Strategic Marketing

Oxford defines marketing as the action or business of promoting and selling products or services, including market research and advertising. Strategic Marketing is doing this, well, strategically.

Strategic Marketing calls for a more structured approach where we define what were trying to accomplish, measure and analyze the markets and media options and implement an integrated campaign that will help you capture the most value for your budgeted marketing dollars by achieving your defined objectives.

Process of Strategic Marketing

After you have defined you business objectives, the basic thought process of strategic marketing should go like this:

1. IDENTIFY your audience or market

If youre an established business, look at your consumer base and Identify the type of consumer you want more of. If youre a startup, form a clear picture of what type of consumer you want to attract?

2. Thoroughly UNDERSTAND your audience or market Where do they live? What do they do every day? What are their passions? What media do they engage with most? What messages resonate with them, etc.

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3. SELECT the marketing mediums that your target is most engaged with E.g., If your audience is a teeny-bop, communicate with them through Facebook or other social networks or better e-modes. If youre going after business men, you may want to hit them through LinkedIn, professional business journals like Wall Street Journal or business dailies. 4. DEVELOP a messaging strategy to effectively communicate with your audience With a clear picture of your target audience in your mind, determine what message will most effectively move your target to take the desired action.

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5. EXECUTE a consistent, integrated campaign across your selected mediums Keep your branding and messaging consistent. Each medium has pros and cons. Leverage the pros as much as possible.

6. MONITOR your results and make necessary adjustments along the way
If your LinkedIn campaign is driving 30% more new business than your Google Adwords campaign, you may determine its best to shift the Adwords funds to the LinkedIn campaign.

Marketing plan
A marketing plan is a comprehensive blueprint which outlines an organization's overall marketing efforts. A marketing process can be realized by the marketing mix . The marketing plan can function from two points: strategy and tactics (P. Kotler, K.L. Keller). In most organizations, "strategic planning" is an annual process, typically covering just the year ahead. Occasionally, a few organizations may look at a practical plan which stretches three or more years ahead.

7 KEY ELEMENTS OF A MARKETING PLAN

1. Segmentation Who are the groups, what are their characteristics and how do you identify them.

2. Competitive Alternatives This is a documented list of what your customers would consider alternatives to your product or service. It differentiates your offering from others in the space. These are generally macro things.
3. Differentiated Points of Value (by segment) For each segment, what are the top 3 or 4 differentiators that your offering has versus others. Remember this isnt just about technology or features. It often includes things like pricing, delivery options, ease of use, time to value, etc. 4. Messaging and Positioning (by segment) Create a set of messages for each segment.

 5. Marketing Goals and Measures What are the goals of your marketing plan and what metrics are you tracking that are associated with those goals? For example you might decide that increasing customer acquisition by 10% is a key goal. You can tie acquisition to site visits, product signups, emails or blog signups, etc 6. Tactical Plan, Budget, Owners Based on the above goals and measures this is the set of marketing plans you plan on executing to drive those results and the costs associated with each of those tactics. The tactics are broken into discreet items of work (i.e for example a tactic such as a webinar will include creating the invite list, writing/designing the mailer, sending the invite, creating the webinar content, etc.) and assigned to an owner. 7. Timeline- The tactics need to be broken into work items and plotted on a timeline so they can be tracked on a regular basis.

Consumer Buying Behavior

Consumer buying behavior is a very complex process. There are many different factors that affect it. Consumer behavior and consumer market are highly dynamic. The age, Income, education, taste etc are different in different markets. Consumer buying behavior refers to the buying behavior of final consumers.

 Learning about the whys of human behavior is not so easy. As per the consumer behavior experts 95% of the thought, emotion and learning (that drives our purchases) occur in our unconscious mind that is without our awareness.
Penetrating the dark recess of consumers mind is no easy task. Often customers themselves dont know what influence their purchase.

 The marketers wants to understand how the stimuli are changed in to responses in the mind of the consumers. Consumer Behavior consist of two parts. a) Buyers characteristics b) Buyers Decision process.

Buyer characteristics
Consumer purchase are strongly influenced by cultural, social, personal, and psychological characteristics. 1) Cultural factors :- Culture is the most basic cause of a persons want and behavior.

Culture can be divided into : a) Culture b) Subculture c) Social class

2) Social factors
It include a number of group that influence the consumer behavior. These factors include: a) Groups b) Family c) Social roles and status.

3) Personal Factors
Buyers decision also are influenced by personal characteristics. It includes age and life cycle, occupation, economic situation, life style, personality and self concept. Sony targeted its customers based on their life stage as Gen y (under 25), DINKS (25-34), Families (35-54), and Zoomers (55 and over).

4) Psychological factors
There are 4 major psychological factors influence persons buying choice. a) Motivation b) Perception c) Learning d) Belief and attitude

Consumer Buying Process

Buying process is centered around the decision making of the buyer. It actually involves what goes on in the mind of the buyer.

