your product (commonly referred to as USP  – unique selling proposition  – or value proposition). The USP or the value proposition refers to the 1  Prepared solely for the purpose of  class discussion by Manoj Thomas,  Cornell  University.  Please do not circulate without prior permission.  

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  • 1

    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.

  • 2

    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.

  • 3

    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.

  • 4

    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


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