Marketing in a Domestic Environment – Part I Class 3

1-2 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

1-3 Revisiting Utopinasia David and Hugo are trading shirts and pants A mutually beneficial exchange rate has been set Both engaged in market-making activities to facilitate the trade Benefits of trade exceed cost of market-making activities

1-4 Revisiting Utopinasia Now let’s add other producers of shirts and pants How will this change Hugo and David’s approach to trade?

1-5 What are the components of a marketing strategy?

1-6 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. = Marketing Strategy

1-7 Requirements of an Effective SegmentationMeaningfulMeaningful ActionableActionable SubstantialSubstantial MeasurableMeasurable 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

1-8 Segmentation Approaches

1-9 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

1-10 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.

1-11 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

1-12 The Marketing Task Marketing Strategy (Controllable) Implementatio n Segmentation Targeting Positioning Product Price Promotion Distribution

1-13 Competitive structure Economic climate Political/ legal forces Domestic environment (uncontrollable) The Domestic Marketing Task Marketing Strategy Implementatio n Segmentation Targeting Positioning Product Price Promotion Distribution

1-14 Developing a Marketing Strategy Situation Analysis Segmentation and Targeting Positioning Marketing Objectives Implementation - Marketing Mix Budget