Mm aug 2014 module 3
- 1. Marketing – Module 3
- 9. Why STP? • To Compete Effectively • Focus on Customer and Satisfy
- 10. Requirements for STP? • Identifying and Profiling distinct group of Buyers who differ in their needs and wants • Select one or more market segments to enter • For each segment, establish and communicate the distinctive benefit of the Company’s market offering
- 11. Market Segment • Consists of group of customers who share similar needs or wants • Factors considered for Segmentation – Measurable – Size, Purchase – Accessibility – Effectively reached and served – Actionability – Effective programs can be designed – Differentiable – Distinguishable – Substantial – Large and Profitable
- 12. Variables for Segmentation • Descriptive Characteristics – Geographic – Demographic – Psychographic • Behavioral Characteristics – Needs and Benefit – User and Usage Related – Loyalty Status
- 13. Geographic Segmentation • Regions • Cities • Rural / Urban • Nations • Grassroot Marketing • Size and Market Attractiveness of different geographic markets are important considerations
- 14. Demographic Segmentation • Age and life cycle stage • Gender • Income • Socio-Economic Classification • Generation
- 15. Psychographic Segmentation • Use of Psychology to understand customers • Division based on Psychological / Personality Traits / Lifestyle / Values • People in the same demographic group can display different Psychographic profiles • Most popular classification is VALS Framework, classifies adults into 8 groups based on responses to a questionnaire
- 16. VALS Framework • Main Dimensions are Consumer Motivation and Consumer Resources
- 18. VALS Framework • Consumers are inspired by one of three primary motivations – Ideals: People guided by knowledge and principles – Achievement: look for products and services that demonstrate success to their peers – Self Expression: Social / Physical Activity, Variety and risk
- 19. VALS Framework • The 4 groups with higher resources are – Innovators – Thinkers – Achievers – Experiencers • The 4 groups with lower resources are – Believers – Strivers – Makers – Survivors
- 20. Behavioral Segmentation • Needs and Benefit • Decision Roles • User and Usage Related: Occasions, User Status, Usage Rate • Buyer Readiness Stage • Loyalty Status
- 21. TARGETING • There are many statistical techniques for developing market segments • Marketers are increasingly combining several variables in an effort to identify smaller better defined target groups • This has led to need based market segmentation appraoch
- 22. Effective Segmentation Criteria • Measurable • Substantial • Accessible • Differentiable • Actionable
- 23. Roger Best’s Seven Step • Needs Based Segmentation: Group customers into segments based on similar needs and benefits sought by customers in solving a particular consumption problem • Segmentation Identification: For each needs based segment, determine which demographics, lifestyle and usage behaviors make the segment distinct and identifiable (actionable) • Segment Attractiveness: Using predetermined segment attractiveness criteria(market growth, competitive intensity, market access) determine overall attractiveness of each segment
- 24. Roger Best’s Seven Step • Segment Profitability: Determine Segment Profitability • Segment Positioning: For each segment, create a “Value Proposition” and product-price positioning strategy based on that segment’s unique customer needs and characteristics • Segment Acid Test: Create “Segment Story Board” to test the attractiveness of each segment’s positioning strategy • Marketing Mix Strategy: Expand Segment Positioning strategy to include all aspects of marketing mix: Product, Price, Promotion and Place
- 25. Michael Porter’s Five Force • Threat of Intense Segment Rivalry • Threat of new entrants • Threat of Substitute Products • Threat from Buyer’s growing bargaining power • Threat from Supplier’s growing bargaining power
- 26. Evaluating and Selecting the Market Segments • 2 Factors: Segment Overall Attractiveness and Company’s Objectives and Resources • There are 4 approaches – Full Market Coverage – Multiple Segment Specialization – Single Segment Concentration – Individual Marketing
- 27. Full Market Coverage • A firm attempts to serve all customer groups with all the products they might need, e.g. Microsoft, GM, Coca-Cola • Undifferentiated Marketing – Mass Communication – Largest Potential Market – Lowest cost, highest margin – Narrow product line keeps R&D, production, inventory costs down • Differentiated Marketing: Different product to different segments – Creates more sales than undifferentiated marketing – Increases the cost of business
- 28. Multiple Segment Specialization • Selective Specialization: A firm selects a subset of all the possible segments • There may be little or no synergy among segments, but each promises to be a moneymaker • This strategy diversifies risk • Supersegment is a set of segments sharing some exploitable similarities • A firm can attempt to achieve some synergy with – Product Specialization e.g. Microscope – Market Specialization
- 29. Single Segment Concentration • Firm markets to only one particular segment • Concentrated Marketing • Niche is a narrowly defined customer group seeking a distinctive mix of benefits within a segment
- 30. Individual Marketing • Ultimate level of segmentation leads to Customized Marketing or one-to-one marketing • Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice
- 31. Ethical Choice of Market Targets • Marketers must target carefully to avoid any backlash • Targeting can generate controversy when marketers take unfair advantage of vulnerable groups • Socially Responsible Marketing
- 32. POSITIONING • Company can make a mark • Requires keen understanding of consumer needs, and wants, company’s capability and competitive actions • “Foot in the present” and a “foot in the future” • Trick is to strike the right balance between what the brand is and what it could be • Result is creating customer focused value proposition
- 33. POSITIONING • Requires that marketers define and communicate similarities and differences between their brand and its competitor • Positioning requires: – Determining a frame of reference by identifying the target market and relevant competition – Identifying the optimal points of parity and points of difference brand association – Creating a brand mantra to summarize the positioning and essence of brand
