6M:147 Marketing Management Positioning products in MS3 6M:147 Marketing Management Positioning products in MS3

Markstrat3
Strategic Issues

Markstrat3 • Which segments do we want to target?

Postioning and Product Development • How do we design products appropriate
for these segments?
• How do we position these products. . . ?
• How do we reposition existing products to
respond to envionmental changes?

September 14, 2002 Filename: \MarketStrat3\MarkstratPositioning˙4.tex 1 September 14, 2002 Filename: \MarketStrat3\MarkstratPositioning˙4.tex 2

6M:147 Marketing Management Positioning products in MS3

Customers make purchase decisions based on

their perception of your brands
Your Perception of Brands

Brand Brand Brand Brand

A B C D Market Evolution
Ideal points change
Technical quality

Their Perception of Brands Consumer values and behavior

? Competitive behavior
Brand
BBrand
Brand
C D
?
Brand
A

2
September 14, 2002 Filename: \MarketStrat3\MarkstratPositioning˙4.tex 7

The "Perceptual Map" is a valuable tool for The "Perceptual Map" is a valuable tool for
visualizing brand positioning visualizing brand positioning

Need 2 Perceptual Map Need 2 Perceptual Map

based on MDS Study based on MDS Study
SELF
SONO +20 SELF
SONO +20
Bu Bu
SEMI SEMI

SUL SUL
I
Pr I
Pr
SOLD Hi SOLD Hi
-20 +20 -20 +20
Si Need 1 Si Need 1

SALT SALT

SIBI
SUSI
Ot Key SIBI
SUSI
Ot Key
SAMA Ot Segment ideal Point SAMA Ot Segment ideal Point
Perceptual positioning Perceptual positioning
SIRO SIRO
-20 of Brands -20 of Brands

3 3
 There are two key ways to re-position brands in Positioning with advertising requires setting
Markstrat "Perceptual Objectives"
20 Perceived
Performance
Perceived
Performance
10 Si
9
5
Advertising 0
Perceived
Economy
5 11
Perceived
Economy
R&D -10

-20
-20 -10 0 10 20

4 6

6M:147 Marketing Management Positioning products in MS3

. . . and also requires working effectively with

your R&D department

R&D = Profit Center

Number
Positioning with R&D
of Projects

Assess the segment needs

Associate needs and product
characteristics Experience
Develop the product with R&D

„ Provide sufficient budgets

„ Set realistic expected Similarity
unit costs of Projects

9
September 14, 2002 Filename: \MarketStrat3\MarkstratPositioning˙4.tex 5

Impact of physical characteristics on base cost The budget required to complete an R&D
project is a function of several factors

Base
The HIGHER the cost
• Design R&D
requested
• Max. Frequency experience
characteristic • Power
the HIGHER the • Autonomy to find out more:
base cost
Requested characteristic
feasibility
R&D accuracy study
physical
characteristics
budget required
Base vs.
The HIGHER the cost
for completion
requested • Volume on-line
speed query
characteristic • Weight
the LOWER the • Diameter Requested
base cost base
Requested characteristic
cost

11 12
6M:147 Marketing Management Positioning products in MS3 6M:147 Marketing Management Positioning products in MS3

R&D On-line Query R&D Feasibility Study

• Available at any time. . . • Available at end of period requested. . .

• Immediate reponse from R&D . . . • Provides
Testimate of minimum base cost Testimate of required budget
Testimate of required budget Testimate minimum base cost
• Cushion added for surprises • Very accurate estimates

September 14, 2002 Filename: \MarketStrat3\MarkstratPositioning˙4.tex 12 September 14, 2002 Filename: \MarketStrat3\MarkstratPositioning˙4.tex 13

There are two possible outcomes of any R&D A completed R&D project may be used to
project modify existing brands and/or introduce new
brands
Project submitted to R&D: Performance
weight design volume
max.
power Minimum base cost is calculated
freq. at an early stage in the project.
17 6 85 35 70 Minimum base cost = $110
Bu
Case A Case B
Requested Base Cost = $80 Requested Base Cost = $130 Si
(requested base cost is below minimum, but the R&D will try Pr
to develop the project at the minimum base cost) Hi
Budget required for completion is also
calculated at an early stage in the project
Economy
Budget required for completion = $ 800 Budget required for completion = $ 550
(at base cost = $ 110) (at base cost = $ 130) New Brand
"SAMY"
Case A1 Case A2 Case B1 Case B2 New SAMA
Budget allocated by team for this period: Budget allocated by team for this period: Ot more performance
$ 1,000 $ 300 $ 1,000 $ 300

Project is available at Project is available at

base cost = 110
Project unsuccessful
base cost = 130
Project unsuccessful Old SAMA

13 14

Cost reduction projects should be weighed

Bringing successful R&D projects onto the
against experience curve effects
market may result in obsolete inventory
Transfer cost
I'll buy any product
Brand at a given % of its
modification transfer cost Base cost A A
(name kept) Current product
(initial experience curve)

MA
SA
Obsolete Inventory Base cost B
B
MA MA
SA SA inventory disposal Current
A1

MA
transfer cost A1
MA MA SA
SA SA cost reduced product
(new experience curve)
Brand
withdrawal TRADING
TRADING
COMPANY 100 KU 225 KU Cumulative production
COMPANY
15 16
 The MDS study measures brand perception ... which are more or less influenced by the
along three composite dimensions... various brand attributes

VODITE market
SONITE market
Influence of brand characteristics on MDS dimensions
Influence of brand characteristics on MDS dimensions
in P0
in P0
Perceived Efficacy Perceived Flexibility increases
Perceived Economy Perceived Economy increases increases if Max. Freq. increases if Weight decreases
increases if Max. Freq. increases if Price decreases

Product
Product charac.
charac. Autonomy Max. Freq. Diameter Design Weight Price
Composite Weight Design Volume Max. Freq. Power Price Composite
dimensions
dimensions
very moderate
moderate moderate strong slight
Economy slight slight slight Efficacy slight strong slight slight

strong strong moderate strong moderate moderate

Performance slight slight slight Flexibility slight slight slight

moderate strong moderate very

Convenience slight slight slight Economy slight slight slight slight slight strong

17 18

6M:147 Marketing Management Positioning products in MS3

New decisions introduced in Period 2:

Brand portfolio
New Decisions for Period Two
Perceptual objectives (on semantic scales or MDS)

• Brand portfolio R&D

• Perceptual objectives
sematic scales
MDS scales
• Research and Development

19
September 14, 2002 Filename: \MarketStrat3\MarkstratPositioning˙4.tex 20

You can now extend your portfolio by

introducing new brands ... ... you can also modify existing brands

Keep the
same name

select a new
click here to display all completed R&D project
R&D projects and their features

20 21
 To convey the right message to the market, you You can initiate up to five R&D projects per
can set perceptual objectives for each of your period and per product type (five Sonite and five
products Vodite)

click here to obtain a

1
safe estimate of the
Do you want to communicate
on the semantic scales or on minimum base cost
the MDS composite and budget required
dimensions? for completion of
this project

2
On which dimensions
do you want to communicate?

3
Input the coordinates
of the point that you
want to reach on the map

22 23

You now know everything.

From here on, it's down to your strategy...