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Marketing Strategy-
               Strategy-
    Introduction
    Abhishek Bhide
    B.E. (Cons); PGP (Indian School of Business)




1
                                                   Abhishek Bhide- Mktg Strategy- MET-eMBA
Agenda
     Introduction
     Topics to be covered in this Course; Format
     What is marketing ? What is strategy?
     Why is it relevant?
     How does it connect to Execution?




2                              Abhishek Bhide- Mktg Strategy- MET-eMBA
INTRODUCTION




        Abhishek Bhide- Mktg Strategy- MET-eMBA   3
Rules & Marks
     Respect for each other
     Only One person talks at a time
     No personal remarks even if you disagree
     Debates over concepts and examples are welcome just
     lets not degrade them into arguments

     MARKS:
     ◦ 50 marks written paper at term end
     ◦ 50 marks divided over 3 presentation to be done by each group




4                                       Abhishek Bhide- Mktg Strategy- MET-eMBA
What is Marketing?
    Philip Kotler:
    “The process by which companies create value for customers
    and build strong customer relationships in order to capture
    value from customers in return.”

    The Chartered Institute of Marketing (CIM):
    Marketing is the management process for identifying,
    anticipating and satisfying customer requirements profitably.

    Sergio Zyman, ex-CMO, Coca Cola:
    “The sole purpose of marketing is to sell more to more people,
    more often and at higher prices. There is no other reason to do
    it.”

5                                        Abhishek Bhide- Mktg Strategy- MET-eMBA
Strategy?
    Oxford Dictionary:
    “A plan of action designed to achieve a long-term or overall aim”

    Peter Drucker:
    "Strategic planning is the continuous process of making present
    entrepreneurial (risk-taking) decisions systematically and with
    the greatest knowledge of their futurity; organizing systematically
    the efforts needed to carry out these decisions; and measuring
    the results of these decisions against the expectations through
    organized, systematic feedback."




6                                          Abhishek Bhide- Mktg Strategy- MET-eMBA
What does ‘Marketing Strategy’ mean?
     A strategy that integrates an organization's 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.

     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.




7                                          Abhishek Bhide- Mktg Strategy- MET-eMBA
Examples:
    Mission statements based on Marketing Strategies:
     Coca Cola:
     Wants to capture share of the stomach rather than
     share of the beverage market
     Xerox:
     Wants to help office productivity rather than help
     copying documents
     Columbia Tristar:
     Wants to entertain people rather than make movies




8                                Abhishek Bhide- Mktg Strategy- MET-eMBA
Coca Cola
     http://en.wikipedia.org/wiki/List_of_Coca-Cola_brands




9                                  Abhishek Bhide- Mktg Strategy- MET-eMBA
Xerox
Current products

Xerox today manufactures and sells a wide variety of office and production equipment including LCD
Monitors, photo copiers, Xerox Phaser printers, multifunction printers, large-volume digital printers
as well as workflow software under the brand strategy of FreeFlow. The impact of Xerox FreeFlow
products on the graphic arts market and the print industry in general has grown exponentially since
May 2006, largely as a result of the Xerox presence at IPEX 2006. Xerox also sells scanners and
digital presses. On 29 May 2008, Xerox launched the Xerox iGen4 Press.
Xerox sells both color and black and white printers under the Xerox Phaser and ColorQube brand,
with the color consumer model starting at US$299; the most expensive color model costs US$6,799.
Xerox also produces fax machines, professional printers, black and white copiers, and several other
products.
In addition, Xerox produces many printing and office supplies such as paper in many forms,
and solid ink that takes advantage of 2400 FinePoint technology; and markets software such
as Xerox DocuShare, Xerox MarketPort and FlowPort, offers consulting services, ECMDigital
Repository Services and printing outsourcing.
                                                             Abhishek Bhide- Mktg Strategy- MET-eMBA   10
A D-I-Y approach to strategy:
       D-
     A simple way of creating a marketing strategy on a
       website:

        Describe your company's unique selling proposition
        (USP).
        Define your target market.
        Write down the benefits of your products or services.
        Describe how you will position your products or
        services.
        Define your marketing methods. Will you advertise, use
        Internet marketing, direct marketing, or public relations?

     Source: http://marketing.about.com/cs/advertising/ht/5steps2strategy.htm


11                                                     Abhishek Bhide- Mktg Strategy- MET-eMBA
The Systematic Approach
     A marketing strategy is a part of a Marketing Plan which consists of:


        Executive summary & Table of contents
        Brief summary an contents of the plan
         Situation analysis
        Internal & external factors used to carry out a SWOT analysis
         Marketing strategy
        Financial projections
        Details of expenses required and revenues expected in detail
         Implementation controls
        Milestones and implementation details as well as corrective measures that can
        be taken if required




12                                                 Abhishek Bhide- Mktg Strategy- MET-eMBA
Marketing Strategy:
       Mission Statement
       Marketing Objectives
       Financial Objectives
       Target Markets
       Positioning
       Strategy description
       Marketing Mix
       Marketing Research




13                            Abhishek Bhide- Mktg Strategy- MET-eMBA
Porter’s Generic Strategies

     Overall Cost Leadership


         Differentiation


             Focus




14                             Abhishek Bhide- Mktg Strategy- MET-eMBA
Creating a Marketing Strategy

     HOW DO WE START?




15                                   Abhishek Bhide- Mktg Strategy- MET-eMBA
DEVELOPMENT OF MARKETING STRATEGY
     This is where we can start:




16                                 Abhishek Bhide- Mktg Strategy- MET-eMBA
Relevance of Marketing Strategy?
       Do we always need Marketing Strategy?

     Does SAIL or Coal India Ltd need it?
        ◦ In Monopolistic/ Oligopolistic Markets


     Does a civil contractor or a rickshaw meter supplier need it?
        ◦ In Markets where prices are controlled


     Does TATA salt or Balrampur Chini need it?
        ◦ In commoditized product markets



17                                            Abhishek Bhide- Mktg Strategy- MET-eMBA
STRATEGIES THAT WE
WILL DISCUSS




                     Abhishek Bhide- Mktg Strategy- MET-eMBA   18
Marketing Execution
      What happens at the ground level?

      ◦   Lack of communication
      ◦   Unviable tactics or strategies
      ◦   Lack of training for implementing new strategies
      ◦    Insufficient time to change




19                                           Abhishek Bhide- Mktg Strategy- MET-eMBA
References:
     1.    http://www.businessdictionary.com/definition/marketing-
          strategy.html#ixzz232TG4yLC
     2.   www.wikipedia.com
     3.   Aboutmarketing.com
     4.   Kotler & Keller Marketing Management e13




20                                                    Abhishek Bhide- Mktg Strategy- MET-eMBA
Segmentation, Targeting,
Positioning & Differentiation
Abhishek Bhide;
B.E. (Cons), PGP (ISB)




                         Abhishek Bhide- Mktg Strategy- MET-eMBA   21
Columbia Tri-Star
              Tri-
      Acquired stake in New World Entertainment
      Formed Columbia TriStar HomeVideo for video
      cassettes and became #1 in two years
      Columbia Tristar International formed to dub serials for
      German markets

      What more can it do?




