Developing a Marketing Strategy

Marketing: Micro and Macro levels

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

Marketing: Micro and Macro levels Micro Level (The individual organization)

– Marketing is all the decisions and activities involved in getting and keeping customers.

Marketing Strategy vs. Marketing OperationMarketing Strategy – Organization sets its general direction and objectivesMarketing Strategy:

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 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)

The competitive advantage is an internal question. What do you have that gives you advantage over your competitors?

Some things to consider:    – 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)

The is the external environment.

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 Description Examples — Variables

Geographic Divides the market into differentgeographical units

Country / Region / City, City Size, Density(Urban, Suburban, Rural), ISP Domain

Demographic Divides the market on the basis ofdemographic variables

Age, Gender, Income, Occupation,Education, Nationality, Family Status,Internet Connectivity

Firmographic Divides the market on the basis ofcompany-specific variables

On-line / Off-line Business, Number ofEmployees, Company Size, Job Function,Purchasing Process

Behavioral Divides market based on how customersactually buy and use the product

On-line / Off-line Shopping Behavior, Web-page or Site Customer Arrived From,Website Loyalty, Prior Purchases

Occasion (Situational) Divides market based on the situation thatleads to a product need, purchase or use

Routine Occasion, Special Occasion, Time(Time of Day, Day of Week, Holidays),Location (from Home, on the Road), Event(when writing a business plan, whenshopping), Trigger (out of supply)

Psychographic Divides market based on lifestyle and / orpersonality

Personality (laid back, type A), Lifestyle(thrill seekers, fun lovers, recluse), Affinity(community builders, belongers, outcasts)

Benefits Divides market based on benefits orqualities sought from the product

Convenience, Economy, Quality, Ease ofUse, Speed, Information, Selection

Needs Based Segmentation– Consumers and businesses purchase goods and services because

they satisfy their needs

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

MeaningfulMeaningfulMeaningfulMeaningful

ActionableActionableActionableActionable

SubstantialSubstantialSubstantialSubstantial

MeasurableMeasurableMeasurableMeasurable

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

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

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

Key characteristics of the segments (e.g. size and spending patterns) must be easy to measure

Source: Philip Kotler, Marketing Management, 1997 (Chapter 9, page 269)

In order for a customer segmentation to be effective, it must be meaningful, actionable, measurable and substantial

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

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? 

The competitive advantage is an internal question. What do you have that gives you advantage over your competitors. Some things to consider:   

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)?

Positioning Strategies

Positioning Strategies  There are seven positioning strategies that can be pursued: 

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. 

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 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. 

= Marketing Strategy

How is a product “positioned?”

Product Price Promotions Place

Implementation of Marketing Strategy

4 Ps - Product 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:– 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 Price decision are all decisions which relate to the price of the

product, price negotiation, and payment terms. Pricing dimensions include:– 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 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:– 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

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:– 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

SWOT Analysis Segmentation and Targeting Positioning Marketing Objectives Implementation - Marketing Mix Budget

Principles of Marketing Management

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.