Marketing Strategy

Segmentation, Targeting and Positioning

Business Strategy

Marketing Strategy Who to Serve How to Serve

the “Offering”

Marketing Tactics and Programs

PricingPolicy

List pricesDiscounts and promotionsCredit termsEtc.

ProductPolicy

Length and depth of lineQualityAssociated servicesPackaging/labelingDesignEtc.

Place/DistributionPolicy

IntensityTermsServiceEtc.

Promotional Policy

Communication MixElements

The Tools of MarketingMissionSBUs

STP

Business Strategy

A Business has customer groups (i.e. markets), customer needs, core offering

Three generic business strategies (Porter):

1. Overall cost leadership

2. Differentiation3. Focus

Business Growth Strategies

Existing Markets New Markets

Existing Products

Market Penetration

Market Development

New Products

Product Development

Diversification

Marketing Strategy (STP)

• Segmentation of customer groups (markets)

• Selection of specific Target Markets

• Positioning of core offering to each target market

The Environments

FACTORS SHAPING PRIMARY DEMAND• Cultural, Social and Demographic Environment

• Major effect is on people’s and organization’s willingness to buy certain kinds of products and services

• Economic and Technological Environments• Impacts on people’s and organization’s ability to buy

• Political and Legal Environments• Impacts on the nature of practices used to drive primary and

selective demand• May also shape primary demand for goods and services

needed to comply with regulations

The EnvironmentsFACTORS SHAPING SELECTIVE DEMAND• Competitive Environment

• Impacts on whether we can meet buyer needs better than anyone else

• Includes substitutes• Major effect is on people’s and organization’s choice of brands

other than yours

• Customer Environment• Major effect is on people’s and organization’s choice of brands

• Current Marketing Situation (i.e. the internal environment)• Major effect is on people’s and organization’s choice of your

brand over others

Competitive Assessment

Marketing Strategy

• Target Market(s)• Business Strategy• Generic Strategy • Market Share• Key Success Factors • Share of Mind• Competitive Advantage

(Positioning)

Marketing Mix Elements

• Core Offering(s)• Product/Service Quality• Pricing• Communication Media• Personal Selling Methods• Distribution Methods• Location• Post-sales service

For Each Competitor, Assess the following:

Segmentation Scheme

Core Offering

Segment A Segment B Segment C

Segment C.1 Segment C.2 Segment C.3

Segment C.3.i

Segment C.3.ii

Level 1 - Base

Level 2 - Base

Typical Bases:- Demographic- Geographic- Behavioral- Psychographic

A Sample

Boxed C hocola tesL au ra S ecordS eason a l

F orm a lG es tu reE as te r

C h ris tm as

S easona l

Inform a lH allow een

G ifting

K in d er S u rp riseS m artiesA s tro 'sM & M M in is

Rew ard/T rea tP es te r

S h u t u pP erm iss ib le S p o ilin g

Kid's T reat

C aram ilk /R o lo /D oveC rem e E g g sB ou n tyC erises /P ep

Persona l S poi l ingM e Tim e

R elaxa tionP erson a l R ew ard

C M CA ero /M irag eF lakeH M C

IndulgenceP leasu re

F ee l G ood

Adult T reat (12+)

M r. B igM ars /S n ickersO h H en ryB u tte rfin g er

G ut F i l lM eal R ep lacem en t

H u n g ry

C risp y C ru n chW u n d erb ar/C ru n ch ieK it K a t/C offee C rispTw ix

G ap F i l l /S nack ingIn b e tw een M ea ls

P eck ishS m all S n ack

Refuel

C an ad ian C h oco la te S eg m en ta tion M ap

The Segmentation GridConsumer Profiling

Contents:

• Who buys…• What• Where• When• Why• How

Assessment of Current Marketing Situation

• Current marketing strategy assessment

• Segmentation strategy

• Target Markets

• Positioning & Branding

• Marketing Mix Elements

• Sources of competitive advantage

• Constraints

• Budget

• Technology

• Human factors

• Channels

• Suppliers

• Management, etc.

