Ch3 : Strategic marketing
Why is it the single offer is not possible nor efficient? What is a solution to the problem?
Companies can not connect with all customers in large, broad, or diverse markets. Indeed, markets are heterogenous in terms of needs and wants. So there is a need for companies to segment their market. Market segmentation : dividing the market in significant homogenous sub-groups, that are accessible for specific marketing actions Market segment : consists of a group of customers who share a similar set of needs and wants.
Define what is competitive frame of reference.
Decisions about the competitive frame of reference are closely linked to target market decisions. Deciding to target a certain type of consumer can define the nature of competition because certain firms have decided to target that segment in the past (or plan to do so in the future) or because consumers in that segment may already look to certain products or brands in their purchase decisions. A company needs to gather information about each competitor's real and perceived strengthsand weaknesses. Once a company has identified its main competitors and their strategies, it must ask: What is each competitor seeking in the marketplace? What drives each competitor's behavior?
Explain integrative growth.
Integrative growth: A business can increase sales and profits through backward, forward, or horizontal integration within its industry Besides intensive growth, companies can grow by acquiring other companies within its industry.A good example of horizontal integration is Luftansa acquiring Brussels Airlines. Backward growth is when a company acquires its suppliers and forward growth is when acquiring its distributors for example.
Explain market demand (market force).
The marketer's first step in evaluating marketing opportunities is to estimate total market demand. Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. The horizontal axis shows different possible levels of industry marketing expenditure in a given time period. The vertical axis shows the resulting demand level. The curve represents the estimated market demand associated with varying levels of marketing expenditure. Needs: the basic human requirements such as for air, food, water, clothing, and shelter Wants: specific objects that might satisfy the need Demands: wants for specific products backed by an ability to pay
What is the band mantra? What are its purposes?
Three- to five-word articulation of the heart and soul of the brand and is closely related to other branding concepts like "brand essence" and "core brand promise." - Communicate : A good brand mantra should clarify what is unique about the brand. It may also need to Define the category (or categories) of business for the brand and set brand boundaries. - Simplify : An effective brand mantra should be memorable. For that, it should be short, crisp, and vivid in meaning. - Inspire : Ideally, the brand mantra should also stake out ground that is personally meaningful and relevant to as many employees as possible.
What are the market-nicher strategies?
• To be a leader in a small market • Firms with low shares of the total market can become highly profitable through smart niching Smaller firms normally avoid competing with larger firms by targeting small markets of little or no interest to the larger firms. Over time, those markets can sometimes end up being sizable in their own right.
What are the competitive strategies for market leaders?
• Expanding total market demand In general, the market leader should look for new customers or more usage from existing customers. A company can search for new users among three groups: those who might use it but do not (market-penetration strategy), those who have never used it (new-market segment strategy), or those who live elsewhere (geographical-expansion strategy). In targeting new customers, the firm should not lose sight of existing ones. Marketers can try to increase the amount, level, or frequency of consumption. They can sometimes boost the amount through packaging or product redesign. In general, increasing frequency of consumption requires either (1) identifying additional opportunities to use the brand in the same basic way or (2) identifying completely new and different ways to use the brand. • Protecting market share While trying to expand total market size, the dominant firm must actively defend its current business. The most constructive response is continuous innovation. The front-runner should lead the industry in developing new products and customer services, distribution effectiveness, and cost cutting. Comprehensive solutions increase competitive strength and value to customers so they feel appreciative or even privileged to be a customer as opposed to feeling trapped or taken advantage of. A company needs two proactive skills: (1) responsive anticipation to see the writing on the wall, as when IBM changed from a hardware producer to a service business (2) creative anticipation to devise innovative solutions. Note that responsive anticipation is performed before a given change, while reactive response happens after the change takes place. (3) The aim of defensive strategy is to reduce the probability of attack, divert attacks to less threatened areas, and lessen their intensity. A leader would like to do anything it legally and ethically can to reduce competitors' ability to launch a new product, secure distribution, and gain consumer awareness, trial, and repeat. • Increasing market share The cost of buying higher market share through acquisition may far exceed its revenue value. Gaining increased share does not automatically produce higher profits, however— especially for labor intensive service companies that may not experience many economies of scale. Frustrated competitors are likely to cry "monopoly" and seek legal action if a dominant firm makes further inroads. Pushing for higher share is less justifiable when there are unattractive market segments, buyers who want multiple sources of supply, high exit barriers, and few scale or experience economies. Some market leaders have even increased profitability by selectively decreasing market share in weaker areas. Companies that attempt to increase market share by cutting prices more deeply than competitors typically don't achieve significant gains because rivals meet the price cuts or offer other values so buyers don't switch. Too many customers can put a strain on the firm's resources, hurting product value and service delivery.
