2. strategic marketing

7/28/2019 2. Strategic Marketing

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Strategic MarketingOxford defines marketing as the action or business of promotingand selling products or services, including market research andadvertising.

Strategic Marketing is doing this, well, strategically.

Strategic Marketing calls for a more structured approach where wedefine what were trying to accomplish, measure and analyze themarkets and media options and implement an integrated campaign

that will help you capture the most value for your budgetedmarketing dollars by achieving your defined objectives.


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Process of Strategic Marketing

After you have defined you business objectives, the basic thought process ofstrategic marketing should go like this:

1. IDENTIFY your audience or market

If youre an established business, look at your consumer base and Identify thetype of consumer you want more of.

If youre a startup, form a clear picture of what type of consumer you want toattract?

2. Thoroughly UNDERSTAND your audience or market

Where do they live? What do they do every day?

What are their passions?

What media do they engage with most?

What messages resonate with them, etc.


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Strategic Marketing Process continues

3. SELECT the marketing mediums that your target is most engagedwith

E.g., If your audience is a teeny-bop, communicate with themthrough Facebook or other social networks or better e-modes.

If youre going after business men, you may want to hit themthrough LinkedIn, professional business journals like Wall StreetJournal or business dailies.

4. DEVELOP a messaging strategy to effectively communicate with

your audience

With a clear picture of your target audience in your mind, determinewhat message will most effectively move your target to take thedesired action.


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Strategic Marketing Process continues

5. EXECUTE a consistent, integrated campaign across

your selected mediums

Keep your branding and messaging consistent. Eachmedium has pros and cons. Leverage the pros as much as

possible.

6. MONITOR your results and make necessaryadjustments along the way

If your LinkedIn campaign is driving 30% more newbusiness than your Google Adwords campaign, you maydetermine its best to shift the Adwords funds to theLinkedIn campaign.


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Marketing plan

A marketing plan is a comprehensive blueprint whichoutlines an organization's overall marketing efforts. Amarketing process can be realized by the marketingmix .

The marketing plan can function from two points:strategy and tactics (P. Kotler, K.L. Keller). In mostorganizations, "strategic planning" is an annual

process, typically covering just the year ahead.Occasionally, a few organizations may look at a

practical plan which stretches three or more yearsahead.


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7 KEY ELEMENTS OF A MARKETING PLAN

1. SegmentationWho are the groups, what are their

characteristics and how do you identify them.

2. Competitive AlternativesThis is a documented list ofwhat your customers would consider alternatives to your

product or service. It differentiates your offering from

others in the space. These are generally macro things.

3. Differentiated Points of Value (by segment)For eachsegment, what are the top 3 or 4 differentiators that youroffering has versus others. Remember this isnt just about

technology or features. It often includes things like pricing,delivery options, ease of use, time to value, etc.

4. Messaging and Positioning (by segment)Create a setof messages for each segment.


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5. Marketing Goals and MeasuresWhat are the goals of your

marketing plan and what metrics are you tracking that are associated with

those goals? For example you might decide that increasing customeracquisition by 10% is a key goal. You can tie acquisition to site visits,

product signups, emails or blog signups, etc

6. Tactical Plan, Budget, OwnersBased on the above goals and

measures this is the set of marketing plans you plan on executing to drivethose results and the costs associated with each of those tactics. The tactics

are broken into discreet items of work (i.e for example a tactic such as a

webinar will include creating the invite list, writing/designing the mailer,

sending the invite, creating the webinar content, etc.) and assigned to an

owner.

7. Timeline- The tactics need to be broken into work items and plotted on a

timeline so they can be tracked on a regular basis.


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Consumer Buying Behavior

Consumer buying behavior is a very complexprocess. There are many different factors that

affect it. Consumer behavior and consumer

market are highly dynamic.

The age, Income, education, taste etc are

different in different markets.

Consumer buying behavior refers to the buying

behavior of final consumers.


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Learning about the whys of human

behavior is not so easy. As per theconsumer behavior experts 95% of the

thought, emotion and learning (that drives

our purchases) occur in our unconscious

mindthat is without our awareness.

Penetrating the dark recess of consumers

mind is no easy task. Often customers

themselves dont know what influence

their purchase.


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The marketers wants to understand how

the stimuli are changed in to responses inthe mind of the consumers.

