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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
- Superior performance
- Value leadership
Slide 4
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
[D]
Slide 7
Customer's Views of Value Leaders
[D]
Source: George Day
Slide 8
Process for teaching
- Lecture
- Cases (real life situations)
- Simulation
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In all instances asking, how can the company improve
its position with its customers.
Improve position=increase sales, market share, profitability,
customer satisfaction, loyalty,...
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Slide 9
Simulation: Industry Dynamics
| Market growth |
 Korex
 Lomex
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| 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"
Slide 11
Collaboration
 
| * 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
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