Marketing%20Strategy

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Marketing Strategy
Chapter 6 Marketing Strategy Decisions
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Market Segmentation Strategies

• Mass Marketing Strategy
• Market Segmentation
• Multisegment Strategy
• Market Concentration Strategy
• Niche Marketing Strategy
• Customized Marketing Strategy

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Mass Marketing Strategy
All Customers in the Market
Single Marketing Mix
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Mass Marketing Strategy

• Mass marketing (or undifferentiated marketing) is
  aimed at the total market for a particular type
  of product.
• Companies that adopt mass marketing assume that
  all customers in the product market have similar
  needs, and that these needs can be reasonably
  satisfied with a single marketing mix.
• This marketing mix typically consists of a single
  product (or, in the case of retailers, a
  homogeneous set of products), one price, one
  promotional program, and one distribution system.

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Market Segmentation

• Market segmentation involves dividing the total
  market into groups of customers having relatively
  common or homogeneous needs and attempting to
  develop a marketing mix that appeals to one or
  more of these groups.
• This approach may be necessary when customer
  needs are similar within a single group, but
  their needs differ across groups.
• Through research, firms can identify the needs of
  each market segment and create marketing mixes
  that best match those needs and expectations.
• There are a variety of factors that can be used
  to divide markets into homogeneous groupings, but
  most fall into one of three general categories
• State-of-being segmentation divides markets into
  segments using demographic factors such as
  gender, age, income, and education.
• State-of-mind segmentation deals with how
  consumers think and feel.
• State-of-being and state-of-mind segmentation are
  really surrogates for the true issue in market
  segmentation, benefits sought.

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Multisegment Strategy
More Than One Market Segment
Multiple Marketing Mixes
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Multisegment Strategy

• Firms using the multisegment option (or
  differentiated marketing) seek to attract buyers
  in more than one market segment by offering
  multiple marketing mixes that will appeal to more
  parts of the total market.
• The firm can increase its share of the market by
  responding to the heterogeneous wants and desires
  of different segments or submarkets.
• If the segments have enough buying potential, and
  the product is successful, the resulting sales
  increases can more than offset the increased
  costs of offering multiple marketing mixes.

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P G Segmentation - Detergent Market53
market share of the 3.2 billion market
IVORY SNOW - mild, gentle soap for baby clothes
TIDE - Tides in, dirt out
ARIEL - tough cleaner
???
CHEER - all temperature - Cheer
DREFT - a clean you can trust
BOLD - cleans, soften,and controls static
SOLO - liquid detergent with fabric softener
GAIN - freshens like sunshine
ERA - built-in stain remover
DASH - attack tough dirt
OXYDOL - makes clothes bright
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Market Concentration Strategy
Single Marketing Mix
Focused on a Single Market Segment
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Market Concentration Strategy

• Firms using the market concentration approach
  focus on a single market segment.
• The main advantage of market concentration is
  specialization, as it allows the firm to focus
  all its resources toward understanding and
  serving a single segment.
• However, by "putting all of its eggs in one
  basket," the firm can be vulnerable to changes in
  its market segment, such as economic downturns
  and demographic shifts.

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Niche Marketing Strategy
Focused on a Small Niche Market Segment
Single Marketing Mix
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Niche Marketing Strategy

• Niche marketing narrows the market concentration
  approach even more and focuses all marketing
  efforts on one small, well-defined market segment
  that has a unique, specific set of needs.
• The key to niche marketing is to understand and
  meet the needs of target customers so completely
  that, despite the small size of the niche, the
  firms substantial share makes the segment highly
  profitable.

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Customized Marketing Strategy
Unique Marketing Mixes
Individual Customers
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Customized Marketing Strategy

• Customized (or individual) marketing involves the
  creation of a unique marketing mix for each
  customer in the target segment.
• This approach is common in business-to-business
  marketing where unique programs and/or systems
  are designed for each and every customer.
• Such "one-on-one" marketing is more rare in
  consumer marketing.

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Developing the Marketing Mix

• Marketing strategy decisions for the marketing
  mix involve creating a combination of product,
  price, promotion, and distribution that, to the
  greatest extent possible, matches the needs of
  customers in the chosen target market segment(s)
• In-depth, current data about the target market is
  necessary to provide information on customer
  preferences for product features, attitudes
  toward competitors' products, price/budget
  considerations, and the frequency and intensity
  with which the product is used.
• With this information, the marketing manager has
  the potential to develop a marketing mix that
  delivers value and customer satisfaction better
  than competitors' mixes.

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Product

• The product is at the core of the marketing
  strategy.
• Products refer to more than tangible goods and
  are usually some combination of goods, services,
  ideas, and even people.
• Products in and of themselves are of little
  value.
• The real value a product provides is derived from
  its ability to deliver benefits that enhance the
  buyer's situation.
• Organizations that keep their sights set on
  developing products, systems, and processes that
  identify and meet needs of the target market are
  more likely to be successful.

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Marketing Strategy Options Related to the Newness
of Products

• Innovation involves the firm in a pioneering
  effort innovations of this type can even result
  in new product categories.
• New product lines allow a firm to enter new
  markets with a new group of closely related
  product items that are considered a unit based on
  technical, or end-use, considerations.
• Product line extensions supplement an existing
  product line with new styles or models.
• Improvements or changes in existing products
  offer customers improved performance or greater
  perceived value this option also includes
  changes to make an existing product "new and
  improved."
• Repositioning involves the modification of
  existing products (either real or through
  promotion) so that they can be targeted at new
  markets or segments.
• Cost reductions involve modified products that
  offer similar performance at a lower price.

