Day 1 : Picking the Right Markets and Projects
“When General Motors wants to predict demand for new automobiles,
or
P&G wants to predict demand for Ivory soap, they use models developed at MIT Sloan.”
The first day of the program is designed to take the mystery out of marketing. We will provide a comprehensive roadmap of the science of marketing to help enable you to select the right markets, products, and projects. We will then address the financial aspects (Day #2) and the global strategy (Day #3).
By the end of Day #1, led by Professor Duncan Simester, you will better understand:
Customers
• Why you need to segment customers, and how to do so
• How customers make purchasing decisions
• How customer decisions vary across contexts and cultures
Marketing Strategy
• Selecting markets in which the potential profits are high
• Determining whether you have the resources to extract some of that profit
• Identifying threats to your profits from your suppliers and distributors
• Developing barriers to block entry by potential competitors
Product Development
• Measuring the attractiveness of new product and service ideas
• Screening impractical, infeasible or unmarketable ideas
• Asking the right questions when testing new product service concepts
• Illustrating an ideal approach to new product development (industry examples)
Marketing is not just selling or advertising. It is a rigorous, disciplined science that applies a reasoned framework to the assessment of consumer needs, market segmentation, product design, branding, advertising, channel management, and pricing. In this program, you will learn to look at marketing problems through the lens of an analytical framework that will help you better understand:
• what information you can provide to improve your marketing strategy and tactics
• how you can collect customer data to support the product development process
1. Customers: Understanding the Customer Decision Process
This session will begin by providing the strategic and tactical reasons for segmenting customers, and enable you to identify viable customer segments. The session also focuses on the customer decision process, including:
• how customers collect information and the factors and distortions which influence their search
• how customers form expectations and infer information
• how customers trade-off product attributes
• how you can make your product more attractive by changing the context in which customers evaluate it
2. Marketing Strategy: Which Markets to Enter?
Which markets are more attractive and how should you select your target markets? What are the trade-offs between market size and competition? You will learn how to:
• target markets in which the potential profits are high
• avoid markets in which competition is intense or competitors are likely to enter
• recognize the importance of competition from your suppliers and distributors and identify how to improve your bargaining position
3. Product Development: The Trade-Off Between Risk and Reward
You must learn how to manage your market risk. In this session, we describe how to design your product development process so that you learn whether you will succeed before you risk too much capital. The focus will be on practical insights. Why do you need an independent advisory group, when should you speak to customers, why should you write down your criteria for success? You will learn to think about the product development process in stages:
- idea generation
- idea screening
- concept testing
- market testing
The key to new product development success is not only designing the best product but also managing the downside: learning to acquire the key necessary market information while minimizing risk.
4. Optimal Product Line Design: The Bag Design Exercise
We present a real-life product development problem: what products to offer in a new product category? There are two parts to the problem: measurement of customer preferences and optimization of product design. In this session we will illustrate the state-of-the-art methods for addressing both issues.
You will work in small teams to engage in a conjoint analysis task using data provided by an innovative luggage manufacturer. You will use real data to infer customer preferences and predict which products customers will choose. You will then be asked to design a product line: which five computer bags should the firm produce? You will be able to compare your answers with actual sales data to evaluate the quality of your choices.
The session highlights what is possible when firms use a rigorous approach to solve marketing problems. The optimization and measurement methods that we will illustrate represent leading edge research developed at MIT. The profit improvement will illustrate why marketing is a science rather than simply a set of loose principles. |
