Marketing Strategy Planning Process Narrowing down to focused

Marketing Strategy Planning Process Narrowing down to focused strategy with screening criteria Customers Company S. W. O. T. Segmentation & Targeting Product Place Target Market Differentiation & Positioning Price Promo Competitors External Exhibit 3 -1 3 -3 Market Environment 1

What is Market Segmentation? Market segmentation: The act of dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors who might require separate products and/or marketing mixes. 2

Market Segmentation B. Product-market showing six segments Status dimension A. Product-market showing three segments Dependability dimension Exhibit 3 -6 3 -9 3

Bases for Segmentation Geographic Segmentation Demographic Segmentation Psychographic Segmentation Sociocultural Segmentation Usage-Situation Segmentation Hybrid Segmentation Approaches 4

Market Segmentation SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Geographic Segmentation Region Southwest, Northeast City Size Major metropolitan cities, small cities, towns(Tire 1, III Density of area Urban, suburban, rural Climate Temperate, hot, humid, rainy Demographic Segmentation Age Under 11, 12 -17, 18 -34, 35 -49, 50 -64, 65 -74, 75 -99, 100+ Sex Male, female Marital status Single, married, divorced, living together, widowed Income Under Rs 25, 000, Rs 25, 000 -Rs 34, 999, Rs 35, 000 Rs 49, 999, Rs 50, 000 -Rs 74, 999, Rs 75, 000 -Rs 99, 999, Rs 100, 000 school, high school graduate, some college, Education Some high and over college graduate, postgraduate Occupation Professional, blue-collar, white-collar, agricultural, military, own business 5

Table 3. 2, continued SEGMENTATION SELECTED SEGMENTATION VARIABLES Psychological Segmentation Needs-motivation Shelter, safety, security, affection, sense of self-worth Personality Extroverts, novelty seeker, aggressives, low dogmatics Perception Low-risk, moderate-risk, high-risk Learning-involvement Low-involvement, high-involvement Attitudes Positive attitude, negative attitude Psychographic (Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers Sociocultural Segmentation Cultures Gujrati, Marathi, Punjabi, Bengali, Religion Hindu, Muslim, Christan, Sikh Subcultures (Race/ethnic) Brahmin, Kshatriya, Baniya Social class Lower, middle, upper Family life cycle Bachelors, young married, full nesters, empty nesters 6

SEGMENTATION BAS SELECTED SEGMENTATION VARIABLES Use-Related Segmentation Usage rate Heavy users, medium users, light users, non users Awareness status Unaware, interested, enthusiastic Brand loyalty None, some, strong Use-Situation Segmentation Time Leisure, work, rush, morning, night Objective Personal, gift, snack, fun, achievement Location Home, work, friend’s home, in-store Person Self, family members, friends, boss, peers Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money Hybrid Segmentation Demographic/ Psychographics Geodemographics SRI VALSTM Combination of demographic and psychographic profiles of consumer segments profiles “Money and Brains, ” “Black Enterprise, ” “Old Yankee Rows, ” “Downtown Dixie-Style” Actualizer, fulfilled, believer, achiever, striver, experiencer, maker, struggler 7

Market-Oriented Approaches A segmenter The Strategy 3 -10 Usingle target market approach— can aim at one submarket with one marketing mix 8

Market-Oriented Approaches A segmenter Strategy One Strategy Three Using multiple target market approach— can aim at two or more submarkets with different marketing mixes Strategy Two 9

Step 2. Market Targeting Market Coverage Strategies Company Marketing Mix Market A. Undifferentiated Marketing Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3 Segment 1 Segment 2 Segment 3 B. Differentiated Marketing Company Marketing Mix Segment 1 Segment 2 Segment 3 C. Concentrated Marketing 10

Step 2. Market Targeting Choosing a Market-Coverage Strategy Company Resources Product Variability Product’s Stage in the Product Life Cycle Market Variability Competitors’ Marketing Strategies 11

Five Patterns of Target Market Selection Single - Segment Specialization A firm selects one segments in the market and makes one product for them. Woodland shoes M 1 M 2 M 3 P 1 P 2 P 3 12

Five Patterns of Target Market Selection Selective Specialization A firm selects a number of segments, each objectively attractive and appropriate. M 1 M 2 M 3 P 1 P 2 P 3 13

Product Specialization The firm makes a certain product that it sells to several different market segments. M 1 M 2 M 3 P 1 P 2 P 3 14

Market Specialization The firm concentrates on serving many needs of a particular customer group. M 1 M 2 M 3 P 1 P 2 P 3 15

Full Market Coverage The firm attempts to serve all customer groups with all the products they might need. Only very large firms can attempt to do that M 1 M 2 M 3 P 1 P 2 P 3 P= Product M= Market 16

Positioning Strategy 17

Step 3. Choosing a Positioning Strategy Step 1. Identifying Possible Competitive Advantages Step 2. Selecting the Right Competitive Advantage Step 3. Communicating and Delivering the Chosen Position 18

Step 3. Positioning for Competitive Advantage Product’s Position - the place the product occupies in consumers’ minds relative to competing products; i. e. Volvo positions on “safety”. Marketers must: Ø Plan positions to give products the greatest advantage Ø Develop marketing mixes to create planned positions 19

Step 3. Positioning for Competitive Advantage: Strategies Product Class Away from Competitors Product Attributes Benefits Offered G H C A D Against a Competitor E B F Usage Occasions Users 20

