university of washington emba program regional 20 marketing management “setting objectives &...
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University of Washington EMBA ProgramRegional 20
Marketing Management
“Setting Objectives &
Marketing Strategy: Segmentation, Targeting and Positioning (STP)”
Instructor: Elizabeth Stearns
Course Structure
The Marketing Framework/Concept
Analysis5C’s Opportunity Analysis
Marketing Strategy & Customer StrategyGoal Setting, Segmentation, Targeting, and Positioning
Implementation/Action PlansMarketing Mix (4 P’s)
MarketingResearch
StrategyFormulation
ProgramFormulation
Contention
DifferingPerspectives
Marketing
FinanceHuman Resources
R&D
Operations
Sales
Project Planning
Consensus Execution
CoordinationCreativity
The Strategy Development and Implementation Process
Marketing Strategy & Objectives
• Marketing Strategy:Marketing Strategy: A game plan for achieving objectives
Typically a set of customer and competitor targets plus Typically a set of customer and competitor targets plus a positioning, a framing of the organization’s offer in a positioning, a framing of the organization’s offer in the minds of customersthe minds of customers
• Objectives:Objectives: Means of evaluating performance
• Caveat: Consider that the position of your product in the Product Life Cycle may influence your strategy
Setting Objectives
• PurposePurpose
To identify the results we wish to achieve in the market segments and provide a platform for measurement and evaluation.
• Types of Marketing Objectives
– Strategic: Qualitative and directional
– Operational: Quantitative and time dependent (SMART)
Select Dimensions for Operational Marketing Objectives
Pre-Sale
Financial Oriented Volume Oriented
Sale
Post-Sale
Awareness
Attitude
Purchase Intention Dollars (Nominal, Real)
Units
Growth Market Share
Trial, Repeat
Contribution Bottom Line
Profit
Cash Generated
Gross Spreads
Return on Investment
Customer Satisfaction
Consideration
Strategic Focus and Customer Targeting
ROI
Improve Efficiency
Improve Price
Reduce Investment
Change Sales Mix
Reduce Costs
Strategic Focus and Customer Targeting
ROI
Increase SalesVolume (units)from customers
ImproveEfficiency
ImprovePrice
ReduceInvestment
ChangeSales Mix
ReduceCosts
Retain existingcustomers
More business fromcurrent customers
Non Users
Competitors'customers
A Note on Sources of VolumeMany objectives are “growth” oriented.Many objectives are “growth” oriented.
• Where does growth come from?– Primary demand = “New” volume
• New users into the market• Getting current users to use more• Get same users to use for a “new” purpose
– Secondary demand = “Somebody else’s” volume• Take volume from competitors
• Caveats– Beware of cannibalization—it’s not really growth– Stimulating secondary demand implies a competitive
response
Using Objectives in Alternatives & Recommendations Choice
• Write an operational marketing objective• Project all viable alternatives onto the dimension of the
objective use expected value of outcome• Measure the “attractiveness” of each alternative according
to whether/the degree to which it satisfies your operational marketing objective– If only 1 alternative meets your objective—choose it– If 2 or more alternatives meet your objective…
• Choose the one which performs best on the dimension underlying your objective
• Move to “tiebreaker” criteria– Risk/variance in performance– Cost– “Fit”– Etc.
Objectives Statements
• Our primary objective in the loudspeaker market is to grow market share from 25% to 30% by stealing share from competitors in 2003 while maintaining margins at 23%. (What is wrong with this?)
• Our task is to generate $70 million cash flow from mainframes in both 2003 and 2004, while maintaining dollar-denominated market share at 45%.
– Primary objectives are most important– Secondary objectives are relevant and desirable, but
tradeoffs for primary objectives are acceptable
Overview of STP Process1. Identify Segmentation/segmentation
bases and segment the market.