22                                   Abhishek Bhide- Mktg Strategy- MET-eMBA
WHAT? CAN YOU EXPLAIN?

Philip Kotler:



Even the most well-defined segments are partly
fiction




                              Abhishek Bhide- Mktg Strategy- MET-eMBA   23
Segmentation
       What is Segmentation?
       Market segmentation is a marketing strategy that
       involves dividing a broad target market into subsets of
       consumers who have common needs and applications
       for the relevant goods and services

     “The overall intent of Market Segmentation is to identify groups of
       similar customers and potential customers;
          to prioritize the groups to address;
          to understand their behavior
          to respond with appropriate marketing strategies that satisfy the
          different preferences of each chosen segment.”



24                                               Abhishek Bhide- Mktg Strategy- MET-eMBA
Market Preferences




                     8-25
Why Segment?
      Better matching of customer needs
      Customer needs differ. Creating separate offers for each segment
      makes sense and provides customers with a better solution
      Enhanced profits for business
      Customers have different disposable income. They are, therefore,
      different in how sensitive they are to price. By segmenting markets,
      businesses can raise average prices and subsequently enhance
      profits
      Better opportunities for growth
      Market segmentation can build sales. For example, customers can
      be encouraged to "trade-up" after being introduced to a particular
      product with an introductory, lower-priced product




26                                          Abhishek Bhide- Mktg Strategy- MET-eMBA
Why Segment?
      Retain more customers
      Customer circumstances change, for example they grow older, form
      families, change jobs or get promoted, change their buying patterns.
      By marketing products that appeal to customers at different stages
      of their life ("life-cycle"), a business can retain customers who might
      otherwise switch to competing products and brands

      Target marketing communications
      Businesses need to deliver their marketing message to a relevant
      customer audience. If the target market is too broad, there is a
      strong risk that
      (1) the key customers are missed and
      (2) the cost of communicating to customers becomes too high /
           unprofitable. By segmenting markets, the target customer can
           be reached more often and at lower cost


27                                            Abhishek Bhide- Mktg Strategy- MET-eMBA
Why Segment?
      Gain share of the market segment
      Unless a business has a strong or leading share of a market, it is
      unlikely to be maximising its profitability. Minor brands suffer from
      lack of scale economies in production and marketing, pressures
      from distributors and limited space on the shelves. Through careful
      segmentation and targeting, businesses can often achieve
      competitive production and marketing costs and become the
      preferred choice of customers and distributors. In other words,
      segmentation offers the opportunity for smaller firms to compete
      with bigger ones.




28                                           Abhishek Bhide- Mktg Strategy- MET-eMBA
Requirements of Segments

       Measurable

        Substantial

        Accessible

        Differentiable

        Actionable

29                       Abhishek Bhide- Mktg Strategy- MET-eMBA
Ways of Segmentation?
      Geographic segmentation
      The market is segmented according to geographic criteria—nations,
      states, regions, countries, cities, neighborhoods, or zip codes. Geo-
      cluster approach combines demographic data with geographic data
      to create a more accurate profile.
      With respect to region, in rainy regions you can sell things like
      raincoats, umbrellas and gumboots. In hot regions you can sell
      summer wear. In cold regions you can sell warm clothes.

      Demographic Segmentation
      Demographic segmentation consists of dividing the market into
      groups based on variables such as age, gender, family size, income,
      occupation, education, religion, race and nationality. As one might
      expect, demographic segmentation variables are amongst the most
      popular bases for segmenting customer groups. This is partly
      because customer wants are closely linked to variables such as
      income and age. Also, for practical reasons, there is often much
      more data available to help with the demographic segmentation
      process.

30                                          Abhishek Bhide- Mktg Strategy- MET-eMBA
Ways of Segmentation
      Psychographic Segmentation
      Psychographics is the science of using psychology and
      demographics to better understand consumers. Psychographic
      segmentation: consumer are divided according to their lifestyle,
      personality, values. Aliens within the same demographic group can
      exhibit very different psychographic profiles.
      Behavioral Segmentation
      In Behavioural segmentation buyers are divided into groups on the
      basis of their knowledge of, attitude towards, use of, or response to
      a product. The variables of behavioral segmentation are:
        1. Occasions
        2. Benefits
        3. User Status
        4. Usage Rate
        5. Buyer-Readiness Stage
        6. Loyalty Status
        7. Attitude
31                                          Abhishek Bhide- Mktg Strategy- MET-eMBA
Behavioral Segmentation Breakdown




32                       Abhishek Bhide- Mktg Strategy- MET-eMBA
Maruti Suzuki- Segmentation?
            Suzuki-
                                Alto




                                Swift Dzire




                                Kizashi




33                     Abhishek Bhide- Mktg Strategy- MET-eMBA
Segmentation of Older people
      A more complex problem- Why?
      Can attracting older people damage the brand image?
      How?
      Are they more loyal?
      Can it afford to ignore them?




34                                  Abhishek Bhide- Mktg Strategy- MET-eMBA
Segmenting across international
     boundaries
      What is the need?
      What would be the challenges?
      What would change in the 4 P’s?:
      ◦   Price
      ◦   Packaging
      ◦   Promotion
      ◦   Place
      Examples you know or use?




35                                  Abhishek Bhide- Mktg Strategy- MET-eMBA
References:
      Marketing Management – Kotler & Keller
      Wikipedia
      Tutor2u.net
      ISB Study materials




36                                       Abhishek Bhide- Mktg Strategy- MET-eMBA
Demographic Segmentation-WHY?
                 Segmentation-

      Demographic Segmentation:

      ◦ Reasonably co related to behaviours
      ◦ Easy to obtain data and population sizes for each
      ◦ Easy to complement with products already using
        demographic segmentation




37                                    Abhishek Bhide- Mktg Strategy- MET-eMBA
Why is it Important?
      Increased life expectancy
      Requirements for completely new product & their
      development
      A very affluent segment of the population with varying
      amounts of disposable income
      Large proportion of population in some countries
      Possible untapped opportunity in a crowded market




38                                   Abhishek Bhide- Mktg Strategy- MET-eMBA
Why is it Tougher?
      Less Tribal and more individualistic
      More and varied experiences leading to very different
      preferences & behaviours
      Marketers are most often below 50 years- so difficulty
      in relating
      Very varied amount of disposable incomes
      Significant proportion want to ‘experience’ new
      products, lifestyles & brands
      Most importantly- they do NOT want to feel old




39                                   Abhishek Bhide- Mktg Strategy- MET-eMBA
Tips for Marketing to the Older Market
     1. Many older people seek experiences, and do not want to be just spectators.
         They want to do, not just see.
     2. When they want an experience, they want a top notch experience. And, more
         than most, they will pay for it.
     3 Appeal to their core values and motivations. Don’t underestimate those, or
         stereotype them because of their age.
     4. Don’t forget sensory experiences, and the importance of entertainment or fun.
         It should not be too hard work
     5. They like products and services that save time.
     6. They also like value for money. They do research before they buy.
     7. Marketing should be honest and authentic; avoid hyperbole.
     8. Word of mouth referrals are important. Old fashioned social networking
     9. They want a rational as well as an emotional benefit
     10. Don’t use chronological age to predict who they are and what they’ll do. Don’t
         assume they are all the same, don’t stereotype


     Source: http://www.wisebranding.co.uk/blog/tag/marketing-to-the-over-50s/


40                                                  Abhishek Bhide- Mktg Strategy- MET-eMBA
Additional Readings
      http://www.wisebranding.co.uk/blog/tag/marketing-to-
      the-over-50s/
      http://www.emarketing.net.cn/upload/file/2008/05/08/00
      1210177863586.pdf




