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MS Surface Marketing Plan
MS Surface Marketing Plan
1
Executive Summary
Key point: Microsoft makes devices to glue people into their ecosystem
not to profit directly from hardware sales. Their goal is to drive
customers to purchase their software, where they earn the highest
margins. Their goal is to fill a niche that will bring enough customers into
their ecosystem to contribute to the growth in sales for their software.
(Charles Arthur, 2014).
2
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
[2] Aurthur, Charles. Digital Wars. New York, 2014
Table of contents
A. Current Marketing Situation
3
Current Marketing Situation
Market description and Microsoft’s position in it.
4
Market description
• This will allow the company to create value for the targeted
customer.
5
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Segmentation
• Behavioral. Microsoft segments its consumers by how they will
likely use the device.
6
images source: microsoft.com
Marketing Strategy - Concentrated
7
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Value proposition - Why should I buy your brand?
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
8
[3] Bradley, Tony. “3 reasons to invest in a Surface Pro 3 instead of an iPad Air 2.” Tech Republic. October 2, 2014.
http://www.techrepublic.com/article/3-reasons-to-invest-in-a-surface-pro-3-instead-of-an-ipad-air-2/
Factors influencing consumer behavior
of the primary target market
9
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Buyer decision process
of the primary target market
Need recognition – Typical large tablets have a 10 inch screen and the smallest fully
featured laptops are 13 inches. Tablets have a weak mobile core processors and laptops are
heavy and lack convenient touchscreens. The SP3 at 12 inches is a combination of both
device types.
Information search – The SP3 is tablet, but has a detachable keyboard and full operating
system which makes it also a laptop. It is cheaper than buying two separate devices but is
expensive when compared to any one laptop or tablet by itself.
Evaluation of alternatives – A 128GB iPad Air 2 costs $700. A 256GB MacBook Air cost
$1300. That’s a combined cost of $2000. The 256GB SP3 with a equivalent specification
costs $1300. Apple has more apps, Microsoft has more supported programs
Purchase decision – It is the most full featured device that serves a multitude of purposes
and replaces two devices. It is an overall great buy, packed with value.
Post-purchase behavior – It comes with the number one operating system in the world,
ensuring tons of program compatibility. It has a one year warranty and is connected to one
of the largest customer support teams in the world.
10
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Product review
11
Levels of product/service
12
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Core customer value - What is the buyer
really buying?
13
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Actual Product
Features: It has the full feature list of a table and a laptop
crammed into a tablet form factor.
14
image source: microsoft.com
Actual Product
Design: The thinnest full size PC. Features a unique kickstand, Detachable type cover,
and electronic pen.
15
image source: microsoft.com
Actual Product
Quality Level: It has the most powerful processor of any tablet, the
largest touch and pen interface screen, and it’s the thinnest PC.
Brand Name: Microsoft is the most recognizable brand of operating
systems with a global market share of 85%.
Packaging: It has been modernized its packaging to match its new
design language.
17
[4] http://www.microsoftstore.com/store/msusa/en_US/pdp/Surface-Pro-3/productID.300190600?WT.mc_id=sp3pdp-appstory
Type of product: Consumer vs Industrial
18
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Product life cycle
The product is past the Product development stage, and Introduction stage.
At less than 10% market share for tablets, the SP3 is far from the Maturity or
Decline stage.
19
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Benefits/features analysis
BENEFITS
Portable Powerful Capable
FEATURES
Screen: 12-inch touch CPU: 1.9GHz Intel Core i5-4300U microSDXC card reader
Weight: 1.76 pounds Graphics: Intel HD Graphics 4400 Two 5MP webcams (1080p)
Size: 7.93 x 11.5 x 0.36 inches RAM: 8GB LPDDR3 Storage: 256GB SSD
802.11ac Wi-Fi, Bluetooth 4.0 USB 3.0, Mini DisplayPort
headphone/mic jack
20
Differentiation
• There was no product that existed in the space between the PC
and the tablet until the SP3. It’s a tablet with a full-size operating
system, it full sized ports, expandable memory, a pen interface
and a larger screen size.
PORTABLE
POWERFUL POWERFUL
PORTABLE VALUE PRICED CAPABLE
CHEAP TOUCH KEYBOARD
TOUCH PEN ENABLED PEN
SIMPLE STYLISH/COOL FACTOR
21
images source: apple.com, microsoft.com
Branding strategy
22
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Competitive review
"Surface Pro devices and our PC accessories face competition from
computer, tablet, and other hardware manufacturers, many of which
are also current or potential partners and customers.”
