MARKETING STRATEGY

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MARKETING STRATEGY

• 8
• Identifying Market
• Segments and Targets

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Process of Market Segmentation

1. Market Segmentation
2. Target Marketing
3. Differentiation and Positioning
4. Positioning for Competitive Advantage

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Market Segmentation

• Market segmentation is the process that companies
  use to divide large heterogeneous markets into
  small markets that can be reached more
  efficiently and effectively with products and
  services that match their unique needs

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Market Segmentation

• Segmenting consumer markets
• Segmenting business markets
• Segmenting international markets
• Requirements for effective segmentation

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The Segmentation Process

• Defining the market
• Identifying the best market segmentation criteria
• Applying the segmentation criteria and dividing
  the market
• Analyzing and understanding the profile of the
  priority consumer segment

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Effective Targeting Requires

• Identify and profile distinct groups of buyers
  who differ in their needs and preferences.
• Select one or more market segments to enter.
• Establish and communicate the distinctive
  benefits of the market offering.

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Four Levels of Micromarketing

• Segments
• Niches more narrowly defined customer group
• Local areas - neighborhoods
• Individuals

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Segment Marketing
Targeting a group of customers who share a
similar set of needs and wants ( e.g. young
middle income buyers who are looking for an
expensive car).
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Customerization
Combines operationally driven mass customization
with customized marketing in a way that
empowers consumers to design the product and
service offering of their choice. (e.g. the firm
provides a platform, tools And rents out to
customers the means To design their own product
DIY, IKEA)
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Segmenting Consumer Markets

• Geographic units territories
• Demographic age and life cycle, gender, income
• Psychographic personality, life-style
  activities, values
• Behavioral occasions, benefits, user status,
  usage rate, loyalty, attitudes

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Demographic Segmentation

• Demographic segmentation is the most popular
  segmentation method because consumer needs,
  wants, and usage often vary closely with
  demographic variables and are easier to measure
  than other types of variables
• Age and Life Cycle
• Life Stage
• Gender
• Income
• Generation
• Social Class

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Demographic Segmentation-Segmenting Consumer
Markets

• Age and life-cycle stage segmentation is the
  process of offering different products or using
  different marketing approaches for different age
  and life-cycle groups
• Income segmentation divides the market into
  affluent or low-income consumers
• Gender segmentation divides the market based on
  sex (male or female)

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Behavioral Segmentation

• Decision Roles
• Initiator
• Influencer
• Decider
• Buyer
• User

• Behavioral Variables
• Occasions
• Benefits
• User Status
• Usage Rate
• Buyer-Readiness
• Loyalty Status
• Attitude

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Decision Roles

• Initiator The person who brings up the idea or
  identifies the need.
• Influencer The person who influences the outcome
  of the decision. Some people may be more
  motivated than others to get involved, and are
  more powerful to convince others of their choice.
• Decider The person who decides on any component
  of the purchase when, what, how, who.
• Buyer The person who actually makes the
  purchase.
• User The person who winds up using the product
  or service.

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Behavioral Segmentation

• Behavioral segmentation divides buyers into
  groups based on their knowledge, attitudes, uses,
  or responses to a product
• Occasion
• Benefits sought
• User status
• Usage rate
• Loyalty status

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Behavioral Segmentation

• Occasion segmentation divides buyers into groups
  according to occasions when they get the idea to
  buy, actually make purchases, or respond to a
  product e.g. buying an air ticket
• Benefit segmentation requires finding the major
  benefits people look for in the product class,
  the kinds of people who look for each benefit,
  and the major brands that deliver each benefit
  e.g. buying a toothpaste
• User status divides buyers into ex-users,
  potential users, first-time users, and regular
  users of a product

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Behavioral Segmentation

• Buyer-Readiness a market consists of people in
  different stages of readiness to buy the product
  unaware, aware, informed, interested, desire or
  intend to buy the product
• Usage rate divides buyers into light, medium, and
  heavy product users
• Loyalty status divides buyers into groups
  according to their degree of loyalty
• Attitude different attitude groups can be found
  in a market enthusiastic, positive, indifferent,
  negative and hostile

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Steps in Segmentation Process

• Needs-based segmentation
• Segment identification
• Segment attractiveness
• Segment profitability
• Segment positioning
• Marketing mix strategy

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Effective Segmentation Criteria

• Measurable examples include the size, purchasing
  power, and profiles of the segments
• Substantial refers to the fact that the markets
  are large and profitable enough to serve
• Accessible refers to the fact that the market
  can be effectively reached and served
• Differentiable refers to the fact that the
  markets are conceptually distinguishable and
  respond differently to marketing mix elements and
  programs
• Actionable refers to the fact that effective
  programs can be designed for attracting and
  serving the segments

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Market Targeting - Evaluating Market Segments

• Segment structural attractiveness
• Competition
• Substitute products
• Power of buyers
• Power of suppliers

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Market Targeting - Evaluating Market Segments

• Company objectives and resources
• Competitive advantage
• Availability of resources
• Consistent with company objectives

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Market Targeting - Selecting Target Market
Segments

• Undifferentiated marketing
• Differentiated marketing
• Concentrated marketing
• Micromarketing

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Market Targeting - Selecting Target Market
Segments

• Undifferentiated marketing targets the whole
  market with one offer
• Mass marketing
• Focuses on common needs rather than whats
  different

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Market Targeting - Selecting Target Market
Segments

• Differentiated marketing targets several
  different market segments and designs separate
  offers for each
• Goal is to achieve higher sales and stronger
  position
• More expensive than undifferentiated marketing

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Market Targeting - Selecting Target Market
Segments

• Concentrated marketing targets a small share of a
  large market
• Limited company resources
• Knowledge of the market
• More effective and efficient

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Market Targeting - Selecting Target Market
Segments

• Micromarketing is the practice of tailoring
  products and marketing programs to suit the
  tastes of specific individuals and locations
• Local marketing
• Individual marketing

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Market Targeting Selecting Target Market Segments

• Local marketing
• Challenges
• Increased manufacturing and marketing costs
• Less economy of scale
• Logistics

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Market Targeting Selecting Target Market Segments

• Individual marketing involves tailoring products
  and marketing programs to the needs and
  preferences of individual customers
• Also known as
• One-to-one marketing
• Mass customization
• Markets-of-one marketing

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Market Targeting Selecting Target Market Segments

• Mass customization is the process through which
  firms interact one-to-one with masses of
  customers to design products and services
  tailor-made to meet individual needs. Has made
  relationships with customers important in the new
  economy.
• Provides a way to distinguish the company against
  competitors

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Market Targeting Choosing a Targeting
Strategy

• Depends on
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitors marketing strategies

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Differentiation and Positioning

• Product position is the way the product is
  defined by consumers on important attributesthe
  place the product occupies in consumers minds
  relative to competing products
• Perceptions
• Impressions
• Feelings
• Positioning maps show consumer perceptions of
  their brands versus competing products on
  important buying dimensions

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Differentiation and Positioning

• Choosing a Differentiation and Positioning
  Strategy
• Identifying a set of possible competitive
  advantages to build a position
• Choosing the right competitive advantages
• Selecting an overall positioning strategy

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Differentiation and Positioning

• Choosing a Differentiation and Positioning
  Strategy
• Identifying a set of possible competitive
  advantages to build a position by providing
  superior value from
• Product differentiation
• Service differentiation
• Channels
• People
• Image

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Differentiation and Positioning

• Identifying Possible Value Differences and
• Competitive Advantage
• Competitive Advantage is the advantage over
  competitors gained by offering greater value
  either through lower prices or by providing more
  benefits that justify higher prices