Market Segmentation, Target Marketing, and Positioning

1
GRAHAM HOOLEY NIGEL F. PIERCY BRIGETTE
NICOULAUD
1
Market-led strategic management
2
Introduction

• Marketing, centering on identifying and
  satisfying customer requirements at profit
• In greyser terms, marketing migrated from being
  functional discipline to how business should be
  run
• More than paying lip service to marketing

3
Doyle distinguishes between the following
4
Radical strategies

• Companies achieve spectacular growth in sales and
  profits without building customer value through
  superior products
• Acquisition based
• Marketing department based (High level of
  advertising, proliferating product lines)
• Public relations based (media hype to attract
  customers)

5
Rational strategies

• High short term performance through products
  cheaper than traditional competitors
• Major innovations in technology, marketing
  methods or distribution channels
• Amstrad in electronics, and personal computers
  (PCs), sock shop in specialty retailing

6
Robust strategies

• Companies achieve steady performance over long
  period by creating superior customer value and
  building long-term customer relationships.
• Superior customer value, long-term investments in
  relations with suppliers, distributors and offer
  long-term advantage

7
Webster proposes marketing as a set of processes
8
Value-defining processes

• Processes that enable the organization to
  understand its environment in which it operates
  better (understand resources and capabilities)
• Such as market research, buying behavior, product
  use and so on

9
Value developing processes

• Processes that create value throughout the value
  chain
• Procurement strategy, vendor selection, strategic
  partnership with service providers etc.

10
Value-delivery processes

• Processes that enable the delivery of value to
  customers
• Service delivery, customer relationship
  management, management of distribution and
  logistics, communication processes (such as
  advertising and sales promotion) and customer
  support services etc.

11
The marketing concept and market orientation
12
Definition of marketing

• Definition from Ferrell and Lucas (1987)
• Marketing is the process of planning and
  executing the conception, pricing, planning and
  distribution of ideas, goods and services to
  create exchanges that satisfy individual and
  organizational objectives.

13
Figure 1.1
Model of mutually beneficial exchanges
Providers goals Survival Financial Social Spiritu
al
Customers goals Solutions Benefits Well-being
Offers Services, products
customers providers satisfaction
Responses Purchases, support
14
Marketing concept

• Marketing involves the following
• organisational culture set of values and beliefs
  for the organisation to serve customers needs
• strategy develop effective responses to changing
  market environments by defining market segments,
  and developing and positioning product offerings
  for targets
• tactics concerned activities of product
  management, pricing, distribution and
  communications such as advertising, personal
  selling, publicity and sales promotion

15
Market orientation

• Philosophy of marketing into reality
• Definition from Kohli and Jaworski (1990)
• Market orientation are activities toward
  developing an understanding of customers current
  and future needs.

16
Components and context of market orientation are
proposed

• Customer orientation
• Understanding costumers to create superior value
• Competitor orientation
• Awareness of the short-long term competitors
  capabilities
• Interfunctional co-ordination
• Using all resources to create value for customers
• Organizational culture
• Linking employee and managerial behavior to
  customer satisfaction
• Long-term profit

17
Figure 1.2
Components and context of market orientation
Market-led organizational culture
18
Resource based view of marketing

• Focus on core competencies
• Performance is driven by the resource profile of
  the organization
• Possession and deployment of distinctive, hard to
  imitate or protected resources
• Three alternative approaches are apparent

19
Product push marketing

• Activities on existing products and services and
  look for ways to encourage, or persuade customers
  to buy.
• The key is to make customer want what we are good
  at.

20
Customer-led marketing

• Under this approach organisations chase their
  customers at all costs.
• The retailers react by giving customers more
  choice, heavy promotions and deals to stimulate
  purchases, and aggressive sales force targets.
• Customers get confused because of the over
  complex promotions.

21
Resource based marketing

• Companies base their marketing strategies on
  equal consideration of the requirements of the
  market and their abilities to serve it.
• Resource based marketing seeks a long term fit
  between the requirements of the markets and the
  abilities of the organisation to compete in it.

22
Figure 1.3
Marketing approaches
Market needs
Customer-led marketing
Customer-led marketing
Customer-led marketing
Organizational capabilities
23
Figure 1.4
Organizational stakeholders
Focal Organization
24
Contribution of marketing to stakeholders
objectives

• Firms that do well in marketplace also do well
  financially
• Adding value of firm for shareholders
• Firm adopting market-oriented culture perform
  better financially than those that do not

25
Figure 1.5
Marketing and performance outcomes
Marketing resources
Market performance
Market-oriented culture
Assets
Financial performance
Customer satisfaction loyalty
capabilities
Sales volume market share
26
Marketing fundamentals

• Set of basic and pragmatic marketing principles
  that guide marketing thought and action
• Follow logic of value-based processes described
  by webster
• Their applications can revolutionize how
  organizations respond to, interact with, their
  customers

27
Principle 1 Focus on the customer

• High degree of customer focus-But not blind
  focus!
• Market-led approach
• What business are we in?
• What business could we be in?
• What business do we want to be in?
• What must we do to get into or consolidate in
  that business?

28
Principle 2 Only compete in markets where you
can establish a competitive advantage

• Choosing where to compete and where to commit its
  resources
• How attractive the market appears
• Do we have the competencies and skills to compete
  here?

29
Principle 3 Customers do not buy products

• Customers do not buy products , they buy what the
  product can do for them the problem it solves

30
Principle 4 Marketing is too important to leave
to the marketing department (even if there still
is one)

• Marketing is everyones job in the organisation

31
Principle 5 Markets are heterogeneous

• Different customers, sub-markets and segments
  buy a car for cheap transport from a to b or for
  comfortable or save travel different benefits
  requirements

32
Principle 6 Markets and customers are constantly
changing

• Markets are dynamic and products have a limited
  life need product and service improvement
  customer expectations change
• Two main processes of improvement innovation and
  changes in technology (which is a continuous
  process)

33
Figure 1.6
Product and process improvement
34
The role of marketing in leading strategic
management

• The role of marketing in the organisation can be
  in a way shown in figure 1.7. (that role is
  threefold)

35
Figure 1.7
The role of marketing in the organization
Identify and communicate customer wants and needs
throughout the organization
Determine the competitive positioning to match
the needs of the customers with company
capabilities
Marshal all relevent organisational resources to
deliver customer satisfaction
36
Identification of customer requirements

• Identity and communicate customers want and need
  throughout the organisation
• Identify the requirements of customers and
  communicate them effectively who the customers
  are and what will give them satisfaction or
  create customer delight
• Customers expectations, wants and need must be
  understood and communicated

37
Deciding on the competitive positioning to be
adopted

• Which target markets or markets the organisation
  will seek to serve
• Two main set of factors
• First, how attractive the alternative potential
  targets are
• Second, how well the company can hope to serve
  potential target relative to the competition

38
Implementing the marketing strategy

• Marshal all relevant organisational resources to
  deliver customer satisfaction
• Implementing the marketing strategy no gaps
  between offer, design, production and delivery