Strategic Marketing

1. Imperatives for Market-Driven Strategy

2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion
Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control

Chapter 3

Strategic
Market
Segmentation

Strategic market segmentation (1)

* Levels and types of market

segmentation

3-3

Levels and types of market

segmentation
Strategic
Segmentation

Vision
Strategic intent
Product benefits
Managerial
Segmentation

Resource allocation
Alignment
Planning

Operational
Segmentation

Marketing programs
- Advertising
- Sales
- Distribution

3-4

Best Buy segmentation strategy

* Jills - soccer moms

* Barrys - wealthy professionals
* Buzzs - tech enthusiasts
* Rays - the family man
* Mr Storefront - the small business customer
* Carries - young, single females
* Helen and Charlies - older couples whose
children have left home

3-5

From Mass Markets to Micro Markets

CONSUMERS

ASPIRATIONS
TV CHOICE
MAGAZINES
ADS
BRANDS

OLD

NEW

Passively receive
whatever TV
networks
broadcast
To keep up with
the crowd
Three networks
plus maybe a
PBS station
Age of the big
glossies: Time,
Life, Newsweek
Everyone hums
the Alka-Seltzer
jingle
Rise of the big,
ubiquitous brands
from Coca-Cola
to Tide

Empowered media users

control and shape content
thanks to TiVo, iPod and
Internet
To standout from the
crowd
Hundreds of channels
plus video on demand
Age of the special interest
magazine for every age
and affinity group
Talking to a group of
one, ads go ever
narrower
Niche brands, product
extensions and mass
customization mean many
product variations

Source: Anthony Bianco, The Vanishing Mass Market, Business Week, July 12 2004, 58-62

3-6

Strategic market segmentation (2)

* Market-driven strategy and

segmentation

* Market segmentation, value opportunities

and new market space

* Market targeting and strategic positioning

3-7

Segmentation and Market-Driven

Strategy
SEGMENTS

VALUE
OPPORTUNITIES
CAPABILITIES/
SEGMENT
MATCH
TARGET(S)

POSITIONING
STRATEGY

3-8

Strategic market segmentation (3)

* Market-driven strategy and

segmentation

* Market segmentation, value opportunities

and new market space

* Market targeting and strategic positioning

* Activities and decisions in market

segmentation

3-9

Market Segmentation Activities

and Decisions
Market to be
Segmented
Strategic
Analysis
of Segments
Finer
Segmentation
Strategies

Decide How
to Segment

Form
Segments
3-10

Strategic market segmentation (4)

* Market-driven strategy and

segmentation

* Market segmentation, value opportunities

and new market space

* Market targeting and strategic positioning

* Activities and decisions in market

segmentation
* Defining the market to be segmented
3-11

Product Variant Segmentation

Product Type Segmentation
Generic Segmentation
3-12

Strategic market segmentation (5)

* Identifying market segments

* Segmentation variables
* Characteristics of people and organizations
* Consumer markets
* Organizational markets
* Product use situation segmentation
* Buyers needs and preferences

* Consumer needs
* Attitudes
* Perceptions

* Purchase behavior

3-13

Segmentation Variables

Purchase
Behavior
Characteristics
of People/
Organizations

Buyers Needs/
Preferences

Use
Situation
3-14

Illustrative Segmentation Variables

Consumer
Markets
Age, gender, income,
family size, lifecycle
stage, geographic
location,
lifestyle

Industrial/
Organizational Markets
Type of industry, size,
geographic location,
corporate culture, stage of
development, producer/
intermediary

Use situation

Occasion, importance of
purchase, prior
experience with product,
user status

Application, purchasing
Procedure (new task,
modified rebuy, straight
rebuy

Buyers needs/
preferences

Brand loyalty status, brand

preference, benefits sought,
quality, proneness to make
a deal

Performance requirements,
brand preferences, desired
features, service
requirements

Purchase
behavior

Size of purchase,
frequency of purchase

Volume, frequency
of purchase

Characteristics
of people/
organizations

3-15

Strategic market segmentation (6)

* Forming market segments

* Requirements for segmentation

*
*
*
*
*

Response differences
Identifiable segments
Actionable segments
Cost/benefits
Stability

* Approaches to segment identification

* Customer group identification
* Forming groups based on response differences
3-16

Miller Brewings beer brand targets

* Miller genuine draft - mainstream

sophisticates
* Milwaukees Best Light - hardworking
men
* Pilsner Urquell - beer afficionados
* Miller Icehouse - for drinking buddies

3-17

Requirements for Segmentation

Response
differences

Identifiable
segments
Segmentation
Requirements

Stability
over time

Actionable
segments

Favorable
cost/benefit

3-18

Approaches to Segment
Identification
IDENTIFIERS
OF CUSTOMER
GROUPS

Characteristics
of People and
Organizations

CUSTOMER
RESPONSE
PROFILE
Use Situation

Buyers Needs
and Preferences
3-19

Segment Dimensions for Hotel Lodging Services

3-20

Illustrative Example: Gasoline Buyers

Road
Warriors

True
Blues
Generation
F3 (Fuel,
Food & Fast)
Homebodies

Price
Shoppers

Higher-income, middle-aged men, drive 2550000 miles a year buy premium with a
credit card purchase sandwiches and drinks
from the convenience store will sometimes
use carwash
Men and women with moderate to
high incomes, loyal to a brand and
sometimes a particular station
frequently buy premium, pay in cash
Upwardly mobile men and women half under 25 years of age constantly on the go drive a lot
snack heavily from the convenience store
Usually housewives who shuttle
children around during the day and
use whatever gas station is based on
town or on route of travel
Not loyal to brand or station and
rarely buy premium frequently on
tight budgets.

16% of
buyers

16% of
buyers

27% of
buyers

21% of
buyers
20% of
buyers
3-21

Illustrative Consumer
Perception Map
Expensive
GROUP
II

Brand E

Brand B
Low
Quality

Brand D

GROUP
I

Brand A

GROUP
V

GROUP
III

High
Quality

Brand C

GROUP
IV

Inexpensive
3-22

Strategic market segmentation (7)

* Finer segmentation strategies

* Logic

* Customized offerings
* Diverse customer base
* Close customer relationships

* Finer segmentation strategies

* Micro-segmentation
* Mass customization
* Variety-seeking strategy
3-23

Strategic market segmentation (8)

* Selecting the segmentation strategy

* Deciding how to segment
* Strategic analysis of market segments
* Customer analysis
* Competitor analysis
* Positioning analysis
* Estimating segment attractiveness
* Segmentation fit and implementation
3-24

Strategic Analysis of Market Segments

Customer
Analysis
Financial and
Market
Attractiveness

Competitor
Analysis

Positioning
Analysis
3-25

Segmentation Fit for Implementation

Segment Attractiveness
and Internal Compatibility
Internal Compatibility
High

High

Market Segment
Attractiveness
Low

Low

Attractive segments
that match with
company
capabilities

Attractive segments
but with poor match
with company
capabilities

Unattractive segments
but with match to
company
capabilities

Unattractive segments
that do not match with
company capabilities

3-26