Marketing Planning Process

David Alexander Session 5

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 Assignments.
Questions? Issues?

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 Next Week one-to-ones all day.

We will book times in. Bring in a paper/printed copy of your work.

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What is strategy?
"Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations".
Johnson & Scholes
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Strategy Considerations
Where is the business trying to get to in the long-term (direction) Which markets should a business compete in and what kind of activities are involved in such markets? (markets; scope) How can the business perform better than the competition in those markets? (advantage)? What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete? (resources)? What external, environmental factors affect the businesses' ability to compete? (environment)? What are the values and expectations of those who have power in and around the business? (stakeholders)

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Strategy Management 3 Main Components

Strategic Analysis

Strategic Choice

Strategy Implementa tion

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 Analysis: Audit tools Choice: Understanding stakeholder expectations, what the options are and evaluating them Implementation: Action.

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Strategy
Ansoffs Matrix Porters Generic Strategies STP

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Ansoffs Matrix (recap)

Market penetration: This involves selling more of the firms existing products to its existing markets. This can be achieved by means of heavy advertising and sales promotions focussing on the following: Persuading existing users to use more Persuading non-user to use Attracting consumers from competitors Sales promotions activities such as BOGOF, discount pricing, more for less Market development: This involves expanding into new markets with existing products. These may be achieved by way of expanding into: New markets geographically (international markets) New market segments or New users for products.

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Ansoffs Matrix (recap)

1.Product development: This approach requires the organisation to develop modified products, which can appeal to existing markets. By tailoring the products specifically to the needs of existing customers, the organisation can strengthen its competitive advantage.

2.Diversification: This implies developing new products for new markets. It is very risky because the organisation might be entering into new areas in which it has no expertise. The Virgin group has been very successful in its diversification efforts.

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What is your product?

Brand new to the market? Major innovation for the market? Minor innovation for the market? No innovation for the market?

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Segmentation
Segmentation divides customers into groups based on the underlying needs or characteristics driving their purchase decisions. Truly distinct customer segments respond to different value propositions and require different strategic approaches.
Vijay Vishwanath
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Segmentation
Segmentation implies dividing the total market into Identifiable subgroups with similar characteristics and then devoting organisational resources to satisfying the needs of these subgroups. The aim of segmentation is to assist the organisation to differentiate its product/service offerings to different groups of customers. The benefits of segmentation includes the following: Better identification and understanding of customer needs Strong brand name in that particular market or industry Greater market share Makes cross-selling or new product introduction easier and much more readily acceptable Better utilisation and allocation of organisational resources

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BASES FOR SEGMENTATION

Markets can be segmented on any of the following 5 bases:
1. Demographic segmentation encompasses dividing the total consumer market based on such factors as: Age Gender Education Income Occupation 2. Geographic segmentation: This implies dividing the total market based on the physical location of customers such as towns, cities, regions or countries.
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BASES FOR SEGMENTATION

3. Psychographic segmentation seeks to classify people according to their lifestyles, values, opinions, personality characteristics and interests. 4. Behavioural segmentation involves dividing the total market based on the behaviours of customers, for example, how sensitive is the consumer to marketing mix factors such as price, product quality, place and promotion.

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Bases for segmentation Which organisations would use: Demographic? Psychographic? Behavioural?

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BASES FOR SEGMENTATION

5. Geo-demographic segmentation is a segmentation technique that classifies people according to where they live. The idea is based on presumptions that people who live within a particular neighbourhood exhibit similar purchasing behaviour. This system allows organisations to profile the users or potential users of a product or service and then proceed to target customers who match these profiles. ACORN (A Classification of Residential Neighbourhoods is mostly used in the practice of geo-demographic segmentation.

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MPP Geo-demographic Segmentation

Basis people on where they live and assumes that people in the same neighbourhood have similar behaviour ACORN
A Classification of Residential Neighbourhoods www.caci.co.uk

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MPP Geo-Demographic
Types of Acorn classification
Wealthy achievers Urban prosperity Comfortably off Moderate means Hard and pressed
Sub categories under each section

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MPP Geo-demographic example

Comfortably off
Starting out
Young couples, flats terraces

Secure Families
Younger white collar couples with mortgages Middle income, home owning Woking families with mortgages Mature families in suburban semis Established home owning workers Home owning Asian famaily areas

Settled Suburbia Prudent pensioners

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MPP The Grey Market

Has been classified as:
Healthy hermits Ailing outgoers Healthy indulgers Empty nesters Grandparents Single again

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The Grey Market

More and more organisations have realised that the grey market is growing and they have more disposable income....

