Marketing Strategy. Chapter 6 Marketing Strategy Decisions. Mass Marketing Strategy Market Segmentation Multisegment Strategy Market Concentration Strategy Niche Marketing Strategy Customized Marketing Strategy. Market Segmentation Strategies. Product. Price. Distribution.
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Marketing Strategy Decisions
Mass Marketing Strategy
in the Market
Companies that adopt mass marketing assume that all customers in the product market have similar needs, and that these needs can be reasonably satisfied with a single marketing mix.
This marketing mix typically consists of a single product (or, in the case of retailers, a homogeneous set of products), one price, one promotional program, and one distribution system.Mass Marketing Strategy
This approach may be necessary when customer needs are similar within a single group, but their needs differ across groups.
Through research, firms can identify the needs of each market segment and create marketing mixes that best match those needs and expectations.
There are a variety of factors that can be used to divide markets into homogeneous groupings, but most fall into one of three general categories:
State-of-being segmentation divides markets into segments using demographic factors such as gender, age, income, and education.
State-of-mind segmentation deals with how consumers think and feel.
State-of-being and state-of-mind segmentation are really surrogates for the true issue in market segmentation, benefits sought.Market Segmentation
More Than One
The firm can increase its share of the market by responding to the heterogeneous wants and desires of different segments or submarkets.
If the segments have enough buying potential, and the product is successful, the resulting sales increases can more than offset the increased costs of offering multiple marketing mixes.Multisegment Strategy
IVORY SNOW - “mild, gentle soap for baby clothes
TIDE - “Tide’s in, dirt out”
ARIEL - “tough cleaner”
CHEER - “all temperature - Cheer”
DREFT - “a clean you can trust”
BOLD- “cleans, soften,and controls static”
SOLO - “liquid detergent with fabric softener
GAIN - “freshens like sunshine”
ERA - “built-in stain remover”
DASH - “attack tough dirt”
OXYDOL - “makes clothes bright”
Market Concentration Strategy
Focused on a Single
The main advantage of market concentration is specialization, as it allows the firm to focus all its resources toward understanding and serving a single segment.
However, by "putting all of its eggs in one basket," the firm can be vulnerable to changes in its market segment, such as economic downturns and demographic shifts.Market Concentration Strategy
Niche Marketing Strategy
Focused on a Small
Niche Market Segment
The key to niche marketing is to understand and meet the needs of target customers so completely that, despite the small size of the niche, the firm’s substantial share makes the segment highly profitable.Niche Marketing Strategy
Customized Marketing Strategy
This approach is common in business-to-business marketing where unique programs and/or systems are designed for each and every customer.
Such "one-on-one" marketing is more rare in consumer marketing.Customized Marketing Strategy
In-depth, current data about the target market is necessary to provide information on customer preferences for product features, attitudes toward competitors' products, price/budget considerations, and the frequency and intensity with which the product is used.
With this information, the marketing manager has the potential to develop a marketing mix that delivers value and customer satisfaction better than competitors' mixes.Developing the Marketing Mix
Products refer to more than tangible goods and are usually some combination of goods, services, ideas, and even people.
Products in and of themselves are of little value.
The real value a product provides is derived from its ability to deliver benefits that enhance the buyer's situation.
Organizations that keep their sights set on developing products, systems, and processes that identify and meet needs of the target market are more likely to be successful.Product
New product lines allow a firm to enter new markets with a new group of closely related product items that are considered a unit based on technical, or end-use, considerations.
Product line extensions supplement an existing product line with new styles or models.
Improvements or changes in existing products offer customers improved performance or greater perceived value; this option also includes changes to make an existing product "new and improved."
Repositioning involves the modification of existing products (either real or through promotion) so that they can be targeted at new markets or segments.
Cost reductions involve modified products that offer similar performance at a lower price.Marketing Strategy Options Related to the Newness of Products
The manager must set the price correctly to achieve the right balance between customers' needs, alternative solutions, and the firm's need to cover its direct and indirect costs, while also making an acceptable profit.
Price is the most flexible element of the marketing mix as it can be adjusted to meet changing market conditions.
Price is more than a financial or economic issue; it also has significant social and psychological connotations.
There are two points of view to consider with regard to price.
To the marketer, price is the amount of money that the firm is willing to accept in exchange for a product.
To customers, price is anything they are willing to give up in exchange for the product.Price
Ongoing discount, or everyday low pricing (EDLP) strategy, is another commonly employed strategy, particularly in retailing.
Prestige pricing strategy is the focal point of a marketing mix oriented toward a high quality, prestige product image. In order for this strategy to be successful, customers must perceive the firm's product to be of significantly higher quality than competing products.Marketing Strategy Options related to the Pricing of Products
The role of advertising, sales promotion, personal selling, and public relations (elements of the promotional mix) in a particular marketing strategy will vary depending on the nature of the product.
The role of promotion mix elements also varies by stage in the product purchase process (awareness, interest, desire, and action).
Promotion mix decisions are affected by price, as lower priced products tend to have a lower profitability per unit that would dictate advertising while higher priced products include a level of margin that makes covering the costs of personal selling feasible.Promotion
Marketing channels—a system of organizations through which a product, resources, information, and/or product ownership flows from producer to customers.
Physical distribution—moving products to the right place in the right quantities at the right time, and in a cost-efficient manner.
Logistics strategies address physical distribution issues, such as transportation, storage, materials handling, and the systems and equipment necessary for these functions.
A good distribution strategy is essential because once a channel is selected and commitments are made, distribution often becomes highly inflexible due to long-term contracts, investments, and commitments with channel members.Distribution (Place)
Exclusive distribution gives one merchant or outlet the sole right to sell a product within a defined geographic region (e.g., Rolex, Mercedes-Benz).
Selective distribution gives several outlets the right to sell a product in a defined geographic region (e.g., Bose, franchising industry).
Intensive distribution makes a product available in the maximum number of outlets in each region to gain as much exposure and as many sales opportunities as possible (e.g., things sold at a convenience store).Marketing Strategy Options related to the Distribution of Products
Advantages are performance descriptors that communicate how the features make the product behave, hopefully in a fashion that is distinctive and appealing to the target customers.
Benefits are the positive outcomes or need satisfactions people acquire from purchased products.
Another product descriptor that is highly valued by customers is quality, which refers to the overall characteristics of a product that allow it to perform as expected in the satisfaction of customer needs.Differential Strategies: Product Descriptors
This impression includes what the entity has done in the past, what it presently offers, and projections about what it will do in the future.
All aspects of the firm's marketing mix as perceived by target customers will affect this overall impression.
Marketers can manipulate the marketing mix elements to position and enhance a product's image (typically through promotion activities) in consumers' minds.Differentiation Strategy: Image
The firm must continue to invest time, money, talent, and attention in after-sale service to protect its market share and sales from competitors.
Strengthening positioning is about continually "raising the bar" of customer expectations, and being perceived by customers as the only firm capable of reaching the new height.Positioning Strategies: Strengthen Current Position
Declining sales or market share may signal that customers have lost faith in a product's ability to satisfy their needs. In such cases, strengthening the present position may well accelerate the downturn in performance; a new position may be the best response.
Repositioning may involve a fundamental change in any of the marketing mix elements, and perhaps even all of them.
Move the Competition to a New Position
Sometimes, it is advantageous to attempt to reposition the competition rather than change your own position.
A direct attack on a competitor's strength may put its products in a less favorable light, or even force the competitor to change its positioning strategy.Positioning Strategies: Repositioning