SMM8 Figutes Print

FIGURES
This document contains the figures included in Strategic Marketing Management

(8th Edition). The figures included in this document are in a format appropriate for
use with a word processing program (e.g., Microsoft Word). For use with
presentation programs (e.g., PowerPoint and Keynote) use the editable version of
these figures.
© Alexander Chernev 2014. All figures are subject to copyright by the author
(except when noted otherwise) and must be properly referenced as follows:
Chernev, Alexander (2014), Strategic Marketing Management, 8th Edition. Chicago,
IL: Cerebellum Press.
Figure 1-1: The Role of Frameworks in Marketing Management
Framework
Typical Typical
problem solution
Abstraction Application
Specific Specific
problem solution
Trial & error
Figure 2-1: Identifying the Market: The 5-C Framework
Co
ny
lla
a
bo
mp
ra
Co
Customers
to
rs
Competitors
Context
Figure 2-2: Defining the Value Exchange: The 6-V Framework
Company
Company
Value Value value exchange
Value
Customers Collaborators
Value
Value Value Competitive
value exchange
Competitors
Context
Figure 2-3: The Optimal Value Proposition (OVP)
Company The optimal value

value proposition (OVP)
OVP
Customer Collaborator
value value
Figure 2-4: The 7 Tactics Articulating the Offering’s Value Proposition
Company
value
OVP Strategy
value value
Product Service Brand
Price Incentives Tactics

Communication Distribution
Figure 2-5: Marketing Tactics as a Process of Designing, Communicating, and Delivering Value
Designing Communicating Delivering
value value value
Product
Service
Brand
Price
Incentives
Figure 2-6: Strategies for Generating a Business Model
Marketing strategy
Top-down (value analysis) Bottom-up
business model business model
generation Marketing tactics generation
(offering design)
Figure 2-7. The 7-T and the 4-P Frameworks

Product
Incentives Value Price Price

Promotion
Communication Distribution Place
Figure 2-8. The Five Forces of Competition1
New entrants
Suppliers Competitors Buyers
Substitutes
Figure 3-1: The G-STIC Framework for Market Planning and Analysis
Goal
Strategy
Business
model
Tactics
Implementation
Control
Figure 3-2. The G-STIC Action-Planning Flowchart

Goal The ultimate criterion
Focus Benchmarks for success
Strategy
The logic of the value-
Target Value creation model
market proposition
Tactics
Product Service Brand The specifics of the
Incentives Price market offering
Implementation
Organizational Business The logistics of developing
infrastructure processes the offering
Implementation schedule
Control
The process of evaluating
Evaluate Monitor the goal progress
performance environment
Figure 3-3. The Marketing Plan
Executive summary
Situation analysis
Goal
Strategy
Tactics G-STIC
Implementation
Control
Exhibits
Figure 4-1. Segment-Based Targeting
Segment A (target)
Segment B (nontarget)
Segment C (nontarget)
Unsegmented Segment-based
market target identification
Figure 4-2: The Key Targeting Principles
Target
Company attractiveness Customer
goals resources
Target
Company compatibility Customer
resources needs
Company analysis Customer analysis
Figure 4-3: The Resource Advantage Principle

Unutilized company
resources
Company’s ideal Company Competitive

target customers resources wasteland
Target
Unmet Unutilized
Customer Competitor competitor
customer needs resources
needs resources
Intense
competition
Competitors’ ideal
target customers
Figure 4-4: The Customer Identification Process

Strategic Tactical
targeting targeting
Value- Channel-
based analysis based analysis
Figure 4-5: Strategic and Tactical Targeting: Linking Customer Value and Profile
Target
attractiveness
Value
Target
compatibility
Target Customer Strategic targeting

customers identification
Demographic
factors
Profile
Behavioral
factors
Tactical targeting
Figure 4-6. Targeting Efficiency
A. “Sniper” targeting B. “Shotgun” targeting C. Oversegmentation D. Shot-in-the-dark

