Marketing Strategy Planning Process

1. Narrowing down tofocused strategy with screening criteria Customers S. W. O. T. Segmentation & Targeting Product Place Company TargetMarket Differentiation & Positioning Price Promo Competitors External Market Environment Marketing Strategy Planning Process Exhibit 3-1 3-3

2. What is Market Segmentation? • Market segmentation: The act of dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors who might require separate products and/or marketing mixes.

3. A. Product-market showing three segments B. Product-market showing six segments Status dimension Status dimension Dependability dimension Dependability dimension Market Segmentation Exhibit 3-6 3-9

4. Bases for Segmentation • Geographic Segmentation • Demographic Segmentation • Psychographic Segmentation • Sociocultural Segmentation • Usage-Situation Segmentation • Hybrid Segmentation Approaches

5. Market Segmentation SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Geographic Segmentation Region Southwest, Northeast City Size Major metropolitan cities, small cities, towns(Tire1,II,III Density of area Urban, suburban, rural Climate Temperate, hot, humid, rainy Demographic Segmentation Age Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ Sex Male, female Marital status Single, married, divorced, living together, widowed Income Under Rs25,000, Rs25,000-Rs34,999, Rs35,000-Rs49,999, Rs50,000-Rs74,999, Rs75,000-Rs 99,999, Rs100,000 and over Education Some high school, high school graduate, some college, college graduate, postgraduate Occupation Professional, blue-collar, white-collar, agricultural, military, own business

6. Table 3.2, continued SEGMENTATION SELECTED SEGMENTATION VARIABLES Psychological Segmentation Needs-motivation Shelter, safety, security, affection, sense of self-worth Personality Extroverts, novelty seeker, aggressives, low dogmatics Perception Low-risk, moderate-risk, high-risk Learning-involvement Low-involvement, high-involvement Attitudes Positive attitude, negative attitude Psychographic (Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers Sociocultural Segmentation Cultures Gujrati, Marathi,Punjabi,Bengali, Religion Hindu,Muslim,Christan,Sikh Subcultures (Race/ethnic) Brahmin, Kshatriya,Baniya Social class Lower, middle, upper Family life cycle Bachelors, young married, full nesters, empty nesters

7. SEGMENTATION BAS SELECTED SEGMENTATION VARIABLES Use-Related Segmentation Usage rate Heavy users, medium users, light users, non users Awareness status Unaware, aware, interested, enthusiastic Brand loyalty None, some, strong Use-Situation Segmentation Time Leisure, work, rush, morning, night Objective Personal, gift, snack, fun, achievement Hybrid Segmentation Location Home, work, friend’s home, in-store Demographic/ Psychographics Combination of demographic and psychographic profiles of consumer segments profiles Person Self, family members, friends, boss, peers Geodemographics “Money and Brains,” “Black Enterprise,” “Old Yankee Rows,” “Downtown Dixie-Style” Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money SRI VALSTM Actualizer, fulfilled, believer, achiever, striver, experiencer, maker, struggler

8. A segmenter The Strategy Market-Oriented Approaches Using single target market approach— can aim at one submarket with one marketing mix 3-10

9. A segmenter Strategy One Strategy Three Strategy Two Market-Oriented Approaches Using multiple target market approach— can aim at two or more submarkets with different marketing mixes

10. Step 2. Market TargetingMarket Coverage Strategies Market Company Marketing Mix Company Marketing Mix 1 Segment 1 Company Marketing Mix 2 Segment 2 A. Undifferentiated Marketing Segment 3 Company Marketing Mix 3 Segment 1 Company Marketing Mix Segment 2 B. Differentiated Marketing Segment 3 C. Concentrated Marketing

11. Step 2. Market TargetingChoosing a Market-Coverage Strategy Company Resources Product Variability Product’s Stage in the Product Life Cycle Market Variability Competitors’ Marketing Strategies

12. Five Patterns of Target Market Selection M1 M2 M3 P1 P2 P3 Single - Segment Specialization A firm selects one segments in the market and makes one product for them .Woodland shoes

13. Five Patterns of Target Market Selection M1 M2 M3 P1 P2 P3 Selective Specialization A firm selects a number of segments, each objectively attractive and appropriate.

14. M1 M2 M3 P1 P2 P3 Product Specialization The firm makes a certain product that it sells to several different market segments.

15. M1 M2 M3 P1 P2 P3 Market Specialization The firm concentrates on serving many needs of a particular customer group.

16. M1 M2 M3 P1 P2 P3 Full Market Coverage The firm attempts to serve all customer groups with all the products they might need. Only very large firms can attempt to do that P= Product M= Market

17. Positioning Strategy

18. Step 3. Choosing a Positioning Strategy Step 1. Identifying Possible Competitive Advantages Step 2. Selecting the Right Competitive Advantage Step 3. Communicating and Delivering the Chosen Position

19. Step 3. Positioning for Competitive Advantage • Product’s Position - the place the product occupies in consumers’ minds relative to competing products; i.e. Volvo positions on “safety”. • Marketers must: • Plan positions to give products the greatest advantage • Develop marketing mixes to create planned positions

20. G H C A D E B F Step 3. Positioning for Competitive Advantage: Strategies Product Class Product Attributes Away from Competitors Benefits Offered Usage Occasions Against a Competitor Users

21. Product Service Developing Competitive Differentiation Areas for Competitive Differentiation Personnel Image

22. Product Differentiation (e.g., consistency, durability, reliability, repairability) Services Differentiation (e.g., speed, convenience, careful delivery) Channel Differentiation People Differentiation (e.g., hiring, training better people than competitors) Image Differentiation (e.g., convey benefits and positioning) Identifying Possible Competitive Advantages

23. Selecting the Right CompetitiveAdvantages Important Profitable Distinctive Criteria for Determining Which Differences to Promote Affordable Superior Communicable Preemptive

25. Communicating and Delivering the Chosen Position • Company must take strong steps to deliver and communicate the desired position to target consumers. • The marketing mix efforts must support the positioning strategy. • Must monitor and adapt the position over time to match changes in consumer needs and competitors’ strategies.

