Microsoft Surface Pro 3 Marketing Plan Summary

Marketing Plan
Microsoft Surface Pro 3 (SP3)
Anthony Seo
MRKT 310 Marketing Principles
Professor Eusebio Inocencio
May 10, 2015
1

Executive Summary
 The goal of this marketing plan is to understand the marketplace and
customer needs and wants. From this we can design a marketing
strategy driven by the customer that will allow the company to provide
superior value to the customer. By doing so, the company can build
relationships where the company can capture value in return from the
customer. (Principles of Marketing, 2014)
 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
3
A. Current Marketing Situation
1. Market description
a. Segmentation
b. Marketing targeting strategy
c. Value proposition
d. Factors influencing behavior
e. Buyer decision process
2. Product review
a. Levels of product/service
b. Type of product/service
c. Product/service life cycle
d. Benefits/features analysis
e. Differentiation
f. Branding strategy
g. Competitive review
3. Competitive analysis
a. Market share
b. Competitive positions and roles
c. Strategic sweet spot
d. Positioning
4. Competitive review
a. Supply chain members and roles
b. Value-delivery network analysis
c. Type of distribution strategy
B. SWOT
1. Microenvironment
2. Macroenvironment

Current Marketing Situation
Market description and Microsoft’s position in it.
4

Market description
• In creating a marketing plan, first there needs to be an
understanding of which customers to serve (segmentation and
targeting) and what is the products value proposition
(differentiation and positioning).
• 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
As a computer software company its
largest competitor is Apple. Apple has
been able to undercut Microsoft for
years by creating its own hardware
along with its own software.
Microsoft needed to start producing
its own hardware to bring down its
cost and increase its margins making it
competitive with Apple.
The Microsoft Surface Pro 3 is the
answer to that decision.
7

Value proposition - Why should I buy your brand?
Consumers juggled a notepad for jotting and sketching,
a tablet for general consumption and entertainment, a
netbook for light task such as writing emails, and a fully
powered PC for heavy tasks such as photo or video
editing.
The SP3 can do more than any of these devices and cost
less than trying to purchase all of these devices.
This is a “the more for less price” positioning.
Tech Republic’s article validates this.
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
 Cultural – Multiple language interfaces making it a global product.
 Social – Windows has an 85% share of the operating system market. Majority of
the world has a shared familiarity of the platform on which the SP3 operates and
is comfortable with it.
 Personal – Attracts middle to upper class users, who are note-takers, content
producers, and frequently switch between devices.
 Psychological – There is a strong psychological affect of being able to do all of
your tasks from a single portable device.
9

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

Levels of product/service
12

Core customer value - What is the buyer
really buying?
Convenience and simplification by only owning one
device versus several devices.
Cost savings of only buying one device versus
multiple devices.
The cool new niche technology in a brand new
market.
The Tesla effect. The Tesla S has the power of a
Ferrari under its hood. The SP3 has the power of a
full-sized PC.
13

Actual Product
14
Features: It has the full feature list of a table and a laptop
crammed into a tablet form factor.
image source: microsoft.com

Actual Product
15
Design: The thinnest full size PC. Features a unique kickstand, Detachable type cover,
and electronic pen.
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.
16
images source: techrepublic

Augmented Product: additional consumer services
and benefits
• Delivery and credit: Library of supported programs and a growing Apps
Store. Windows ecosystems. Windows OS, and Office products.
• Product support: Experienced and refined support team
• After-sale service: Free support and training is offered to all owners at the
Microsoft Store.
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
• Consumer Products > Shopping Product
• Customer buying behavior: Buying a tablet or PC is an
infrequent purchase occurring every few years. There are
many competitors and consumers compare them by price,
quality, and features.
• Price: The price is high and compared to its competitors its
one of the highest.
• Distribution: It is available for sale in its own Microsoft
stores and some electronic stores that deal in higher end
electronics such as name brand computers.
• Promotion: Mass promotion is done by Microsoft
• For these reasons, the SP3 falls under the category of the
Shopping Product under Consumer Product.
18

Product life cycle
19
The product is past the Product development stage, and Introduction stage.
It is currently in the Growth stage. It is quickly seeing market acceptance and
increasing profits. Other competitors are rumored to be producing
competitive devices.
At less than 10% market share for tablets, the SP3 is far from the Maturity or
Decline stage.

