Chapter
6
Marketing Strategy
Chapter 6
Marketing Strategy Decisions
Chapter
6
Market Segmentation Strategies
• Mass Marketing Strategy
• Market Segmentation
– Multisegment Strategy
– Market Concentration Strategy
– Niche Marketing Strategy
– Customized Marketing Strategy
Chapter
Mass Marketing Strategy
6
Product
Price
Distribution
Promotion
Single
Marketing Mix
All Customers
in the Market
Chapter
6
Mass Marketing Strategy
• Mass marketing (or undifferentiated marketing) is
aimed at the total market for a particular type of
product.
– Companies that adopt mass marketing assume that all
customers in the product market have similar needs, and
that these needs can be reasonably satisfied with a single
marketing mix.
– This marketing mix typically consists of a single product
(or, in the case of retailers, a homogeneous set of
products), one price, one promotional program, and one
distribution system.
Chapter
6
Market Segmentation
• Market segmentation involves dividing the total market into
groups of customers having relatively common or
homogeneous needs and attempting to develop a marketing
mix that appeals to one or more of these groups.
– This approach may be necessary when customer needs are similar
within a single group, but their needs differ across groups.
– Through research, firms can identify the needs of each market
segment and create marketing mixes that best match those needs and
expectations.
– There are a variety of factors that can be used to divide markets into
homogeneous groupings, but most fall into one of three general
categories:
• State-of-being segmentation divides markets into segments using
demographic factors such as gender, age, income, and education.
• State-of-mind segmentation deals with how consumers think and feel.
• State-of-being and state-of-mind segmentation are really surrogates for
the true issue in market segmentation, benefits sought.
Chapter
Multisegment Strategy
6
Product
Price
Distribution
Promotion
Product
Price
Distribution
Promotion
Multiple
Marketing Mixes
More Than One
Market Segment
Chapter
6
Multisegment Strategy
• Firms using the multisegment option (or
differentiated marketing) seek to attract buyers in
more than one market segment by offering
multiple marketing mixes that will appeal to more
parts of the total market.
– The firm can increase its share of the market by
responding to the heterogeneous wants and desires of
different segments or submarkets.
– If the segments have enough buying potential, and the
product is successful, the resulting sales increases can
more than offset the increased costs of offering multiple
marketing mixes.
Chapter
6
P & G Segmentation - Detergent Market
53% market share of the $3.2 billion market
TIDE - “Tide’s
in, dirt out”
ARIEL - “tough
cleaner”
???
CHEER - “all
temperature Cheer”
DREFT - “a
clean you can
trust”
BOLD - “cleans,
soften,and
controls static”
GAIN “freshens like
sunshine”
IVORY SNOW “mild, gentle soap
for baby clothes
SOLO - “liquid
detergent with
fabric softener
ERA - “builtin stain
remover”
DASH “attack
tough dirt”
OXYDOL “makes clothes
bright”
Chapter
Market Concentration Strategy
6
Product
Price
Distribution
Promotion
Single
Marketing Mix
Focused on a Single
Market Segment
Chapter
6
Market Concentration Strategy
• Firms using the market concentration approach
focus on a single market segment.
– The main advantage of market concentration is
specialization, as it allows the firm to focus all its
resources toward understanding and serving a single
segment.
– However, by "putting all of its eggs in one basket," the
firm can be vulnerable to changes in its market segment,
such as economic downturns and demographic shifts.
Chapter
Niche Marketing Strategy
6
Product
Price
Distribution
Promotion
Single
Marketing Mix
Focused on a Small
Niche Market Segment
Chapter
6
Niche Marketing Strategy
• Niche marketing narrows the market concentration
approach even more and focuses all marketing
efforts on one small, well-defined market segment
that has a unique, specific set of needs.
• The key to niche marketing is to understand and
meet the needs of target customers so completely
that, despite the small size of the niche, the firm’s
substantial share makes the segment highly
profitable.
Chapter
6
Customized Marketing Strategy
Product
Price
Distribution
Promotion
Product
Price
Distribution
Promotion
Unique
Marketing
Mixes
Individual
Customers
Chapter
6
Customized Marketing Strategy
• Customized (or individual) marketing involves
the creation of a unique marketing mix for each
customer in the target segment.
– This approach is common in business-to-business
marketing where unique programs and/or systems are
designed for each and every customer.
– Such "one-on-one" marketing is more rare in consumer
marketing.
Chapter
6
Developing the Marketing Mix
• Marketing strategy decisions for the marketing mix involve
creating a combination of product, price, promotion, and
distribution that, to the greatest extent possible, matches the
needs of customers in the chosen target market segment(s)
• In-depth, current data about the target market is necessary to
provide information on customer preferences for product
features, attitudes toward competitors' products, price/budget
considerations, and the frequency and intensity with which
the product is used.
• With this information, the marketing manager has the
potential to develop a marketing mix that delivers value and
customer satisfaction better than competitors' mixes.
Chapter
6
Product
• The product is at the core of the marketing strategy.
• Products refer to more than tangible goods and are
usually some combination of goods, services, ideas,
and even people.
• Products in and of themselves are of little value.
– The real value a product provides is derived from its
ability to deliver benefits that enhance the buyer's
situation.
• Organizations that keep their sights set on developing
products, systems, and processes that identify and meet needs
of the target market are more likely to be successful.
Chapter
6
Marketing Strategy Options Related to the
Newness of Products
• Innovation involves the firm in a pioneering effort; innovations of
this type can even result in new product categories.
• New product lines allow a firm to enter new markets with a new
group of closely related product items that are considered a unit
based on technical, or end-use, considerations.
