chapter 6 smm

8/2/2019 Chapter 6 SMM

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By Obaid Pervaiz Gill


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A mini case of Baby Boomers People born in Europe between 1946-64 are referred to

as Baby Boomers.

In 2004 they possessed 80 percent if UKs wealth. They are a distinct demographic sector that represent

marketing opportunities.

Baby boomers have registered their displeasure at

being on companies mailing lists.What is the key learning here in the case?


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Discussion QuestionWhat is the underlying difference

between Mass Marketing and

Micro-marketing?


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Segment Marketing (Emerging

Concepts) If strategy is the art of allocating resources then

segmentation is a part of science that helps inform andunderstand that allocation.

Flexible Market Perceived Offering has two parts; Naked Solution: Elements that all segment members value

Discretionary Value options: Elements that some segmentmembers require.

Market Segments can be characterized through preferencesegments; Homogeneous Preferences (Cherry BlossomShoe Polish), Diffused Preference (Rolls Royce),Clustered Preferences (Johnson & Johnson)


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Niche Marketing (Emerging

Concepts) Niches are identified by marketers by dividing market

segment into sub-segments.

Hertz specializes in airport rental cars for business and

leisure travellers. Enterprise specializes in insurance replacement cars

by providing to people whose cars have been writtenoff.

The objective of a nicher is to be a large fish in thesmall pond (Body Shop)

They have been often called as Guerrillas against Gorillas.


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A mini case of Internet Niching Social networking sites have the characteristics of

Fads, they quickly emerge and soon fade out.

They initially enjoy a wide appeal and are cruciallyreliant on advertising revenue.

A sudden drop in traffic numbers can threaten theirsurvival.

What would you do if you were a Dot ComEntrepreneur?


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Local Marketing (Emerging

Concepts) Marketing programmes tailored to the needs and

wants of local customer groups in theneighbourhoods, trading areas etc.

Starbucks is a classic example.

Local marketing reflects a growing trends calledGrass root Marketing

Nike started out with sponsorship of local schoolteams.


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Individual Marketing (Emerging

Concepts) The ultimate level of segmentation results in Segment

of One, Mass Customization or One to OneMarketing

One to One Marketing: Opportunity to learn moreabout the customers needs or to adapt existingproducts and services to meet changing

circumstances. (YouTube, Amazon) Mass Customization: Opportunity to empower

consumers to design the customer perceived value oftheir own choice. (Nike ID, Towels R Us)


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Basis for Consumer Segmentation Geographic

Region: Sindh, Punjab etc.

City Size: Under 5000, 5000-20000 etc.

Density: Urban, Suburban, Rural

Demographic

Age: Under 6, 6-11 etc.

Family Size: 1-2, 3-4, 5+ Family Life Cycle: Young single, Young married, Older

no children etc.

Gender: Male, Female


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Basis for Consumer Segmentation Occupation: Farmers, Managers, Unemployed etc.

Income: Under 10000, 10000-15000 etc.

Education: Primary, Middle, Secondary, HigherSecondary etc.

Religion: Christian, Muslim, Hindu etc.

Race: Bohri, Gujrati etc.

Social Class: Lower lowers, lower uppers etc. Psychographics

Lifestyles: Culture oriented, Sports oriented etc.

Personality: Compulsive, Authoritarian etc.


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Basis for Consumer Segmentation Behavioural

Occasions: Regular occasion, Special occasion

Benefits: Quality, Economy User Status: Non-user, ex-user, potential user, first-

time user, regular

Loyalty Status: None, medium, strong, absolute

Readiness Stage: Unaware, aware, informed etc.

Attitude towards product: Enthusiastic, Positive,Indifferent, Negative , Hostile etc.


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Marketing Insight: Trading Up &

Down Silverstein and Fiske call new luxury products and services

that have higher level of perceived quality but not soexpensive as beyond reach.

New luxury goods sell at higher volume than traditionalluxury goods, while being priced higher than conventionalmid-market items.

Accessible Super-Premium Products: They carry asignificant premium over middle market brands (Kettle)

Old Luxury Brand Extensions: Extend historically highpriced brands down the market (Mercedes Benz C Class)

Prestige Goods: They are always based on emotions(Cuban Cigars)


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The Conversion Model Measures the strength of customers psychological

commitment to brands and their openness to change.

The model segments the user into four groups;

Convertible: Most likely to defect (Tooth Paste).

Shallow: Uncommitted to brand and actively consideringalternatives (Job).

Average: Not strongly committed but unlikely to defect inthe short run (Car).

Entrenched: Strongly committed to the brand andunlikely to switch brands in the foreseeable future. (Tea)


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The Conversion Model - Non Users Strongly Unavailable: Preference lies strongly with

current brands.

