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Slide 1

Teaching Marketing Strategy

Professor David Reibstein
The William S. Woodside Professor and Professor of
Marketing
The Wharton School

October 26, 2006

 


Slide 2

Marketing Strategy

  • Marketing
    • Sits at the interface between the company and the customer
    • Objective: satisfy customers and do so better than other choices (competitors) they face, while making a profit

  • Strategy
    • Long term perspective
    • Guide for the tactics


Slide 3

Different paradigms of marketing
strategy

  • Porter's five forces
  • Competitive advantage
    • Cost or differential
  • Superior performance
  • Value leadership


Slide 4

Diagram of Porter's 5 Forces

Diagram of Porter's 5 Forces

[D]


Slide 5

Competitive advantage

  • Can be gained through
    • Lower costs enabling lower price
    • Superior product (service) which can be protected through IP
    • Recognizable and preferred brand (advertising)
    • Distribution and dominating the best resellers, shelf space, store location
    • Owning customers
      • Loyalty programs
      • Customer familiarity/intimacy/data


Slide 6

Achieving Superior Performance

Flow Chart titled Achieving Superior Performance

[D]


Slide 7

Customer's Views of Value Leaders

Flow Chart titled  Customer's Views of Value Leaders

[D]

Source: George Day

 


Slide 8

Process for teaching

  • Lecture
  • Cases (real life situations)
  • Simulation
  • Arrow pointing right In all instances asking, how can the company improve
    its position with its customers.

    Improve position=increase sales, market share, profitability,
    customer satisfaction, loyalty,...


Slide 9

Simulation: Industry Dynamics

Market growth Image of a graph with line making an s curve upKorex

Image of a graph with a question mark in the centerLomex

Competition No new competitors
Introduction of Lomex
Collaboration for licensing and jv's
Technology No further scientific innovation expected
Four Korex technologies
One Lomex technology
Economic environment Growing GNP
Inflation
Antitrust intervention


Slide 10

The "Competition"

Image of Mike Tyson and Evander Holyfield boxing


Slide 11

Collaboration

Image of two hands shakingImage of legal documents

 
* Negotiations Only within approved periods
* Outcome Licensing and/or joint research
* Terms Royalties: historically 3%, but deregulated now
Negotiated annual minimum royalties
Other fund transfers
* Process Written contract and approval (arbitration in case
of violation)
* Implementation Compatible decisions entered by both parties
* Risk Government invalidates contract in case of
antitrust action


Slide 12

Focus on

  • Acquiring customers, either from
    • Non-users to users
    • Competitors' customers
  • Retaining customers, via
    • Customer satisfaction leading to loyalty
    • Continuous improvement
    • Outperforming competitive options
  • General principle: retaining customers always
    more efficient than acquiring customers


Slide 13

Potential issues

  • Local monopolies
  • Competitive interaction
  • Predatory pricing
  • Collusion

 


Slide 14

Another principle--local
monopolies are good

  • Recognize not everyone wants the same thing
  • Focus on a segment
  • Satisfy that segment by focusing attention and resources
  • e.g., toothpaste for smokers

 


Slide 15

Another principle--anticipate
competitive response

  • Before taking any move,
    • assess the moves that your competition will likely take
    • Assess the likely reactions to your move before you move

  • Build the likely competitive actions and reactions into your strategy

Slide 16

Predatory pricing

  • It may be illegal, the key is the word "predatory"
  • It may be used as a temporary device for other purposes, i.e., to gain awareness, trial, or traffic, or to help sell other products (e.g., razors and blades; printers and toners)
  • Beware of lowering price, as if you think you will gain an advantage by lowering price, you may only be instigating a competitive response

Slide 17

Collusion

  • Unacceptable
    • You cannot collude on price
    • You cannot collude on who goes after which market

Slide 18

Goal

  • Serve customers
  • Build capabilities
  • Deliver value to customers and shareholders