Explain what a macro segmentation is.
It defines reference market from a buyer perspective. What solution for customer needs? - What need is being satisfied (functions or needs)? Drinking - Who is being satisfied (customer groups)? STAY VERY GENERAL - How is it being satisfied (technologies)? Bottle water, tap water, softs, alcohol (different technologies that respond to drinking)
How does a company target customers?
Once a company has divided its market into different and relevant segments, they need to decide how many and which targets to segment. We are going to see how to choose the most appropriate target and what target strategies companies can use.First of all, based on attractiveness and competitiveness analysis, companies need to evaluate if segments are attractive enough and is they are competitive on particular segments. For example, won't be a good idea for a high-end luxury brand to target young, low revenue segment. Similarly, launching an organic brand and decide to target a segment who doesn't care about organic food would not be relevant.
What are the different types of macro segmentation?
Product market: a specific customer group, seeking a specific function or assortment of functions based on a single technology Solution market: performance of given functions in given customer groups but including all the substitute technologies to perform those functions Industry: a signle technology, but covers several businesses, that is several functions or assortments of functions and several groups
Explain the attractiveness analysis.
When we refer to MARKET, we are referring to the TOTAL DEMAND (all brands present on a particular market). When we refer to SEGMENT, we are referring to the different segments we created based on our micro segmentation. It is important to evaluate if the segments are attractive enough before you want to launch a product targeted to a particular segment.
Explain what is micro-segmentation criteria. What are the 2 broad group of variables to segment consumer markets? Explain each and one of them.
1. Descriptive segmentation criteria a) Geographic segmentation Dividing the market into geographical units such as nations, states, regions, counties, cities, or neigbourhoods. b) Demographic segmentation Dividing the market into demographic variables such as age, family size, gender, income, occupation, education, race, social class,... Most popular segmentation criteria because: - Demographic criteria often associated with needs and wants - Easy to measure c) Psychographic segmentation Buyers are divided into groups on the basis of psychological/personality traits, lifestyle, or values. Indeed, people within the same demographic group can exhibit very different pyschographic profiles. So, psychographic segmentation divides buyer into groups on the basis of their psychological/personality traits, lifestyle or values. Although descriptive segmentation can provide a richer understanding of consumers, for some they can not be relevant because it is not close enough to the actual behaviour of consumers. So, the second type of segmentation criteria are behavioural. 2. Behavioral segmentation Buyers are divided into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. a) Needs and benefits You divide the market according to benefits (sensitive skins, whitening, fresh breath, etc). Each person will wait for a different benefit for a product. b) Decision rules You have to think about the ones that buy: babies don't buy their own product. So you must target babies' parents to make them buy babies' products. c) User and usage-related (1) Occasions You can segment the market on the occasions: the same person but different situations. In different occasions, the people will have different needs. (2) Usage rate Usage rate: family pack or individual. In the Netherlands for example, it is mainly small packaging because people go by bikes.
What are the 6 defense strategies a dominant firm can do?
