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A BRIEF NOTE ON MARKETING FRAMEWORKS

This note is designed to provide a quick, conversational overview of some popular

frameworks that can be applied to marketing problems or situations.

Why frameworks?
As you are probably well aware, each marketing problem or situation comes with its own
quirks, so frameworks may be misleading at times. However, it is important to have a fluent
knowledge of these frameworks (at least the popular ones) for a variety of reasons:

• One, they are very useful in thinking about a marketing problem or situation in a
structured manner - they help you lend structure to a situation.

• Two, they are incredibly useful in interview situations. Interviewers will often, either
a) Ask you to react to a marketing problem or situation (e.g., “What do you think of
Cadbury’s latest Gorilla viral campaign?”), or
b) Ask you to describe the good, bad, or ugly of marketing campaigns (or other
strategies) that you can think of (e.g., “Describe one good and one bad marketing
campaign that you can think of?”), or
c) Ask you a market sizing question (e.g., “How big is the North American market
for diapers?”), or
d) Ask you to “solve” a problem (e.g., “A candy manufacturer’s sales revenue went
down from $100Mlln to $50Mlln in the Northeast markets. How would you help
them diagnose the problem?”).

• For all four classes of questions, you need to be structured in the way you tackle the
problem or describe the situation (or at least sound that way!).

• For the first two questions, one of the keys to sounding structured is to begin with the
macro (i.e., the big picture) and then drill down for specifics, data, assumptions, etc. And
this is where frameworks come in handy – it gives you an easy or ready start with the
“big picture.”

• It is also important to speak the same “language” as the interviewers (in business, law,
etc. – any professional degree), so at minimum you should not mix up terminologies
(and misunderstand questions).

• Additionally, note that once you have set up the big picture (e.g., the 3Cs, STP, and 4Ps
framework), you will probably need to drill down to get some data that fills in each of
these silos, then move back up to the big picture, maybe adjust the framework a little, or
perhaps even create a hybrid of two different frameworks, etc. So the key point is: don’t
get bogged down with a single framework, or try to force fit one to a given case or
question – remember to be flexible.

• Also try to appear as “natural” as possible when you apply these frameworks. Don’t
begin your answer with the declaration, “Let me apply the 3Cs framework to your
question…” Be subtle!
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• For tackling the third (i.e., market sizing) question, you should refer to class notes for an
illustration. The basic approach is still the same – you start with something broad and
then drill down. For useful “starting points” for market size estimations, see stats below
(please translate to your specific country/context).
o 6.6 B people in the World
o 300 M people in the US
o Adults: 200 M
o Children: 100 M
o 100 M Households
o 50% of total population have access to internet (150 M)
o 50% of world web users speak English
o 10,000 Cities / Towns in US
o 140,000 ATMS in the US
o 8 M People in New York
o 1.5 M live in Manhattan
o 45 M visitors to NYC each year
o 3.5 M in LA
o 7 M in London
o 1.2 B people in China
o 13 M in Shanghai
o 1 B in India

• For tackling the fourth (i.e., “solve” or diagnose the firm’s problem), please see the note
after the discussion of the 3Cs, STP, and 4Ps framework below.

THE 3Cs, STP, & 4Ps FRAMEWORK

Framework: Centered Around Major

“Decisions”
Identify
Market CUSTOMER COMPANY COMPETITION
Opportunities

Set
Strategy
SEGMENTATION TARGETING POSITIONING

Formulate
Marketing PRODUCT PRICE PROMOTION PLACE
Program

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The framework simply implies that there are ten critical business strategy questions that you
can ask:
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Step 1: Opportunity Identification (The 3Cs)

The first broad step in any marketing related business decision is to identify sustainable
opportunities. For opportunities to be sustainable there are three pieces that need to be
examined.

First, especially since this is a marketing class, the starting point for us would be to look at
the customer and ask some basic questions about our (potential) customers:

Customers
• Who are the customers?
• How do they make their decisions?
• Are there unmet needs and wants?
• Are there underserved needs and wants?

