Strategy and the Marketing Mix

Business Policy

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Please note that these slides are not intended as a substitute

to reading the recommended text for this course.

Relevance of strategic marketing

The role of the consumer in a firm’s competitive advantage

The role of pricing management in a firm’s competitive advantage

Impact of price sensitive customer segment

Apply STP – Segmentation, Targeting, and Positioning process

Chapter 2: Johnson, Scholes & Whittington

Objectives

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Consumer / Buyer Behavior

The decision processes and purchasing

activities of people who purchase products

for personal or household use and not for

business purposes.

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Consumer Buying Decision Process/Possible Influences on the Process

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Expanded Marketing Mix – 7Ps

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Pricing decisions are influenced by various factors

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Cost of the Product

CompanyObjectives

CompetitionCustomer Needs &

Characteristics

Pricing Policy & Decisions

Pricing decisions from a company perspective

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AdvetisingSales

PromotionPublic

Relations

Personal Selling

Direct Marketing

Marketing Communications - Promotional Mix

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Integrated Marketing Communications

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An approach to

achieving the

objectives of a

marketing

campaign,

through a well

coordinated use

of different

promotional

methods that are

intended to

reinforce each

other.

Segmentation Marketing

– Identify bases for segmenting the market

– Develop segment profiles

Target Marketing

– Develop measure of segment attractiveness

– Select target segments

Market Positioning

– Develop positioning for target segments

– Develop a marketing mix for each segment

3 Steps in Target Marketing (S T P)

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Segmentation, Targeting & Positioning (STP) - Market segmentation

This is the process of dividing the total market for a good or service into several smaller, internally similar (or homogeneous) groups.

All members in a group have similar factors that influence their demand for the particular product.

– Mass marketing– Segmented – differentiated

marketing– Niche – distinctive traits– Micro - specific

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Geographic — The city size, urban/ suburban/ rural population distribution and climate.

Demographic — The distribution of a population’s age, sex, income, stage in family cycle and ethnic background.

Psychographic — Personalities, lifestyles, social class including activities, interests and opinions (AIO).

Behaviour towards products.

– Benefits desired or sought.

– Product usage rate.

Bases for segmentation

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Mcdonalds globally, sell burgers aimed at local markets, for example, burgers are made from lamb in India rather then beef because of religious issues.

In Mexico more chilli sauce is added and so on. Tereyaki burger in Japan.

Geographic Example - McDonalds

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Measurable examples include the size, purchasing power, and profiles of the segments.

Accessible refers to the fact that the market can be effectively reached and served.

Substantial refers to the fact that the markets are large and profitable enough to serve.

Differentiable refers to the fact that the markets are conceptually distinguishable and respond differently to marketing mix elements and programs.

Actionable refers to the fact that effective programs can be designed for attracting and serving the segments.

Segmentation Criteria

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Segment size and growth

Segment structural attractiveness –think 5 Forces – Competition / Substitute products /Power of buyers /Power of suppliers

Company objectives and resources

Evaluating Market Segments

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Undifferentiated marketing targets the whole market with one offer - Mass marketing

Differentiated marketing targets several different market segments and designs separate offers for each

Concentrated marketing targets a small share of a large market

Target Marketing Strategies

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Market coverage strategies

Segment 1

Segment 2

Segment 3

Companymarketing

mix

Segment 1

Segment 2

Segment 3

Companymarketing

mix

Company mix 1

Company mix 2

Company mix 3

Market

A. Undifferentiated marketing (Aggregation)

B. Differentiated marketing (Single segment)

C. Concentrated marketing (Multiple segments)

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Appeal to

‘All’

Think Coca

Cola / Cars

Shoes

Depends on:

– Company resources – limited resources - Concentrated

– Product variability – little to no variability – steel - undifferentiated

– Product life-cycle stage – new product could chose undifferentiated / concentrated

– Market variability – same tastes - undifferentiated

– Competitor’s marketing strategies – opposite /same

Choosing a Targeting Strategy

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Positioning is assessed:

– In relation to a competitor.

– According to a product class or attribute.

– By price and quality.

Positioning can be in various forms, although it always incorporates a statement that identifies, (based on the marketing mix) how a business wants its products or services to be perceivedby the consumer.

Positioning strategies

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Factors to consider:

– Competition — look for a gap or niche.

– Customers — seek product attributes.

