Marketing Strategy exam 2

c9 Share-Growth Strategies for Followers guerrilla attack strategy

surprise raids against its more established comp when all major segments are covered sales promotion efforts (e.g., coupon drops and merchandising deals), local advertising blitzes, and even legal action Capture a modest share of repeat/replacement purchases in several market segments or territories; attract a share of new customers in a number of existing segments.

c9 Share-Growth Strategies for Followers Frontal attack strategy

tackle a major competitor head-on. an approach is most likely to succeed when most existing customers do not have strong brand preferences or loyalties best way- differentiate its product or associated services in ways that better meet the needs and preferences of many customers in the mass market Capture substantial repeat/replacement purchases from target competitor's current customers; attract new customers among later adopters by offering lower price or more attractive features.

c9 Share-Growth Strategies for Followers encirclement strategy

targeting several smaller untapped or underdeveloped segments in the market simultaneously Attract a substantial share of new customers in a variety of smaller, specialized segments where customers' needs or preferences differ from those of early adopters in the mass market. schweppes unique flavors, not cola like coke

Buying situation- part of behavioral segmentation

three distinct types of situation straight rebuy- a recurring situation handles on a routine basis modified rebuy- occurs when some element, such as price or delivery schedule, has changed in a client- supplier relationship new buying situation- likely to require the customer gathering considerable info and evaluating alternative suppliers.

c7 Levers Marketers can use to establish brand positioning complex physically based attributes

used by consumers to evaluate competitive offerings speed of computer system, roominess of a car, a product or service being user friendly

C6 Segmentation approaches Geographic segmentation

used in both consumer and organizational markets and is particularly important in retailing and many series businesses, where customers are unwilling to travel very far to obtain the goods or services trade area: one way to segment retail markets is by distance or driving time from a particular location. The area within such a geographically defined region is called a trade area. ex. more pickups sold in south and more vans in the north east.

Innovative segmentation

uses combination of different attribute to precisely target an attractive segment.

c7 brand equity

value created by establishing customer preference for one's brands. Maintaining brand value requires brand reinforcement, brand revitalization

c7 positioning grid or perceptual map

visual representation of the positions of various products or brands in the competitive set in terms of two determinant attributes

C6 Market Segmentation

"The process by which a a market is divided into distinct subsets of customers with similar needs and characteristics that lead to them to respond in similar ways to a particular product offering and marketing program." Population growth has slowed and more product markets are maturing. Social and economic forces have produced customers with more varied and sophisticated needs. Increasing importance toward microsegmentation. Implementing sharply focused marketing programs. Decisions based on - who the customers are, where they are, how they behave.

c7 perceptual positioning analysis

-consumer orientation -perceptual attributes -perceptual measures -need for marketing research -perceptual brand positions and positioning intensities -limited # of dimensions -represents impact of product specs and communication -R&D implications need to be interpreted

c7 physical positioning analysis from chart

-technical orientation -physical characteristics -objective measures -data readily available -physical brand properties -large number of dimensions -represents impact of product specs -direct r&d implications

How are markets best defined?

1. identify a homogenous segment that differs from other segments- divide based on wants and needs and likely responses to the 4 p's 2. specify criteria that define the segment 3. determine segment size and potential

c7 steps in the positioning process for goods and services

1. identify relevant set of competitive products serving a target market 2.identify determinant attributes that define the "product space" in which positions of current offerings are located. 3. collect data about the customers perceptions for brands in the competitive set 4. determine and analyze the current positions of brands in the competitive set and intensity thereof (positioning grid and value curve) 5. determine customers most preferred combination of determinant attributes (via surveying and conjoint analysis) 6. examine the fit between preferences of market segments and current position of brands - concludes analysis portion and crystallizes decision about the positioning the brand should hold 7. Write positioning statement or value proposition to guide development and implantation of marketing strategy- should reflect current and future attractiveness of target market

c8 follower strategy

Ability to take advantage of pioneer's positioning mistakes• Ability to take advantage of pioneer's product mistakes• Ability to take advantage of pioneer's marketing mistakes• Ability to take advantage of latest technology• Ability to take advantage of pioneer's limited resources

