2. Marketing Operations STP

3. Marketing And Sales Operations Segmentation The act of dividing the market into specific groups of consumers/buyers who share common needs and who might require separate products and/or marketing mixes. Market Segmentation Identifying the most productive bases for dividing a market, identifying the customers in different segments and developing segment descriptions.

4. Let us focus on the following questions: 1.How can a company identify the segments that make up a market? 2.What criteria can a company use to choose the most attractive target markets?

5. Target Marketing Target marketing requires marketers to take three major steps: –Identify and profile distinct groups of buyers who differ in their needs and preferences (market segmentation). –Select one or more market segments to enter (market targeting). –For each target segment, establish and communicate the key distinctive benefit(s) of the company’s market offering (market positioning).

6. Targeting The process of evaluating the various segments in the market and selecting the most suitable segment(s) to go after. Positioning Using the elements of the marketing mix to establish in the minds of consumers a particular image of your product or service, in relation to those of your competitors.

7. Marketing And Sales Operations The Process Of Market Segmentation Segmentation Consider the basis on which to segment the market Look at the profile of people and how they break into groups Confirm that these groups are valid segments Targeting Decide on a target strategy Decide which segments should be targeted and why Positioning Understand consumer perceptions Position products in the mind of the consumer Design an appropriate marketing mix to meet customer requirements

8. Marketing And Sales Operations Market Segmentation and Competitive Positioning Segments are often formed based upon common customer characteristics, brand preferences, and upon customer attitudes. Basis for segmenting consumer markets: Geographic; Demographic (social grading system); Geo-demographic (ACORN); Behavioural; Lifestyle (Psychographic); Basis for segmenting business to business markets: Using the Standard Industrial Classification (SIC); by the industry technology; by the size of the organisation; by season purchasing trends; by geographical location; by the type of product needed

9. Marketing And Sales Operations Psychographic/Lifestyle Variables Behavioural Variables Demographic Variables Geographic Variables Age, gender, race, ethnicity, income, education, occupation, family size, family life-cycle, religion, social class Personality attributes, motives, lifestyles Region, urban,suburban, rural, city size, county size, state size, market density, climate, terrain Volume usage, end use, benefit expectations, brand loyalty, occasions price sensitivity Variables For Segmenting Consumer Markets

10. Marketing And Sales Operations Customer SizeProduct Use Type of OrganisationGeographic Location Variables For Segmenting Organisational Markets

11. Socio-Economic Grading System Socio-economic Status Characteristics of Occupation A B C1 C2 D E Upper Middle Class Supervisory/Clerical/Junior managerial/ professional High Managerial/Professional Intermediate Managerial/ administrative professional Semi-skilled and Unskilled labour Skilled manual labour/administrative Casual workers, pensioners, unemployed Grades Middle Class Lower Middle Class Skilled Working Class Working Class Lowest Level of Subsistence Income Range (Annual) Above $4.0m $2.4m - $4.0m $1.3m - $2.3m $0.7m - $1.2m $0.4m - $0.6m Below $0.4m

12. Geo-Demographic Segmentation Marketing And Sales Operations ACORN consumer targeting classification 19.8% 11.5% 7.6% 22.3% 13.7% 22.6% 2.4% Category A Thriving 6. Affluent urbanites, town and city areas 7. Prosperous professionals, metropolitan areas 8. Better-off executives, inner-city areas 1. Wealthy achievers – suburban area 2. Affluent greys, rural communities 3. Prosperous pensioners 4. Affluent executives 5. Well-off workers, family areas 11. New home-owners, mature communities 12. White-collar workers, better-off multi-ethnic areas 9. Comfortable middle-aged, mature home owning areas 10. Skilled workers, home owning 13. Older people, less prosperous areas 14. Council estate residents, better off homes 15. Council estate residents, high unemployment 16. Council estate residents, greatest hardship 17. People in multi-ethnic low-income areas Category B Expanding Category C Rising Category D Settling Category E Aspiring Category F Striving Unclassified

13. Table 10-1: Steps in Segmentation Process Description 1. Needs-Based Segmentation Group customers into segments based on similar needs and benefits sought by customer in solving a particular consumption problem. 2. Segment IdentificationFor each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable). 3. Segment Attractiveness Using predetermined segment attractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment. 4. Segment ProfitabilityDetermine segment profitability. 5. Segment PositioningFor each segment, create a “value proposition” and product-price positioning strategy based on that segment’s unique customer needs and characteristics. See text for complete table

14. Effective Market Segmentation M easurable A ccessible S ubstantial D ifferentiable A ctionable

15. Marketing And Sales Operations The foundation of any marketing plan lies in answering the question, “ What business are we in, and where are we going? ” The answer is in the firm’s Mission Statement: Go to Hooley chapter 10

16. Marketing And Sales Operations The foundation of any marketing plan lies in answering the question, “ What business are we in, and where are we going? ” The answer is in the firm’s Mission Statement: Corporate Positioning Strategies 1.Market Leaders - are extremely dominant and high profile, and possess significant market share within their industry. Pepsi and Coca-cola are good examples. 2. Market Challengers – fairly significant, cash rich and well resourced organisations who are aggressive in seeking to take market share away from other players. This makes them particularly difficult to compete with. The development of a positioning strategy is essential not only for products and services, but also for the organisations which offer them.

17. Marketing And Sales Operations The foundation of any marketing plan lies in answering the question, “ What business are we in, and where are we going? ” The answer is in the firm’s Mission Statement: Corporate Positioning Strategies... continued 3. Market Followers - are found second or third or even lower down the rankings in the marketplace. It is can sometimes prove more advantageous to be a market follower than a market leader. Whatever the leader does, the follower duplicates. 4. Market Nichers - apply the previously discussed strategy of “focus”, to differentiate their product or service offerings so as to achieve competitive advantage in a particular segment of the market. Nichers mostly move towards the high end of the market.

18. Developing and Communicating a Positioning Strategy Positioning Value position

19. Table 11.1: Examples of Value Propositions Demand States and Marketing Tasks Company & Product Target CustomersBenefitsPriceValue Proposition Perdue (chicken) Quality- conscious consumers of chicken Tenderness10% premium More tender golden chicken at a moderate premium price Volvo (station wagon) Safety- conscious “upscale” families Durability and safety 20% premium The safest, most durable wagon in which your family can ride Domino’s (pizza) Convenience- minded pizza lovers Delivery speed and good quality 15% premium A good hot pizza, delivered to your door door within 30 minutes of ordering, at a moderate price

20. Developing and Communicating a Positioning Strategy Positioning According to Ries and Trout –Strengthen own current position –Grab an unoccupied position –De-position –Re-position –Product ladders Positioning According to Treacy and Wiersema –Value disciplines Product leader Operationally excellent firm Customer intimate firm

21. –Treacy and Wiersema propose that a business should follow four rules for success 1.Become best at one of the three value disciplines. 2.Achieve an adequate performance level in the other two disciplines. 3.Keep improving one’s superior position in the chosen discipline so as not to lose out to a competitor. 4.Keep becoming more adequate in the other two disciplines, because competitors keep raising customers’ expectations. Developing and Communicating a Positioning Strategy

22. Positioning: How many ideas to promote? Unique selling proposition –Four major positioning errors 1.Underpositioning 2.Overpositioning 3.Confused positioning 4.Doubtful positioning Developing and Communicating a Positioning Strategy

23. Marketing And Sales Operations The foundation of any marketing plan lies in answering the question, “ What business are we in, and where are we going? ” The answer is in the firm’s Mission Statement: Go to Hooley chapters 13 - 16