Download Marketing summary TP1

What is Marketing?
Define marketing and outline steps in the marketing process.
Marketing :
The process which companies create value for customers and build strong customer
relationships in order to capture value from customers in return.
Marketing is all around you: TV ads, magazines, post ads, Websites, mobile apps, videos and
social media.
Satisfying customer needs
Marketing Process:
Create value for customers and build customer relationships
1. Understand the Marketplace and customer needs and wants.
2. Design a customer value-driven marketing strategy
3. Construct an integrated marketing program that delivers superior value
4. Build profitable relationships and create customer delight
Capture value from customers in return
5. Capture value from customers to create profits and customer equity
Understanding the Marketplace and Customer needs
Customer Needs, Wants, and Demands:
Needs: States of felt deprivation; physical needs (food, clothing, warmth, safety)
social needs (belonging and affection)
individual needs (knowledge and self-expression)
Wants: Human needs shaped by culture and personality (needs water and bread / wants
McDonalds)
Demands: Wants backed up by buying power: People demand Products and Services which
benefit the most value and satisfaction.
Understanding the market: Companies conduct consumer research, analyze customer data and
observe customers off- and online.
Market Offerings: Some combination of products, services, information, or experiences offered
to a market to satisfy a need or want.
Market Myopia: The mistake of paying more attention to the specific products a company
offers than to the benefits and experiences produced by these products.
Exchange: Obtaining a desired object by offering something in return; Marketing consist of
actions taken to create, maintain, and grow desirable exchange relationships with target
audiences involving products, services, ideas and other objects.
Market: The set of all actual and potential buyers of a product or service;
1. Suppliers; main factor when it comes to pricing (Walmart cant fulfill promised low prices
unless its suppliers provide merchandise at low cost)
2. Companies & Competitors:
Step 1. Research the market and interact with customers to understand their needs
Step 2. Create and exchange market offerings, messages and other marketing content
with consumers, either directly or through marketing intermediaries.
3. Final Consumers: Can influence companies nowadays through social media, smartphone
apps, etc.
All of parties is affected by major environmental forces (demographics, economic, natural,
technological, political and social/cultural).
Designing a customer value-driven marketing strategy
Once it fully understands consumers and the marketplace, marketing management can
design a customer value-driven marketing strategy.
Marketing Management: The art and science of choosing target markets and building
profitable relationships with them.
What customers will we serve? (What’s our target market?)
 Divides the market into segments of customers (market segmentation)
 Selecting which segments it will go after (target marketing)
How can we serve these customers best? (What’s our value proposition?)
 Depending on the level, timing and nature of their demand.
 Decide how the company will differentiate and position itself in the marketplace
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Value proposition: the set of benefits or values it promises to deliver to consumers to
satisfy their needs.
Marketing Management Orientations:
Production Concept: The idea that consumers will favor products that are available and highly
affordable; therefore the organization should focus on improving production and distribution
efficiency.
Product Concept: The idea that consumers will favor products that offer the most quality,
performance, and features; therefore the organization should devote its energy to making
continuous product improvements.
Selling Concept: The idea that soncumers will not buy enough of the firm’s products unless the
firm undertakes a large-scale selling and promotion effort.
The aim is to sell what the company makes rather than making what the costumers wants.
Marketing Concept: A philosophy in which achieving organizational goals depends on knowing
the needs and wants of target markets and delivering the desired satisfactions better than
competitors do.
Focuses on satisfying customer needs as a path to profits.
Societal Marketing Concept: The idea that a company’s marketing decisions should consider
consumers wants, the company’s requirements, consumers long-run interests, and society’s
long-run interests.
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Questions whether pure marketing concept overlooks possible conflicts between
consumer short-run wants and consumer long-run welfare.
Big players preaching the concept of “shared value”, which recognizes that societal
needs, not just economic needs define markets.
Preparing an Integrated Marketing Plan and Program
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After choosing which customers the company will serve
Develops plans and programs (marketing mix) that will deliver the intended customer
value.
