Marketing Strategy Overview - Strategy: plan to achieve defined objectives - Strategy at multiple levels with an enterprise - Marketing strategy is at the heart of any business, everything else is complementary Elements of Marketing Strategy (Marketing Mix) - Product/Market Selection Market Segmentation (DGPP, its an art, not a science) Demography (buying behaviour) Geography Psychographic Variables (individual lifestyle, and attitude towards work, home etc. For industrial sectors this is equivalent of corporate culture) Product Application and Use Market Selection Criteria (PLRC) Product Value (who values the product highly?) Long-run growth potential Resource commitments Company-product/market fit (cannibalisation? Utilise existing capacity?) In market selection first mover might have an advantage, can develop market recognition, and achieve scale economies - Price (SCCBV) Supply/demand conditions (cartels, competitive signalling) Costs of production and overheads (fixed and variable) Competition (respond to competition by: differentiation, price leadership, dampen intra-brand competition among resellers) Buyer bargaining power Value of product to customers (the worth of a thing is the price it will bring) Skimming (high to low) vs Penetration (low to high) pricing Price Depressors Excessive supply Brand competition intra-brand competition penetration pricing black markets buyer bargaining power Price Lifters limited/controlled supply high value differentiation skimming price leadership buyer dependency on suppliers - Place (distribution systems and channels) Distribution systems: personal salesforce, wholesale, retail channels, e- commerce Link between product manufacturing and customers Cost factors: reducing costs in distribution channels is important Channels support by suppliers Selective vs Intensive distribution
Superior product line High degree of supplier/reseller dependency End market demand development (brand pull) Supplier salesforce presence at resale/retail level Of all elements of marketing, distribution systems are the hardest to build and change - Promotion Market communications (advertising) Decision making process DMP of the buyer: NIEP (lecture notes) Decision making unit DMU can be an individual person or firm Push vs Pull - Processes Product service Technical service - Physical environment Plant location For strategic planning purposes, seller's opinion is not important. But the value that a buyer places on a product compared with competitive offerings is the most important. Model for Strategic Planning Corporate goals External environment Business unit strengths and weaknesses Product/market opportunities Market analysis Economic and risk analysis Ethics analysis Product/market strategies Get inside the lives of your customer Companies should define broader 'customer scenarios' (and manage them) to deliver more value and reap much greater loyalty. Each customer is different. Need to/should receive tailored service. Idea is to reach into the lives of buyers. Companies should not provide one size fits all service. e.g. National Semiconductor, and its Webench (online simulation for engineers). Tesco Direct, and its decentralised online shopping. How to make customer scenarios? 1) Select target customers (be explicit) 2) Select a goal that customer needs to fill 3) Envision a particular situation for the customer (e.g. an exhausted traveller) 4) Determine a start point and an end point. The latter is what the customer considers to be the successful achievement of his goals. 5) Map out as many variations as possible 6) Think of the individual activities the customer performs and the information needed at every step. What can the company do to support at those steps?
7) How can you use your marketing, distribution, and service channels to support and streamline the customer scenarios. Note: don't think what you can sell to your customers, think instead what the customers want to buy. Customer scenarios: Build loyalty Invest Now, Drink Later, Spend Never! Monetary transactions in which consumption is temporally separated from purchase naturally lend themselves to multiple frames and to alternative accounting schemes, which nonetheless maintain a modicum of discipline and authenticity 1 - Advanced purchases are investments 2 - Goods purchased earlier, and used as planned are coded 'free' 3 - But if the good is lost/broken, it is termed as a cost Never-spenders! Marketing Research Marketing research is a process by which marketing information is collected and analysed. Undertaken before a marketing strategy is formulated. Marketing Research: Environmental scanning Environmental monitoring Scanning systems Marketing intelligence Situation assessment Costs time and money. Collect information on: Customers (5Cs?) Channels (4Ps?) Competitors Marketing Partners Objectives: Forecasting Customer analysis Segmentation Understanding consumer choice Testing levels of the marketing mix Marketing managers address:
What research design to gather information? Experimental Laboratory Simulated environments Field Test markets Survey Primary Focus groups Secondary Publications Experimental -> Manipulation, Treatment (changed variable), Measurement (of the pre and post result) Survey -> Problem statement, Questionnaire design (design, pretest, print), Sampling, Data analysis Exploratory -> Descriptive -> Experimental What methods to collect data? Primary (individuals or companies) Controllable variables Secondary (data collected previously by someone else) Uncontrollable variables, e.g. demographics etc Methods: Focus groups Surveys Interviews Phone Questionnaires Panels Diary panels (consumers agree to report product purchases) Scanner panels (recording items purchased at checkout without consumer knowledge) What models to interpret data or test hypothesis? Allow synthesis and analysis of information. They are abstractions of reality. Quantitative (Forecasting e.g. Bass' (1969) diffusion model) Qualitative (Why adoptable? e.g. Rogers' (1983)) Choices made in marketing research, both explicit and implicit, will have a profound effect on the conclusions reached. Explicit Choices Models Research methods Measures Sampling Implicit Choices Questions Values Judgement Politics Backward Market Research Marketing research shouldn't only provide you with facts, but also the reasons or causes behind those facts. Close collaboration between researcher and corporate decision makers is key to
