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Developing a Marketing Strategy & the Benefits Identify a competitive advantage Market Segmentation Tailored and effective marketing activities Target Marketing Increased customer base Positioning Effective use of resources Develop marketing mix Positioning & differentiation Increased sales/profits Stimulates innovation Overview of a Marketing Strategy Market Segmentation Market Targeting Market Positioning Develop Marketing Mix(es) Defining Market Segmentation …the process of dividing a market into similar groups Hair Salon Males 60+ Landscape Gardener 10-14yrs 15-19yrs Business Parks Res Homes Hotels Golf Courses 50-59yrs 40-49yrs 30-39yrs 20-29yrs Females 10yrs - 60yrs+ Community Centres Domestic Market Essential Criteria of a Market Segment Substantial: Large and profitable enough to serve Accessible: Can be effectively reached and served Differential: Segments must respond differently to different marketing mix elements Actionable: Effective marketing activities can be designed to attract and serve the segments Measurable: Size of segments can be measured Segmentation Variables Consumer market Commercial Market Geographical County, region, town, postcode, mile radius County, region, town, postcode, mile radius Demographic/ Firmographic Age, gender, income, occupation, dependants, household composition Turnover, size, employees, business activity, industry Behavioural Usage rate, loyalty, impulse buying, benefit expectations, price sensitivity Usage rate, end product use, benefits sought, purchase procedure, buying status Psychographic Lifestyle, interests, attitudes, personality traits, opinions Socially responsible, entrepreneurial, employee focused, financially prudent Market Segment Profile • • • • • • • • • • • • Demographic/firmographic characteristics Location Needs/wants Benefits sought How much customers purchase How much customers spend Frequency of purchase Payment method Purchase decision factors Attitudes towards product or service Brand loyalty Mediums used to source product or service Target Marketing Strategies UNDIFFERENTIATED MARKETING Marketing mix Segment 1 CONCENTRATED MARKETING Marketing mix Marketing mix 1 Segment 1 Marketing mix 2 Segment 2 Segment 3 DIFFERENTIATED MARKETING Marketing mix 3 Market Segment 2 Segment 3 Marketing Strategies & Factors to Consider • • • • • • Resources Capabilities Product variability Market variability Competitors' marketing strategies Market environment Evaluating Market Segments • • • • • • • • • Expected growth rates Demand Profitability Competition intensity Competitive advantage Speed of payment Price sensitivity Cost of marketing activities Compatible with business aims and objectives Quantitative Measures of Market Segment Attractiveness Key Success Factors Market Segment 1 2 3 4 Sales potential 3 8 6 8 Competition intensity 3 6 2 8 Sensitivity to price 4 7 5 7 Market growth rate 2 6 5 8 Market size 2 8 4 8 Ability to meet needs 3 6 8 5 Total 17 41 30 44 Positioning Strategies • • • • • • • Product attributes Usage occasions Users Against a competitor Away from competitors Product classes A combination of the above approaches Positioning Map High Prestige . Product b Product a Inexpensive . Expensive Product d Product c Low Prestige A Model of Competitive Advantage Cost advantage Or Differentiation Advantage Customers Value Creation Your Business Developing an Image/Brand Company Identity Branding Competitive advantage Name Colours Logo Consistency of use + = Commitment to quality Company Image Marketing Mix/4Ps Marketing Mix Customer solution Cost Market Price Product Place Convenience Or Promotion Communication Segment 1 Segment 2 Segment 3 Product Levels Core product level Actual product level Guarantee Market Attributes After sales Augmented Product level Support service Core Benefit or function Size Packaging Delivery Features Or Segment 1 Segment 2 Segment 3 Three Dimensions of Customer Benefits Market Product Or Service Relationship benefits Or Segment 1 Segment 2 Segment 3 Pricing Approaches Cost Based Pricing • Cost plus pricing • Breakeven Buyer Based Pricing • Perceived value pricing Competition Based Pricing • Going rate pricing Market Or Segment 1 Segment 2 Segment 3 Place/Distribution Product Service Direct to customer Market Or Product Service Intermediary Agents Retailers Distributors Internet Segment 1 Segment 2 Segment 3 Aim of Promotion • Positioning/branding/image • Move customers through the decision making process (DMP) Decision making process (DMP) Unawareness Awareness Attitude Interest Desire Action Promotional Mix & Effectiveness in the DMP process Level of effectiveness Personal selling Public Relations Sales promotions Advertising Awareness Attitude (Interest, desire) Action Communicating the Message Noise Your Business Customer Message Encoding Decoding Promotional Plan Checklist Mission • Who you are targeting • Aims & objectives Money • Budget Method • Image/branding/positioning • Costs • Logistics/timeframes • Integration with the marketing mix • Accessibility within market segments • Image/branding/positioning • Information – product/business • Features & benefits Message Monitoring • Costs • Evaluation • Effective/feedback • Cost effective Ansoff’s Product/Market Matrix Existing Markets Market penetration New Products Increase sales in existing market Product development Develop existing or new products for existing markets New Markets Market development Introduce current product into new markets Diversification New products or related products for new markets 5 Evaluation and Control Process Take corrective action 2 1 Determine what to measure 3 Establish standards for comparison NO 4 Measure performance Continue with marketing activity Is performance >/ = standards? Yes Marketing Measurement Methods • Customer satisfaction – Satisfaction surveys – Customer feed back forms – Formal/informal meetings with customers • Sales variances – Sales/cash flow analysis – Profit margin analysis • Marketing cost effectiveness – Marketing costs ratios e.g. Marketing costs Sales