Friday, August 31, 2012
2:35 PM aaaa 3 comments
Chapter No. 7
Question #1 Briefly describe the four steps in designing a customer driven marketing strategy?
Instead of scattering their marketing efforts, firms are now focusing on the buyers who have greatest in the values they create best.
Below are four major steps in designing a customer driven marketing strategy.
In the first two steps, the company selects the customers it will serve.
Marketing segmentation: this step involves dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes. The company identifies different ways to segment the market and develops profile of the resulting market segments.
Market targeting: targeting consists of evaluating each market segment’s attractiveness and selecting one or more marketing segments to enter.
In the final two steps, the company decides upon a value proposition, on how it will create value for target customers.
Differentiation: it involves actually differentiating firm’s marketing offering to create superior customer value
Positioning : positioning consists of arranging for a market offering to occupy a clear, distinctive and desirable place relative to competing products in the minds of targeted customers.
Question #2 Name and describe the four major sets of variables that might be used in segmenting consumer markets. Which segmenting variables do you think Pizza hut is using?
There is no single way to segment a market. A marketer has to try different segmentation variables alone and in combination, to find the best characteristics affecting consumer behavior
Here are some major geographic, demographic, psychographic and behavioral variables.
This segment calls for dividing the market into different geographical units such as in one or a few geographical areas or to operate in all areas but pay attention to geographical difference in needs and wants.
Many companies are today are localizing their products, advertising, promotion and sales efforts to fit the needs of individual region, cities and even neighborhoods.
For example, most of Pizza hut branches are located in posh areas and we could not find any Pizza hut branch in Orangi Town or Lyari.
This segment divides the market into groups based on variables such as gender, family size, family life cycle, income, occupation, education, religion, race, generation and nationality. Demographic factors are the most popular bases for segmenting customer groups. One reason is that consumer needs, wants and usage rates often vary closely with demographic variables. Another is that demographic variables are easier to measure than most other types of variables. Even when marketers first define segments using other bases, such as benefit sought or behavior, they must know segment demographic characteristics in order to assess the size of the target market and to reach it efficiently.
For example, Piazza hut targets younger lot and offered variety of delicious piazza with multiple choices of topping that make Piazza most favorite food for younger generation.
Behavior segments divides buyer into group based on their knowledge, attitudes, uses or responses to a product. Many marketers believe that behavior variables are the best starting point for building market segments.
Buyers can be grouped according to occasions when they get the idea to buy, actually make their purchase, or use the purchased item. Occasion segmentation can help firms build up product usage.
For example, Piazza hut introduce their ‘eat for all’ campaign in the month of Ramazan to attract maximum number of customer in this month. Similarly Piazza hut also offer different packages on occasion such as birth day celebration and make special arrangements on Valentine day.
A powerful form of segmentation is to group buyers according to different benefits that they seek from the product. It requires finding the major benefits people look for in the product class, the kinds of people who look for each benefit and the major brands that deliver each benefit.
For example: Piazza hut introduces ‘Mid-Night deal’ during this timing all of their products are sold at 50% off rates, this is a good opportunity for that kind of people who seek economical benefits in product.
This segment divides buyers into different groups based on social class, life style, or personality characteristic. People in the same demographic group can have very different psychographic makups.
For example: Piazza hut targets a particular social class and once visiting Piazza hut used to considered as a part of luxurious life style.
Question #4 Compare and contrast undifferentiated, differentiated, concentrated, micromarketing targeting strategies, which strategy is best?
The company must decide which and how many segments it will target. A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve. Market target can be carried out at several different levels, companies can target very broadly (undifferentiated marketing), very narrowly (micromarketing) or some where in between (differentiated or concentrated marketing)
Using undifferentiated marketing or mass marketing, a firm might decide to ignore market segment differences and target the whole market with one offer. This mass marketing strategy focuses on what is common in the needs of consumer rather than on what is different. The company designs a product and a marketing program that will appeal to the largest number of buyers.
Most modern marketers have strong doubts about this strategy. Difficulties arise in developing a product or brand that will satisfy all consumers. Moreover mass marketers often have trouble competing with more focused firms that do a better job of satisfying the needs of specific segments and niches.
Using a differentiated marketing (or segmented marketing) strategy, a firm decides to target several market segments and designs separate offers for each. By offering product and marketing variations to segments, companies hope for higher sales and a stronger position within each market segment. Developing a strong positing within several segments creates more total sales than undifferentiated marketing across all segments.
But differentiated marketing also increase the cost of doing business. A firm usually finds it more expensive to develop and produce. Developing separate marketing plans for the separate segments require more marketing research, forecasting, sales analysis, promotion planning and channel management.. and trying to reach different market segments with different advertising campaigns,
Using a concentrated marketing also increases, instead of going after small share of a large market, the firm goes after a larger share of one or few smaller segments of niches. Yet the smaller, upscale retailer is growing faster and more profitably than its giant rivals.
Through concentrated marketing, the firm achieves a strong market position because of the greater knowledge of consumer needs in the niches it serves and the special reputation it acquires. It can market more effectively by fine tuning its products, price and programs to the needs of carefully defined segments. It can also market more efficiently, targeting its products or services, channels and communication programs toward only consumer that it can serve better and most profitable.