SMART Objectives

• Specific

• Measurable

• Achievable

• Realistic

• Timeline

Overall Plan Objectives

Individual Segment Objectives

Positioning Objectives

Tactical Objectives:•Product Objectives•Pricing Objectives•Place Objectives•Promotion Objectives

The Marketing PlanA Hierarchy of Objectives

ASSESS MARKET-COMPANY FIT

Define Quality and Identify Segments You Can Serve

(Targeting)

ASSESS PRODUCT-COMPANY FIT Evaluate Relative Quality and Identify Competitors

You Can Beat

(Targeting & Positioning)

CUSTOMER ANALYSIS Who BUYS What, Where,

When, How and Why

Determine Basis of Segmentation

COMPETITOR ANALYSIS Who OFFERS What, Where,

When, How and Why

Determine Basis ofDifferentiation

COMPANY ANALYSISGiven your objectives and resources … what can you do, for whom,

where and when?

Integrating Analysis with Planning

Alternatives Segmentation Strategy

MassMarket

SegmentA

SegmentA

SegmentB

SegmentB

SegmentB

SegmentC

SegmentC

SegmentC

NicheA2

NicheA1

NicheA3

NicheA2

NicheA1

NicheA3

Multi-SegmentStrategy

SingleSegmentStrategy

SegmentNiche

Strategy

MassCustomization

Strategy

SegmentC

SegmentB

Targeting Decision MatrixCriteria (Fit) Weight Target

Segment A

Target Segment B

Target

Segment C

Attractive? **

Fit with growth and profit objectives?

**

Fit with Mission? **

Competitive Advantage

Company Resources

Constraints?

Fit with Trends – elements affecting Primary Demand

Profitable?

Total

Positioning• The “definition”, “place”, or “identity” of a

product in the minds of consumers, relative to competitive offerings.

• Assumes• Differentiation

• A positioning statement• To defined target segment• X is the brand of defined category• That unique selling proposition

Positioning Competitively:Alternative Positioning Strategies

• Product attributes• Benefits offered• Usage occasions• Classes of users• Directly on

competitor• Around competitor• Against product class

Positioning: The Unifying Theme for Marketing Efforts

Positioning Reflects Key Elements of Strategy How we think the customer views the product How we want the customer to think about us Who the customer sees as a substitute for us What we feel we can do better than the competition

Positioning Shapes Customer Expectations A “promise” to potential customers The reason they give us trial; the standard we must

meet

All Marketing Elements Must Reinforce the Positioning Positioning embodies the principle of market FOCUS Focus requires a concentration on a specific type

of customer Inconsistencies between marketing tools leads to a

loss of efficiency and effectiveness

What the Customer Gets

What theCustomer

Wants

Associated services

Packaging

Features

Brand identity

Image

Level of quality

War

rant

y

Cred

it

Del

iver

y

Installation

Pre-sales

services

Back-o

ffice

services

Creating a Value Proposition (Positioning)

• Part 1: What We Do• For the target market• Who want the “consumption problem”

(what “need” do you serve?)• Our product is our portion of the “solution”

(when do they think about your class of product in connection with that need?)

• That features key benefit provided (what’s the one or two things you want them to

remember about you?)• As measured by how the customer infers quality

• Part 2: Why We Will Win• Unlike our main competitors• Our product provides key point(s) of difference• As supported by what makes our difference possible

(why they should believe us…TODAY)• And protected by why the competition cannot easily

overcome it (why they should believe us…TOMORROW)

The role of the marketing mix

ProductPricePlace

PromotionPhysical Evidence

ProcessPeople

Partnering

TargetCustomers

Marketing Strategy Decisions

TacticalImplementation

Customer Effects

Product• Objectives• Physical Goods• Service• Features• Quality Level• Accessories• Installation• Instructions• Warranty• Product Lines• Packaging• Branding