It can be depicted as :Stimuli Decision making Purchase Post purchase Behavior

a) Stimuli :It refer to anything that arose interest in a product or service. There are a number of stimuli acting on the consumers. Such stimuli may be offered by marketers or other forces like cultural, social, political, economical, technological etc

b) Decision Making
It is a process taken in the mind of a person. It can be broken in to 4 stages.
Evaluation Of alternatives

Need recognition

Information search

Purchase decision

b1) Need recognition

The decision making starts when an individual perceives a need or want for satisfaction. This may arise due to internal or external stimuli. Human beings is a bundle of needs and wants but only those needs or wants pushed to the top by the stimuli is taken up for gratification.

b2) Information search

Once the recognizes the need he or she searches for information about a product or service that will satisfy this need. The information sources are
1) Personal sources family, friends, neighbors 2) Commercial sources advt, Sales persons 3) Public sources Mass media, consumer rating 4) Experimental Handling, examining, using the product

b3) Evaluation of alternatives

When the buyer has required information on available alternatives, s/he evaluate them on the basis of benefits, product attribute, after sale service etcS/he compares and contrasts the different alternatives at hand.

b4) Purchase decision

Evaluation of alternative will reveal the best among them and the individual decides to buy it.

c) Purchase
Once the customer take the decision the next step is actual purchase of goods or services.

4) Post purchase behavior:- Buyer behavior does not stop with purchase of products. The behavior of the customers after purchase is called post purchase behavior.

Cognitive dissonance
The reaction of the buyer after purchase may be a positive or negative feeling. At times buyer may have conflict of feeling. This is known as cognitive dissonance. This is a doubt whether the purchase was right ; does the product live up to our attitude, belief, ideas and expectations. A buyer take step to reduce this dissonance.

Marketers make these days more effort to remove this cognitive dissonance from the mind of the consumes.

Cognitive dissonance is the buyers discomfort caused by post purchase conflict.

Classification of buying motives

Buying motive may be divided in to two : a) Rational buying motive b) Emotional buying motive

 a) Rational buying motive :It look in to the : a) Economy c) Utility b) Safety d) Benefit.

b) Emotional buying motive :It consist of :a) Pride d) Affection

b) Imitation c) Affection e) Distinctiveness.

Scientist have discovered that human feelings are controlled by right part of the brain and reasoning is controlled by left part of the brain.

Buying Roles
For many products it is easy to identify the buyer. We can distinguish 6 roles people might play in a buying decision : a) Initiator :- A person who first suggest the idea. b) Influencer :- A person who view or advice influences the decision

 c) Decider :- A person who decides on any component of a buying decision. Whether to buy, what to buy, how to buy, where to buy.
d) Buyer :- The person who makes the actual purchase.

e) User :- A person who consumes or uses the product or services.

f) Gate keepers :- Who control the flow of information to others. Technical persons, sales persons etc

Types of buying decision behavior

1) Complex buying behavior :- When customers are highly involved in purchase and perceive significant difference among brands. E.g.:- For a P.C 3.4GHz Pentium processor, super VGA resolution or 2 GB SDRAM Memory. 2) Dissonance reducing buying behavior :When consumers are highly involved with an expensive, infrequent, or risky purchase but sees little difference among brands. E.g.:- Small car purchase.

 c) Habitual buying behavior :- It involves low consumer involvement and little significant brand difference. e.g.:- salt. d) Variety-seeking buying behavior :- It is the situation characterized by low consumer involvement but significant perceived brand differences. Consumers often do a lot of brand switching. E.g.:- washing powder, soap etc

4 types of buying behavior

High involvement Significant difference seeking buying Between brands Few difference Between brands Complex buying behavior Low involvement Variety behavior

Dissonance-reducing buying behavior

Habitual buying behavior

Consumer Adoption Process

Adoption is an individuals decision to become a regular user of a product and is followed by the consumer loyalty process. Stages in the adoption process : Innovation is any good, service, idea, or process that some one perceives as new. Innovation diffusion process is the spread of new ideas from its source of invention to its ultimate users or adopters. It is a mental step through which an individual passes from hearing about an innovation to final adoption.

Characteristics of innovation
1. Relative Advantage :2. Compatibility :3. Complexity :4. Divisibility :- Innovation can be tried on a limited basis. 5. Communicability :- Beneficial result should be describable to others.

Stages in the Adoption Process

1. Awareness. In this stage the consumer is aware of the new product but lacks further information about it.

2. Interest. The consumer is motivated to seek information about the new product.
3. Evaluation. The consumer determines whether or not to try the new product. 4. Trial. The consumer tries the new product on a small scale to test its efficacy in meeting his or her needs. Trial can be imagined use of the product in some cases. 5. Adoption. The consumer decides to make use of the product on a regular basis.

