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Marketing strategies

Next, The Marketing Program

Segmentation, targeting and

positioning
After developing objectives with a clear the marketing direction, your next step is to develop the supporting strategies. These

strategies can be broken into three areas:

• Segmentation – Define who are your customers

• Targeting – Defines the customers you want to attract

• Positioning – Your product’s place in the market in relation to rival products

Segmentation
How big is the total market, what part of it are you going after and who are your competitors? Your firm has a number of different

types of customer to consider. Although markets are diverse, you can group customers with similar needs into segments. The

following list provide possible approaches in categorizing your segments.

Demographic Industry:

Which industries should we serve? Company size: What size companies should we serve? Location: Which geographical areas should

we serve?

Operating variables Technology: What customer technologies should we focus on? User/non-user status: Should we serve heavy

users, medium users, light users, or non-users?

Customer capabilities: Should we serve customers needing many or few services? Purchasing approaches Purchasing-function

organization: Should we serve companies with highly centralized or decentralized purchasing organizations ?

Power structure: Should we serve companies that are engineering dominated, financially dominated, and so forth? Nature of

existing relationships: Should we serve companies with which we have strong relationships or simply go after the most desirable

companies?

General purchase policies: Should we serve companies that prefer leasing? Service contracts? Systems purchases? Sealed bidding?

Purchasing criteria: Should we serve companies that are seeking quality? Service? Price? Situational factors
Urgency: Should we serve companies that need quick and sudden delivery or service? Specific application: Should we focus on

certain applications of our product rather than all applications? Size of order: Should we focus on large or small orders?

Personal characteristics Buyer-seller similarity: Should we serve companies whose people and values are similar to ours? Attitudes

toward risk: Should we serve risk-taking or risk-avoiding customers?

Loyalty: Should we serve companies that show high loyalty to their suppliers?

Assessing segments After identifying your segments, assess their attractiveness. You can use the following criteria:

• Accessible — they can be reached and served

• Identifiable — clear understanding of the composition of the segment

• Profitable — and add value

• Actionable — has the resources to respond to customers in the segment

• Effective — contains customers with homogeneous characteristics and needs.

Establish a clear target market

After defining your segments, decide which segments they can serve with the available resources. Consider the customer’s

propensity to buy and the future potential of the segment, the level of competition for that segment, both now and in the future

and your company’s own resources.

There are three key targeting approaches: undifferentiated marketing, differentiated marketing and a concentrated or focused

approach.

Undifferentiated

With undifferentiated marketing to the whole market, the decision is made to ignore segmentation and target the whole as the

differences between the customers are negligible. There is an assumption that the market is homogeneous and can be reached

with one marketing mix approach.

Differentiated

With a differentiated approach the company identifies a number of segments in the market which it thinks that it can serve well

with its resources, and develops different marketing approaches to meet the needs and satisfy the requirements of different

customers in the different segments.

Focused Marketing

A company that decides to target a smaller part of the market can adopt a concentrated or focused approach The organisation may

choose to focus on one segment because it does not have the resources to target any of the others even though they may be viable

segments. If this is a particularly small and narrowly defined part of the market the company may be considered to be a niche

player

Example
Positioning
A positioning statement emphasizes the product’s place in the market in relation to rival products — it represents the point of

distinction. There are five key elements in any positioning statement that provide the necessary clarity of purpose:

1. Target market: Whom are you aiming at? Explain this succinctly, straightforwardly and in a way that is easily

understandable.

2. Buyer’s or influencer’s main problem: What does the product or service have to solve in a functional and/or emotional

way? Again, be succinct and direct and keep it simple.

3. Key benefit(s): What is the main advantage of using the product or service?

4. Competitors: Who is or are the main competitors and how is the key benefit of your product or service different from

what they offer?

5. Features or attributes: Just how does the product or service manage to provide this benefit?

Example:

1. Target market: Medium to large organizations operating in a distributed network environment dealing fundamental

changes within their IT environment where there is a greater acceptance of the need to outsource services driven by

recent competitive pressures.