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Price

• Price can be the most critical, the most visible,
  and the most over manipulated element of the
  marketing mix.
• The manager must set the price correctly to
  achieve the right balance between customers'
  needs, alternative solutions, and the firm's need
  to cover its direct and indirect costs, while
  also making an acceptable profit.
• Price is the most flexible element of the
  marketing mix as it can be adjusted to meet
  changing market conditions.
• Price is more than a financial or economic issue
  it also has significant social and psychological
  connotations.
• There are two points of view to consider with
  regard to price.
• To the marketer, price is the amount of money
  that the firm is willing to accept in exchange
  for a product.
• To customers, price is anything they are willing
  to give up in exchange for the product.

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Marketing Strategy Options related to the Pricing
of Products

• Companies that employ a competitive pricing
  strategy of operational excellence focus on
  efficiency of operations that lowers costs and
  allows them to deliver goods and services to
  their customers at lower prices and thus a better
  value. Regardless of their appeal, low price
  strategies are frequently not sustainable over
  time.
• Ongoing discount, or everyday low pricing (EDLP)
  strategy, is another commonly employed strategy,
  particularly in retailing.
• Prestige pricing strategy is the focal point of a
  marketing mix oriented toward a high quality,
  prestige product image. In order for this
  strategy to be successful, customers must
  perceive the firm's product to be of
  significantly higher quality than competing
  products.

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Promotion

• Promotion activities are necessary to communicate
  the features and benefits of a product to its
  intended target market(s).
• The role of advertising, sales promotion,
  personal selling, and public relations (elements
  of the promotional mix) in a particular marketing
  strategy will vary depending on the nature of the
  product.
• The role of promotion mix elements also varies by
  stage in the product purchase process (awareness,
  interest, desire, and action).
• Promotion mix decisions are affected by price, as
  lower priced products tend to have a lower
  profitability per unit that would dictate
  advertising while higher priced products include
  a level of margin that makes covering the costs
  of personal selling feasible.

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Promotion Strategies
Push Strategy
MarketingCommunications
MarketingCommunications
Resellers
Producer
End Users
Pull Strategy
Marketing Communications
Request Products
Request Products
Resellers
Producer
End Users
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Distribution (Place)

• Distribution refers to both of the following
• Marketing channelsa system of organizations
  through which a product, resources, information,
  and/or product ownership flows from producer to
  customers.
• Physical distributionmoving products to the
  right place in the right quantities at the right
  time, and in a cost-efficient manner.
• Logistics strategies address physical
  distribution issues, such as transportation,
  storage, materials handling, and the systems and
  equipment necessary for these functions.
• A good distribution strategy is essential because
  once a channel is selected and commitments are
  made, distribution often becomes highly
  inflexible due to long-term contracts,
  investments, and commitments with channel
  members.

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Marketing Strategy Options related to the
Distribution of Products

• There are three basic strategic options for
  distribution in terms of the amount of market
  coverage and level of exclusivity between vendor
  and retailer.
• Exclusive distribution gives one merchant or
  outlet the sole right to sell a product within a
  defined geographic region (e.g., Rolex,
  Mercedes-Benz).
• Selective distribution gives several outlets the
  right to sell a product in a defined geographic
  region (e.g., Bose, franchising industry).
• Intensive distribution makes a product available
  in the maximum number of outlets in each region
  to gain as much exposure and as many sales
  opportunities as possible (e.g., things sold at a
  convenience store).

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Differential Strategies Product Descriptors

• Product features are factual (hopefully)
  descriptors of the product.
• Advantages are performance descriptors that
  communicate how the features make the product
  behave, hopefully in a fashion that is
  distinctive and appealing to the target
  customers.
• Benefits are the positive outcomes or need
  satisfactions people acquire from purchased
  products.
• Another product descriptor that is highly valued
  by customers is quality, which refers to the
  overall characteristics of a product that allow
  it to perform as expected in the satisfaction of
  customer needs.

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Differentiation Strategy Image

• The image of a product, or organization, is the
  overall impression, positive and negative, that
  target customers have of it.
• This impression includes what the entity has done
  in the past, what it presently offers, and
  projections about what it will do in the future.
• All aspects of the firm's marketing mix as
  perceived by target customers will affect this
  overall impression.
• Marketers can manipulate the marketing mix
  elements to position and enhance a product's
  image (typically through promotion activities) in
  consumers' minds.

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Positioning Strategies Strengthen Current
Position

• The key to strengthening a product's current
  position is to constantly monitor what target
  customers want and the extent to which the
  product or SBU is perceived as satisfying those
  wants.
• The firm must continue to invest time, money,
  talent, and attention in after-sale service to
  protect its market share and sales from
  competitors.
• Strengthening positioning is about continually
  "raising the bar" of customer expectations, and
  being perceived by customers as the only firm
  capable of reaching the new height.

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Positioning Strategies Repositioning

• Move yourself to a New Position
• Declining sales or market share may signal that
  customers have lost faith in a product's ability
  to satisfy their needs. In such cases,
  strengthening the present position may well
  accelerate the downturn in performance a new
  position may be the best response.
• Repositioning may involve a fundamental change in
  any of the marketing mix elements, and perhaps
  even all of them.
• Move the Competition to a New Position
• Sometimes, it is advantageous to attempt to
  reposition the competition rather than change
  your own position.
• A direct attack on a competitor's strength may
  put its products in a less favorable light, or
  even force the competitor to change its
  positioning strategy.