Second, it is important to assess our own company strengths and weaknesses to see if we are
able to fulfill these unmet or underserved needs, and we might ask questions like:

Company
• What are our strengths (S)?
• What are our weaknesses (W)?
• Based on our strengths (S) and weaknesses (W), are we in a good position to serve
these unmet or underserved needs?

Third, it is also important to look at the opportunities (O) and threats (T) that a company
might be facing (since they might undermine the Ss, or alleviate the Ws identified earlier).
Note: this is how the traditional “SWOT Analysis” terminology came about.

Part of these opportunities and threats may stem from how your competitors behave, hence
it is important to look at the competition. You might want to ask questions like:

Competition
• Who are the competitors?
• How intense is the competition?
• What factors do they compete on? Price? Quality? Other factors?
• Is there a source of sustainable competitive advantage?

By far, the most commonly used framework for analyzing the competition and rivalry is
Michael Porter’s 5-Forces Model. The model details 5 forces (Barriers to Entry, Threat of
Substitutes, Buyer Power, Supplier Power, and Degree of Rivalry, with each of these 5 forces
being composed of further subcomponents) that determine the attractiveness of an industry.
You will be covering this in detail in your Strategy / Management class (ad nauseam), so I
will not repeat it here. If you’re impatient, just Google it up – you will find a cottage industry
of sorts on it!

Note: Traditionally, the 3Cs mnemonic represented the analysis of the Customer, Company,
and Competition. However, an important point to note is that opportunities and threats that
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are external to the company need not be limited to “Competition” alone. These Os and Ts
may stem from (a) the Collaborators that the firm seeks out, and (b) the Context (i.e., the
general environment) that the firm finds itself in. Thus, it is also important to analyze a
firm’s collaborators and scan the firm’s general environment in order to properly assess the
Os and Ts. Thus, the traditional 3Cs analysis has been expanded to the 5Cs analysis and
includes an analysis of the Customer, Company, Competition, Collaborators, and Context.

A common mnemonic used to analyze the general environment (i.e., Context) is, STEP, and
involves looking for macro-level trends like:

• Social (change in public awareness, health concerns, etc.)

• Technological (new technologies, failed products, etc.)
• Economic (inflation, recession, luxury creep, etc.)
• Political (governments, treaties, including regulatory/legal forces, etc.)

Step 2: Setting the Strategy (STP)

For a lot of marketing activities, this second step is an all-important one that might make or
break the business. This second step involves another set of decisions that essentially set the
strategy for the opportunity that was (hopefully) identified in the previous step. For example,
going through step 1 might reveal that (a) there are plenty of opportunities that point
towards millions of potential customers, and (b) they can be reached and served in a million
different ways. However, every firm is resource constrained – you just cannot pursue every
opportunity that presents itself, and you need to prioritize.

Therefore, STP is defined as a managerial decision process that seeks to:

First, Segment the potential market into groups such that, in terms of the benefits they seek,
(a) within each group people are very similar to each other, and (b) across groups, people are
very different from each other. This helps maximizing marketing efficiencies.

Second, select or Target, one or more of these groups as a target segment. This mainly stems
from the fact that it may not be feasible to go after every available segment out there (i.e.,
resource constraints). Additionally, for many segments, the returns on marketing activities
(in terms of sales, revenues, profits, etc.) may be just too low to make any business sense.

Third, even within the target segment, there are usually other competitors who are already
present. Therefore, not only is it very important for a firm to create a desirable Positioning
for its offerings in the minds of the consumers, but it is also important to distinguish its
offerings from that of the competitors. This is what positioning is all about.

Step 3: Formulating the Marketing Program (4Ps)

This is the final step and offers a simple tool for planning and analyzing the execution of a
given marketing strategy. According to this model there are four key decisions that managers
must think about:
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Product
• What features to include in a product?
• How do we differentiate it?
• What brand name? What kind of brand name (extension, completely new, etc.)?
• Packaging decisions?
• Will it cannibalize any existing offerings?
• Warranties? Service?

