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MARKETING STRATEGY FRAMEWORK

SatisfiedCustomers

RealizedOrganization Objectives

MarketSelection

MarketingPrograms

MarketingStrategy

TargetMarkets

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OPPORTUNITY ANALYSIS

Opportunity-Organization

Matching

OpportunityEvaluation

OpportunityIdentification

Opportunity analysis consists of three interrelated activities:

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OPPORTUNITY ANALYSIS

� Opportunities arise from:

� Opportunity analysis focuses on finding markets that an organization can profitably serve

• Identifying new types of buyers

• Creating new ways or means for satisfying buyer needs

• Uncovering unsatisfied needs of buyers

Opportunity Identification

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OPPORTUNITY ANALYSIS

Determines whether an identified market opportunity is consistent with the definition ofthe firm’s business, mission statement, and distinctive competencies

� Assesses strengths and weaknesses via a SWOT� Identifies the success requirements

� Rejects those that do not conform to a firm’s character even if they offer sizable sales and profit

Opportunity-Organization Matching

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OPPORTUNITY ANALYSIS

• Market sales potential estimates

• Sales forecasts

• Budgets

Matches the attractiveness of an opportunity with the potential for uncovering a market niche, which depends on:

• Competitive activity

• Buyer requirements

• Market demand

• Supplier sources

• Environmental forces

• Organizational capabilities

Consists of:

Opportunity Evaluation

Qualitative Quantitative

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EXHIBIT 4.1: OPPORTUNITY EVALUATION MATRIX—ATTRACTIVENESS CRITERIA

Market Niche Criterion

CompetitiveActivity

BuyerRequirements

EnvironmentalForces

OrganizationalCapabilities

Demand/Supply

BuyerType

·How many andwhich firmscompete for thisuser group?

·What affects buyerwillingness andability to buy?

·Do different buyertypes havedifferent levels ofeffective demand?

·How important areadequate sourcesof supply?

·How sensitive aredifferent buyers tothese forces?

·Can we gainaccess to buyersthrough marketingmix variables?

·Can we supplythese buyers?

BuyerNeeds

·Which firms aresatisfying whichbuyer needs?

·Are there buyerneeds that are notbeing satisfied?

·What are they?

·Are buyer needslikely to belong-term?

·Do we have orcan we acquireresources tosatisfy buyerneeds?

·How sensitive arebuyer needs tothese forces?

·Which buyer needscan our firmprofitably satisfy?

Means forSatisfying

Buyer Needs

·What are thestrategies beingemployed tosatisfy buyerneeds?

·Is the technologyfor satisfyingbuyer needschanging?

·To what extent arethe means forsatisfying buyerneeds affected bysupply sources?

·Is the demand forthe means forsatisfying buyerneeds changing?

·How sensitive arethe means forsatisfying buyerneeds to theseforces?

·Do we have thefinancial, human,technological,and marketingexpertise tosatisfy buyerneeds?

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WHAT IS A MARKET?

CHAPTER 4: OPPORTUNITY ANALYSIS, MARKET SEGMENTATION, AND MARKET TARGETING

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WHAT IS A MARKET?

A market consists of the prospective buyers (individuals or organizations) willing and able to purchase the existing or potential offering (product or service) of an organization.

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WHAT IS A MARKET?

Focus on buyers, not products or services

Implications for marketers:

Exchanges cannot occur unless buyers are able and willing to purchase a product or servicePurchases consist of offerings, not products or services, due to the values or benefits that buyers derive from them

Buyers

Offerings

EffectiveDemand

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WHAT IS A MARKET?

View as a composite of mini- or regional markets to:

• Identify competitors and how they compete

• Monitor changes in sales volume

• Assess differences between buyers’ taste preferences and the competition

Market Structure

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EXHIBIT 4.2: MARKET STRUCTURE FOR COFFEE IN THE UNITED STATES

New England Midwest Southeast Northwest

Caffeinated

Ground Whole Bean Instant

Institutional Sales(restaurants, institutions, etc.)

Decaffeinated

…

… …

…

Total U. S. Coffee Market

Retail Sales(retail food stores)

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WHAT IS A MARKET?

MarketShare

Firm, Offering, or Brand Sales($ or #)

= = X%Market Sales

($ or #)

Market Share

Market share is the sales dollars ($) or units(#) of a firm, offering, or brand divided by the sales of the “market,” expressed as a percentage (%):

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CoffeeDollar Sales

Atlantic Blend Sales

MarketDefinition

WHAT IS A MARKET?

MarketShare

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WHAT IS A MARKET?