1. Deliver on its value propositions, the firm must create a need-satisfying market
offering ( PRODUCT )
2. Decide how much it will charge for the offering ( PRICE )
3. Decide how it will make the Product available for targeted costumers ( PLACE )
4. Engage target consumers, communicate about the offering, and persuade
consumers of the offers merits ( PROMOTION )
Customer Relationship Management
Customer relationship management: The overall process of building and maintaining profitable
customer relationships by delivering superior customer value and satisfaction (acquiring,
engaging, and growing customers)
Customer-perceived value: The customer’s evaluation of the difference between all the
benefits and all the costs of a marketing offer relative to those of competing offers.
(Customers often don’t judge values and costs accurately or objectively)
Customer Satisfaction: The extent to which a product’s perceived performance matches a
buyer’s expectations.
Products performance falls short of expectations = dissatisfied
Performance matches expectations = satisfied
Performance exceeds expectations = highly satisfied/delighted
Customer-engagement marketing: Making a brand a meaningful part of consumer’s
conversations and lives by fostering direct and continuous customer involvement in shaping
brand conversations, experiences, and community. (social media)
Consumer-Generated Marketing: Brand exchanges created by consumers themselves –both
invited and uninvited- by which consumers are playing an increasing role in shaping their own
brand experiences and those of other consumers.
Engaged consumers now have a say in everything (product design, usage, packaging, pricing
and distribution.
Partner Relationship Management: Working closely with partners in other company
departments and outside the company to jointly bring greater value to customers.
Also partners with suppliers, channel partners and others outside the company
Capturing Value from Customers (Step 5 in Market Process)
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Captures Value for the following in return: Sales, market share, profits
Gains customer loyalty and retention, share of customer, and customer equity
Creating Customer Loyalty and Retention:
Customer lifetime value: The value of the entire stream of purchases a customer makes over a
lifetime of patronage.
Building Customer Equity:
Customer Equity: The total combined customer lifetime values of all of the company’s
customers.
The more loyal the firm’s profitable customers, the higher its customers equity.
Building the right relationship with the right customers:
Companies classify their customers into the following groups:
Strangers: low potential profitability/little projected loyalty = Don’t invest anything in them
Butterflies: high potential profitability/not loyal = create satisfying and profitable transactions
with them / enjoy while they are buying
True friends: profitable/loyal = make continues relationship investments to delight these
customers
Barnacles: highly loyal / not very profitable = Try to make them profitable or fire them if not
possible
Company-Wide Strategic Planning: Defining Marketing’s Role
Strategic Planning: The process of developing and maintaining a strategic fit between the
organization’s goals and capabilities and its changing marketing opportunities.
1.
2.
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4.
Defining the company mission
Setting company objectives and goals
Designing the business portfolio
Planning marketing and other functional strategies
Mission statement: A statement of the organization’s purpose – what it wants to accomplish in
the larger environment.
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Should be a Market-Oriented Definiton like “We empower consumers to achieve the
homes of their dreams”
Product-Oriented Definitions like “We sell tools and home repair and improvement
items” are not seen to often
Designing the Business Portfolio
Business Portfolio: The collection of Businesses and products that make up the company.
1. The Company must analyze its current business portfolio and determine which
businesses should receive more, less, or no investment.
2. It must shape the future portfolio by developing strategies for growth and downsizing.
Portfolio Analysis: The process by which management evaluates the products and businesses
that make up the company.
1. Identify key businesses that make up the company
2. Asses the attractiveness of its various strategic business units (SBU) and decide how
much support each deserves
The BCG Growth-Share Matrix
Developing Strategies for Growth and Downsizing
Product/market expansion grid: A portfolio-planning tool for identifying company growth
opportunities through market penetration, market development, product development or
diversification.
Market Penetration: Company growth by increasing sales of current products to current
market segments without changing the product.
Market development: Company growth by identifying and developing new market segments
for current company products.
Product development: Company growth by offering modified or new products to current
market segments.
Diversification: Company can grow by starting or buying businesses outside their current
product/markets.
Partnering with other Company Departments
A Firms success depends not only on how well each department performs its work but also on
how well the various departments coordinate their activities.
Value Chain: The series of internal departments that carry out value-creating activities to
design, produce, market, deliver, and support a firm’s products.
