Company and Marketing Strategy

Marketing Strategy & Marketing Mix

Customer orientationCustomer commitment.Creation of customer value.Understanding of customer needs and objectives.Measure customer satisfaction.After-sales service.

Competitor orientationSales force shares competitors’ information among themselves.Individual organizations respond rapidly to competitors actions.Senior managers frequently discuss competitors’ strategies and tactics.Keen to seize opportunities for competitive advantage.Constant struggle to achieve market leader status.

Inter-functional coordinationInter-functional calls on customers.Technical, procurement, customer and market information is shared closely among different functions/departments.Close integration among different functions and departments in implementation of strategy.Functions are geared towards creation and satisfaction of individual customer needs.Resources are shared frequently among the various business units.

Strategy Success Indicators

(a) Growth in sales revenue (b) Increase in market share. (c) Percentage increase in sales achieved through

customer retention/brand loyal customers. (d) Product development speed time i.e. time to

develop, manufacture and market a new product. (e) Number of customer complaints lodged. Percent

increase/decrease in number of customer complaints. (f) Number of new distributorships appointed in the

year. (g) Sales of new products / models lodged in the year

as a proportion of the Company’s annual turnover.

Market Segmentation

The market consists of many types of customers, products, and needs. The marketer must determine which segments offer the best opportunities. Consumers can be grouped and served in various ways based on geographic, demographic, psychographic, and behavioral factors. The process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs is called market segmentation.

Criteria for segmentation Measurability is the degree to which the size, purchasing power,

and profiles of a market segment can be measured. 2) Accessibility refers to the degree to which a market

segment can be reached and served. 3) Substantiality refers to the degree to which a market

segment is sufficiently large or profitable. 4) Differentiation refers to the degree to which a market

segment can conceptually be distinguished and has the ability to respond differently to different marketing mix elements and programs.

5) Action ability is the degree to which effective programs can be designed for attracting and serving a given market segment.

 

Geographic Segmentation

Geographic segmentation calls for dividing the market into different geographical units such as nations, regions, states, counties, cities, or neighborhoods. A company may decide to operate in one or a few geographical areas, or to operate in all areas but pay attention to geographical differences in needs and wants. It is common to localize products, advertising, promotions, and sales efforts to fit the needs of geographical areas (regions, cities, and even neighborhoods).

Demographic Segmentation

Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, and nationality.

  Demographic factors are the most popular bases for segmenting

customer groups. One reason is that consumer needs, wants, and usage rates often vary closely with demographic variables.

  Another is that demographic variables are easier to measure than

most other types of variables.   Even when market segments are first defined using other bases,

such as benefits sought or behavior, their demographic characteristics must be known in order to assess the size of the target market and to reach it efficiently. Demographic variables are easier to measure than most other types of variables.

Age and Life cycle segmentation

Age and life cycle segmentation consists of offering different products or using different marketing approaches for different age and life-cycle groups. Marketers must guard against stereotypes when using this form of segmentation. While certain age and life cycle groups do behave similarly, age is often a poor predictor of a person’s life cycle, health, work or family status, needs, and buying power. Consumer needs and wants change with age. Some companies use age and life cycle segmentation, offering different products or using different marketing approaches for different age and life-cycle groups.

Gender Segmentation

Calls for dividing a market into different groups based on gender. This segmentation form has long been used for clothing, cosmetics, toiletries, and magazines. New opportunities in this area are emerging such as automobiles, deodorants, and financial services. There is an increased emphasis on marketing and advertising to women. Specialized Web sites are becoming very popular with this group.

Income Segmentation

It consists of dividing a market into different income groups. Marketers for automobiles, boats, clothing, cosmetics, financial services, and travel have long used this form of segmentation. Using this form, marketers must remember that they do not always have to target the affluent. Other income groups are also viable and profitable market segments.