C6 Segmentation approaches Behavioral segmentation

Consumer needs- often expressed in benefits sought from a particular product or service. In the end, the product that provides the best bundle of benefits to customers needs is most likely to be purchased. Choice criteria, how valuable each characteristic is to the consumer. product usage- small proportion of potential customers makes a high percentage of all purchasers, key accounts or heavy or large users purchase influence- joint husband wife decisions, decisions made by family members together, childrens products, prescription drugs etch lifestyle- interests =, opinions, psychographics, what they do or believe organizational behavior attributes- purchasing structure is the degree to which the purchasing activity is centralized. In a centralized structure, buyer is likely to consider all transactions with a given supplier on a companywide or global basis, to emphasize cost savings and minimize risk. In decentralized sitch, the buyer is apt to be more sensitive to the users need, to emphasize product quality, and fast delivery. ex. gatorade developing from a target market of athletes looking to replenish water and salt

c8 pioneer strategy

It is assumed competitive advantages inherent in being the first to enter a new product-market can be sustained through the growth stage and into the maturity stage of the product life cycle, resulting in a strong share position and substantial returns. potential advantages: 1. First choice of market segments and positions- difficult for followers to convince existing customers that their new brands are superior to the older and more familiar pioneer and to differentiate offerings 2. The pioneer defines the rules of the game- product quality, price, distribution, warranties, postsale service, and promotional appeals and budgets set standards that subsequent competitors must meet or beat 3. Distribution advantages-Distributors are often reluctant to take on second or third brands 4. Economies of scale and experience.-being first means pioneer can gain accumulated volume and experience and thereby lower per unit costs at a faster rate than followers. cost advantages protect its early lead against followers. One strategy is to lower price, which can discourage followers from entering the market because it raises the volume necessary for them to break even. Or the pioneer might invest its savings in additional marketing efforts to expand its penetration of the market, such as heavier advertising, a larger salesforce, or continuing product improvements or line extensions. 5. High switching costs for early adopters.- customers who are early to adopt pioneers new product may be reluctant to change suppliers when competitive products appear. 6. Possibility of positive network effects. if established before competing technologies, established 7.possibility of preempting scarce resources and suppliers-Apple was able to absorb more than half the entire production of Toshiba's innovative 1.8 inch hard disk a crucial comment of apples iPod

c6- the matrix

Left bottom up- market attractiveness. low 0-3 moderate 4-7 high 8-10 bottom left to right company's competitive position weak 0-3 moderate 4-7 strong 8-10

C6 1. A Five-Step process to construct a Market Attractiveness/Competitive Position Matrix 1) Choose criteria to measure market attractiveness and competitive position.

Managers can assess both dimensions on the basis of information obtained from analyses of the environment, industry and competitive situation, market potential estimates, and customer needs assessing the attractiveness of markets or market segments involves determining the market's size and growth rate and assessing various trends— demographic, sociocultural, economic, political/ legal, technological, and natural—that influence demand in that market. determining whether to enter the market, based on the degree to which unmet customer needs can be identified competitive position factors- the degree to which the firm's proposed product will be sufficiently differentiated from its competitors. decision makers need to know whether their firm has or will be able to acquire the resources it will take—human, financial, and otherwise—to effectively compete in the new segment

C6 1. A Five-Step process to construct a Market Attractiveness/Competitive Position Matrix 5) Evaluate implications of possible future changes for business strategies and resource requirements.

Managers should consider a market segment to be a desirable target only if it is strongly positive on at least one of the two dimensions of market attractiveness and potential competitive position and at least moderately positive on the other. However, a business may decide to enter a market that currently falls into one of the middle cells under these conditions: (1) managers believe that the market's attractiveness or their competitive strength is likely to im-prove over the next few years; (2) they see such markets as stepping-stones to entering larger, more attractive markets in the future; or (3) shared costs or synergies are present, thereby benefiting another entry.

