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    6 Piercy Fourth Ed

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    Chandolu Leenaamulya
    This document discusses strategic market choices and targeting, including: 1. The importance of redefining market boundaries and avoiding being trapped in the "competitive box" while new opportunities emerge outside it. 2. Segmenting markets based on customer benefits and insights into customer loyalty and relationships to develop consistent marketing programs for different segments. 3. Considering both the attractiveness of market segments and the internal compatibility with a company's capabilities when deciding which segments to target.

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    6 Piercy Fourth Ed

    Uploaded by

    Chandolu Leenaamulya
    141 views28 pages
    This document discusses strategic market choices and targeting, including: 1. The importance of redefining market boundaries and avoiding being trapped in the "competitive box" while new opportunities emerge outside it. 2. Segmenting markets based on customer benefits and insights into customer loyalty and relationships to develop consistent marketing programs for different segments. 3. Considering both the attractiveness of market segments and the internal compatibility with a company's capabilities when deciding which segments to target.

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    This document discusses strategic market choices and targeting, including: 1. The importance of redefining market boundaries and avoiding being trapped in the "competitive box" while new opportunities emerge outside it. 2. Segmenting markets based on customer benefits and insights into customer loyalty and relationships to develop consistent marketing programs for different segments. 3. Considering both the attractiveness of market segments and the internal compatibility with a company's capabilities when deciding which segments to target.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    141 views28 pages

    6 Piercy Fourth Ed

    Uploaded by

    Chandolu Leenaamulya
    This document discusses strategic market choices and targeting, including: 1. The importance of redefining market boundaries and avoiding being trapped in the "competitive box" while new opportunities emerge outside it. 2. Segmenting markets based on customer benefits and insights into customer loyalty and relationships to develop consistent marketing programs for different segments. 3. Considering both the attractiveness of market segments and the internal compatibility with a company's capabilities when deciding which segments to target.

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    Strategic market choices and targets: Where to compete and where not to

    Lecture 6

    A route-map for marketled strategic change


    Part I Customer value imperatives Part II Developing a value-based marketing strategy
    The strategic pathway Market sensing and learning strategy

    Part III Processes for managing strategic transformation


    Change strategy

    The Customer is always right-handed

    Strategic gaps

    New marketing meets old marketing

    Strategic thinking and thinking strategically

    Strategic market choices and targets

    Organization and processes for change

    Customer value strategy and positioning

    Value-based marketing strategy

    Strategic relationships and networks

    Implementation process and internal marketing

    The strategic pathway


    Strategic thinking and thinking strategically

    Market sensing and learning strategy

    Strategic market choices and targets

    Customer value Strategic strategy relationships and and positioning networks

    Strategic transformation and strategy implementation

    Agenda
    Market definition and the competitive box Market segmentation and targeting Market positioning Market choices

    Strategic market choices and targets


    Market definition and the competitive box Market segmentation and targeting

    Strategic market choices and targets

    Market positioning

    Market choices

    Market definition and the competitive box


    Markets are not fixed or static The way they are defined should not be either The danger is being trapped inside the competitive box while the important changes occur outside the box

    The trap of the competitive box

    The competitive box


    The usual suspects

    New types of competitor

    Known competitors, operating in traditional ways with the existing, known customer base and competing for market share through incremental innovation

    New business models

    Conventional value propositions New customers

    Existing customer base

    New customers

    New customer base

    Market definition and the competitive box


    Re-thinking market boundaries is a high priority The way management understands and defines its markets is one of the most significant strategic issues The product-customer matrix a practical tool for looking at markets in new ways

    The productcustomer matrix


    Market: Products 1. 2. 3. 4. 5. 6. 7. Total Customers 1. 2. 3. 4. 5. 6. 7. Total

    Market definition and the competitive box


    Mapping market structure and change insights into drivers of change fundamental to looking at market segmentation and targeting

    Mapping market structure and trends for central heating units


    Production = 100,000 units Consumption = 100,000 units

    Direct sales = 10,000 units


    Commercial Construction Companies (85,000 units)

    84,000 units

    Independent Distributors

    42,000 units

    Construction 75,000 units SubContractors 7,000 units 40,000 units 2,000 units

    42,000 units Production Of Central Heating Units

    Small Hardware Retailers

    5,000 units

    Large Hardware Retailers

    5,000 units Domestic Customers (15,000 units)

