Individual Case submission

Submitting Cleopatra assignment this week.

Three levels of Product
Customer often thinks of product as a tangible or physical item but there is more to a product than its physical appearance and tangible aspect. There are 3 levels of a product - Core, Actual and Augmented. I will us the example of automotive industry in order to explain this

	1.      Core Product - This defines the benefits of the product. If you consider a car as a product, the core product is not the actual car. The core product is the "benefit" to the consumer and in case of a car it the fast transportation. 2.      Actual Product - This defines the actual product and in our example it is the actual car. In addition, it includes the brand, color, design, quality, and durability of the car 3.      Augmented Product - This defines the additional elements that can be added to the actual product. In our example this can be the manufacturing warranty, servicing and maintenance, financing service and customer service.
Product Lifecycle The image on the right illustrates the typical lifecycle of a product. The product is introduced in the market and starts with initial growth where sales are rising, slowly followed by maturity where prices are at peak with stable sales and finally followed by a gradual decline.

The product gets obsolete inevitably (the decline phase of product lifecycle) and gets replaced by a better product that provide superior benefits. Below are some classic example of products that went obsolete
1. PDAs - Everyone remembers PDAs, aka palmtop computers, the mobile device that functions as a personal information manager. With the introduction smartphones, PDA are now surely things of past. The reason is pretty simple, why carry a PDA when your smart phone can be PDA, camera, MP3 player, and GPS.
2. Dial up – I still remember when we used a dialup connection and waited forever for the page to render on the browser. The slow speed (56 kbps) and intermittent connection disruption was so annoying. Now we use high speed internet with zooming speed of 5-12 mbps
3. The landline - Today with the wireless penetration in US is currently at 89%, most of the people are using mobile and internet voice services as their primary way to connect with people. It is much cheaper than the landline and in some cases, with internet voice services, you can make international call free. If you have a landline, it’s time to change.
Here is an interesting article on what’s gone obsolete in last decade    
http://www.businessinsider.com/21-things-that-became-obsolete-this-decade-2009-12?op=1
http://www.debate.org/opinions/will-cds-become-obsolete

Product Lifecycle getting shorter

Noticeably, with the advent of technology, increasing consumer awareness, rapid changing demand, and growing market competition the product lifecycle is getting shorter day by day. This trend has put a lot of pressure on the organization to react to the change in market and consumer trend and quickly turnaround with the right fit product. This changing demand means that demand planning and forecasting needs to be accurate. The introduction of technology in understanding customer's buying patterns can help organization plan and adjust with the market trend. To ensure maximum profit, it is inevitable for the company to launch sooner and gain early bird bonus. Technology has played primary role in reducing the product development lifecycle. If we look at Apple and Samsung, the furious market competition is forcing these companies to launch new product models almost every year resulting in cannibalization of their older models.

References

http://www.trustedreviews.com/opinions/half-life-get-used-to-shorter-product-cycles
http://www.supplychaindigital.com/procurement/the-product-life-cycle-is-in-decline
http://www.bloomberg.com/video/product-life-cycles-are-getting-shorteroringerCsHeGitCTmSUO4Ia4gR5ig.html

Week 4: STDP Segmentation, Target, Differentiation and Promotion

1. Does segmentation Facilitate consumer obsession?

Let me start by explaining why consumer obsession is important. I stumbled across a reading from a book "Customer Obsession" by Abaete de Azevedo & Ricardo Pomeranz. One of the statements from the books states that "Consumer obsession is definitive roadmap of all business that want to achieve maximum return for their market investments." Amazon has already proved this and their acquisition of Zappos is primarily based on the fact that both companies values customer satisfaction and incorporate this value in their organization strategy. It is the customer obsession that is driving Amazon to plan on how to use drones (auto copters) for order delivery. The purpose is to simply reduce the order delivery time to 30 minutes or less. They have researched that 86% of their orders weigh 5 pounds of less and can potentially be delivered using the drones or auto copters. Though the technology to do this is 4 to 5 years away and there are FAA restrictions to be resolved, this has not stopped Amazon from planning as this adds a lot of value to the customer.

How segmentation facilitates consumer obsession? In order to better serve the customer, it is essential for an organization to know who their customers are or going to be. This is where segmentation comes into play. This allows you to understand the cluster, a sizable group, of consumer in the market with homogeneous purchasing behavior and needs. Segmentation allows an organization to focus on a particular group of consumer, provides promising opportunities and opportunity to enter into a market with competitive offering.

2. When a firm chooses a particular segment for targeting what are its primary considerations?

While assessing a marketing segment following factors needs to be considered

1. Market Factors
1. Is the segment representative of observable variable like age, gender, life cycle, lifestyle, income, price sensitivity etc.
2. Is it predictable and big enough for sustainable profit?
3. What is the growth rate of the segment? Does it promise future growth?
4. What is the cyclicality of the demand?
2. Competitive Factors
1. Who is the competitor? What are their product offerings? Are there any threats of price war?
2. How is your product different from the competitor?
3. Economical & Technological Factors
1. Are there any barriers to entry or exit? The barriers to entry can include government regulations, inelastic demand, customer loyalty etc. The barrier to exit can include sunk costs.
2. How much investment is required?
3. What is the profit margin?
4. Business & Environmental Factors
1. What is the impact economic fluctuations?
2. What is the impact of political legal and government regulations? 

3. What is positioning?  Where does a firm's position reside. 

Positioning is a strategy to differentiate company's brand on the basis of attributes that customers find meaningful. Meaningful differentiation can be based on several attributes like physical attributes for e.g. product features and service features or pricing attributes such as bargain pricing. 

Positioning should be strategized to clearly articulate who the target customers are, what needs the product fills and why your product is the best option to satisfy those needs. Additionally,  marketing programs should be designed to support and reinforce the differentiation of a product in order to effectively position a product.

4. Example of companies within same space but different customer segment focus
If you look at food service industry. There are 2 largest segments - full service and fast food segments. Companies like McDonalds, Burger king, Denny's, Wendy's, Arbys and subway have captured the fast food segment.
Within the fast food segment, McDonalds has put more focus on children, youth and young urban family. The Happy Meal is a combination meal that is suitable for kids and incudes toys that attracts children to McDonalds. McDonalds has strategically added play area for kids in selected places to attract families with kids.

Subway on the other hand targets customer within the fast food segment who are health conscious. Subway's marketing strategy is to address health, include fresh ingredients, and low-calorie custom made sandwiches. Subway promotes its products that is directed towards healthy living by sponsoring in events such as Heart Association heart Walks and local triathlon events.