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MM2– Advanced Marketing Management : Agenda for Session #2

MM2– Advanced Marketing Management : Agenda for Session #2. Brief Review of Session #1 The Sealed Air Case. Review of Session 1. Introduction & conventions Basic marketing strategy concepts & tools Concepts: Marketing strategy; Competitive advantages; Firm capabilities. Tools:

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MM2– Advanced Marketing Management : Agenda for Session #2

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  1. MM2– Advanced Marketing Management: Agenda for Session #2 • Brief Review of Session #1 • The Sealed Air Case Prof. Ziv Carmon MM2 Spring 2003

  2. Review of Session 1 • Introduction& conventions • Basic marketing strategy concepts & tools • Concepts: • Marketing strategy; • Competitive advantages; • Firm capabilities. • Tools: • Porter’s generic differentiation strategies; • Listening to customers; • Shaping customer preferences / shape customer perceptions Prof. Ziv Carmon MM2 Spring 2003

  3. EffectiveMarketing Strategy Examples • Stew Leonard’s • Creativity: a unique customer experience • Committedemployees: effective workforce (offer customers significant benefits) • Cost advantage: good prices & profitability • Good consumer insight: manage customer perceptions (strawberry & fish examples) • ‘Porter-wise’: differentiated but also low cost & narrow • Southwest • Cost advantages: can profitably charge low prices (most valuable in economic crises) • ‘Socially talented’ employees: a unique Southwest customer experience • Motivatedemployees: good performance (e.g., air crew help turn plane around for on-time arrival/departure; good customer service) • Great positioning/ marketing: good value proposition (SW actively recruited by airports; consumers are especially grateful for good service) • ‘Porter-wise’: low cost but also differentiated & broad Prof. Ziv Carmon MM2 Spring 2003

  4. The Sealed Air Case Prof. Ziv Carmon MM2 Spring 2003

  5. S. A. :Definition of Product Quality High Quality Shock PSI Prof. Ziv Carmon MM2 Spring 2003

  6. Performance Curves:Gafcel vs. Similar S.A. Products Gafcel Uncoated ($36) SC-120($44) ST-120($51) SD-120($65) SD-240 ($79) .1 .2 .3 Static Stress (PSI) Prof. Ziv Carmon MM2 Spring 2003

  7. S.A. Revenue & Contribution of Different Grades Prof. Ziv Carmon MM2 Spring 2003

  8. S.A. Margins on Main Products in Line Grade Distributor Price Margin SC-120 $43.50 $22.94 52.7% ST-120 $51.40 $20.75 40.4% SD-120 $65.35 $29.04 44.4% Prof. Ziv Carmon MM2 Spring 2003

  9. S. A. CORP. ‘Back-of-the-Envelope’ Calculation Prof. Ziv Carmon MM2 Spring 2003

  10. The Sealed Air Case:What Happened (I) • SA introduced an uncoated bubble product • Presented as “an engineering breakthrough from SA’s R&D” • Gave sales force only 1% commission on it • Named it Polycap • Very slow start for the uncoated product • Difficult economic situation hurt packaging market • Limited motivation of sales-force to push uncoated product • Distributors concerned about inventories, were reluctant to carry a new line Prof. Ziv Carmon MM2 Spring 2003

  11. The Sealed Air Case:What Happened (II) • Things changed for the better afterwards • Commission was changed to 2% (like other products)+ bonus program instituted. • Distributors began receiving orders for uncoated product & started carrying it. • Polycap achieved national distribution, & several regional firms decided not to enter the uncoated market. • In subsequent years SA continued to develop • Grew largely via acquisitions • Is doing reasonably well today • Is expected to do even better in the future. • http://www.sealedair.com/index.htm Prof. Ziv Carmon MM2 Spring 2003

  12. The Sealed Air Case:Take Away Points • Consider state & expected changes in competition; • Competitors’ ability & motivation to pursue your customers; • Carefully interpret signals about expected competition; • Implications for S.A. of what is happening in Europe & NY markets; • Consider what is threatened • Consider state & expected changes in customer needs; • Must consider customers’ true needs; • Express advantages in terms of customer benefits: • Consider state & expected changes in environment; • Technological changes, outlook of economy, etc. • Internal policy very important, but cannot ignore external realities Prof. Ziv Carmon MM2 Spring 2003

  13. The Sealed Air Case:Secondary Take Away Points • Internal issues to consider • Potential cannibalization • Consistency with prior message to customers • Fit with company policy • Non-obvious implications of marketing mix decisions • Pricing • Whether or not competitors decide to enter the market • Perceived quality • Place (distribution) • Effect of commission level on sales force motivation • Typical of mature market Prof. Ziv Carmon MM2 Spring 2003

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