41                                  Abhishek Bhide- Mktg Strategy- MET-eMBA
Details & Examples

SWOT




                     Abhishek Bhide- Mktg Strategy- MET-eMBA   42
Why SWOT?
      It gives structure to the data collected from:
      ◦ Market research
      ◦ Customer feedback
      ◦ External sources
      It helps to highlight key problem areas, strengths
      opportunities & issues across the organization
      It is easy enough in its structure to be understood at
      multiple levels- hence can be carried out at product,
      SBU & company level




43                                    Abhishek Bhide- Mktg Strategy- MET-eMBA
Skoda UK Case
     Background:
     ◦ Started as an Arms manufacturer in
       1859 in Czechoslovakia
     ◦ Acquired Laurin-Klement in 1924- beginning of Skoda
       Auto
     ◦ Was well-regarded right upto 1970s despite having
       outdated technologies and communist policies
     ◦ Its reputation then started to decline upto a point where
       it was called the ‘laughing stock of the automotive world’
     ◦ Volkswagen acquired a stake in 1991 and worked on
       improving its image
     ◦ Became completely owned by VW
       in 2000


44                                       Abhishek Bhide- Mktg Strategy- MET-eMBA
What was done?
      An independent research was carried out by a known
      market research agency
      Surveys & polls such as ‘Top Gear’, J.D. Power were also
      analysed
      Company personnel at all levels were consulted about
      customers’ opinions




45                                    Abhishek Bhide- Mktg Strategy- MET-eMBA
SWOT
                                    INTERNAL
     Strengths                               Weaknesses
     •100 + year old history / experience    •Only has 1.7% of the market share in
     of car manufacturing                    UK market
     •Established brands such as Superb,     •East European origin of the brand
     Rapid, Octavia                          leading to misconceptions about
     •Focus on human experience rather       quality, image and technology
     than cars-strategy to build cars that   •Image still ‘neutral & weak’ according
     owners enjoy driving                    to brand health check
     •Image improvement due to efforts &
     association with Volkswagen AG
     •Rated #1 car maker by Top Gear
     •Octavia rated best car by Auto
     Express
     •98% of drivers would recommend
     the car to friends- So very high
     satisfaction levels among customers

46                                                Abhishek Bhide- Mktg Strategy- MET-eMBA
SWOT
                                   EXTERNAL
     Opportunities                           Threats
     •No of Competitors focusing on          •50 car makers having 200 models &
     product only-                           2000 derivatives (variants)
          •BMW- Ultimate Driving Machine     •Cheaper cars & car makers coming
          •Audi- Vorsprung durch Technik     into the market
     •Gaps in product lines of competitors   •EU legal & environmental
     •Likability of Skoda cars higher than   constraints- lower emissions, tougher
     Ford, Renault                           safety regulations etc.
     •New segments being created due to
     changing lifestyles




47                                                Abhishek Bhide- Mktg Strategy- MET-eMBA
What did they do?




     They focused on ‘happiness’
     Expanded variants to fill gaps
     Leveraged Volkswagen’s economies of scale by
     using common platforms
     for cars across the group- A1 platform is used
     across 20+ cars
48                                    Abhishek Bhide- Mktg Strategy- MET-eMBA
INTERNATIONAL
SEGMENTATION




         Abhishek Bhide- Mktg Strategy- MET-eMBA   49
Segmenting across international
     boundaries
      What is the need?
      What would be the challenges?
      What would change in the 4 P’s?:
      ◦   Price
      ◦   Packaging
      ◦   Promotion
      ◦   Place
      Examples you know or use?




50                                  Abhishek Bhide- Mktg Strategy- MET-eMBA
What does it mean?
     International Segmentation:
     The process of identifying countries and/or consumers
     that are similar with regard to key traits, such as product-
     related needs and wants (across countries), that would
     respond well to a (similar) product and related marketing
     mix.

      Who all would have use for it?




51                                      Abhishek Bhide- Mktg Strategy- MET-eMBA
SEQUENTIAL
SEGMENTATION




        Abhishek Bhide- Mktg Strategy- MET-eMBA   52
Sequential Segmentation
     The division of a heterogeneous market into relatively
     homogeneous groups on one basis (for example,
     geographically), followed by further segmentation on some
     other basis (for example, end-user type)
      Reasons for sequential segmentation:
       ◦   New product introduction
       ◦   Limited resources
       ◦   Secondary markets
       ◦   Test marketing
       ◦   Niche products




53                                    Abhishek Bhide- Mktg Strategy- MET-eMBA
Example: Aluminium Manufacturer
      Which Market? Automobile/ Residential/ Beverage

       ◦ Residential: Semi-finished material,/ building components/ Aluminium mobile
         homes


            Building Components:           Large/ Medium/ Individual Customers


                   Large Customers-Orientation?                  Price/ Service/ Quality


                         Quality



     Service Oriented Customers of Aluminum Building
     Components in the Residential Market

54                                                 Abhishek Bhide- Mktg Strategy- MET-eMBA
How would you segment? What are the challenges?

UNITED AIRLINES
CASELET




                           Abhishek Bhide- Mktg Strategy- MET-eMBA   55
Question-
     Question- United Airlines
       Introduction:

       Today we live in a global community as global citizens where we have become increasingly conscious about
       sharing the planet with people from other cultures and backgrounds. In this global community where so
       many technologies are shared, distances and time barriers have shrunk. Not only can we use information
       technologies to e-mail, phone or fax friends, family and colleagues in other parts of the world, we can also
       use reliable and regular travel links to visit them, covering vast distances in a matter of hours.
       Whereas in the past travelling by air was, for many people, an experience more often than not associated
       with an annual family holiday, today air travel has become a way of life both for business and leisure. One
       frequently quoted estimate is that demand for air travel will double in the next 20 years. As a result more
       and more people do not just need regular air travel, but also the type of travel that meets their particular
       needs best. For example, unlike the manufacture of tangible goods such as shampoo or bread that have clear
       uses, providing travel opportunities is more sophisticated as it involves providing customer service to match
       the expectations of travel users.

       About United Airlines:

       United Airlines was formed in 1927 from four airlines - Boeing Airplane Company, National Air Transport,
       Varney and Pacific Air Transport. From its roots as a USA domestic carrier, United Airlines expanded into
       international routes to become the world's second largest air carrier. With hubs in Chicago, Denver, Los
       Angeles, San Francisco, Washington D.C. and key international gateways in Tokyo, London, Frankfurt, Miami
       and Toronto, United flies to 117 destinations in 26 countries. These schedules are obviously subject to
       change. United employs more than 80,000 people worldwide and carries more than 210,000 passengers
       every day. Its customers have access to more than 729 destinations around the world through Star Alliance,
       the leading global airline network.


       Question:

       Customers in this industry look for various things such as convenient routes, correct timings, better service and
       connectivity. How can United Airlines segment its market so as to better position its services and reach out to the right
       customers with its marketing communications?



56                                                                                Abhishek Bhide- Mktg Strategy- MET-eMBA
Need for Segmenting?
      Given its global reach & size United Airlines Customers
      want very different things
      United Airlines can identify market opportunities and
      meet its marketing objectives.
      Segmentation gives an airline a better understanding of
      its customers, the services they require, where and
      when they want those services and how they would
      prefer to pay for them.