A dominant firm can use the six defense strategies summarized in this figure. Position defense. Position defense means occupying the most desirable position in consumers' minds, making the brand almost impregnable. Flank defense. The market leader should erect outposts to protect a weak front or support a possible counterattack. Preemptive defense. A more aggressive maneuver is to attack first, perhaps with guerrilla action across the market—hitting one competitor here, another there—and keeping everyone off balance. Another is to achieve broad market envelopment that signals competitors not to attack. Counteroffensive defense. In a counteroffensive, the market leader can meet the attacker frontally and hit its flank or launch a pincer movement so the attacker will have to pull back to defend itself. Another form of counteroffensive is the exercise of economic or political clout. Mobile defense. In mobile defense, the leader stretches its domain over new territories through market broadening and market diversification. Contraction defense. Sometimes large companies can no longer defend all their territory. In planned contraction (also called strategic withdrawal), they give up weaker markets and reassign resources to stronger ones.
What are the market-follower strategies?
A market follower can have three types of strategies: 1) Cloner—The cloner emulates the leader's products, name, and packaging with slight variations. 2)Imitator—The imitator copies some things from the leader but differentiates on packaging, advertising, pricing, or location. The leader doesn't mind as long as the imitator doesn't attack aggressively. 3) Adapter—The adapter takes the leader's products and adapts or improves them. The adapter may choose to sell to different markets, but often it grows into a future challenger, as many Japanese firms have done after improving products developed elsewhere.
What are the three special categories of product life cycles? Explain them.
A style is a basic and distinctive mode of expression appearing in a field of human endeavor. A fashion is a currently accepted or popular style in a given field. Fashions pass through four stages: distinctiveness, emulation, mass fashion, and decline. Fads are fashions that come quickly into public view, are adopted with great zeal, peak early, and decline very fast.
Before entering the market, what should be verified first? What are the 3 parts of attractiveness analysis?
Before entering a market, it is important to evaluate if the market is attractive enough to enter. The attractiveness analysis is divided in three main parts: Market forces: - Size of the market : market demand. What is the total size of the market? - Growth rate: What is the growth rate of the total demand? Is the growth rate increasing or decreasing? - What is the lifecycle of the total demand of the product market? Competitive intensity: - Number of competitors: how many competitors are present on the market? Important to evaluate what type of competitive market we want to enter in. - Price rivalry: is the market very price competitive? Is there a price war on the market? - Substitutes: is one product easily substituted by another? - Are the competitors present on the market strong? For example, entering a market like soda, we could say that Coke is a very strong competitor. Market accessibility: Can I easily access the market? - Are there channels to access the market? For example, I want to launch a new smartphone -> channels are accessible to sell my smartphone (stores, websites, ...) - Do I need to educate the consumers? For example, at first, it was necessary to educate consumers that electric cars where good for the environment. Now, education has been done by competitors present on the market. - Is there logistic support on the market to distribute my product? - Media: is there media available to promote my product? Nowadays, almost always possible through digital channels.
What marketing strategies can be adopted by brands in the "growth" life cycle stage.
By spending money on product improvement, promotion, and distribution, the firm can capture a dominant position. It trades off maximum current profit for high market share and the hope of even greater profits in the next stage. - Add new features and add new models: Apple adds Appstore and different apps. New features include for example the fact that you can pay with your iphone - Add flanker products: e.g. new earphones for iPhone - Increase distribution coverage and enter new distribution channels: e.g. being sold in other stores than only own brand stores - Shift from awareness and trial communications to preference and loyalty communications: don't emphasize on recruiting anymore but make customers more loyal. - Lower prices to attract the next layer of price-sensitive buyers
What are the pro's and con's being first (pioneer) in the market?
Companies that plan to introduce a new product must decide when to do so. To be first can be rewarding, but risky and expensive. To come in later makes sense if the firm can bring superior technology, quality, or brand strength to create a market advantage. Here are some pro's and con's being first (pioneer). If you are first, (1) consumers will remember your brand name more easily (for example Tesla for electronic cars or Iphone for smartphones), (2) you will be able to define the standards, (3) you'll recruit more consumers. On the other hand, pioneers need to be careful because they can quickly be surpassed by imitators who will perform better (and didn't have the R&D & education costs) and once leadership is lost, it's rarely regained (e.g. Nokia with cellphones)
What is Porter's 5 forces?