Psychographic segmentation

It calls for dividing a market into different groups based on social class, lifestyle, or personality characteristics. People in the same demographic class can exhibit very different psychographics characteristics. As previously seen in, lifestyle also affects people’s interest in various goods, and the goods they buy express those lifestyles. This method of segmentation is gaining in popularity. Personality variables can also be used to segment markets. Marketers will give their products personalities that correspond to consumer personalities.

Behavioral segmentation

It involves dividing a market into groups based on consumer knowledge, attitudes, uses, or responses to a product. Many marketers believe that behavior variables are the best starting point for building market segments. Occasion segmentation consists of dividing the market into groups according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item.

Pricing for segments

Geographic or location segments – High prices are charged for the same products/services in posh locations where customers are willing to pay the high prices and low prices are charged in relatively less affluent areas where the consumers are not well-off or have different types of needs, although the cost of offering may be the same in both the locations. A bottle of water of 0.5 liter may sell for Rs 25 in the super market, but in a prestigious restaurant the price charged for the same brand of bottled water may be as high as Rs 95.

Demographic segments – Different prices may be charged from different customers for the same product/service on the basis of differences in their age, gender or profession. Lower entry fees may be recovered from students and senior citizens to encourage them to visit a museum or an amusement park as compared to the entry fees charged from other visitors.

Time segments – The market may be segmented to recover high prices for use of the service during peak business hours and low prices for use of the same service during the slack or off-peak periods. A provider of telephone services may levy a higher tariff structure for calls made during the business hours and lower rates for services provided after the normal business hours. This pricing strategy would encourage more customers to make their calls during the off-peak periods.

Usage or consumption segments – Marketers often differentiate the market segments on the basis of customers volume of purchases, frequency of usage or their particular types of use and reward them with low prices as compared to the high prices charged from those customers who make their purchases in small quantities or usage for specific purposes. A supermarket may offer special discounts on certain items to those customers whose purchases are in excess of a specified quantity to encourage bulk purchases. Also, lower tariff structures may be charged for electricity used for drawing water from tube wells for agricultural purposes to reduce costs of inputs used in the production of agricultural products and higher rates for electricity consumed in commercial establishments.

Market targeting

After a company has defined its market segments, it can enter one or many of these segments. Market targeting involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. A company should target segments in which it can profitably generate the greatest customer value and sustain it over time.

Differentiation

Actually differentiating the market offering to create superior customer value.

Positioning

Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Marketers plan positions that distinguish their products from competing brands and give them the greatest advantage in their target markets.

Undifferentiated Marketing

Using an undifferentiated marketing (or mass-marketing) strategy, a firm might decide to ignore market segment differences and go to the whole market with one offer. This mass-marketing strategy focuses on what is common in the needs of consumers rather than on what is different. The company designs a product and a marketing program that will appeal to the largest number of buyers. It relies on mass distribution and mass advertising, and it aims to give the product a superior image in people's minds. Difficulties arise in developing a product or brand that will satisfy all consumers. Moreover, mass marketers often have trouble competing with more focused firms that do a better job of satisfying the needs of specific segments and niches.

Differentiated Marketing

Using a differentiated marketing strategy, a firm decides to target several market segments or niches and designs separate offers for each. General Motors tries to produce a car for every "purse, purpose, and personality." Nike offers athletic shoes for a dozen or more different sports, from running, fencing, and aerobics to bicycling and baseball. By offering product and marketing variations, these companies hope for higher sales and a stronger position within each market segment.

 

Concentrated Marketing

A third market-coverage strategy, concentrated marketing, is especially appealing when company resources are limited. Instead of going after a small share of a large market, the firm goes after a large share of one or a few segments or niches. Concentrated marketing provides an excellent way for small new businesses to get a foothold against larger, more resourceful competitors. Through concentrated marketing, firms achieve strong market positions in the segments or niches they serve because of their greater knowledge of the segments' needs and the special reputations they acquire. They also enjoy any operating economies because of specialization in production, distribution, and promotion. If the egment is well chosen, firms can earn a high rate of return on their investments. At the same time, concentrated marketing involves higher-than-normal risks. The particular market segment can turn sour. Or larger competitors may decide to enter the same segment.

