Download 2.1_A.Sirsi_Tab_1_Overview_and_Segmentation

Marketing Concepts & Overview
Market Segmentation & Positioning
Dr. Ajay K. Sirsi
Schulich School of Business
[email protected]
Introductions
• Please tell us
– Your name
– Organization
– Role
– Previous experience with Marketing theory
and practice
– What are your expectations of the marketing
and sales module?
Biography – Dr. Ajay Sirsi
• Schulich School of Business, Marketing professor
• Research, writing, teaching (Exec, MBA, BBA)
– Marketing: A Roadmap To Success (Pearson)
– Marketing Led - Sales Driven (Trafford)
– Marketing: Real People, Real Decisions (Pearson)
• Consulting
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Royal Bank
Bayer
International Paper
Purolator
Manulife Financial
TELUS
Farm Credit Canada
Seminar Objectives
• Provide you with frameworks and tools to understand
marketing strategy
• Enable you to ask the right questions to design
superior marketing strategies
• Enable you to implement marketing strategies
– By thinking about implementation at functional
level
Agenda
• Why do organizations succeed or fail?
• What is marketing?
– Concepts and overview
• Fundamentals of market segmentation
– Positioning
Outline Key Challenges Facing Your
Organization
I’m going to show you how, using
the power of Marketing, you can …
• Build a brand
– Decommoditize your business
• Attract new customers
• Satisfy your customers
• Retain your customers
• At a lower cost
• Build a more profitable business
– 8 – 80% profit improvements
The Research Is Clear
• Organizations that succeed do so because
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They develop sound marketing strategies
They execute those strategies well
They align different parts of the organization
They are always testing their business models
Source: Nohria (2003), Sirsi (2005)
Key Requirements
• A Focus on the fundamentals
– Strong strategies
• Marketing Plans
• Customer value propositions
– Solid execution
• Customer-focused Sales Plans
• Functional Plans by Operations
Source: Nohria (2003), Sirsi (2005)
Agenda: Day 1
• Why do organizations succeed or fail?
• What is marketing?
– Concepts and overview
• Fundamentals of market segmentation
– Positioning
What is marketing?
Source: Marketing: A Roadmap to Success by Ajay Sirsi
What Is The Role of Marketing?
• Contextualize the market
• Be the voice of the customer within the
organization
• Educate others
• Help them develop functional plans
• Achieve customer focus
Source: Marketing: A Roadmap to Success by Ajay Sirsi
External Analysis
Opportunities and Threats
Strengths and Weaknesses
Key Issues
Marketing Strategies and Tactics
Key Outcomes
The Marketing Plan
• External analysis
– markets
– segments and customers
– competitors
• Internal analysis
– OTSW analysis
– Key issues to be addressed next year
• Key objectives to be achieved
• Key strategies
• Key tactics
• Key outcomes
• Control of marketing plan
OTSW Analysis
Opportunities
•Market is fragmented
•Customers are seeking a one
stop shop
Threats
•Economy has slowed down
•Customers are price sensitive
Strengths
•We have a strong brand
•We have a broad suite of
offerings
Weaknesses
•We have a high cost structure
•We don’t have products to serve
price sensitive customers
•Our sales force is not trained on
value selling
OTSW Analysis
Business Implications
•Market is fragmented
•Customers are
seeking a one stop
shop
•Economy has slowed
down
•Customers are price
sensitive
•We have a strong
brand
•We have a broad
suite of offerings
•We have a high cost
structure
•Our sales force is not
trained on value selling
Product Development
•Address customer price sensitivity
Sales Training
•Train sales on value based selling
Channel Development
•Develop lower cost to serve channels
Key Issues
•Address customer price sensitivity
•Train sales on value based selling
Tactics
Product
Tactics
Modify
ABC line
Timing/
Person
Q2
A. Sirsi
Cost/Resou
rces
$55k
Finance
NPD
Metric
to
Track
Impact
Units
EBIT
50 new
customers
$2M EBIT
Strategies
Develop products for value segment
In Chapter 4 - I show you how to develop a
superior Marketing Plan
Appendix 1 has an example of a strong
Marketing Plan
Group Work
• Pick any two businesses within the same industry
• Answer these questions:
– How do they segment their customers?
– How do they use the marketing mix elements
(product, price, channel, marketing
communications) to differentiate themselves?
– Whose strategy is superior? Why?
Agenda: Day 1
• Why do organizations succeed or fail?
• What is marketing?
– Concepts and overview
• Fundamentals of market segmentation
– Positioning
A business that is not segmenting its customers
is leaving money on the table – guaranteed!
Market Segmentation: Glue that Holds
the Business Together
• Why segment customers?