Competitive rivalry: how intense is competition on the market? Rival forces : Michael Porter has identified five forces that determine the intrinsic long-run attractiveness of a market or market segment: industry competitors, potential entrants, substitutes, buyers, and suppliers. Threat of intense segment rivalry—A segment is unattractive if it already contains numerous, strong, or aggressive competitors. These conditions will lead to frequent price wars, advertising battles, and new-product introductions and will make it expensive to compete. Threat of new entrants—The most attractive segment is one in which entry barriers are high and exit barriers are low. Few new firms can enter the industry, and poorly performing firms can easily exit. When both entry and exit barriers are high, profit potential is high, but firms face more risk because poorer-performing firms stay in and fight it out. When both entry and exit barriers are low, firms easily enter and leave the industry, and returns are stable but low. The worst case occurs when entry barriers are low and exit barriers are high: Here firms enter during good times but find it hard to leave during bad times. Threat of substitute products—A segment is unattractive when there are actual or potential substitutes for the product. Substitutes place a limit on prices and on profits. If technology advances or competition increases in these substitute industries, prices and profits are likely to fall. Threat of buyers' growing bargaining power—A segment is unattractive if buyers possess strong or growing bargaining power. Buyers' bargaining power grows when they become more concentrated or organized, when the product represents a significant fraction of their costs, when the product is undifferentiated, when buyers' switching costs are low, or when they can integrate upstream. To protect themselves, sellers might select buyers who have the least power to negotiate or switch suppliers. A better defense is developing superior offers that strong buyers cannot refuse. Threat of suppliers' growing bargaining power—A segment is unattractive if the company's suppliers are able to raise prices or reduce quantity supplied. Suppliers tend to be powerful when they are concentrated or organized, when they can integrate downstream, when there are few substitutes, when the supplied product is an important input, and when the costs of switching suppliers are high. The best defenses are to build win-win relationships with suppliers or use multiple supply sources.
What is diversification growth?
Diversification growth: makes sense when good opportunities exist outside the present businesses The industry is highly attractive and the company has the right mix of business strengths to succeed. The third major growth strategy is diversification growth. The big difference with an intensive growth by diversification is that the company decides to grow outside its core business. For example, from its origins as an animated film producer, The Walt Disney Company has moved into licensing characters for merchandised goods, publishing general interest fiction books under the Hyperion imprint, entering the broadcast industry with its own Disney Channel as well as ABC and ESPN, developing theme parks and vacation and resort properties, and offering cruise and commercial theatre experiences.
What marketing strategies can be adopted by brands in the "maturity" life cycle stage.
In maturity stage, brands can have several different strategies: Market Modification. Increase sales volume - by increasing usage rate (fostering usage more often Narta mini -> they develop new small sized products so you can use deo during the day (not only in the morning) - or increasing number of users (recruiting new consumers) Product modification: - quality improvement (improve your product, this is for example the strategy of Apple with their iMac) - launch new product with new features or new style (this is the strategy of Apple with their iphones) Marketing program modification: - modify non-product elements (price, distribution & communications) (you can decrease price, get sold in more stores or run a new communication campaign). A company might try to expand the market for its mature brand by working with the two factors that make up sales volume, number of brand users and usage rate per customer, as in Table 12.1, but competitors may match this strategy.
What are the effective segmentation criteria?
Measurable: Are the segmentation criteria measurable? You should be able to measure the size, the purchase power and the characteristics of the different segmentations. (blonde or brown hard to measure) Substantial: Make sur the segments are large and profitable enough (making a car according to the size of people is not a good idea because it is too restrictive) Accessible: segments can be effectively reached and served; via magazines, I can access these consumers effectively. (class, emails, Facebook,àstudents are easy reachable). You won't you the same pace for different consumers. Differentiable: segments are conceptually distinguishable and respond differently to different marketing mix elements. Differentiable: if married and single woman respond similarly to a new cosmetic, it is not relevant to seperate them into different segmentsActionable: it is possible to develop specific programs for them. Millenials -> app directed to them
What are the 3 Porter's generic strategies?