2. Develop profiles of the resulting Segments.
1. Evaluate the attractiveness of each Segment.
2. Select target Segment(s).
1. Identify possible positioning concepts for each Segment.
2. Select, develop, and communicate the chosen positioning.
SegmentatiSegmentationon
PositioningPositioning
TargetingTargeting
Steps in Market Segmentation, Targeting,and Positioning
1. Identifysegmentationvariables andsegment themarket
2. Develop profiles ofresultingsegments
MarketMarketSegmentationSegmentation
3. Evaluateattractivenessof eachsegment
4. Select thetargetsegment(s)
MarketMarketTargetingTargeting
5. Identifypossible
positioningconcepts foreach target
segment
6. Select,develop, andcommunicate
the chosenpositioning
concept
MarketMarketPositioningPositioning
©2000 Prentice Hall
Market Segmentation
• The process of grouping actual and potential customers in a market for the purpose of selecting targets for effort and designing marketing strategies and programs for them
Market Segment
• A group of actual or potential customers with similar characteristics, who seek similar sets of benefits and attach the same importance to their satisfaction
Taxonomy at the Pump:Five Types of Gasoline Buyers
Road Warriors: Generally higher-Income, middle -aged men who drive 25,000 to 50,000 miles a year . . . buy premium with a credit card . . . purchase sandwiches and drinks from the convenience store . . . will sometimes wash their cars at the carwash. 18% of buyers
True Blues: Usually men and women with moderate to high incomes who are loyal to a brand and sometimes to a particular station . . . frequently buy premium gasoline and pay cash. 16% of buyers
Generation F3 (for fuel, food and fast): Upwardly mobile men and women-half under 25 years of age-who are constantly on the go . . . drive a lot and snack heavily from the convenience store. 27% of buyers
Homebodies: Usually housewives who shuttle their children around during the day and use whatever gasoline station is based in town or along their route of travel. 21% of buyers
Price Shoppers: Generally aren't loyal to either a brand or a particular station, and rarely buy the premium line . . . frequently on tight budgets . . . efforts to woo them have been the basis of marketing strategies for years. 20% of buyers
® Mobil Oil Company
Process: Example
Usage-based Segmentation for an Established Product/Service
IDENTIFYING SEGMENTSIDENTIFYING SEGMENTS DESCRIBING SEGMENTS DESCRIBING SEGMENTS
BASES LEVELSBASES LEVELS STRATEGIC IMPACT STRATEGIC IMPACTDEMOGRAPHICS/ MEDIA VALUEDEMOGRAPHICS/ MEDIA VALUE
PSYCHOGRAPHICSPSYCHOGRAPHICS TECHNOS $$Use of product/service?
Brand used?
Level of use?
Occasion of use?
Motivation for use?
• Nonuser• User
• My Brand• Competitor’s brand
• Heavy• Moderate• Light
• Time of day• Season
• Self /Other• Functional/. Psychic
Describe levels in terms of $$$,Demographics Psychographics, Media Habits, Lifestage, Technos, etc.
Category versusBrand Build
Loyalty versusSwitching
Value of a customer, Efficiency
Image Focus versus Attribute Focus, Timing
Form of the value equation
Process
Purpose of Forming Market Segments
• To form the closest possible match between customers’ needs or wants and priorities, and the firm’s offer, such that customer satisfaction is maximized and competitive advantage is created. As a result, unit volume and/or price increases, and profits are enhanced
Segmentation
• Dividing up the market into groups of consumers who share similar needs (and who respond similarly to marketing mix variables)
– Account for customers’ diverse needs and differing behaviors in its strategy
– Design the marketing mix to more closely match customer needs
– Improve efficiency and effectiveness of resource allocation
Measurable Measurable
AccessibleAccessible
SubstantialSubstantial
DifferentialDifferential
• Segments must be large or profitable enough to serve.
• Segments can be effectively reached and served.
ActionableActionable
• Size, purchasing power, profiles of segments can be measured.
• Segments must respond differently to
different marketing mix elements & actions.
• Must be able to attract and serve
the segments.
Effective Segmentation
©2000 Prentice Hall
Targeting
• Key Questions(Review)– Selectivity: Which segments will we address?– Concession: Which segments will we leave to
others?– Concentration: What is the relative degree of effort
we will place on each segment we choose to pursue?
• Select segments to pursue according to your possession of Differential/Customer Advantage
Ready-to-Eat Cereal
Apple Jacks
Trix
Cocoa Crispies
Special K
TotalProduct 19
Shredded Wheat
Frosted FlakesLucky Charms
Raisin Bran
Life
Corn Chex
Cheerios
Sun Country Granola
Fruit Loops
Hearty Granola
Wheaties
High Sugar Content
No Sugar
$$$$
USA: BEER CATEGORY MAP
Miller Lite
Coors Lite
Amstel Light
Light
Bass
Pete’s Wicked Ale Rolling Rock
Guinness
Foster’s
Becks
Corona Samuel Adams
Molson Ice
Budweiser Michelob
Red Dog
Busch
Specialty
Traditional
Source: Simmons SMM 1998
Positioning Maps/Perceptual Space
USA: BEER CATEGORY MAP
Miller Lite
Coors Lite
Amstel Light
Light I am driving.
Most of the time I am trying to lose weight.
It’s important to attend religious services.
I enjoy watching religious TV programs.
I am a Conservative Evangelical Christian. I enjoy eating foreign foods.
I exercise regularly.
I really enjoy shopping for clothes.
I am willing to volunteer for Environmental Organizations.
Bass
Pete’s Wicked Ale Rolling Rock
Guinness
Foster’s
Becks
Corona Samuel Adams
I’m not too concerned about my appearance.
I like to do things unconventional.
I like to be outrageous.
I feel very alone in the world.
I’m no good at saving money.
Women are more suited
to running homes.
There is little I can do to change my life.
Money is the best measure of success.
Molson Ice
Budweiser Michelob
Red Dog
Busch
Specialty
Traditional
Source: Simmons SMM 1998
Positioning and Perceptual Maps
• What brands are perceived as similar to others?
– Deals with issue of substitutability.
– if customer’s brand is not available, what brand is
most likely to be purchased?
– Unique Position
» Or
– Easy switching
Positioning and Perceptual Maps
• What holes exist for repositioning an old, or new product introduction? (Point on map where no competitive brands exist)– Opportunity or not?
