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Developing Marketing Strategies .

Developing Marketing Strategies . Nov 13 th , 2009. This section covers:. 2 of 35. Segmentation, Targeting and Market Positioning Developing new products Brand Management Managing products over the lifecycle . Chaps 7 & 8 of book. 3 of 35. Learning Objectives.

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Developing Marketing Strategies .

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  1. Developing Marketing Strategies. Nov 13th, 2009

  2. This section covers: 2 of 35 • Segmentation, Targeting and Market Positioning • Developing new products • Brand Management • Managing products over the lifecycle Chaps 7 & 8 of book

  3. 3 of 35 Learning Objectives • Know how both B2B and consumer markets can be broken down into smaller, more manageable groups of similar customers. • Understand the effects on the marketing mix of pursuing specific segments. – 4 Ps • Understand the potential benefits and risks of segmentation. • Review New Product Development and the Product Lifecycle • Understand why branding is important for product success

  4. 4 of 35 Segmentation Defined Segmentation is the art of discerning and defining meaningful differences between groups of customers to form the foundations of a more focused marketing effort. Mass Market Niche MicroMarkets The individual Segmentation Continuum

  5. Market Segmentation 5 of 35 Market segmentation is the top down process of grouping customers in markets with some similarities into smaller, more homogenous segments. But what are the benefits of segmentation? • better customer analysis and service; • better competitor analysis; • more effective resource allocation; • better strategic marketing planning. What market segment is Red Bull aimed at? See Pg 197 book – they knew their customers before designing marketing mix – what if you get it wrong?

  6. 6 of 35 Stages of Segmentation for B2B Markets • Identify subgroups within the whole market that share common general characteristics (macro segments). • Select target segments from macro segments based on differences in specific buying characteristics (micro segments).

  7. Macro Size Location Usage rate Micro Product Applications Technology Purchasing and decision-making processes Buyer-seller relationships 7of 35 B2B Segmentation Bases

  8. 8 of 35 Consumer Segmentation Bases 1. Geographic 6. Multi-variable 3. Geo-demographic 5. Behaviour 4. Psychographic 2. Demographic

  9. 9 of 35 Consumer Segmentation • Similar to B2B segmentation, except: • Consumer segments tend to be larger; • More difficult to get close to buyer; • More emphasis on lifestyle and context. 1. Geographic Segmentation Example: Instant Hot Chocolate • Ideal for UK market (homes equipped with kettles, nice bedtime drink, or substitute for tea. • Less good for French market (kettles uncommon, norm of making hot chocolate is with milk rather than with water). • Wine Sales – North or South of England?

  10. 10of 35 2. Demographic Segmentation On the basis of: • Age • Gender • Race • Income • Occupation • Social status • Family structure Also:3. Geo-demographic Segmentation exists. It combines geographic and demographic analysis. Example – targetting teenagers in a specific location

  11. 11of 35 4. Psychographic Segmentation • This is Lifestyle segmentation • Categories are: • Activities • Interests • Opinions • Demographics Example: Quorn targets vegetarians with meat substitutes The Green Movement

  12. 12 of 35 Lifestyle Orientations in the US

  13. 13of 35 Why Use Psychographic Segmentation? • To define a target market; • To create a new view of the market; • To position the product; • To better communicate product attributes; • To develop overall strategy; • To market social and political issues.

  14. On the basis of: End use Benefits sought Usage rate Loyalty Attitude Buyer readiness Example. Usage Segmentation in the Soup Market: Dinner party starter Warming snack Meal replacement Recipe ingredient Easy office lunch 14 of 35 5. Behaviour Segmentation

  15. 15 of 35 6. Multivariable Segmentation • It is unlikely that any one segmentation variable will be used absolutely on its own. • It is more common to use a multivariable segmentation approach. • This includes defining a portfolio of relevant segmentation variables depending on the market in question. • What would you suggest for garden centres and /or golf courses?