Michael Porter has proposed three generic strategies that provide a good starting point for strategic thinking: overall cost leadership, differentiation, and focus. - With overall cost leadership, firms work to achieve the lowest production and distribution costs so they can underprice competitors and win market share. - With differentiation, the business concentrates on achieving superior performance in an important customer benefit area valued by a large part of the market. - With focus, the business focuses on one or more narrow market segments. According to Porter, competing firms directing the same strategy to the same target market constitute a strategic group. The firm that carries out the strategy best will make the most profits.
How to choose specific POP's and POD's?
Michael Porter urged companies to build a sustainable competitive advantage. Competitive advantage is a company's ability to perform in one or more ways that competitors cannot or will not match. But few competitive advantages are inherently sustainable. At best, they may be leverageable. A leverageable advantage is one that a company can use as a springboard to new advantages, much as Microsoft has leveraged its operating system to Microsoft Office and then to networking applications. In general, a company that hopes to endure must be in the business of continuously inventing new advantages that can serve as the basis of points-of- difference. Any product or service benefit that is sufficiently desirable, deliverable, and differentiating can serve as a point-of-difference for a brand. The obvious, and often the most compelling, means of differentiation for consumers are benefits related to performance. For choosing specific benefits as POPs and PODs to position a brand, perceptual maps may be useful. Perceptual maps are visual representations of consumer perceptions and preferences. They provide quantitative pictures of market situations and the way consumers view different products, services, and brands along various dimensions. By overlaying consumer preferences with brand perceptions, marketers can reveal "holes" or "openings" that suggest unmet consumer needs and marketing opportunities. Many marketing experts believe a brand positioning should have both rational and emotional components. In other words, it should contain points-of-difference and points-of-parity that appeal to both the head and the heart. A person's emotional response to a brand and its marketing will depend on many factors. An increasingly important one is the brand's authenticity.
What is one common challenge in positioning?
One common challenge in positioning is that many of the benefits that make up points-of-parity and points-of-difference are negatively correlated. ConAgra must convince consumers that Healthy Choice frozen foods both taste good and are good for you. Unfortunately, consumers typically want to maximize both the negatively correlated attributes or benefits. Much of the art and science of marketing consists of dealing with trade-offs, and positioning is no different. The best approach clearly is to develop a product or service that performs well on both dimensions.
Define Points-of-difference and Points-of-Parity. What are the criteria and forms of each?
Points-of-difference (PODs) : Attributes/benefits that consumers strongly associate with a brand, positively evaluate, and believe they could not find to the same extent with a competitive brand Associations that make up points-of-difference can be based on virtually any type of attribute or benefit. Strong brands often have multiple points-of-difference. Three criteria determine whether a brand association can truly function as a point- of-difference: - Desirable to consumer. Consumers must see the brand association as personally relevant to them. - Deliverable by the company. The company must have the internal resources and commitment to feasibly and profitably create and maintain the brand association in the minds of consumers. The product design and marketing offering must support the desired association. - Differentiating from competitors. Finally, consumers must see the brand association as distinctive and superior to relevant competitors. Points-of-parity (POPs) : Attribute/benefitassociationsthatarenotnecessarilyuniquetothebrand but may in fact be shared with other brands Regardless of the source of perceived weaknesses, if, in the eyes of consumers, a brand can "break even" in those areas where it appears to be at a disadvantage and achieve advantages in other areas, it should be in a strong—and perhaps unbeatable—competitive position. POP associations come in three basic forms: - Category points-of-parity are attributes or benefits that consumers view as essential to a legitimate and credible offering within a certain product or service category. In other words, they represent necessary—but not sufficient— conditions for brand choice. - Correlational points-of-parity are potentially negative associations that arise from the existence of positive associations for the brand. - Competitive points-of-parity are associations designed to overcome perceived weaknesses of the brand in light of competitors' points-of-difference.
What does "positioning" means? What is the purpose of brand positioning?