Value delivery network: The network made up of the company, it’s suppliers, it’s distributors,
and ultimately it’s customers who partner with each other to improve the performance of the
entire system.
Customer Value-Driven Marketing Strategy
Market Segmentation: Dividing a market into distinct groups of buyers who have different
needs, characteristics, or behaviors, and who might require separate products or marketing
programs.
Market Segment: A group of consumers who respond in a similar way to given set of marketing
efforts.
Market Targeting: The process of evaluating each market segment’s attractiveness and
selecting one or more segments to enter.
Market Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place
relative to competing products in the minds of target consumers.
Market Differentiation: Actually differentiating the market offering to create superior
customer value.
Developing an Integrated Marketing Mix
Marketing Mix: The Set of tactical marketing tools (price, product, place, promotion) that the
firm blends to produce the response it wants in the target market.
The 4 P’s:
Product: The goods and services combination the company offers to the target market.
Variety, Quality, Design, Features, Brand Name, Packaging, Services
Price: Is the amount of money customers must pay to obtain the product.
List Price, Discounts, Allowances, Payment Period, Credit terms
Place: Includes company activities that make the product available to the target market.
Channels(Supermarkets,E-Stores), Coverage, Locations, Inventory, Transportation, Logistics
Promotion: Refers to activities that communicate the merits of the product and persuade
target customers to buy it.
Advertising, Personal Selling, Sales Promotion, Public Relations
Managing the Marketing Effort
[Not included in Exam]
1. The company first develops company-wide strategic plans and then translates them into
marketing and other plans for each division, product, and brand.
2. Through Implementation and organization, the company turns the plans into actions.
3. Control consists of measuring and evaluating the results of marketing activities and
taking corrective action where needed.
4. Finally marketing analysis provides the information and evaluations needed for all the
other marketing activities.
SWOT Analysis: An overall evaluation of the company’s strengths, weaknesses, opportunities,
and threats.
Marketing Implementation: Turning marketing strategies and plans into marketing actions to
accomplish strategic marketing objectives.
Marketing Plan Contents:
Executive Summary: Presents a brieg summary of the main goals and recommendations of the
plan for management review, helping top management find the plan’s major points quickly.
Current Marketing Situation: Describes the target market and the company’s position in it,
including information about the market, product performance, competition, and distribution.
This section includes the following:
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A market description that defines the market and major segments and then reviews
customer needs and factors in the marketing environment that may affect customer
purchasing
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A product review that shows sales, prices, and gross margins of the major products in
the product line.
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A review of competition that identifies major competitors and assesses their market
positions and strategies for product quality, pricing, distribution, and promotion.
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A review of distribution that evaluates recent sales trends and other developments in
major distribution channels.
Threats and opportunities analysis: Assesses major threats and opportunities that the product
might face, helping management to anticipate important positive or negative developments
that might have an impact on the firm and its strategies.
Objectives and Issues: States the marketing objectives that the company would like to attain
during the plans term and discusses key issues that will affect their attainments.
Marketing strategy: Outlines the broad marketing logic by which the business unit hopes to
engage customers, create customer value, and build customer relationships, plus the specifics
of target markets, positioning, and marketing expenditure levels. How will the company create
value for customers in order to capture value from customers in return?
Action Programs: Spells out how marketing strategies will be turned into specific action
programs that answer the following questions: What will be done? When will it be done? Who
will do it? How much will it cost?
Budgets: Details a supporting marketing budget that is essentially a projected profit and loss
statement. It shows expected revenues and expected costs of production, distribution, and
marketing. The difference is the projected profit. The budget becomes the basis for materials
buying, production scheduling, personal planning, and marketing operations.
Controls: Outlines the controls that will be used to monitor progress, allow management to
review implementation results, and spot products that are not meeting their goals. It includes
measures of return on marketing investment.
Measuring and Managing Marketing
Marketing Return on Investment: The net return from a marketing investment divided by the
costs of the marketing investment.
Macro- and Micro-Environment
Marketing Environment: The actors and forces outside marketing that affect marketing
managements ability to build and maintain successful relationships with target customers.
The micro-environment: The actors close to the company that affect its ability to serve its
customers.