Benefits/features analysis
20
Portable Powerful Capable
CPU: 1.9GHz Intel Core i5-4300U
Graphics: Intel HD Graphics 4400
RAM: 8GB LPDDR3
Screen: 12-inch touch
Storage: 256GB SSD
USB 3.0, Mini DisplayPort
microSDXC card reader
802.11ac Wi-Fi, Bluetooth 4.0
Two 5MP webcams (1080p)Weight: 1.76 pounds
Size: 7.93 x 11.5 x 0.36 inches
headphone/mic jack
FEATURES
BENEFITS

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.
21
images source: apple.com, microsoft.com
PORTABLE
CHEAP
TOUCH
SIMPLE
POWERFUL
CAPABLE
KEYBOARD
PEN
PORTABLE
POWERFUL
VALUE PRICED
TOUCH
PEN ENABLED
STYLISH/COOL FACTOR

Branding strategy
• Brand Positioning – It concentration on the major differences in this product
such as the kickstand, keyboard cover, pen, and operating system.
• Brand Name Selection – They created the surface line which includes the
tablet but also all there other touchscreen based technologies such as the
table and wall mounted displays.
• Brand Sponsorship – This is private brand.
• Brand Development – They plan to extend this name brand to larger and
smaller tablets and also other touch based technologies.
22

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

Identify competitors
24
images source: apple.com, samsung.com
Apple iPad/Macbook Air Samsung Galaxy Note Tablet

Assess the competitor
Apple = rigid design language, slow release, high quality, strong brand
Samsung = Fast to react to consumer desires, no design integrity, low
quality, confused branding
25
March 2, 2011
IPAD 2
October 22, 2013
IPAD AIR
2013
NOTE 82012
NOTE 10
2014
NOTE 10.1
2014
NOTE PRO 12.2
The iPad mainly remained the same
The Note made major changes with
each iteration adding the latest
technologies

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
Apple does not allow for their
operating system to be used on non-
Apple hardware which created an
opportunity for Microsoft to
distribute their hardware agnostic
operating system to any hardware
developer.
In present day Apple will not
distribute its mobile operating system
allowing for Microsoft and now also
Google to distribute their mobile
operating systems.
[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[7] 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/

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
• Microsoft is positioning itself between categories thus able to take
market share from competitors in the tablet market and PC market
thus doubling this opportunity to attract customers.
30

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.
32
images source: microsoft.com

Value-delivery network analysis
• Microsoft has internalized much of the manufacturing, distribution and
sales.
• By manufacturing the hardware, developing the software and selling
directly to the consumer, Microsoft is further decreasing the cost of
delivering its products at competitive price.
• This decrease in dependency decreases the risk that an external
component of the network will negatively affect the companies ability to
deliver the product it wants and when it wants it.
33

Current type of distribution strategy
Microsoft has moved to a
strategy in which they
create its own
stores where they can
educate its potential
customers and deliver its
product directly to the
consumer.
However Microsoft is still
establishing its store and
thus still heavily
dependent on third party
deliverance of its offerings
which adds to cost.
34
MICROSOFT’S
OLD STRATEGY
MICROSOFT’S
NEW STRATEGY

Strengths, Weaknesses,
Opportunities, and Threats
Analysis (SWOT)
35

Microenvironment - INTERNAL
36
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..

Microenvironment - INTERNAL
37
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.

Macro environments - EXTERNAL
38
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.

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

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

Table of Contents
C. Objectives and Issues
1. Statement of marketing objective(s) (for first year only)
2. Issues that may hinder marketing objectives
D. Marketing Strategy Recommendations
1. Positioning strategy
2. Product/Branding strategy
3. Pricing strategy
4. Distribution strategy
5. Marketing Communications objectives
6. Marketing Research
E. Action Programs
1. IMC
2. Message design, content, and structure
3. Media choices
4. Promotion mix tools
F. Budgets
1. Objective/task method
G. Controls
1. Metrics needed to monitor marketing plan progress
42

Statement of marketing objectives (year one)
• Microsoft’s objective of selling the Surface Pro 3 is to bring new
customers into the Microsoft eco-system. They know this will
increase their overall profits through up selling.
• First they need to determine what is the break even point. How many
units does Microsoft have to sell before they are able to offset the
cost of manufacturing, distribution and sale?
• Secondly, how much will the sale of the SP3s contribute to the overall
sale of all of its products.
• Thirdly, will the overall sales increase combined with the sale of the
SP3 result in a loss or a profit.
44