Positioning : The act of designing a company's offering and image to occupy a distinctive place in the minds of the target market• Value proposition The goal is to locate the brand in the minds of consumers to maximize the potential benefit to the firm. A good brand positioning helps guide marketing strategy by clarifying the brand's essence, identifying the goals it helps the consumer achieve, and showing how it does so in a unique way. One result of positioning is the successful creation of a customer-focused value proposition, a cogent reason why the target market should buy a product or service. As introduced in Chapter 1, a value proposition captures the way a product or service's key benefits provide value to customers by satisfying their needs. • Gives a « reason for being » to your brand in comparison with others. Identify the benefits that will differentiate a brand versus other brands
Which 3 parts divide company's competitiveness?
The company competitiveness analysis is divided in three parts: Differentiation : Is my company differentiated enough from other companies? Is my company superior on product quality, service quality, brand image,.... ? Cost advantage: Does my company have a cost advantage above other companies? Do I have economies of scale (unit cost lower)? Can I benefit from other production lines/raw materials/R&D in my company? Do I have an advantage with my marketing expenses (for example, if I would launch a TV by being Apple, I would have an advantage above competitors on marketing expenses because brand awaraness is high and every time I communicate on my brand, it would be beneficial for my new TV as well). Commercial advantage: Does my company have a commercial advantage? For example, if a company has already big market share before entering a market, they will benefit from this advantage (they are already well established in the market). Similarly, a company could have a distribution and sales force advantage. Let's go back to our Apple example (if Apple would launch a TV. Apple would have a significant commercial advantage because they already have a sales force and well-established distribution channels.
Evidently, the company wants to grow much faster than its current businesses will permit. How can it fill the strategic planning gap? Why is there a strategic planning gap?
The first option is to identify opportunities for growth within current businesses (intensive opportunities). The second is to identify opportunities to build or acquire businesses related to current businesses (integrative opportunities). The third is to identify opportunities to add attractive unrelated businesses (diversification opportunities). Assessing growth opportunities includes planning new businesses, downsizing, and terminating older businesses. If there is a gap between future desired sales and projected sales, corporate management will need to develop or acquire new businesses to fill it. The figure illustrates this strategic-planning gap for a hypothetical manufacturer. The lowest curve projects expected sales from the current business portfolio over the next five years. The highest describes desired sales over the same period.
How can we monitor the external and internal marketing environment?
The overall evaluation of a company's strengths, weaknesses, opportunities, and threats is called SWOT analysis. It's a way of monitoring the external and internal marketing environment. External analysis should be the same for all competitors on the market whereas internal analysis is specific to every company External environment There are three main sources of market opportunities. -Marketing opportunity: an area of buyer need and interest that a company has a high probability of profitably satisfying. to offer something that is in short supply. This requires little marketing talent, as the need is fairly obvious. - Is it possible to locate the target market(s) and reach them with cost- effective media and trade channels? to supply an existing product or service in a new or superior way. How? The problem detection method asks consumers for their suggestions, the ideal method has them imagine an ideal version of the product or service, and the consumption chain method asks them to chart their steps in acquiring, using, and disposing of a product. - Environmental threat: challenge posed by an unfavorable trend or development that, in the absence of defensive marketing action, would lead to lower sales or profit This last method can often lead to a totally new product or service, which is the third main source of market opportunities. To deal with environmental threats, the company needs contingency plans. Internal strengths To evaluate opportunities, companies can use market opportunity analysis (MOA) to ask questions like those posed on this slide. - Can we articulate the benefits convincingly to a defined target market(s)? - Does our company possess or have access to the critical capabilities and resources we need to deliver the customer benefits? - Can we deliver the benefits better than any actual or potential competitors? - Will the financial rate of return meet or exceed our required threshold for investment?
Explain product lifecycle model (market force).