(perfect fit) (broad) (narrow) (misaligned)
Value-based segment (unobservable)

Profile-based segment (observable)
Figure 4-7. Targeting Multiple Segments
Segment A (target)
Segment B (target)
Segment C (nontarget)
Offering A Offering B
Figure 4-8. Segmentation as a Process of Differentiation and Agglomeration

Mass market Segmented Idiosyncratic market
(unsegmented) market (unsegmented)
Differentiation Agglomeration
Figure 4-9. Segmentation and Targeting: The Big Picture
Strategic segmentation Tactical segmentation
(value-based) (profile-based)
Divide Identify the

customers into behavioral and
segments based demographic
on their needs profile of target
and resources customers
Decide whom Strategic targeting

to target Channel A Channel B
(value-based)
Channel C
Decide how to reach target
customers to communicate Tactical targeting
and deliver the offering (profile-based)
Figure 4-10. Key Segmentation Principles
A. Correct B. Incorrect C. Incorrect D. Incorrect E. Incorrect

(irrelevant) (heterogeneous) (not exclusive) (not exhaustive)
Figure 5-1: Identifying Target Customers, Developing a Value Proposition, and Positioning
Value Primary
benefit
Identifying Developing a Positioning

target customers value proposition
Figure 5-2: Value as a Function of Customer Needs and Offering Attributes
Customer Customer Company

needs value offering
Figure 5-3: Dimensions of Customer Value
Functional
value
Customer Psychological
value value
Monetary
value
Figure 5-4: Reference-Point Dependence
Value
Gains
Reference
point
Performance
Losses
Figure 5-5: Loss Aversion

Value
Value of
a gain
Performance
Value
of a loss
Figure 5-6: Diminishing Marginal Value
Marginal
increase
in value
Marginal
increase
in value
Marginal Marginal
increase in increase in
performance performance
Figure 5-7. Creating Superior Customer Value
Company Competitive Competitive

offering advantage offering
Value Value
Customer
needs
Figure 5-8: Competitive Value Map
Customer Competitive
parity
value
Company offering
Competitive offering A
Competitive
disadvantage Competitive offering B
Competitive
advantage
Attribute 1 Attribute 2 Attribute 3 Attribute 4 Attribute 5
Figure 5-9: Single-Benefit Positioning
Primary Key reason

Benefit 1
benefit for choice
+
Benefit 2
Secondary Benefit 3
benefits Benefit 4
Benefit 5
Figure 5-10: Dual-Benefit Positioning
Primary Benefit 1 Key reason

benefits for choice
Benefit 2
+
Benefit 3
Secondary Benefit 4
benefits
Benefit 5
Figure 5-11: Holistic Positioning

Benefit 1
Benefit 2
Benefit 3 Overall Key reason
benefit for choice
Benefit 4
Benefit 5
Figure 5-12. The Value Function2

Value
Performance
Reference
point
Figure 5-13. Positioning Map
Attribute 1
● Offering A
● Offering B
● Offering C
Attribute 2
● Offering D
● Offering E
Figure 6-1. The Three Dimensions of Company Value
Monetary Monetary
value goals
Company Functional
value value
Strategic
Psychological goals
value
Figure 6-2. The Key Profit Drivers
Price
Current
Revenues
customers
New to the
Volume
New category
customers
Competitors’
Net income
Cost of customers
goods sold
Research &
Costs development
Marketing
Other costs
Figure 6-3. Strategies for Growing Sales Volume
New customers
Customers new Market-growth

to the category strategy
Competitors’ Steal-share
Sales volume strategy
customers
Current Market-penetration
customers strategy
Figure 6-4. Economic Value Analysis
Monetary
value
Monetizing
functional value
Company Functional
value value Monetizing
psychological value
Psychological
value
Strategic value
Figure 6-6: Calculating Distribution Channel Margins