Consumer Behavior consist of two parts.

a) Buyers characteristics

b) Buyers Decision process.


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Buyer characteristics Consumer purchase are strongly influenced

by cultural, social, personal, and

psychological characteristics.

1) Cultural factors :- Culture is the most

basic cause of a persons want and

behavior.

Culture can be divided into :

a) Culture b) Subculture c) Social class


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2) Social factors

It include a number of group that

influence the consumer behavior.

These factors include:

a) Groups

b) Familyc) Social roles and status.


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3) Personal Factors

Buyers decision also are influenced by personal

characteristics.

It includes age and life cycle, occupation, economicsituation, life style, personality and self concept.

Sony targeted its customers based on their life stage as

Gen y (under 25), DINKS (25-34), Families (35-54), andZoomers (55 and over).


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4) Psychological factors There are 4 major psychological factors

influence persons buying choice.

a) Motivation

b) Perception c) Learning

d) Belief and attitude


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Consumer Buying Process

Buying process is centered around the

decision making of the buyer. It

actually involves what goes on in themind of the buyer.


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It can be depicted as :-

a) Stimuli :-

It refer to anything that arose interest in a product or

service. There are a number of stimuli acting on the

consumers. Such stimuli may be offered by marketersor other forces like cultural, social, political, economical,

technological etc

Stimuli Decision

makingPurchase Post purchase

Behavior


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b) Decision Making

It is a process taken in the mind of a

person. It can be broken in to 4 stages.

Need

recognition

Information

search

Evaluation

Of

alternatives

Purchase

decision


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b1) Need recognition

The decision making starts when an

individual perceives a need or want for

satisfaction. This may arise due to internal

or external stimuli.

Human beings is a bundle of needs and

wants but only those needs or wants

pushed to the top by the stimuli is taken upfor gratification.


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b2) Information search

Once the recognizes the need he or shesearches for information about a product or

service that will satisfy this need.

The information sources are

1) Personal sources family, friends, neighbors

2) Commercial sources advt, Sales persons

3) Public sources Mass media, consumer rating 4) Experimental Handling, examining, using the

product


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b3) Evaluation of alternatives

When the buyer has required informationon available alternatives, s/he evaluate

them on the basis of benefits, product

attribute, after sale service etcS/hecompares and contrasts the different

alternatives at hand.


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b4) Purchase decision

Evaluation of alternative will reveal the

best among them and the individual

decides to buy it.


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c) Purchase

Once the customer take the decision thenext step is actual purchase of goods orservices.

4) Post purchase behavior:- Buyerbehavior does not stop with purchase of

products. The behavior of the customersafter purchase is called post purchasebehavior.


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Cognitive dissonance The reaction of the buyer after purchase may be a

positive or negative feeling. At times buyer mayhave conflict of feeling. This is known as cognitivedissonance.

This is a doubt whether the purchase was right ;does the product live up to our attitude, belief, ideasand expectations. A buyer take step to reduce thisdissonance.

Marketers make these days more effort to removethis cognitive dissonance from the mind of theconsumes.


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Cognitive dissonance is the buyers discomfort

caused by post purchase conflict.

Classification of buying motives

Buying motive may be divided in to two :-

a) Rational buying motive

b) Emotional buying motive


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a) Rational buying motive :-

It look in to the :-

a) Economy b) Safety

c) Utility d) Benefit.

b) Emotional buying motive :-It consist of :-

a) Pride b) Imitation c) Affection

d) Affection e) Distinctiveness.

Scientist have discovered that human feelings are

controlled by right part of the brain and reasoning is

controlled by left part of the brain.


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Buying Roles

For many products it is easy to identify thebuyer.

We can distinguish 6 roles people might play in

a buying decision :

a) Initiator :- A person who first suggest the idea.

b) Influencer :- A person who view or advice

influences the decision


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c) Decider :- A person who decides on anycomponent of a buying decision. Whether to buy,

what to buy, how to buy, where to buy.

d) Buyer :- The person who makes the actualpurchase.

e) User :- A person who consumes or uses theproduct or services.

f) Gate keepers :- Who control the flow ofinformation to others. Technical persons, salespersons etc


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Types of buying decision behavior

1) Complex buying behavior :- When customers are

highly involved in purchase and perceive significant

difference among brands. E.g.:- For a P.C 3.4GHz

Pentium processor, super VGA resolution or 2 GB

SDRAM Memory.