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Segment attractiveness & internal Capabilities

High High Attractive segments that match company capabilities Segment attractiveness Unattractive segment with match to company capabilities Attractive segment with poor match to company capabilities Unattractive segment with no match to the company capabilities N. Piercy Internal capabilities Low

Low

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Consistency & Integration

What is the existing or achievable fit between capabilities and the segment? (structure, systems, culture, processes) Managerial fit with the external marketplace? (Market research, advertising, distribution, media buying) Although difficult to implement the framework may identify barriers and therefore gas that must be bridged for successful segmentation

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Optimeyes Case Sudy

What segmentation would you suggest for Ben at Optimeyes? Why? How would this help him grow his organisation?

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B2B Segmentation Adapted from Kotler

Industry: what industry shall we serve? Company Size: what turnover? Location: What geographic regions do we serve? Capabilities: Do they need few or many services/products? User: focus on user or nonusers? Personal Characteristics: values similar to ours? Risk Takers?
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Targeting

Marketing Mix

Market

Marketing Mix 1 Marketing Mix 2 Marketing Mix 3

Segment 1 Segment 2 Segment 3

3 Marketing Mix

Segment 1 Segment2 Segment 3

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Undifferentiated Marketing
The whole market with one offering what do they have in common rather than different? Campaign to appeal to the largest number of buyers Ignore different segments Quality, Mass distribution and Advertising (Push) Avoids alienating segments Difficult to satisfy all people (M&S) Little market research Erosion of Mass markets as competitors focus on niche markets
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Differentiated Marketing
Several markets with a separate offering for each GM a car for every purse, purpose and personality Hopes for repeat purchases as product more suited to the needs of customers Increased identification with the brand Typically creates more total sales

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Concentrated Marketing
Good for companies with limited resources Large share of a smaller market Can achieve strong market position as has great market knowledge Can have higher risk involved Larger competitors can enter the market

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Which to choose?
Company resources? Uniformity/variability of products? Where is product on PLC? How variable is the market do they have the same tastes/needs and wants? Competitors what are they doing? How intense is competition? Size structure & future potential of segment? Current market share? Economies of scale

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D. Cravens Strategic Marketing

Needs wants end user

Product Market size / structure

Company Market Share

Target Market Strategy

Company Resources Intensity of Competition

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Economies of Scale

Positioning Definition
The sum of those attributes normally ascribed to it by its customers its standing, quality, the type of people who use it, its strengths, its weaknesses, any other unusual or memorable characteristics it may possess, its price and the value it represents
Dibb Simkin et al
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Positioning
Is not what is done to the product it is what it creates (image) in the mind of the customer Target markets must perceive the product to have a distinct image and positioning Is only partially controlled by the marketer

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Positioning
Can be based on different criterion
Price (FMCG) Service level (Banks) Quality (Electronic goods Reliability (Cars) Value for Money (Theme parks) Reputation and image of the company

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Positioning
Must understand the market and what motivates them.
Focus groups / market research Perceptual mapping

What else will the customers spend on if not on your product (indirect competition)

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Positioning A positioning Plan

1. 2. 3. 4. 5. Define the segments Decide which ones to target Understand buyer motivations to buy Develop product(s) for these needs & expectations Evaluate the positioning and images as perceived by the target segments 6. Select an image that sets the product apart from the competitions products. Ensure it matches segments aspirations 7. Inform the segments of the product
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Positioning Considerations
1. The approach must be plausible and matched by few or no competitors 2. What are the key benefits for the consumer 3. Emphasis key/specific uses (Campbells soups as a cooking ingredient) 4. Depict user groups (Pepsi Generation) 5. Head to head positioning against rival (Asda, Avis) 6. Dissociating from direct rivals to develop a clear image and differentiation (Dr Pepper, 7Up)

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Positioning Positioning Statements

Should strike a chord with the target market, reflect the nature of the product, its branding and attributes plus demonstrate understanding of customer needs Similar to taglines in advertising
LOreal because youre worth it Avis We try harder Everest fit the best, Fit Everest Gillette The best a man can get BMW The ultimate driving machine

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Positioning
Optimeyes How would you target and position Optimeyes when entering a new market?

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