The Markstrat Challenge II

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The Markstrat Challenge II
StratX The Key to Strategic Excellence
Tour Pacific, 92977 Paris-la-Defense cedex,
France, Tel [phone], Fax (33-1)
47.78.18.44 Boston - London - Munich - Paris
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Your success in Markstrat will greatly depend on
your ability to manage the development and
positioning of brands for targeted market segments
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Customers make purchase decisions based on their
perception of your brands
Your Perception of Brands
Brand A
Brand B
Brand C
Brand D
Technical quality
Their Perception of Brands
?
Brand B
Brand D
Brand C
?
Brand A
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The "Perceptual Map" is a valuable tool for
visualizing brand positioning
Need 2
Perceptual Map based on MDS Study
Need 1
Key
Segment ideal Point
Ot
Perceptual positioning of Brands
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There are two key ways to re-position brands in
Markstrat
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The MDS study measures brand perception along
three composite dimensions...
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... which are more or less influenced by the
various brand attributes
VODITE market Influence of brand characteristics
on MDS dimensions in P0
Perceived Flexibility increases if Weight
decreases
Perceived Efficacy increases if Max. Freq.
increases
Autonomy
Max. Freq.
Diameter
Design
Weight
Price
Product charac.
Composite dimensions
slight
moderate
Efficacy
slight
very strong
slight
slight
Flexibility
strong
slight
moderate
slight
moderate
slight
Economy
slight
slight
very strong
slight
slight
slight
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Positioning with advertising requires setting
"Perceptual Objectives"
Perceived Performance
20
10
Si
9
5
Perceived Economy
0
5
11
-10
-20
-20
-10
0
10
20
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The other means to achieve success with your
positioning of brands is to Change Physical
Attributes
Positioning Strategy
Advertising
RD
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Physical positioning involves matching brand
characteristics to customer needs
Price
Power
Max. Freq.
Design
Volume
Weight
SAMA
Brand characteristics
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RD success demands long-term thinking and the
ability to identify evolving opportunities...
Si
New target segments
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. . . and also requires working effectively with
your RD department
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Impact of physical characteristics on base cost
Base cost
The HIGHER the requested characteristic the
HIGHER the base cost

• Design
• Max. Frequency
• Power
• Autonomy

Requested characteristic
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Cost reduction projects should be weighed against
experience curve effects
Transfer cost
A
Base cost A
Current product (initial experience curve)
Base cost B
B
A1
Current transfer cost A1
cost reduced product (new experience curve)
100 KU
225 KU
Cumulative production
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The budget required to complete an RD project is
a function of several factors
RDexperience
RDbudget requiredfor completion
physicalcharacteristics
Requestedbasecost
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There are two possible outcomes of any RD project
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A completed RD project may be used to modify
existing brands and/or introduce new brands
Performance
Bu
Si
Pr
Hi
Economy
New Brand "SAMY"
New SAMA more performance
Ot
Old SAMA
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Bringing successful RD projects onto the market
may result in obsolete inventory
I'll buy any product at a given of
its transfer cost
Brand modification (name kept)
SAMA
Inventory disposal
Obsolete inventory
SAMA
SAMA
SAMA
SAMA
SAMA
Brand withdrawal
TRADING COMPANY
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You now know everything. From here on, it's
down to your strategy...