© 2012 Pearson Education, Inc. publishing Prentice Hall. Chapter 4 Strategy Formation

© 2012 Pearson Education, Inc. publishing Prentice Hall. Figure Strategy Formation 2

© 2012 Pearson Education, Inc. publishing Prentice Hall. Identifying Competitive Advantages  A company has a competitive advantage if it possesses resources or capabilities that are:  Valuable in the market  Rare  Not imitable or substitutable  Transferable to other markets or products 3

© 2012 Pearson Education, Inc. publishing Prentice Hall. Segmenting the Market  The primary reason to differentiate customers into segments is to capture the strategic advantage of meeting differing needs with tailored mixes  The objective and the key to successful segmentation is to find differing needs that match the firm’s competitive advantages and thus can be served at a profit better than by the competition 4

© 2012 Pearson Education, Inc. publishing Prentice Hall. Segmenting the Market  There are two types of variables to be distinguished in the segmentation process for (B2C) and (B2B) markets:  Segmentation bases  Segment descriptors 5

© 2012 Pearson Education, Inc. publishing Prentice Hall. Table Needs, Wants, Benefits, and Demand 6

© 2012 Pearson Education, Inc. publishing Prentice Hall. Figure Example of Segmentation Bases and Descriptors 7

© 2012 Pearson Education, Inc. publishing Prentice Hall. Figure Segmentation Scope 8

© 2012 Pearson Education, Inc. publishing Prentice Hall. Figure Differentiated Marketing Approaches 9

© 2012 Pearson Education, Inc. publishing Prentice Hall. Segmentation Dynamics  Segment preferences change—a segment’s ideal product can shift over time, sometimes quite rapidly  Segments can split or merge 10

© 2012 Pearson Education, Inc. publishing Prentice Hall. Targeting  Matching the firm’s competitive advantages with attractive market opportunities  Targeting is the crucial junction in formulating strategy and translating strategy into tactics, matching external opportunities with internal strengths  Targeting is where the strategy is specified and becomes concrete 11

© 2012 Pearson Education, Inc. publishing Prentice Hall. Targeting  Frameworks that help identify attractive markets to target with valuable offerings, the  Two most powerful of which are:  SWOT analysis  The application of strength/ attractiveness matrices to segments 12

© 2012 Pearson Education, Inc. publishing Prentice Hall. Figure SWOT Analysis 13

© 2012 Pearson Education, Inc. publishing Prentice Hall. Figure Strengths/Attractiveness and Segmentation 14

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