Transcript The Value Chain

Developing a Marketing Strategy
Marketing: Micro and Macro levels
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Macro Level:
– Marketing is the process by which buyers and sellers
are brought together and discrepancies of assortments,
place, and time are resolved.
– Marketing activities include:
Communication to inform buyers and sellers about each other.
 Negotiation and consummation of transactions
 Transportation of goods from the point of production to the
point of purchase.
 Storage of goods from the time of production to the time of
purchase
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Marketing: Micro and Macro levels
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Micro Level (The individual organization)
– Marketing is all the decisions and activities involved in getting and
keeping customers.
Marketing Strategy vs. Marketing Operation
Marketing Strategy – Organization sets its general direction and
objectives
Marketing Strategy:
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Which product or services should be offered?
Which potential customers are targeted for selling efforts?
How will the organization position itself against competitors?
Marketing Operations – Organization attempts to implement its
strategy and meet its objectives
Marketing Operations
 How are the organization’s product or services designed?
 How are these products or services priced?
 How are these products or services distributed?
 How are these products or services advertised and sold?
Step One: Do your homework
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In order to develop a successful marketing strategy for
a product, two questions need to be answered:
1.What is our marketing environment?
2.What is our competitive advantage?
SWOT Analysis
Competitive Advantage (S-W)
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The competitive advantage is an internal
question. What do you have that gives you
advantage over your competitors?
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Some things to consider:
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Is your company small and flexibility?
Do you offer low cost and high quality?
Does your product offer unique benefits?
Are you the first on the market with this product (First
mover advantage)?
Marketing Environment (O-T)
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The is the external environment.
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Some things to consider:
– How is the market currently satisfying the need your product
satisfies?
– What are the switching costs for potential users for your market?
– What are the positions of the competition?
What are the components of a
marketing strategy?
 Segmenting
 Targeting
 Positioning
Segmentation Approaches
Segmentation Type
Examples — Variables
Description
Geographic
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Divides the market into different
geographical units
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Country / Region / City, City Size, Density
(Urban, Suburban, Rural), ISP Domain
Demographic
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Divides the market on the basis of
demographic variables
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Age, Gender, Income, Occupation,
Education, Nationality, Family Status,
Internet Connectivity
Firmographic
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Divides the market on the basis of
company-specific variables
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On-line / Off-line Business, Number of
Employees, Company Size, Job Function,
Purchasing Process
Behavioral
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Divides market based on how customers
actually buy and use the product
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On-line / Off-line Shopping Behavior, Webpage or Site Customer Arrived From,
Website Loyalty, Prior Purchases
Occasion (Situational)
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Divides market based on the situation that
leads to a product need, purchase or use
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Routine Occasion, Special Occasion, Time
(Time of Day, Day of Week, Holidays),
Location (from Home, on the Road), Event
(when writing a business plan, when
shopping), Trigger (out of supply)
Psychographic
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Divides market based on lifestyle and / or
personality
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Personality (laid back, type A), Lifestyle
(thrill seekers, fun lovers, recluse), Affinity
(community builders, belongers, outcasts)
Benefits
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Divides market based on benefits or
qualities sought from the product
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Convenience, Economy, Quality, Ease of
Use, Speed, Information, Selection
Needs Based Segmentation
– Consumers and businesses purchase goods and
services because they satisfy their needs
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The same product may satisfy many different needs; a person
may purchase chewing gum in order to freshen her breath, to
promote dental health, to help them quit smoking, or because
she enjoys the taste
– Needs based segmentation seeks to understand why a
purchase is made (i.e., what needs are being satisfied)
and to divide the market up into groups of buyers
whose needs are homogenous
– Needs based segmentations are particularly
compelling for technology companies because they
can prevent companies from developing new
technology features because they are “cool” or just
because they are possible
Requirements of an Effective Segmentation
In order for a customer segmentation to be effective, it must be meaningful, actionable,
measurable and substantial
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Customers must demonstrate needs, aspirations or behavioral patterns that are similar within
a segment and different across segments
– A distinction between a price sensitive and a quality seeking segment is meaningful, since
the two segments demonstrate distinguishable sets of needs
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A company must be able to reach customers within each segment through effective and
targeted marketing programs
– A customer segment consisting of customers with blue eyes is not actionable, since it is
very hard to identify and reach only customers with blue eyes
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Segments must be large and profitable enough to make the investment in serving them
worthwhile
– myCFO.com is targeted towards high net worth individuals, helping them manage their
portfolios. Even though the number of those individuals is small, the $ amount managed
is sizeable, thus constituting a substantial segment
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Key characteristics of the segments (e.g. size and spending patterns) must be easy to
measure
Meaningful
Actionable
Substantial
Measurable
Source: Philip Kotler, Marketing Management, 1997 (Chapter 9, page 269)
Positioning
 Positioning
Simply, positioning is how
your target market defines you in relation
to your competitors.
 A good position:
1. Makes you unique
2. Is considered a benefit by your target
market
Product Positioning
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In order to begin positioning a product, two questions need to be answered:
1.What is our marketing environment?