    Direct sales = 1,000 units

    Market segmentation and targeting


    Market segmentation dividing market into groups of buyers who make coherent targets, e.g., by demographics for consumers to industry type for companies aims to develop consistent marketing programmes for segments with potentially different approaches for each

    Consistency versus differentiation in market segmentation


    Market segments
    A Product Marketing actions Price Communications Distribution & service Differentiated marketing actions across market segments B C D

    Consistent value offerings for each market segment

    Market segmentation and targeting


    Insightful segmentation is based on the customer benefit from the product or service e.g., customer loyalty-based segmentation e.g., customer relationship-based segmentation

    Customer loyalty-based segmentation


    Loyalty segments Our customers
    Committed to us and rate us highly, they show little interest in competitors

    Competitors customers
    Committed to competitors and rate them highly, show little interest in us

    Satisfied stayers

    Hostages

    Loyal customers, but this may only be inertia, may be vulnerable to competitors

    Repeat buyers for competitors, but may be interested in us

    Happy wanderers

    Show little positive commitment, may become interested in alternatives

    Little commitment to competitors, may be interested in our offer

    Dealers

    Show strong preference for the best deal on the market, with low supplier loyalty

    No commitment to competitors - open to superior offers

    Customer relationshipbased segmentation


    Relationship segments Relationship seekers Our customers
    Invest in customer relationship management and loyalty programmes to give a close relationship that is long term Focus on retention through the value offering and not through relationship emphasis Control expenditures on loyalty incentives and provide economic contact, e.g. through Internet Emphasize value offering and avoid relationship investments unless can be converted to Loyal Buyers

    Competitors customers
    Find ways to offer a relationship that is superior in the customers terms to attract away from competitors Emphasize superiority in value offering and rewards for long-term retention superior to those of competitors Offer relationship-based incentives to switch suppliers, but control costs to allow for short retention Demonstrate superior value offering and lack of ties or barriers to switching

    Loyal buyers

    Relationship exploiters

    Arms length transactional customers

    Market segmentation and targeting


    Broad segments and micro-segments Strategic market segmentation distinction between strategic and managerial issues in segmentation

    Strategic and managerial segmentation


    Corporate mission

    Values
    Strategic segmentation Strategic intent Market position

    Resource allocation Marketing plans Managerial segmentation Operational management (sales, advertising)

    Market segmentation and targeting


    Conventional views of market segmentation methodology to identify criteria for evaluation segmentation approach (differentiated, concentrated, undifferentiated) An extended model of market segmentation a diagnostic framework to distinguish between strategic and operational issues and address implementation questions

    An extended model of market segmentation


    Explicitness and focus
    Explicit/external Implicit/internal

    Strategic segmentation Strategic Organizational decision making level


    Customer benefits Qualitative approach Links to mission and vision Organizational structure Information processing Corporate culture and history

    Managerial segmentation
    Conventional segmentation bases Quantitative approach Conventional tests and criteria of choice Sales and distribution organization Advertising and promotion Media buying Pricing tactics

    Operational

    Market segmentation and targeting


    Market segment attractiveness and internal compatibility consider not just how attractive a segment is as a target, but also how well it fits with company capabilities a significant implementation question

    Segment attractiveness and internal compatibility


    Internal compatibility
    High High
    Attractive segments that match with company capabilities Attractive segments but with poor match with company capabilities

    Low

    Market segment attractiveness

    Unattractive segments Unattractive segments but with match to that do not match with company company capabilities capabilities

    Low

    Market positioning
    How customers compare you to the competition and what they decide The logic of blue oceans and red oceans finding spaces where there is no competition

    Market positioning
    Creating new market space
    looking across substitute industries looking across strategic groups within the industry redefining the buyer group look across to complementary products/services re-think the functional/emotional orientation of the industry participate in shaping external trends

    Market positioning
    But, will the big idea work? buyer utility strategic pricing business model adoption hurdles

    Market choices
    Usually there are choices which markets/segments to target? how do we set priorities? Portfolio approaches compare market/segment attractiveness (how well the opportunity fits our goals and capabilities market position (how well we believe we can do in this market/segment)

    Market attractiveness and position


    Market attractiveness
    High Low

    Strong

    Core business

    Peripheral business

    Market position
    Weak

    Illusion business

    Dead-end business

    Market choices
    Portfolio approach identifies core business targets with a good fit and where we can do well peripheral business market is less attractive to us but we will take a strong position illusion business attractive markets where we can take only a weak position dead-end business unattractive markets where we do badly. Provides a basis for making investment choices

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