Strategic Marketing Management

7 P’s of Marketing Product – Tangible & Intangible (an insurance policy can be a product), which must provide value to the Customer. Customers must get what they want, not what the company thinks they want. (Don’t try to sell a Rolls Royce, when the customer really wants a Nissan Micra). Price – Positions the product in the market place, the more 1 charges, the Customer will expect more value or quality for their money. Place – Where the Customers buy a product & the means of distributing the product to that place, must be appropriate & convenient to the Customer. Also, means ways of displaying your product to Customer groups. Could be in a shop window & also could be through the internet.

7 P’s of marketing (continued…) Promotion – The way a company communicates what it does & what it can offer Customers. Should communicate the benefits that a Customer can obtain from a product & not just the features of the product. Also, a means to ensure that both internal & external stakeholders are aware of the value & attributes of the products. Both employees & staff are knowledgeable & share the expertise with the Customer. People – The reputation of the brand rests on the people, so the employees must be trained, motivated & have the right attitude. Level of sales support & advise to the Customer, for example exchange of existing product with the latest, offers etc.

7 P’s of marketing Process – How the products reach from the manufacturer through various source to the end user. Customers are not interested in the details of how the business runs, rather how the system works. The most overlooked component of the 7p’s. Physical evidence – Make the Customers understand what they are buying. Case studies, samples & testimonials, endorsements, benefits, clean, tidy & well decorated reception area etc. can form a physical evidence. All these combined together can form a marketing mix.

Market segmentation An integral part of a company’s marketing strategy. The process of breaking down a larger target market into a smaller, more homogeneous groups of Customers that you can more efficiently market to. Examples of segmentation 1. Demographics 2. Geographic 3. Psychographics 4. Behavioral

Market segmentation (continued…) Demographics – The most common approach. A company dividing the larger market into groups based on traits like, age, race, gender, marital status, income group, occupation, education. Geographic – used by companies that sell products or services to a certain community, state, region, country or group of companies. For e.g., 1 tv, radio, magazine, or newspaper ad. Psychographics – life style segmentation where consumers are identified based on interests & activities like outdoor adventurer, camper. General personality, repetition of need, benefits sought.

Market Segmentation (continued…) Behavioral – based on user behaviors, patterns of use, price sensitivity, brand loyalty. For e.g, a same product used by some weekly or monthly. High quality models used by HIG & low cost models used by LIG and MIG. High end product to 1 group segmented & more value oriented offerings to LIG & MIG. The needs Customers seek to fulfill, level of knowledge, information sources, attitude, use or response to a product of Customers. Business Segmentation – Based on repeat or loyal customers v/s 1 time users. For e.g., banks have different products for small v/s large businesses.

Positioning Outlines what a business should do to market its product or service to it’s Customers. In positioning, marketing department, creates an image for the product based on its intended audience. Done through, promotion, place, price & product. The more intense a positioning strategy, more effective the marketing strategy. Positioning in ads, sales locations, price.

Mass Marketing (v/s) Target Marketing Mass Marketing - The maximum exposure of product advertising to consumers. Opposite of Niche marketing where the idea is to advertise & market products to a specific target group of people. Products that people may want or need, such as soda, tooth paste, soft drinks, bread, house hold cleaning liquids, detergent powders. A fast food chain might offer the same burger or sandwich at all of its franchises to create a demand for its new products. Medium – TV, Radio, Internet Target Marketing – A target market is a segment of consumers identified through research to be the most likely to buy a particular product. For e.g., a specific program, scheme, promotion for retired pensioners, medical insurance, child care, health drinks etc.

Analyzing Competitors Identify your primary competitors & then identify their Strategies Objectives Strengths Weaknesses

Competitive Strategies for Market Leaders Leader – Apple, Visa Credit Card Challenger Follower Nicher Example :- 10% 20% 30% 40% Market Market Market Market nichers follower challenger leader

Other Competitive Strategies 1. Market-challenger strategies – market leader often runs the business ‘as usual’ whereas Challengers have high aspirations Define the strategic objective & opponents. Decide who to attack: Market leader Market equals that are underperforming Small local & regional firms

Other Competitive Strategies (continued…) Market-challenger strategies – Attack Strategies Frontal attack – matches the opponents product, advertising, price, distribution. Flank attack – targeting the weak spots Encirclement attack – launching a grand offensive on several fronts Bypass attack – bypassing by diversification into unrelated products, into new locations or using new technologies to supplant existing products. Guerilla warfare – waging small intermittent wars to demoralize

Specific Attack Strategies Price discounts Lower-priced goods Value-priced goods Prestige goods Product proliferation Product innovation Improved services Distribution innovation Manufacturing-cost reduction Intensive advertising promotion

