Marketing Strategy-               Strategy-    Introduction    Abhishek Bhide    B.E. (Cons); PGP (Indian School of Busine...
Agenda     Introduction     Topics to be covered in this Course; Format     What is marketing ? What is strategy?     Why ...
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 ...
What is Marketing?    Philip Kotler:    “The process by which companies create value for customers    and build strong cus...
Strategy?    Oxford Dictionary:    “A plan of action designed to achieve a long-term or overall aim”    Peter Drucker:    ...
What does ‘Marketing Strategy’ mean?     A strategy that integrates an organizations marketing goals into a     cohesive w...
Examples:    Mission statements based on Marketing Strategies:     Coca Cola:     Wants to capture share of the stomach ra...
Coca Cola     http://en.wikipedia.org/wiki/List_of_Coca-Cola_brands9                                  Abhishek Bhide- Mktg...
XeroxCurrent productsXerox today manufactures and sells a wide variety of office and production equipment including LCDMon...
A D-I-Y approach to strategy:       D-     A simple way of creating a marketing strategy on a       website:        Descri...
The Systematic Approach     A marketing strategy is a part of a Marketing Plan which consists of:        Executive summary...
Marketing Strategy:       Mission Statement       Marketing Objectives       Financial Objectives       Target Markets    ...
Porter’s Generic Strategies     Overall Cost Leadership         Differentiation             Focus14                       ...
Creating a Marketing Strategy     HOW DO WE START?15                                   Abhishek Bhide- Mktg Strategy- MET-...
DEVELOPMENT OF MARKETING STRATEGY     This is where we can start:16                                 Abhishek Bhide- Mktg S...
Relevance of Marketing Strategy?       Do we always need Marketing Strategy?     Does SAIL or Coal India Ltd need it?     ...
STRATEGIES THAT WEWILL DISCUSS                     Abhishek Bhide- Mktg Strategy- MET-eMBA   18
Marketing Execution      What happens at the ground level?      ◦   Lack of communication      ◦   Unviable tactics or str...
References:     1.    http://www.businessdictionary.com/definition/marketing-          strategy.html#ixzz232TG4yLC     2. ...
Segmentation, Targeting,Positioning & DifferentiationAbhishek Bhide;B.E. (Cons), PGP (ISB)                         Abhishe...
Columbia Tri-Star              Tri-      Acquired stake in New World Entertainment      Formed Columbia TriStar HomeVideo ...
WHAT? CAN YOU EXPLAIN?Philip Kotler:Even the most well-defined segments are partlyfiction                              Abh...
Segmentation       What is Segmentation?       Market segmentation is a marketing strategy that       involves dividing a ...
Market Preferences                     8-25
Why Segment?      Better matching of customer needs      Customer needs differ. Creating separate offers for each segment ...
Why Segment?      Retain more customers      Customer circumstances change, for example they grow older, form      familie...
Why Segment?      Gain share of the market segment      Unless a business has a strong or leading share of a market, it is...
Requirements of Segments       Measurable        Substantial        Accessible        Differentiable        Actionable29  ...
Ways of Segmentation?      Geographic segmentation      The market is segmented according to geographic criteria—nations, ...
Ways of Segmentation      Psychographic Segmentation      Psychographics is the science of using psychology and      demog...
Behavioral Segmentation Breakdown32                       Abhishek Bhide- Mktg Strategy- MET-eMBA
Maruti Suzuki- Segmentation?            Suzuki-                                Alto                                Swift D...
Segmentation of Older people      A more complex problem- Why?      Can attracting older people damage the brand image?   ...
Segmenting across international     boundaries      What is the need?      What would be the challenges?      What would c...
References:      Marketing Management – Kotler & Keller      Wikipedia      Tutor2u.net      ISB Study materials36        ...
Demographic Segmentation-WHY?                 Segmentation-      Demographic Segmentation:      ◦ Reasonably co related to...