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The Company: With marketing taking the lead, all departments (manufacturing, finance,
human resources…) share the responsibility for understanding customer needs and
creating customer value.
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Suppliers: They provide the resources needed by the company to produce its goods and
services.
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Marketing Intermediaries: Firms that help the company to promote, sell, and distribute
its goods to final buyers.
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Competitors: A company must provide greater customer value and satisfaction than its
competitors do.
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Publics: Any group that has an actual or potential interest in or impact on an
organizations ability to achieve its objectives.
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Customers: Customers are the most important actors in the company’s
microenvironment. The aim of the entire value delivery network is to engage target
customers and create strong relationships with them.
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Macro-Environment
The macro-environment: The larger societal forces that affect the microenvironment.
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Demographics: The study of human populations in terms of size, density, location, age,
gender, race, occupations, and other statistics.
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Economic: Economic factors that affect consumer purchasing power and spending
patterns such as income.
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Natural: The physical environment and the natural resources that are needed as inputs
by marketers or that are affected by marketing activities.
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Technological: Forces that create new technologies, creating new product or market
opportunities.
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Political: Laws, government agencies, and pressure groups that influence and limit
various organizations and individuals in a given society.
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Cultural: Institutions and other forces that affect society’s basic values, perceptions,
preferences, and behaviors.
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2.
3.
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5.
6.
Peoples Views of Others
Peoples Views of Organizations
Peoples Views of Themselves
Peoples Views of Society
Peoples Views of Nature
Peoples Views of the Universe
Consumer Behavior
Consumer buyer behavior: The buying behavior of final consumers – individuals and
households that buy goods and services for personal consumption.
Consumer Market: All the individuals and households that buy or acquire goods and services
for personal consumption.
Model of Consumer Behavior
Most large companies research consumer buying decisions in great detail to answer
questions about what consumers buy, what the buy, how and how much they buy, when they
buy, and why they buy.
Characteristics affecting Consumer Behavior
For the most part marketers cannot control such factors, but they must take them into
account.
Cultural Factors
Culture: The set of basic values, perceptions, wants, and behaviors learned by a member of
society from family and other important institutions.
A child in the US normally learns or is exposed to the following values:
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Achievement and success
Freedom
Individualism
Hard work
Activity and involvement
Efficiency and practicality
Material comfort
Youthfulness
Fitness and health
Subculture: A group of people with shared value systems based on common life experiences
and situations. (Hispanic Consumers, African Consumers, Asian Consumers)
Cross-cultural marketing: Including ethnic themes and cross-cultural perspectives within a
brand’s mainstream marketing, appealing to consumer similarities across subcultural segments
rather than differences.
Social Class: Relatively permanent and ordered divisions in a society whose members share
similar values, interests, and behaviors.
Marketers are interested in social class because people within a given social class tend to
exhibit similar buying behavior. Social classes show distinct product and brand preferences in
areas such as
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Clothing
Home furnishings
Travel and leisure activity
Financial services
Automobiles
Social Factors
Groups and Social Networks: Marketers try to identify the reference groups of their target
markets. Reference groups expose a person to new behaviors and lifestyles, influence the
person’s attitudes and self-concept, and create pressures to conform that may affect the
person’s product and brand choices.
Word of mouth influence: The impact of the personal words and recommendations of trusted
friends, family, associates, and other consumers on buying behavior.
Opinion Leader: A person with a reference group who, because of special skills, knowledge,
personality, or other characteristics, exerts social influence on others.
Buzz marketing: involves enlisting or even creating opinion leaders to serve as “brand
ambassadors” who spread the word about a company’s product.
Online Social Networks: Online social communities – blogs, social networking Web Sites, and
other online communities – where people socialize or exchange information and opinions.
The goal is to create opportunities for customers to get involved with brands and then with
others in both their real world and virtual social networks.
Family: Family members can strongly influence buyer behavior. The family is the most
important consumer buying organization in society. Marketers are interested in the roles and
influence of the husband, wife, and children on the purchase of different products and services.
Personal Factors
Age and Life-Cycle Stage: People change the goods and services they buy over their lifetimes.
Tastes in food, clothes, furniture, and recreation are often age related.
