András Bauer Marketing Management 1

András Bauer Marketing Management 2

Overall marketing strategy

• Based on their mission statements, firms set strategic objectives

• Strategic objectives should be quantified and measurable and create a challenge for the organization

• Insight: you cannot run an organization on a large number of objectives

András Bauer Marketing Management 3

Overall marketing strategy

• What is our source of revenue?

• Where does our business come from?

• There are many options to increase sales, including converting non-users; taking-away share from competitors; increasing overall market by higher intensity, or unwanted outcomes such as cannibalisation

András Bauer Marketing Management 4

A

OVERALL CUSTOMER BASE

B

CURRENT CUSTOMERS

COMPETING BRAND

COUR OTHER BRAND

STARTING SITUATION

NON-USERS

András Bauer Marketing Management 5

OVERALL CUSTOMER BASE

B

CURRENT CUSTOMERS

COMPETING BRAND

COTHER BRAND

OPTION: TAKE AWAY CUSTOMERS FROM B

A

NON-USERS

András Bauer Marketing Management 6

OVERALL CUSTOMER BASE

B

CURRENT CUSTOMERS

COMPETING BRAND

COUR OTHER BRAND

UNWANTED OPTION:CANNIBALIZE

A

NON-USERS

András Bauer Marketing Management 7

OVERALL CUSTOMER BASE

B

CURRENT CUSTOMERS

COMPETING BRAND

COUR OTHER BRAND

OPTION:INCREASE A BY CONVERTING NON-USERS

A

NON-USERS

András Bauer Marketing Management 8

Overall marketing strategy

• You should do something different in every situation

• Converting non-users, be careful not to become generic

• Generic examples:

András Bauer Marketing Management 9

Overall marketing strategy

• Take share away from competitors: usually a good move; look at the cost

• Cannibalization: avoid

András Bauer Marketing Management 10

Product features

• The most basic strategic decision: which markets to serve by which products

• Depending on the product and the customers: develop segment specific product features

• Insights from information goods: versioning

András Bauer Marketing Management 11

Competitive advantage

• There are many ways to create competitive advantage:

• Cost-based: IKEA, Southwest

• Quality-based:Fedex, Danone

• Perceived quality or brand:

• Or a combination of all these

András Bauer Marketing Management 12

Product Positioning

• What are the dimensions ?

• How important are dimensions ?

• How do you compare on dimensions ?

• How do customers decide ?

András Bauer Marketing Management 13

THE IDEAL POINT

x

PREFERENCE MAP OF A NEW PRODUCT CATEGORYA

B

András Bauer Marketing Management 14

x

PREFERENCE MAP AFTER THE FIRST ENTRY

A

B

Y

THE IDEAL POINT

x THE NEW IDEAL POINT

THE FIRST BRAND

András Bauer Marketing Management 15

WHERE TO POSITIONS SECOND BRAND ON THE PREFERENCE MAP ?

A

B

Y x THE NEW IDEAL POINT

THE FIRST BRAND

?

?

?

András Bauer Marketing Management 16

The value proposition

For (target customer) who (statement of the need) the (product or brand name) is a (product category) that (statement of the key benefit/reason to buy). Unlike (primary competitive alternative), (product/brand name) (statement of the primary differentiation)

András Bauer Marketing Management 17

The value proposition=often called positioning statement

• The Coca-Cola Bible:

Point of Difference

Point of Reference

Support

András Bauer Marketing Management 18

András Bauer Marketing Management 19

The Marketing Mix

• Price

• Communication

• Promotion

• Channels

• Or together: The 4P 

András Bauer Marketing Management 20

Market segmentation

• Everything we have until now discussed is based on the concept of market segmentation

• There is an appealing reason to segment markets: to offer exactly what the customers want and create profit this way

András Bauer Marketing Management 21

Market segmentation definitions

• Segmenting is breaking down the market into homogeneous groups of customers

• Reasons:Customers differ in wants

Have different price sensitivity Competitors might be active

András Bauer Marketing Management 22

An overview of segmentation criteria in consumer markets

1. Socio-demographics

2. Psychographics

3. Lifestyle

4. Benefits sought

5. Behavioural variables: user status/loyalty, buyer readiness, usage level, purchase habit

6. Usually multiple variables

András Bauer Marketing Management

Relevant Descriptor

Variable: Climate1 Cold zone2 Continental zone3 Hot zone

Customer distribution

Likelihood of solar panel purchse0 100%

Segment 1Segment 2

Segment 3

András Bauer Marketing Management

Likelihood of solar panel purchse

Irrelevant descriptor

Customer distribution

0 100%

Variable: Education1Low2 Medium3 High

Segment 1Segment 2

Segment 3