- 34. Determining a competitive frame of reference • Defines which other brands a brand competes with, therefore which brands should be the focus of competitive analysis • Decision about the competitive frame of reference are closely related to target market decisions • Target market can define the nature of competition
- 35. Determining a competitive frame of reference • Identifying competitors – Category membership, Aquafina, CitiBank – Range of actual and potential competitors can be much broader than the obvious – More likely to be hurt by emerging competitors or new technology rather than current competition, Nokia vs Samsung – Firms should identify their competitive frame in the most advantageous way possible, Sensodyne – Industry – Competitors
- 36. Determining a competitive frame of reference • Analyzing competitors – Company needs to gather info about each competitor’s real and perceived strengths and weakness – Once company has identified competitor and its strategy, it must understand what is each competitor seeking in the marketplace – Many factors shape a competitor’s objective including size, history, current management and financial situation – Parent company running for growth or for profit – Marketers must formally define the competitive frame of reference to guide positioning
- 37. IDENTIFYING OPTIMAL POINTS OF DIFFERENCE AND POINTS OF PARITY • Once frame of reference is defined, the company has to define the appropriate points of difference and points of parity associations • Points of difference – Attributes or benefits that consumers strongly associate with a brand, positively evaluate and believe they could not find to the same extent with a competitive brand
- 38. IDENTIFYING OPTIMAL POINTS OF DIFFERENCE AND POINTS OF PARITY • Points of Difference – POD can be any type of attribute or benefit – Strong brand may have multiple points of difference, Apple – Design, ease-of-use, Nike – Performance, innovative tech, winning – Creating strong, favorable and unique associations is a real challenge, but essential one for competitive brand positioning – Criteria to determine if brand association can be POD • Desirability • Deliverable • Differentiable
- 40. IDENTIFYING OPTIMAL POINTS OF DIFFERENCE AND POINTS OF PARITY • Points of Parity – Attribute or benefit association that are not necessarily unique to the brand but in fact be shared with other brands – Category POP – Competitive POP, Hyundai, McDonalds
- 41. Situation What to emphasize When the firm is a ‘me-too’ competitor In this case, being a weaker competitor, the goal is to piggyback on the success of the market leader by highlighting many points-of-parity When the firm as a market leader This is the reverse situation from the one above. To maintain market leadership, the brand/product needs to be seen in as superior/different in key ways, thus highlighting the need to focus on relevant points-of- difference When the firm enters an established and mature market In this case, the likelihood of switching is relatively lower, so points-of- difference are required to break their habitual loyalty When the firm and is a fast- growing market Fast-growing markets have primary demand (that is, first-time customers to the market), therefore points-of-parity positioning will should be quite successful in capturing new customers When there is a diversity of needs, even when looking at fairly narrow market segments When there is significant diversity of consumer needs, a points-of- difference positioning should ensure that reasonable market share is generated In a target market where the firm already offers multiple products To reduce the risk of cannibalization of sales, the firm would need to have more emphasis on points-of-difference In a relatively price sensitive market Our goal in this case would be to provide additional benefits, in order to reduce the importance of price in the decision. Therefore, a points-of- difference positioning emphasis would be required
- 42. BRAND MANTRA • Mantra is an articulation of the heart and soul of the brand • Short 3 to 5 word phrases that capture the irrefutable essence or spirit of positioning • Ensure understanding of the brand by employees as well as customers – Nike – Authentic Athletic Performance, Just do it – Disney – Fun Family Entertainment
- 43. Positioning Strategies • Using Product Characteristics or Customer Benefits • Positioning by Price and Quality • Positioning by use or application • Positioning by Product User • Positioning by Product Class • Positioning by Cultural Symbols • Positioning by Competitor
- 44. Tasks Involved in Positioning • Identify the competitors • Determine how the competitors are perceived and evaluated • Determine the competitors positioning • Analyze the customers • Select the position • Monitor the position
- 45. BRANDING • AMA defines Brand as a “name, term, sign, symbol or design or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors • Differences may be functional, rational or tangible
- 46. Role / Functions of Brands • Simplify Product Handling / Tracing • Organize Inventory and Accounting Records • Legal Protection • Quality • Intangible Asset • A good brand name should be – Easy to pronounce and remember – Short and sweet – Legally protectable – original
- 47. Criticism against Branding • Creates Brand Loyalty in turn promoting Monopoly • Expensive • Confusion
- 48. Selecting Brand Name and Logo • Easy to pronounce, recognize and remember • Denote something about the nature / function of the product • Types of Brands – Individual and Family – Manufacturer and Distributor Brand – Regional / National Brand
- 49. Brand Equity • Refers to a set of assets and liabilities linked to brand, its name and symbol that add or to subtract from the value provided by the product or service to a form and or that firms competition • Components – Customer Loyalty – Brand Awareness – Brand Recall – Perceived Quality – Brand Association – Attributes and Benefits – Proprietary Assets
- 50. Brand Equity – Benefits to Customers • Information Processing • Confidence • Usage Satisfaction
- 51. Brand Equity – Benefits to Marketers • Increase effectiveness of marketing • Increase customer loyalty • Premium prices • Growth opportunities • Competitive weapon
- 52. LA FIN