C6 Target Marketing

Requires evaluating the relative attractiveness of various segments in terms of market potential, growth rate, competitive intensity, and other factors, along with the firm's mission and capabilities to deliver what each segment wants, in order to choose which segments it will serve.

c9 Growth-market strategies for market leaders market expansion strategy

More aggressive and proactive version of the flanker strategy leader defends its relative market share by expanding into a number of market segments. This strategy's primary objective is to capture a large share of new cus-tomer groups who may prefer something different from the firm's initial offering, protect-ing the firm from future competitive threats from a number of directions. The most obvious way a leader can implement market expansion is to develop line extensions, new brands, or even alternative product forms utilizing similar technologies to appeal to multiple market segments. Increase ability to attract new customers by developing new product offerings or line extensions aimed at a variety of new applications and user segments; improve ability to retain current customers as market fragments.

c9 Growth-market strategies for market leaders Flanker strategy

One shortcoming of a fortress strategy is that a challenger might simply choose to bypass the leader's fortress and try to capture territory where the leader has not yet established a strong presence To defend against an attack directed at a weakness in its current offering (its exposed flank), a leader might develop a second brand (a flanker or fighting brand) to compete directly against the challenger's offering. Protect against loss of specific segments of current customers by developing a second entry that covers a weakness in original offering; improve ability to attract new customers with specific needs or purchase criteria different from those of early adopters.

c7 value proposition

Similar to positioning statement, states unique benefits of the product reflects the unique selling proposition (USP) of the product Target market:upscale American families benefits offered: safety price range : 20% premium over similar cars

c8 marketing mix in the introductory stage

Skimming:Designed to obtain as much margin per unit as possible- appropriate in niche markets or where consumers are insensitive to price •Penetration pricing:Enables the firm to strive for quick market development and lowers costs, makes sense when there is a steep experience curve •Promotion:Expenditures involving advertising and salesforce are a high percentage of sales for a mass-market, small-value product, especially for mass market

c9 Growth-market strategies for market leaders Contraction or strategic withdrawal strategy

The firm may then have to reduce or abandon its efforts in some segments to focus on areas where it enjoys the greatest relative advantages or that have the greatest potential for future growth. increase ability to attract new customers in selected high-growth segments by focusing offerings and resources on those segments; withdraw from smaller or slower-growing segments to conserve resources.

c9 Growth-market strategies for market leaders Fortress or position defense strategy

The most basic defensive strategy is to continually strengthen a strongly held current position—to build an impregnable fortress capable of repelling attacks by current or future competitors. Increase satisfaction, loyalty, and repeat purchase among current customers by building on existing strengths; appeal to late adopters with same attributes and benefits offered to early adopters.

C6 1. A Five-Step process to construct a Market Attractiveness/Competitive Position Matrix 4) Project the future position of each market.

The starting point for this assessment is to consider possible shifts in customer needs and behavior, the entry or exit of competitors, and changes in their strategies- next three to five years if not longer. Managers must also address several broader issues, such as possible changes in product or process technology, shifts in the economic climate, the impact of social or political trends, and shifts in the bargaining power or vertical integra-tion of customers. once they have determine any changes likely to occur in market attractiveness, managers must next determine how the business's competitive position in the market is likely to change, assuming that it responds effectively to projected environmental changes but the firm does not undertake any initiatives requiring a change in basic strategy. ex-pected changes in both market attractiveness and competitive position can then be plotted on the matrix in the form of a vector to reflect the direction and magnitude of the expected changes

C6 1. A Five-Step process to construct a Market Attractiveness/Competitive Position Matrix 3) Assess the current position of each potential target market on each factor.

