S

MARKETING STRATEGY
Part 1
DIE UNT ERNEHM ERISCHE HOCHSCHUL E

M CI M ANAGEM ENT CENT ER INNSBRUCK
6020 Innsbruck / Austria

Universittsstrae 15
Marketing Strategy
www.mci.edu
Elgar Schnegg
Course objective
Main objective of this course is to provide the participants with a general

understanding of the main issues concerning the formulation and
implementation of a marketing strategy. The students understand the central
concepts of market segmentation, differentiation and positioning, and the
strategic dimension of customer relationship management. They know
which data are needed and know basic tools to come to the decisions.


Universittsstrae 15
Marketing Strategy
www.mci.edu
Elgar Schnegg
Marketing Strategy
Curriculum
Definition, scope and development of marketing strategy

Market analysis
Market targeting
- segmentation
- differentiation
- positioning
Customer relationship management
Implementation issues


Universittsstrae 15
Marketing Strategy
www.mci.edu
Elgar Schnegg
Teaching method
Lecture and discussion
Continuous development of real world examples
Group work results presentation
Exam


Universittsstrae 15
Marketing Strategy
www.mci.edu
Elgar Schnegg
My goals and expectations
Textbook knowledge
Interactive sessions/active participation
Practical applications
Learn for your (future) job
Know where to find it
Remember key elements and approaches
You pass your exam (superbly)
Like and Enjoy the course


Universittsstrae 15
Marketing Strategy
www.mci.edu
Elgar Schnegg
What is Marketing? Why is it so exciting?
Marketing strategy?


Universittsstrae 15
Marketing Strategy
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Elgar Schnegg
Marketing Strategy - Definitions
A strategy that integrates an organizations marketing goals into a cohesive whole.

Ideally drawn from market research, it focuses on the ideal product mix to
achieve maximum profit potential. The marketing strategy is set out in a
marketing plan.
(business dictionary.com)
Marketing strategy is a process that can allow an organization to concentrate its

limited resources on the greatest opportunities to increase sales and achieve a
sustainable competitive advantage. Marketing strategy includes all basic and
long-term activities in the field of marketing that deal with the analysis of the
strategic initial situation of a company and the formulation, evaluation and
selection of market-oriented strategies and therefore contribute to the goals
of the company and its marketing objectives.
(Wikipedia)


Universittsstrae 15
Marketing Strategy
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Elgar Schnegg
Marketing strategy - considerations
What does the customer want?
What is the market?
How can we create (perceived) customer value?
What are our strengths, our USP?
What is the company mission?
What is our (marketing) strategy?
How do we implement strategy?


Universittsstrae 15
Marketing Strategy
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Elgar Schnegg
Marketing strategy - scope
Define a mission:
Fiat: we dont want to get from A to B. We want to get you there with a smile on your face
Define goals:
market share, market leadership, turnover, profit, etc.

specific, realistic, quantitative, consistent
SWOT Analysis
Monitors external and internal marketing environment
Define a strategy: a game plan for getting there
e.g. generic strategies by Porter (1984):
Cost leadership - be the lowest in costs

Differentiation - highest perceived value
Focus - best in serving customer segments


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SWOT
Kotler et. al, p. 101


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Developing a Marketing Strategy I
Marketing strategies serve as the fundamental underpinning of marketing plans

designed to fill market needs and reach marketing objectives.[3] Plans and objectives
are generally tested for measurable results. Commonly, marketing strategies are
developed as multi-year plans, with a tactical plan detailing specific actions to be
accomplished in the current year. Time horizons covered by the marketing plan vary
by company, by industry, and by nation, however, time horizons are becoming shorter
as the speed of change in the environment increases. [4] Marketing strategies are
dynamic and interactive. They are partially planned and partially unplanned. See
strategy dynamics.
Marketing strategy involves careful scanning of the internal and external
environments.[5] Internal environmental factors include the marketing mix, plus
performance analysis and strategic constraints. [6] External environmental factors
include customer analysis, competitor analysis, target market analysis, as well as
evaluation of any elements of the technological, economic, cultural or political/legal
environment likely to impact success. [4][7] A key component of marketing strategy is
often to keep marketing in line with a company's overarching mission statement.[8]
Once a thorough environmental scan is complete, a strategic plan can be constructed
to identify business alternatives, establish challenging goals, determine the optimal
marketing mix to attain these goals, and detail implementation. [4] A final step in
developing a marketing strategy is to create a plan to monitor progress and a set of
contingencies if problems arise in the implementation of the plan. Wikipedia