[8] Microsoft SEC Annual Report 2013
23
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Identify competitors
24
images source: apple.com, samsung.com
Assess the competitor
Apple = rigid design language, slow release, high quality, strong brand
2014
2014
2013 NOTE PRO 12.2
The iPad mainly remained the same NOTE 10.1
The Note made major changes with 2012 NOTE 8
each iteration adding the latest NOTE 10
technologies
25
Select competitors to attack
Apple is the easiest to go after and it the past has proven to be the
winning strategy. This was the case with the original windows
operating system which elevated the company in the first place.
26
[5] http://www.netmarketshare.com
Market share
• According International Data Corporation (IDC), The SP3 has less than
10% of the tablet market versus the market leader (Apple iPad) with
over 50%.
27
[6] Tushneem. “Microsoft needs to up the ante with the Surface RT to gain market share.” Mobinett. February 4, 2013.
http://www.mobinett.com/2013/02/04/microsoft-needs-to-up-the-ante-with-surface-rt
Competitive positions and roles
• The Surface Pro 3, it is fairly new to the tablet market and technically
it is in a new category of its own. Due to the fact that is a non-
traditional product with a very little market share in the tablet or the
PC market it is is best categorized as a Market Nicher.
• Unfortunately Microsoft is using Market challenger strategies, such
as attack ads against Apple, which have since backfired
28 19, 2014.
[7] Bott, Ed. “How Microsoft’s Surface Pro 3 marketing push backfired.” ZD Net. June
http://www.zdnet.com/article/how-microsofts-surface-pro-3-marketing-push-backfired/
Strategic sweet spot
• Owning a SP3 equates to owning a laptop, a tablet, and a digital
notepad. This means buying and maintaining only one device which
decrease the cost to consumer.
• These are advantages geared toward Students, Families,
Professionals and Creators.
29
Positioning
30
Distribution review
31
Current supply chain members and roles
Microsoft has internalized many components of the manufacturing
process by producing their own hardware. Microsoft still has to
purchase several subcomponents for its product such as processors,
memory storage and displays.
33
Current type of distribution strategy
34
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Strengths, Weaknesses,
Opportunities, and Threats
Analysis (SWOT)
35
Microenvironment - INTERNAL
STRENGTHS
Company – Microsoft’s overall goal is to get people to use its operating system and services. Selling the SP3 is also for
the purpose of this goal and not to dominate the tablet market. They design and manufacture the hardware which
ensures their software developer can customize programs to the specification of the device thus producing the best
user experience.
Suppliers – Microsoft is shedding some of its dependence of device makers and developing its own through
relationship with the parts suppliers. This gives them better control over supply and supply cost.
Marketing intermediaries – Buy creating their own physical stores and selling online, Microsoft is less dependent on
Marketing intermediaries to help the company promote, sell, and distribute its products to final buyers.
Competitors – They have a unique offering that is competitive with the competition.
Publics –
Financial publics: Microsoft is a large company with large cash reserves able to push development and sale
further than its competition.
Government publics: Microsoft is a huge enterprise partner with U.S. government at all levels.
Customers – The surface is an attempt to target to the consumer electronics market, where Microsoft does not have
a strong relationship. However most consumers are familiar with the brand and is likely experienced with the
companies product through work or its other devices. This means there is a less of a hurdle to the customer than a
company has no previous relationship with the consumer at all..
36
Microenvironment - INTERNAL
WEAKNESSES
Company – There weakness as a company they have difficulty rallying the entire company under one brand. It is
difficult to get the company departments to communicate and support each other. It is also a weakness that
Microsoft is new to hardware development and direct consume sales.
Suppliers – Microsoft has a long history as a licensing company and they are new to developing relationships and
negotiating with parts manufacturers. Bad relationships could results in delayed products or shortages.
Marketing intermediaries – Microsoft is inexperienced at operating its own physical stores with less dependence on
marketing intermediaries to help the company promote, sell, and distribute its products to final buyers, it takes the
risk of not being able to do this well and hurting its sales during the learning process.
Competitors – Technology competitors are fast and a product could be released tomorrow making the Surface inferior
and dead in the eyes of the consumer.
Publics
Financial publics: Though it has large cash reserves, Microsoft is also controlled by its shareholders who may
refuse to continue to finance the Surface product.
Government publics: Apple as recently teamed up with IBM to target government contracts.
Citizen-action publics: Microsoft has long been a target of antitrust violation thus have difficult entering new
markets with the speed of smaller competitors.