2) Dissonance reducing buying behavior :-

When consumers are highly involved with an expensive,

infrequent, or risky purchase but sees little difference

among brands. E.g.:- Small car purchase.


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c) Habitual buying behavior :- It involves low

consumer involvement and little significant brand

difference. e.g.:- salt.

d) Variety-seeking buying behavior :- It is the

situation characterized by low consumer

involvement but significant perceived brand

differences. Consumers often do a lot of brand

switching. E.g.:- washing powder, soap etc


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4 types of buying behavior

Low

High involvement involvement

Significant difference Complex Variety

seeking buying buying behavior behavior

Between brands

Few difference Dissonance-reducing Habitual buying

Between brands buying behavior behavior


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Adoption is an individuals decision to become a regular

user of a product and is followed by the consumer loyaltyprocess.

Stages in the adoption process :

Innovation is any good, service, idea, or process that

some one perceives as new.

Innovation diffusionprocess is the spread of new

ideas from its source of invention to its ultimate users or

adopters.

It is a mental step through which an individual passes

from hearing about an innovation to final adoption.

Consumer Adoption Process


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Characteristics of innovation

1. Relative Advantage :-

2. Compatibility :-

3. Complexity :- 4. Divisibility :- Innovation can be tried on

a limited basis.

5. Communicability :- Beneficial resultshould be describable to others.


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1. Awareness. In this stage the consumer is aware of the newproduct but lacks further information about it.

2. Interest. The consumer is motivated to seek information

about the new product.

3. Evaluation. The consumer determines whether or not to trythe new product.

4. Trial. The consumer tries the new product on a small scale

to test its efficacy in meeting his or her needs. Trial can be

imagined use of the product in some cases.

5. Adoption. The consumer decides to make use of the

product on a regular basis.

Stages in the Adoption Process


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Factors influencing the adoption process

It influences :

1) The individuals readiness to try new product

2)The effect of personal influence

3) Differing rates of adoption and differences in

organization's readiness to try new products.

Rogers defines a personal level of innovativeness as the degree to

which an individual is relatively earlier in adopting new ideas than

the other members of his social system.

Some people are first to adopt new clothing fashions or new

appliances.

Five adopter groups differ in value orientations and their motives for

adopting or resisting the new product.


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1. Innovators: Innovators help get the product exposure but are

not often perceived by the majority of potential buyers as typical

consumers.

2. Early Adopters: This group serves as opinion leaders to the

rest of the market.

3. Early Majority: Some 34% of the market that is the "typicalconsumer" but likely to adopt innovations a little sooner.

4. Late Majority: This group is skeptical and adopts innovations

only after most of the market has accepted the product.

5. Laggards: This group is suspicious of change and adopts only

after the product is no longer considered an innovation.

Ti d ti f i ti


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Time adoption of innovations

Source :-Tungsten, http://en.wikipedia.ord/wiki/Everett_Rogers. Based on

Rogers, E. (1962) Diffusion of Innovations. Free press, London, NY,USA
http://en.wikipedia.ord/wiki/Everett_Rogershttp://en.wikipedia.ord/wiki/Everett_Rogers


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Organizational Buying Process

Organization buying is the decision-making

process by which formal organizations establish

the need for purchased products and servicesand identify, evaluate, and choose among

alternative brands and suppliers.- Frederick E

Webster Jr. and Yoram Wind


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Some of the characteristics of

organizational buyers are:

1. Organizational buyers are limited in number but are of largequantities.

2. Close relationships and service are required.

3. Professional purchasing but multiple buying influences.

4. Demand fluctuations are high.

5. Geographically concentrated buyers.

6. Direct purchase.

O i ti l B i Sit ti


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Organizational Buying Situations Straight rebuy

This is a routine buying situation, where the purchasing department is

involved for the purchase from the approved vendor list.

Modified rebuy

The company want to change product specifications, price and deliveryrequirements etc. So they usually go for additional participants.

New task buyIn this situation, the buyer is buying the product for the first time. As the costof the product or consumption value becomes higher, more number ofexecutives are involved in the process.

Systems buy

This is a total problem solution from one seller. Originated with Govt.

purchase of major weapon and telecommunication. Systems buying is aprocess in which the organization gives a single order to any organizationfor supplying its full requirements.