– Company image — what is the current image?

– Target market — have the needs of the target market changed? Do we need repositioning?

– The marketing mix — does it support the selected position?

Selecting a position

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Branding is the imagery a company uses to make us IDENTIFY them and pick them out from their competition.

Branding can involve the use of a CONSISTENT range of colour or a LOGO.

The “Brand” can be the company e.g. TESCO; or it can be a product range that is a “Brand” e.g. “Lynx” (made by Unilever).

Branding - Definition

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Products & Brand

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Increases loyalty

Can charge HIGHER PRICES

Establishes product’s position

Can launch complimentary products in same brand name – e.g. shampoo; conditioner; hairspray.

Positive association

Be easy to pronounce and remember

Suggest product benefits

Be distinctive

Benefits of Branding to the consumer

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Basis for product’s quality story

Provides legal protection

Helps to segment markets

Allows premium pricing

Helps create loyalty

Benefits of Branding to the organisation

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Brand Positioning

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Own-label brands have become increasingly important in the Ireland. Once considered as a cheap alternative, own label brands are now an acceptable alternative, which account for over 20 per cent of food purchases. Supermarkets have moved on from creating copy-cat brands of leading manufactures to producing their own good quality ranges.

Ad: Give the kids healthy food they'll love with Disney Kids! Trusted by parents, loved by kids, Tesco Disney is a nutritious new range that encourages healthier eating. Making good food great fun the range covers everything from fresh fruit to Mickey shaped pizza.

Example: Tesco

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What is a New Product?

New Product

Replacement

Addition

New Line

New to the world

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PLC

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Pre-

Launch

The Seven-Stage New Product Development Process

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Idea Generation

ScreeningConcept

DevStrategy

DevBusiness Analysis

Product Dev

Mkt Testing

What is Service Marketing?

Definition: Activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product

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Health Care

– hospital, medical practice, dentistry, eye care

Professional Services

– accounting, legal, architectural

Financial Services

– banking, investment advising, insurance

Hospitality

– restaurant, hotel/motel, bed & breakfast

– ski resort, rafting

Travel

– airline, travel agency, theme park

Others

– hair styling, pest control, plumbing, lawn maintenance, counseling services, health club, interior design

Examples of Service Industries

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IntangibilityVariability /

Heterogeneity

Inseparability /

Simultaneous

Production

and

Consumption

Perishability

Characteristics of Services Compared to Goods

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Nature of Services

Characteristics

Intangibility

Inseparability

Variability

Perishability

Cannot be touched, seen, tasted, heard, or smelled before purchase

Lack of trial means higher consumer risk

Consumers rely on cues to draw quality inferences

Marketers must try to “tangibilise the intangible”

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Nature of Services

Characteristics

Intangibility

Inseparability

Variability

Perishability

Services are produced and consumed at the same time (air travel)

Service providers and sometimes other customers become part of the service (restaurant)

Strong preferences for service providers exist

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Nature of Services

Characteristics

Intangibility

Inseparability

Variability

Perishability

Service providers vary with respect to attitudes, skills, mood, etc. Even the same provider may give different service on a different day.

Quality control is critical:– Hiring the right people

– Standardising service

– Monitoring satisfaction

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Nature of Services

Characteristics

Intangibility

Inseparability

Variability

Perishability

Services can not be inventoried or otherwise stored

Capacity / demand management is critical:

– Demand side strategies

– Supply side strategies

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The Services Marketing Triangle

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Overall Strategic Assessment

– How is the service organization doing on all three sides of the triangle?

– Where are the weaknesses?

– What are the strengths?

Specific Service Implementation

– What is being promoted and by whom?

– How will it be delivered and by whom?

– Are the supporting systems in place to deliver the promised service?

Ways to Use the Services Marketing Triangle

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Understanding customer needs

Managing expectations

Traditional marketing communications

Sales and promotion

Advertising

Internet and web site communication

Five Major Approaches to Overcome Service Communication Channels

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Service delivery

– Reliability, responsiveness, empathy, assurance, tangibles, recovery, flexibility

Face-to-face, telephone & online interactions

The Customer Experience

Customer interactions with sub-contractors or business partners

The “moment of truth”

Keeping Promises

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Enabling Promises

Hiring the right people

Training and developing people to deliver service

Employee empowerment

Support systems

Appropriate technology and equipment

Rewards and incentives

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