General public. Microsoft has been long considered a productivity and enterprise company but as a tablet it
needs to garner the reputation of a company that can produce a portable, easy to use and fun to use
consumer product.
Customers – The surface is an attempt to target to the consumer electronics market, where Microsoft has historically
been weak. The SP3 however also targets the business and government markets where it has been very successful.
However this is a very different product than what Microsoft usually markets to its business and government markets.
37
Macro environments - EXTERNAL
THREATS
Demographics - There has been a decline in PC sales and Laptop sales for the past few years as more and
more people adopt mobile device. A cross platform device like the SP3 may be affected next.
Economic – If the economic stops improving, the first products to suffer will be niche items like the SP3
Natural – Scarcity of resources such as lithium ion will drive up cost and scare away buyers.
Technological – Technology is innovating at an increasing rate and the SP3 could be lost overnight by a single
announcement of a new better product by a competitor
Political – If countries like China and India suddenly close their doors it will eliminate a huge demand.
Cultural – If a company in china produces its own copy cat device, cultural Chinese may adopt the domestic
product over a heavily taxed import.
38
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Macro environments - EXTERNAL
OPPORTUNITIES
Demographics – The millennial generation was raise on today’s tech and wants more of it faster
than the last generation. This grows the market for others to gain profits.
Economic – Economies around the world is improving and thus more money is being spent on
personal technology
Natural – The SP3 minimize the number of electronics thus eventual waste. Its notepad
replacement feature decrease paper waste.
Technological – Technology is innovating at an increasing rate where companies that go from idea
to product to sale, all in house can keep up with demand.
Political – As countries like China and India opens their doors it will create a new demand for
technology.
Cultural - Millennials understand the need for a simplification of technology to one device.
39
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Part 1 Endnotes
Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014 [1]
Aurthur, Charles. Digital Wars. Kogan, 2012 [2]
Bradley, Tony. “3 reasons to invest in a Surface Pro 3 instead of an iPad Air 2.” Tech Republic.
October 2, 2014. http://www.techrepublic.com/article/3-reasons-to-invest-in-a-surface-pro-
3-instead-of-an-ipad-air-2/ [3]
Microsoft.com. Warranty Information.
http://www.microsoftstore.com/store/msusa/en_US/pdp/Surface-Pro-
3/productID.300190600?WT.mc_id=sp3pdp-appstory [4]
Operating System Market Share. http://www.netmarketshare.com [5]
Tushneem. “Microsoft needs to up the ante with the Surface RT to gain market share.”
Mobinett. February 4, 2013. http://www.mobinett.com/2013/02/04/microsoft-needs-to-up-
the-ante-with-surface-rt [6]
Bott, Ed. “How Microsoft’s Surface Pro 3 marketing push backfired.” ZD Net. June 19, 2014.
http://www.zdnet.com/article/how-microsofts-surface-pro-3-marketing-push-backfired/ [7]
Microsoft Annual Report 2013 [8]
40
Part 2
Marketing Plan
41
Table of Contents
42
Objectives and Issues
43
Statement of marketing objectives (year one)
44
[1] Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Issues that may hinder marketing objectives
45
Marketing Strategy
Recommendations
46
Positioning strategy
47
Positioning
They need to bring their price point down to closer to the market leader’s
prices to be more attractive.
Removing features cuts cost which lets them reduce prices and combined
with the addition of more benefits adds to the overall value. 48
Feature to remove
49
[2] Photo. Man Taking picture with a pink iPad.
http://technews.wpengine.netdna-cdn.com/wp-content/gallery/ipad-photos/pink.jpg
Benefits to Add
The SP3 cannot be opened for repairs, but the iPad can be easily opened
Using screws instead of glue adds benefits without increasing cost. nice
cracked
SP3 iPad
51
[3] IFixIt. Microsoft Surface Pro 3 Teardown.
https://www.ifixit.com/Teardown/Microsoft+Surface+Pro+3+Teardown/26595
Product Strategy
• Strategy Decision
• Positioning
• Attribute - This should receive the
least attention as the specifications
are only important to the minority
hardcore consumer
• Benefits – Continue to express the
benefits as this is how the majority
of the potential consumer will relate
to the product. This should be done
through storytelling. Messages
should try to think out the 24 hour
use by a student, professional or a
parent.