Manufacturer cost: $3
Manufacturer Selling price to wholesalers: $10
Margin ($): $7
Margin (% of selling price): $7/$10 = 70%
Purchase price from manufacturer: $10
Selling price to retailers: $15
Wholesaler Margin ($): $5
Purchase price from wholesalers: $15

Retailer Selling price to customers: $20
Margin ($): $5
Customer Purchase price: $20
Figure 7-1. Conflicts in Vertical Collaboration
Manufacturer Manufacturer
Distributor Distributor A Distributor B
Customer Customer
Vertical channel conflict Horizontal channel conflict

Figure 7-2. Conflicts in Horizontal Collaboration
Company Collaborator
Customer
Figure 8-1. Product and Service Management as a Value-Creation Process
Company
Company
value
Product
OVP
Service Customer Collaborator
value value
Competitors Context
The optimal value
proposition
Decision factors Decision criteria
Figure 9-1. Branding as a Value-Creation Process
Company
Company
value
Brand OVP
value value
Competitors Context
The optimal value
proposition
Figure 9-2. Vertical Brand Extensions

Price
Upscale
Price tier A offering
Price tier B Core

offering
Downscale
Price tier C offering
Benefits
Figure 9-3. Horizontal Brand Extensions

Price
Offering Core Offering

A offering C
Category Category Category

A B C
Figure 10-1. Pricing as a Value-Creation Process
Company
Company
value
Price OVP
value value
Competitors Context
The optimal value
proposition
Figure 11-1. Managing Incentives as a Value-Creation Process
Company
Company
value
Incentives OVP
value value
Competitors Context
The optimal value
proposition
Figure 11-2. Push and Pull Promotion Strategies
Manufacturer Manufacturer
Demand Communication
Incentives Demand
Retailer Retailer Communication

Incentives
Communication
Demand Demand
Incentives
Customer Customer
Push strategy Pull strategy
Figure 12-1. Communication as a Value-Creation Process
Company
Company
value
Communi-
OVP
cation
value value
Competitors Context
The optimal value
proposition
Figure 12-2. Developing a Communication Plan
Goal
Strategy
Message
Media Tactics
Creative solution
Implementation
Control
Figure 13-1. Distribution as a Value-Creation Process
Company
Company
value
Distribution OVP
value value
Competitors Context
The optimal value
proposition
Figure 13-2. Distribution Channel Structure
Company
Wholesaler
Retailer Retailer
Customer Customer Customer
Direct channel Indirect channels
Hybrid channel
Figure 14-1. Steal-Share Strategy
Current users
New users
Figure 14-2. Market-Growth Strategy
Current users
New users
Figure 14-3. Market-Growth Strategy for an Offering with a Superior Value Proposition
Current users
New users
Figure 14-4. Market-Innovation Strategy
New users
Current users
Current market New market
Figure 14-5. Defensive Market Strategies3
Customer Launch
costs premium
Move offering
upscale
Do
nothing Increase
benefits
Move
downscale
Reduce
Launch costs
economy
offering
Customer benefits
Figure 14-6. Product–Market Growth Matrix
Current customers New customers
Current Market Market

products penetration development
New Product
products development Diversification
Figure 14-7. The SWOT Framework4

Favorable Unfavorable
factors factors
Internal Company
Strengths Weaknesses
factors analysis
External Market
Opportunities Threats
factors analysis
Figure 15-1. Managing Sales Growth

New Managing
customers adoption
Sales volume
Current Managing
customers usage
Figure 15-2: The Adoption Funnel
Awareness
Attractiveness
Affordability
Availability
Purchase
Figure 15-3: Identifying Adoption Gaps
All target Aware of Perceive the Perceive the Have Purchase

customers the offering’s offering to be offering to be access to the offering
existence attractive affordable the offering
Figure 15-4: Key Factors Influencing Consumption Quantity
Satisfaction
Usage
frequency
Usage
Purchase quantity Repurchase
Replacement
frequency
Availability
Consumption
variables
Figure 15-5: Identifying Consumption Gaps
Satisfaction Usage Usage Replacement Availability

frequency quantity frequency
Figure 16-1. New Product Adoption

Total New
adoptions adoptions
Inflection
Speed of point
Inflection Market
diffusion point potential
Time Time
A. Total adoptions B. New adoptions
Figure 16-2: The Stage-Gate Approach for Minimizing Risk in New Product Development
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6
Idea Concept Business Product Market Commercial

generation development analysis development testing deployment
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5

