Tuesday, May 22, 2012

Marketing Management Insights and Thoughts - Collection 1

Marketing Management Insights and Thoughts - Collection 1

Marketing Management Insights and Thoughts - Collection 1


The Four-Tiered Structure of Markets

In developing countries, the markets for finished goods (products) and raw materials (factors of production) can be broken up into four distinct components.

Global tier

At the apex of the market pyramid is the global tier. In the product market, this section consists of consumers who want offerings to have the same attributes and quality that products in developed countries have and are willing to pay global prices for them. In the talent market, this tier consists of top-notch managers, such as newly minted graduates from the Indian Institutes of Management, who demand global-level salaries.

Glocal tier

Immediately below that is the glocal tier. In the product market, this tier consists of consumers who demand customized products of near-global standard and are willing to pay a shade less than global consumers do. An example would be Chinese and Indian executives who prefer to stay in a Shangri-La or Taj hotel rather than at a Four Seasons. In the talent market, this section consists of high-quality managers who will work only for local companies even if the pay is a little less than it would be at multinational corporations.

Local tier

Consumers in the local tier are happy with products of local quality and at local prices. In the talent market, managers in this section will put up with less-than-world-class working conditions as long as they are paid higher-than-average salaries.

Bottom tier

The bottom of the market consists of people who can afford only the least expensive products.

Multinational corporations typically compete for consumers and talent only in the global tier. Meanwhile, smart local companies, which dominate the local tier, move into the glocal tier and also create breakthrough products for the bottom segment as economies liberalize. These businesses often become emerging giants.

Emerging Giants.
By: Tarun Khanna, Krishna G. Palepu,
Harvard Business Review,
October 2006, Vol. 84, Issue 10


Companies have only three options: attack, coexist uneasily, or become low-cost players themselves. None of them is easy, but the right framework can help you learn which strategy is most likely to work.

Low-cost players will continue to mushroom, and some will succeed. However, there will always be two kinds of consumers: those who buy on the basis of price and those who are partial to value. Therefore, there will always be room for both low-cost players and value-added businesses. How much room each will have depends not only on the industry and customers' preferences, but also on the strategies traditional businesses deploy. If incumbents don't take on low-cost rivals quickly and effectively, they can blame no one for their failure but themselves.
By: Kumar, Nirmalya,
Harvard Business Review,
Dec 2006, Vol. 84, Issue 12

Customer Experience Management

Customer Experience Management (CEM)
What: Captures and distributes what a customer thinks about a company

When: At points of customer interaction: "touch points"

How Monitored: Surveys, targeted studies, observational studies, "voice of customer" Research

Who Uses the Information: Business or functional leaders, in order to create fulfillable expectations and better experiences with products and services

Relevance to Future Performance: Leading: Locates places to add offerings in the gaps between expectations and experience
By: Meyer, Christopher, Schwager, Andre,
Harvard Business Review,
Feb 2007, Vol. 85, Issue 2


Successful companies use three basic approaches. First, they leverage their existing assets and resources. They use their excess capacity, often combining it with partners' assets or resources, to lower the cost of entering new markets. For instance, a company may place a new product in shelf space it already owns or manufacture goods with machines that would otherwise be idle.

Second, companies reconfigure their value chains by changing the activities or the sequence of activities they perform. They borrow elements from other industries or use technological advances to create value chains that differ from those of incumbents. When a company bypasses bricks-and-mortar retail outlets and sells its products through a Web site, for example, it is reconfiguring the industry's value chain.

Third, enterprises create niches by developing offerings that appeal only to some customers. That can mean offering premium features at a price that only certain consumers are willing to pay or dropping features that some people don't care to pay for.
By: Bryce, David J., Dyer, Jeffrey H.,
Harvard Business Review,
May 2007, Vol. 85, Issue 5

Neglect of Long Term Health of Brands

Our research into the role of marketing strategy in brand performance indicates that companies are paying too much attention to short-term data and not enough to the long-term health of their brands. They routinely overinvest in price promotions and underinvest in advertising, new- product development, and new forms of distribution.
If Brands Are Built over Years, Why Are They Managed over Quarters?
By: Lodish, Leonard M.; Mela, Carl F..
Harvard Business Review,
Jul/Aug 2007, Vol. 85 Issue 7/8, p104-112,

Understanding Generation Xers

Generation X (born 1961-1981, now age 26-46)
The Midlife of Generation Xers

Gen Xers will retain their reputation for alienation and disaffection as they enter their fifties -- meaning that the midlife age bracket of American society will no longer be associated with moral authority but, rather, with toughness, grittiness, and practicality.

More than people of other generations, Gen Xers will deflect a generational identity, thinking of themselves as not Boomers and not Millennials rather than as Generation X.

Having had so many choices and taken so many risks in their youth, they will feel like Generation Exhausted.

Xers entering midlife will veer in the opposite direction, searching for greater security in their families and jobs and for a steady anchor in their communities.

As they fill the ranks of midlife consumers, Gen Xers will continue to evaluate products in terms of their efficiency, convenience, and mass customization. Houses, cars, and computers will be produced for and advertised to individual consumers.

As business leaders, Gen Xers will be more effective at pushing efficiency and innovation than any other generation in memory.
The Next 20 Years: How Customer and Workforce Attitudes Will Evolve.
By: Howe, Neil, Strauss, William,
Harvard Business Review,
July/August 2007, Vol. 85, Issue 7/8

Customer Referral Value (CRV)

To estimate the value of a customer's referrals, take the value of the business brought in by the customers she refers and subtract the marketing costs that prompted her to make the referral. You base your estimates of future referral behavior on past behavior.

Clearly, a corporation that accurately targets those of its customers who are likely to make profitable referrals will earn a better return on its marketing investment than its competitors that do not.
How Valuable Is Word of Mouth?
By: Kumar, V., Petersen, J. Andrew, Leone, Robert P.,
Harvard Business Review,
October 2007, Vol. 85, Issue 10

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