Life-Stage segmentation provides a powerful marketing tool for marketers in all industries to
better find, understand, and engage consumers.
Occupation: A person’s occupation affects the goods and services bought. Blue-collar workers
tend to buy more rugged work clothes, whereas executives buy more business suits.
Economic Situation: A person’s economic situation will affect his or her store and product
choices. Marketers watch trends in spending, personal income, savings, and interest rates.
Lifestyle: A person’s pattern of living as expressed in his or her activities, interests, and
opinions. Marketers look for lifestyle segments with needs that can be served through special
products or marketing approaches.
Personality: The unique psychological characteristics that distinguish a person or group.
Personality is usually described in terms of traits such as:
 Self-confidence
 Dominance
 Sociability
 Autonomy
 Defensiveness
 Adaptability
 Aggressiveness
Brand Personality: A Researcher identified five brand personality traits:
 Sincerity (down-to-earth, honest, wholesome, cheerful)
 Excitement (daring, spirited, imaginative, up-to-date)
 Sophistication (glamorous, upper class, charming)
 Competence (reliable, intelligent, successful)
 Ruggedness (outdoorsy, tough)
Psychological Factors
Motive (drive): A need that is sufficiently pressing to direct the person to seek satisfaction of
the need.
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Biological needs (hunger, thirst, discomfort)
Psychological needs (recognition, esteem, belonging)
Perception: The process by which people select, organize, and interpret information to form a
meaningful picture of the world.
People can form different perceptions of the same stimulus because of three perceptual
processes:
 Selective attention
 Selective distortion
 Selective retention
Learning: Changes in an individual’s behavior arising from experience.
Belief: A descriptive thought that a person holds about something.
Attitude: A person’s consistently favorable or unfavorable evaluations, feelings, and tendencies
toward an object or idea.
Types of Buying Decision Behavior:
The Buyer Decision Process
1. Needs Awareness: The first stage of the buyer decision process, in which the consumer
recognizes a problem or need.
2. Information Search: The stage of the buyer decision process in which the consumer is
motivated to search for more information.
3. Evaluating Alternatives: The stage of the buyer decision process in which the consumer
uses information to evaluate alternative brands in the choice set.
4. Purchase Decision: The buyers decision about which brand to purchase.
5. Post Purchase: The stage of the buyer decision process in which consumers take further
action after purchase, based on their satisfaction or dissatisfaction.
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Cognitive dissonance: Buyers discomfort caused by post-purchase conflict.
The Buyer Decision Process for New Products
Adoption Process: The mental process through which an individual passes from first hearing
about an innovation to final adoption.
Stages in the Adoption Process:
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Awareness: Consumer becomes aware of the new product but lacks information about
it.
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Interest: Consumer seeks information about the new product.
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Evaluation: Consumer considers whether buying the new product makes sense.
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Trial: Consumer tries the new product on a small scale to improve his estimate of its
value.
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Adoption: Consumer decides to make full and regular use of the new product.
Individual Differences in Innovativeness
People differ greatly in their readiness to try new products. In each product area there are
consumption pioneers and early adopters. Other individuals adopt new products much
later.
See Figure:
Customer Driven Marketing Strategy
Market Segmentation: Dividing a market into smaller segments of buyers with distinct needs,
characteristics, or behaviors that might require separate marketing strategies or mixes.
Market Targeting: Evaluating each market segment’s attractiveness and selecting one or more
segments to enter.
Differentiation: Differentiating the market offering to create superior customer value.
Positioning: Arranging for a market offering to occupy a clear, distinctive, and desirable place
relative to competing products in the minds of target customers.
Segmenting Consumer Markets
Geographic Segmentation: Dividing a market into different geographical units, such as nations,
states, regions, counties, cities, or even neighborhoods.
Demographic Segmentation: Dividing the market into segments based on variables such as age,
life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation.
Psychographic Segmentation: Dividing a market into different segments based on social class,
lifestyle, or personality characteristics.
Behavioral Segmentation: Dividing a market into segments based on consumer knowledge,
attitudes, uses of a product, or responses to a product.
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Occasion Segmentation: Segments according to occasions when buyers get the idea to
buy, actually make their purchase, or use the purchased item.