Issues that may hinder marketing objectives
• There already more established products in the tablet market to
whom Microsoft is attempting to sway to buy the SP3.
• Microsoft is new the hardware market and many people are waiting
to see if their products will become more mainstream before
deciding to buy
• The Tablet/PC hybrid market is a new market that is very niche and
unproven
45

Marketing Strategy
Recommendations
46

Positioning strategy
Microsoft is using a more for less positioning and currently is alone
in this market. As this market grows other competitors may enter
the market and Microsoft should be pre-planning for this possibility.
One strategy may be to split the product line into even further
niches with one leaning toward more the laptop side (13 inch
screen with a better video processors) and one leaning more to the
tablet side (10 inch screen with a smaller processor, but longer
battery life).
By maintaining a shifting position, competitors are trying to keep up
with Microsoft instead of Microsoft trying to keep up with everyone
else.
Microsoft would still be providing more for less but at slightly
different levels within that position.
47

Positioning
48
Microsoft’s goal should be to move from being “full of features” to “full of
benefits.”
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.

Feature to remove
• Remove the 5 MP rear camera
• No one should be taking a
picture with a 12 inch device
• No one should be taking a
picture with a 5 MP camera
period
• Remove it and pass on the
savings.
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
SP3 iPad
The SP3 cannot be opened for repairs, but the iPad can be easily opened
Using screws instead of glue adds benefits without increasing cost.
cracked
nice
[3] IFixIt. Microsoft Surface Pro 3 Teardown.
https://www.ifixit.com/Teardown/Microsoft+Surface+Pro+3+Teardown/26595

Benefits to Add
• Add a removable battery.
• It can be hidden behind the
kickstand and would double the
battery life with a hot-swap-able
battery.
• Stop with the glue; make it
upgradeable; this is a secret
benefit that dominates the
word-of-mouth community
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
52[4] GSMArena. 2 May 2011. Mobile phone usage report 2011: The things you do.
http://www.gsmarena.com/mobile_phone_usage_survey-review-592p3.php

Product Strategy
Augmented product layer:
• Increasing warranties and
services well above the norm
will result in greater confidence
in the product.
• Apple products are not higher
quality. They have better
warranties so when one does
break, complainers don’t hit the
message boards because Apple
just replaces it.
• This means fewer people end up
knowing about the bad apples.
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.
• Mainly tech sites do the work for
you and you just have to take a
look
• Looking at the poll here you see
that the price is a large hit to the
brand. They did fail to see the
value; Microsoft failed to show
them the value.
54[6] 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

Pricing strategy
Market-penetration pricing – Since the company’s objective as a new to
market, niche product, it makes the most sense to go with a market-
penetration pricing. Setting a lower initial price will lead to faster adoption of
the product thus a higher chance of upselling to other Microsoft products.
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
56
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 iPad 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
• As a niche product it doesn’t make
sense to use an intensive
distribution strategy. It makes more
sense to pursue an exclusive
distribution as this will decrease
distribution costs due to the
decrease channels of distribution.
• Ideally, Microsoft should build more
physical locations and handle sales
themselves and also conduct sales
online. Using their own sales teams
ensure the best, most
knowledgeable and focused
attention for their product. This
also benefits the customer as they
received better information to
make their decisions.
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
• If by chance the demand ramps
up too quickly, Microsoft may
need to consider the selective
distribution strategy to handle
the increased demand.
• Best Buy is a strong avenue.
58
[9] iSpot. Best Buy Commercials. http://www.ispot.tv/brands/7c_/best-buy

• Microsoft should embrace more word of mouth and social media
campaigns. There should be several dozens of video reviews on
YouTube and blogs talking about the product from the point of view
of multiple different demographics.
• Seeing a person who a consumer can relate to, speak about the SP3
will have a strong effect on that consumer’s desire to buy.
59
Marketing Communications objectives
[10] Youtube. 10 May 2015. Search results for "Microsoft Surface Pro 3 Reviews".
https://www.youtube.com/results?search_query=microsoft+surface+pro+3+review
The Top 4 videos have 2.5 million views. That’s 2.5 million potential customers.