2. Buyer’s or influencer’s main problem: Consistency in quality worldwide.

 3. Key benefits: Savings and efficiencies through centralisation and standardisation, minimise overhead costs, eliminate

intermediate production steps, reduce transaction costs, optimise business processes across functional and

organisational boundaries and improve manufacturing efficiency.

4. Competitors: NextiraOne is viewed as the strongest competitor. Our geographical coverage, Ericsson heritage, vendor

independence and our competence in voice and data will distinguish us form the competition.

5. Features or attributes: Damovo’s services are customised through a listening approach. This is a structured process that

turns a customer’s unstructured business issues into a structured, formal service offering. Damovo is focusing on

developing Customer Intimacy (Treacy) by concentrating on the customer issues.

Competitive roles in the marketplace

After, choosing your target market, consider your competitive role in the marketplace. You need to anticipate your rival’s

retaliation. Competitive roles differ between a company that dominates the marketplace and one that occupies only a small niche.

Clearly, the competitive position in the marketplace will also effect the company's marketing mix strategies. The key is to ‘take

stock’ of where you are and where you want to go to with your available resources. In this process, an appreciation of the

appropriate competitive roles is very important in developing your marketing direction. The competitive roles to consider are

‘market leader,’ ‘market challenger’ and ‘market follower’ and their suggested marketing strategies.

Market leaders
Just about every market has an acknowledged market leader — an organization with dominant market share that sets the standards

or rules in the marketplace. Obvious examples are Hewlett Packard with printers, Levi’s with jeans, Microsoft with software and

Canon with photocopiers. Market leaders remain vigilant to the activities of close rivals trying to usurp their position by exploiting

some weakness in the marketplace. Classic battles would be Fuji versus Kodak, Matsushita versus Sony and Compaq versus IBM.

Marketing strategies for market leaders:

1. Attack challengers. Other strategies might be to attack challengers directly, for example by price reductions,

promotions or new technologies, such as with BT in the terrestrial phone marketplace and Esso with the ‘Price

Promise’.

2. Diversification. Of course, diversification is a good defensive move for market leaders as it spreads their market base

and leaves them less vulnerable to attack from any individual challenger. For example, were Heinz to lose its

dominance with Ketchup, it has other markets to fall back upon and does not ‘lose its shirt’ on this one market.

3. Expand the total market. Dominant market leaders need to expand the total market as much as possible as they are the

ones most likely to benefit, given their leadership position. They can achieve this with strategies for market usage and

new applications as well as considering developing any niche markets previously neglected.

4. Defend market share. Alternatively they may need to defend their market share by continual product innovation,

service and brand building, to ensure buyer loyalty. This strategy can be seen in companies like Gillette or Hewlett

Packard.

Market challenger
Market challengers are substantial organizations in their own right, with sufficient resources and skills to occupy the market leader

spot. Any marketplace is dynamic and a company’s fortunes can go up or down.Market challengers normally do not completely

destroy the business of the market leader, but they can edge their way towards equality or gradually overtake the market leader

and marginalize their position. Of course, a successful market challenger that usurps the leader changes its competitive role and as

market leader has to look ‘over its shoulder’ to retain its new position.
Marketing strategies for market challengers

1. Attack leaders. Market challengers have little alternative but to attack leaders either directly or indirectly. A

concentrated all-out attack on a leader may be the best way forward.

2. Attacking other challengers. Attacking other challengers, followers or smaller niche players in the marketplace, rather

than attacking leaders, can launch indirect attacks on leaders. Such tactics will result in the challenger discreetly

building share without going head-tohead with the leader by picking-off weaker geographic markets or segments in so-

called ‘bypass’ attacks. For example, Swatch managed to outmanoeuvre Seiko in the fashion segment.

Market follower
• Market followers make a conscious decision to chase and emulate the market decisions of leaders and/or challengers.

They may clone fashion, design, innovations, pricing, advertising and so on and trade successfully upon the risks of

other companies or institutions. Their profitability emanates from their decision to forego investing in uncertain new

product development or in educating consumers to new ways of thinking in favor of simply following the actions of

leaders or challengers in the marketplace. Followers, by their nature, do not seek leadership or to challenge a leader

overtly. They can make good profits simply by providing imitations of leader or challenger products.
•

Marketing strategies for market followers - stealth

Follow carefully, at a distance, and selectively By definition, market followers need to follow leaders and challengers and not

launch attacks. If they launch attacks, they will become challengers and will need the requisite resources and skills to survive such

combat.