Benefit Segmentation: Segments according to the different benefits that consumers
seek from the product.
Using Multiple Segmentation Bases:
Marketers often use multiple segmentation bases in an effort to identify smaller, betterdefined target groups.
Segmenting Business Markets:
Consumer and Business Marketers use many of the same variables to segment their markets.
Business buyers can be segmented geographically, demographically (industry, company size),
or by benefits sought, user status, usage rate, and loyalty status.
Segmenting International Markets:
Companies can segment international markets using one or a combination of several
variables:
Geographic location: grouping countries by regions such as Western Europe, the Pacific Rim,
South Asia, or Africa.
Economic factors: Countries might be grouped by people’s income levels or by their overall
level of economic development.
Political and legal factors: such as the type and stability of government, receptivity to foreign
firms, monetary regulations, and amount of bureaucracy
Cultural factors: can also be used, grouping markets according to common languages, religions,
values and attitudes, customs, and behavioral patterns.
Intermarket (cross-market) Segmentation: Forming segments of consumers who have similar
needs and buying behaviors even though they are located in different countries.
Requirements for Effective Segmentation
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Measurable: The size, purchasing power, and profiles of the segments can be measured.
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Accessible: The market segments can be effectively reached and served.
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Substantial: The market segments are large or profitable enough to serve. A segment
should be the largest possible, homogeneous group worth pursuing with a tailored
marketing program. It would not pay, for example, for an automobile manufacturer to
develop cars especially for people whose height is greater then seven feet.
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Differentiable: The segments are conceptually distinguishable and respond differently
to different marketing mix elements and programs. If men and women respond similarly
to marketing efforts for soft drinks, they do not constitute separate segments.
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Actionable: Effective programs can be designed for attracting and serving the segments.
For example, although one small airline identified seven market segments, its staff was
too small to develop separate marketing programs for each segment.
Market Targeting
Target Market: A set of buyers sharing common needs or characteristics that the company
decides to serve.
Undifferentiated (mass) Marketing: A market- coverage strategy in which a firm decides to
ignore market segment differences and go after the whole market with one offer.
Differentiated (segmented) Marketing: A firm decides to target several market segments and
designs separate offers for each.
Concentrated (niche) Marketing: A firm goes after a large share of one or a few segments or
niches.
Micromarketing: Tailoring products and marketing programs to the needs and wants of specific
individuals and local customer segments; it includes local marketing and individual marketing.
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Local Marketing: Tailoring brans and marketing to the needs and wants of local
customer segments – cities, neighborhoods, and even specific stores.
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Individual Marketing: Tailoring products and marketing programs to the needs
and preferences of individual customers.
Choosing a Targeting Strategy: Which strategy is best, depends on the company’s resources.
When they are limited, concentrated marketing makes the most sense.
It also depends on the degree of product variability:
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Uniform products (grapefruit, steel)  Undifferentiated Marketing
Products that vary in design  Differentiation or Concentration
The products life-cycle most also be considered  Differentiated Marketing
Competitors marketing strategies:
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Competitor uses differentiated or concentrated marketing
 undifferentiated marketing can be suicidal.
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Competitor uses undifferentiated marketing
 a firm can gain advantage by using differentiated or concentrated marketing.
Differentiation and Positioning: Beyond deciding which segments of the market it will target ,
the company must decide on a value proposition – how it will create differentiated value for
targeted segments and what positions it wants to occupy in those segments.
Product Position: The way a product is defined by consumers on important attributes – the
place the product occupies in consumers’ minds relative to competing products.
Choosing a Differentiation and Positioning Strategy
A firm well known for quality in certain segments will go after this position in a new segment if
there are enough buyers seeking quality.
But in many cases, two or more firms will go after the same position – then each will have to
find other ways to set itself apart.
They must differentiate its offer by building a unique bundle of benefits that appeals to a
substantial group within the segment.
The differentiation and positioning task consists of three steps:
Identifying Possible Value Differences and Competitive Advantages:
Competitive Advantage: An advantage over competitors gained by offering greater customer
value, either by having lower prices or providing more benefits that justify higher prices.