Why is it Important?      Increased life expectancy      Requirements for completely new product & their      development ...
Why is it Tougher?      Less Tribal and more individualistic      More and varied experiences leading to very different   ...
Tips for Marketing to the Older Market     1. Many older people seek experiences, and do not want to be just spectators.  ...
Additional Readings      http://www.wisebranding.co.uk/blog/tag/marketing-to-      the-over-50s/      http://www.emarketin...
Details & ExamplesSWOT                     Abhishek Bhide- Mktg Strategy- MET-eMBA   42
Why SWOT?      It gives structure to the data collected from:      ◦ Market research      ◦ Customer feedback      ◦ Exter...
Skoda UK Case     Background:     ◦ Started as an Arms manufacturer in       1859 in Czechoslovakia     ◦ Acquired Laurin-...
What was done?      An independent research was carried out by a known      market research agency      Surveys & polls su...
SWOT                                    INTERNAL     Strengths                               Weaknesses     •100 + year ol...
SWOT                                   EXTERNAL     Opportunities                           Threats     •No of Competitors...
What did they do?     They focused on ‘happiness’     Expanded variants to fill gaps     Leveraged Volkswagen’s economies ...
INTERNATIONALSEGMENTATION         Abhishek Bhide- Mktg Strategy- MET-eMBA   49
Segmenting across international     boundaries      What is the need?      What would be the challenges?      What would c...
What does it mean?     International Segmentation:     The process of identifying countries and/or consumers     that are ...
SEQUENTIALSEGMENTATION        Abhishek Bhide- Mktg Strategy- MET-eMBA   52
Sequential Segmentation     The division of a heterogeneous market into relatively     homogeneous groups on one basis (fo...
Example: Aluminium Manufacturer      Which Market? Automobile/ Residential/ Beverage       ◦ Residential: Semi-finished ma...
How would you segment? What are the challenges?UNITED AIRLINESCASELET                           Abhishek Bhide- Mktg Strat...
Question-     Question- United Airlines       Introduction:       Today we live in a global community as global citizens w...
Need for Segmenting?      Given its global reach & size United Airlines Customers      want very different things      Uni...
Advantages of Segmentation      United Airlines segments its market so that it can:      ◦ identify consumer needs and the...
How was it Done?      United Airlines uses a form of psychographic      segmentation to divide up the market for its servi...
Focus of Segmentation      The United Airlines business model can be compared to      the classic 80:20 rule in Paretos An...
The Psychographic Segments1.   Global executives2.   Schedule optimizers:3.   Corporate troopers:4.   Mile accumulators:5....
References:      Marketing Management – Kotler & Keller      Wikipedia      Tutor2u.net      ISB Study materials      http...
Lecture 4BUSINESS TO BUSINESSSEGMENTATION            Abhishek Bhide- Mktg Strategy- MET-eMBA
What is Different?1. B2B markets have a more complex decision-   making unit2. B2B buyers are more ‘rational’3. B2B produc...
What is Different?5.   Personal relationships are more important in B2B     markets6.   B2B buyers are longer-term buyers7...
Examples of Segments in B2B A price-focused segment, which has a transactional outlook to doing business and does not seek...
Examples of Segments in B2B A service-focused segment, which has high requirements in terms of product quality and range, ...
Types of Segmentation in B2Bhttp://www.b2binternational.com/publications/white-papers/b2b-segmentation-research/          ...
Advantages of this Segmentation      United Airlines segments its market so that it can:      ◦ identify consumer needs an...
Problems in Execution? Resources Suitable segmentation basis Periodicity of Segmentation Suitable dissemination of Study C...
TARGETING        Abhishek Bhide- Mktg Strategy- MET-eMBA
The Big Picture   Segmentation                              Product    Targeting                                Price    P...
Targeting & Target Segments The selection of potential customers segments to whom a business wishes to sell products or se...
Which Segments to Target? How?                 Points for effective segments                 How do they help us decideMea...
Targeting the right segments Substantial- Target the biggest or smallest first? Accessible- Most accessible & least costly...
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 Mar...
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 ...
What is Positioning?1.   Positioning is a final step in the Segmentation Targeting and Positioning     step2.   Positionin...
What is Positioning?5.   Positioning can make or break a brand. A rightly     perceived product / company gets lots of ret...
Note on Perceptual Mapping Perceptual Mapping is a diagrammatic technique used by asset marketers that attempts to visuall...
Perceptual Map & Oldsmobile                 Abhishek Bhide- Mktg Strategy- MET-eMBA
Positioning StrategiesPositioning Strategies can be based on:1. Product characteristics or benefits2. Competitive Pricing3...
Product characteristics or benefits  This strategy basically focuses upon the characteristics  of the product or customer ...
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...
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...
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 positioningExamples?      ...
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 ther...
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 maj...
Competitive Positioning                  Abhishek Bhide- Mktg Strategy- MET-eMBA
References http://www.marketing91.com/positioning-strategies/ www.wikepedia.org                                     Abhish...
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Mktg strat lec-intro&stpd-ahb

  1. 1. Marketing Strategy- Strategy- Introduction Abhishek Bhide B.E. (Cons); PGP (Indian School of Business)1 Abhishek Bhide- Mktg Strategy- MET-eMBA
  2. 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. 3. INTRODUCTION Abhishek Bhide- Mktg Strategy- MET-eMBA 3
  4. 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 group4 Abhishek Bhide- Mktg Strategy- MET-eMBA
  5. 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. 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. 7. What does ‘Marketing Strategy’ mean? A strategy that integrates an organizations 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. 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 movies8 Abhishek Bhide- Mktg Strategy- MET-eMBA
  9. 9. Coca Cola http://en.wikipedia.org/wiki/List_of_Coca-Cola_brands9 Abhishek Bhide- Mktg Strategy- MET-eMBA
  10. 10. XeroxCurrent productsXerox today manufactures and sells a wide variety of office and production equipment including LCDMonitors, photo copiers, Xerox Phaser printers, multifunction printers, large-volume digital printersas well as workflow software under the brand strategy of FreeFlow. The impact of Xerox FreeFlowproducts on the graphic arts market and the print industry in general has grown exponentially sinceMay 2006, largely as a result of the Xerox presence at IPEX 2006. Xerox also sells scanners anddigital 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 otherproducts.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 suchas Xerox DocuShare, Xerox MarketPort and FlowPort, offers consulting services, ECMDigitalRepository Services and printing outsourcing. Abhishek Bhide- Mktg Strategy- MET-eMBA 10
  11. 11. A D-I-Y approach to strategy: D- A simple way of creating a marketing strategy on a website: Describe your companys 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.htm11 Abhishek Bhide- Mktg Strategy- MET-eMBA
  12. 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 required12 Abhishek Bhide- Mktg Strategy- MET-eMBA
  13. 13. Marketing Strategy: Mission Statement Marketing Objectives Financial Objectives Target Markets Positioning Strategy description Marketing Mix Marketing Research13 Abhishek Bhide- Mktg Strategy- MET-eMBA
  14. 14. Porter’s Generic Strategies Overall Cost Leadership Differentiation Focus14 Abhishek Bhide- Mktg Strategy- MET-eMBA
  15. 15. Creating a Marketing Strategy HOW DO WE START?15 Abhishek Bhide- Mktg Strategy- MET-eMBA
  16. 16. DEVELOPMENT OF MARKETING STRATEGY This is where we can start:16 Abhishek Bhide- Mktg Strategy- MET-eMBA
  17. 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 markets17 Abhishek Bhide- Mktg Strategy- MET-eMBA
