with Professor Lakshman Krishnamurthi
Lakshman Krishnamurthi is the A. Montgomery Ward Professor
of Marketing and chair of the Marketing Department at the
Kellogg School. His research addresses the impact of price
and advertising on consumer purchase decisions, particularly
in the estimation of price elasticity in brand choice and
quantity purchased. He also studies strategy related to customer
advantage, branding, segmentation and new products. His scholarship
has earned him numerous awards, including the prestigious
John D.C. Little Award for best paper. Kellogg World caught
up with “Prof. K” to seek his strategic insights.
World: What strategies must marketers adopt as they engage
increasingly demanding consumers in a marketplace driven by
Lakshman Krishnamurthi: The central focus of marketing
strategy should be the insightful understanding of customer
benefits and how to translate those benefits into meaningful
products and services. Competitive advantage often ends up
in wasteful strategies which may not address customer benefits.
The key questions that must be answered have to do with customer
benefits: what compelling customer advantage does the technology
provide; is the customer better off; how hard must the customer
work to enjoy the benefits?
Which firms best understand marketing strategy, and what are
they doing so effectively?
Airlines is very focused in its customer targets and positioning.
Anybody can charge a low price; very few can make money unless
they are operationally excellent. Southwest is extremely cost-efficient.
At the high end, Porsche is doing very well, as a niche player
that dominates the premium sports car market with just two
car lines, the 911 and the Boxster. Its positioning is its
mystique which allows it to command high prices. At the same
time, the company is run extremely efficiently using sophisticated
supply chain optimization and JIT manufacturing. All low-value-added
parts and mechanicals are manufactured by suppliers, leaving
Porsche to concentrate on the car engine, the finishing and
the marketing. IBM has also understood better than most that
customers want solutions, not products, and has started to
partner with key players in the systems marketplace to sell
e-commerce solutions. Such partnering added $3 billion to
IBM’s top line last year.
are some misconceptions about marketing strategy, and why
do these misconceptions persist?
misconception is that you have to dominate on one of the three
value disciplines, either operational excellence, product
leadership, or customer intimacy. Regardless of what business
you are in, today’s marketplace does demand operational
excellence. Neiman Marcus cannot be as operationally excellent
as Target, but must be better than competitors like Saks.
Porsche, after years of believing that simply having great
cars — product leadership — is enough, has now
embraced the operational excellence paradigm with a vengeance.
are marketers meeting the challenge of disruptive technologies,
such as TiVo, that allow viewers to eliminate commercials
in broadcast media?
to be creative and take advantage of the disruption. Advertisers
could work with TiVo (or the cable company) to provide targeted
infomercials. Assuming two-way interaction, viewers could
identify products and services that they are interested in.
Customers want to learn about products, but at their discretion.