Product Differentiation: Brands can be differentiated on features, performance, or style and
design.
Service Differentiation: Speedy convenient, or careful delivery.
Channel Differentiation: Retail, Online sales, etc.
People Differentiation: requires that a company select its customer-contact people carefully
and train them well.
Image Differentiation: A company or brand image should convey a product’s distinctive
benefits and positioning.
Choosing the Right Competitive Advantages:
How many differences to promote: A company should develop a unique selling proposition
(USP) for each brand and stick to it. Each brand should pick an attribute and tout itself as
“number one” on this attribute.
Which differences to promote: A difference is worth establishing to the extent that it satisfies
the following criteria:
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Important: The difference delivers a highly valued benefit to target buyers.
Distinctive: Competitors don not offer the difference, or the company can offer it in a
more distinctive way.
Superior: The difference is superior to other ways that customers might obtain the same
benefit.
Communicable: The difference is communicable and visible to buyers.
Preemptive: Competitors cannot easily copy the difference.
Affordable: Buyers can afford to pay for this difference
Profitable: The company can introduce the difference profitably.
Selecting an Overall Positioning Strategy:
Value proposition: The full positioning of a brand – the full mix of benefits on which it is
positioned.
More for More: providing the most upscale product offering not only offers higher quality, it
also gives prestige to the buyer.
More for the Same: A company can attack a competitor’s value proposition by positioning its
brand as offering more for the same price.
The Same for Less: Can be a powerful value proposition – everyone likes a good deal.
Discount stores such as Walmart use this positioning.
Less for Much Less: In many cases, consumers will gladly settle for less-than-optimal
performance or give up some of the bells and whistles in exchange for a lower price.
More for Less: The winning value proposition, many companies claim to do this and in the short
run, some companies can actually achieve such lofty positions.
Developing a Positioning Statement
Positioning Statement: A Statement that summarizes company or brand positioning using this
form:
To (target segment and need)
Our (brand)
Is (concept)
That (point of difference)
Communicating and Delivering the Chosen Position:
Once it has chosen a position, the company must take strong steps to deliver and communicate
the desired position to its target consumers. All the company’s marketing mix efforts must
support the positioning strategy.
Positioning the company calls for concrete action, not just talk.
If the company decides to build a position on better quality and service, it must first deliver that
position.
Designing the marketing mix – 4 P’s – involves working out the tactical details of the positioning
strategy.
Thus a firm that seizes on a more-for-more position knows that it must produce high-quality
products, charge a high price, distribute through high-quality dealers, and advertise in highquality media.
It must hire and train more service people, find retailers that have a good reputation for
service, and develop sales and advertising messages that broadcast its superior service.
Competitor Analysis
To plan effective marketing strategies, a company needs to find out all it can about its
competitors. It must constantly compare its marketing strategies, products, prices, channels,
and promotions competitive advantage and disadvantage.
Identifying Competitors: The company might define its competitors as all firms with the same
product or class of products.
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All companies making products that supply the same service
All companies that compete for the same consumer dollar
Assessing Competitors
Having identified the main competitors, marketing management now asks: What are the
competitors’ objectives? What does each seek in the marketplace? What is the competitors
strategy? What are various competitors’ strengths and weaknesses, and how much will each
react to actions the company might take?
Determining Competitors’ Objectives:
A Company wants to know the relative importance that a competitor places on current
profitability, market share growth, cash flow, technological leadership, service leadership, and
other goals.
It also must monitor competitors’ objectives for various segments.
Identifying Competitors’ Strategies:
The more that one firm’s strategy resembles another firm’s strategy, the more the two firms
compete.
Strategic Group: A group of firms in an industry following the same or a similar strategy.
The company needs to look at all the dimensions within the Industry.
It must understand how each competitor delivers value to its customers.
It needs to know each competitors’ product quality, features, and mix; customer services;
pricing policy; distribution coverage; sales force strategy; and advertising, sales promotion and
online and social media programs.
It also must study the details of each competitors’ research and development (R&D),
manufacturing, purchasing, financial, and other strategies.
Assessing Competitors’ Strengths and Weaknesses:
Companies normally learn about their competitors’ strengths and weaknesses through
secondary data, personal experience, and word of mouth.
