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FIGURES
This document contains the figures included in Strategic Marketing Management (8th Edition). The figures included in this document are in a format appropriate for use with a word processing program (e.g., Microsoft Word). For use with presentation programs (e.g., PowerPoint and Keynote) use the editable version of these figures.
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 1-1: The Role of Frameworks in Marketing Management
Typical solution
Specific solution
Typical problem
Specific problem
Framework
Abstraction Application
Trial & error
Figure 2-1: Identifying the Market: The 5-C Framework
Com
pany
Collaborators
Competitors
Context
Customers
Figure 2-2: Defining the Value Exchange: The 6-V Framework
Customers Collaborators
Company
Competitors
Context
Competitive value exchange
ValueValue
Value Value
Value
Value
Company value exchange
Figure 2-3: The Optimal Value Proposition (OVP)
The optimal value proposition (OVP)
Company value
Collaborator value
Customervalue
OVP
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 2-4: The 7 Tactics Articulating the Offering’s Value Proposition
Strategy
Tactics
Communication Distribution
Product Service Brand
Price Incentives
Company value
Collaborator value
Customervalue
OVP
Figure 2-5: Marketing Tactics as a Process of Designing, Communicating, and Delivering Value
Product
Service
Brand
Incentives
Price
Designing value
Communicating value
Delivering value
Figure 2-6: Strategies for Generating a Business Model
Marketing strategy(value analysis)
Marketing tactics(offering design)
Top-down business model
generation
Bottom-up business model generation
Figure 2-7. The 7-T and the 4-P Frameworks
Communication
Price
Product
Incentives
Distribution
Service Brand
Value
Product
Promotion
Price
Place
Figure 2-8. The Five Forces of Competition1
New entrants
CompetitorsSuppliers Buyers
Substitutes
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 3-1: The G-STIC Framework for Market Planning and Analysis
Goal
Strategy
Tactics
Implementation
Control
Business model
Figure 3-2. The G-STIC Action-Planning Flowchart
BenchmarksFocusGoal
PriceProduct
IncentivesService Brand
Communication Distribution
Tactics
Control
The ultimate criterion for success
Monitor the environment
Evaluate performance
StrategyValue
propositionTarget market
Implementation
Implementation schedule
Business processes
Organizational infrastructure
The logic of the value-creation model
The process of evaluating goal progress
The specifics of the market offering
The logistics of developing the offering
Figure 3-3. The Marketing Plan
Situation analysis
Goal
Strategy
Tactics
Implementation
Control
Exhibits
G-STIC
Executive summary
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 4-1. Segment-Based Targeting
Segment A (target)Segment B (nontarget)Segment C (nontarget)
Unsegmented market
Segment-based target identification
Figure 4-2: The Key Targeting Principles
Customer needs
Customer resources
Company resources
Company goals
Target attractiveness
Target compatibility
Company analysis Customer analysis
Figure 4-3: The Resource Advantage Principle
Competitive wasteland
Company resources
Target
Competitor resources
Customerneeds
Intense competition
Company’s ideal target customers
Unmet customer
needs
Competitors’ ideal target customers
Unutilized competitor resources
Unutilized company resources
Figure 4-4: The Customer Identification Process
Value-
based analysisChannel-
based analysis
Strategic targeting
Tacticaltargeting
Figure 4-5: Strategic and Tactical Targeting: Linking Customer Value and Profile
Target compatibility
Target attractiveness
Value
Behavioral factors
Demographic factors
Profile
Customer identification
Target customers
Strategic targeting
Tactical targeting
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 4-6. Targeting Efficiency
A. “Sniper” targeting B. “Shotgun” targeting C. Oversegmentation D. Shot-in-the-dark (perfect fit) (broad) (narrow) (misaligned)
Value-based segment (unobservable)Profile-based segment (observable)
Figure 4-7. Targeting Multiple Segments
Segment A (target)Segment B (target)Segment C (nontarget)
Offering BOffering A
Figure 4-8. Segmentation as a Process of Differentiation and Agglomeration
Differentiation
Mass market(unsegmented)
Agglomeration
Idiosyncratic market(unsegmented)
Segmentedmarket
Figure 4-9. Segmentation and Targeting: The Big Picture
Channel BChannel A
Channel C