57                                   Abhishek Bhide- Mktg Strategy- MET-eMBA
Advantages of Segmentation
      United Airlines segments its market so that it can:
      ◦ identify consumer needs and the proportion of customers who
        have those needs
      ◦ develop products and prices to meet these needs
      ◦ target communications at customers within each segment
      ◦ allocate funds to support and develop each market opportunity.
      Market segmentation therefore enables United Airlines to
      maximise the efficiency of its marketing efforts by moving the
      company to use a different strategy for each market segment.




58                                         Abhishek Bhide- Mktg Strategy- MET-eMBA
How was it Done?
      United Airlines uses a form of psychographic
      segmentation to divide up the market for its services. This
      involves identifying the social class, lifestyles, opinions,
      interests, behaviour and attitudes of customers.
      Modern communication systems play a major part in this
      information-gathering exercise. With the help of
      questionnaires, United Airlines classifies its customers by
      their motivations.
      For United Airlines, successful segmentation enables targeting
      to take place. Targeting provides the focus for the activities of
      the business.
      It enables promotions and services to be aimed only at those
      who are most likely to respond positively to them.
      Passengers are communicated with through email which is
      becoming a focus for closely-targeted marketing.

59                                        Abhishek Bhide- Mktg Strategy- MET-eMBA
Focus of Segmentation
      The United Airlines business model can be compared to
      the classic 80:20 rule in Pareto's Analysis.
      Based on experience of the airline industry, the model
      assumes that, for airlines offering a high level of service,
      80%of profit comes from 20% of customers.
      The profit-generating customers are the ones who are
      prepared to pay a premium price for a premium service.
      They are the ones that the airline most needs to
      attract.
      This is what the segmentation needs to identify and
      target


60                                     Abhishek Bhide- Mktg Strategy- MET-eMBA
The Psychographic Segments
1.   Global executives
2.   Schedule optimizers:
3.   Corporate troopers:
4.   Mile accumulators:
5.   Reluctant travellers:
6.   Tour takers:
7.   Quality vacationers:
8.   Travel seekers:
9.   Frugal flyers:




                             Abhishek Bhide- Mktg Strategy- MET-eMBA
References:
      Marketing Management – Kotler & Keller
      Wikipedia
      Tutor2u.net
      ISB Study materials
      http://www.citeman.com/1417-sequential-segmentation.html




62                                       Abhishek Bhide- Mktg Strategy- MET-eMBA
Lecture 4
BUSINESS TO BUSINESS
SEGMENTATION




            Abhishek Bhide- Mktg Strategy- MET-eMBA
What is Different?
1. B2B markets have a more complex decision-
   making unit
2. B2B buyers are more ‘rational’
3. B2B products are often more complex
4. B2B target audiences are smaller than
   consumer target audiences




                          Abhishek Bhide- Mktg Strategy- MET-eMBA
What is Different?
5.   Personal relationships are more important in B2B
     markets
6.   B2B buyers are longer-term buyers
7.   B2B markets drive innovation less than consumer
     markets
8.   B2B markets have fewer behavioural and needs-based
     segments




                                Abhishek Bhide- Mktg Strategy- MET-eMBA
Examples of Segments in B2B
 A price-focused segment,
 which has a transactional outlook to doing business and does
 not seek any ‘extras’. Companies in this segment are often
 small, working to low margins and regard the product/service
 in question as of low strategic importance to their business.
 A quality and brand-focused segment,
 which wants the best possible product and is prepared to pay
 for it. Companies in this segment often work to high margins,
 are medium-sized or large, and regard the product/service as
 of high strategic importance.




 Contd…                            Abhishek Bhide- Mktg Strategy- MET-eMBA
Examples of Segments in B2B
 A service-focused segment,
 which has high requirements in terms of product quality and
 range, but also in terms of after sales, delivery, etc. These
 companies tend to work in time-critical industries and can
 be small, medium or large. They are usually purchasing
 relatively high volumes.
 A partnership-focused segment,
 usually consisting of key accounts, which seeks trust and
 reliability and regards the supplier as a strategic partner. Such
 companies tend to be large, operate on relatively high
 margins, and regard the product or service in question as
 strategically important.



                                     Abhishek Bhide- Mktg Strategy- MET-eMBA
Types of Segmentation in B2B




http://www.b2binternational.com/publications/white-papers/b2b-segmentation-research/


                                                Abhishek Bhide- Mktg Strategy- MET-eMBA
Advantages of this Segmentation
      United Airlines segments its market so that it can:
      ◦ identify consumer needs and the proportion of customers who
        have those needs
      ◦ develop products and prices to meet these needs
      ◦ target communications at customers within each segment
      ◦ allocate funds to support and develop each market opportunity.
      Market segmentation therefore enables United Airlines to
      maximise the efficiency of its marketing efforts by moving the
      company to use a different strategy for each market segment.




69                                         Abhishek Bhide- Mktg Strategy- MET-eMBA
Problems in Execution?
 Resources
 Suitable segmentation basis
 Periodicity of Segmentation
 Suitable dissemination of Study
 Communicating to the Sales team




                              Abhishek Bhide- Mktg Strategy- MET-eMBA
TARGETING




        Abhishek Bhide- Mktg Strategy- MET-eMBA
The Big Picture
   Segmentation



                              Product
    Targeting


                                Price

    Positioning

                                Place



                            Promotion



                  Abhishek Bhide- Mktg Strategy- MET-eMBA
Targeting & Target Segments
 The selection of potential customers segments to
 whom a business wishes to sell products or services.




 A target market/ segment is a group of customers
 that the business has decided to aim
 its marketing efforts and ultimately
 its merchandise towards.[




                                Abhishek Bhide- Mktg Strategy- MET-eMBA
Which Segments to Target? How?
                 Points for effective segments
                 How do they help us decide
Measurable       targeting?
Substantial
Accessible
Differentiable
Actionable




                         Abhishek Bhide- Mktg Strategy- MET-eMBA
Targeting the right segments
 Substantial- Target the biggest or smallest first?
 Accessible- Most accessible & least costly to address
 Differentiable- If the segment is easy to differentiate-
 means it will be easier to address




                                  Abhishek Bhide- Mktg Strategy- MET-eMBA
Single Segment & Selective Targeting




                     Abhishek Bhide- Mktg Strategy- MET-eMBA
Specialization




                 Abhishek Bhide- Mktg Strategy- MET-eMBA
Example:
 Three Companies/ Products which are Transportation
 softwares
 Products are comparable and priced competitively
 Markets are segmented by:
 ◦ Sector
 ◦ Size of Computer systems




                              Abhishek Bhide- Mktg Strategy- MET-eMBA
Sequential Targeting




                   Abhishek Bhide- Mktg Strategy- MET-eMBA
POSITIONING &
DIFFERENTIATION




         Abhishek Bhide- Mktg Strategy- MET-eMBA
Positioning
 Positioning is defined as the act of designing the
 company’s offering and image to occupy a distinctive
 place in the target market’s mind
 ◦ Re-positioning involves changing the identity of a product,
   relative to the identity of competing products, in the collective
   minds of the target market.
 ◦ De-positioning involves attempting to change the identity of
   competing products, relative to the identity of your own
   product, in the collective minds of the target market.