They can also conduct primary research with customers, suppliers and dealers.
Benchmarking: Comparing the company’s products and processes to those of competitors or
leading firms in other industries to identify best practices and find ways to improve quality and
performance.
Estimating Competitors’ Reactions:
Next the Company wants to know: What will our competitors do?
Most likely company moves:
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Price cuts
Promotion increases
New-Product introductions
In addition each competitor has a certain philosophy of doing business, a certain internal
culture and guiding beliefs.
Strong or Weak Competitors:
Customer Value Analysis: An analysis conducted to determine what benefits target customers
value and how they rate the relative value of various competitors’ offers.
The key to gaining competitive advantage is to examine how a company’s offer compares to
that of its major competitors on those valued attributes.
Close or Distant Competitors:
Most Companies will compete with close competitors – those that resemble them most –
rather than distant competitors.
Finding Uncontested Market Spaces:
Companies try to create products and services for which there are no direct competitors. Called
a “blue-ocean strategy,” the goal is to make competition irrelevant.
Designing a Competitive Intelligence System:
1. The competence intelligence system identifies the vital types of competitive information
needed and the best sources of this Information
2. The system continuously collects information from the field (sales force, channels,
suppliers, market research firms, internet and social media sites, online monitoring, and
trade associations)
And publish data (government publications, speeches, and online databases)
3. The System checks the information for validity and reliability, interprets it, and organizes
it in an appropriate way.
4. Finally, it sends relevant information to decision makers and responds to inquiries from
managers about competitors.
Competitive Strategies
A Company now must design broad marketing strategies by which it can gain competitive
advantage.
Approaches to Marketing Strategy:
Entrepreneurial Marketing: Most companies are started by individuals who live by their wits.
They visualize an opportunity, construct flexible strategies on the backs of envelopes, and
knock on every door to gain attention.
Formulated Marketing: As small companies achieve success they inevitably move toward moreformulated marketing. They develop formal marketing strategies and adhere to them closely.
Intrepreneurial Marketing: Many large and mature companies get stuck in formulated
marketing. They pore over the latest Nielsen numbers, scan market research reports, and try to
fine-tune their competitive strategies and programs.
These companies sometimes lose the marketing creativity and passion they had at the start.
They now need to reestablish within their companies the entrepreneurial spirit and actions that
made them successful in the first place.
Basic Competitive Strategies
Michael Porters suggestion:
1. Cost Leadership
In cost leadership, a firm sets out to become the low cost producer in its industry. The sources
of cost advantage are varied and depend on the structure of the industry. They may include the
pursuit of economies of scale, proprietary technology, preferential access to raw materials and
other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm
can achieve and sustain overall cost leadership, then it will be an above average performer in its
industry, provided it can command prices at or near the industry average.
2. Differentiation
In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that
are widely valued by buyers. It selects one or more attributes that many buyers in an industry
perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its
uniqueness with a premium price.
3. Focus
The generic strategy of focus rests on the choice of a narrow competitive scope within an
industry. The focuser selects a segment or group of segments in the industry and tailors its
strategy to serving them to the exclusion of others.
Michael Treacy and Fred Wiersema’s Suggestion:
Competitive Positions
Market Leader: The firm in an industry with the largest market share.
Market Challenger: A runner-up firm that is fighting hard to increase market share in an
industry.
Market Follower: A runner-up firm that wants to hold its share in an industry without rocking
the boat.
Market Nicher: A firm that serves small segments that the other firms in an industry overlook
or ignore.
Strategies:
Market Leader: Expand Total Market; Protect Market Share; Expand Market Share
Market Challenger: Full frontal attack; Indirect attack
Market Follower: Follow Closely; Follow at a distance
Market Nicher: By Customer; Market; Quality-Price; Service; Multiple Niching
Balancing Customer and Competitor Orientations
Competitor-centered company: A Company whose moves are mainly based on competitors’
actions and reactions.
Customer-centered company: A company that focuses on customer developments in designing
its marketing strategies and delivering superior value to its target customers.
Market-centered company: A company that pays balanced attention to both customers and
competitors in designing its marketing strategies.