STRATEGIC MARKETING MANAGEMENT CHAPTER -5

STRATEGIC MARKETING MANAGEMENT CHAPTER -5
Chaudhry Muhammad Nadeem Faisal Cell: B- Url: Business Intelligence:

Strategic Market Segmentation Chapter # 5
Segmentation & Market-Driven Strategy Market segmentation needs to be considers early in the development of market driven strategy. Market segmentation and value Opportunities Market segmentation is the process of placing the buyers in product market into subgroup so that the members of each segment display similar responsive to a particular positioning strategy. The segmentation is an identification process aimed at fining subgroup of buyers within a total market. The opportunity occur when the difference in buyers demand (response) functions market demand to be divide into segments each with a distinct capabilities.

Segmentation & Market-Driven Strategy Like niche marker. A segment is an possible market target for a organization competing in the market and provide an opportunity to batter match its product and capabilities to buyer’s value requirements. Creating New Market Space Importantly market analysis may identify segments not recognizes or served effectively by competitor, there may be opportunity to tap into new area of value and crate a unique space in the markets.

Segmentation & Market-Driven Strategy Matching Value Opportunity and capabilities Broad competitive comparison can be made for an entire product market more penetration insight about competitive advantages and market opportunity results form markets segments analysis. Examining specific market segments help to identify how to attain a closer match between buyers value reference and the organization capabilities and compare the organization strength (weakens ) to the key competitors in the each market. Market targeting and strategic positing Targeting market consists of evaluating and selecting one more segments whose value requirements provide a good match with organizational l capabilities.

Which Market Segment To Target Single Segment Selective Segmentation Mass Market Segmentation Product Specialization Market Specialization

Factors Influencing Targeting Decisions Stage of product – market maturity Extent of diversity in buyer preferences Industry structure Capabilities and resources Opportunities to gain competitive advantage How marketers establish a position Simple physically based attributes Complex physically based attributes Essentially abstract attributes

Designing a Positioning Strategy First Step – Choosing a Positioning Concept Functional Experimental Symbolic Positioning Strategies How best to utilize the marketing program components Strengthen the current position Repositioning Reposition the competition

Positioning Errors 1 Under-positioning 2 Over-positioning 3 Confused positioning 4 Doubtful positioning

Market segmentation activities The processed of segmenting the market involves the interrelated activities and decision begins the defining to be segmented. It is necessary to decide how to segment the market. Frequency of use of product and nest the methods are decided for segmentation. Market to be segmented Strategic Analysis Decide how Of segments to segment Finer Segmentation Form Strategies Segments

Indentifying market segments After the market to be segments is defined one or more variable are selected to identify segments Purpose of segmentation variable Demographic, psychographic, characteristics of buyers these information may available form different sources The use situation valuable, consider how the buyers use the product. Variable measure the buyers needs and preferences include attitude, brand awareness and brand preferences, Purchase- behavior variable describe the brand use and consumption

Indentifying market segments Stage 1 segmentation consists of variables that can be easily identified through demographics (i.e., statistics that describe a population), geographic (i.e., location issues) and financial information. For both consumer and business segmentation this information focuses mostly on easy to obtain data from such sources as government data (e.g., census information), examining secondary data sources (e.g., news media), trade associations and financial reporting services 1 Segmentation Variables Consumer Markets Demographics age group (e.g., teens, retirees, young adults), gender, education level, ethnicity, income, occupation, social class, marital status Geographic location (e.g., national, regional, urban/suburban/rural, international), climate

Current Purchasing Situation brands used, purchase frequency, current suppliers Purchase Ready possess necessary equipment, property, knowledge and skill sets Local Environment cultural, political, legal Benefits Sought price, overall value, specific feature, ease-of-use, service, etc. Product Usage how used, situation when used, etc. Purchase Conditions time of day/month/year when purchased, credit terms, trade-in option, etc. Characteristics of Individual Buyer purchase experience, how purchase is made, influencers on purchase decision, importance of purchase

