1. Formulating Strategy to Fill
Identified Needs
2. Segmentation and Positioning
MARK 430 WEEK 4
What we will cover this week...
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Now we have all that information about customer
behaviour and customer needs....
what are we going to do with it?
1. Formulate a strategy to fill the needs that we have
identified
2. Determine which customers to target, and how to
position our product/service vis a vis the competition
Main strategy tool: SWOT
analysis
 Goal is to pursue opportunities that use your
company’s strengths, while avoiding threats
and overcoming weaknesses (Urban p 45)
Strategy formulation
 Identify and rank strengths and weaknesses in your
company / organization
 Technique:
 list key marketing success factors eg.
 high product quality
 customer loyalty
 patent protection
 rank your position relative to that of your competition against
these factors
 much worse, worse, equal, better, much better
 Objective is to recognize, then build on your
strengths and overcome your weaknesses
Strategy formulation
Identify and rate opportunities and threats in the
external marketing environment
 Opportunities eg.
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technological change
low entry costs
market growth
unmet customer need
weak competition
customer power.....
 Threats eg.
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technological change
regulatory changes
price war
new competition
social change
customer power.....
Customer power: both threat and
opportunity
 More information, more options, simpler
transactions
 More knowledge, more sophistication
 Threat to traditional marketing tactics - push
based, one-way
 marketers must “make” customers buy
 Opportunity to attract the “new” customer
 trust-based marketing
 build mutually beneficial relationship
Which strategic approach to follow?
 Which one to use:
 what kind of customers do you have?
 what kind of product/service are you providing?
 Push-based strategy
 commodities
 price sensitive
 deal seekers
 Pull (trust-based) strategy
 expensive / complex product
 information seeking customers
 customers that value long-term relationship
 The web is fundamentally a pull medium rather than
a push medium
 Agree?
Trust based marketing
 The web is really good an enabling trust
building (a paradox?)
 HPs Online Advisor
 Acts as an online advisor, that helps people
acquire products and services for their home.
 How does HP benefit?
Benefits of trust-based
marketing
 Fits the nature of the web medium
 Ebay - ratings of buyers and sellers without
interference from EBay
 Amazon - customer ratings of products (does
Amazon censor?)
 Collaborative filtering
 Reviews, customer ratings sites, blogs
 Less churn (cheaper to keep a customer than
acquire a new one)
 Cheaper to serve.
What we will cover this week...

Now we have all that information about customer
behaviour and customer needs....
what are we going to do with it?
1. Formulate a strategy to fill the needs that we have
identified
2. Determine which customers to target, and how to
position our product/service vis a vis the competition
Which customers will you serve? Segmentation
and Targeting
 Marketing segmentation
 the process of aggregating individuals or
businesses with similar characteristics
 that relate to the use, consumption, or benefits
of a product or service.
 Targeting
 the process of selecting the market segments that
are most attractive to the firm
Why segment?
 Customers prefer “custom” products
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The market of one?
Cost
How many segments should we deliver?
What characteristics do we use to group
people into market segments
 How do we know we are reaching those
segments?
Traditional marketing complaint
 I know I am wasting 50% of my advertising
budget, but I don’t know which 50%
 Did the right segment see the ad?
 Internet technologies can answer that
question much more effectively than
traditional advertising media
The Internet advantage
 The Internet is the marketer’s dream
 Ad server companies (eg. DoubleClick)
compile and serve much narrower consumer
segments than mass media
 Cost to deliver an ad is much smaller
 User registration info and cookies provide
specific user data
 including what they did after they saw the ad
 immediately
 later
Segmentation Bases and Examples of Related Variables
Bases
Geographics
Demographics Psychographics Behavior
Identifying /
Profiling
Variable
Examples
City
County
State
Region
Country
Age
Income
Gender
Education
Ethnicity
Activities
Interests
Opinions
Personality
Values
Importances
Benefits
sought
Usage level
Brand
loyalty
User status
VALS
 An example of a Marketing strategy tool
(VALS stands for values and lifestyle, but now
focuses on personality)
 segments the market on the basis of
personality traits
 traits assumed to drive consumer behaviour
 uses a survey instrument
 The VALS personality types
 Primary and secondary types
After Segmentation > Positioning
 Product positioning takes place within a
target market segment
 Position is based on consumer perception
 What we need to know:
 What product dimensions/attributes do consumers
use to evaluate?
 How important are these when decisions are
made?
 How do we and our competitors sit relative to
these dimensions
 One tool we can use is a Perceptual Map
Perceptual Map: Automobiles
Classy
Distinctive
Conservative
Sporty
Practical
Affordable
2 uses for a perceptual map
Identify areas without
competitors
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Mercedes
Honda
Ford
Nissan
Porsche
BMW
Chrysler
VW
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Hyundai
Toyota
Cadillac
Dodge
Jeep
Saturn
Kia
Lexus
Display consumer’s ideal
points
 These points reflect
ideal combinations of
the two dimensions
as seen by a
consumer.
 Use them to identify
potential market
segments
 The Internet’s big promise is individualized
targeting giving individual consumers exactly what they
want at the right time and place.