Idea Concept Business Product Market
screening screening review review review
Figure 16-3. Managing the Product Life Cycle5
Sales
Introduction Growth Maturity Decline Time
Market size Small Moderate Large Moderate/Small

Market growth Low High Low Negative
Competition Low Moderate High Moderate/Low
Figure 16-4. Extending Product Life Cycle through Innovation6

Sales
revenues
Third
generation
Second
generation
First
generation
Time
Figure 16-5. Rogers’ Categorization of Customers Based on the Time of Adoption of Innovation
Number of
adoptions
2.5% 13.5% 34% 34% 16% Time

Innovators Early Early Late Laggards
adopters majority majority
(x-2SD) (x-SD) (x) (x+SD)
Figure 16-6. Moore’s Application of Rogers’ Model to Technology Markets
Number of
adoptions
The chasm
Enthusiasts Visionaries Pragmatists Conservatives Skeptics Time
Early market Mainstream market
Figure 17-1. Product-Line Positioning Map

Attribute 1
● Offering A
Target A
● Offering B
● Offering C
Target B Target C
Attribute 2
● Offering D
Target D
● Offering E
Target E
Figure 17-2. Product-Line Attribute Value Map

Value
Attribute 1
Attribute 2
Attribute 3
Attribute 4
Offering A Offering B Offering C Offering D Offering E Product

lilne
(Target A) (Target B) (Target C) (Target D) (Target E)
Figure 17-3. Vertical Product-Line Extensions

Price
Upscale
offering
Downscale
offering
Benefits
Figure 17-4. Horizontal Product-Line Extensions
Price
Offering A Offering B
Benefits
Figure 17-5: Product-Line Cannibalization

Existing Existing Existing Loss of share due
offering offering offering to cannibalization
New New
offering offering
Competitive Competitive Competitive

offerings offerings offerings
A. Single-offering scenario B. Dual-offering scenario C. Dual-offering scenario

without cannibalization with cannibalization
Figure 17-6: Product-Line Cannibalization and the Price-Benefit Tradeoff

Price Value-equivalence line
D B E
C F
Benefits
Figure 17-7. The Fighting-Brand Strategy

Price
Quality
Incumbent
brand
Low-price
competitors
Fighting brand
Time
Figure 17-8. The Sandwich Strategy
Price
Quality
Incumbent Premium brand
brand
Low-price
competitors
Fighting brand
Time
Figure 17-9. The Good-Better-Best Strategy

Price
Quality
Incumbent Best
brand
Better
Low-price
competitors
Good
Time
Figure 18-1. Identifying Target Customers: Key Steps
Step 1 Define tentative customer segments
Step 2 Define the value drivers for the category

Segmentation
analysis
Step 3 Define the needs of each segment
Step 4 Validate the tentative segmentation
Step 5 Assess segment attractiveness
Step 6 Identify the key competitors

Strategic
target analysis
Step 7 Assess segment compatibility
Step 8 Identify the strategically optimal segment
Step 9 Define the profile of the target segment

Tactical
target analysis
Step 10 Assess the tactical viability of this segment
Step 11 Commit to targeting a particular segment

