EE204: Business Management for
Electrical Engineers and Computer Scientists



Marketing Strategy

Read

  1. Note on Marketing Strategy (HBS course materials)
  2. Breakeven Volume
  3. Marketing Strategy Example
  4. Kiva the Disrupter (HBS course materials)
  5. Articles
    1. Businessweek article on Kiva/Amazon, November 2012
    2. Supply Chain Digest comment, January 2013
    3. The Boston Globe on Amazon/Kiva, December 2013

Case Summary

When Mick Mountz set out to build Kiva Systems, he knew he was attempting to disrupt long-standing incumbents in the material-handling industry--and he succeeded. There is no question that the company's armies of mobile robots upend the normal pick-and-pack process in an online retailer's warehouse. But Mountz explains that it wasn't enough to envision the novel approach, invent the required technology, and make it commercially viable--he had to do much more to help customers take on the risk of buying an unprecedented solution. He had to price it in a way that made his company, not the customer, bear the risk. He had to provide all components of the solution so that Kiva would be 100% responsible for its performance. And he had to design his organization to deliver the entire customer experience--from initial marketing contact to after-sales service. It all adds up to a daunting proposition for a new company--and begins to show why disruption is so hard to pull off. When a company must defy so many of its industry's norms to change the game, it's out there to sink or swim on its own.

Discussion Questions

  1. What are the sources of Kiva's success? How well does Kiva fit the Innovator's Dilemma model? What was the big picture that the CEO saw when he started the company?
  2. How would you describe Kiva's corporate strategy? How would you describe their marketing strategy? Consider the five C's, four P's, and a concise product positioning statement. Do you think Steve Jobs or Mark Zuckerberg used the five C's and the four P's when they started?
  3. What role does Kiva'sculture play in Kiva's success?
  4. What are the steps, and who are the stakeholders, in the sale and installation of a Kiva system? Describe the DMU and the DMP.
  5. What are the limits to Kiva's business model?
  6. If you are the salesperson for Kiva, what is the BEV calculation that you would show the CFO of a prospective customer company (where V refers to the number of warehouse picking and shipping employees)? Use the information in the case, and assume that factory workers are paid minimum wage of $10/hour. How does this assessment affect what size company Kiva should target?
  7. Why did Kiva sell to Amazon? Why did Amazon buy Kiva?