Whereas segments are fairly and normally attract several competitors , niches are smaller and may attract only one or a few competitors. Niching lets smaller companies focus their limited resources on serving niches that may be unimportant or overloaded by larger competitors. Many companies start as niches to get a foothold against larger, more resourceful competitors then and then grow into broader competitors.
Differentiated and concentrated marketers tailor their offers and marketing programs to meet the needs of various market segments and niches. At the same time, they don’t customize their offers to each individual customer. Micro marketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Rather than seeking a customer in every individual, micro marketers see the individual in every customer. Micro marketing includes local marketing and individual marketing.
It involves tailoring brands and promotions to the needs and wants of local customer groups, cities, neighborhoods and specific stores.
Advancement of communication technology have given rise to a new high tech version of location based marketing. By coupling mobile phone services with GPS devices, many marketers are now targeting customers wherever they are with what they want.
In the extreme, micro marketing becomes individual marketing, tailoring products and marketing programs to the needs and preferences of individual customers. Individual marketing has also been labeled one-to-one , mass customization and markets of one marketing.
After discussing different marketing types, the best marketing strategy in my opinion is differentiate marketing, because of some logical reasons, one of that is in this marketing type, marketer target more than one segments and make products and marketing plan which suits multiple segments which helps increase sales and a stronger position within different segments.
Question # 5 what is products ‘position’ and how do marketers know what it is?
The way the product is defined by customers on important attributes, the place the product occupies in consumer minds relative to competing products.
Consumers are overloaded with information about products and services. Thy cannot reevaluate products every time they make a buying decision. To simplify the buying process, consumer organizes products or services and companies into categories and positions them in their minds. A product position is the complex set of perceptions, impressions, and feelings that customer has for the product with competing products.
Below statement from positioning experts clearly let us know what is positioning and it’s significance for them
“Products are created in factories, but brands are created in the mind”
Question #6 Name and define the five winning value propositions, describe in the chapter. Which value proposition describes big bazaar/Macro Habib. Explain your answer.
The full positioning of a brand is called the brand’s value proposition. The full mix of benefits upon which the brand is differentiated and positioned. It is the answer to customer question “why should I buy your product”/
Below are possible value propositions upon which a company might position its products.
More for more
This positioning involves providing the most upscale products or service and charging a higher price to cover the higher cost. Not only is the market offering high in quality, it also give prestige to the buyer. It symbolizes status and loftier life style. Often the price difference exceeds the actual increment in quality.
More for the same
Companies can attack competitors more-for more positioning by introducing a brand offering comparable quality but at a lower price
The same for less
Offering “the same for less” can be powerful value proposition, every one likes a good deal. Discount store such as Big Bazar of India and Macro Habib in Pakistan use this positioning . the don’t claim to offer different or better products. Instead they many of the same brands as department stores specialty stores but at deep discounts based on superior purchasing power and lower cost operation. Other companies develop initiatives but lower-priced brands in an effort to lure customers away from the market leaders.
Less for much less
A market always exists for products that offer less and therefore cost less. Few people need, want or can afford the very best in everything they buy. In many cases consumers will gladly settle for less than optimal performance in exchange of lower price.
Less for much less positioning involves meeting consumers lower performance or quality requirements at a much lower price.
More for less
Off course, the winning proposition would be to offer more for less. Many companies claim to do this. And in the short run, some companies can actually achieve such lofty position. Ye t in the long run companies will find it very difficult such best of both positioning. Offering more usually cost more, making it difficult to deliver on the “for less” promise. Companies that try to deliver both may loose out to more focused competitors.
Question # Explain how marketers can segment international market.
Few companies have either resources or will to operate in all or even most of the countries that dot the global. Operating in many countries presents new challenges. Different countries, even those that are close together can vary greatly in their economic, cultural and political makeup. Thus, just as they do within their domestic markets, international firms need to group their world markets into segments with distinct buying needs and behaviors.
Companies can segment international markets using one or more combination of several variables. They can segment by geographic location, grouping countries by regions such as North America, Western Europe, the pacific Rim, the Middle East, Asia or Africa. Geographic segmentation assumes the nations close to each other will have many common traits and behaviors. Although this is often the case, there are many exceptions. For example, although United States and Canada have much in common, both differ culturally and economically from neighboring Mexico. Even within a region consumers can differ widely. For example, some US markets lump all central and South American countries together. However, the Domican Republic is no more like Brazil than Italy is like Sweden. Many Central and South Americans don’t even speak Spanish.
World markets can also be segmented on the basis of economic factors and countries might be grouped by population income levels or by their overall level of economic development. A country’s economic structure shapes its population’s product and service needs and therefore the marketing opportunities it offers. Countries can be segmented by political and legal factors such as the type and stability of Government, receptivity of 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.
Segmenting international markets based on geographic, economic, political, cultural and other factors assumes that segments should consist of clusters of countries. However, as new communication technologies, such as satellite TV and the internet, connect consumers around the world, marketers can define and reach segments of like-minded consumers no matter where in the world they are. Using intemarket segmentation (also called cross market segmentation) the form segments of customers who have similar needs and buying behaviors even though they are located in different countries.