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PILLARS OF MARKETING - STPD StrategiesGroup- 2:Shrikant Bhole 6Megharaj Birje 7Sagar Chachondia 8Rajeshwari Chintalwar 9Satyaprakash Dubey - 10INTRODUCTIONDSTP + Marketing Mix = Marketing StrategyDifficult to connect with large customer base Identifying the right market is the key to successServes as the instrument of Value delivery.

Specifies following w.r.t. its products.Differentiation strength?Product-offer will it make?Marketing programs to be carried out?Market segment need to be served?What are the growth paths?What are the competitive advantage?

Page 170 189 in kotler2MARKETING STRATEGYSegmentation: Understanding the heterogeneous market and dividing the market into various segmentsDistinguishes one customer group from another within the same market.E.g. Ford motors modifies its models for Indian market like Higher ground clearance for rougher road surface.

Targeting: Evaluating the market segments and selecting the ones which is attractive based on Size, growth and profitability.Each segment gives distinct market opportunity.E.g. Reebok shifted recently to much lower end of Consumers. Offer Classic categories of shoes at 900/Pair.

Positioning:Was popularized by two advertising executive Al Ries and Jack TroutAct of designing the companies offering and image to consumers mindCreation of Consumer-focused Value PropositionE.g. 7-UP positioned itself as The UNCOLA

Differentiation: Task of Defining your Differences - Jack TroutTo define your brand differently; Competitive advantage.A brand can be built and developed only through differentiation.E.g. Videocon fridge has its differentiation on certain functional features.

MARKETING STRATEGYDiff 402-405 in ramaswami

4Segmentation means the identification of customer groups that respond differently from other groups to competitive offeringConsumers can be grouped together so that the behavior of group members is similar to each other, and noticeably different from the behavior of other groups. Groups of this nature- groups of consumers showing common patterns of consumption behaviour- are called Market Segments, and the process of dividing the market up into groups is called SegmentationA segmentation strategy couples the identified segments with a program to deliver an offering to those segments. Development of a successful segmentation strategy requires the conceptualization, development and evaluation of a targeted competitive offeringSegment is often the key to developing a sustainable competitive advantageSegmentation strategy is judged on three dimensionsCan competitive offering be developed and implemented that will be appealing to the target segment?Can the appeal of the offering and the subsequent relationship with the target segment be maintained over time despite competitive response?Is the resulting business from the target segment worthwhile, given the investment required to develop and market an offering tailored to it? SEGMENTATIONSegmentation in companies is a more complex and messy process than in textbooks. The task of identifying segments is difficult, because in any given context there are literally hundreds of ways to divide up the marketMarkets must be continuously segmented and re-segmented to arrive at a scheme that delivers actionable segmentActionable segments share three characteristicsDistinctiveness, that is, different segments respond differentially to marketing mixIdentity, that is, the ability to reasonably profile which customer falls within which segmentAdequate Size, so that the development of tailored marketing programs for individual segments is economically viable for the firm

Examples of approaches to defining segmentsCustomer Characteristics- 1. Geographic 2. Type of Organization 3. Size of firm 4. Lifestyle 5. Sex 6. Age 7. OccupationProduct-related- 1. User type 2. Usage 3. Benefits sought 4. Price sensitivity 5. Competitor 6. Application 7. Brand LoyaltySEGMENTATIONAim of consumer market segmentation is to identify subgroups within the overall market. When addressing organizational markets the aim is the same, but rather than groups of individuals or families, the marketing manager must identify coherent groups of organizationsThere are three easy to observe characteristicsOrganizational Size- It is measured in terms of annual sales turnover, number of employees or even volume of productionIndustry Sector- This is measured in an informal way, simply by referring to the banking sector or manufacturing industryGeographical location- It simply allocates customers to domestic and export markets SEGMENTATIONMultiple Segment vs Focus StrategyFocus Strategy- It focuses on a single segment, which can be much smaller than the market as a wholeWalmart, now the largest U.S retailer, started by concentrating on cities with populations under 25,000 in eleven south central states. This rural geographic focus strategy was directly responsible for several significant SCAs, including an efficient and responsive warehouse supply system, a low-cost, motivated work force, relatively inexpensive retail space and a lean and mean, hands on management styleMultiple Segments Strategy- It involves multiple segments instead of single segmentGeneral Motors is a classic example. In the 1920s, the firm positioned the Chevrolet for price-conscious buyers, the Cadillac for the high end and the Oldsmobile, Pontiac and Buick for well-defined segments in betweenSEGMENTATIONTargeting of target market selection is the process of deciding which market segments the company should actively pursue to generate sales

After the segmentation process, each segment must be assessed to decide whether it is a potentially profitable target

Evaluating segments for targeting based on the following characteristics for attractiveness :Sufficient current and potential sales and profitsFuture growth potentialNot much competitiveLow entry and exit barriersHas relatively unsatisfied needs that the company can serve well

The process of target marketing is the manipulation of the marketing mix such that a distinctive marketing mix is designed for each chosen market segment

TARGETINGPage: 31. Nirmalya KumarPage: 168.. Rosalind Masterson & David PicktonPage: 19, 20. Geoff Lancaster and Paul Renolds9Five step process to choose attractive market segments for a firm based on the segments future attractiveness and the firms strengths and capabilities