Factors influencing the adoption process

It influences : 1) The individuals readiness to try new product 2)The effect of personal influence 3) Differing rates of adoption and differences in organization's readiness to try new products. Rogers defines a personal level of innovativeness as the degree to which an individual is relatively earlier in adopting new ideas than the other members of his social system. Some people are first to adopt new clothing fashions or new appliances. Five adopter groups differ in value orientations and their motives for adopting or resisting the new product.

1. Innovators: Innovators help get the product exposure but are not often perceived by the majority of potential buyers as typical consumers.

2. Early Adopters: This group serves as opinion leaders to the rest of the market.
3. Early Majority: Some 34% of the market that is the "typical consumer" but likely to adopt innovations a little sooner. 4. Late Majority: This group is skeptical and adopts innovations only after most of the market has accepted the product. 5. Laggards: This group is suspicious of change and adopts only after the product is no longer considered an innovation.

Time adoption of innovations

Source :-Tungsten, http://en.wikipedia.ord/wiki/Everett_Rogers. Based on Rogers, E. (1962) Diffusion of Innovations. Free press, London, NY,USA

Organizational Buying Process

Organization buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers.- Frederick E Webster Jr. and Yoram Wind

Some of the characteristics of organizational buyers are:

1. Organizational buyers are limited in number but are of large quantities. 2. Close relationships and service are required. 3. Professional purchasing but multiple buying influences. 4. Demand fluctuations are high. 5. Geographically concentrated buyers. 6. Direct purchase.

Organizational Buying Situations

Straight rebuy This is a routine buying situation, where the purchasing department is involved for the purchase from the approved vendor list.

Modified rebuy The company want to change product specifications, price and delivery requirements etc. So they usually go for additional participants.
New task buy In this situation, the buyer is buying the product for the first time. As the cost of the product or consumption value becomes higher, more number of executives are involved in the process. Systems buy This is a total problem solution from one seller. Originated with Govt. purchase of major weapon and telecommunication. Systems buying is a process in which the organization gives a single order to any organization for supplying its full requirements.

Participants in the Business Buying Process

8 Steps of a Business Organization's Purchasing Process :1. Identify problem 2. Select Specific Product and need description 3. Supplier search :a) Catalog site, Specialized Websites (E-bubs), Auction sites, 4. Proposal solicitation 5. Supplier selection 6. Order routine specification :- Negotiate the final price, technical specification, quantity, time of delivery etc 7. Performance review.

Market segmentation
Market consist of buyers and buyers differ in one or more ways. They may differ in their wants, resources, locations, buying attitudes, and buying practices.

Through market segmentation, companies divide large heterogeneous markets in to smaller segments that can be reached more efficiently to match their unique needs.

 Consumer market can be segmented as :-

a) Geographic b) Demographic c) Psychographic d) Behavioral factors

a) Geographic segmentation
It is dividing the market in to different geographical units such as nations, regions, state, countries, cities etc This segmentation is based on region or place.

b) Demographic segmentation
In this we divide the market in to different groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. Customer wants and usage rate often vary closely with demographic variable.

-1) Age and life cycle stage Consumer needs and wants change with age. Different tastes are there for different ages. 2) Gender :- Preference vary according to the gender especially to clothing, toiletries, magazines etc 3) Income :- It is a major segmenting factor as the income varies, demand also varies.

c) Psychographic segmentation
It is the science of using psychology and demographics to better understand the consumers.

In this segmentation buyers are divided in to different groups on the basis of psychological/personality traits, life style or values.

d) Behavioral Segmentation
It divides buyers on the basis of their knowledge, attitudes, uses or responsiveness. Occasion :- Buyers can be grouped according to occasions. Benefit sought :- Dividing the market into groups according to different benefit that consumers seek from the product.

 User status :- Markets can be segmented in to groups of non users, ex-users, potential users, first users and regular users.
User rate :-Market can be segmented in to light, medium, and heavy product users. It is based on consumption. Loyalty rate :- Consumers can also loyal to brands, stores and companies like Hard core loyal, Split loyal, Shifting loyal, Switchers.

Requirements for effective segmentation

1. Measurable :- The purchasing power and profiles of the segment can be measured. 2. Accessible :- It can be effectively reached and served.

3. Substantial :- It should be large or profitable enough to

serve. 4. Differentiable :- It should be distinguishable and respond differently to different marketing mix. 5. Actionable :- It can be fit for taking action

Target Marketing
After defined the market segment the firm must decide on how many segments and which one to target. Target market involves evaluating each market segments attractiveness and selecting one or more segments to enter.

A company should target segments in which it can profitably generate the greatest customer value and sustain it over time.