Psychographics personality, attitudes, and lifestyle combined with demographics 2 Segmentation Variables Business Markets Demographics type (e.g., manufacturer, retailer, wholesaler), industry, size (e.g., sales volume; number of retail outlets), age (e.g., new; young growth, established growth, mature) Geographic location (e.g., national, regional, urban/suburban/rural, international), climate Current Purchasing Situation brands used, purchase frequency, current suppliers Purchase Ready possess necessary equipment, property, knowledge and skill sets Local Environment cultural, political, legal

Benefits Sought price, overall value, specific feature, services, profit margins, promotional assistance; etc. Product Usage how used (e.g., raw material, component product, major selling item at retail level), situation when used, etc. Purchase Conditions length of sales cycle, set product specifications, bid pricing, credit terms, trade-in option, product handling, etc. Characteristics of Buying Center purchase experience, number of members, make-up of key influencers, willingness to assume risk;

Business Arrangement ownership (e.g.,. private versus public, independent versus chain), financial condition (e.g., credit rating, income growth, stock price, cash flow) Current Purchasing Situation brands used, purchase frequency, current suppliers Purchase Ready possess necessary equipment, property, knowledge and skill sets Local Environment cultural, political, legal Customers Served by the Business identify the business’ market Business’ Perceived Image identify how targeted businesses are perceived by their customers

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Finer Segmentation Strategies Combination of factors may help the company utilize the finer segmentation strategies Logic of finer strategies Customized offering Diverse customer base Close customer relationship Finer segmentation strategies Micro-segmentations Seeks to identify the narrowly defined segments using the previously discussed segmentation variable as result to large number of small segments

Finer Segmentation Strategies Mass-Customization Provide the customized products at price not very higher then mass produced Items is feasible using mass customization concepts and methods. Achieving mass customization objective is possible through computer added design and manufacturing software, flexible manufacturing techniques and flexible supply systems Verity Seeking Strategy This product strategy is indented to offer buyers opportunity to vary their choices in contrast to making unique choices.

Develop Marketing Strategy Undifferentiated or Mass Marketing – Under this strategy the marketer attempts to appeal to one large market with a single marketing strategy. While this approach offers advantages in terms of lowering development and production costs, since only one product is marketed, there are few markets in which all customers seek the same benefits Differentiated or Segmentation Marketing – Marketers choosing this strategy try to appeal to multiple smaller markets with a unique marketing strategy for each market. The underlying concept is that bigger markets can be divided into many sub-markets and an organization chooses different marketing strategies to reach each sub-market it targets

Develop Marketing Strategy Concentrated or Niche Marketing –This strategy combines mass and segmentation marketing by using a single marketing strategy to appeal to one or more very small markets. Customized or Micro-Marketing - This newest target marketing strategy attempts to appeal to targeted customers with individualized marketing programs. For micro-marketing segmentation to be effective the marketer must, to some degree, allow customers to “build-their-own” products.

Selecting Segmentation Strategy Four basic segmentation strategy alternatives May decide not to enter the market May decide to be a mass marketer instead of segmenting May decide to market to only one segment May decide to market more than one segment and design a separate marketing strategy for each Marketers must have some criteria on which to base segmentation strategy decisions Measurable Meaningful Marketable

References Victoria L. Crittenden, “ Strategic Marketing management ” , McGraw-Hill, NY,2002. Philip R. Cateora, International Marketing, 9th edition 2000, alpha Sky Printer. D Cravens, N Piercy, Strategic Marketing, 8th edition, McGraw Hill, 2005 V Rao, J steckel, Analysis for strategic Marketing, Addison Wesley Longmsn, Inc, 1998. Fred R. David, Strategic Management, 6th edition, Prentice-hall, Inc, 1997.

STRATEGIC MARKETING MANAGEMENT CHAPTER -5

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