Strategic targeting (value-based)
Strategic segmentation(value-based)
Tactical segmentation(profile-based)
Tactical targeting (profile-based)
Divide customers into
segments based on their needs and resources
Identify the behavioral and demographic profile of target customers
Decide how to reach target customers to communicate
and deliver the offering
Decide whom to target
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 4-10. Key Segmentation Principles
A. Correct B. Incorrect (irrelevant)
C. Incorrect (heterogeneous)
D. Incorrect (not exclusive)
E. Incorrect (not exhaustive)
Figure 5-1: Identifying Target Customers, Developing a Value Proposition, and Positioning
Identifying
target customersDeveloping a
value propositionPositioning
Value Primary benefit
Figure 5-2: Value as a Function of Customer Needs and Offering Attributes
Customer value
Customer needs
Company offering
Figure 5-3: Dimensions of Customer Value
Monetary value
Psychological value
Functional value
Customer value
Figure 5-4: Reference-Point Dependence
Losses
Reference point
Gains
Value
Performance
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 5-5: Loss Aversion
Performance
Value of a gain
Value
Value of a loss
Figure 5-6: Diminishing Marginal Value
Marginal increase in value
Marginal increase in value
Marginal increase in
performance
Marginal increase in
performance
Figure 5-7. Creating Superior Customer Value
Company offering
Competitive offering
Competitive advantage
ValueValue
Customer needs
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 5-8: Competitive Value Map
Attribute 1 Attribute 2 Attribute 3 Attribute 4 Attribute 5
Customervalue
Competitive advantage
Competitive parity
Competitive disadvantage
Company offeringCompetitive offering ACompetitive offering B
Figure 5-9: Single-Benefit Positioning
Benefit 1+
Benefit 2
Benefit 3
Benefit 4
Benefit 5
Primary benefit
Secondary benefits
Key reason for choice
Figure 5-10: Dual-Benefit Positioning
Benefit 1Benefit 2
+Benefit 3
Benefit 4
Benefit 5
Primary benefits
Secondary benefits
Key reason for choice
Figure 5-11: Holistic Positioning
Overallbenefit
Benefit 1
Benefit 2
Benefit 3
Benefit 4
Benefit 5
Key reason for choice
Figure 5-12. The Value Function2
Reference point
Value
Performance
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 5-13. Positioning MapAttribute 1
Attribute 2
Offering A●
Offering E●
Offering C●
Offering D●
Offering B●
Figure 6-1. The Three Dimensions of Company Value
Psychological value
Functional value
Monetary value
Strategic goals
Company value
Monetary goals
Figure 6-2. The Key Profit Drivers
Research & development
Other costs
RevenuesVolume
Cost of goods sold
Price
Costs
Net income
New customers
Current customers
Competitors’ customers
New to the category
Marketing
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 6-3. Strategies for Growing Sales Volume
Market-growth strategy
Current customers
Sales volume Competitors’ customers
Customers new to the category
Steal-share strategy
Market-penetration strategy
New customers
Figure 6-4. Economic Value Analysis
Monetizing functional value
Monetizing psychological value
Psychological value
Functional value
Monetary value
Strategic value
Company value
Figure 6-6: Calculating Distribution Channel Margins
Manufacturer
Wholesaler
Retailer
Manufacturer cost: $3Selling price to wholesalers: $10Margin ($): $7 Margin (% of selling price): $7/$10 = 70%
Purchase price from manufacturer: $10Selling price to retailers: $15Margin ($): $5Margin (% of selling price): $5/$15 = 33%
Customer Purchase price: $20
Purchase price from wholesalers: $15Selling price to customers: $20Margin ($): $5Margin (% of selling price): $5/$20 = 25%
Figure 7-1. Conflicts in Vertical Collaboration
Manufacturer
Distributor
Customer
Vertical channel conflict
Manufacturer
Distributor B
Customer
Distributor A
Horizontal channel conflictFigure 7-2. Conflicts in Horizontal Collaboration
Collaborator
Customer
Company
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 8-1. Product and Service Management as a Value-Creation Process
Company value
Collaborator value
Customervalue
OVP
The optimal value proposition
ProductService
Company
Customers Collaborators
ContextCompetitors
Decision factors Decision criteria
Figure 9-1. Branding as a Value-Creation Process
Company value
Collaborator value
Customervalue
OVP
The optimal value proposition
Brand
Company
Customers Collaborators
ContextCompetitors
Decision factors Decision criteria