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Developing a Marketing strategy II
CUSTOMER
MARKET
VALUE
Define the companys value proposition and differentiate through your USP:
how do we create value?
Assess the market opportunity and potential
Segmentation and selection of target market
Positioning to maximize customer-perceived-value
Define the marketing plan (strategic and tactical)
Excellence in implementation


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Market opportunity analysis
Kotler et. al, p. 103


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Market analysis The Marketing environment
Macroenvironment
Demographic environment
Fad: unpredictable, short-lived

Trend: direction with momentum and durability
Megatrend: large changes, slow but influencing, 7-10 years
Worldwide population growth

Population age mix: 6 age groups, cohorts
Diversity of markets: ethnic-, racial groups
Educational groups
Household patterns
Economic environment
Income distribution


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Market analysis The Marketing environment
Social-cultural environment
Ecological and physical environment
Environment
Green marketing
Technological environment
Views of themselves, others, organisations, society, nature
Increasing pace of change

Unlimited opportunities for innovation
Varying R&D budgets
Increased regulation of technological change
Political-legal environment
Increase in business legislation

Growth of special interest groups


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Marketing plan
Strategic Marketing (plan):

lays out the target markets and the customer perceived value offerings of
the company, based on an analysis of the best market opportunities
Tactical Marketing (plan):

specifies the marketing tactics, including product features, promotion,
merchandising, pricing, sales channels and service
Kotler et al. p. 86


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Marketing Information System - Definition
Consists of people, equipment, and procedures to gather, sort, analyse, evaluate

and distribute needed, timely and accurate information to marketing decision
makers. A marketing information system relies on internal company records,
marketing intelligence activities and marketing research.
Kotler et al, p. 173
Jobber (2007) defines it as a "system in which marketing data is formally gathered,

stored, analysed and distributed to managers in accordance with their
informational needs on a regular basis."


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Marketing information system
Internal records
Marketing intelligence system
order to payment cycle

sales information systems
Sales force reports on new developments

Motivate distributors, retailers
Network externally
Databases: data warehousing and mining
Database marketing: Benefits and downsides
Competitive intelligence
Customer advisory panel

Government data resources
Purchase information from 3rd parties
Online customer feedback systems


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Marketing research system definition and current

trends
the systematic design, collection, analysis and reporting of data and findings
relevant to a specific marketing situation facing the company
Kotler, page 190
Knowing the market and its dynamics is key to a marketing-oriented

organisation
Current trends include
Neuro-marketing research
Online research
Data research in social networking groups


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Market(ing) research process
Define the problem, alternatives and research objectives
Develop the research plan
Primary data Data sources: e.g. observational research, focus groups, surveys,
questionnaires, interviews
Secondary data: buy existing market and customer information
Collect the information
The most expensive part
Conventional or online
Analyse the information
Test hypothesis
Sensitivity analysis, etc
Present findings and decision making

Kotler et al. p. 191ff


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Barriers in marketing research
What can go wrong?
Narrow conception of the research
Uneven caliber of research
Poor framing of the problem
Late and occasionally erroneous findings
Personality and presentational differences


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Marketing productivity
Forecasting and demand management
Marketing productivity
Measuring through marketing metrics
Measures of market demand
Potential market: consumers with sufficient level of interest
Available market: consumers with interest, income, access
Target market: company decides what to pursue
Penetrated market: consumers who buy companys product(s)
Company demand
Estimated market share at alternative company efforts in a certain time period
Company sales forecast
Sales based on a chosen marketing plan and assumed marketing environment


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Marketing Strategy
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22
MARKETING STRATEGY
Part 2


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Marketing Strategy
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Marketing Strategy
Curriculum