Marketing Mix After determining its overall marketing strategy, the company is ready to begin

planning the details of the marketing mix, one of the major concepts in modern marketing. The marketing mix is the set of tactical marketing tools that the firm blends to produce the response it wants in the target market. The marketing mix consists of everything the firm can do to influence the demand for its product. The many possibilities can be collected into four groups of variables—the four Ps (Product, Price, Place, Promotion)

Product means the goods-and-services combination the company offers to the target market. (Variety, Quality, Design, Features, Brand name, Packaging, Services)

Price is the amount of money customers must pay to obtain the product. (List price, Discounts, Allowances, Payment period , Credit terms)

Place includes company activities that make the product available to target consumers. (Channels, Coverage, Locations, Inventory, Transportation, Logistics)

Promotion means activities that communicate the merits of the product and persuade target customers to buy it. (Advertising, Personal selling. Sales promotion, Public relations)

Advantages   Television Offers combined effects of highly attractive sights, sound and motion to

appeal to the audience. Captures high attention of the audience. Reaches a large segment of the prospective market. Qualities of the product can be highlighted more effectively.   Disadvantages/Limitations Entails high cost. Has very short exposure. Has minimum audience selectivity. Audience can move away from the TV sets during advertisement breaks.

Widely circulated newspapers   Advantages extensive coverage of different categories of the prospective audience. a large part of the audience may read the newspaper in their free time or when required when it

is more easier to respond. customers can refer back to the newspaper whenever there is a need for the product. captures attention of the audience for a relatively longer duration.   Disadvantages   Newspapers have a very short life and advertisements are effective only if they are repeated

frequently. Quality of the advertisements are generally not ‘audience attention captivating type’. Newspapers have a very restricted ‘pass-on’ or secondary audience. busy readers glance through the newspapers to read the headlines and ignore the

advertisements.  

Billboards(Hoardings)   Advantages High repeated exposure to the passing traffic. Can be installed at most strategic locations. Colourful digital graphic billboards attract attention of large audience. Disadvantages Limited audience selectivity. Ignored by the fast moving traffic on busy roads. Billboards placed too closely are eyesore for the audience and are

ignored. High costs are involved in the maintenance and upkeep of the billboards. Audience often find the similar colours on billboard boring and therefore

avoid looking at them.

Marketing Analysis Managing the marketing function begins with a complete analysis of the company’s

situation. The marketer should conduct a SWOT analysis (pronounced “swat” analysis), by which it evaluates the company’s overall strengths (S), weaknesses (W), opportunities (O), and threats (T). Strengths include internal capabilities, resources, and positive situational factors that may help the company serve its customers and achieve its objectives. Weaknesses include internal limitations and negative situational factors that may interfere with the company’s performance. Opportunities are favorable factors or trends in the external environment that the company may be able to exploit to its advantage. And threats are unfavorable external factors or trends that may present challenges to performance.

  The company should analyze its markets and marketing environment to find

attractive opportunities and identify environmental threats. It should analyze company strengths and weaknesses as well as current and possible marketing actions to determine which opportunities it can best pursue. The goal is to match the company’s strengths to attractive opportunities in the environment, while eliminating or overcoming the weaknesses and minimizing the threats. Marketing analysis provides inputs to each of the other marketing management functions. (for details on SWOT Analysis, see Chapter 2)

Market Planning Market Planning Through strategic planning, the company decides what it wants to do

with each business unit. Marketing planning involves choosing marketing strategies that will help the company attain its overall strategic objectives. A detailed marketing plan is needed for each business, product, or brand. What does a marketing plan look like?

  Sections of a Marketing Plan Executive Summary Current Market Situation Threats and Opportunities Analysis Objectives and Issues Marketing Strategy Action Programs Budgets Controls

Marketing Implementation

Marketing implementation is the process that turns marketing plans into marketing actions to accomplish strategic marketing objectives. Whereas marketing planning addresses the what and why of marketing activities, implementation addresses the who, where, when, and how. 

Marketing Control

Marketing control refers to measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved.