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Marketing Strategy and Value Proposition
Marketing Management is the art and science of choosing target
markets and building profitable relationships with them. The goal is
to find, attract, keep, and grow target customers by delivering
superior customer value.
To create a winning marketing strategy, you need to answer:
o Who will we serve (target market)?
o How can we serve them best (value proposition)?
Value Proposition: A brand's value proposition is the set of
benefits or values it promises to deliver to consumers to satisfy their
needs.
2. Market Philosophies (Marketing Management Orientations)
There are five concepts that guide marketing strategies:
o The Production Concept: Consumers favor products that
are available and highly affordable. Focus is on improving
production and distribution efficiency. This is favorable when
product demand exceeds supply, or when product cost is too
high. However, it can lead to market myopia.
o The Product Concept: Consumers favor products offering
the most quality, performance, and innovative features. The
strategy focuses on continuous product improvement. Be
careful to avoid market myopia.
o The Selling Concept: Consumers will not buy enough of a
firm's products without large-scale selling and promotion. This
is favorable with unsought goods (e.g., insurance) or when
there's overcapacity (e.g., real estate). It's a short-sighted
approach that focuses on the company's needs rather than
the market's wants.
o The Marketing Concept: Achieving organizational goals
depends on knowing the needs and wants of target markets
and delivering the desired satisfactions better than
competitors do. Customer focus and value are key. It's a
"sense and respond" philosophy, viewing marketing as
"gardening" rather than "hunting."
o The Societal Marketing Concept: Good marketing balances
consumer's short-term wants with their long-term welfare. It
delivers value that improves both consumer and society's
well-being. Marketing decisions consider consumer wants,
company requirements, consumer's long-run interests, and
society's long-run interests.
3. Market Segmentation, Targeting, and Positioning
Companies can't serve all customers in every way. They must select
customers they can serve well and profitably.
This involves:
o Market Segmentation: Dividing the market into segments
of customers.
o Target Marketing: Selecting which segments to go after.
Most companies don't sell to all possible clients; they select a target
group. Understanding customers is crucial for successful marketing.
Segmentation: The process of looking at a market and using
variables to identify differentiating characteristics among markets.
Segmentation Bases:
o Demographic Segmentation: Segmenting buyers by
personal characteristics like age, gender, family life cycle,
occupation, education level, religion, and race. It's commonly
used due to the availability of global data.
o Psychographic Segmentation: Using personal and societal
characteristics to distinguish between markets. Key variables
include social class (lower lowers to upper uppers) and
lifestyle (achievers, strivers, survivors).
o Behavioral Segmentation: Segmenting based on how
customers behave or act towards products. Variables include
occasions, user status, loyalty status, buyer readiness stage,
attitude towards the product, benefits sought, user rates, and
application.
4. Requirements for Effective Segmentation
Measurable: The size, purchasing power, and profiles of segments
can be measured.
Accessible: Segments can be effectively reached and served (e.g.,
geographic, political/legal, technological, or social accessibility).
Substantial: Segments are large or profitable enough to serve; a
segment should be the largest possible homogenous group worth
pursuing with a tailored marketing program.
Differentiable: Segments should be conceptually different and
respond differently to marketing mix elements.
Actionable: Effective programs can be designed and executed for
the segments.
5. Benefits of Segmentation and Targeting
Avoid head-on competition.
Develop new offerings and expand profitable brands/product lines.
Remarket older, less-profitable products.
Identify early adopters.
Redistribute money and sales efforts to focus on the most profitable
customers.
Pareto Rule (80/20 Rule): 80% of the effects come from 20% of
the causes.
