MARK4210, 2014 Spring, L1/L2

[Class #2]

Overview of Marketing

Strategy

MARK4210: Strategic Marketing

2014 Spring, Section L1/L2

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Agenda

Context

Case Example of Marketing Strategy – Optical

Distortion, Inc. (ODI)

Case Analysis Methodology

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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

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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

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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

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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

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Marketing Strategy Case Example –

Optical Distortion, Inc. (ODI)

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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

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Traditional Solution

Debeaking – using a hot knife and anvil to cut and

cauterize the beak

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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

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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

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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

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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

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Customers

Facts

• 1974 Chicken census: 300,000 farms, 440 million birds

• 80% of these housed on 3% of farms

Characteristics???

• Large base

• Highly concentrated

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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.

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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”

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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

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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

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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?

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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

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Reinforcement: Case Analysis

Methodology

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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

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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

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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