 Thus positioning will impact:
 ◦   Product features
 ◦   Packaging
 ◦   Distribution
 ◦   Availability
 ◦   Pricing & discounting
 ◦   Communications
                                        Abhishek Bhide- Mktg Strategy- MET-eMBA
What is Positioning?
1.   Positioning is a final step in the Segmentation Targeting and Positioning
     step
2.   Positioning requires a holistic approach and is one of the most useful
     tools for marketers.
3.   Positioning is almost completely about perception. How the customer
     perceives your product or brand is what positioning is all about. Thus
     the best mass marketers like to use marketing tactics which touch the
     whole market
4.   Perceptual mapping is generally used to determine the Positioning of a
     product in the target market.
5.   Positioning can make or break a brand. A rightly perceived product /
     company gets lots of returns from the market as compared to a wrongly
     perceived company. Example – Airtel vs Reliance telecom
6.   Communication is of ultimate importance in positioning. The right
     communication can go a long way in determining the perception of a
     product / brand.
7.   Finally, Attributes – tangible or intangible (in case of services) are
     necessary to be involved in the product which increase the positioning
     of the product in the customers mind.
                                              Abhishek Bhide- Mktg Strategy- MET-eMBA
What is Positioning?
5.   Positioning can make or break a brand. A rightly
     perceived product / company gets lots of returns from
     the market as compared to a wrongly perceived
     company.
6.   Communication is of ultimate importance in
     positioning. The right communication can go a long
     way in determining the perception of a product /
     brand.
7.   Finally, Attributes – tangible or intangible (in case of
     services) are necessary to be involved in the product
     which increase the positioning of the product in the
     customers mind.


                                   Abhishek Bhide- Mktg Strategy- MET-eMBA
Note on Perceptual Mapping
 Perceptual Mapping is a diagrammatic technique
 used by asset marketers that attempts to visually
 display the perceptions of customers or potential
 customers. Typically the position of
 a product, product line, brand, or company is
 displayed relative to their competition.
 The map can also have indicators of customer
 preferences
 The position can also be displayed as a circle or
 shape which is relative to its size in the market




                                Abhishek Bhide- Mktg Strategy- MET-eMBA
Perceptual Map & Oldsmobile




                 Abhishek Bhide- Mktg Strategy- MET-eMBA
Positioning Strategies
Positioning Strategies can be based on:
1. Product characteristics or benefits
2. Competitive Pricing
3. Time or occasion of use
4. Usage Frequency
5. New Class or category
6. Competitive Positioning




                                  Abhishek Bhide- Mktg Strategy- MET-eMBA
Product characteristics or benefits
  This strategy basically focuses upon the characteristics
  of the product or customer benefits.
  A product may also be positioned along two or more
  product characteristics at the same time.

Examples?




                                  Abhishek Bhide- Mktg Strategy- MET-eMBA
Product characteristics or benefits




                     Abhishek Bhide- Mktg Strategy- MET-eMBA
Competitive Pricing
  Products offered at the best price in the market
  OR with some additional benefits or services at the
  same price
  The focus remains the pricing of the product

Examples?




                                 Abhishek Bhide- Mktg Strategy- MET-eMBA
Competitive Pricing




                  Abhishek Bhide- Mktg Strategy- MET-eMBA
Time or occasion of use
 The time or occasion when you are most likely to
 consume this product is communicated
 Also used to expand the occasions when the product is
 CURRENTLY being used

Example?




                               Abhishek Bhide- Mktg Strategy- MET-eMBA
Time or occasion of use




                  Abhishek Bhide- Mktg Strategy- MET-eMBA
Usage Frequency
  Strategy to focus on usage amount, frequency and time
  and increase it through positioning

Examples?




                                Abhishek Bhide- Mktg Strategy- MET-eMBA
Usage Frequency




                  Abhishek Bhide- Mktg Strategy- MET-eMBA
New Class or category
  Strategy to position your product as a completely new
  category or type in established markets thereby
  changing the dynamics of the market possibly attracting
  market share from across segments

Examples?




                                 Abhishek Bhide- Mktg Strategy- MET-eMBA
New Class or category




                 Abhishek Bhide- Mktg Strategy- MET-eMBA
Competitive Positioning
  Where most or all of the attributes of the product are
  positioned in relation to one or more major products/
  brands in the market
  The features highlighted are meant to provide a
  competitive advantage

Examples?




                                 Abhishek Bhide- Mktg Strategy- MET-eMBA
Competitive Positioning




                  Abhishek Bhide- Mktg Strategy- MET-eMBA
References
 http://www.marketing91.com/positioning-strategies/
 www.wikepedia.org




                                     Abhishek Bhide- Mktg Strategy- MET-eMBA

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Mktg strat lec-intro&stpd-ahb

