MARK4210, 2014 Spring, L1/L2 [Class #2] Overview of Marketing Strategy MARK4210: Strategic Marketing 2014 Spring, Section L1/L2
Jan 28, 2015
MARK4210, 2014 Spring, L1/L2
[Class #2]
Overview of Marketing
Strategy
MARK4210: Strategic Marketing
2014 Spring, Section L1/L2
2 MARK4210, 2014 Spring, L1/L2
Agenda
Context
Case Example of Marketing Strategy – Optical
Distortion, Inc. (ODI)
Case Analysis Methodology
3 MARK4210, 2014 Spring, L1/L2
Strategic Marketing Decisions
Where to compete – i.e., definition of the market
How to compete – i.e., means for competing
When to compete – i.e., timing of market
movements, planning
Source: Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009
4 MARK4210, 2014 Spring, L1/L2
Failings in Strategic Marketing
Too much emphasis on “where” to compete and not
enough on “how” to compete
Too little focus on uniqueness and adaptability in
strategy
Inadequate emphasis on “when” to compete
Lack of objectivity and/or inherent bias
Source: Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009
5 MARK4210, 2014 Spring, L1/L2
Addressing Failings of Strategic
Marketing
Develop attainable goals and objectives
Involve key operating personnel
Avoid becoming engrossed in current problems
Avoid formality in strategy formulation – make it
practical
Do not separate marketing strategy from the rest of
management process
Source: Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009
6 MARK4210, 2014 Spring, L1/L2
Situation Analysis
(Customer, Competitor, Company)
Market Selection
(Segmentation, Targeting, Positioning)
Marketing Mix Formulation
(Product, Price, Place, Promotion)
Quantitative Analysis
Consumer Behavior
Simulation Game
-- PharmaSim
Elements of
Marketing Strategy Fundamentals Application
Course Roadmap
7 MARK4210, 2014 Spring, L1/L2
Marketing Strategy Case Example –
Optical Distortion, Inc. (ODI)
8 MARK4210, 2014 Spring, L1/L2
Chicken Sociology
Social structure: “Pecking order”
Dominant versus submissive chickens – submissive
chickens get pecked:
• If they hold their heads high
• If they enter the territory of a dominant bird
Associated costs
• Death
• Less feeding time and hence poorer egg production
• Replacement of dead chickens
• Upset pecking order
Cannibalism was greater for more productive flocks
9 MARK4210, 2014 Spring, L1/L2
Traditional Solution
Debeaking – using a hot knife and anvil to cut and
cauterize the beak
10 MARK4210, 2014 Spring, L1/L2
Traditional Solution
Debeaking reduces mortality from 25% to 9%
Costs associated with debeaking
• Trauma (weight loss, reduced egg production)
• Higher feed trough levels (at least 3/8” deep)
• Labor costs ($2.50/hr x 3 people) - 220 birds per hour
11 MARK4210, 2014 Spring, L1/L2
Optical Distortion, Inc. (ODI)
Solution
• Contact lenses for chicken
• Unlike contact lenses for humans that improve eyesight,
the ODI lens was made to partially blind the chickens
How it works
• Blurred vision makes it harder to waste feed
• Birds had to walk with their heads low
• Peck order disturbed, hence reducing cannibalization
12 MARK4210, 2014 Spring, L1/L2
Company
Product invented in 1965
ODI corporation founded in 1966
Product difficulties solved by 1969, patent awarded
In 1973, ODI licensed production of lenses to New
World Plastics (cost =$0.032 / pair)
Limited financial and management resources
13 MARK4210, 2014 Spring, L1/L2
Company
What are the advantages of ODI lenses over
debeaking?
• Further reduce chicken mortality
• Reduce egg production loss due to trauma caused by
debeaking
• Reduce feeding cost
14 MARK4210, 2014 Spring, L1/L2
Customers
Facts
• 1974 Chicken census: 300,000 farms, 440 million birds
• 80% of these housed on 3% of farms
Characteristics???
• Large base
• Highly concentrated
15 MARK4210, 2014 Spring, L1/L2
Competition
Who are the competitors???
• Debeaking is considered as indirect competition.
• Patent and license protection should hold off the entry of
other competitors for at least three years.
16 MARK4210, 2014 Spring, L1/L2
Segmentation (STP)
What are the possible ways to segment the
customers???
• Geography
• California
• South Central
• Southern Atlantic
• Farm Size
• Small (<10,000 birds): Family operated, sells eggs locally
• Medium (10,000-50,000 birds): Professionally run, farmer
owned, sells eggs to middlemen
• Large (>50,000 birds): “Corporation”
17 MARK4210, 2014 Spring, L1/L2
Targeting (STP)
Who should ODI target?
By size (small, medium, large)???
• Large farms
• Potential savings bigger for large farms
• More economical use of ODI’s sales and technical
personnel
• Managers of larger farms may be less conservative
• Can easily test the lens on a segment of their chicken
18 MARK4210, 2014 Spring, L1/L2
Targeting (STP)
Who should ODI target?
By geography (California, No. Carolina, Georgia)
• California area
• ODI has been doing their testing in California
• High concentration (13% of all US chicken population)
• Less conservative
19 MARK4210, 2014 Spring, L1/L2
4P’s
Pricing
• What pricing strategy?
• Skimming vs. penetration?
Promotion
• What promotional method to use?
• How much should you allocate to each method?
Product
• How to improve the product?
Place
• Where should regional office & warehouse be located?
20 MARK4210, 2014 Spring, L1/L2
What Happened?
1975 Limited testing in California
1976 Expand distribution in California and began
limited testing in the Southern Atlantic or South
Central areas
1977 Large scale distribution in California
1978 Expand into entire Southern US
1979 Go national
Mid-80s Achieve national roll-out
21 MARK4210, 2014 Spring, L1/L2
Reinforcement: Case Analysis
Methodology
22 MARK4210, 2014 Spring, L1/L2
How to Read a Case
Skim through the case and identify the key issue
With the question in mind, re-read the case carefully
and highlight relevant information
Think about what analyses the information might be
used for and what other information you might need
23 MARK4210, 2014 Spring, L1/L2
How to Structure a Case Analysis
Problem
Identification Analyses/
Framework
Alternative
Generation
Criteria
Identifi-
cation
Decision
Making
• What is the
main issue/
problem to be
solved?
• Organize/ link
information
• 5Cs, SWOT,
etc.
• What are the
possible
solution
options, or
courses of
action?
• What factors
are important
in selecting
the best
option?
• Pros/cons of
each option?
• Evaluate the
alternatives
based on the
identified
criteria and
choose the
“best” option
24 MARK4210, 2014 Spring, L1/L2
Hints
Try to see the big picture as you read the case
• Do not get hung up on complicated terminology
• Avoid theory fitting and think intuitively
Not all information there is useful, and not all useful
information is there
Make reasonable assumptions when necessary, and
state these assumptions clearly
The goal is not to find the “right” answer, but to learn
the approach to thinking and problem solving