Weakly Unavailable: Preference lies with currentbrands but not strongly.

Ambivalent:As attracted to the current brand as theyare to their current brands.

Available: Most likely to be acquired in the short run.


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Discussion QuestionTalent hits a target no one else can

hit; genius hits a target no one else

can see

what does this statement imply?


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Steps in the Segmentation Process Needs based Segmentation: Grouping of customers

based on similar needs. Segment Identification: Understanding distinct

characteristics based on demographics etc. Segment Attractiveness: Calculating potential growth,

competitive intensity etc. Segment Profitability: Assessing profit potential. Segment Positioning: Create a value proposition based

on customers needs. Segment Acid Test: Pilot testing. Marketing Mix Strategy: Including all aspects pertaining

to 4 or 7Ps


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Evaluating Segmentation Criteria Measurable: Its size, purchasing power and other

characteristics should be measurable.

Substantial: It should be large and profitable enoughto serve.

Accessible: It should be effectively reached andserved.

Differentiable: It should be distinguishable.Actionable: It can be served with effective

programmes.


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Evaluating and Selecting Market

Segments Single-segment concentration: Gaining strong

knowledge of the segments needs so to achieve a strongmarket presence (Porsche: Sport car market) [1p-1m]

Selective Specialization: A firm selects a number ofsegments, each objectively attractive an appropriate(Virgin; Airline, Cola)

Product Specialization: A firm makes a certain productthat it sells to several different market segments (Research

Machines: Universities; Research Institutes) [1p-3m] Market Specialization: The firm concentrates on serving

many needs of a particular customer group (EFU LifeInsurance: Different Quotes) [3p-1m]


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Evaluating and Selecting Market

Segments Full Market Coverage: The firm attempts to serve all

customer group (Microsoft, General Motors)

It can do that in two broad ways;

Undifferentiated Marketing: The firm ignores segmentdifferences and trades on the whole market with oneoffer (Coca Cola; In the past)

Differentiated Marketing: The firm operates in severalmarket segments and design different products foreach (Estee Lauder: Hugo Boss, Body Shop)


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Discussion QuestionWhat do you think Counter

Segmentation is?

Johnson & Johnson

Kellogg's


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Segment by Segment InvasionA company would be wise to enter one segment at a

time.

Competitors must not know what segments the firmwill go for next.

Too many companied fail to develop an invasion plan.

PepsiCo is an exception. It attacked Coca Cola in the

grocery market, then in the vending machine market,then in the fast food market and so on.


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A mini case of Yves Saint Laurent Founded in 1961, it is one of the greatest fashion names

of the twentieth century.

The couture house for YSL created innovative clothing.

In 1999 Gucci Group, acquired YSL.

They now have 63 stores, including 6 Flagship Stores.

What is the X factor for YSL?


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Positioning (Emerging Concepts) Positioning results in successful creation of Customer

Focused Value Proposition.

Nivea targets Personal Care Oriented People and offerbenefits of Life and Care and charge a premium of 15percent; the underlying value Proposition is QualitySkin and Beauty Care

Positioning is done in line with Competitive Frame ofReference to establish category membership (Pepsi;Coke: Colour, Taste, SKUs etc.)


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POPs and PODs Deciding on positioning requires identification of Points of

Parity and Points of Difference.

Points of Difference: These are the attributes consumers

strongly associate with a brand, and believe they could notfind to the same in the competitive context. (IKEA;Affordable Design, Michelin; Performance)

Points of Parity: Not necessarily unique to the brand butin fact may be shared with other brands.

Category Points of Parity are expected (Hotel will haveclean rooms)

Competitive Points of Difference are designed in accordancewith competitors POD (Nespresso: Coffee Machines)


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Key Learning-Straddle Positioning BMW entered the UK market in the 1980s

It was positioned as a car that not only offered luxurybut performance as well.

With performance cars; it had POP in the samecontext and POD through luxury and vice versa.

A company in this positioning will straddle two frames

if reference.


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Choosing POPs and PODs Relevant (National Express, UK; WiFi)

Feasible (Audi; Youthful Image)

Distinct (Dyson; Design) Communicable (Nivea; Q 10 co-enzyme)

Believable (Chanel No.5; Elegance)

Sustainable (Visa; Everywhere)


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Identifying Positioning Perceptual

Maps It helps answer the following questions;

Customers view of you brand

Your brands view in context of competition Most desirable attributes


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Positioning Strategies Cost Leadership (Swatch)

Distinctive Superior Quality (Mont Blanc)

Differentiation; types Personnel Differentiation (Singapore Airlines; Flight

Attendants)

Channel Differentiation (Tesco; Online)

Image Differentiation (Harrods)

chapter 6 smm

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