Page 70 - Marketing Management

DEVELOPING MARKETING STRATEGIES AND PLANS | CHAPTER 2 47

Value Capture Redefine how company gets paid or create • Google paid search
innovative new revenue streams. • Blockbuster revenue sharing with movie
distributors
Processes (HOW) Redesign core operating processes to improve • Toyota Production System for operations
efficiency and effectiveness. • General Electric Design for Six Sigma (DFSS)
Organization Change form, function, or activity scope • Cisco partner-centric networked virtual
of the firm. organization
• Procter & Gamble front-back hybrid
organization for customer focus
Supply Chain Think differently about sourcing and fulfillment. • Moen ProjectNet for collaborative design
with suppliers
• General Motors Celta use of integrated
supply and online sales
Presence (WHERE) Create new distribution channels or innovative • Starbucks music CD sales in coffee stores
points of presence, including the places where • Diebold RemoteTeller System for banking
offerings can be bought or used by customers.
Networking Create network-centric intelligent and • Otis Remote Elevator Monitoring service
integrated offerings. • Department of Defense Network-Centric
Warfare
Brand Leverage a brand into new domains. • Virgin Group “branded venture capital”
• Yahoo! as a lifestyle brand

Source: Mohanbir Sawhney, Robert C. Wolcott, and Inigo Arroniz, “The 12 Different Ways for Companies to Innovate,” MIT Sloan Management Review (Spring 2006), p. 78. © 2006 by Massachusetts
Institute of Technology. All rights reserved. Distributed by Tribune Media Services.

Movie Industry The success of Netflix (see Chapter 15) and the ease of watch-
ing longer-form entertainment or playing games on broadband Internet helped produce a
6.8 percent decrease in DVD sales—one that experts believe will continue.The recent emergence
of Redbox and its thousands of kiosks renting movies for $1 a day poses yet another threat to the
movie business and DVD sales. Film studios clearly need to prepare for
the day when films are primarily sold not through physical distribution but
through satellite and cable companies’ video-on-demand services.Although
studios make 70 percent on a typical $4.99 cable viewing versus 30 percent
on the sale of a DVD, sales of DVDs still generate 70 percent of film profits.
To increase electronic distribution without destroying their DVD business,
studios are experimenting with new approaches. Some, such as Warner
Bros., are releasing a DVD at the same time as online and cable versions of
a movie. Disney has emphasized its parent-friendly Disney-branded films,
which generate higher DVD sales and are easy to cross-promote at the com-
pany’s theme parks,on its TV channels,and in its stores.Paramount chose to
debut Jackass 2.5 on Blockbuster’s site for free to create buzz and interest.
Film studios are considering all possible scenarios as they rethink their busi-
ness model in a world where the DVD no longer will reign as king. 29

The easy availability of rentals
from Redbox kiosks has film stu-
dios rethinking their pricing and Business Unit Strategic Planning
distribution strategies.
The business unit strategic-planning process consists of the steps shown in Figure 2.3. We
examine each step in the sections that follow.