Marketing problem solving: Problem Solving Format
Perhaps the biggest mistake in marketing is to try to answer a marketing question without developing a marketing plan for a brand. Whether it's a new advertising campaign or a new price or distribution strategy, the starting point should always be the same: the logically prior question of what should the marketing strategy should be. Then see how the question would be answered given this strategy.
The PSF incorporates all of the prior nine marketing ideas, either explicitly or implicitly.
Look at the original Problem Solving Format (see below). There is a clear logic to the approach: market coverage strategy defines target markets; price and distribution strategies are derived from the core benefit proposition, which itself follows from a brand's positioning strategy; the business model depends on price and place decisions; and promotion reflects—if it is to be logical—the core benefit proposition.
Using the PSF, development of a marketing plan starts with the naming of the market. For Duracell, the market is batteries. Who will buy the product comes later, and it is a mistake to define the market by "who" and not "what."
The market definition can be refined by considering a focus market. A focus market is just a device for narrowing the case analysis by excluding product categories that are not "substitutes" while including categories that are substitutes. For example, a case on Gatorade (which has a 90% market share) should not exclude water since that is a substitute for a sports drink and a possible source of new sales. But for Duracell, industrial batteries are not substitutes for consumer batteries, so the focus market could be consumer batteries.
The first major brand management task is to choose a market coverage strategy, but to do that you must segment the market, that is, segment the focus market or whole market if there is no focus market.
Draw a "blank" segmentation circle. Figure out which segmentation variables could divide up the market (the circle) such that each resulting segment meets separate needs and wants and thus is a potential product for the brand. List the segmentation variables. Show the finished segmentation circle. For the consumer battery market, one way of segmenting the market is by benefits sought, in particular type of use: regular or high-drain.
Which market coverage strategy is best? Compare the best strategy with what the company is already using for the brand. Duracell uses a differentiated market coverage strategy to cover both the regular and high-drain segments of the consumer battery market with two brands: Duracell and Duracell Ultra.
Then turn your attention to the second major brand management task: positioning
Next define the target market(s). The target market is just the market(s) defined by the market coverage strategy.
List the needs and wants of the target market under consideration. If the target market is the whole market, they would be very broad. If the target market is a segment of the whole market, they would be narrower. Then you can consider who has these needs and wants. By doing things in this order you will not make the mistake of defining the market by who before what.
For example, Craftsman certainly sells more tools to men than women. But it would be a mistake to define Craftsman's target market as handymen. It would be better to define the target market as the home tool market.
Then for consumers with these needs and wants, put yourself in the shoes of the buyer and ask yourself what process do consumers use to choose among brands in this market, i.e., identify the steps in the buying process.
Create a Buyer Behavior Flow Chart (BBFC). Start with evaluative dimensions that are more important to all consumers at the top. Uncover evaluative dimensions at the bottom that can be used for positioning.
Summarize the evaluative dimensions. List the ones that were derived from the Buyer Behavior Flow Chart, say A, B, C, D and E. Highlight the ones that will be used for positioning, say C, D and E.
Draw positioning maps. Draw the maps in order of the evaluative dimensions used for positioning. Make pairwise comparisons, e.g. C vs. D, then C vs. E, or C vs. D, then D vs. E. Make sure that each map has evaluative dimensions, perceptions and preferences.
State the logic of the positioning. This is a recap of what you have shown in the series of positioning maps.
State the core benefit proposition (CBP). This is a restatement of the "meaning" from the positioning maps. (Don't worry about redundancy. The PSF is built with redundancy to emphasize the logic and make it more difficult to depart from that logic.)
Support any changes in perceptions or preferences. Use conjoint analysis for a change in perceptions (at least one for each directional change). Use preference analysis for a change in preferences.
Now complete the third major brand management task: setting the tactical marketing mix variables in a logical order.
What price strategy is implied by the CBP? A skimming price strategy would have the brand priced slightly higher than its main competition. A penetration price strategy would have the brand priced slightly lower than its competition. Note that this logic works since the brands with price points much higher or lower were ruled out as main competitors higher up in the BBFC.
What place strategy is implied by the CBP and the price strategy? Selective distribution means distribution in a few outlets in a market area, while intensive distribution means distribution in just about every possible outlet in a market area. This simplification helps both the logic and consistency of the marketing plan. You would not have Krispy Kreme both positioned as fresh, hot and special (a core benefit proposition) and following intensive distribution, since that would be inconsistent.
What promotion strategy is implied by the CBP, the price strategy and the place strategy? The message for promotion should be the core benefit proposition. With this guidance for advertising agencies, there would be little if any change of them adding some extraneous evaluative dimension (say "fun") or, perhaps more important, omitting one or more of the evaluative dimensions that the brand is logically positioned on. Under this logic Miller beer would be "Tastes Great, Less Filling" (a core benefit proposition) and not "It's It and That's That."
The brand's business model is derived from the first two of the 3P's: price and place. This allows a consistency check on the marketing plan since the plan should not only reflect the brand's business model but do something about improving profits.
Finally, protect the marketing plan against competition with MAGIC strategies.
Developing a marketing plan using the Problem Solving Format results in a logical plan, a consistent plan and a plan largely protected from competitive reaction.
Summary of the marketing logic