Marketing Strategy MKTG350
Marketing Strategy • Generic business strategy frameworks • Segmentation • Targeting • Positioning • Generic marketing strategies
Generic Business Strategy Frameworks • Growth strategies • Portfolio strategies—BCG Growth-Share Matrix
Growth Strategies Product/ Market Expansion Grid Existing Products New Products Existing Markets 1. Market Penetration 3. Product Development 4. Diversification 2. Market Development New Markets
Product/ Market Expansion Grid • Market Penetration • Market Development
Product/ Market Expansion Grid • Product Development • Diversification
Boston Consulting Group Growth-Share Matrix Framework Relative Market Share High Low ? • Stars • High growth & share • Profit potential • May need heavy • investment to grow • Question Marks • High growth, low share • Build into Stars or phase out • Require cash to hold • market share Market Growth Rate Low High • Dogs • Low growth & share • Low profit potential • Cash Cows • Low growth, high share • Established, successful • SBU’s • Produce cash
BCG Framework Implications • Dynamic nature of SBUs—importance of a portfolio. • Attractiveness of growing markets. • Value of increasing market share. • Cash Cows support Question Marks. • Maintain Stars. • Build Question Marks. • Divest/harvest Dogs.
Market Segmentation Market Segmentation
Steps in Market Segmentation, Targeting, and Positioning Market Segmentation 1. Identify bases for segmenting the market 2. Develop segment profiles Market Targeting 3. Develop measure of segment attractiveness 4. Select target segments Market positioning 5. Develop positioning for target segments 6. Develop a marketing mix for each segment
Target Segment Size mass niche micro customized
Step 1. Market SegmentationDemographic Segmentation • Dividing the market into groups based on variables such as: • Age • Gender • Family size or life cycle • Income • Occupation • Education • Religion • Race • Generation • Nationality Most Popular Bases & Easiest to Measure
Step 1. Market SegmentationPsychographic Segmentation Divides Buyers Into Different Groups Based on: Social Class Lifestyle Personality
Step 1. Market SegmentationBehavioral Segmentation • Dividing the market into groups based on variables such as: • Occasions • Benefits • User status • Usage rate • Loyalty status • Readiness stage • Attitude toward product
Benefit segmentation of the beverage market Which product would you choose for which benefit?
values • User differences: • Demographics • Life cycle • Lifestyle needs benefits • Situation differences: • Physical • Social • Psychological beliefs/evaluations Brand attitudes Choice rules Price sensitivity Choice Brand loyalty Use level Use situation Model of Segmentation
Measurable Accessible Substantial • Size, purchasing power, profiles • of segments can be measured. Differential • Segments can be effectively • reached and served. Actionable • Segments are large or profitable enough to serve. • Segments must respond differently to different marketing mix elements & programs. • Effective programs can be designed to attract and serve the segments. Step 1. Market SegmentationRequirements for Effective Segmentation
guides marketing research improves satisfaction improves forecasting identifies competition and opportunities increases marketing costs proliferation of products consumer backlash limits general popularity Advantages and disadvantages of segmentation Segmentation is a trade-off of efficiency for effectiveness.
Step 2. Market Targeting • Segment Size and Growth • Segment Structural Attractiveness • Company Objectives and Resources
Step 2. Market TargetingMarket Coverage Strategies Market Company Marketing Mix Company Marketing Mix 1 Segment 1 Company Marketing Mix 2 Segment 2 A. Undifferentiated Marketing Segment 3 Company Marketing Mix 3 Segment 1 Company Marketing Mix Segment 2 B. Differentiated Marketing Segment 3 C. Concentrated Marketing
Step 2. Market TargetingChoosing a Market-Coverage Strategy Company Resources Product Variability Product’s Stage in the Life Cycle Market Variability Competitor’s Marketing Strategies
Socially Responsible Target Marketing • Smart targeting helps companies and consumers alike. • Target marketing sometimes generates controversy and concern.
Step 3. Positioning Strategy • Product’s Position - the way the product is defined by consumers on important attributes - the place the product occupies in consumers’ minds relative to competing products. • Marketers must:
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
Identifying Possible Competitive Advantages • Key to winning and keeping customers is to understand their needs and buying processes better than competitors do and deliver more value. • Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits, that justify competitive advantage,
Generic Marketing Strategy • Michael Porter’s basic strategic options: • Cost leadership • Differentiation • Focus Focus implies segmentation and positioning.
Basic Competitive Strategies Overall Cost Leadership Focus Differentiation Middle of the Road
Identifying Possible Competitive Advantages Product Differentiation i.e. Features, Performance, Style & Design, or Attributes Services Differentiation i.e. Delivery, Installation, Repair Services, Customer Training Services Image Differentiation i.e. Symbols, Atmospheres, Events Personnel Differentiation i.e. Hiring, Training Better People Than Competitors Do
Operational Excellence Customer Intimacy Product Leadership Competitive Strategies: Value Disciplines Companies Gain Leadership Positions by Delivering Superior Value to their Customers Through These Strategies:
Analyzing Competitors Identifying the company’s competitors Assessing competitor’s objectives, strategies, strengths and weaknesses, and reaction patterns Selecting which competitors to attack or avoid
Market Leader Market Challenger Market Follower Market Nicher Strategies Relative to Competitors Firms Competing in a Given Target Market Differ in their Objectives and Resources so May Choose the Following Forms:
Firm With the Largest Market Share Runner-Up Firms that Fight to Increase Market Share Market Leader Market Challenger Expand the Total Market Protecting Market Share Attack the Market Leader Avoid the Market Leader Expanding Market Share Attack Other Firms Acquire Smaller Firms Competitive Marketing Strategies
Firms that Serve Small Segments Not Pursued by Other Firms Market Nicher Runner-Up Firms that Want to Hold Their Share Without Rocking the Boat Market Follower End-User Specialist Customer-Size Specialist Follow Closely Follow at a Distance Geographic Market Specialist Quality- Price Specialist Service Specialist Competitive Marketing Strategies