This step requires that evidence—typically both qualitative and quantitative data—be col-lected to objectively assess each of the criteria identified in Step 1. It is especially important to undertake a detailed analysis of key competitors, especially with regard to their objectives, strategy, resources, and mar-keting programs. Similarly, compelling evidence that a proposed entry into a new segment will satisfy some previously unmet needs, and do so in a way that can bring about sustainable competitive advantage, is called for. once these assessments have been made, the weighted results can be plotted on a market attractiveness/competitive position matrix

c7 differentiation

a creative undertaking whereby an existing brand in an overcrowded marketplace of similar brands can be given a distinctive position in the minds of targeted prospects preference of one product, good or service, over another reasons why consumers choose what they buy (what they choose is better or cheaper) important in business strategies and marketing brands seek to create both physical and perceptual differences, through the 4 p's package design example

C6 1. A Five-Step process to construct a Market Attractiveness/Competitive Position Matrix 2) Weight market attractiveness and competitive position factors to reflect their relative importance.

a numerical weight is assigned to each factor to indicate its relative importance in the overall assessment both the scores and the weights placed on different factors may differ in emerging versus developed markets, for example, and the factors and their weights may differ across markets where a category is relatively mature versus na-scent.

c7 physical positioning

assessing product offering based on a set. of objective physical characteristics limitations: does not provide a complete picture of relative positions0 customers attitudes are often based on social and psychological attributes , perceptions of aesthetic appeal or status image more impactful customers may perceive some of the brand characteristics differently from how the marketer intended

c9 Share-Growth Strategies for Followers leapfrog strategy

attracting repeat or replacement purchases from competitor's current customers when it can offer a product that is attractively differ-entiated from the competitor's offerings. advanced tech or better design Induce current customers in mass market to replace their current brand with superior new offering; attract new customers by providing enhanced benefits.

c8 Alternative marketing programs for Pioneers mass-market penetration

capture and maintain a commanding share of the total market for the new product critical marketing task is to convince as many potential customers as possible to adopt the pioneer's product quickly to drive down unit costs and build a large contingent of loyal customers before competitors enter the market. most successful then entry barriers prohibit or delay comp

C6 Segmentation approaches Demographic segmentation

common attributes: Age, sex, income, occupation, education, race and ethnic origin , household life cycle (young, single, newly married, no children etc.) Industrial market segmentation: macrosegmentation microsegmentation

c7 value curve

comprises more than just two dimensions that can be generated

Market attractiveness factors

customer needs and behavior- unmet needs? market or market segment size and growth rate (market potential in units, revenue, number of prospective customers, growth rate in units, rev, pc, might the target segment constitute a platform for later expansion into related segments as a whole? macro trends- favorable, on balance? (demographic, sociocultural, economic, political, tech, natural)

c7 Levers Marketers can use to establish brand positioning Simple physically based attributes

directly related to a single physical dimension such as quality, power, or size. two cars with with an estimated gasoline mileage of 23.2 and 25.8 miles per gallon may be perceived as having similar gasoline consumption.

C6 Brand Positioning

entails designing product offerings and marketing programs that can establish an enduring competitive advantage in the target market by creating a unique brand image, or position, in the customer's mind.

c7 common determinant attributes for brand positioning pg 170

features- the quietest dishwasher benefits- Volvos emphasis on safety parentage - include who makes it and prior products, at fidelity you're not just buying s stock, you're buying a better way to manage it manufacturing process- taking time with high end watches endorsements- expert or emulation- so many dentists love this toothpaste or Kobe Bryant wears nike shoes ingredients- organic cotton comparison - pedigree is better than IAMS pro environment - positioning seeks to portray company as a good citizen price/quality- Walmart as lowest price seller of household products

c8 Stages in a Product Life Cycle shakeout or competitive turbulance

growth rate decreases resulting in strong price competition, forcing many firms to exit industry or sell out characteristics: leveling off growth rate in constant dollars limited technical change in product design few to many segments decreasing competitors low profitability marketing mix: entering into more direct price competition, look enhance distribution system, promotion costs increase

c8 Alternative marketing programs for Pioneers niche penetration

help the smaller pioneer gain the biggest bang for its limited bucks and avoid direct confrontations with bigger competitors most appropriate when new market is expected to grow quickly and there are a number of different benefit or applications segments to appeal to. can become a very attractive candidate for acquisition by larger competitors, like Insta and fb

c7 positioning statement

identifies the target market, states unique benefits of the product, not just features reflects the unique selling proposition (USP) of the product "for upscale American families, Volvo is the automobile that offers the utmost in safety"

c7 Levers Marketers can use to establish brand positioning price

implies high or low quality discount airlines like Southwest careful to ensure the low priced image they seek does not imply a low level of safety too.

