the digital markstrat challenge - introduction ii b2c

THE DIGITAL MARKSTRAT CHALLENGE - INTRODUCTION IIB2C – DURABLE GOODS

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2Introduction to the Markstrat Challenge - Part II

YOUR SUCCESS WILL DEPEND ON YOUR ABILITY TO DEVELOP & POSITION BRANDS

POSITIONING

THROUGH

R&D

POSITIONING

THROUGH

ADVERTISING

PERCEPTUAL

MAP

MODIFYING

AND

LAUNCHING

BRANDS

NEW

DECISIONS

PERIOD 2

CONSUMERS MAKE PURCHASE DECISIONS BASED ON THEIR PERCEPTION OF YOUR BRANDS


Consumers’ perception of brands

Firms’ perception of brands

Attribute 1

Brand

ABrand

BBrand

CBrand

D

Brand

C

Brand

A

?

?

Brand

DBrand

B

Attribute 2

Brand

ABrand

BBrand

CBrand

D

Attribute N

Brand

ABrand

BBrand

CBrand

D

THE PERCEPTUAL MAP IS A VALUABLE TOOL FOR VISUALIZING BRAND POSITIONING


Segment ideal point

Perceived position of TOPS

NEE

D 1

NEED 2NEEDS: Economy, Performance, Convenience, Flexibility …

THE BRAND MAP PLOTS PERCEIVED PHYSICAL CHARACTERISTICS RATHER THAN CONSUMER NEEDS


Segment ideal point

Perceived price and

features of ROLL

SUCCESSFUL POSITIONING DEMANDS LONG-TERM THINKING AND THE ABILITY TO IDENTIFY EVOLVING OPPORTUNITIES


Gen-X

Millennials

Gen-Z

Profs

Changing segment needs

New target segment

Competitor entry

Pressure on margins

THERE ARE TWO KEY WAYS TO RE-POSITION BRANDS IN MARKSTRAT


R&D

Advertising

PerceivedPerformance

PerceivedEconomy



POSITIONING

THROUGH

R&D

POSITIONING

THROUGH

ADVERTISING

PERCEPTUAL

MAP

MODIFYING

AND

LAUNCHING

BRANDS

NEW

DECISIONS

PERIOD 2

POSITIONING WITH ADVERTISING REQUIRES SETTING "PERCEPTUAL OBJECTIVES"


-20

Profs

10

0

20

-10

-20 -10 0 10 20

5

5

11

12

PerceivedEconomy

PerceivedPerformance

CurrentPosition

Target Position

SETTING PERCEPTUAL OBJECTIVES IN MARKSTRAT


1Enter a significant

advertising budget and spend 10% to 15% in advertising research

2

Decide which scales (semantic or MDS) you

want to communicate on

3

Select the dimensionswhich you want to communicate on

4

Input the coordinatesof the point that you

want to reach on the map

2

34

1

34



POSITIONING

THROUGH

R&D

POSITIONING

THROUGH

ADVERTISING

PERCEPTUAL

MAP

MODIFYING

AND

LAUNCHING

BRANDS

NEW

DECISIONS

PERIOD 2

HOW TO MATCH BRAND CHARACTERISTICS TO CONSUMER NEEDS


SOLO Pric

e

Dis

pla

y Si

ze

Pro

cess

ing

Pow

er

Des

ign

No

. of

Feat

ure

s

Bat

tery

Life

CONSUMER NEEDS

Economy Performance Convenience

BRAND CHARACTERISTICS

WHY AND WHEN INTERFACE WITH R&D ?

R&D IS REQUIRED IN SEVERAL CASES:

• To develop and launch a brand in a new market (eg: Vodite)

• To develop and launch a brand in a new segment (eg: Millennials)

• To develop and launch a brand in a segment where you are not yet present

• To modify a brand if its characteristics do not match consumers’ expectations

• To reduce the manufacturing unit cost of an existing product.


HOW TO INTERFACE WITH R&D


1. Choose a meaningful name and enter a description

2. Enter the desired physical characteristics of the future brand

3. Enter the desired Base Cost of the future brand

4. Allocate a budget so that R&D can allocate resources and complete the project

STEP 1 - HOW TO TRANSLATE CONSUMER NEEDS INTO PHYSICAL CHARACTERISTICS ?

