Transcript Market3
3. Marketing Strategies MKT 3 MKT3 - Slide 1 to 18 1 Marketing Opportunities ► Breakthrough opportunities – help to develop hard-to-copy marketing strategies that are profitable in the long-term ► Even if a company can’t get breakthrough opportunities, it must strive for competitive advantage: When its target market prefers its marketing mix to that of a competitor Must provide superior value and satisfy customers better than competitors Sources of competitive advantage: price advantage, well-known brand, reliable distribution channels, strong sales force MKT3 - Slide 1 to 18 2 Competitive Strategies ► Porter’s generic strategies: Cost leadership Differentiation Focus: ► Differentiation focus – differentiate in one/small number of target market segments; provide products different from competitor who caters for a broader group of customers (niche) ► Cost focus – lower cost advantage in one/small number of market segments; e.g., product similar to high-priced product, but acceptable to segment (“me-too” product) MKT3 - Slide 1 to 18 3 Marketing Mix – 4 Ps ► Product ► Price ► Promotion ► Place MKT3 - Slide 1 to 18 4 Marketing Mix – 4 Ps ► Product Market research indicates what customer wants Then, match product – packaging design, materials used, size & quantity Need to track – customers’ needs change over time MKT3 - Slide 1 to 18 5 Marketing Mix – 4 Ps ► Price: Need Need Need Need to to to to recoup overheads, costs. compete match what customers are willing to pay fine tune: ► Loss leader pricing – lowering price to attract customers (you may make a loss, but customer may buy other products). For products in maturity/decline ► Penetration pricing – lower price to discourage competitors/induce interest in product at introductory stage ► Price skimming – keep price artificially high. To recoup costs & make profits. Good for products that are new/in demand (growth stage) ► Differential pricing – same product to be sold at different costs in different markets MKT3 - Slide 1 to 18 6 Marketing Mix – 4 Ps ► Place: How you will sell your product: Direct selling – door-to-door, retailing, mail order, ecommerce; complete control and easy to get customer info, but need storage/retail premises Direct to retailer – avoid problems related to direct selling, but needs admin to control, and sales force. Loss of control/customer info Wholesaler – lose identity; lose customer contact, but less headaches ► Could have combinations MKT3 - Slide 1 to 18 7 Marketing Mix – 4 Ps ► Promotion: Thru: Mass media (TV, magazines, Internet, radio) Personal selling Non-personal communication (persuasion advertising, competitions, free samples) Others (PR, free publicity) ► Message should be geared to market segment targeted MKT3 - Slide 1 to 18 8 A word about advertising… ► Could concentrate on company’s general image or particular product ► Main forms: TV, radio, newspapers/magazines, travel trade press, videos, posters, cinema, exhibitions/trade fairs, Internet MKT3 - Slide 1 to 18 9 Marketing of Services ► Marketing of services can cause customer dissatisfaction ► Marketing: Important not to over-promise, but, at the same time, attract customers ► Need to consider product/service mix first ► Apply four P’s: ► - Product (core service) ► - Place (access & location) ► - Price ► - Promotion MKT3 - Slide 1 to 18 10 Marketing of Services ► For services, need to apply more P’s (according to Booms & Bitner) ► - Participants (employees & customers) ► - Physical evidence (tangibles, ie, décor, layout, etc) ► - Process (all the steps that deliver the service), ie, ease of use, volume, etc MKT3 - Slide 1 to 18 11 Marketing of Services ► Other factors that affect the customer’s purchase decision: ► - Safety ► - Convenience ► - Flexibility ► - Speed ► - Reputation ► - Availability ► - Package (explicit & implicit) ► - Value for the customer MKT3 - Slide 1 to 18 12 Four Non-price Competitive Strategies (Ansoff Matrix) Products Market Segments Existing New Existing Market Penetration Product Development New Market Development Diversification MKT3 - Slide 1 to 18 13 Market Segmentation ► Two step process: Naming broad markets – this is the process of disaggregation; e.g., a car manufacturer focuses on the generic market “transporting people.” Then further breakdown to “cars”, “trucks”, etc Segmenting the broad market in order to select target markets; this is an aggregating process where similar customers (with similar needs) are grouped ► ► A market segment is relatively homogeneous (similar) – customers who will respond in the same way to a marketing mix Marketers group individual customers into workable number of relatively homogeneous target markets – then treat each target market differently MKT3 - Slide 1 to 18 14 Market Segmentation ► market segments should be: Internally homogeneous in terms of their response to a marketing mix Externally heterogeneous – different segments should be different Substantial – a market segment should be substantial enough to be profitable Operational – Its segmentation dimensions should be useful in identifying customers and deciding on a marketing mix MKT3 - Slide 1 to 18 15 Market Segmentation ► Marketers use market dimensions to segment markets. The main dimensions are: Behavioral (needs & attitudes, e.g., prestige needs) Geographic Demographic (family status, education, ethnicity, social class) MKT3 - Slide 1 to 18 16 Three ways to develop market oriented strategies… ► Single target market: pick one segment to target ► Multiple target market: Choose two or more segments – treat each segment differently (sometimes called mass marketing, e.g., coke) ► Combined target market – combine two or more segments into one larger target market, then approach it with one marketing mix MKT3 - Slide 1 to 18 17 Positioning ► This is consumer perception of existing/ proposed product ► Marketers need to consider: How a product is viewed in the market The need for repositioning a product Ways of repositioning a product Positioning helps marketers by indicating all key dimensions of a market segment MKT3 - Slide 1 to 18 18