- Who are we not targeting?
- Good companies meet needs; great companies make markets
- Largest possible segment that create meaningful value prop; âdegrees of freedomâ, what are your degrees of freedom in designing, communicating, and delivering (example product attributes/approaches); think about the tradeoffs that when you make whatâs their effect on your customers, if you distance a large subset of your ideal customers, then you should likely further segment your customers
- Identifying entities (individuals or organizations) that the company aims to serve also means identifying entities that the company will not serve (i.e., ignore).
- Generally speaking, any decision that involves identifying certain aspects of the market can be deemed an identification problem. The most common use of the term refers to the challenge of identifying the profile of the strategically viable customers so that the company can reach these customers in an effective and cost-efficient manner.
- User-based targeting is appropriate in settings in which customersâ needs are relatively stable across purchase occasions and can be used as a reliable predictor of their behavior on any particular purchase occasion. This is not the case here since the same user displays different preferences depending on the purchase/usage occasion. As long as customer preferences do not vary over time, user-based segmentation is appropriate. For example, the preference for regular versus light (diet) soft drinks is fairly stable across individuals and can serve as the basis for user-based targeting.
đ Fighting-Brand Strategy (per Chernev):
A fighting brand is a lower-priced offering introduced by a company to protect its premium brand from being undercut by lower-priced competitors. Itâs a form of defensive strategy.
- Purpose: Defend the market share of the higher-end brand without diluting its value.
- Example: Toyota launching Scion to fend off competition from low-cost car brands.
đ Explanation (per Chernevâs framework):
- A sandwich strategy involves:
- Introducing a lower-priced offering (a "fighting brand") to target price-sensitive customers.
- Repositioning the existing offering upward to differentiate and protect it from price erosion.
The result is a product line that "sandwiches" the competition: one product undercuts them, and another outclasses them.
This is different from:
- Fighting-brand strategy: only adds a low-priced product.
- Good-better-best: maintains a tiered lineup across the board.
- Two-part pricing: involves fixed + variable cost (not relevant here).
- Value-pricing: emphasizes value, not product-line positioning.
Market position
- Share of market, heart, & Mind
- Option Dâshare of voiceâreflects the relative share of a companyâs communication (e.g., advertising) expenditures relative to the competition. It does not necessarily represent a companyâs market position. For example, a company might be spending a lot on advertising that is ineffective and does not strengthen its market position.
- Market-penetration strategy involves gaining market position by increasing sales from current customers | Market-creation strategy involves gaining market position by creating a new category | Market-growth strategy involves gaining market position by attracting customers who are new to the category | Steal-share strategy involves gaining market position by attracting customers from competitors.
4 As: Awareness, Attractiveness, Affordability, Availability
Cannibalization: Options B and C are incorrect because they describe a companyâs activities that might not necessarily result in product-line cannibalization. Option D is incorrect because cannibalization can occur only within a companyâs own portfolio of offerings (a competitor cannot cannibalize another companyâs sales; the right term to use in this case would be âsteal shareâ).
Disruptive innovation: The concept of disruptive innovation implies that companies lose their market position because of their exclusive focus on current customers and markets...Contrary to conventional wisdom that managers set the strategic goals of a company and control the allocation of a companyâs resources, the theory of disruptive innovation argues that it is the customers and investors who ultimately make these decisions. Managers actions are driven by their beliefs about customer needs and investor expectations.