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Participants in the Business Buying Process


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8 Steps of a Business Organization's Purchasing Process :-

1. Identify problem2. Select Specific Product and need description

3. Supplier search :-

a) Catalog site, Specialized Websites (E-bubs),

Auction sites,

4. Proposal solicitation

5. Supplier selection

6. Order routine specification :- Negotiate the final price,

technical specification, quantity, time of delivery etc

7. Performance review.

Market segmentation


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Market segmentation

Market consist of buyers and buyers differ

in one or more ways. They may differ intheir wants, resources, locations, buying

attitudes, and buying practices.

Through market segmentation, companies

divide large heterogeneous markets in to

smaller segments that can be reachedmore efficiently to match their unique

needs.


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Consumer market can be segmented as :-

a) Geographic

b) Demographic

c) Psychographic d) Behavioral factors


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a) Geographic segmentation

It is dividing the market in to different

geographical units such as nations,

regions, state, countries, cities etc This

segmentation is based on region or place.


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b) Demographic segmentation

In this we divide the market in to different

groups based on variables such as age,

gender, family size, family life cycle,

income, occupation, education, religion,race, generation, and nationality.

Customer wants and usage rate often vary

closely with demographic variable.


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-1) Age and life cycle stage

Consumer needs and wants change withage. Different tastes are there for different

ages.

2) Gender :- Preference vary according to the

gender especially to clothing, toiletries,magazines etc

3) Income :- It is a major segmenting factor as

the income varies, demand also varies.


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c) Psychographic segmentation

It is the science of using psychology anddemographics to better understand the

consumers.

In this segmentation buyers are divided in

to different groups on the basis of

psychological/personality traits, life style orvalues.


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d) Behavioral Segmentation It divides buyers on the basis of their knowledge,

attitudes, uses or responsiveness.

Occasion :- Buyers can be grouped according to

occasions.

Benefit sought :- Dividing the market into groups

according to different benefit that consumers seekfrom the product.


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User status :- Markets can be segmented in to

groups of non users, ex-users, potential users,

first users and regular users.

User rate :-Market can be segmented in to light,

medium, and heavy product users. It is based on

consumption.

Loyalty rate :- Consumers can also loyal to

brands, stores and companies like Hard coreloyal, Split loyal, Shifting loyal, Switchers.

R i t f ff ti


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Requirements for effective

segmentation

1. Measurable :- The purchasing power and profiles of

the segment can be measured.

2. Accessible :- It can be effectively reached and served.

3. Substantial :- It should be large or profitable enough to

serve.

4. Differentiable :- It should be distinguishable and

respond differently to different marketing mix.

5. Actionable :- It can be fit for taking action


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Target Marketing

After defined the market segment the firm must

decide on how many segments and which one

to target.

Target market involves evaluating each marketsegments attractiveness and selecting one or

more segments to enter.

A company should target segments in which it

can profitably generate the greatest customer

value and sustain it over time.


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E l ti d l ti th k t


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Evaluating and selecting the market

segments

1. Full market coverage :- E.g.:- Microsoft in IT,

Coca Cola, GM etc

It can be attained through:-a) Undifferentiated Marketing:- Goes to the

market with one offer.

b) Differentiated Marketing:- Firm sellsdifferent products to all the different segments

of the market.


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2. Multiple segment specialization :- It is possible

withproduct specialization (sells certain product

to several different market segments) andmarket specialization (Serving many needs of a

particular customer group).

3. Single segment concentration :- The firm

markets to only one segment.

4. Individual Marketing :- It is customizedmarketing.

Targeting Strategies


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Targeting Strategies

Mass/Undifferentiated marketing It is concerned with

selling a single product to the whole market. This strategy isbased on the assumption that, in respect to the product in

question, customers needs are very similar if not identical.

Differentiated/Selective marketing It is concerned withtargeting each segment with a product with its own

marketing mix designed to match the needs of the

consumers within the segment.

Niche/Concentration marketing It is concerned with

targeting one particular, well-defined group of customers

(a niche) within the overall market.


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Market Positioning It is arranging for a product to occupy a clear,

distinctive, and desirable place relative tocompeting products in the mind of targetcustomers.

A products position is the way the product isdefined by consumers on importantattributes- the place the product occupies inconsumers minds relative to competingproducts.