26. Positioning of Different Bar Soaps High moisturizing • Pears • LUX International 7 4 • Cinthol • Dove 2 5 Santoor • Lux 8 Nondeodorant Deodorant 3 1 • Medimix • Margo “Product Space”Representing Consumers’ Perception for Different Brands of Bar Soap • Lifebuoy 6 Low moisturizing 3-14

27. Positioning Errors • Underpositioning: • Failing to really position the company at all. • Overpositioning: • Giving buyers too narrow a picture of the company. • Confused Positioning: • Leaving buyers with a confused image of a company.

28. Rest Stop: Reviewing the Concepts • Define the three steps of target marketing: market segmentation, market targeting, and market positioning. • List and discuss the major bases for segmenting consumer and business markets. • Explain how companies identify attractive market segments and choose a target marketing strategy. • Discuss how companies position their products for maximum competitive advantage in the marketplace.

29. NEW PRODUCT DEVELOPMENT • Explain how companies find and develop new-product ideas. • List and define the steps in the new-product development process. • Describe the stages of the product life cycle. • Describe how marketing strategies change during the product’s life cycle.

30. NEW PRODUCT DEVELOPMENT

31. Strategies for Obtaining New-Product Ideas New-Product Development Strategy Acquisition of: Companies Patents Licenses New Products: Original Products Improvements Modifications

32. New-Product Failures • Only 10% of new products are still on the market and profitable after 3 years. • Failure rate for industrial products is as high as 30%. • Why? • Overestimation of market size • Design problems • Incorrectly positioned, priced, or advertised • Pushed despite poor marketing research findings • Development costs • Competition

33. Major Stages in New-Product Development

34. Idea Generation Screening Idea Evaluation Development Commercial -ization Strengths and weaknesses Fit with objectives Market trends Rough ROI estimate Concept testing Customer reactions Rough estimates of cost, sales, profits R & D Develop model or service prototype Test marketing mix Revise plans as needed ROI estimate Finalize product and marketing plan Start production and marketing “Roll out” in select markets Final ROI estimate Ideas from: Customers and users Marketing research Competitors Other markets Company people Intermediaries New-Product Development Process

35. Company Employees Customers Competitors Flow of Ideas and Product Distributors Suppliers

36. Idea Screening • Process to spot good ideas and drop poor ones. • Develop system to estimate: market size, product price, development time and costs, manufacturing costs, and rate of return. • Evaluate these findings against set of company criteria for new products.

37. Concept Development and Testing • Product Idea: idea for a possible product that the company can see itself offering. • Product Concept: detailed version of the idea stated in meaningful consumer terms. • Product Image: the way consumers perceive an actual or potential product.

38. Part One Describes: The Target Market Planned Product Positioning Sales, Market Share, & Profit Goals Marketing Strategy Development Part Two Outlines the First-Year’s: Product’s Planned Price Distribution Marketing Budget Part Three Describes Long-Run: Sales & Profit Goals Marketing Mix Strategy

39. Business Analysis • Involves a review of the sales, costs, and profit projections to assess fit with company objectives. • If yes, move to the product development phase.

40. Product Development • Develop concept into physical product • Calls for large jump in investment • Prototypes are made • Prototype must have correct physical features and convey psychological characteristics

41. Test Marketing • Product and program introduced in more realistic market setting. • Not needed for all products. • Can be expensive and time consuming, but better than making major marketing mistake.

42. Test Marketing Nokia test-marketed its new N-Gage cell phone/mobile game player extensively before introducing it worldwide.

43. Commercialization • Must decide on timing (i.e., when to introduce the product). • Must decide on where to introduce the product (e.g., single location, state, region, nationally, internationally). • Must develop a market rollout plan.

44. Organizing New-Product Development • Sequential Approach: each stage completed before moving to next phase of the project. • Simultaneous Approach: Cross-functional teams work through overlapping steps to save time and increase effectiveness.

45. THEORY OF DIFFUSION OF A NEW PRODUCT 21/2 % INNOVATORS 34% EARLY MAJORITY 131/2% EARLY ADOPTERS 34% LATE MAJORITY 16% LAGGARDS

46. THE CONSUMER ADOPTIONPROCESS (STAGES IN THE ADOPTION PROCESS ) • Awareness : The consumer becomes aware of the innovation but lacks information about it. • Interest : The consumer is stimulated to seek information about the innovation. • Evaluation : The consumer considers whether to try the innovation. • Trial : The consumer tries the innovation to improve his or her estimate of its value. • Adoption : The consumer decides to make full and regular use of the innovation.