  16. Defines the market for further analysis Allows creation of a customised marketing mix Aids in assessing potential demand Aids in identifying competitors Aids in positioning Aids in identifying opportunities Increased costs Increased number of products False segmentation Collecting & storing personal data may violate privacy May decrease brand loyalty Some practices considered unethical Danger of Stereotyping 16 of 35 Advantages & Disadvantages of Segmentation

  17. 17 of 35 E X A M P L e Principles of Marketing and Best Practice (2005) Czionkta et al

  18. 18 of 35 Post-Segmentation Targeting After segmenting your market, you will have to decide which and how many segments should be targeted. Concen-trated Targeting Undifferen-tiated Targeting Differen-tiated Targeting Three main Targeting Strategies

  19. 19 of 35 1. Undifferentiated Strategy Marketing mix The market To have the same marketing mix for the whole mass market, e.g. washing powder.

  20. 20 of 35 2. Differentiated Strategy Marketing mix 1 Segment 1 Marketing mix 2 Segment 2 Marketing mix 3 Segment 3 To have a different marketing mix for each of the key customer segments that have been identified, e.g. Cadbury (immediate eat, home stock, kids, gifts, Easter, Christmas).

  21. 21 of 35 3. Concentrated Strategy Marketing mix 2 Segment 2 One marketing mix is developed & directed toward only one very profitable market segment. Suitable small company with limited resources: smarthomes.ie

  22. 22 of 35 Important Criteria for Successful Segmentation Is the segment distinguishable Is the segment distinguishable Distinctiveness Tangibility Does the segment exist over time and can money be made Accessibility Can you reach it within budget? Defendability Will competition react? Only if those factors can be satisfied, it is worthwhile to pursue a different segment.

  23. 23 of 35 External Factors Affecting Success of Segmentation • Age of the product • General Company Profitability • Market share vis-à-vis competitors • The competition itself • The product itself • The general market This reminds us of the importance to monitor continuously the Macro- and Micro- Business Environment.

  24. 24 of 35 Example: Positioning - Computers Which consumer segment buys which type of computer?

  25. Positioning Strategies 25 of 35 On the basis of: • Specific features • Specific usage occasions • Specific user groups • Head to head with key competition • Service superiority • Note: that you might have to engage in repositioning your product regularly.

  26. 26 of 35 New Product Development • Remember what a Product is!- A car isn’t just a mode of transport…it’s a lifestyle choice - A restaurant isn’t just a place to visit if you’re hungry…why can some restaurants get away with charging so much?

  27. 28 of 35 Product Classifications • Convenience Goods – unplanned • Shopping Goods • Speciality Goods • Unsought Goods • Business Products

  28. 29 of 35 New Product Development • Follows a Framework Product Line Strategy Product Strategy Feasibility Knowledge Generate Ideas Identify Consumer needs • Concept Study • Generation • Screening • Business Case • Development • Specifications • Prototype • Product Test • ManufacturingDevelopment • Pilot Production PostdevelopmentReview Maintenance Commercialization Source: Czinkota et al. Marketing Best Practices, pg.253

  29. 30 of 35 Phases in NDP • Idea Generation • Screening • Concept Development & Testing • Marketing Strategy Development • Business Analysis • Product Development • Test Marketing • Commercialisation

  30. 31 of 35 Brand Management • Attributes that make up a brand can be real or illusory, rational or emotional, tangible or intangible • A brand is a word or group of letters which can be vocalised (3M, U2) • The symbol or design is the brand mark Can you think of any examples of brands that have been abused by copycat companies?

  31. 32 of 35 Branding Decisions Good brandname, trademark or logo has 4 important characteristics. 1. Attract Attention 2. Be memorable 3. Help communicate the positioning of the product 4. Distinguish the product from competing brandsGood brand should also develop brand equity (a monetary value that can be put on the brand)

  32. 33 of 35 Brand Strategies Individual vs. Family Branding Individual – Lever Brothers: Family - Coke Note: Increasing success of retailers’ own brand. Now over 5% of Irish grocery market and growing.

  33. 34 of 35 Managing Products over the lifecycle • Already touched on this in previous lectures – Page 264 of book • Introduction, Growth, Maturity & Decline

  34. 35 of 35 How do customers react at different lifecycle stages? • Innovators: - 2.5% tend to be younger & higher in social status and better educated – iPhone?? • Early Adopters: 13.5% of potential adopters, enjoy the prestige & respect of owning new product • Early Majority: 34% seek the opinions of the aforementioned and spend time deciding whether to try or not • Late Majority: 34% is less cosmopolitan and responive to change than any of the previous • Laggards: 16% - laggards tend to be older, conservative, low socioeconomic status and suspicious of change.

  35. Next Week • Marketing Management

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