OPTION 1 – COPY THE LEADER• Adjust dimensions if the leader is not perfectly

positioned

• In this example, you can copy ROOT to target Millennials as this brand is very well positioned in Performance (Display Size & Proc. Power)


OPTION 2 - INTERPOLATE


This graph is available in the Semantic Scales study.

This example suggests that around 60 gigaflops would match the need of Shoppers in term of Processing Power.

Learn more about this graph in the handbook.


• In the case of the Vodite market, no competitive offerings are available to copy and/or interpolate

• For each physical attribute, the available information includes:

• In the Semantic Scale study: the expected ideal value : I

o In the handbook: the minimum and maximum level : CMin and Cmax

• Use the formula below to calculate the “ideal” attribute


7

I

C

1

CMin CMax

C = CMin + (CMax – CMin) x (I – 1)(7 – 1)


Option 1 – Choose a Base Cost that:• Is in line with the base cost of comparable competitive products; see the market report

• Provides you with a good Unit Margin: Unit Margin = Retail Price – Distribution Margin – Base Cost

Option 2 – Ask R&D to “Develop this project at the lowest possible base cost”• You will get the required product at the lowest possible unit cost

• The project will be more expensive to develop.


STEP 2 - HOW TO DECIDE ON THE DESIRED BASE COST?

Option 1 – Run an online query• R&D will tell you the budget needed to develop the project• R&D will also provide you with the project Minimum Base Cost• You do not have to allocate the entire budget in 1 year: you may complete the project

in 1, 2 or even 3 years• Beware: budgets given by online queries are usually overestimated

Option 2 – Run a Feasibility Study• The budget needed is $100,000• The project will not be completed • After one year, R&D will tell you: (1) the budget needed to develop the project; (2)

what the project Minimum Base Cost is• Quite useful to investigate various options for the new Vodite market


STEP 3 - DETERMINE HOW MUCH BUDGET IS NEEDED TO DEVELOP THE PROJECT


POSITIONING

THROUGH

R&D

POSITIONING

THROUGH

ADVERTISING

PERCEPTUAL

MAP


MODIFYING

AND

LAUNCHING

BRANDS

NEW

DECISIONS

PERIOD 2

A COMPLETED R&D PROJECT MAY BE USED TO MODIFY EXISTING BRANDS OR INTRODUCE NEW ONES


Increase performance of SOLO

Introduce new brand SOCCER

HOW TO INTRODUCE NEW BRANDS


1. Click here to launch a new brand

2. Choose a name

4. Choose the base R&D project

3. Enter the role of the new brand …

HOW TO MODIFY AN EXISTING BRAND


1. Click here to modify a brand

2. Keep the same name

4. Select MODIFY

3. Enter a new role

5. Choose the new R&D project for this Brand

BRINGING SUCCESSFUL R&D PROJECTS ONTO THE MARKET MAY RESULT IN OBSOLETE INVENTORY


Brandmodification

Brandwithdrawal TRADING COMPANY

I'll buy any inventoryat a given % of its

cost

Obsolete inventory

COST REDUCTION PROJECTS SHOULD BE WEIGHED AGAINST EXPERIENCE CURVE EFFECTS


Transfer cost

Cumulative production



POSITIONING

THROUGH

R&D

POSITIONING

THROUGH

ADVERTISING

PERCEPTUAL

MAP

MODIFYING

AND

LAUNCHING

BRANDS

NEW

DECISIONS

PERIOD 2

NEW DECISIONS INTRODUCED IN PERIOD 2

27

MARKETING

MIX

• Setting perceptual objectives

Introduction to the Markstrat Challenge - Part II

BRAND

PORTFOLIO

• Launching new brands

• Upgrading or withdrawing existing brands

R&D

• Initiating new projects

• Continuing or shelving uncompleted projects


FROM HERE ON, IT'S DOWN TO YOUR STRATEGY...

the digital markstrat challenge - introduction ii b2c

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