Market-Leader Strategies (next slide) 1. Expanding the total market New Customers More Usage Market-penetration strategy New-market segment strategy Geographical-expansion strategy

Market-Leader Strategies (next slide) 2. Defending market share Responsive marketer, anticipative marketer, creative marketer Position defense – build a strong brand power & almost impregnable Flank Defense – build an outpost to protect a weak front Preemptive defense – attack before the enemy attacks Counteroffensive defense – to meet the attacker with another attack Mobile defense – market broadening or market diversification Contraction defense – strategic withdrawal 3. Expanding market share (next slide)

Other Competitive Strategies 2. Market-follower strategies – the follower must define a growth path, but 1 that doesn’t invite competitive retaliation. Counterfeit – black marketing Cloner – copies the leaders products, name, packaging with slight variation Imitator –copies but maintains differentiation in terms of packaging, pricing etc Adaptor – adapts to improve the leaders product 3. Market-nicher strategies – an alternative to be a follower in a large market is to be a leader in a small market or niche. Firms with low market shares can grow to become highly profitable through this strategy A nicher achieves high margin whereas mass market achieves high volume Niches can weaken & hence new ones should be created continuously

Specialized Niche Roles End-user specialist Vertical-level specialist Customer-size Specific-customer Geographical Product or product-line Product-feature Job-shop Quality-price Service Distribution Channel specialist

Balancing Customer & Competitor Orientations Competitor-centered company Looks at what competitors are doing & then formulates competitive reactions. Customer-centered company Focuses more on Customer developments in formulating its strategies. Generally Customers believe in Brands

What is a Brand Promise? A brand promise is the marketer’s vision of what the brand must be & must do for Consumers.

Devising a Branding Strategy Develop new brand elements Apply existing brand elements Use a combination of old & new

Brand Elements Memorable Meaningful Likeable Transferable Adaptable Protectible

Slogans Like a good neighbor, State Farm is there Just do it God’s own country The complete man The Zing Thing

Marketing Strategy Segmentation Targeting Positioning

Value Propositions Perdue Chicken More tender golden chicken at a moderate premium price Domino’s A good hot pizza, delivered to your door within 30 minutes of ordering, at a moderate price Basing it on brand, product, target Customers, benefits

Differentiation Strategies Competitive advantage—a company’s ability to perform in 1 or more ways that competitors can’t or won’t match. Few are sustainable, but a leverageable advantage can be used as a springboard to new advantages. Focus on building competitive advantages as Customer advantages.

Differentiation Strategies (continued…) Competitive advantage – Firms can use the following to differentiate :- Personnel Differentiation Channel Differentiation Image Differentiation

Personnel Differentiation: Singapore Airlines

Channel Differentiation

Image Differentiation “Macho cowboy”

Service Differentiation Ordering ease Delivery Installation Customer training Customer consulting Maintenance & repair Returns

Product Differentiation Product form Features Performance Conformance Durability Reliability Reparability Style Design Ordering ease Delivery Installation Customer training Customer consulting Maintenance

Sales & Product Life Cycle

Claims of Product Life Cycles Products have a limited life Product sales pass through distinct stages each with different challenges & opportunities Profits rise & fall at different stages Products require different marketing, financial, manufacturing, purchasing & human resource strategies in each life cycle stage

Summary of Product Life-Cycle Characteristics, Objectives & Strategies Introduction Growth Maturity Characteristics Sales Low sales Rapidly rising sales Peak sales Costs High cost per Customer Average cost per Customer Low cost per Customer Profits Negative Rising profits High profits Customers Few Growing Number Stable number beginning to decline

PDLC Marketing Strategies

Product Life-Cycle Marketing Strategies Marketing Strategies: Growth Stage Improve product quality & add new product features & improved styling Add new models & flanker products Enter new market segments Increase distribution coverage & enter new distribution channels Shift from product-awareness advertising to product-preference advertising Lower prices to attract next layer of price-sensitive buyers

Product Life-Cycle Marketing Strategies Marketing Strategies: Maturity Stage Market Modification Expand number of brand users by: Converting nonusers Entering new market segments Winning competitors’ customers Convince current users to increase usage by: Using the product on more occasions Using more of the product on each occasion Using the product in new ways

Product Life-Cycle Marketing Strategies Marketing Strategies: Decline Stage Increase firm’s investment (to dominate the market & strengthen its competitive position) Maintain the firm’s investment level until the uncertainties about the industry are resolved. Decrease the firm’s investment level selectively by dropping unprofitable customer groups, while simultaneously strengthening the firm’s investment in lucrative niches Harvesting (“milking”) the firm’s investment to recover cash quickly Divesting the business quickly by disposing of its assets as advantageously as possible.