• Ideal points = Preference maps
– If customer could have any product they wished.
……is the act of designing the is the act of designing the company’s offering and image to company’s offering and image to
occupy a distinctive place in the the occupy a distinctive place in the the
target market’s mind.target market’s mind.
©2000 Prentice Hall
PositioningPositioning
Positioning
• Positioning: Positioning: The act of framing the organization’s image and its offer in the target customer’s minds, so it occupies a distinct and valued place relative to competition.
• The process we use to set ourselves apart from competitors in the minds of the customer.
Four D’s of Effective Positioning
Successful positioning requires:
• Defining what the brand is.• Differentiating the brand from other similar
offers.• Deepening the brand’s connection to
consumer’s goals.• Defending the position as competitors react.
Example: Competitor Targets 7UP
• Direct Competitors in the same product formDirect Competitors in the same product form
• The Generalized Set of Competitors in the The Generalized Set of Competitors in the same product formsame product form
• Competitors in a different product form that Competitors in a different product form that satisfies the same basic need.satisfies the same basic need.
Think of your positioning statement as leading to a piece of advertising
(define, differentiate, deepen, defend)
• Does it help overcome the pitfalls of positioning:Does it help overcome the pitfalls of positioning:-- Underpositioning Underpositioning Customers cannot sense the difference.- Overpositioning Overpositioning Our offer projects too narrow an image.- Confusing PositioningConfusing Positioning
We make too many claims, or keep changing the claims over time.
-- Doubtful PositioningDoubtful PositioningConsumers find our claims hard to believe.
• Will it find a way into our customer’s mind and will it stay there?
• Is it about your customer or is it about the product? (selling or marketing?)
Developing Positioning Statements
• Customer Target:Customer Target: Person(s) in whose mind(s) we want to create the perception or image and whose behavior we hope to affect
• Frame of Reference:Frame of Reference: Competitive offer(s) from whom we wish to differentiate ourselves in order to provide a reference point for the customer
• Compelling Point of Difference:Compelling Point of Difference: How our offer fits into the customer’s frame of reference better than competing alternatives—and reasons to believe that difference.
Developing Positioning Statements
Selecting Frames of ReferenceSelecting Frames of Reference
• Competitive– Direct competitors in the same product form– Generalized set of competitors in the same product
form– Competitors in a different product form that satisfy
the same basic benefit requirements
• Benefit-based– Reference is customers’ goals and values
Developing Positioning Statements
Point of DifferencePoint of Difference
• Core Strategy: The benefits we intend to emphasize in our communications to our core customer targets (how we get customers to buy from us rather than competitors)
– Exploit Differential Advantage– Communicate key benefit in a clear, concise
statement
Developing Positioning StatementsCustomer Target:Customer Target: Person(s) in whose mind(s) we want to create
the perception or image and whose behavior we hope to affect
Frame of Reference:Frame of Reference: Competitive offer(s) or counterfactuals from whom we wish to differentiate ourselves in order to provide a reference point for the customer
Compelling Point of Difference:Compelling Point of Difference: How our offer fits into the customer’s frame of reference better than competing alternatives—and reasons to believe that difference.
To _____ (customer target description)To _____ (customer target description)……my organization is the _____ (frame of reference)my organization is the _____ (frame of reference)
……that ____ (point of difference) that ____ (point of difference) because ____ (reason to believe dif.)because ____ (reason to believe dif.)better than ____. (competitive target)better than ____. (competitive target)
Positioning: Asics Gel MC Plus
Positioning Statement:Positioning Statement: To Michele, the recreational marathoner who risks injury when she trains on uneven surfaces, Asics MotionControl Plus puts you back in control because it prevents overpronation better than any other training shoe.
• Tag-line:Tag-line: You can’t control the road, but you can control the way your foot reacts to it with Asics Gel MC Plus.
Positioning: Asics Gel Kayano
• Positioning Statement:Positioning Statement: To Marc, the recreational runner who places a premium on enjoying the running experience, the Asics Gel Kayano provides better cushioning than any other shoe on every stride he takes through the Impact Guidance System.
• Tag-line:Tag-line: Heel-to-toe comfort for a smooth ride.
Positioning: Reebok Boston Road
• Positioning Statement:Positioning Statement: To Marc, the recreational runner who places a premium on enjoying the running experience, the Brooks Boston Road provides better cushioning than any other shoe on every stride he takes through DMX technology.
• Tag-line:Tag-line: Enjoy the sunrise in complete comfort.
Positioning: New Balance
• Positioning Statement:Positioning Statement: For Suzanne, the working professional, New Balance shoes let you leave behind the daily office grind and discover the natural, simple beauty in life.
• Tag-line:Tag-line: Your computer has a key labeled “escape.” Does your life have one too?
Positioning: Common Errors
• UnderpositioningUnderpositioningCustomers cannot sense the difference.
• OverpositioningOverpositioningOur offer projects too narrow an image.
• Confusing PositioningConfusing PositioningWe make too many claims, or keep changing the
claims over time.
• Doubtful PositioningDoubtful PositioningConsumers find our claims hard to believe.