  18. 18. STRATEGIES THAT WEWILL DISCUSS Abhishek Bhide- Mktg Strategy- MET-eMBA 18
  19. 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 change19 Abhishek Bhide- Mktg Strategy- MET-eMBA
  20. 20. References: 1. http://www.businessdictionary.com/definition/marketing- strategy.html#ixzz232TG4yLC 2. www.wikipedia.com 3. Aboutmarketing.com 4. Kotler & Keller Marketing Management e1320 Abhishek Bhide- Mktg Strategy- MET-eMBA
  21. 21. Segmentation, Targeting,Positioning & DifferentiationAbhishek Bhide;B.E. (Cons), PGP (ISB) Abhishek Bhide- Mktg Strategy- MET-eMBA 21
  22. 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. 23. WHAT? CAN YOU EXPLAIN?Philip Kotler:Even the most well-defined segments are partlyfiction Abhishek Bhide- Mktg Strategy- MET-eMBA 23
  24. 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
  25. 25. Market Preferences 8-25
  26. 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 product26 Abhishek Bhide- Mktg Strategy- MET-eMBA
  27. 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 cost27 Abhishek Bhide- Mktg Strategy- MET-eMBA
  28. 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. 29. Requirements of Segments Measurable Substantial Accessible Differentiable Actionable29 Abhishek Bhide- Mktg Strategy- MET-eMBA
  30. 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. 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. Attitude31 Abhishek Bhide- Mktg Strategy- MET-eMBA
  32. 32. Behavioral Segmentation Breakdown32 Abhishek Bhide- Mktg Strategy- MET-eMBA
  33. 33. Maruti Suzuki- Segmentation? Suzuki- Alto Swift Dzire Kizashi33 Abhishek Bhide- Mktg Strategy- MET-eMBA
  34. 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. 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. 36. References: Marketing Management – Kotler & Keller Wikipedia Tutor2u.net ISB Study materials36 Abhishek Bhide- Mktg Strategy- MET-eMBA
  37. 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 segmentation37 Abhishek Bhide- Mktg Strategy- MET-eMBA
  38. 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 market38 Abhishek Bhide- Mktg Strategy- MET-eMBA
  39. 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 old39 Abhishek Bhide- Mktg Strategy- MET-eMBA
  40. 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. 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.pdf41 Abhishek Bhide- Mktg Strategy- MET-eMBA
  42. 42. Details & ExamplesSWOT Abhishek Bhide- Mktg Strategy- MET-eMBA 42
  43. 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 level43 Abhishek Bhide- Mktg Strategy- MET-eMBA
  44. 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 200044 Abhishek Bhide- Mktg Strategy- MET-eMBA
  45. 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’ opinions45 Abhishek Bhide- Mktg Strategy- MET-eMBA
  46. 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 customers46 Abhishek Bhide- Mktg Strategy- MET-eMBA
  47. 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 lifestyles47 Abhishek Bhide- Mktg Strategy- MET-eMBA
  48. 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+ cars48 Abhishek Bhide- Mktg Strategy- MET-eMBA
  49. 49. INTERNATIONALSEGMENTATION Abhishek Bhide- Mktg Strategy- MET-eMBA 49
  50. 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. 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. 52. SEQUENTIALSEGMENTATION Abhishek Bhide- Mktg Strategy- MET-eMBA 52
  53. 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 products53 Abhishek Bhide- Mktg Strategy- MET-eMBA
  54. 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 Market54 Abhishek Bhide- Mktg Strategy- MET-eMBA
  55. 55. How would you segment? What are the challenges?UNITED AIRLINESCASELET Abhishek Bhide- Mktg Strategy- MET-eMBA 55
  56. 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 worlds 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. 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. 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. 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. 60. Focus of Segmentation The United Airlines business model can be compared to the classic 80:20 rule in Paretos 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 target60 Abhishek Bhide- Mktg Strategy- MET-eMBA