Place• Objectives• Channel Type• Market

Exposure• Kinds of

Middleman• Kinds and

Locations of Stores

• How to Handle Transporting and Storing

• Service Levels• Recruiting

Middlemen• Managing

Channels

Promotion• Objectives• Blend• Salespeople - Kind - Number - Selection - Training - Motivation• Advertising - Targets - Kinds of Ads - Media Type - Copy Thrust - Who Prepares?• Sales Promotion• Publicity

Price• Objectives• Flexibility• Level over

Product Life Cycle

• Geographic Terms

• Discounts• Allowances

Some Decision Areas Organized by the Four Ps

Phys. Evidence• Objectives• Facility Design• Equipment• Signage• Employee Dress• Other tangibles

- Reports- Bus. Cards- Statements- Guarantees

Process• Objectives• Flow of

activities• Customer

involvement• Number of steps• Queuing• Payment

methods

People• Objectives• HR activities• Customer

training• Customer

education

Partnering• Objectives• Loyalty

programs• Incentive

programs• Alliances• Networking

Some Decision Areas Organized by the other Ps

Marketing Mix Target Segment A Target Segment B

Positioning Statement

To Target Market A, X is the differentiated brand of category that offers…..

Product Objectives for Product Mix Items

Product Tactics to augment offering to fit with positioning

Price Objectives for pricing

Pricing tactics to fit with positioning

Promotion Objectives for promotion

Promotion tactics to fit with positioning

Place Objectives for channels/place

Tactics

Partnering Objectives and tactics

Physical Evidence*

Process*

People *

ImplementationImplementation Task People Money Time Control/Evaluation

Place full page advertisement in CIO magazine

Marketing Manager

$10,000 September, 2003

Track telephone calls and website visits pre- and post-advertisement

Re-arrange waiting area, purchase couches,

Office Manager

$15,000 for new furniture and other chattels

October 2003

Review regular customer surveys to check satisfaction with waiting area

Reduce price of Widget inventory to eliminate excess stock

Store Managers

$300 for new price tags

November 2003

Store managers to review inventory weekly to determine if further price changes are needed

Budget

• Projections of sales

• Include and note implementation costs

• Sensitivity analysis

Worst Case Objectives Best CaseRevenue Quantity Price Total Quantity Price Total Quantity Price TotalCruise Passengers 1480 $500 $740,000 1606 $500 $803,000 1690 $500 $845,000Total Revenue $500 $740,000 $500 $803,000 $500 $845,000

Variable CostsServices 1480 $100 $148,000 1606 $100 $160,600 1690 $100 $169,000Marketing 1480 $20 $29,600 1606 $20 $32,120 1690 $20 $33,800Total Variable Costs $120 $177,600 $120 $192,720 $120 $202,800

Contribution Margin $380 $562,400 $380 $610,280 $380 $642,200

Fixed CostsIndirect Costs $200,000 $200,000 $200,000 $200,000 $200,000 $200,000Wages 820 $500 $410,000 820 $500 $410,000 820 $500 $410,000

$610,000 $610,000 $610,000

Net Profit -$47,600 $280 $32,200

Controls

Overall Plan Objectives

Individual Segment Objectives

The Marketing PlanA Hierarchy of Objectives

Metrics

Method of Evaluation

Timing and frequencyof Evaluation

Reaction PlansContingencies

The Report

• Introduction (Background)

• Case Problem(s), Issue(s)

• Objectives/Decision Criteria

• Analysis • Current marketing situation• Identification and analysis of alternatives

• Marketing Strategy/ Recommendations

• Implementation Plan (Marketing Mix)

SourcesDr. S. Armstrong, Wharton

Dr. M. Cunningham, Queen’s

Mr. K. Wong, Queen’s

Dr. S. Taylor, Queen’s

Kotler and Keller (2007), A Framework for Marketing Management – 3rd Edition, Pearson/Prentice Hall

Zeithaml, Bitner, and Gremler (2005), Services Marketing – 4th Edition, McGraw-Hill

The 2201 Team – S. Myrden, D. Stapleton, T. Jones