Market analysis
Market targeting
- segmentation
- differentiation
- positioning
Implementation issues


Universittsstrae 15
Marketing Strategy
www.mci.edu
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Segmentation Targeting and Positioning
S: discovers and defines specific customer groups with specific needs in the
marketplace
T: selects those targets and focus on satisfaction of customer needs
P: defines the product offering according the companys distinctive

capabilities and image
Goal: attaining an sustained competitive advantage - SCA
Cost leadership
Differentiation
combination


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Levels of market segmentation
Mass marketing
Buyer markets
Largest potential market

Lowest costs > lower prices or higher margins
Things have changed

Wide choice of possible suppliers
Suppliers are influenced by buyers
Markets break up in many segments

Standard customer-perceived value offerings are decreasing
Decline of Mass marketing
-> micromarketing


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Micro marketing
Segment marketing
A group of customers with similar needs and wants

Company can define differentiated product offering
-> flexible market-perceived-value offering
Naked solution plus discretionary value options
Niche marketing
Narrowly defined customer group with distinct preference for a distinctive mix of
benefits or values
a large fish in a small pool
E.g. Porsche, Saab, Body shop, ..
Customers buy a premium
Economies through specialization
Big companies are starting to focus on niches: through sub-brands


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Micro marketing
Local marketing
Tailor offering to local needs

E.g. Starbucks, Ikea, ..
Grassroots marketing: e.g. Nike
Advantages: high customer-perceived value, less marketing costs
Disadvantages: manufacturing costs, logistics, diluting image of the brand
Individual marketing
Customerisation: combines mass customisation with customised marketing

Empowers customers to design individual customer-perceived value offering
Firm provides platform and tools
Very importantin business-to-business markets
Advantages: no manufacturing, no prior customer information
Disadvantages: cost but higher pricing
E.g. cars? Nike


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Segmenting Consumer markets
Geographic segmentation
Demographic segmentation
Different geographical units

Nations, states, cities, neighbourhoods
Age and (family) life cycle, generation

Gender, race, nationality
Income, occupation, social class
Education, social class
religion
Psychographic segmentation:
AIO factors
Activities, interests, opinions


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Segmenting Consumer markets
Behavioural segmentation
Decision roles
initiator, influencer, decider, buyer, user
Behavourial variables
occasions, benefits, user status, usage rate, buyer-readiness stage, loyalty status,
attitude
Conversion model: psychological commitment to brands and their openness to
change
Convertible
Shallow
Average
Entrenched
Classification of non-users
Strongly unavailable
Weakly unavailable
Ambivalent
Available


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Segmenting Business markets
Demographic
Operating variables
Purchasing approaches
Situational factors
Personal characteristics
Kotler et al. p. 355


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Market targeting
Steps in the segmentation process
Needs-based segmentation
Segment identification
Value proposition for each segment; product-price positioning
Segment acid test
Determine profitability
Segment positioning
Determine overall attractiveness through market growth, competition, etc.)
Segment profitability
Determine which criteria make segment distinctive and identifiable (actionable)
Segment attractiveness
Similar needs and benefits
Segment storyboard to test attractiveness of positioning strategy
Marketing-mix strategy
Positioning strategy including all aspects of the marketing mix

Kotler et al; page 356 Table 10.7


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Effective segmentation criteria
Measurable
Substantial
Accessible
Differentiable
Actionable
see Kotler et al. p. 357


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Selecting market segments
Single-segment concentration
strong knowledge and specialised production, distribution, promotion
Exposure risk of single segment focus

-> segment leadership
Selective specialisation
a number of attractive segments with diversification of risks

Product specialisation
One product for different segments with risk of new technology replacement
Market specialisation
Serving many needs of one customer group with risk of budget shrinks
Full market coverage
Serve all customer groups
Possible only for Large firms practising (un)differentiated marketing