Evaluating and selecting the market segments

1. Full market coverage :- E.g.:- Microsoft in IT, Coca Cola, GM etc It can be attained through:a) Undifferentiated Marketing :- Goes to the market with one offer. b) Differentiated Marketing :- Firm sells different products to all the different segments of the market.

 2. Multiple segment specialization :- It is possible with product specialization (sells certain product to several different market segments) and market specialization (Serving many needs of a particular customer group).
3. Single segment concentration :- The firm markets to only one segment. 4. Individual Marketing :- It is customized marketing.

Targeting Strategies
Mass/Undifferentiated marketing It is concerned with selling a single product to the whole market. This strategy is based on the assumption that, in respect to the product in question, customers needs are very similar if not identical. Differentiated/Selective marketing It is concerned with targeting each segment with a product with its own marketing mix designed to match the needs of the consumers within the segment.

Niche/Concentration marketing It is concerned with targeting one particular, well-defined group of customers (a niche) within the overall market.

Market Positioning
It is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the mind of target customers. A products position is the way the product is defined by consumers on important attributes- the place the product occupies in consumers minds relative to competing products.

 It was popularized by Al Ries and Jack Trout in their bestseller book "Positioning - The Battle for Your Mind." (McGraw-Hill 1981) Positioning is not what you do with the product but what you do in the mind of the customers Customer maintains different positioning in their minds to different products.

Identifying competition
competitors can be identified as those companies that offer similar products or services to the same customers at similar prices. These can be either direct or indirect competitors. As an example, Kodak identifies Fuji as a major or direct competitor for camera products. However, they also face competition from companies that offer different products, but ones that supply the same service or capability, i.e. indirect competitors which are companies like Nokia who offer mobile phones with digital cameras as an integrated feature.

Competitor Analysis
Competitor analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context to identify opportunities and threats. Competitor Profiling combining all of the relevant sources of competitor analysis into one framework in the support of efficient and effective strategy formulation, implementation, monitoring and adjustment.

Competitor profiling
Background location of offices, plants, and online presences history - key personalities, dates, events, and trends ownership, corporate governance, and organizational structure Financials P-E ratios, dividend policy, and profitability various financial ratios, liquidity, and cash flow profit growth profile.

Marketing segments served, market shares, customer base, growth rate, and customer loyalty promotional mix, promotional budgets, advertising themes, ad agency used, sales force success rate, online promotional strategy distribution channels used (direct & indirect), exclusivity agreements, alliances, and geographical coverage pricing, discounts, and allowances Products products offered, depth and breadth of product line, and product portfolio balance new products developed, new product success rate, and R&D strengths brands, strength of brand portfolio, brand loyalty and brand awareness patents and licenses quality control conformance reverse engineering

Facilities plant capacity, capacity utilization rate, age of plant, plant efficiency, capital investment location, shipping logistics, and product mix by plant Personnel number of employees, key employees, and skill sets strength of management, and management style compensation, benefits, and employee morale & retention rates Corporate and marketing strategies objectives, mission statement, growth plans, acquisitions, and divestitures marketing strategies

Competitive Strategies for Market Leaders

Expanding the total market (Example. Modi Xerox)

1.New customers :- Company can search for customers in the following three groups :Those who might use it but do not (Market penetration strategy), those who have never used it (New market segment strategy) and those who live else where (Geographical expansion strategy).
2.More usages :- Larger package size, increasing frequency of consumption, identifying completely new and different ways to use the brand (Eg :- Monaco advertised as a starter, Nestle published recipes for ice cream and come up with milk maid.), additional opportunities to use the brand (The repainting of the home coincides with a holiday, Gillette provide colored stripes that signals to move on to the next cartridge).

Defensive Marketing
1. Position Defense :- Occupying the most desirable market space in consumers mind. Eg :- P&G done with Tide for cleaning, Crest tooth paste for cavity protection, Pampers for dryness. 2. Flank Defense :- It is an attempt to support a counter attack. 3. Preemptive Defense :- Its a more aggressive maneuver to attack first, perhaps with the gurilla action and keeping everyone off balance. SBI focus on expanding their network over 1,00,000 villages by setting up ATMs.

 4. Counter offensive Defense :- It launch a pincer movement, so the competitor will have to pull back to defend. Common form of counter offense is the exercise of economic or political clout.
5. Mobile defense :- Through market diversification market leader stretches its domain over new territories. ITC focusing on FMCG and Food business. Petroleum Companies recast themselves as energy companies and do the research on oil, coal, nuclear, hydroelectric, and chemical industries. 6. Contraction :- Its a planned contraction (also called strategic withdrawal)where sometimes large companies can no longer defend all their territory. HULs disinvestment from non core business is an example.

Competitive Strategies for Market challengers

Market challengers have gained ground or even overtake the leaders. They set high aspirations .Toyota today produces more cars than GM. Ujala is a successful challenger brand.