Figure 9-2. Vertical Brand Extensions
Upscale offering
Downscale offering
Price
Benefits
Core offering
Price tier A
Price tier B
Price tier C
Figure 9-3. Horizontal Brand Extensions
Offering A
Offering C
Price
Core offering
Category A
Category B
Category C
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 10-1. Pricing as a Value-Creation Process
Company value
Collaborator value
Customervalue
OVP
The optimal value proposition
Price
Company
Customers Collaborators
ContextCompetitors
Decision factors Decision criteria
Figure 11-1. Managing Incentives as a Value-Creation Process
Company value
Collaborator value
Customervalue
OVP
The optimal value proposition
Incentives
Company
Customers Collaborators
ContextCompetitors
Decision factors Decision criteria
Figure 11-2. Push and Pull Promotion Strategies
Manufacturer
Retailer
Customer
CommunicationIncentives
CommunicationIncentives
Manufacturer
Retailer
Customer
CommunicationIncentives
Demand
DemandDemand
Demand
Push strategy Pull strategy
Figure 12-1. Communication as a Value-Creation Process
Company value
Collaborator value
Customervalue
OVP
The optimal value proposition
Communi-cation
Company
Customers Collaborators
ContextCompetitors
Decision factors Decision criteria
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 12-2. Developing a Communication Plan
Strategy
Message
Media
Creative solution
Implementation
Control
Tactics
Goal
Figure 13-1. Distribution as a Value-Creation Process
Company value
Collaborator value
Customervalue
OVP
The optimal value proposition
Distribution
Company
Customers Collaborators
ContextCompetitors
Decision factors Decision criteria
Figure 13-2. Distribution Channel Structure
Company
Wholesaler
Retailer
Customer
Retailer
CustomerCustomer
Direct channel Indirect channels
Hybrid channel
Figure 14-1. Steal-Share Strategy
New users
Current users
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 14-2. Market-Growth Strategy
Current users
New users
Figure 14-3. Market-Growth Strategy for an Offering with a Superior Value Proposition
Current users
New users
Figure 14-4. Market-Innovation Strategy
Current users New users
Current market New market
Figure 14-5. Defensive Market Strategies3
Customer costs
Customer benefits
Move upscale
Reduce costs
Increase benefits
Launch economy offering
Do nothing
Launch premium offering
Move downscale
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 14-6. Product–Market Growth Matrix
Currentproducts
New products
Current customers New customers
Market penetration
Product development
Market development
Diversification
Figure 14-7. The SWOT Framework4
Internalfactors
Externalfactors
Favorable factors
Unfavorable factors
Strengths
Opportunities
Weaknesses
Threats
Company analysis
Market analysis
Figure 15-1. Managing Sales Growth Managing adoption
Managing usage
Current customers
Sales volume
Newcustomers
Figure 15-2: The Adoption Funnel
Purchase
Availability
Affordability
Attractiveness
Awareness
Figure 15-3: Identifying Adoption Gaps
All targetcustomers
Aware ofthe offering’s
existence
Purchase the offering
Perceive the offering to be
attractive
Perceive the offering to be
affordable
Have access to
the offering
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 15-4: Key Factors Influencing Consumption Quantity
Replacement frequency
Purchase Usage quantity
Usage frequency
Satisfaction
Availability
Repurchase
Consumption variables
Figure 15-5: Identifying Consumption Gaps
AvailabilitySatisfaction Usage frequency
Usage quantity
Replacement frequency
Figure 16-1. New Product Adoption
Time
Total adoptions
Market potential
Inflection point
Speed of diffusion
Time
New adoptions
Inflection point
A. Total adoptions B. New adoptions
Figure 16-2: The Stage-Gate Approach for Minimizing Risk in New Product Development
Stage 2 Stage 3 Stage 4
Concept development
Business analysis
Product development
Stage 5 Stage 6
Market testing
Commercial deployment
Gate 2Concept screening
Gate 3Business review
Gate 4Product review
Stage 1
Idea generation
Gate 1Idea
screening
Gate 5Market review
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 16-3. Managing the Product Life Cycle5
Introduction Growth Maturity Decline
Sales
Time
Market size
Market growth
Competition
Small Moderate Large Moderate/Small
Low High Low Negative
Low Moderate High Moderate/Low
Figure 16-4. Extending Product Life Cycle through Innovation6
Sales revenues
Time
First generation
Second generation
Third generation