  61. 61. The Psychographic Segments1. Global executives2. 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. 62. References: Marketing Management – Kotler & Keller Wikipedia Tutor2u.net ISB Study materials http://www.citeman.com/1417-sequential-segmentation.html62 Abhishek Bhide- Mktg Strategy- MET-eMBA
  63. 63. Lecture 4BUSINESS TO BUSINESSSEGMENTATION Abhishek Bhide- Mktg Strategy- MET-eMBA
  64. 64. What is Different?1. B2B markets have a more complex decision- making unit2. B2B buyers are more ‘rational’3. B2B products are often more complex4. B2B target audiences are smaller than consumer target audiences Abhishek Bhide- Mktg Strategy- MET-eMBA
  65. 65. What is Different?5. Personal relationships are more important in B2B markets6. B2B buyers are longer-term buyers7. B2B markets drive innovation less than consumer markets8. B2B markets have fewer behavioural and needs-based segments Abhishek Bhide- Mktg Strategy- MET-eMBA
  66. 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. 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. 68. Types of Segmentation in B2Bhttp://www.b2binternational.com/publications/white-papers/b2b-segmentation-research/ Abhishek Bhide- Mktg Strategy- MET-eMBA
  69. 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. 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. 71. TARGETING Abhishek Bhide- Mktg Strategy- MET-eMBA
  72. 72. The Big Picture Segmentation Product Targeting Price Positioning Place Promotion Abhishek Bhide- Mktg Strategy- MET-eMBA
  73. 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. 74. Which Segments to Target? How? Points for effective segments How do they help us decideMeasurable targeting?SubstantialAccessibleDifferentiableActionable Abhishek Bhide- Mktg Strategy- MET-eMBA
  75. 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. 76. Single Segment & Selective Targeting Abhishek Bhide- Mktg Strategy- MET-eMBA
  77. 77. Specialization Abhishek Bhide- Mktg Strategy- MET-eMBA
  78. 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. 79. Sequential Targeting Abhishek Bhide- Mktg Strategy- MET-eMBA
  80. 80. POSITIONING &DIFFERENTIATION Abhishek Bhide- Mktg Strategy- MET-eMBA
  81. 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. 82. What is Positioning?1. Positioning is a final step in the Segmentation Targeting and Positioning step2. 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 market4. 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 telecom6. 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. 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. 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. 85. Perceptual Map & Oldsmobile Abhishek Bhide- Mktg Strategy- MET-eMBA
  86. 86. Positioning StrategiesPositioning Strategies can be based on:1. Product characteristics or benefits2. Competitive Pricing3. Time or occasion of use4. Usage Frequency5. New Class or category6. Competitive Positioning Abhishek Bhide- Mktg Strategy- MET-eMBA
  87. 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. 88. Product characteristics or benefits Abhishek Bhide- Mktg Strategy- MET-eMBA
  89. 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 productExamples? Abhishek Bhide- Mktg Strategy- MET-eMBA
  90. 90. Competitive Pricing Abhishek Bhide- Mktg Strategy- MET-eMBA
  91. 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 usedExample? Abhishek Bhide- Mktg Strategy- MET-eMBA
  92. 92. Time or occasion of use Abhishek Bhide- Mktg Strategy- MET-eMBA
  93. 93. Usage Frequency Strategy to focus on usage amount, frequency and time and increase it through positioningExamples? Abhishek Bhide- Mktg Strategy- MET-eMBA
  94. 94. Usage Frequency Abhishek Bhide- Mktg Strategy- MET-eMBA
  95. 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 segmentsExamples? Abhishek Bhide- Mktg Strategy- MET-eMBA
  96. 96. New Class or category Abhishek Bhide- Mktg Strategy- MET-eMBA
  97. 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 advantageExamples? Abhishek Bhide- Mktg Strategy- MET-eMBA
  98. 98. Competitive Positioning Abhishek Bhide- Mktg Strategy- MET-eMBA
  99. 99. References http://www.marketing91.com/positioning-strategies/ www.wikepedia.org Abhishek Bhide- Mktg Strategy- MET-eMBA

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