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Class 6 Intro to STDP

M370 Fall 2012
by

John Talbott

on 11 September 2012

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Transcript of Class 6 Intro to STDP

Funny Video
Class 6 STDP

M370 Talbott Obess over the Consumer Invent Think Long Term Every Day is Day 1 Segmentation Targeting Differentiation Positioning Today's Class Cannibalization Requirements for Effective Segmentation based on Observable Variables Measurable
Accessible
Substantial
Differentiable
Actionable From Your Text The introduction of a new product or service reduces the sales of an existing product. Is Cannibalization Good or Bad? Cleaning Substances
Market Cleaning Substances
Market Tide w/Bleach Benefit: Cleaner Clothes Observeable Variable
Age of Children Cannibalization Cannibalization Tide w/Bleach Cleaning Substances Market Tide Downy Benefit:Gentler
Observeable Variable
Small Children Cleaning Substances
Market Tide w/Bleach Tide Downy Tide Febreze Benefit: Non-Chemical Smell
Observeable Variable: Purchases of other Scent Products Tide Green? Pick Clusters based on potential and company strengths. Determine a unique or underserved area of demand for the target. Orchestrate the components of the marketing mix to achieve a valuable location in the consumer’s mind. "Evaluating each market segment's attractiveness and selecting one or more of the market segments to enter." HBR:Market Segmentation, Target Market Selection, and Positioning. Competitor Capability Matrix ability to conceive and design
production ability
marketing capability
financial strength
management and execution Competitor Capability Matrix or Differential Advantage Analysis How important is the capability listed in Column 1 to success in the segment? How good is competitor 3 in each area. Combining the two metrics to create an overall rating of the company capabilities in the segment relative to competitors. Step 1 Step 3 Step 2 Segment Assessment Tool Sum of Column BxC Beer: Refreshing Taste "Lite" Beer: Refreshing Taste and fewer calories Product
Beer with fewer calories Pricing
Same as Regular Beer Distribution (Place)
Same as Regular Beer Promotion
Emphasis on fewer Calories
More focus on Women than Regular Beer The Mix Laser Focus on most salient differences Who are the Customers?
What is the set of needs or wants this product fill? (Benefits)
Why is the product the best option to satisfy those those needs or wants? Must be a Valuable Position in the Mind of the Customer Unique Selling Position (USP) Avis Rentals
Miller Lite
Geico Segment Profitability Analysis Estimate Market Size using secondary Data Step 1 Based on the DAA/CCM estimate potential Share Step 2 Step 3 Estimate relative profitability of each segment using secondary data Adjust for Risk Step 4 These tools are developed from HBR
Article on STDP Key Points from Last Class on CLV Positioning Statement From your Text Have a Great Weekend! From your Assignment:If Brands are Built Over Years
Why are they Managed Over Quarters.
Take Reading Assessment over STDP by Tuesday at 11:00 PM A segment from a marketing standpoint is
a group of consumers with common needs or wants that can be
satisfied by a common marketing offering. Want:
Information about parenting and appropriate products to meet needs of
very small children. How can we identify people with this Want? Example: Segmentation for Non-Prescription Pain Relievers Pain Relief Gentle Effective Benefit Desired Table 1:Creating Value for Target Customers
See Table 1 Chapter 4 of your text CLV Review Problems Follow on Questions Using CLV to evaluate alternatives 1.      Remote 'R Us Company sells products on its website. It uses two methods to drive new traffic to its products. First the company uses paid search engine marketing by buying key word searches from Yahoo. It also uses banner advertising TV sites like TV.com. Key words cost 8.5 cents/Impression and historically have produced 2.1% click thru rates and a 4.3% conversion to sale rate. Pop-up adds cost $50/1000 impressions. Transaction history indicates that these produce a 2.0% click-thru rate and lead to a 3.4% conversion rate. Which of these two methods is more efficient from a cost standpoint in providing new customers?     How much improvement in the cost/ad or cost per impression is needed in order to make the more expensive acquisition method as good of a choice as the other?     Remotes 'R Us has gathered information about its customers from its CRM system. The average sale on the website is $32 dollars. Customers usually buy in about 45 day supplies so the average customer shops on the site 8 times/year. Product margins average 60% as the company sells a significant amount of the Happy Sunshine Private Brand, which it owns. The company enjoys average annual retention rates of approximately 70%. This is a result of ongoing marketing efforts in the form of emails about new products, special offers, and reminders to re-stock staples. These efforts cost about $75
/customer.
The company has been in business for 8 years and enjoys stable cash flows and little seasonality in its business. The CFO uses a 12% discount rate in all of his NPV analysis and feels that this adequately adjusts future cash flows for risk. Does the company attract profitable customers? Can you estimate CLV using the lower acquisition cost method from the previous problem   At Remote 'R US the on-going e-mail marketing program has been very effective and because of this the company is considering increasing the frequency of these emails to its customer base by 15% which is directly proportional to the cost. If it does so, they estimate that average transaction size will go up by $2 and that retention will also increase by 3% points. Should the company implement this program? Why?    Cruzer is an internet company selling bottles of all shapes and sizes. In their marketing they have utilized pop-up ads to acquire new customers. These ads are placed on high traffic websites and on Google when searchers look for words like water, bottle, etc. CLV analysis indicates that an acquired customer has a lifetime value of 80$. Acquisition of customers is done through pop-up advertising. A pop-up add costs $350/1000 exposures. Of these exposures 13% click-thru to Cruzer.com. Once at the site the company converts 3.5% of the visitors to purchase. Should Cruzer continue with the pop-up ad acquisition program? Complete Reading 4 in your text.
Reading Assessment due Next Monday night at 11:00 pm What's Next? Prior to class on Thursday you should read: Chapter 5 Products, Services, and Brands:Building Customer Value.
Reading 5: If Brands are Built Over Years Why Are They Managed Over Quarters.

There is a reading assessment for this also. It is due to be completed by midnight Wednesday and will cover Managing Brands over Quarters and Chapter 5. Be sure you have read both before you take it.
Assignment
Full transcript