Developing Competitive Differentiation Product Service Areas for Competitive Differentiation Personnel Image 21

Identifying Possible Competitive Advantages Product Differentiation (e. g. , consistency, durability, reliability, repairability) Services Differentiation (e. g. , speed, convenience, careful delivery) Channel Differentiation Image Differentiation (e. g. , convey benefits and positioning) People Differentiation (e. g. , hiring, training better people than competitors) 22

Selecting the Right Competitive Advantages Important Profitable Affordable Preemptive Criteria for Determining Which Differences to Promote Distinctive Superior Communicable 23

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Communicating and Delivering the Chosen Position Company must take strong steps to deliver and communicate the desired position to target consumers. The marketing mix efforts must support the positioning strategy. Must monitor and adapt the position over time to match changes in consumer needs and competitors’ strategies. 25

Positioning of Different Bar Soaps High moisturizing • Pears 4 • LUX International 7 • Cinthol • Dove 2 5 Santoor • Lux Nondeodorant 8 Deodorant 3 1 “Product Space” 3 -14 • Medimix Representing Consumers’ 6 Perception for Different Brands of Bar Soap Low moisturizing • Margo • Lifebuoy 26

Positioning Errors Underpositioning: Ø Failing to really position the company at all. Overpositioning: Ø Giving buyers too narrow a picture of the company. Confused Positioning: Ø Leaving buyers with a confused image of a company. 28

Rest Stop: Reviewing the Concepts Define three steps of target marketing: market segmentation, market targeting, and market positioning. List and discuss the major bases for segmenting consumer and business markets. Explain how companies identify attractive market segments and choose a target marketing strategy. Discuss how companies position their products for maximum competitive advantage in the marketplace. 29

NEW PRODUCT DEVELOPMENT Explain how companies find and develop newproduct ideas. List and define the steps in the new-product development process. Describe the stages of the product life cycle. Describe how marketing strategies change during the product’s life cycle. 30

NEW PRODUCT DEVELOPMENT 31

New-Product Development Strategy Strategies for Obtaining New-Product Ideas Acquisition of: New Products: Companies Original Products Patents Improvements Licenses Modifications 32

New-Product Failures Only 10% of new products are still on the market and profitable after 3 years. Failure rate for industrial products is as high as 30%. Why? Ø Overestimation of market size Ø Design problems Ø Incorrectly positioned, priced, or advertised Ø Pushed despite poor marketing research findings Ø Development costs Ø Competition 33

Major Stages in New-Product Development 34

New-Product Development Process Idea Generation Ideas from: Customers and users Marketing research Competitors Other markets Company people Intermediaries Screening Idea Evaluation Strengths and weaknesses Fit with objectives Market trends Rough ROI estimate Concept testing Customer reactions Rough estimates of cost, sales, profits Development R&D Develop model or service prototype Test marketing mix Revise plans as needed ROI estimate Commercial -ization Finalize product and marketing plan Start production and marketing “Roll out” in select markets Final ROI estimate 35

Flow of Ideas and Product Company Employees Customers Competitors Distributors Suppliers 36

Idea Screening Process to spot good ideas and drop poor ones. Develop system to estimate: market size, product price, development time and costs, manufacturing costs, and rate of return. Evaluate these findings against set of company criteria for new products. 37

Concept Development and Testing Product Idea: idea for a possible product that the company can see itself offering. Product Concept: detailed version of the idea stated in meaningful consumer terms. Product Image: the way consumers perceive an actual or potential product. 38

Marketing Strategy Development Part One Describes: The Target Market Planned Product Positioning Sales, Market Share, & Profit Goals Part Two Outlines the First-Year’s: Product’s Planned Price Distribution Marketing Budget Part Three Describes Long-Run: Sales & Profit Goals Marketing Mix Strategy 39

Business Analysis Involves a review of the sales, costs, and profit projections to assess fit with company objectives. If yes, move to the product development phase. 40

Product Development Develop concept into physical product Calls for large jump in investment Prototypes are made Prototype must have correct physical features and convey psychological characteristics 41

Test Marketing Product and program introduced in more realistic market setting. Not needed for all products. Can be expensive and time consuming, but better than making major marketing mistake. 42

Test Marketing Nokia test-marketed its new N-Gage cell phone/mobile game player extensively before introducing it worldwide. 43

Commercialization Must decide on timing (i. e. , when to introduce the product). Must decide on where to introduce the product (e. g. , single location, state, region, nationally, internationally). Must develop a market rollout plan. 44

Organizing New-Product Development Sequential Approach: each stage completed before moving to next phase of the project. Simultaneous Approach: Cross-functional teams work through overlapping steps to save time and increase effectiveness. 45

THEORY OF DIFFUSION OF A NEW PRODUCT 21/2 % INNOVATORS 131/2% EARLY ADOPTERS 34% EARLY MAJORITY 34% LATE MAJORITY 16% LAGGARDS 46

THE CONSUMER ADOPTIONPROCESS (STAGES IN THE ADOPTION PROCESS ) Awareness : The consumer becomes aware of the innovation but lacks information about it. Interest : The consumer is stimulated to seek information about the innovation. Evaluation : The consumer considers whether to try the innovation. Trial : The consumer tries the innovation to improve his or her estimate of its value. Adoption : The consumer decides to make full and regular use of the innovation. 47