1. imperatives for market-driven strategy 2. markets and competitive space 3. strategic market...

1. Imperatives for Market-Driven Strategy

2. Markets and Competitive Space

3. Strategic Market Segmentation

4. Strategic Customer Relationship Management

5. Capabilities for Learning about Customers and Markets

6. Market Targeting and Strategic Positioning

7. Strategic Relationships

8. Innovation and New Product Strategy

9. Strategic Brand Management

10. Value Chain Strategy

11. Pricing Strategy

12. Promotion, Advertising and Sales Promotion

Strategies

13. Sales Force, Internet, and Direct Marketing Strategies

14. Designing Market-Driven Organizations

15. Marketing Strategy Implementation And Control

Strategic Marketing

StrategicMarket

Segmentation

Chapter 3

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Strategic market segmentation (1)Strategic market segmentation (1)

* Levels and types of market Levels and types of market segmentationsegmentation

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Levels and types of market Levels and types of market segmentationsegmentation

OperationalSegmentation

ManagerialSegmentation

StrategicSegmentation

VisionStrategic intentProduct benefits

Resource allocationAlignmentPlanning

Marketing programs - Advertising - Sales - Distribution

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Best Buy segmentation strategyBest Buy segmentation strategy

* Jill’s - “soccer moms”Jill’s - “soccer moms”* Barry’s - wealthy professionalsBarry’s - wealthy professionals* Buzz’s - “tech enthusiasts”Buzz’s - “tech enthusiasts”* Ray’s - the family manRay’s - the family man* Mr Storefront - the small business customerMr Storefront - the small business customer* Carrie’s - young, single femalesCarrie’s - young, single females* Helen and Charlie’s - older couples whose Helen and Charlie’s - older couples whose

children have left homechildren have left home

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From Mass Markets to Micro MarketsFrom Mass Markets to Micro MarketsOLD NEW

CONSUMERS Passively receive Empowered media userswhatever TV control and shape contentnetworks thanks to TiVo, iPod andbroadcast Internet

ASPIRATIONS To keep up with To standout from thethe crowd crowd

TV CHOICE Three networks Hundreds of channelsplus maybe a plus video on demand PBS station

MAGAZINES Age of the big Age of the special interestglossies: Time, magazine for every ageLife, Newsweek and affinity group

ADS Everyone hums Talking to a group of the Alka-Seltzer one, ads go everjingle narrower

BRANDS Rise of the big, Niche brands, productubiquitous brands extensions and massfrom Coca-Cola customization mean manyto Tide product variations

Source: Anthony Bianco, “The Vanishing Mass Market”, Business Week, July 12 2004, 58-62

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* Market-driven strategy and Market-driven strategy and segmentationsegmentation* Market segmentation, value opportunities Market segmentation, value opportunities

and new market spaceand new market space* Market targeting and strategic positioningMarket targeting and strategic positioning

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Segmentation and Market-Driven Segmentation and Market-Driven StrategyStrategy

SEGMENTS

VALUE OPPORTUNITIES

CAPABILITIES/ SEGMENT MATCH

TARGET(S)

POSITIONING STRATEGY

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* Activities and decisions in market Activities and decisions in market segmentationsegmentation

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Market Segmentation Activities and Market Segmentation Activities and DecisionsDecisions

Market to beSegmented

Decide Howto Segment

FormSegments

FinerSegmentation

Strategies

StrategicAnalysis

of Segments

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* Activities and decisions in market Activities and decisions in market segmentationsegmentation

* Defining the market to be segmentedDefining the market to be segmented

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Product Variant Segmentation

Product Type Segmentation

Generic Segmentation

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Strategic market segmentation (5)Strategic market segmentation (5)* Identifying market segmentsIdentifying market segments

* Segmentation variablesSegmentation variables* Characteristics of people and organizationsCharacteristics of people and organizations

* Consumer marketsConsumer markets* Organizational marketsOrganizational markets* Product use situation segmentationProduct use situation segmentation* Buyers’ needs and preferencesBuyers’ needs and preferences

* Consumer needsConsumer needs* AttitudesAttitudes* PerceptionsPerceptions

* Purchase behaviorPurchase behavior

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PurchaseBehavior

Characteristicsof People/

Organizations

UseSituation

Buyers’ Needs/Preferences

Segmentation Variables

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Illustrative Segmentation VariablesIllustrative Segmentation Variables

Characteristicsof people/organizations

ConsumerMarkets

Industrial/Organizational Markets

Age, gender, income,family size, lifecycle stage, geographiclocation,lifestyle

Type of industry, size, geographic location, corporate culture, stage ofdevelopment, producer/intermediary

Use situation Occasion, importance ofpurchase, prior experience with product, user status

