Success FormulasSuccess Formulas®

Session Three

Marketing StrategyMarketing Strategy

Session Three Session Three AgendaAgenda

� Present Revised Executive Summaries� Market Life Cycle� Defining Your Market� Estimating Market Size� Adaptation Curve� Leadership Style� Sales Channel

Executive SummaryExecutive SummaryIn 2-or-3 Pages, highlight the following:

� Elevator Speech� Industry� Vision� Mission� Corporate Legal Description� Product/Service - What it does, how much it sells for,

proprietary position� Market - Who’s going to buy, what is the sales channel.� Operations� Management Team� Investment Required� Financial Proforma� Note: Develop each topic for five years

Your MarketYour Market

Working Definition

Products or Services that You can Sell to People in Your Geographic Distribution Area, or Where your Competition Could Sell Instead of You.

Market Life CycleMarket Life Cycle

Time

Interesting Fact

Of All “New” Products Brought to Market by Large US Firms…(Approximately)

� 70% are Modifications of an Old Product� 20% are Minor Modifications of an Old

Product� 10% are Major Innovations.

Where Does YOUR Business Fit In the

Competitive Landscape?

Market Life CycleMarket Life Cycle

Time

Market Life CycleMarket Life Cycle

� Innovation� Growth� Maturity� Decline

For Each of These Phases...For Each of These Phases...

InnovationInnovation

Description1) Characteristics of sales

environment

2) Issues of operations

3) Competition

4) Profits

Strategy1) Marketing 2) Engineering 3) Sales 4 Pricing 5) Promotion 6) Manufacturing 7) Investment8) Target the Customer

GrowthGrowth

Description1) Characteristics of sales

environment

2) Issues of operations

3) Competition

4) Profits

Strategy1) Marketing

2) Engineering

3) Sales

4 Pricing

5) Promotion

6) Manufacturing

7) Investment

8) Target Customer

MaturityMaturity

Description1) Characteristics of sales

environment

2) Issues of operations

3) Competition

4) Profits

Strategy1) Marketing

2) Engineering

3) Sales

4 Pricing

5) Promotion

6) Manufacturing

7) Investment

8) Target Customer

Decline PhaseDecline Phase

Description1) Characteristics of sales

environment

2) Issues of operations

3) Competition

4) Profits

Strategy1) Marketing

2) Engineering

3) Sales

4 Pricing

5) Promotion

6) Manufacturing

7) Investment

8) Target Customer

Revisit the question:

Where Does YOUR Business Fit In the Competitive Landscape?

Your Market Your Market

� Define Target Market� Estimate % of Market � Estimate Potential Usage Rate.� Estimate Market Share Factor.� Check Estimates Against Market Size of

Similar Products.� Growth Rate of the Market

How Big Is Your Market?

� Top-Down Approach� Bottom-Up Approach� Cross-Sectional Approach� Combination of All Three

Top-Down ApproachEstimates Total Company Demand… Total industry volume (from reliable sources, e.g. US Dept. of

Commerce)

Bought by a defined customer group (demographics)

In a defined geographical area (where selling?)

In a defined time period (when selling; e.g.. toys sell big at Christmas-time)

In a defined market environment

Resulting in a defined market share (% of overall market)

Reduced by the competitors (defined) share (% of overall market after the competitors share)

Adaptation Curve Adaptation Curve (Bass)(Bass)

Bottom-Up Approach

Estimates Total Demand..

Cross-Section Approach

Estimates Total Demand...

Combination Approach

Based on Estimates Derived From the Three Methods…

Leadership StyleLeadership Style

� Low Price Leader� Technology Leader� Quality Leader� Relationship Leader

Low Price LeaderLow Price Leader

Example: Wal-MartWal-MartPremise: � Investment in Infrastructure = Low Pricing� Track Buying Patterns & Inventory � Investment in Logistics & Transportation

Trade-Off: Lack of Expert Sales People & Aversion Away From Leading Edge Products

Technology LeaderTechnology Leader

Example: Sony Digital CamerasSony Digital CamerasPremise:� Investment in Technology= Product Obsolete� Keep the Competition Running to Catch Up

Trade-Off: Can’t be the Low Price Leader and Can not Build Expensive Relationships With Customers.

Relationship LeaderRelationship Leader

Example: Lexus AutomobilesLexus AutomobilesPremise:� Extreme Customer Service = Loyalty

Trade-Off: Not the Low price Leader and Not the Technology Leader

Quality LeaderQuality Leader

Example: Porsche Design GroupPorsche Design GroupPremise:� Precision Design/Production = High Performance

Trade-Off: Usually Not the Low Price Leader

Which Will Your Business Be?Which Will Your Business Be?

� Low Price Leader?� Technology Leader?� Quality Leader?� Relationship Leader?

Sales ChannelSales Channel

WHO Will Sell Your Product?� Executive Sales: Company Executives Sell

� Direct Sales: Hired Sales People Sell

� Stocking Distributors: Third Parties Buy and Resell it at a Mark-Up

� Commissioned Reps: Third Parties Take Orders and Earn Commission When They Sell

Sales Channels

M ethod Success Cost ControlExecutive Sales Highest Highest Highest

Direct Sales Good High High Stocking Distributor Fair M odest M odest Commissioned Reps Poor Low Poor

Homework AssignmentHomework Assignment

� Update Executive Summary to Include Marketing & Sales Information

� Write Chapter on Marketing & Sales

Review Session Four: Technical Strategy

� Present Revised Executive Summaries� Product/Service Strategy� Offensive & Defensive Strategy� Intellectual Property� Make/Buy Decision� Group Discussion: What Will Your

Technology Strategy Be?

Success FormulasSuccess Formulas®

Session Three

Marketing StrategyMarketing Strategy