  • 1. Marketing Strategy- Strategy- Introduction Abhishek Bhide B.E. (Cons); PGP (Indian School of Business) 1 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 2. Agenda Introduction Topics to be covered in this Course; Format What is marketing ? What is strategy? Why is it relevant? How does it connect to Execution? 2 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 3. INTRODUCTION Abhishek Bhide- Mktg Strategy- MET-eMBA 3
  • 4. Rules & Marks Respect for each other Only One person talks at a time No personal remarks even if you disagree Debates over concepts and examples are welcome just lets not degrade them into arguments MARKS: ◦ 50 marks written paper at term end ◦ 50 marks divided over 3 presentation to be done by each group 4 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 5. What is Marketing? Philip Kotler: “The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.” The Chartered Institute of Marketing (CIM): Marketing is the management process for identifying, anticipating and satisfying customer requirements profitably. Sergio Zyman, ex-CMO, Coca Cola: “The sole purpose of marketing is to sell more to more people, more often and at higher prices. There is no other reason to do it.” 5 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 6. Strategy? Oxford Dictionary: “A plan of action designed to achieve a long-term or overall aim” Peter Drucker: "Strategic planning is the continuous process of making present entrepreneurial (risk-taking) decisions systematically and with the greatest knowledge of their futurity; organizing systematically the efforts needed to carry out these decisions; and measuring the results of these decisions against the expectations through organized, systematic feedback." 6 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 7. What does ‘Marketing Strategy’ mean? A strategy that integrates an organization's 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. 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. 7 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 8. Examples: Mission statements based on Marketing Strategies: Coca Cola: Wants to capture share of the stomach rather than share of the beverage market Xerox: Wants to help office productivity rather than help copying documents Columbia Tristar: Wants to entertain people rather than make movies 8 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 9. Coca Cola http://en.wikipedia.org/wiki/List_of_Coca-Cola_brands 9 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 10. Xerox Current products Xerox today manufactures and sells a wide variety of office and production equipment including LCD Monitors, photo copiers, Xerox Phaser printers, multifunction printers, large-volume digital printers as well as workflow software under the brand strategy of FreeFlow. The impact of Xerox FreeFlow products on the graphic arts market and the print industry in general has grown exponentially since May 2006, largely as a result of the Xerox presence at IPEX 2006. Xerox also sells scanners and digital presses. On 29 May 2008, Xerox launched the Xerox iGen4 Press. Xerox sells both color and black and white printers under the Xerox Phaser and ColorQube brand, with the color consumer model starting at US$299; the most expensive color model costs US$6,799. Xerox also produces fax machines, professional printers, black and white copiers, and several other products. In addition, Xerox produces many printing and office supplies such as paper in many forms, and solid ink that takes advantage of 2400 FinePoint technology; and markets software such as Xerox DocuShare, Xerox MarketPort and FlowPort, offers consulting services, ECMDigital Repository Services and printing outsourcing. Abhishek Bhide- Mktg Strategy- MET-eMBA 10
  • 11. A D-I-Y approach to strategy: D- A simple way of creating a marketing strategy on a website: Describe your company's unique selling proposition (USP). Define your target market. Write down the benefits of your products or services. Describe how you will position your products or services. Define your marketing methods. Will you advertise, use Internet marketing, direct marketing, or public relations? Source: http://marketing.about.com/cs/advertising/ht/5steps2strategy.htm 11 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 12. The Systematic Approach A marketing strategy is a part of a Marketing Plan which consists of: Executive summary & Table of contents Brief summary an contents of the plan Situation analysis Internal & external factors used to carry out a SWOT analysis Marketing strategy Financial projections Details of expenses required and revenues expected in detail Implementation controls Milestones and implementation details as well as corrective measures that can be taken if required 12 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 13. Marketing Strategy: Mission Statement Marketing Objectives Financial Objectives Target Markets Positioning Strategy description Marketing Mix Marketing Research 13 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 14. Porter’s Generic Strategies Overall Cost Leadership Differentiation Focus 14 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 15. Creating a Marketing Strategy HOW DO WE START? 15 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 16. DEVELOPMENT OF MARKETING STRATEGY This is where we can start: 16 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 17. Relevance of Marketing Strategy? Do we always need Marketing Strategy? Does SAIL or Coal India Ltd need it? ◦ In Monopolistic/ Oligopolistic Markets Does a civil contractor or a rickshaw meter supplier need it? ◦ In Markets where prices are controlled Does TATA salt or Balrampur Chini need it? ◦ In commoditized product markets 17 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 18. STRATEGIES THAT WE WILL DISCUSS Abhishek Bhide- Mktg Strategy- MET-eMBA 18
  • 19. Marketing Execution What happens at the ground level? ◦ Lack of communication ◦ Unviable tactics or strategies ◦ Lack of training for implementing new strategies ◦ Insufficient time to change 19 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 20. References: 1. http://www.businessdictionary.com/definition/marketing- strategy.html#ixzz232TG4yLC 2. www.wikipedia.com 3. Aboutmarketing.com 4. Kotler & Keller Marketing Management e13 20 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 21. Segmentation, Targeting, Positioning & Differentiation Abhishek Bhide; B.E. (Cons), PGP (ISB) Abhishek Bhide- Mktg Strategy- MET-eMBA 21
  • 22. Columbia Tri-Star Tri- Acquired stake in New World Entertainment Formed Columbia TriStar HomeVideo for video cassettes and became #1 in two years Columbia Tristar International formed to dub serials for German markets What more can it do? 22 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 23. WHAT? CAN YOU EXPLAIN? Philip Kotler: Even the most well-defined segments are partly fiction Abhishek Bhide- Mktg Strategy- MET-eMBA 23
  • 24. Segmentation What is Segmentation? Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs and applications for the relevant goods and services “The overall intent of Market Segmentation is to identify groups of similar customers and potential customers; to prioritize the groups to address; to understand their behavior to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment.” 24 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 26. Why Segment? Better matching of customer needs Customer needs differ. Creating separate offers for each segment makes sense and provides customers with a better solution Enhanced profits for business Customers have different disposable income. They are, therefore, different in how sensitive they are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profits Better opportunities for growth Market segmentation can build sales. For example, customers can be encouraged to "trade-up" after being introduced to a particular product with an introductory, lower-priced product 26 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 27. Why Segment? Retain more customers Customer circumstances change, for example they grow older, form families, change jobs or get promoted, change their buying patterns. By marketing products that appeal to customers at different stages of their life ("life-cycle"), a business can retain customers who might otherwise switch to competing products and brands Target marketing communications Businesses need to deliver their marketing message to a relevant customer audience. If the target market is too broad, there is a strong risk that (1) the key customers are missed and (2) the cost of communicating to customers becomes too high / unprofitable. By segmenting markets, the target customer can be reached more often and at lower cost 27 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 28. Why Segment? Gain share of the market segment Unless a business has a strong or leading share of a market, it is unlikely to be maximising its profitability. Minor brands suffer from lack of scale economies in production and marketing, pressures from distributors and limited space on the shelves. Through careful segmentation and targeting, businesses can often achieve competitive production and marketing costs and become the preferred choice of customers and distributors. In other words, segmentation offers the opportunity for smaller firms to compete with bigger ones. 28 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 29. Requirements of Segments Measurable Substantial Accessible Differentiable Actionable 29 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 30. Ways of Segmentation? Geographic segmentation The market is segmented according to geographic criteria—nations, states, regions, countries, cities, neighborhoods, or zip codes. Geo- cluster approach combines demographic data with geographic data to create a more accurate profile. With respect to region, in rainy regions you can sell things like raincoats, umbrellas and gumboots. In hot regions you can sell summer wear. In cold regions you can sell warm clothes. Demographic Segmentation Demographic segmentation consists of dividing the market into groups based on variables such as age, gender, family size, income, occupation, education, religion, race and nationality. As one might expect, demographic segmentation variables are amongst the most popular bases for segmenting customer groups. This is partly because customer wants are closely linked to variables such as income and age. Also, for practical reasons, there is often much more data available to help with the demographic segmentation process. 