Figure 16-5. Rogers’ Categorization of Customers Based on the Time of Adoption of Innovation
2.5%Innovators
13.5%Early
adopters
34%Early
majority
34%Late
majority
16%Laggards
(x) (x+SD)(x-SD)(x-2SD)
Number of adoptions
Time
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 16-6. Moore’s Application of Rogers’ Model to Technology Markets
Enthusiasts Visionaries Pragmatists Skeptics
Number of adoptions
Time
Early market Mainstream market
The chasm
Conservatives
Figure 17-1. Product-Line Positioning Map
Attribute 1
Attribute 2
● Offering A
● Offering E
● Offering C
● Offering D
● Offering B
Target B
Target E
Target D
Target C
Target A
Figure 17-2. Product-Line Attribute Value Map
Offering A Offering B Offering C Offering D Offering E
Value
Attribute 1Attribute 2Attribute 3Attribute 4
Product lilne (Target A) (Target B) (Target C) (Target D) (Target E)
Figure 17-3. Vertical Product-Line Extensions
Upscale offering
Downscale offering
Price
Benefits
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 17-4. Horizontal Product-Line Extensions
Offering A Offering B
Price
Benefits
Figure 17-5: Product-Line Cannibalization Existing offering
A. Single-offering scenario B. Dual-offering scenario without cannibalization
C. Dual-offering scenario with cannibalization
Loss of share due to cannibalization
New offering
Existing offering
New offering
Competitive offerings
Existing offering
Competitive offerings
Competitive offerings
Figure 17-6: Product-Line Cannibalization and the Price-Benefit TradeoffPrice
Benefits
A
C F
Value-equivalence line
BD E
Figure 17-7. The Fighting-Brand StrategyPrice
Quality
Time
Incumbent brand
Low-price competitors
Fighting brand
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 17-8. The Sandwich StrategyPrice
Quality
Time
Incumbent brand
Premium brand
Low-price competitors
Fighting brand
Figure 17-9. The Good-Better-Best StrategyPrice
Quality
Time
Incumbent brand
Best
BetterLow-price competitors
Good
Figure 18-1. Identifying Target Customers: Key Steps
Define tentative customer segments
Define the value drivers for the category
Define the needs of each segment
Validate the tentative segmentation
Assess segment attractiveness
Identify the key competitors
Identify the strategically optimal segment
Define the profile of the target segment
Assess the tactical viability of this segment
Commit to targeting a particular segment
Develop a value proposition and positioning
Segmentation analysis
Strategic target analysis
Tactical target analysis
Customer strategy
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
Step 8
Step 9
Step 10
Step 11
Step 12
Assess segment compatibilityStep 7
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 19-1: The Business Model as a Value-Creation Process
Company value
Collaborator value
Customervalue
OVP
Customer value model
StrategyTactics
Collaborator value model
StrategyTactics
Company value model
StrategyTactics
Figure 19-2: The 5-C Framework for Defining the Target Market
Com
pany
Collaborators
Competitors
Context
Customers
Figure 19-3: Customer Value Model
Value proposition
Communication Distribution
Product Service Brand
Price Incentives
Customer value
Figure 19-4: Collaborator Value Model
Value proposition
Communication Distribution
Product Service Brand
Price Incentives
Collaborator value
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
Figure 19-5: Company Value Model
Value proposition
Communication Distribution
Product Service Brand
Price Incentives
Company value
References
© Alexander Chernev 2014. All figures are subject to copyright by the author (except when noted otherwise) and must be properly referenced as follows: Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago, IL: Cerebellum Press.
1 Adapted from Porter, Michael E. (1979), “How Competitive Forces Shape Strategy,” Harvard Business Review, 57 (March–April), 137–145.2 Adapted from Kahneman, Daniel and Amos Tversky (1979), “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, 47 (March), 263–91. 3 Adapted from Hoch, Stephen J. (1996), “How Should National Brands Think about Private Labels?” Sloan Management Review, 37 (2), 89–102.
4 Ansoff, H. Igor (1979), Strategic Management. New York, NY: John Wiley & Sons.5 Adapted from Levitt, Theodore (1965), “Exploit the Product Life Cycle,” Harvard Business Review, 43, (November–December), 81–94.6 Adapted from Christensen, Clayton (1997), The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business School Press.