Customer
strategy
Step 12 Develop a value proposition and positioning
Figure 19-1: The Business Model as a Value-Creation Process
Company
value
OVP
value value
Customer Collaborator Company

value model value model value model
Strategy Strategy Strategy
Tactics Tactics Tactics
Figure 19-2: The 5-C Framework for Defining the Target Market
Co
y
an
lla
bo
mp
ra
Co
Customers
to
rs
Competitors
Context
Figure 19-3: Customer Value Model
Customer
value
Value proposition
Price Incentives
Figure 19-4: Collaborator Value Model
Collaborator
value
Value proposition
Price Incentives
Figure 19-5: Company Value Model
Company
value
Value proposition
Price Incentives
References
1Adapted from Porter, Michael E. (1979), “How Competitive Forces Shape Strategy,” Harvard
Business Review, 57 (March–April), 137–145.
2 Adapted from Kahneman, Daniel and Amos Tversky (1979), “Prospect Theory: An Analysis of
Decision under Risk,” Econometrica, 47 (March), 263–91.
3Adapted from Hoch, Stephen J. (1996), “How Should National Brands Think about Private Labels?”
Sloan Management Review, 37 (2), 89–102.
4 Ansoff, H. Igor (1979), Strategic Management. New York, NY: John Wiley & Sons.
5 Adapted from Levitt, Theodore (1965), “Exploit the Product Life Cycle,” Harvard Business Review, 43,
(November–December), 81–94.
6Adapted from Christensen, Clayton (1997), The Innovator's Dilemma: When New Technologies Cause
Great Firms to Fail. Boston, MA: Harvard Business School Press.

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FIGURES

This document contains the figures included in Strategic Marketing Management

Trial & error

Figure 2-1: Identifying the Market: The 5-C Framework

Figure 2-2: Defining the Value Exchange: The 6-V Framework

Figure 2-3: The Optimal Value Proposition (OVP)

Company The optimal value

Product Service Brand

Price Incentives Tactics

Figure 2-6: Strategies for Generating a Business Model

Figure 2-7. The 7-T and the 4-P Frameworks

Product Service Brand

Incentives Value Price Price

Communication Distribution Place

Figure 2-8. The Five Forces of Competition1

Suppliers Competitors Buyers

Figure 3-2. The G-STIC Action-Planning Flowchart

Figure 3-3. The Marketing Plan

Figure 4-1. Segment-Based Targeting

Figure 4-3: The Resource Advantage Principle

Company’s ideal Company Competitive

Figure 4-4: The Customer Identification Process

Target Customer Strategic targeting

A. “Sniper” targeting B. “Shotgun” targeting C. Oversegmentation D. Shot-in-the-dark

Value-based segment (unobservable)

Figure 4-7. Targeting Multiple Segments

Figure 4-8. Segmentation as a Process of Differentiation and Agglomeration

Divide Identify the

Decide whom Strategic targeting

Figure 4-10. Key Segmentation Principles

A. Correct B. Incorrect C. Incorrect D. Incorrect E. Incorrect

Identifying Developing a Positioning

Figure 5-2: Value as a Function of Customer Needs and Offering Attributes

Customer Customer Company

Figure 5-3: Dimensions of Customer Value

Figure 5-5: Loss Aversion

Figure 5-6: Diminishing Marginal Value

Figure 5-7. Creating Superior Customer Value

Company Competitive Competitive

Attribute 1 Attribute 2 Attribute 3 Attribute 4 Attribute 5

Figure 5-9: Single-Benefit Positioning

Primary Key reason

Figure 5-10: Dual-Benefit Positioning

Primary Benefit 1 Key reason

Figure 5-11: Holistic Positioning

Figure 5-12. The Value Function2

Figure 6-1. The Three Dimensions of Company Value

Customers new Market-growth

Figure 6-4. Economic Value Analysis

Figure 6-6: Calculating Distribution Channel Margins

Purchase price from wholesalers: $15

Customer Purchase price: $20

Figure 7-1. Conflicts in Vertical Collaboration

Distributor Distributor A Distributor B

Vertical channel conflict Horizontal channel conflict

Decision factors Decision criteria

Figure 9-1. Branding as a Value-Creation Process

Decision factors Decision criteria

Figure 9-2. Vertical Brand Extensions

Price tier B Core

Figure 9-3. Horizontal Brand Extensions

Offering Core Offering

Category Category Category

Decision factors Decision criteria