Marketing Strategy Flashcards
In your opinion, what are potential criteria for determining the target market(s)?
I. Size and Growth 1. Size: Market potential, current market penetration 2. Growth: Past growth forecasts of technology change II. Structural Characteristics 3. Competition 4. Segment saturation 5. Protectability 6. Environmental risk III. Product-Market Fit 7. Fit 8. Relationships with segments 9. Profitability
What are potential benefits of segmentation to organisations?
- Identification of unfulfilled needs
- Better product design
- Allows specific and targeted promotion activities 4. Increasing customers’ satisfaction
→ SUSTAINABLE PROFIT GROWTH
What are potential benefits of segmentation to customers?
- More convenience and time savings
- Tailored products and services
- Relevant offers
- Increased personalized experience
→ COMPELLING CUSTOMER EXPERIENCES
What are benefits of standardising the market strategy across all countries?
- Cost synergies (economies of scale, economies of simplicity)
- Anticipation of converging customer needs
- Negotiation with international customers and retailers
What are the problems of standardising the market strategy across all countries?
Limited flexibility
What are the benefits of differentiating the market strategy across the countries?
- Meeting specific local market characteristics (customer needs, ecological and legal aspects) → local market orientation
- Addressing country-of-origin effects
- Strategic benefits (price, product and brand strategy
What are the problems of differentiating the market strategy across the countries?
High costs
Definition of marketing strategy
Marketing strategy includes all basic and long-term activities in the field of marketing that deal with:
- the analysis of the strategic initial situation of a company and
- the formulation, evaluation and selection of market- oriented strategies
and therefore contributes to the goals of the company and its marketing objectives.
Objectives pyramid of marketing strategy
- BUSINESS MISSION
- COMPANY OBJECTIVES
- FUNCTIONAL OBJECTIVES
- INSTRUMENTAL OBJECTIVES
Objectives related to…
A. POTENTIAL
- Prerequisites of customer behaviour and market success
- Examples: customer satisfaction
B. MARKET SUCCESS
- Actual customer behaviour
- Examples: customer loyalty
C. FINANCIAL ASPECTS
- Economic success
- Examples: turnover, profit
“Classical” marketing strategy approaches
- Experience curve model
2. Lifecycle model
Explain experience curve model
Key variable: development of product costs over time
Idea: the more often a task is performed the lower the costs of performing this task become. More specifically, this effect leads to a reduction in costs depending on the amount of “experience” accumulated over time.
Formula for the law of experience curve:
k(x) = a ⋅ x^ − b
Beginning of the 20th century:
• Growing demand for automobiles but product still quite expensive
• Fords implements strategy of price leadership by decreasing production costs
• Standardisation of products (only black automobiles)
Consequences:
• Cost decrease of about 75% within 14 years
• Price decreased from over $ 3,000 to ca. $ 1,000 and market share increased from 10% to 55%
What’s the experience curve’s model relevance for pricing decisions?
Relevance for pricing decisions:
• Forecasting of costs (helps setting the “right” price)
• Model relevant when price is driving factor for consumers
What are the limitations of experience curve model?
- Simplification: Focus only on one variable: costs
* Requirement of a consistent product identity over time
Explain lifecycle model
DRAW CURVE WITH PHASES!
Assumptions:
Product has limited life time and goes through several life cycle phases Each phase has different sales and profit potentials
INTRODUCTION
GROWTH
MATURITY
SATURATION
RELEVANCE:
• Product life span is limited → importance of knowing current phase of a product (resource allocation)
What are the limitations of the lifecycle model?
Limitations:
- Simplification: Focus only on one variable to explain sales (time)
- Several alternative shapes of curve observed: not all products and brands exhibit the bell-shaped curve
- Ignores management ability to influence shape of curve, economic and marketing activities (e.g. face lifting car model), and legal issues (e.g. protection by a patent)
What is the strategy process?
- Analysis of initial strategic situation:
• Environment
• Market
• Company situation - Formulation of alternative marketing strategies
- Evaluation of alternative marketing strategies
- Selection of marketing strategies
- Strategy implementation and implementation monitoring
What’s the microenvironment in marketing and what is the microenvironment
MACROENVIRONMENT: Global environmental factors
MICROENVIRONMENT:
Market
Macroenvironment elements
- Demographics
- Nature
- Technology
- Sociocultural context
- Economy
- Political-legal context
What is the objective of market segmentation?
To identify distinct subsets of customers with common needs or characteristics, which are economically interesting, and to target them distinctively.
The goal of market segmentation is targeting the customers exactly as they want to be targeted…
What is the process of segmentation?
1. SEGMENTATION • Determination of segmentation criteria • Compile segment profiles and characteristics • Validate segments 2. TARGETING • Determination of evaluation criteria • Evaluate the segments • Decide which and how many segments should be targeted 3. POSITIONING • Develop a deep understanding of the segments • Derive target-positioning for each segment • Develop marketing actions and instruments per segment (e.g., marketing mix)
What are the goals of market segmentation?
- Cluster customers in groups
- Homogeneity within the groups
- Heterogeneity across the groups
What are the segmentation requirements?
- Behavioural relevance/ actionability
- Accessibility/ responsiveness
- Clear differentiation
- Measurability
- Stability over time
- Economic feasibility/substantiality
What are the segmentation approaches?
DRAW DIAGRAM
Slide 38
- DEMOGRAPHIC
- BEHAVIOURAL
- BENEFIT
- SOCIOECONOMIC
- PSYCHOGRAPHIC
7 Global Consumer Types
1. Undaunted striver (Confident, status-orientated, tech-savvy) 2. Independent sceptic (Unconventional, skeptical, indifferent) 3. Balanced optimist (Quality seeking, practical, optimistic) 4. Impulsive spender (Social, indulgent, friend focused) 5. Secure traditionalist (settled in ways, independent, frugal) 6. Aspiring struggler (Uncertain, stressed, approval seeking) 7. Conservative homebody (family-focused, private, minimalistic)
What is positioning?
Positioning involves designing an offering so that the target segment members perceive it in a distinct and valued way relative to competitors
What are the three ways to position an offering?
- Unique
(“Only product/service with XXX”) - Difference
(“More than twice the [feature] vs. [competitor]”) - Similarities
(“Same functionality as [competitor]; lower price”)
What’s the strategic triangle of customer benefits and positioning?
DRAW!
1. CUSTOMER Value - Price 2. COMPANY'S PRODUCT Competitive Advantage 3. COMPETITOR'S PRODUCT Value - Price
Slide 60
What are the competitive strategies?
- Cost leadership
- Differentiation
a) based on superior products
b) based on better customer relationships
Draw the Ansoff growth matrix
Slide 64
What are the reasons for customer loyalty?
- Psychological
- Economic
- Technical, functional
- Contractual
Special decisions related to the international marketing strategy
- Determination of the degree of inter- nationalization
- Selection/ prioritization of country markets
- Design and
structure of international market developments
a) Selection of the form of international market entry
b) Decision about the timing of international market entry - Decision regarding the cross-national standard- ization of marketing activities
- Decision concerning the relationship between head office and local entities
Timing types of international market entries
- Waterfall strategy
- Sprinkler strategy
- Hybrid strategy
Benefits of waterfall strategy
- Requires lower investments than sprinkler (launch in all countries at same time requires high investments in manufacturing, inventory etc.)
- Revenues from an early market can be used for investment in a subsequent market
Benefits of Sprinkler strategy
- Maximizing revenues by fully exploiting economies of scale and experience in R&D
- If competition is a threat, sprinkler strategy may pre- empt competitive moves (maximizing market share)
