8. Strategies for products and markets Flashcards
Describe a firm that has a marketing orientation.
A firm which has a marketing orientation will see the needs of consumers/customers as vital. If it develops and markets products to meet these demands (ie, to meet the critical success factors), certain structural characteristics will be apparent within the company, ie:
- Identifying customer/consumer needs - Marketing research
- Developing products to meet consumer/customer wants/needs - R&D/Production
- Determining the value of the product to the customers - Pricing
- Making the product available to the customer - Distribution
- Informing the customer/consumer of the product’s existence and persuading them to buy it - Promotion
What are Porter’s three generic strategies to create superior long-term profitability?
- Overall cost leadership
- Differentiation
- Focus - monopolise a niche segment
What are the 7Ps of the marketing mix?
- Product
- Price
- Promotion
- Place
- People
- Physical evidence
- Process
What are the four strategies presented in the Ansoff matrix?
- Market penetration
- Market development
- Product development
- Diversification
Define market segmentation.
The division of the market into homogeneous groups of potential customers who may be treated similarly for marketing purposes.
Alternatives are:
- Mass marketing
- Niche marketing
- Micro marketing
What are the benefits of market segmentation?
- Better understanding of customer needs –> Able to identify new marketing opportunities
- Specialists can be used for each segment
- Total marketing budget can be allocated proportionally to each segment –> optimises return on investment
- Can try to dominate particular segments, gaining a competitive advantage from a focus strategy
What are some examples of bases for segmentation?
- Type of customer, e.g., business, personal, own use, presents
- Different needs and tastes of the customer
- Location of the customer
- Spending potential of the customer
- Circumstances of the customer, e.g., loans targeted at new businesses or those with poor credit ratings
What does industrial segmentation include?
- Geographic: eg, as basis for sales force, distribution or because industries cluster.
- Purchasing characteristics: eg, order size, frequency of order.
- Benefit, eg, reliability, economy, durability, versatility, safety, value for money.
- Company type: eg, type of business, sole trader, partnership, limited company.
- Company size: eg, number of employees, profits, revenue.
- Technological eg, capable of/willing to buy online and to make use of developing technologies.
What does consumer segmentation include?
- Geographic: eg, as by country, region, city etc.
- Psychological: groups sharing common psychological characteristics, eg, old people may be security-oriented.
- Purchasing characteristics: eg, heavy user, medium user, low user.
- Benefit: eg, soap powders – smell, whiteness, economy, stain removal.
- Demographic: divides the market into groups based on such things as age, gender, family size, income, occupation, race etc.
- Technological: eg, whether the customer uses technology, eg, social media, mobile devices etc.
What is socio-economic grouping?
A - Upper middle class
B - Middle class
C1 - Lower middle class
C2 - Skilled working class
D - Working class
E - Subsistence
What is targeting?
Involves selecting the most attractive market segments
What does the attractiveness of a market segment depend on?
- Measurable: ability to forecast sales
- Accessible: ability to make, distribute and promote product
- Stable
- Substantial
- Defensible: there should be barriers to entry
Issues to consider include:
- How big is the market segment?
- How quickly is it growing?
- How many competitors are there and what is their market share?
- What are the main distribution channels?
- Are there any potential substitute products or services?
- What is the relative power of buyers/suppliers?
- What resources and competences does the company have?
- Can the segment be accessed through the deployment of internet technologies?
What can target strategies be?
- Single segment strategies (concentrated strategies): One market segment is served with one marketing mix – suitable for smaller organisations with limited resources.
- Selective specialisation (multi-segment strategies): Different market mixes are offered to different market segments.
- Product specialisation: The organisation specialises in a particular product and tailors it to suit different market segments.
- Market specialisation: The organisation specialises in serving a particular market segment and offers that segment an array of different products
- Full market coverage: The organisation attempts to serve the entire market.
Define positioning and re-positioning.
The overall location of a product or service in the buyer’s mind in relation to other competing products, services /brands.
Changing the identity of a product or service, relative to the identity of competing products or services, in the collective minds of the target market.
Define marketing research.
Is the systematic gathering, recording and analysing of information about problems relating to the marketing of goods and services.
Define market, product, price, promotional and distribution research.
Market research involves looking at specific markets, their size, market trends, information re segmentation, customer characteristics, customer needs and wants, demand curves, competitors’ products, etc.
Product research could include laboratory testing to analyse product safety, durability and shelf-life.
Pricing research could include attempts to generate more accurate figures to facilitate cost-plus pricing.
Promotional (‘market communications’) research might include contacting social media sites or the websites of online newspapers to determine how much they would charge for advertising.
Distribution research could include contacting potential retail outlets to determine what margins they would expect to make.
What are the various stages in marketing research?
- Defining (and locating) problems, setting objectives
- Developing hypotheses
- Research – desk and field research
- Data collection
- Analysis and interpretation
- Conclusions and recommendations
Define Desk research.
is the gathering and analysis of existing or secondary data. This may use existing company reports and other information from both internal and external sources.
What are the rules for successful desk research?
- Assume that the work has already been done – it just needs to be located.
- Think laterally and keep an open mind.
- Follow up leads, however vague.
- Get behind the published data, since often what is published is just a summary.
- Avoid saying ‘market research’.
- Avoid asking for ‘statistics’.
- Use internal sources of data as this is often available in organisational databases.
Define Field research.
Involves the collection of new (primary) information direct from respondents. As such it is usually more expensive than desk research and so is only performed if desk research fails to answer all questions asked.
What are the three basic types of field research?
- Opinion research
- Motivation research
- Measurement research
- Specific techniques
- In-depth interviews
- Group interviews
- Trial testing, eg, out of three chocolate bars which would you choose?
- Word association, eg, ‘lager drinkers’ – lout?
- Observation, eg, use cameras to determine how long on average it takes to serve customers in a restaurant.
- Questionnaires – very common.
- Online – internet surveys and focus groups.