The product lifecycle refers to the total sales of the entire market (all brands active in a particular product-market). For example, we could represent the product lifecycle of all smartphones. Even though we are attaining the maturity stage, some brands could be growing (e.g. Apple) whereas others could decrease in market share (e.g. Nokia). Be careful -> product lifecycle ≠ brand lifecycle. Most product life cycles are portrayed as bell-shaped curves, typically divided into four stages: introduction, growth, maturity, and decline Introduction—A period of slow sales growth as the product is introduced in the market. Profits are nonexistent because of the heavy expenses of product introduction. Growth—A period of rapid market acceptance and substantial profit improvement. Shake-out: things will get more difficult, weaker competitors will leave Maturity—A slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits stabilize or decline because of increased competition. Decline—Sales show a downward drift and profits erode.
What are the different types of competitor?
There are three different types of competitors: Direct competition: between same product-market products addressing the same consumer segment Indirect competition: same product-market but addressing two different segments. The products satisfy the same need with the same technology (cfr. Macro segmentation) but address a different segment (MICRO segmentation) Generic competition: products satisfy the same need for the segments, but with two different product markets (technology).
What are the different targeting strategies?
Undifferentiated strategy : involves marketing to the entire market the same way. Mass marketing effectively ignores segmentation and instead generates a single offer and marketing mix for everyone. The market is treated as a homogeneous aggregate. Mass marketing aims to reach the largest audience possible, and exposure to the product is maximized. In theory, this would directly correlate with a larger number of sales or buy-in to the product. Differentiated strategy : A differentiated marketing strategy is one in which the company decides to provide separate offerings to each different market segment that it targets. It is also called multisegment marketing. Each segment is targeted in a particular way, as the company provides unique benefits to different segments. The goal is to help the company increase sales and market share across each segment it targets. Concentrated strategy: is a strategy that targets only one or a few very defined and specific segments of the consumer population. The goal is to achieve high penetration among the narrowly defined target segments.
How could companies search for strategic growth opportunities in terms of current and new products and markets?
With an intensive growth strategy, companies search for strategic growth opportunities in terms of current and new products and markets. The company first considers whether it could gain more market share with its current products in their current markets, using a market-penetration strategy. Next it considers whether it can find or develop new markets for its current products, in a market-development strategy. Then it considers whether it can develop new products for its current markets with a product-development strategy. Later the firm will also review opportunities to develop new products for new markets in a diversification strategy. - Market penetration: gain market share in existing markets. In this ad, Gilette works on creating a positive attitude towards its brand and increase brand awareness. They want to convince consumers of their target market to use their brand. - Market development: current products in new markets. For example, if Gilette (American brand) launches their existing products in India - Product development: new products in current product-market. For example, Gilette launches new types of razors, exactly the same target market but convincing them to buy new products. - Diversification: new products in new product markets. For example, Gilette launches shaving gel (still in the same product category)
What are the market-challenger strategies?
• Defining the strategic objective and opponent(s) A market challenger can attack: -The market leader -Underfunded firms its own size -Small local and regional firms -The status quo A market challenger must first define its strategic objective, which is usually to increase market share. It then must decide whom to attack. • Choosing a general attack strategy Given clear opponents and objectives, what attack options are available? As the figure above shows, we can distinguish five: frontal, flank, encirclement, bypass, and guerilla attacks. In a pure frontal attack, the attacker matches its opponent's product, advertising, price, and distribution. The principle of force says the side with the greater resources will win. A flanking strategy is another name for identifying shifts that cause gaps to develop in the market, then rushing to fill the gaps. Flanking is particularly attractive to a challenger with fewer resources and can be more likely to succeed than frontal attacks. Encirclement attempts to capture a wide slice of territory by launching a grand offensive on several fronts. It makes sense when the challenger commands superior resources. Bypassing the enemy altogether to attack easier markets instead offers three lines of approach: diversifying into unrelated products, diversifying into new geographical markets, and leapfrogging into new technologies. Guerrilla attacks consist of small, intermittent attacks, conventional and unconventional, including selective price cuts, intense promotional blitzes, and occasional legal action, to harass the opponent and eventually secure permanent footholds. A guerrilla campaign can be expensive, though less so than a frontal, encirclement, or flank attack, but it typically must be backed by a stronger attack to beat the opponent.