Marketing Research
• Exploratory research should be used to determine whether all of the
features are being used. If there are unused features, they can be
removed and the savings can reduce the prices and increase sales.
• If sales are less than expected, descriptive research should be
conducted to determine what the marketing problems are.
• Cause-and-effect of removing and adding features should be
identified through casual research.
60

Integrated Marketing Communications (IMC)
• Utilize all of the available channels such as Advertising, Personal
Selling, Public Relations, Direct Marketing, and Sales Promotion.
• However concentrate on low cost methods as this is still a niche
product.
• It will be difficult to have all marketing channels processed through a
central office so an alternative would be to have a central office push
out to the other channels preapproved concepts that guide the
messages that are being communicated out. This could be logos,
mottos, stories, focused ideas such as “sustainable manufacturing.”
• This will ensure integration and coordination between the many
communication channels “to deliver a clear consistent compelling
message about the organization and products”
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
Personal communication channels
Face to face – Microsoft Store employees
Internet chat – On the Microsoft website
Online reviews – Encourage customers to leave product review
Word of mouth – Leverage a potential customer’s neighbors, friends, family
members, associates, or other consumers.
Non-personal communication channels
Broad news agencies – Times and Wall Street Journal
Specialty news agencies – CNET, Engagdet, and Techcrunch
Social Media stars - Bloggers and YouTube reviewers
64

65
Advertising
Feature in Film & TV
Feature in Sports
Personal Selling
Build more Microsoft Stores
Public Relations
National News Agency
Specialty News Agencies
Social Media Celebrities
Direct Marketing
Sell from on Microsoft.com
Sales Promotion
Have a trade in offer: A MacBook
for a SP3 discount
All of these strategies
decrease marketing cost
which fits a niche
market product
Promotion mix tools

66
Public Relations
National News Agency
Specialty News Agencies
Social Media Celebrities
Conduct Product Announcements and Press Releases
to the major online news outlets. This is a tech product
and thus is market audience likely uses online news
rather than print news.
Give away free devices to be reviewed by top specialty
news sites, blogs and YouTube channels. We
demonstrated earlier how just the top for YouTube
videos yielded 2.5 million views.

67
Personal Selling
Build more Microsoft Stores
Having a dedicated Personal Selling platform results in the
highest engagement with the customer with the product.

68
Sales Promotion
Have a trade in offer: A MacBook
for a SP3 discount
Discounts can be seen as a sign of product weakness.
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.
“These people switched and so should you”

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.

7070
Advertising
Feature in Film & TV
Feature in Sports
Product placement in Film, TV, and sports
demonstrates to the public, actual use cases that will
further drive market acceptance.

1. Defining specific promotion objectives:
a. Refer to the marketing objectives slide.
2. Determining the tasks needed to achieve these objectives
a. Educate salesman at the Microsoft store and set quotas
b. Conduct a press release to major news outlets and observe reception
c. Give test units to specialty sites, such as CNET or Engadget and check the reviews
d. Feature on the Microsoft site with links to buy and analyze conversion of views-to-sales.
3. Estimating the costs of performing these tasks.
a. How much of the cost of operating the Microsoft stores is focused on the sale of the
SP3.
b. The largest cost is related to giving away the product to as many people as needed to
get a good word of mouth campaign going.
4. Lastly, the sum of these costs is the proposed promotion budget.
a. It is suggested that majority of the budget should go to product awareness and in
teaching the consumer about the benefits of the product. Flat advertisement would be
wasted as it would not convey the complexity of the problem that the SP3 solves.
72
Objective/task method

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
• Determine a reasonable break even price using this formula:
• Unit cost / (1 – Desired Return on sales)
• For example if the unit cost is $500 and the desired return on sales is
40% then the markup price would be $833.33.
• Since the goal of this product is to bring in customers in order to
upsell them on other products this is an important metric to monitor.
75

Metric 2 Return on Marketing Investment
• Determine the ROI price using the following formula
• Unit cost + ((ROI x Investment)/(unit sales))
• 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
• Inventory Turnover is an important metric that lets you know if you
estimated demand properly, and whether there is the expected
acceptance of the product.
• Calculate this using this formula
• Cost of goods sold / average inventory at cost
• For example, if cost of goods sold for the last quarter was 10 million
and the average inventory at cost was 8 million then the turnover
rate would be 1.25. This number should be compared to industry
averages to give it context.
• Higher numbers typically indicate faster turnover which means there
is an efficient use of capital.
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

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