Application, purchasingProcedure (new task, modified rebuy, straightrebuy

Buyers’ needs/preferences

Brand loyalty status, brandpreference, benefits sought,quality, proneness to make a deal

Performance requirements, brand preferences, desiredfeatures, servicerequirements

Purchasebehavior

Size of purchase,frequency of purchase

Volume, frequencyof purchase

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* Forming market segmentsForming market segments* Requirements for segmentationRequirements for segmentation

* Response differencesResponse differences* Identifiable segmentsIdentifiable segments* Actionable segmentsActionable segments* Cost/benefitsCost/benefits* StabilityStability

* Approaches to segment identificationApproaches to segment identification* Customer group identificationCustomer group identification* Forming groups based on response differencesForming groups based on response differences

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Miller Brewing’s beer brand targetsMiller Brewing’s beer brand targets

* Miller genuine draftMiller genuine draft - “mainstream - “mainstream sophisticates”sophisticates”

* Milwaukee’s Best LightMilwaukee’s Best Light - “hardworking - “hardworking men”men”

* Pilsner UrquellPilsner Urquell - “beer afficionados” - “beer afficionados”

* Miller IcehouseMiller Icehouse - for “drinking buddies” - for “drinking buddies”

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Requirements for SegmentationRequirements for Segmentation

SegmentationRequirements

Responsedifferences

Identifiablesegments

Actionablesegments

Favorablecost/benefit

Stabilityover time

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Approaches to Segment Approaches to Segment IdentificationIdentification

IDENTIFIERS OF CUSTOMER

GROUPS

CUSTOMER RESPONSEPROFILE

Characteristics of People and Organizations

Use Situation

Buyers Needs and Preferences

Purchase Behavior and Loyalty

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Segment Dimensions for Hotel Lodging ServicesSegment Dimensions for Hotel Lodging Services

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Illustrative Example: Gasoline BuyersIllustrative Example: Gasoline Buyers

RoadWarriors

TrueBlues

GenerationF3 (Fuel,Food & Fast)

Homebodies

PriceShoppers

Higher-income, middle-aged men, drive 25-50000 miles a year… buy premium with a credit card … purchase sandwiches and drinks from the convenience store… will sometimes use carwash

16% ofbuyers

Men and women with moderate tohigh incomes, loyal to a brand andsometimes a particular station …frequently buy premium, pay in cash

16% ofbuyers

Upwardly mobile men and women -half under 25 years of age - constantly on the go … drive a lotsnack heavily from the convenience store

27% ofbuyers

Usually housewives who shuttlechildren around during the day anduse whatever gas station is based ontown or on route of travel

21% ofbuyers

Not loyal to brand or station andrarely buy premium … frequently ontight budgets.

20% ofbuyers

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Illustrative Consumer Perception Illustrative Consumer Perception MapMap

LowQuality

HighQuality

Expensive

Inexpensive

GROUPI

GROUPV

GROUPIII

GROUPII

GROUPIV

• Brand E

• Brand D• Brand C

• Brand B

• Brand A

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* Finer segmentation strategiesFiner segmentation strategies* LogicLogic

* Customized offeringsCustomized offerings* Diverse customer baseDiverse customer base* Close customer relationshipsClose customer relationships

* Finer segmentation strategiesFiner segmentation strategies* Micro-segmentationMicro-segmentation* Mass customizationMass customization* Variety-seeking strategyVariety-seeking strategy

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* Selecting the segmentation strategySelecting the segmentation strategy* Deciding how to segmentDeciding how to segment* Strategic analysis of market segmentsStrategic analysis of market segments

* Customer analysisCustomer analysis* Competitor analysisCompetitor analysis* Positioning analysisPositioning analysis* Estimating segment attractivenessEstimating segment attractiveness* Segmentation “fit” and implementationSegmentation “fit” and implementation

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CustomerAnalysis

PositioningAnalysis

Financial andMarket

Attractiveness

CompetitorAnalysis

Strategic Analysis of Market SegmentsStrategic Analysis of Market Segments

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Segmentation “Fit” for ImplementationSegmentation “Fit” for Implementation

Segment Attractivenessand Internal Compatibility

Internal Compatibility

Market SegmentAttractiveness

High Low

High

Low

Attractive segmentsthat match with

companycapabilities

Attractive segmentsbut with poor match

with companycapabilities

Unattractive segmentsthat do not match withcompany capabilities

Unattractive segmentsbut with match to

companycapabilities

1. imperatives for market-driven strategy 2. markets and competitive space 3. strategic market...

Documents

market segmentation

market targeting

decisions market

new market space

marketdriven organizations

vanishing mass market

strategic positioning

best buy segmentation