Marketing Basics

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Marketing Basics

• John A. Hengeveld

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Marketing Analysis (The 5Cs)
CreatingValue
MarketSegmentation
Target MarketSelection
Product/ServicePositioning
Marketing Mix (The 4Ps)
CapturingValue
Product Service
Place/Channel
Promotion
Pricing
SustainingValue
CustomerAcquisition
CustomerRetention
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Decide what business you are in.
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Gain understandingMacro-environmental scan

• Demographic forces
• Economic forces.
• Natural forces.
• Technological forces.
• Political/Legal forces.
• Social/Cultural forces.

Understanding these illuminates the terrain upon
which the firm may be deployed
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Examples of Consumer Market Segments

• Region
• Household size
• Lifestyle
• Benefits sought
• Usage rate
• Age
• Sex
• Income
• Lifestyle

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Example of business market segments

• Location
• Vertical market
• By industry
• Horizontal market
• By product usage
• Size of account
• Purchase method

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Five Steps in segmenting and targeting markets

• Steps
• Form prospective buyers into segments
• Form products to be sold into groups
• Develop a market-product grid and estimate size
  of markets
• Select target markets
• Take marketing actions to reach target markets

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Criteria for picking target segments

• Size
• The estimated size of the market to determine
  whether or not it is worth going after.
• Expected growth
• The size of the market may be small, but if it is
  growing significantly it may be worth going
  after.
• Competitive position
• The less competition the more attractive the
  market.
• Cost of reaching the segment
• Compatibility with organizations objectives
  resources
• Bottomline can we be successful there?

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The Basis for Segmentation Customer and Product
Characteristics
Size Technical sophistication OEM/replacemen
t
Industrial buyers
Characteristics of the Buyers
Demographics Lifestyle Purchase occasion
Household buyers
Size Distributor/broker Exclusive/
nonexclusive General/special list
Distribution channel
Opportunities for Differentiation
Geographical location
Physical size Price level Product
features Technology design Inputs used (e.g.
raw materials) Performance characteristics Pre-s
ales post-sales services
Characteristics of the Product
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A Framework for Competitor Analysis
OBJECTIVES What are competitors current
goals? Is performance meeting their goals? How
are its goals likely to change?
STRATEGY How is the firm competing?

• PREDICTIONS
• What strategy changes
• will the competitor
• initiate?
• How will the competitor
• respond to our strategic
• initiatives?

ASSUMPTIONS What assumptions does the
competitor hold about the industry and itself?
RESOURCES CAPABILITIES What are the
competitors key strengths and weaknesses?
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Segmentation and Key Success Factors in the U.S.
Bicycle Industry
SEGMENT
KEY SUCCESS FACTORS
Low-costs through global sourcing of components
low-wage assembly. Supply contract with
major retailer. Leading competitors Taiwanese
Chinese assemblers, some U.S manufacturers, e.g.
Murray Ohio, Huffy
Low price bicycles sold primarily through
department and discount stores, mainly under the
retailers own brand (e.g. Sears Free Spirit)
Cost effieciency through large scale operation
and either low wages or automated
manufacturing. Reputation for quality
(durability, reliability) through effective
marketing to dealers and/or consumers.
International marketing distribution. Leading
competitors Raleigh, Giant, Peugeot, Fuji
Medium-priced bicycles sold primarily under
manufacturers brand name and distributed mainly
through specialist bicycles stores
Quality of components and assembly, Innovation
in design (e.g. minimizing weight and wind
resistence). Reputation (e.g. through success in
racing, through effective brand
management). Strong dealer relations.
High-priced bicycles for enthusiasts.
Childrens bicycles (and tricycles)
sold primarily through toy retailers (discount
toy stores, department stores, and specialist
toy stores).
Similar to low-price bicycle segment.
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The Four Ps of Marketing
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Product
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Product Line Planning Decisions

• Product Line Breadth Consistency or Similarity
  between categories
• Product Line Length Different price points
  within a category
• Product Line Depth Varieties at a price point.

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Product Development Process(Classic Version)

• Opportunity Identification
• Design
• Testing
• Product Introduction
• Life Cycle Management

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The Product Life Cycle
Revenue
Time
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Place
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Price
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Promotion
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Promotion