• Product line extensions supplement an existing product line with new
styles or models.
• Improvements or changes in existing products offer customers
improved performance or greater perceived value; this option also
includes changes to make an existing product "new and improved."
• Repositioning involves the modification of existing products (either
real or through promotion) so that they can be targeted at new
markets or segments.
• Cost reductions involve modified products that offer similar
performance at a lower price.
Chapter
6
Price
• Price can be the most critical, the most visible, and the most
over manipulated element of the marketing mix.
• The manager must set the price correctly to achieve the right
balance between customers' needs, alternative solutions, and
the firm's need to cover its direct and indirect costs, while also
making an acceptable profit.
• Price is the most flexible element of the marketing mix as it
can be adjusted to meet changing market conditions.
• Price is more than a financial or economic issue; it also has
significant social and psychological connotations.
• There are two points of view to consider with regard to price.
– To the marketer, price is the amount of money that the firm is willing to
accept in exchange for a product.
– To customers, price is anything they are willing to give up in exchange
for the product.
Chapter
6
Marketing Strategy Options related to the
Pricing of Products
• Companies that employ a competitive pricing strategy of
operational excellence focus on efficiency of operations that
lowers costs and allows them to deliver goods and services to
their customers at lower prices and thus a better value.
Regardless of their appeal, low price strategies are frequently
not sustainable over time.
• Ongoing discount, or everyday low pricing (EDLP) strategy, is
another commonly employed strategy, particularly in retailing.
• Prestige pricing strategy is the focal point of a marketing mix
oriented toward a high quality, prestige product image. In
order for this strategy to be successful, customers must
perceive the firm's product to be of significantly higher quality
than competing products.
Chapter
6
Promotion
• Promotion activities are necessary to communicate the features
and benefits of a product to its intended target market(s).
• The role of advertising, sales promotion, personal selling, and
public relations (elements of the promotional mix) in a
particular marketing strategy will vary depending on the nature
of the product.
• The role of promotion mix elements also varies by stage in the
product purchase process (awareness, interest, desire, and
action).
• Promotion mix decisions are affected by price, as lower priced
products tend to have a lower profitability per unit that would
dictate advertising while higher priced products include a level
of margin that makes covering the costs of personal selling
feasible.
Chapter
6
Promotion Strategies
Push Strategy
Producer
Marketing
Communications
Resellers
Marketing
Communications
End Users
Pull Strategy
Marketing Communications
Producer
Request
Products
Resellers
Request
Products
End Users
Chapter
6
Distribution (Place)
• Distribution refers to both of the following:
– Marketing channels—a system of organizations through
which a product, resources, information, and/or product
ownership flows from producer to customers.
– Physical distribution—moving products to the right place
in the right quantities at the right time, and in a costefficient manner.
• Logistics strategies address physical distribution issues, such as
transportation, storage, materials handling, and the systems and
equipment necessary for these functions.
• A good distribution strategy is essential because once a
channel is selected and commitments are made,
distribution often becomes highly inflexible due to longterm contracts, investments, and commitments with
channel members.
Chapter
6
Marketing Strategy Options related to the
Distribution of Products
• There are three basic strategic options for
distribution in terms of the amount of market
coverage and level of exclusivity between vendor
and retailer.
– Exclusive distribution gives one merchant or outlet the
sole right to sell a product within a defined geographic
region (e.g., Rolex, Mercedes-Benz).
– Selective distribution gives several outlets the right to
sell a product in a defined geographic region (e.g., Bose,
franchising industry).
– Intensive distribution makes a product available in the
maximum number of outlets in each region to gain as
much exposure and as many sales opportunities as
possible (e.g., things sold at a convenience store).
Chapter
6
Differential Strategies: Product Descriptors
• Product features are factual (hopefully) descriptors of the
product.
• Advantages are performance descriptors that communicate
how the features make the product behave, hopefully in a
fashion that is distinctive and appealing to the target
customers.
• Benefits are the positive outcomes or need satisfactions
people acquire from purchased products.
• Another product descriptor that is highly valued by customers
is quality, which refers to the overall characteristics of a
product that allow it to perform as expected in the satisfaction
of customer needs.
Chapter
6
Differentiation Strategy: Image
• The image of a product, or organization, is the overall
impression, positive and negative, that target customers
have of it.
• This impression includes what the entity has done in the
past, what it presently offers, and projections about what it
will do in the future.
• All aspects of the firm's marketing mix as perceived by
target customers will affect this overall impression.
• Marketers can manipulate the marketing mix elements to
position and enhance a product's image (typically through
promotion activities) in consumers' minds.
Chapter
6
Positioning Strategies: Strengthen
Current Position
• The key to strengthening a product's current position is to
constantly monitor what target customers want and the extent
to which the product or SBU is perceived as satisfying those
wants.
• The firm must continue to invest time, money, talent, and
attention in after-sale service to protect its market share and
sales from competitors.
• Strengthening positioning is about continually "raising the
bar" of customer expectations, and being perceived by
customers as the only firm capable of reaching the new
height.
Chapter
6
Positioning Strategies: Repositioning
• Move yourself to a New Position
– Declining sales or market share may signal that customers have lost
faith in a product's ability to satisfy their needs. In such cases,
strengthening the present position may well accelerate the downturn
in performance; a new position may be the best response.
– Repositioning may involve a fundamental change in any of the
marketing mix elements, and perhaps even all of them.
• Move the Competition to a New Position
– Sometimes, it is advantageous to attempt to reposition the competition
rather than change your own position.
– A direct attack on a competitor's strength may put its products in a
less favorable light, or even force the competitor to change its
positioning strategy.