Chapter-6

Why market segmentation and target marketing make sense?

Because markets are rarely homogeneous in benefits wanted , purchase rate , price and promotion strategies. Their response rate to products and marketing program differ. Population growth has slowed and more product markets are maturing. Expanding disposable income , higher education levels and more awareness has created customers with more varied and sophisticated needs , tastes and lifestyle. Increasing trend towards microsegmentation.

How market segments are best defined?

Identify a homogenous segment that differs from other segments. Specify criteria that define the segment Determine segment size and potential

Descriptors
Behavioral Geodemographic Demographic

Five step process of choosing attractive market segments

1. 2. 3. 4. 5.

Select market attractiveness and competitive-position factors. Weight each factor Rate segments on each factor Project future position for each segment Choose target segment to allocate resources.

Different market strategies

1.

2.
3.

Niche market strategy Mass market strategy Growth market strategy

Chapter-7

Key to customer preference and competitive advantage

Differentiation in business strategies. Differentiation in goods and services

Levers to establish positioning

1. 2.

3.

4.

Simple physically based attributes like quality power or size. Complex physically based attributes like speed of comp. , roominess of car or product or service being user friendly. Essentially abstract attributes like sexiness of perfume , quality of french wine , prestige of car. price

Steps in positioning process

1. 2.

3.
4. 5. 6. 7.

Identify relevant set of competitive products serving the target market. Identify the set of determinant attributes Collect information from sample Determine products current location Determine customer preference Examine market positioning Write positioning statement

Chapter 8

Market entry strategies

1.

2.

Pioneer strategy Follower strategy

Pioneer-advantages
Economies of scale and experience High switching cost for early adopters Distribution advantage Pioneer defines the rules of the game Possibility of positive network effects Influence on consumer choice criteria and attitudes

Follower-advantages
Ability to take advantage of pioneers positioning mistakes Product mistakes Marketing mistakes Latest technology Of pioneers limited resources

Determinants of success of these strategies

Large entry scale Broad product line High product quality Heavy promotional expenditures

Mass market penetration

Appropriate when the product category is likely to experience positive network effects.

Niche penetration

Most appropriate when the new market is expected to grow quickly and there are number of diff benefit segments to appeal to.

chapter9

Opportunities and risks in growth market

1.

2.
3. 4.

Gaining share is easier Share gains are worth more Price competition is likely to be less intense Early entry is necessary to maintain growth expertise

Marketing actions to achieve share maintenance objectives

Improve satisfaction and loyalty Encouraging repeat purchase Reducing attractiveness of switching Head to head positioning against competitive offerings Differential positioning against competitive.

Chapter-10

Challenges in mature markets

Primary marketing objective of all competitors in mature market is to hold their existing customers

Challenges in declining market

Technological advances Changing customer demographics Tastes and lifestyle

Methods of differentiation
1. 2.

Dimensions of product quality Performance Durability Features Reliability Brand name Dimensions of service quality Tangibles Reliability Responsiveness Assurance Empathy

Methods of maintaining low cost position

1.

2.
3. 4. 5. 6.

No-frills product Innovative product design Cheaper raw material Innovative product process Low cost distribution Reduction in overheads

Strategies for extending volume growth

1.

2.
3. 4.

Increased penetration strategy Extended use strategy Market expansion strategy Global market expansion-sequential strategies

harvesting strategy
Maximize short term cash flow maintain or increase margins even at expense of market share decline

Maintenance strategy
Maintain market share for the short term Even at the expense of margins

Profitable survivor strategy

Increase share of the declining market; encourage weaker competitors to exist.

Niche strategy

Strengthen share position in one of few segments with potential for continued profit.

Components of Strategy
Scope Goals and objectives Resource deployments Identification of sustainable competitive advantage Synergy

How to be a Market-Driven Organization.

Keep

close to customers and ahead of competition Love the customer more than the product Our legitimacy is based on customer satisfaction Do business the way the customer wants to do it Our mission is to find needs and fill them, not to make products and sell them If were not customer-driven, our products wont be either

Characteristics of a viable SBU.

Unique business mission Definable set of competitors Integrative planning done independently Responsible for resource management in all areas Large enough but not so large as to become bureaucratic

Key Elements of Marketing Strategy Formulation.

The strategic 3 Cs - Customers, Competitors & the Corporation Environment analysis Strategic Marketing Decisions - Where to compete - How to compete - When to compete

A Viable Marketing Strategy.

Must have: a clearly defined market a good match between corporate strengths and market needs significant positive differentiation in the key success factors of the business

Alternative Corporate Growth Strategies

Corporate Objectives

Components of an objective:
A performance dimension A measure or index for evaluating progress A target or hurdle level to be achieved A time frame within which the target is to be accomplished

Components of a Corporate Strategy

Overall scope and mission of the organization Company goals and objectives Source of competitive advantage Development strategy for future growth Allocation of corporate resources across firms various businesses Sources of synergy

Two Approaches to Forecasting Demand

Top Down
1. Forecast economic conditions 2. Determine market potential 3. Estimate market share 4. Forecast sales

Bottom Up

2. Add individual estimates to get total forecast 1. Estimate demand in market segments or from organizational units in the company

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