• Values – Donate SP3 regularly to
schools, hospitals and other non-
profits, in order to create an
emotional connection to the brand
[4] GSMArena. 2 May 2011. Mobile phone usage report 2011: The 52
things you do.
http://www.gsmarena.com/mobile_phone_usage_survey-review-592p3.php
Product Strategy
53
[5] Apple. Apple Care Products.
http://www.apple.com/support/products/
Branding strategy
• Brand equity
• Conduct polls, analyze reviews
and determine the differential
effect of the brand. Determine
how to increase its positive brand
equity.
[6] Phone Arena. 22 May 2014. Poll results: What did you think of the Microsoft Surface Pro 3?54
http://www.phonearena.com/news/Poll-results-What-did-you-think-of-the-Microsoft-Surface-Pro-3_id56382
Pricing strategy
Since the main competitor Apple uses a Market-skimming pricing strategy, this
will help the market-penetration strategy as their will be potential Apple
customers that have not purchased yet and could then be converted into
Microsoft customers.
55
Pricing strategy
Market-penetration pricing has the added benefit of looking like you are beating out
your competitors. The news do not see the pricing strategy, they just see units sold.
[7] The Motley Fool. October 29 2014. Why Microsoft's Surface Pro 3 Sales Soared as Apple's iPad56
Sales Plunged.
http://www.fool.com/investing/general/2014/10/29/why-microsofts-surface-pro-3-sales-soared-as-apple.aspx
Distribution strategy - exclusive distribution
57
[8] Techsaucer Blog. August 24 2012. Microsoft opens its retail store – Trying to compete Apple?
https://techsaucer.wordpress.com/2012/08/24/microsoft-opens-its-retail-store-trying-to-compete-apple/
Distribution strategy - selective distribution
58
[9] iSpot. Best Buy Commercials. http://www.ispot.tv/brands/7c_/best-buy
Marketing Communications objectives
The Top 4 videos have 2.5 million views. That’s 2.5 million potential customers.
[10] Youtube. 10 May 2015. Search results for "Microsoft Surface Pro 359Reviews".
https://www.youtube.com/results?search_query=microsoft+surface+pro+3+review
Marketing Research
60
Action Programs
61
Integrated Marketing Communications (IMC)
62
Message design, content, and structure
1. Design
a. Get attention – “It’s a Tablet will replace your Laptop”
b. Hold interest – Show that it is different from the competition.
c. Arouse desire – Focus on the benefits.
d. Obtain action – Link to the online store or provide directions to the nearest store
2. Content
a. Rational Appeal – Make the consumer ask themselves, “Why pay for so many devices and proceed to
carry around and switch between these devices?” Then pose to them it is more reasonable to buy one
device that does it all.
b. Relate to the audience’s self-interest – Show the consumers the benefits of having that one device
that can do all of these tasks typically done across multiple devices.
3. Structure
a. Draw a conclusion - due to the fact that it is a niche product in a new market, it is necessary to draw
the conclusion for the consumer
b. Present the strongest arguments first – There are so many features and benefits that its best to go
right into them.
c. One-sided argument: All technology has trade-offs and are subjective thus it should be up to the
consumer to make those judgements.
4. Format
a. This product should be presented in online media types, such as online news sites, blogs, YouTube,
and other avenues that can display the SP3’s long list of features.
63
Media choices
64
Promotion mix tools
Public Relations
National News Agency
Advertising
Feature in Film & TV
Sales Promotion
Specialty News Agencies Have a trade in offer: A MacBook
for a SP3 discount
Feature in Sports
65
Public Relations
National News Agency
66
Personal Selling
Build more Microsoft Stores
67
Sales Promotion
Have a trade in offer: A MacBook
for a SP3 discount
Instead, offer a trade in deal for competitor products. Even if only a few participate in the trade
in this is a powerful message to rest of the potential consumers.
68
Direct Marketing
Sell from on Microsoft.com
Selling directly through the website results in the lowest overhead. Advertising for this
product should be given space on Microsoft’s main landing page with a redirect to the
Microsoft Store.
Advertising
Feature in Film & TV
Product placement in Film, TV, and sports
demonstrates to the public, actual use cases that will
further drive market acceptance.
Feature in Sports
70
Budgets
71
Objective/task method
72
Controls
73
Metrics needed to monitor marketing plan progress
• Set goals:
• Refer to the marketing objectives slide
• Marketing goals should be at 40% since this is a niche product and we plan to
pursue a low cost strategy. Focusing on inexpensive strategies should yield higher
ROIs for marketing.
• Measure
• Observe on a quarterly basis to see if sales of the SP3 and connected products are
increasing, decreasing, or staying the same
• Evaluate
• Determine whether it is being affected by external factors. For example, a snow
storm could slow sales in a particular area. Examining a competitors sales could
be used to adjust expected vs actual performance.
