Chapter 5

Marketing strategies – target marketing, product/brand positioning and marketing mix

Like many clichés, this one turns out to be true – successful marketing does begin with effective segmentation. The trick is simply using an approach to segmentation that works both analytically, and also practically, with your customers and across your organization.

J. Barron and J. Hollingshead, ‘Making segmentation work’, Marketing Management, vol. 11, issue 1, January–February, 2002, p. 28.

Objectives By the end of this chapter, you should be able to: • analyse a market to determine market segments • determine which segments to pursue • analyse product/brand positions • determine product/brand positioning strategies • determine overall marketing mix strategies.

The strategic marketing planning process Situation analysis Problems & opportunities Marketing objectives Budget Marketing strategies Implementation

Marketing strategies

Three sets of interrelated considerations:

1 2

Target market selection Determination of product/brand positioning strategies

3

Development of marketing mix strategies Evaluation & control

An iterative process Marketing objectives

Corporate objectives

• Financial objectives

Marketing objectives

• Performance objectives Marketing strategies

Higher-level strategies

• • Business position Product-market strategies

Marketing mix strategies

• Target markets • Consumer positioning • Product strategies • Pricing strategies • Distribution strategies • IMC strategies + additional 3Ps for service providers • People, process management and physical asset strategies

The marketing strategy development process

Three sets of interrelated considerations

1 Target market selection 2 Determination of product/brand positioning strategies 3 Development of marketing mix strategies

Target market selection Target market selection is based on market segmentation – the partitioning of a market into segments of existing and potential customers who have similar characteristics and similar needs.

Alternative marketing mix strategies Differentiated Concentrated A number of market segments are targeted with a customised marketing mix strategy for each segment.

A strategy for niche marketers focusing on one market segment.

Micromarketing Undifferentiated Mass customisation – individuals are targeted on a one-to-one basis.

One marketing mix strategy services the entire market.

Segmentation approaches – consumer markets (1) The 4Ws: Who (they are) What (they buy) Where (they buy) Why (they buy)

Segmentation approaches – consumer markets (2) The 4Ws: Who What and Where • Demographic • Socioeconomic • Stage of life • Lifestyle • Psychographic Why

Segmentation approaches – consumer markets (3) The 4Ws: Who What and Where Why • product category • brand • product category user • rate of new product adoption • loyalty • price point • type of distribution outlet • geographic • geodemographic

Segmentation approaches – consumer markets (4) The 4Ws: Who What and Where Why • Benefit segmentation

Segmentation approaches – business-to-business (B2B) • Geographic • Customer type – industry type/stature, technology used, industry life-cycle stage, product usage, company size or applications • Benefit • Other – such as personal characteristics; buyer awareness of product category, readiness to adopt new products, the extent to which they are risk takers, or exposure to particular media

Methods for segmentation (1) Normative segmentation A priori segmentation Post hoc segmentation Data mining An econometric approach that attempts to determine buyer similarities by analysing elasticity coefficients, marginal revenues and response function coefficients.

Methods for segmentation (2) Normative segmentation A priori segmentation Post hoc segmentation Data mining Drawing on secondary sources, the market is segmented by appropriate variables, such as age, gender, socio-economic status or benefit sought.

Methods for segmentation (3) Normative segmentation A priori segmentation Post hoc segmentation Data mining A market segmentation study is conducted in order to determine the attitudes, perceptions, benefits sought and product usage information of a representative sample of the market. Individual importance ratings are clustered into person groups by maximising in-group similarities and between group differences.

Methods for segmentation (4) Normative segmentation A priori segmentation Post hoc segmentation Data mining Customer data is analysed in order to determine patterns and relationships that can form a meaningful basis for segmenting the organisation’s customer base.

Determination of product/brand positioning strategies (1) Target market selection Determination of product/brand positioning strategies Development of marketing mix strategies The product offering(s) How to position the product offering(s)

Determination of product/brand positioning strategies (2) The product offering(s) How to position the product offering(s) 1 What product offerings (existing and new) will be required to service the needs of each of the targeted segments (product line depth and breadth decisions)?

2 Branding decisions – individual or umbrella branding?

Determination of product/brand positioning strategies (3) The product offering(s) How to position the product offering(s) Brand positioning strategy – four steps: 1 Determine the current position of the brand and its competitors.

2 Determine the ideal point for the product category.

3 Determine whether to continue or modify the current positioning strategy.

4 Develop a brand positioning strategy based on the core values of the brand.

Determination of product/brand positioning strategies (4) The product offering(s) How to position the product offering(s) Key positioning concepts • Brand meaning – an individual's subjective perception and affective reaction to stimuli such as the product itself or advertising.

• Brand association – anything linked in memory to a brand. This can be either brand image or brand position.

Determination of product/brand positioning strategies (5) The product offering(s) How to position the product offering(s) • Brand image – a set of associations that are meaningful to an individual. The frame of reference may be a product attribute, a product benefit or a perceptual characteristic.

• Brand position – a set of associations arranged in a way that the frame of reference is the competition.

Development of marketing mix strategies Target market selection Determination of product/brand positioning strategies Development of marketing mix strategies • Marketing mix decisions flow on from market segmentation and brand positioning decisions.

• In a strategic marketing plan these decisions are fairly broad-based, ‘big picture’ strategies, involving 4P or 7P strategic direction over a three to five year time frame.

Market segmentation and positioning decision-making aids (1) Perceptual maps Pictures or maps of consumer perceptions of a market or product category : • Mercedes • BMW • Jaguar • Alfa • Lexus • Volvo • • Audi Honda • Saab Conjoint analysis A research technique that shows individuals make overall judgements about brands or products by considering together two or more attributes.

Market segmentation and positioning decision-making aids (2) Perceptual maps Conjoint analysis

Two techniques:

Attribute rating method –

respondents are required to rate a selection of potential brand attributes. The data is analysed either by factor analysis or multiple discriminate analysis to produce a perceptual map.

Overall similarity method –

respondents are required to assess the degree of similarity or dissimilarity between matched pairs of competitive brands. The data is analysed using multidimensional scaling technology to map the distance between brands.

Market segmentation and positioning decision-making aids (3) Perceptual maps A number of attributes are identified and then sorted into bundles of two or more, so that respondents can conjointly rank or rate their preferences, ranging from 'least liked' to 'most liked'.

Conjoint analysis (CA) CA provides a basis for segmenting a market into groups of people with similar needs who are seeking similar benefits for various products. It is also a tool for developing brand positioning strategies.

Suggestions for writing this section • Devote two to three pages to justifying describing market segment that is to be targeted.

to be targeted to this segment, the price, distribution and IMC strategies.

targeted.

section (see next slide).

and the marketing mix strategies for each • That is, define the target market (segmentation descriptors), state the products/brands that are product/brand positioning strategy, the product, • Do this for each of the market segments to be • Then summarise these strategies in table form and insert this table at the beginning of the

Summary of recommended marketing mix strategies Target market 1 Target market 2 Target market 3 Product/brand positioning Product/brand positioning Product/brand positioning

Marketing mix:

Product Price Distribution IMC + additional 3Ps for service providers

Marketing mix:

Product Price Distribution IMC + additional 3Ps for service providers

Marketing mix:

Product Price Distribution IMC + additional 3Ps for service providers

And don’t forget … In developing marketing mix strategies, you should draw on those areas identified in the situation analysis and the problems and opportunities statement that required attention.

Examples: • Improve distribution coverage – achieve X% distribution by the year 2004 and Y% by 2005.

• Achieve X% level of customer service satisfaction by the year 2004 and Y% by 2005.