30 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 31. Ways of Segmentation Psychographic Segmentation Psychographics is the science of using psychology and demographics to better understand consumers. Psychographic segmentation: consumer are divided according to their lifestyle, personality, values. Aliens within the same demographic group can exhibit very different psychographic profiles. Behavioral Segmentation In Behavioural segmentation buyers are divided into groups on the basis of their knowledge of, attitude towards, use of, or response to a product. The variables of behavioral segmentation are: 1. Occasions 2. Benefits 3. User Status 4. Usage Rate 5. Buyer-Readiness Stage 6. Loyalty Status 7. Attitude 31 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 32. Behavioral Segmentation Breakdown 32 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 33. Maruti Suzuki- Segmentation? Suzuki- Alto Swift Dzire Kizashi 33 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 34. Segmentation of Older people A more complex problem- Why? Can attracting older people damage the brand image? How? Are they more loyal? Can it afford to ignore them? 34 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 35. Segmenting across international boundaries What is the need? What would be the challenges? What would change in the 4 P’s?: ◦ Price ◦ Packaging ◦ Promotion ◦ Place Examples you know or use? 35 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 36. References: Marketing Management – Kotler & Keller Wikipedia Tutor2u.net ISB Study materials 36 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 37. Demographic Segmentation-WHY? Segmentation- Demographic Segmentation: ◦ Reasonably co related to behaviours ◦ Easy to obtain data and population sizes for each ◦ Easy to complement with products already using demographic segmentation 37 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 38. Why is it Important? Increased life expectancy Requirements for completely new product & their development A very affluent segment of the population with varying amounts of disposable income Large proportion of population in some countries Possible untapped opportunity in a crowded market 38 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 39. Why is it Tougher? Less Tribal and more individualistic More and varied experiences leading to very different preferences & behaviours Marketers are most often below 50 years- so difficulty in relating Very varied amount of disposable incomes Significant proportion want to ‘experience’ new products, lifestyles & brands Most importantly- they do NOT want to feel old 39 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 40. Tips for Marketing to the Older Market 1. Many older people seek experiences, and do not want to be just spectators. They want to do, not just see. 2. When they want an experience, they want a top notch experience. And, more than most, they will pay for it. 3 Appeal to their core values and motivations. Don’t underestimate those, or stereotype them because of their age. 4. Don’t forget sensory experiences, and the importance of entertainment or fun. It should not be too hard work 5. They like products and services that save time. 6. They also like value for money. They do research before they buy. 7. Marketing should be honest and authentic; avoid hyperbole. 8. Word of mouth referrals are important. Old fashioned social networking 9. They want a rational as well as an emotional benefit 10. Don’t use chronological age to predict who they are and what they’ll do. Don’t assume they are all the same, don’t stereotype Source: http://www.wisebranding.co.uk/blog/tag/marketing-to-the-over-50s/ 40 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 41. Additional Readings http://www.wisebranding.co.uk/blog/tag/marketing-to- the-over-50s/ http://www.emarketing.net.cn/upload/file/2008/05/08/00 1210177863586.pdf 41 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 42. Details & Examples SWOT Abhishek Bhide- Mktg Strategy- MET-eMBA 42
  • 43. Why SWOT? It gives structure to the data collected from: ◦ Market research ◦ Customer feedback ◦ External sources It helps to highlight key problem areas, strengths opportunities & issues across the organization It is easy enough in its structure to be understood at multiple levels- hence can be carried out at product, SBU & company level 43 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 44. Skoda UK Case Background: ◦ Started as an Arms manufacturer in 1859 in Czechoslovakia ◦ Acquired Laurin-Klement in 1924- beginning of Skoda Auto ◦ Was well-regarded right upto 1970s despite having outdated technologies and communist policies ◦ Its reputation then started to decline upto a point where it was called the ‘laughing stock of the automotive world’ ◦ Volkswagen acquired a stake in 1991 and worked on improving its image ◦ Became completely owned by VW in 2000 44 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 45. What was done? An independent research was carried out by a known market research agency Surveys & polls such as ‘Top Gear’, J.D. Power were also analysed Company personnel at all levels were consulted about customers’ opinions 45 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 46. SWOT INTERNAL Strengths Weaknesses •100 + year old history / experience •Only has 1.7% of the market share in of car manufacturing UK market •Established brands such as Superb, •East European origin of the brand Rapid, Octavia leading to misconceptions about •Focus on human experience rather quality, image and technology than cars-strategy to build cars that •Image still ‘neutral & weak’ according owners enjoy driving to brand health check •Image improvement due to efforts & association with Volkswagen AG •Rated #1 car maker by Top Gear •Octavia rated best car by Auto Express •98% of drivers would recommend the car to friends- So very high satisfaction levels among customers 46 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 47. SWOT EXTERNAL Opportunities Threats •No of Competitors focusing on •50 car makers having 200 models & product only- 2000 derivatives (variants) •BMW- Ultimate Driving Machine •Cheaper cars & car makers coming •Audi- Vorsprung durch Technik into the market •Gaps in product lines of competitors •EU legal & environmental •Likability of Skoda cars higher than constraints- lower emissions, tougher Ford, Renault safety regulations etc. •New segments being created due to changing lifestyles 47 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 48. What did they do? They focused on ‘happiness’ Expanded variants to fill gaps Leveraged Volkswagen’s economies of scale by using common platforms for cars across the group- A1 platform is used across 20+ cars 48 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 49. INTERNATIONAL SEGMENTATION Abhishek Bhide- Mktg Strategy- MET-eMBA 49
  • 50. Segmenting across international boundaries What is the need? What would be the challenges? What would change in the 4 P’s?: ◦ Price ◦ Packaging ◦ Promotion ◦ Place Examples you know or use? 50 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 51. What does it mean? International Segmentation: The process of identifying countries and/or consumers that are similar with regard to key traits, such as product- related needs and wants (across countries), that would respond well to a (similar) product and related marketing mix. Who all would have use for it? 51 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 52. SEQUENTIAL SEGMENTATION Abhishek Bhide- Mktg Strategy- MET-eMBA 52
  • 53. Sequential Segmentation The division of a heterogeneous market into relatively homogeneous groups on one basis (for example, geographically), followed by further segmentation on some other basis (for example, end-user type) Reasons for sequential segmentation: ◦ New product introduction ◦ Limited resources ◦ Secondary markets ◦ Test marketing ◦ Niche products 53 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 54. Example: Aluminium Manufacturer Which Market? Automobile/ Residential/ Beverage ◦ Residential: Semi-finished material,/ building components/ Aluminium mobile homes Building Components: Large/ Medium/ Individual Customers Large Customers-Orientation? Price/ Service/ Quality Quality Service Oriented Customers of Aluminum Building Components in the Residential Market 54 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 55. How would you segment? What are the challenges? UNITED AIRLINES CASELET Abhishek Bhide- Mktg Strategy- MET-eMBA 55
  • 56. Question- Question- United Airlines Introduction: Today we live in a global community as global citizens where we have become increasingly conscious about sharing the planet with people from other cultures and backgrounds. In this global community where so many technologies are shared, distances and time barriers have shrunk. Not only can we use information technologies to e-mail, phone or fax friends, family and colleagues in other parts of the world, we can also use reliable and regular travel links to visit them, covering vast distances in a matter of hours. Whereas in the past travelling by air was, for many people, an experience more often than not associated with an annual family holiday, today air travel has become a way of life both for business and leisure. One frequently quoted estimate is that demand for air travel will double in the next 20 years. As a result more and more people do not just need regular air travel, but also the type of travel that meets their particular needs best. For example, unlike the manufacture of tangible goods such as shampoo or bread that have clear uses, providing travel opportunities is more sophisticated as it involves providing customer service to match the expectations of travel users. About United Airlines: United Airlines was formed in 1927 from four airlines - Boeing Airplane Company, National Air Transport, Varney and Pacific Air Transport. From its roots as a USA domestic carrier, United Airlines expanded into international routes to become the world's second largest air carrier. With hubs in Chicago, Denver, Los Angeles, San Francisco, Washington D.C. and key international gateways in Tokyo, London, Frankfurt, Miami and Toronto, United flies to 117 destinations in 26 countries. These schedules are obviously subject to change. United employs more than 80,000 people worldwide and carries more than 210,000 passengers every day. Its customers have access to more than 729 destinations around the world through Star Alliance, the leading global airline network. Question: Customers in this industry look for various things such as convenient routes, correct timings, better service and connectivity. How can United Airlines segment its market so as to better position its services and reach out to the right customers with its marketing communications? 56 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 57. Need for Segmenting? Given its global reach & size United Airlines Customers want very different things United Airlines can identify market opportunities and meet its marketing objectives. Segmentation gives an airline a better understanding of its customers, the services they require, where and when they want those services and how they would prefer to pay for them. 57 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 58. Advantages of Segmentation United Airlines segments its market so that it can: ◦ identify consumer needs and the proportion of customers who have those needs ◦ develop products and prices to meet these needs ◦ target communications at customers within each segment ◦ allocate funds to support and develop each market opportunity. Market segmentation therefore enables United Airlines to maximise the efficiency of its marketing efforts by moving the company to use a different strategy for each market segment. 