• Corrective action
• Adjust the marketing plan as needed, such as decreasing price, changing the
message, or the message channel.
• Use the Operating control method to check performance regularly and take
corrective action as necessary.
74
Metric 1 Break-Even Price
75
Metric 2 Return on Marketing Investment
• For example if the unit cost is $500 and we want a 50% ROI and the
company is investing 50 million dollars and expects to sell 5 million
units, then the ROI price would be $505.
• Carefully consider this in connection to the break even calculation.
76
Metric 3 Inventory Turnover
77
Part 2 Endnotes
• Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014 [1]
• Photo. Man Taking picture with a pink iPad. http://technews.wpengine.netdna-cdn.com/wp-
content/gallery/ipad-photos/pink.jpg [2]
• IFixIt. Microsoft Surface Pro 3 Teardown.
https://www.ifixit.com/Teardown/Microsoft+Surface+Pro+3+Teardown/26595 [3]
• GSMArena. 2 May 2011. Mobile phone usage report 2011: The things you do.
http://www.gsmarena.com/mobile_phone_usage_survey-review-592p3.php [4]
• Apple. Apple Care Products. http://www.apple.com/support/products/ [5]
• Phone Arena. 22 May 2014. Poll results: What did you think of the Microsoft Surface Pro 3?
http://www.phonearena.com/news/Poll-results-What-did-you-think-of-the-Microsoft-Surface-Pro-3_id56382
[6]
• The Motley Fool. October 29 2014. Why Microsoft's Surface Pro 3 Sales Soared as Apple's iPad Sales Plunged.
http://www.fool.com/investing/general/2014/10/29/why-microsofts-surface-pro-3-sales-soared-as-apple.aspx
[7]
• Techsaucer Blog. August 24 2012. Microsoft opens its retail store – Trying to compete Apple?
https://techsaucer.wordpress.com/2012/08/24/microsoft-opens-its-retail-store-trying-to-compete-apple/ [8]
• iSpot. Best Buy Commercials. http://www.ispot.tv/brands/7c_/best-buy [9]
• Youtube. 10 May 2015. Search results for "Microsoft Surface Pro 3 Reviews".
https://www.youtube.com/results?search_query=microsoft+surface+pro+3+review [10]
78
BIBLIOGRAPHY
Kotler, Philip and Armstrong, Gary. Principles of Marketing, 15e. Boston: Pearson, 2014
Aurthur, Charles. Digital Wars. Kogan, 2012 [2]
Bradley, Tony. “3 reasons to invest in a Surface Pro 3 instead of an iPad Air 2.” Tech Republic. October 2, 2014.
http://www.techrepublic.com/article/3-reasons-to-invest-in-a-surface-pro-3-instead-of-an-ipad-air-2/ [3]
Bott, Ed. “How Microsoft’s Surface Pro 3 marketing push backfired.” ZD Net. June 19, 2014.
http://www.zdnet.com/article/how-microsofts-surface-pro-3-marketing-push-backfired/ [7]
Tushneem. “Microsoft needs to up the ante with the Surface RT to gain market share.” Mobinett. February 4, 2013.
http://www.mobinett.com/2013/02/04/microsoft-needs-to-up-the-ante-with-surface-rt [6]
Operating System Market Share. http://netmarketshare.com [5]
Microsoft Annual Report 2013 [8]
IFixIt. Microsoft Surface Pro 3 Teardown. https://www.ifixit.com/Teardown/Microsoft+Surface+Pro+3+Teardown/26595 [3]
GSMArena. 2 May 2011. Mobile phone usage report 2011: The things you do.
http://www.gsmarena.com/mobile_phone_usage_survey-review-592p3.php [4]
Phone Arena. 22 May 2014. Poll results: What did you think of the Microsoft Surface Pro 3?
http://www.phonearena.com/news/Poll-results-What-did-you-think-of-the-Microsoft-Surface-Pro-3_id56382 [6]
The Motley Fool. October 29 2014. Why Microsoft's Surface Pro 3 Sales Soared as Apple's iPad Sales Plunged.
http://www.fool.com/investing/general/2014/10/29/why-microsofts-surface-pro-3-sales-soared-as-apple.aspx [7]
Techsaucer Blog. August 24 2012. Microsoft opens its retail store – Trying to compete Apple?
https://techsaucer.wordpress.com/2012/08/24/microsoft-opens-its-retail-store-trying-to-compete-apple/ [8]
79