Developing a Marketing Strategy

Marketing: Micro and Macro levels F 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: u Communication to inform buyers and sellers about each other. u Negotiation and consummation of transactions u Transportation of goods from the point of production to the point of purchase. u Storage of goods from the time of production to the time of purchase

Marketing: Micro and Macro levels F Micro Level (The individual organization) –Marketing is all the decisions and activities involved in getting and keeping customers. Marketing Strategy vs. Marketing Operation Marketing Strategy – Organization sets its general direction and objectives Marketing Strategy: u Which product or services should be offered? u Which potential customers are targeted for selling efforts? u How will the organization position itself against competitors? Marketing Operations – Organization attempts to implement its strategy and meet its objectives Marketing Operations u How are the organization’s product or services designed? u How are these products or services priced? u How are these products or services distributed? u How are these products or services advertised and sold?

Step One: Do your homework F In order to develop a successful marketing strategy for a product, two questions need to be answered: 1.What is our marketing environment? 2.What is our competitive advantage? SWOT Analysis

Competitive Advantage (S-W) F The competitive advantage is an internal question. What do you have that gives you advantage over your competitors? F Some things to consider: –Is your company small and flexibility? –Do you offer low cost and high quality? –Does your product offer unique benefits? –Are you the first on the market with this product (First mover advantage)?

Marketing Environment (O-T) F The is the external environment. F Some things to consider: –How is the market currently satisfying the need your product satisfies? –What are the switching costs for potential users for your market? –What are the positions of the competition?

What are the components of a marketing strategy? F Segmenting F Targeting F Positioning

Segmentation Approaches

Needs Based Segmentation –Consumers and businesses purchase goods and services because they satisfy their needs u The same product may satisfy many different needs; a person may purchase chewing gum in order to freshen her breath, to promote dental health, to help them quit smoking, or because she enjoys the taste –Needs based segmentation seeks to understand why a purchase is made (i.e., what needs are being satisfied) and to divide the market up into groups of buyers whose needs are homogenous –Needs based segmentations are particularly compelling for technology companies because they can prevent companies from developing new technology features because they are “cool” or just because they are possible

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

Positioning F Positioning Simply, positioning is how your target market defines you in relation to your competitors. F A good position: 1. Makes you unique 2. Is considered a benefit by your target market

Product Positioning F In order to begin positioning a product, two questions need to be answered: F 1.What is our marketing environment? 2.What is our competitive advantage? F The competitive advantage is an internal question. What do you have that gives you advantage over your competitors. Some things to consider: F Is your company small and flexibility? F Do you offer low cost and high quality? F Does your product offer unique benefits? F Are you the first on the market with this product (First mover advantage)?

Positioning Strategies F Positioning Strategies There are seven positioning strategies that can be pursued: F Product Attributes: What are the specific product attributes? F Benefits: What are the benefits to the customers? F Usage Occasions: When / how can the product be used? F Users: Identify a class of users. F Against a Competitor: Positioned directly against a competitor. F Away from a Competitor: Positioned away from competitor. F Product Classes: Compared to different classes of products.

Positioning Differences The differences that are promoted for a product must be: F Important: The difference delivers a highly valued benefit to the target buyers F Distinctive: Competitors do not offer the difference, or the company can offer it in a more distinctive way F Superior: The difference is superior to other ways that the customer might obtain the same benefit F Communicable: The difference can be explained and communicated to the target buyers F Preemptive: Competitors cannot easily copy the difference F Affordable: Buyers can afford to pay the difference F Profitable: Company can introduce the difference profitably

STP F Mass Marketing or Undifferentiated Marketing: Go after the whole market with one offer and focus on common needs rather than differences F Product-variety Marketing or Differentiated Marketing: target several market segments and design separate offers for each F Target Marketing or Concentrated Marketing: Large share of one or a few sub-markets. Good when company’s resources are limited F To identify a niche market, a series of 2 by 2 matrixes can be used to identify an area that is being overlooked by larger competitors. The competitors are mapped on this matrix and you can see where there may be some opportunities. = Marketing Strategy

How is a product “positioned?” F Product F Price F Promotions F Place Implementation of Marketing Strategy

4 Ps - Product F Product decisions are all decision which relate to the physical product and/or service offering, including its name, packaging, warranty, and availability. Product dimensions include: –Size of the product –Color(s) of product –Scent of the product –Materials/ composition of the product –Design of the product –Packaging materials –Package colors and package design –Brand name –Warranty –Availability of options –Customizing services –After-sale service offerings –Inventory levels

4 Ps - Price F Price decision are all decisions which relate to the price of the product, price negotiation, and payment terms. Pricing dimensions include: –Price to end user –Price to distribution intermediaries –Fixed vs. negotiated pricing –Negotiation policies –Credit policies –Credit charges –Payment terms (the amount of time allowed for payment and any discount given for payment on time) –Volume discounts –Introductory allowances –Trade-in policies

4 Ps - Place F Place (distribution) decisions are all decisions which relate to the places at which the product or service is made available to buyers and the methods by which the product or service reaches those places. Place dimensions include: –Selection of geographic markets –Types of outlets from which end-users buy –Level of competition among end-use outlets –Number of end-use outlets –Required qualifications for end-use outlets –Specific identities for end-use outlets –Types of intermediaries which service end-use outlets –Level of competition among intermediaries –Number of intermediaries which service end-use outlets –Required qualifications for intermediaries which service end-use outlets –Specific identities for for intermediaries which service end-use outlets –Push v. pull policy

4 Ps - Promotion F Promotion decisions are all decisions which relate to communication with buyers about the product or service, solicitation of purchases, and short-term purchase incentives. Promotion dimensions include: –Size of advertising budget, if any –Selection of all ad media (television, radio, magazines, etc.) –Selection of ad vehicles (Time, Sports Illustrated, etc.) –Ad Scheduling –Ad appeals –Ad executions –Ad allowance (co-op advertising) programs –Size of sales force –Levels of sales force compensation –Method of sales force compensation –Sales quotas at which commissions or bonuses activate or change –Sales territory definitions –Sales force selection and training –Size of budget for consumer promotions –Types of consumer promotions to be used. –Size of budget for “trade promotions” –Types of trade promotions used.

Developing a Marketing Strategy F SWOT Analysis F Segmentation and Targeting F Positioning F Marketing Objectives F Implementation - Marketing Mix F Budget

Principles of Marketing Management F Before making any marketing decisions, analyze the buyers – segment the market. F Consider how the market is changing. F Evaluate your strengths and weaknesses, both in absolute terms and relative to your competitors. F Given buyer characteristics, market segments, market trends, and your strengths and weaknesses, choose a marketing strategy that will allow your organization to reach its objectives. F Make product, price, place, and promotion decisions that are consistent with buyer analysis and marketing. F In developing your marketing strategy and programs, share ideas within the organization, study other successful organizations to see how they do it, and pick the best ideas. F Make sure your program is legal and ethical F As part of the implementation process, make sure that everyone in your organization knows your marketing strategy and the role s/he plays in making that strategy work.