Market niche
Sole market niche

Success with a niche policy is based upon the reality that market leaders or challengers have little to no interest in niches. Thus,

Bang & Olufsen can survive extremely well in its upmarket, styleconscious (but not expert) hi-fi marketplace, knowing that the

likes of Sony or Marantz would have great difficulty in stretching their image to challenge them. Similarly, in the brewing industry

most major breweries are simply not interested in developing products to rival micro breweries with their wheat, herbal and

chocolate beers. The secret of successful sole niching is to operate within a niche that has very little appeal for major players in

the wider marketplace.

Corporate Niche

As markets have increasingly fragmented, so many market leaders, challengers and even followers have been drawn into the

strategy of niching. Niching can be highly profitable and sometimes offers opportunity for market leadership. Part of the reason

Palm is still popular is because of the fundamental design decisions made with the OS. Which is to be, above all, a damn good

organizer. Part of what Palm realized (and what Apple hadn't yet with the Newton) is that user requirements for an organizer is

significantly different from a computer. Users expect it to work just as well as their wristwatch.

Marketing strategies for market ‘nichers’ - Specialize

The basis of the market niche strategy is to specialise. Market niche strategies may be based upon goods or services, segments,

channels or promotional images. Best practice for sole nichers is to develop more than one market niche so that the company or
institution is less vulnerable to attack from a rival. It is essential that a sole nicher be not seen as a potential rival to a leader or

challenger, as this might lead to a direct attack. An ideal position for a sole nicher would be one where just about everyone else in

the marketplace regards their niche as too much effort. Leaders or challengers can use niches either to entrench their positions or

as a form of attack. As discussed above, in the hands of leaders or challengers a niche can provide a basis for market growth or for

indirectly attacking a rival’s market position.

Strategy Models - The Matrix

Ansoff matrix is a widely used framework that outlines some fundamental strategies for marketers. It can be used to help shape

strategies and also to develop marketing objectives. In both areas the focus on products and markets are important elements in

developing marketing direction and shaping marketing decisions. Developed in the late 1950s, the matrix has now been extended

to include the added dimension of market need.

Growth in existing product markets strategy is to obtain growth from the existing position either by gaining market share,

increasing product usage or developing new applications. Many companies use market share as the key to their strategy.

The idea of new product development to existing markets is to exploit market opportunities amongst existing buyers and to fully

develop the ‘stretch’ potential of your products.

Market development strategies fall into two categories: geographic or new markets. Geographic market development seeks new

territories. In the global marketplace, this means international markets, as with the US Starbucks Coffee shops opening in the UK

and Singapore. It may be new regions at a national level. Use new market growth after a company reaches geographic saturation.

It is often more expensive to pursue than geographic expansion as it requires targeting previous non-user types. While geographic

expansion also targets non-users, it is generally within a familiar target type that has a known propensity to use the product (for

example, the characteristics of a Burberry customer are very similar in both New York and London).

Diversification involves doing some new marketing and may involve new products and new markets by acquisition, merger or new

ventures. In a related diversification the new business has commonalities with the core business in terms of similar assets and

skills. This might be the strength of a brand name being such that it can stretch from one business to another as with Harley

Davidson motorcycles and clothing. By contrast it might be a technical strength such as Honda’s skills in the manufacture and

development of combustion engines, which has seen it diversify from cars to lawnmowers. Another aspect might be strength in

R&D, such as with General Electric’s electrical engineering capabilities which have enabled the company to diversify around a

number of defense, business and consumer markets. The risks associated with related diversification are primarily that the

company or institution deludes itself that it knows how to manage the new business area. A classic example was General Food’s ill-

fated diversification into the restaurant business with its purchase of Burger Chef. The difficulty arose because rather than being

another food company, Burger Chef was a servicebased business that required completely different skills.
Next, The Marketing Program

(c) 2007 bizhelper.info