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It was popularized by Al Ries and Jack Trout in

their bestseller book "Positioning - The Battle for

Your Mind." (McGraw-Hill 1981)

Positioning is not what you do with the product but

what you do in the mind of the customers

Customer maintains different positioning in their

minds to different products.


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Identifying competition

competitors can be identified as those companies that offersimilar products or services to the same customers at similar

prices.

These can be either direct or indirect competitors. As an

example, Kodak identifies Fuji as a major or direct competitorfor camera products.

However, they also face competition from companies that

offer different products, but ones that supply the sameservice or capability, i.e. indirect competitors which are

companies like Nokia who offer mobile phones with digital

cameras as an integrated feature.

Competitor Analysis


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Competitor Analysis

Competitor analysis in marketing and

strategic management is an assessment of the strengthsand weaknesses of current and potential competitors.

This analysis provides both an offensive and defensive

strategic context to identify opportunities and threats.

Competitor Profiling combining all of the relevant sources

of competitor analysis into one framework in the support

of efficient and effective strategy formulation,implementation, monitoring and adjustment.


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Competitor profiling

Background location of offices, plants, and online presences

history - key personalities, dates, events, and trends

ownership, corporate governance, and organizational structure

Financials

P-E ratios, dividend policy, and profitability

various financial ratios, liquidity, and cash flow

profit growth profile.

M k ti


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Marketing

segments served, market shares, customer base, growth rate, and

customer loyalty

promotional mix, promotional budgets, advertising themes, ad

agency used, sales force success rate, online promotional strategy

distribution channels used (direct & indirect), exclusivity

agreements, alliances, and geographical coverage

pricing, discounts, and allowances

Products

products offered, depth and breadth of product line, and product

portfolio balance

new products developed, new product success rate, and R&D

strengths

brands, strength of brand portfolio, brand loyalty and brandawareness

patents and licenses

quality control conformance

reverse engineering


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Facilities

plant capacity, capacity utilization rate, age of plant, plant

efficiency, capital investment

location, shipping logistics, and product mix by plant

Personnel

number of employees, key employees, and skill sets

strength of management, and management style

compensation, benefits, and employee morale & retention rates

Corporate and marketing strategies

objectives, mission statement, growth plans, acquisitions, and

divestitures

marketing strategies


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C titi St t i f M k t L d


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Competitive Strategies for Market Leaders

Expanding the total market (Example. Modi Xerox)

1.New customers :- Company can search for customers in the

following three groups :-

Those who might use it but do not (Market penetration strategy),

those who have never used it (New market segment strategy) and

those who live else where (Geographical expansion strategy).

2.More usages :- Larger package size, increasing frequency of

consumption, identifying completely new and different ways to use

the brand (Eg :- Monaco advertised as a starter, Nestle publishedrecipes for ice cream and come up with milk maid.), additional

opportunities to use the brand (The repainting of the home

coincides with a holiday, Gillette provide colored stripes that signals

to move on to the next cartridge).

Defensi e Marketing


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Defensive Marketing 1. Position Defense :- Occupying the most desirable market

space in consumers mind. Eg :- P&G done with Tide forcleaning, Crest tooth paste for cavity protection, Pampers for

dryness.

2. Flank Defense :- It is an attempt to support a counter

attack.

3. Preemptive Defense :- Its a more aggressive maneuver to

attack first, perhaps with the gurilla action and keeping

everyone off balance. SBI focus on expanding their networkover 1,00,000 villages by setting up ATMs.

4 Counter offensive Defense : It launch a pincer


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4. Counter offensive Defense :- It launch a pincer

movement, so the competitor will have to pull back to defend.

Common form of counter offense is the exercise of economic

or political clout.

5. Mobile defense :- Through market diversification market

leader stretches its domain over new territories. ITC focusing

on FMCG and Food business. Petroleum Companies recast

themselves as energy companies and do the research on oil,coal, nuclear, hydroelectric, and chemical industries.

6. Contraction :- Its a planned contraction (also calledstrategic withdrawal)where sometimes large companies can

no longer defend all their territory. HULs disinvestment from

non core business is an example.

Competitive Strategies for Market challengers


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Competitive Strategies for Market challengers

Market challengers have gained ground or even overtake the

leaders. They set high aspirations .Toyota today producesmore cars than GM. Ujala is a successful challenger brand.

2. strategic marketing

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