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Differentiation
definition
Product differentiation is the process of distinguishing a product or offering from

others, to make it more attractive to a particular target market. This involves
differentiating it from competitors products as well as a firm's own product offerings.
Differentiation primarily impacts performance through reducing directness of

competition: As the product becomes more different, categorization becomes more
difficult and hence draws fewer comparisons with its competition. A successful
product differentiation strategy will move your product from competing based primarily
on price to competing on non-price factors (such as product characteristics,
distribution strategy, or promotional variables).
Wikipedia
USP: communicate a products differentiation -> advertising


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Differentiation strategies
Competitive advantage
To build customer advantages

To deliver high customer value and satisfaction
Repeat business
Profitability
Differentiation variables
Related to the product or service

Personnel differentiation: company employees
Channel differentiation: distribution channel excellence
Image differentiation: product demonstration and shop appearance


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Positioning I Definition and goals
Positioning is the act of designing the companys offering and image to occupy a
distinctive place in the minds of the target market.
A. Ries and J . Trout (2000)
The goal is to establish the brand in the minds of consumers in order to maximise
the potential benefits to the firm. Good brand positioning helps guide marketing
strategy by clarifying the brands essence, what goals it helps the consumer achieve
(how it addresses their genes of meaning) and how it does so in a unique way.
P. Marsden (2002)
Everyone in the organisation should understand the customer-perceived value

that underlies the brand positioning and use it as context for making decisions.
S. Knox (2004)


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Positioning II
Positioning is something (perception) that happens in the minds of the target

market. It is the aggregate perception the market has of a particular company,
product or service in relation to their perceptions of the competitors in the same
category. It will happen whether or not a company's management is proactive,
reactive or passive about the on-going process of evolving a position. But a company
can positively influence the perceptions through enlightened strategic actions.
Positioning statement
For (target customer) who (statement of the need or opportunity), the (product name)
is a (product category) that (statement of key benefit that is, compelling reason to
buy). Unlike (primary competitive alternative), our product (statement of primary
differentiation).
Wikipedia


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Positioning process I
Generally, the product positioning process involves:
Defining the market in which the product or brand will compete (who the relevant
buyers are)
Identifying the attributes (also called dimensions) that define the product 'space'
Collecting information from a sample of customers about their perceptions of each
product on the relevant attributes
Determine each product's share of mind
Determine each product's current location in the product space
Determine the target market's preferred combination of attributes (referred to as an
ideal vector)
Examine the fit between
Wikipedia
Goal is the successful creation of a customer-focused value proposition

why the target market should buy the product


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Positioning process II
Establishing category membership
Points-of-difference (PODs)
Category benefits
Comparing to others
Product descriptor
Attributes strongly and positively associated with a brand and superior in comparison
to comp)etition
Essential part of brand positioning
Points-of-parity (POPs)
Not unique to the brand and shared with other brands

Category POPs: necessary but not sufficient attributes to a brand or product
Competititive POPs: match distinctive competitors strengths and attributes within a
certain range of tolerance


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Positioning mapping
Positioning analysis
Positioning maps
What is the perception of the brand?

What are the closest competitors seen by the customer?
What market offering and company attributes define the customers perception?
High price/high quality

Low price/low quality
Repositioning
Changing the identity of a product, relative to the identity of competing products

Proactive and reactive to market conditions
Can be complex, expensive and risky, but unavoidable


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Marketing Strategy
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41
MARKETING STRATEGY
Part 3


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Marketing Strategy
Curriculum

Market analysis
Market targeting
- segmentation
- differentiation
- positioning
Implementation (issues)


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Marketing Strategy
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43
Customer Relationship Management
Definition
CRM is the process of carefully managing detailed information about individual customers
and all customers touch points to maximise customer loyalty.
R. Siddle and D. Rigby (2001)
Discussion
Advantages of CRM
What kind of marketing is more likely to be successful?
How do build customer relationship and loyalty?