� A served market is one in which a company, offering, or brand competes for targeted customers

� Marketing managers often look closely at served market share when considering strategic options

Use a market development strategy

Use either a product development or market penetration strategy

“High” ServedMarket Share

“Low” ServedMarket Share

Market Share

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MARKETSEGMENTATION

CHAPTER 4: OPPORTUNITY ANALYSIS, MARKET SEGMENTATION, AND MARKET TARGETING

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MARKET SEGMENTATION

� Each segment possesses a homogeneous characteristicthat relates to its purchasing behavior and responseto a marketing program

� “Cannot be all things to all people”

Market Segmentation

� Information technology and flexible manufacturing and service delivery systems can create “segments of one”

� A technique that involves breaking down or building up of potential buyers into groups, which are calledmarket segments

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MARKET SEGMENTATION

� Tailors products and services to the tastes and preferences of individual buyers in high volumes and at a relatively low cost

� Combines the efficiencies of mass production and the effectiveness of designing offerings to a single buyer’s unique wants

Mass Customization

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MARKET SEGMENTATION

� Identifies opportunities for new product development

� Helps in the design of marketing programs that are most effective for reaching homogeneous groups of consumers

� Improves the allocation of marketing resources

Benefits of Market Segmentation

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MARKET SEGMENTATION

BehavioralVariables

• Gender

• Age

Consumers Industrial Buyers

SocioeconomicCharacteristics

BehavioralVariables

SocioeconomicCharacteristics

• Occupation

• Income

• Family Life Cycle

• Education

• Location

• Benefits Sought

• Usage

• Lifestyle

• Attitudes

• Company Size

• Location

• Industry

• Customers Served

• PurchasingObjectives

• ProductBenefits

Bases for Market Segmentation

PsychographicVariables

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MARKET SEGMENTATION

� Who are they?

Need to answer six buyer-related questions:

� What do they want to buy?� How do they want to buy?� When do they want to buy?� Where do they want to buy?� Why do they want to buy?

Requirements for Effective Market Segmentation

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MARKET SEGMENTATION

Measurable Differentiable

Accessible Substantial

Requirements for Effective Market Segmentation

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MARKET TARGETING

CHAPTER 4: OPPORTUNITY ANALYSIS, MARKET SEGMENTATION, AND MARKET TARGETING

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MARKET TARGETING

Marketers ask three questions after a market has been segmented:

Where toCompete?

How toCompete?

When toCompete?

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MARKET TARGETING

� Question focuses on which market segments should be chosen for marketing efforts

� Market targeting (or target marketing) is the specification of the segment(s) the organization wishes to pursue

Where to Compete?

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MARKET TARGETING

� Question focuses on how many market segments the organization will pursue and the marketing strategies to employ

� Two market targeting approaches are:

DifferentiatedMarketing

ConcentratedMarketing

How to Compete?

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MARKET TARGETING

Differentiated Marketing

� Simultaneously pursues several different market segments with a unique marketing strategy for each segment

� Manages multiple products across multiple market segments, which increases marketing-related expenditures

How to Compete?

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MARKET TARGETING

Concentrated Marketing

� Focuses on a single market segment, sometimes marketing one product to one segment

� More commonly, offers one or more product linesto a single market segment

� Provides operating economies

� Limits growth opportunities if the segment size declines

How to Compete?

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EXHIBIT 4.3: NOKIA’S DIFFERNTIATED MARKETING STRATEGY

Series 3000

Series 5000

Series 1000/Series 2000

Series 6000

Series 7000

Series 8000

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EXHIBIT 4.1: OPPORTUNITY EVALUATION MATRIX—ATTRACTIVENESS CRITERIA

Market Niche Criterion

CompetitiveActivity

BuyerRequirements

EnvironmentalForces

OrganizationalCapabilities

Demand/Supply

BuyerType

·How many andwhich firmscompete for thisuser group?

·What affects buyerwillingness andability to buy?

·Do different buyertypes havedifferent levels ofeffective demand?

·How important areadequate sourcesof supply?

·How sensitive aredifferent buyers tothese forces?

·Can we gainaccess to buyersthrough marketingmix variables?

·Can we supplythese buyers?

BuyerNeeds

·Which firms aresatisfying whichbuyer needs?

·Are there buyerneeds that are notbeing satisfied?

·What are they?

·Are buyer needslikely to belong-term?

·Do we have orcan we acquireresources tosatisfy buyerneeds?

·How sensitive arebuyer needs tothese forces?

·Which buyer needscan our firmprofitably satisfy?

Means forSatisfying

Buyer Needs

·What are thestrategies beingemployed tosatisfy buyerneeds?

·Is the technologyfor satisfyingbuyer needschanging?

·To what extent arethe means forsatisfying buyerneeds affected bysupply sources?

·Is the demand forthe means forsatisfying buyerneeds changing?

·How sensitive arethe means forsatisfying buyerneeds to theseforces?

·Do we have thefinancial, human,technological,and marketingexpertise tosatisfy buyerneeds?