58 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 59. How was it Done? United Airlines uses a form of psychographic segmentation to divide up the market for its services. This involves identifying the social class, lifestyles, opinions, interests, behaviour and attitudes of customers. Modern communication systems play a major part in this information-gathering exercise. With the help of questionnaires, United Airlines classifies its customers by their motivations. For United Airlines, successful segmentation enables targeting to take place. Targeting provides the focus for the activities of the business. It enables promotions and services to be aimed only at those who are most likely to respond positively to them. Passengers are communicated with through email which is becoming a focus for closely-targeted marketing. 59 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 60. Focus of Segmentation The United Airlines business model can be compared to the classic 80:20 rule in Pareto's Analysis. Based on experience of the airline industry, the model assumes that, for airlines offering a high level of service, 80%of profit comes from 20% of customers. The profit-generating customers are the ones who are prepared to pay a premium price for a premium service. They are the ones that the airline most needs to attract. This is what the segmentation needs to identify and target 60 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 61. The Psychographic Segments 1. Global executives 2. Schedule optimizers: 3. Corporate troopers: 4. Mile accumulators: 5. Reluctant travellers: 6. Tour takers: 7. Quality vacationers: 8. Travel seekers: 9. Frugal flyers: Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 62. References: Marketing Management – Kotler & Keller Wikipedia Tutor2u.net ISB Study materials http://www.citeman.com/1417-sequential-segmentation.html 62 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 63. Lecture 4 BUSINESS TO BUSINESS SEGMENTATION Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 64. What is Different? 1. B2B markets have a more complex decision- making unit 2. B2B buyers are more ‘rational’ 3. B2B products are often more complex 4. B2B target audiences are smaller than consumer target audiences Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 65. What is Different? 5. Personal relationships are more important in B2B markets 6. B2B buyers are longer-term buyers 7. B2B markets drive innovation less than consumer markets 8. B2B markets have fewer behavioural and needs-based segments Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 66. Examples of Segments in B2B A price-focused segment, which has a transactional outlook to doing business and does not seek any ‘extras’. Companies in this segment are often small, working to low margins and regard the product/service in question as of low strategic importance to their business. A quality and brand-focused segment, which wants the best possible product and is prepared to pay for it. Companies in this segment often work to high margins, are medium-sized or large, and regard the product/service as of high strategic importance. Contd… Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 67. Examples of Segments in B2B A service-focused segment, which has high requirements in terms of product quality and range, but also in terms of after sales, delivery, etc. These companies tend to work in time-critical industries and can be small, medium or large. They are usually purchasing relatively high volumes. A partnership-focused segment, usually consisting of key accounts, which seeks trust and reliability and regards the supplier as a strategic partner. Such companies tend to be large, operate on relatively high margins, and regard the product or service in question as strategically important. Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 68. Types of Segmentation in B2B http://www.b2binternational.com/publications/white-papers/b2b-segmentation-research/ Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 69. Advantages of this Segmentation United Airlines segments its market so that it can: ◦ identify consumer needs and the proportion of customers who have those needs ◦ develop products and prices to meet these needs ◦ target communications at customers within each segment ◦ allocate funds to support and develop each market opportunity. Market segmentation therefore enables United Airlines to maximise the efficiency of its marketing efforts by moving the company to use a different strategy for each market segment. 69 Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 70. Problems in Execution? Resources Suitable segmentation basis Periodicity of Segmentation Suitable dissemination of Study Communicating to the Sales team Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 71. TARGETING Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 72. The Big Picture Segmentation Product Targeting Price Positioning Place Promotion Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 73. Targeting & Target Segments The selection of potential customers segments to whom a business wishes to sell products or services. A target market/ segment is a group of customers that the business has decided to aim its marketing efforts and ultimately its merchandise towards.[ Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 74. Which Segments to Target? How? Points for effective segments How do they help us decide Measurable targeting? Substantial Accessible Differentiable Actionable Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 75. Targeting the right segments Substantial- Target the biggest or smallest first? Accessible- Most accessible & least costly to address Differentiable- If the segment is easy to differentiate- means it will be easier to address Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 76. Single Segment & Selective Targeting Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 77. Specialization Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 78. Example: Three Companies/ Products which are Transportation softwares Products are comparable and priced competitively Markets are segmented by: ◦ Sector ◦ Size of Computer systems Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 79. Sequential Targeting Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 80. POSITIONING & DIFFERENTIATION Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 81. Positioning Positioning is defined as the act of designing the company’s offering and image to occupy a distinctive place in the target market’s mind ◦ Re-positioning involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market. ◦ De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product, in the collective minds of the target market. Thus positioning will impact: ◦ Product features ◦ Packaging ◦ Distribution ◦ Availability ◦ Pricing & discounting ◦ Communications Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 82. What is Positioning? 1. Positioning is a final step in the Segmentation Targeting and Positioning step 2. Positioning requires a holistic approach and is one of the most useful tools for marketers. 3. Positioning is almost completely about perception. How the customer perceives your product or brand is what positioning is all about. Thus the best mass marketers like to use marketing tactics which touch the whole market 4. Perceptual mapping is generally used to determine the Positioning of a product in the target market. 5. Positioning can make or break a brand. A rightly perceived product / company gets lots of returns from the market as compared to a wrongly perceived company. Example – Airtel vs Reliance telecom 6. Communication is of ultimate importance in positioning. The right communication can go a long way in determining the perception of a product / brand. 7. Finally, Attributes – tangible or intangible (in case of services) are necessary to be involved in the product which increase the positioning of the product in the customers mind. Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 83. What is Positioning? 5. Positioning can make or break a brand. A rightly perceived product / company gets lots of returns from the market as compared to a wrongly perceived company. 6. Communication is of ultimate importance in positioning. The right communication can go a long way in determining the perception of a product / brand. 7. Finally, Attributes – tangible or intangible (in case of services) are necessary to be involved in the product which increase the positioning of the product in the customers mind. Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 84. Note on Perceptual Mapping Perceptual Mapping is a diagrammatic technique used by asset marketers that attempts to visually display the perceptions of customers or potential customers. Typically the position of a product, product line, brand, or company is displayed relative to their competition. The map can also have indicators of customer preferences The position can also be displayed as a circle or shape which is relative to its size in the market Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 85. Perceptual Map & Oldsmobile Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 86. Positioning Strategies Positioning Strategies can be based on: 1. Product characteristics or benefits 2. Competitive Pricing 3. Time or occasion of use 4. Usage Frequency 5. New Class or category 6. Competitive Positioning Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 87. Product characteristics or benefits This strategy basically focuses upon the characteristics of the product or customer benefits. A product may also be positioned along two or more product characteristics at the same time. Examples? Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 88. Product characteristics or benefits Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 89. Competitive Pricing Products offered at the best price in the market OR with some additional benefits or services at the same price The focus remains the pricing of the product Examples? Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 90. Competitive Pricing Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 91. Time or occasion of use The time or occasion when you are most likely to consume this product is communicated Also used to expand the occasions when the product is CURRENTLY being used Example? Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 92. Time or occasion of use Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 93. Usage Frequency Strategy to focus on usage amount, frequency and time and increase it through positioning Examples? Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 94. Usage Frequency Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 95. New Class or category Strategy to position your product as a completely new category or type in established markets thereby changing the dynamics of the market possibly attracting market share from across segments Examples? Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 96. New Class or category Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 97. Competitive Positioning Where most or all of the attributes of the product are positioned in relation to one or more major products/ brands in the market The features highlighted are meant to provide a competitive advantage Examples? Abhishek Bhide- Mktg Strategy- MET-eMBA
  • 98. Competitive Positioning Abhishek Bhide- Mktg Strategy- MET-eMBA