ensure that the results are not off target. Research should be designed to lead to a decision. The backward approach entails that the best way to design usable research is to start where the process ends. Develop each stage of the design on the basis of what comes after it, not before. Process: 1. Determine how the research results will be implemented 2. Determine what the final report should contain? 3. Specify the analyses necessary to fill the blanks in the research report. 4. Determine the kind of data required 5. Scan easily available date 6. Then gather data the hard way 7. Continually check whether the data will meet your needs 8. Do the analysis and see if it has the intended effect. The sure thing that flopped Marketing research has its limitations. It gives the indications of customers' surface attitudes, but that make up a relatively small part of the total consumer response. It is critical for companies to understand that every customer relates to a brand on an emotional level, and those emotions trigger or block purchases. Traditionally, marketing has been about touting products features and benefits to the rational part of customers minds. That s still important, but in today s competitive business climate, it s imperative for companies to gain full insight into customers feelings and translate them into an emotional strategy. Market what the people want to be, and not what they are. Customer Value Proposition in Business Market Under pressure to keep costs down, customers may only look at price and not listen to your sales pitch. Help them understand - and believe in - the superior value of your offerings. Types of Value propositions: All benefits All the benefits a product may offer Drawback: benefit assertion Favourable points of difference Recognises that the customer has an alternative. Drawback: value presumption Resonating focus Making your offering superior on the few elements that matter most to target cusomters A note on Consumer Market Segmentation Benefits of segmentation: Helps marketer direct efforts to relevant people Helps marketer avoid trial and error
Helps marketer implement the marketing concept/address and satisfy customer needs Continuous consumer analysis provides useful data for long term market growth Assumptions underlying segmentation It is possible to identify clusters of people with homogenous needs After segmentation, he is willing to select target segments and fulfil their needs If more than one target segments, marketer will devise different strategies for each segment Segmentation's dimensions Consumers' background Consumers' market history/behaviour or preference Segmentation analysis is an iterative process How to segment Define the purpose of segmentation Analyse market data Develop segment profiles Evaluate segmentation Select target segments Design market strategy for that segment Reappraisal of segmentation Rediscovering Market Segmentation You can fashion segments that are both revealing and applicable. Such segments will: Reflect the company s strategyindicate where sources of revenue or profit may lie; Identify consumers values, attitudes, and beliefs as they relate specifically to product or service offerings; Focus on actual customer behavior;make sense to top executives;accommodate or anticipate changes in markets or con- sumer behaviour. Effective segmentations focus on just one or two issues, and they need to be redrawn as soon as they have lost their relevance. Segmentation initiatives have generally been disappointing to the companies launching them. Their failures have mostly taken three forms. The first is excessive interest in consumers identities, which has distracted marketers from the product features that matter most to current and potential customers of particular brands and categories. The second is too little emphasis on actual con- sumer behaviour, which definitively reveals their attitudes and helps predict business outcomes. And the third is undue absorption in the technical details of devising segmentations, which estranges marketers from the decision makers on whose support their initiatives depend. We believe that organisations able to overcome these three weaknesses will be able to respond more quickly and effectively to rapidly changing market conditions,
develop insights into where and how to compete, and gain maximum benefit from scarce marketing resources. Non-demographic segmentation began more than 40 years ago as a way to focus on the differences among customers that matter the most strategically. Since for more than half of that span, it has not managed to do so, we hope that the rediscovery we are proposing here can make up for lost time and, over the next 40 years, at last fulfil segmentation s original purpose. Discovering new points of differentiation Strategic differentiation Map your customer's entire experience with your product/service (i.e. the consumption chain) How do people become aware of their need for your product? How do consumers find your offering? How do consumers make their final selections? How do customers order and purchase your product? How is your product or service delivered? What happens when your product is delivered? How is your product installed? How is your product paid for? How is your product stored? How is your product moved around? What is the customer really using your product for? What do customers need help with when they use your product? What about returns or exchanges? How is your product repaired or serviced? What happens when your product is disposed of? Analyse your customer's experience What are the customers doing at each point in the consumption chain? Where are your.. Who else is with the customer at any given link in the chain? When? How? Finding the right job for your product Most companies segment their markets by customer demographics or product characteristics and differentiate their offerings by adding features and functions. But the consumer has a different view of the marketplace. He simply has a job to be done and is seeking to hire the best product or service to do it. Marketers must adopt that perspective Brand Custodianship by Capon Senior management, as opposed to middle level management, should be entrusted to look after the brand image. Function of brands for buyers Approaching vs Avoiding
Function of brands for sellers Premium vs discount Brand equity A set of brand assets and liabilities linked to a brand, its name and symbol, that add to (or subtract from) the value provided by a product or service to a firm and/or that firm s customers. (Aaker, 1991 Organisational brand equity Organizational brand equity depends upon cash flow streams resulting from its ability to acquire and retain customers for its brands Customer brand equity Customer brand equity, by contrast, relates to the value received by individual customers from a branded product or service, over and above the value received from an unbranded version of the same pro- duct or service. Creating a Superior Customer Relating Capabilities by Day 2003 The first is an organisational orientation that makes customer retention a priority and gives employees, as part of an overall wiillingness to treat customers differently, wide latitude to satisfy them. The second component is a configuration that includes the structure of the organisation, its processes for personalising product or service offerings, and its incentives for building relationships. Information is the final component: information about customers that is in- depth, relevant and available through IT systems in all parts of the company. Building loyalty in Business markets by Das Narayandas