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important aspects
Customer satisfaction
Link to customer loyalty

Less price sensitive
Word of mouth
Cost less: transactions can be routine
Regular measurements are important
Techniques: e.g. periodic surveys; mystery shoppers; customer loss rate
Complaints: source of feedback and product/service improvement
Relationship between
Product/service quality
Customer satisfaction
Company profitability


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important aspects
Total customer satisfaction
Performance of company/product offer matches or exceeds buyers expectations

Is highest customer satisfaction the ultimate goal of the company?
Customer life time value
customer is king
Attracting and keeping profitable customers
Customer profitability analysis: who is most profitable?
Financial importance of retaining long term customers


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important aspects
Increasing the value of the customer base
Reducing the rate of customer defection
Increasing the longevity of customer relationship
Enhancing the growth potential of each customer by
Making low-profit customers more profitable or ceasing to deal with them
Paying additional attention to high-value customers

see Kotler et al. p. 398/99
Attracting and retaining customers
Loyalty programmes
frequency programmes; club memberships
Personalising marketing
Relationship marketing


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Implementation is key
Strategy defines what and why
Implementation defines
Who, where, when and how
Marketing costs are significant
Activity based cost accounting: real costs associated with each customer
Implementation controls
Sales analysis: variances versus budget; microsales budgets
Market share analysis
Financial analysis
Profitability analysis of marketing entities


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Implementation is key
Marketing metrics
Financial
Specific, microlevel
Forward looking
Short-term and long-term
Forms of metrics
Counting-based: e.g. complaints, sales, headcounts

Accounting-based: e.g. ROI, ROA
Outcome metrics: how do marketing elements influence outcome like market share
Contingency plans: be ready
Marketing audit
Systematic, comprehensive, independent examination of companys environment,

objectives, strategies and activities


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Thank you for your attention!


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MARKETING STRATEGY

DIE UNT ERNEHM ERISCHE HOCHSCHUL E

6020 Innsbruck / Austria

Main objective of this course is to provide the participants with a general

DIE UNT ERNEHM ERISCHE HOCHSCHUL E

6020 Innsbruck / Austria

Definition, scope and development of marketing strategy

DIE UNT ERNEHM ERISCHE HOCHSCHUL E

6020 Innsbruck / Austria

Lecture and discussion

Continuous development of real world examples

Group work results presentation

DIE UNT ERNEHM ERISCHE HOCHSCHUL E

6020 Innsbruck / Austria

My goals and expectations

Interactive sessions/active participation

Learn for your (future) job

Know where to find it

Remember key elements and approaches

You pass your exam (superbly)

Like and Enjoy the course

DIE UNT ERNEHM ERISCHE HOCHSCHUL E

6020 Innsbruck / Austria

What is Marketing? Why is it so exciting?

DIE UNT ERNEHM ERISCHE HOCHSCHUL E

6020 Innsbruck / Austria

Marketing Strategy - Definitions

A strategy that integrates an organizations marketing goals into a cohesive whole.

Marketing strategy is a process that can allow an organization to concentrate its

DIE UNT ERNEHM ERISCHE HOCHSCHUL E

6020 Innsbruck / Austria

Marketing strategy - considerations

What does the customer want?

What is the market?

How can we create (perceived) customer value?

What are our strengths, our USP?

What is the company mission?

What is our (marketing) strategy?

How do we implement strategy?

DIE UNT ERNEHM ERISCHE HOCHSCHUL E

6020 Innsbruck / Austria

Marketing strategy - scope

market share, market leadership, turnover, profit, etc.

Monitors external and internal marketing environment

Define a strategy: a game plan for getting there

e.g. generic strategies by Porter (1984):

Cost leadership - be the lowest in costs

DIE UNT ERNEHM ERISCHE HOCHSCHUL E

6020 Innsbruck / Austria

Kotler et. al, p. 101

DIE UNT ERNEHM ERISCHE HOCHSCHUL E

6020 Innsbruck / Austria

Developing a Marketing Strategy I

Marketing strategies serve as the fundamental underpinning of marketing plans

DIE UNT ERNEHM ERISCHE HOCHSCHUL E

6020 Innsbruck / Austria

Developing a Marketing strategy II

Assess the market opportunity and potential

Segmentation and selection of target market

Positioning to maximize customer-perceived-value

Define the marketing plan (strategic and tactical)

DIE UNT ERNEHM ERISCHE HOCHSCHUL E

6020 Innsbruck / Austria

Market opportunity analysis