2.What is our competitive advantage?
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The competitive advantage is an internal question. What do you have that
gives you advantage over your competitors. Some things to consider:
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Is your company small and flexibility?
Do you offer low cost and high quality?
Does your product offer unique benefits?
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Are you the first on the market with this product (First mover advantage)?
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Positioning Strategies
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Positioning Strategies There are seven positioning strategies
that can be pursued:
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Product Attributes: What are the specific product attributes?
Benefits: What are the benefits to the customers?
Usage Occasions: When / how can the product be used?
Users: Identify a class of users.
Against a Competitor: Positioned directly against a
competitor.
Away from a Competitor: Positioned away from competitor.
Product Classes: Compared to different classes of products.
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Positioning Differences
The differences that are promoted for a product must be:
 Important: The difference delivers a highly valued benefit to the
target buyers
 Distinctive: Competitors do not offer the difference, or the
company can offer it in a more distinctive way
 Superior: The difference is superior to other ways that the
customer might obtain the same benefit
 Communicable: The difference can be explained and
communicated to the target buyers
 Preemptive: Competitors cannot easily copy the difference
 Affordable: Buyers can afford to pay the difference
 Profitable: Company can introduce the difference profitably
STP = Marketing Strategy
Mass Marketing or Undifferentiated Marketing: Go
after the whole market with one offer and focus on
common needs rather than differences
 Product-variety Marketing or Differentiated
Marketing: target several market segments and design
separate offers for each
 Target Marketing or Concentrated Marketing: Large
share of one or a few sub-markets. Good when
company’s resources are limited
 To identify a niche market, a series of 2 by 2 matrixes
can be used to identify an area that is being overlooked
by larger competitors. The competitors are mapped on
this matrix and you can see where there may be some
opportunities.
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How is a product “positioned?”
 Product
 Price
 Promotions
 Place
Implementation
of Marketing
Strategy
4 Ps - Product
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Product decisions are all decision which relate to the
physical product and/or service offering, including its name,
packaging, warranty, and availability. Product dimensions
include:
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Size of the product
Color(s) of product
Scent of the product
Materials/ composition of the product
Design of the product
Packaging materials
Package colors and package design
Brand name
Warranty
Availability of options
Customizing services
After-sale service offerings
Inventory levels
4 Ps - Price
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Price decision are all decisions which relate to the
price of the product, price negotiation, and
payment terms. Pricing dimensions include:
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Price to end user
Price to distribution intermediaries
Fixed vs. negotiated pricing
Negotiation policies
Credit policies
Credit charges
Payment terms (the amount of time allowed for payment
and any discount given for payment on time)
– Volume discounts
– Introductory allowances
– Trade-in policies
4 Ps - Place
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Place (distribution) decisions are all decisions which relate
to the places at which the product or service is made
available to buyers and the methods by which the product
or service reaches those places. Place dimensions include:
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Selection of geographic markets
Types of outlets from which end-users buy
Level of competition among end-use outlets
Number of end-use outlets
Required qualifications for end-use outlets
Specific identities for end-use outlets
Types of intermediaries which service end-use outlets
Level of competition among intermediaries
Number of intermediaries which service end-use outlets
Required qualifications for intermediaries which service end-use
outlets
– Specific identities for for intermediaries which service end-use
outlets
– Push v. pull policy
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4 Ps - Promotion
Promotion decisions are all decisions which relate to communication
with buyers about the product or service, solicitation of purchases, and
short-term purchase incentives. Promotion dimensions include:
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Size of advertising budget, if any
Selection of all ad media (television, radio, magazines, etc.)
Selection of ad vehicles (Time, Sports Illustrated, etc.)
Ad Scheduling
Ad appeals
Ad executions
Ad allowance (co-op advertising) programs
Size of sales force
Levels of sales force compensation
Method of sales force compensation
Sales quotas at which commissions or bonuses activate or change
Sales territory definitions
Sales force selection and training
Size of budget for consumer promotions
Types of consumer promotions to be used.
Size of budget for “trade promotions”
Types of trade promotions used.
Developing a Marketing Strategy
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SWOT Analysis
Segmentation and Targeting
Positioning
Marketing Objectives
Implementation - Marketing Mix
Budget
Principles of Marketing
Management
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Before making any marketing decisions, analyze the buyers – segment the
market.
Consider how the market is changing.
Evaluate your strengths and weaknesses, both in absolute terms and relative
to your competitors.
Given buyer characteristics, market segments, market trends, and your
strengths and weaknesses, choose a marketing strategy that will allow your
organization to reach its objectives.
Make product, price, place, and promotion decisions that are consistent with
buyer analysis and marketing.
In developing your marketing strategy and programs, share ideas within the
organization, study other successful organizations to see how they do it, and
pick the best ideas.
Make sure your program is legal and ethical
As part of the implementation process, make sure that everyone in your
organization knows your marketing strategy and the role s/he plays in making
that strategy work.