Price
• How to price the product?
• Costs? Margins? Cost structure?
• Price elasticity?
• How much are people willing to pay for it? Why? (sometimes even more important than
cost based rationales)

Promotion
• How to “promote” the product? Note there are two ways to “promote” a product.
• Part of “promotion” is about communicating the value that you’ve created to customers
(via advertising, public relations, etc.).
• Part of “promotion” is also about incentivizing customers to buy the product offering
(via discounts, rebates, coupons, etc.).

Place (or Distribution)

• In which distribution channels to “place” the product?
• How do these channel decisions affect (a) cost, (b) time to market, and (c) reach of the
product?
• Do these channels add or detract from the image or perceived value of the product?

FINAL COMMENTS ON THE 3Cs, STP, and 4Ps FRAMEWORKS

1. Please note that the purpose of frameworks is to be parsimonious. So as a rule, unless

really necessary don’t get tempted into expanding this into (for example) the 7Ps (by
adding People, Package, Perception, and any other random “P” you happen to meet).
Same goes for the 3Cs and STP.

2. A popular alternative framework for the 4Ps framework is the CCD framework, which
slightly alters the 4Ps framework above. It talks about first, (a) Creating Value (involving
Product, Price, and the “incentive” component of Promotion), then (b) Communicating
Value (involving the “communication” part of Promotion), and finally, (c) Delivering
Value (Distribution).

3. Note that the questions that I’ve noted under each of these decisions (e.g., under the
3Cs, STP, and 4Ps) is by no means exhaustive – there are many more questions that
might be of interest for a given marketing situation.
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4. Finally, remember frameworks are no substitute for good analysis; they’re just good
starting points. In the end, the key to good analysis is to be data based – the data and facts
in question should be driving all your recommendations. All the best!

NOTE ON SOLVING OR DIAGNOSING A FIRM’S PROBLEMS

For the fourth class of problems, you will be given a scenario, typically bleak (falling profits,
revenues, wailing managers…), and you will be asked to diagnose the cause of the problem
and suggest remedies. Here’s how you can approach these problems:

1. I am not going to go into details, but essentially, almost all “profit” woes can be boiled
down to its components (see diagram below). These components simply come from the
“Marketing Math” handout that is there in your Course Pack. Please read it thoroughly
for details, but the diagram below is a good summary of the most important
components. This is a good starting point to probe for further data.

Marketing Math Basics

Break Even Volume occurs at the point where Profits = 0

Profit

___
Sales Revenue Costs

Sales Volume Price Variable Fixed

(Units) X
Cost + Costs

Variable Sales
Unit Cost X Volume

2. Once the probing and additional data gives you some inkling as to which of these
components may be problem areas, you have plenty of resources at your disposal. In
fact, for many problems, you may be able to use all (or some) of the components of the
frameworks that we just discussed (i.e., 3Cs, STP, 4Ps, Porter’s 5 Forces, STEP, SWOT,
etc.). For example, you could ask the following questions:
a. If “Price” is the problem:
• Will changes in pricing, pricing structure, dynamic pricing (i.e., over time),
discounts, rebates, coupons, competitor’s prices, etc., will have an effect?
Solve the problem?
b. If “Sales Volume” is the problem:
• Customers - is the market growing or shrinking? Change in demand? STP –
wrong target segment, positioning? Company Ss and Ws? Competitors – are
there new entrants or is there new competitive action? Environmental factors
(Os and Ts)? 4P’s: Product, price, place, promotion?
c. If “Fixed Costs” is the problem:
• Capital equipment? Land? Buildings? R&D?
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d. Finally, if “Variable Costs” is the problem:

• Labor? Materials? Distribution?

Again, the key is to be flexible and base your recommendations on the data at hand.