Step-1: Select Market-Attractiveness and Competitive-Position factors

Step-2: Weigh each factor

Step-3: Rate segments on each factor, plot results on matrices

Step-4: Project future position for each segment

Step-5: Choose segments to target, allocate resources

CHOOSING ATTRACTIVE TARGET MARKETSPage: 143-148 Walker/Mullins/Boyd/Larreche10UndifferentiatedWhen there is a single marketing mix for all customersFord Model T: You can paint it any colour, as long as it is blackThis kind of undifferentiated strategy is powerful when standardization lowers the cost and opens up the industry to large no of new customers

DifferentiatedWhen there are multiple marketing mixes for different market segmentsFord motor company has a portfolio of brands including Aston Martin, Ford, Lincoln, etc.

ConcentratedWhich has one marketing mix for a segment of the entire marketRolex targets only the luxury segment of the watch market

CustomWhich attempts to satisfy each customers needs with an individual marketing mixAn Architect will design a house as per customer given specificationsTARGETING STRATEGIESPage: 24.. Geoff Lancaster and Paul RenoldsPage: 31, 32.. Nirmalya KumarPage: 173.. Rosalind Masterson & David Pickton

11Is about developing a unique selling proposition for target segmentPositioning is not what you do to a product,Positioning is what you do to the mind of prospectPositioning is also the first body of thought that comes to grips with the problems of getting heard in our over communicated societyPOSITIONINGImplementation Playing the Positioning Game

You must understand words You must understand people You must be careful of change You need vision You need courage You need objectivity You need simplicity You need subtlety You need patience You need a global outlook You need to be They -oriented

POSITIONINGA powerful theme in developing business strategies, as well as in marketingBusiness concentrates on achieving superior performance in an important customer benefit area valued by a large part of the marketThus, a firm must be truly unique at something or be perceived so, if it is to expect a premium priceIt also has to see that the price premium is justified by the value generated by its differentiationDifferentiation in business strategies: Competitive ScopeCompetitive AdvantageLower CostDifferentiationBroad TargetCost Leadership StrategyDifferentiation StrategyNarrow TargetFocus Strategy ( Cost- Based)Focus Strategy(Differentiation- BasedDIFFERENTIATINGPage: 296 & 297.kotlerPg. 192 ramaswamyPg155 boyd14Differentiation among Goods and Services: - Differences are physical as well as perceptual Done by offering either superior product quality, superior service, or bothDimensions of product quality- what dimensions customers perceive to underline differences across productsDimensions of Service Quality: pertains to both the objective performance dimensions as well as elements of the performance

Product Differentiation:-Form-Features-Customization-Performance Quality-Conformance Quality-Durability-Reliability-Reparability-StyleServices Differentiation:

Ordering EaseDeliveryInstallationCustomer TrainingCustomer ConsultingMaintenance & RepairReturns

DIFFERENTIATINGBoyd..pg 155

15For a brand to be effectively positioned, customers must see any competitive advantage as a customer advantageMeans of differentiation: -Employee Differentiation Pharmaceutical companies lay great emphasis on training their medical representatives to improve credibility with the doctor -Channel Differentiation Companies can more effectively & efficiently design their distribution channels coverage, expertise & performance -Image Differentiation Companies can craft powerful, compelling images that appeal to consumers social and psychological needs -Services Differentiation A service company can differentiate itself by designing a better & faster delivery system that provides more effective and efficient solutions to consumersMEANS OF DIFFERENTIATION25216The differentiation-oriented Strategy requires the firm to choose the attributes of differentiation very carefullySince differentiation can be shaped around a large variety of factors, there can be many different types of differentiation-oriented strategies:Differentiation with emphasis on Product: - Product covers attributes such as its functionality, packing convenience, etc. - For e.g.: Intel, e-Bay & Gillette (a) Differentiating with emphasis on experience: -Anything that is of value to the customer can be used as a base for differentiating an offer - For e.g.: Experiential brands- the new generation coffee cafes (b) Differentiating with emphasis on Pack-Size: - Pack size became the differentiator- bring it down to as low a unit as possible so that a mini price could be tagged into it - The objective was to break the price barrier that prevented even a trial among the lower-end segments -For e.g.: Chotta Coke, Godrej Cooklite (c) Differentiating with emphasis on Service: - Fairly big spectrum of airline companies

DIFFERENTIATION-ORIENTED STRATEGIESPg 192172. Differentiation with emphasis on Distribution: - Reaching Indias village markets have always remained a problem for business firms - Maximum penetrating retail network in rural India belongs to HUL - The new retail channel-> e- Choupal to unblock the demands lying in rural India3. Differentiation with emphasis on Promotion: - Some companies/ brands resort more to promotion and rely more on appeals with psychological/ emotional/ prestige/ status orientation than rational, tangible, and benefit oriented ones - For ex: LOreal, Ray Ban, Nike, etc. - Following are the features: Selling more of image/ status than a product Showcasing the user Suits image brands more Promotion contributes to brand equity over time

DIFFERENTIATION-ORIENTED STRATEGIESTHANK YOU