– If you are not segmenting your customers, you are:
• Treating everyone the same, regardless of needs
• Wasting resources
• Trying to be all things to all people
• Not giving the sales force any direction
Segmentation Principles
• A business exists to be profitable
– Opposite: focus on volume
• All customers are not created equal
– Customer needs
– Cost to serve
– Appreciation of value creation
– Propensity to pay
• We cannot be all things to all customers
– Choose segments to serve
Good segmentations identify the
groups most worth pursuing -- the
underserved, the dissatisfied, and
those likely to make a first-time
purchase
Yankelovich and Meer
How To Segment
• No right way
• Many ways possible simultaneously
• Demographic approach easy, but not necessarily
best
• Best way to segment markets
– Group customers by
• Needs and value drivers
• Customer attractiveness
< $1m
> $1m
•Sophisticated users of data (want business
expertise from AC Nielsen)
•Are not buying much currently
•Opportunity - they can be educated to buy
more
•How much time am I spending on these
customers?
•How do they answer customer satisfaction
survey?
•Sophisticated users of data (want business
expertise from AC Nielsen)
•Are buying a lot, need to keep them happy
•How much time am I spending on these
customers?
•How do they answer customer satisfaction
survey?
•Unsophisticated users of data (only want
market share data)
•Are not buying a lot
•Am I spending too much time on these
customers?
•How do they answer customer satisfaction
survey?
•Unsophisticated users of data
•Are buying a lot
•They will leave unless I work with them
•How much time am I spending on these
customers?
•How do they answer customer satisfaction
survey?
Gold
Silver
Bronze
< $100,000
$100-$500
> $500,000
Gives us all his business
Buys from one
other competitor
Buys from
many competitors
Intensity of Interaction
High
Low
•Computer
•TV
•Kitchen appliances
•Doorbell
•Ceiling fan
•Electrical panel
•Home theatre
system
•Security system
•Intercom
•Energy monitor
Phase 1
Phase 2
Phase 3
Export
Export
Export
Home Builder
Domestic Domestic
Industrial
Repair
& Remodeling
Home Builder
Domestic
Industrial
DIY
Repair
& Remodeling
Contractor
5 Years
Segmentation: End State
Premium
Entertainment
Software
Manufacturing
Performance
Value
Segmentation: End State
Premium
Entertainment
Software
Manufacturing
•Needs
Performance
Value
•Value Drivers
Customer Needs And Value Drivers
Premium
Performance
Value
Entertainment
•High impact product •User-friendly products
•Willing to pay price •May consider price
premiums
premium if case made
•Product consistency
•Will not consider
price premiums
Software
•Proactive technical
support
•Willing to pay price
premiums
•Quick turnaround
•May consider price
premium if case is
made
•Basic quality
•Will not consider
price premiums
Manufacturing
•High grade quality
•Willing to pay price
premiums
•Consistent product
quality
•Very willing to
consider price
premiums if case is
made
•Diversified product
line
•Competitive on price
Pivotal Matrix for Marketing – Sales Alignment
Premium
Entertainment
Software
Manufacturing
Performance
Value
•Value Propositions
Pivot Matrix: Customer Value Propositions
Premium
Performance
Value
Entertainment
•Grade A product
•Dedicated TS team
•Product quality
guarantee
•Dedicated TS team
•Grade B product
•Charge for TS
Software
•Grade AA product
•Inventory
management
•Quick turnaround
•Ability to do short runs
•Grade BB product
•Sales materials
Manufacturing
•Grade A product
•Custom solutions
team
•Cost containment
•Security of supply
•Diversified product
line
•Competitive on price
Segmentation Pitfalls
• Always targeting the largest segment
• Failing to identify and invest in emerging segments
• Developing segmentation schemes that are not
actionable
– Over segmenting
• Targeting too many customers with one offering
• Forgetting that segments change
Segmentation Pitfalls
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Segmenting by product, and not by market
Using the same segmentation scheme as competitors
Always using the same segmentation approach
Relying only on the easiest -- demographics
Using complex segmentations -- before trying simple
ones
• Not realizing that segmentation is evolutionary
Segmentation Checklist
1. Is our segmentation scheme simple?
– Will people understand and use it?
– Is it too complex?
2. Have we segmented our markets using existing data?
– Are we starting small, but starting now?
3. Have we utilized customer needs and attractiveness in
our segmentation?
– Or, are we relying on demographics?
4. Is our segmentation scheme actionable?
– Can we actually implement this?
Segmentation Checklist
5. Will our segmentation scheme give us a competitive
advantage?
– Or, is our scheme the same as our competitors’?
6. Do we have mechanisms to evolve our segmentation
scheme over time?
– Are we developing Marketing, Sales and Functional Plans?
7. Will our segmentation scheme enable us to be better
business operators?
– Will we work together as one?
In Chapter 3 - I show you how to segment and
target customers
Your Roadmap
to Success