c7 perceptual positioning

includes product presentation, past experiences and opinion of others. This works better than physical a lot of the time. for example, I don't know the physical attributes of cleaning sprays I buy for our apartment. but I like aesthetic consumers prefer what a product does rather than what it is positioning the brad around lifestyles

c7 Levers Marketers can use to establish brand positioning essentially abstract attributes

influenced by physical characteristics not related in a direct way sexiness of a perfume, heritage of a fine cognac, prestige of a car. highly subjective and difficult to relate to physical characteristics

c8 Strategic implications of the Product Life Cycle

introduction: For both innovators and followers, accelerate overall market growth and product acceptance through awareness, trial, and product availability growth: increase competitive position shakeout: improve/solidify competitive position mature: maintain position

C6 Segmentation approaches Geodemographic segmentation

involves demographic and geographic factors shitty example of rich people in cities and poor people in rural areas or "urban slums." This doesn't feel like a politically correct statement lol. But in general like young, rich, educated people in cities.

c9 Growth-market strategies for market leaders confrontation strategy

more reactive- The leader usually decides to meet or beat the attractive features of a competitor's offering—by making product im-provements, increasing promotional efforts, or lowering prices—only after the challeng-er's success has become obvious. Protect against loss of share among current customers by meeting or beating a head-to-head competitive offering; improve ability to win new customers who might other-wise be attracted to competitor's offering.

c8 Stages in a Product Life Cycle mature

net adoption rate hold steady aka when adopters approximate dropouts characteristics: insignificant growth rate in constant dollars limited technical change in product design few to many segments limited competitors high profitability for market share leaders marketing mix- everything becomes more stable

c8 Categories of new products defined according to their degree of newness to the company and customers in the target market

new-to-the world products- true innovations, create entirely new market (10 percent) New product lines —A product category that is new for the company introducing it, but not new to customers in the target market because of the existence of one or more com-petitive brands (20 percent). Additions to existing product lines —New items that supplement a firm's established product line. These items may be moderately new to both the firm and the customers in its established product-markets. They also may serve to expand the market segments appealed to by the line (26 percent). Improvements in or revisions of existing products —technological new generation of products, similar to products they replace in minds of customers (26 percent) repositioning- existing products that are targeted at new applications and new market segments (7 percent) cost reductions-product modifications providing similar performance at lower cost (11 percent)

Market attractiveness/competitive strength position matrix

not all segments represent equally attractive opportunities for the firm. matrix is a useful framework managers or entrepreneurs can use to compare the future potential of different segments using the same set of criteria and then prioritize them in order to decide which segments to target and how resources and marketing efforts should be allocated.

Competitive position advantage

opportunity for competitive advantage (differentiate? perform against critical success factors?) firm and competitor capabilities and resources (management strength, financial and functional resources, brand image, relative market share.) attractiveness of the industry in which we would compete (porters five forces)

c8 Stages in a Product Life Cycle introductory

product lacks easy availability, a new product's purchase is limited bc many members of the target market are unaware of its existence stage characteristics: moderate growth rate in constant dollars high technical change in product design few segments few competitors negative profitability

c7 brand positioning

refers to both the place a brand occupies in customers' minds relative to their needs and competing brands and to the marketer's decision making intended to create such a position. customer's perception of a brand or a product relative to their needs comprises both competitive and customer need considerations

c8 Stages in a Product Life Cycle growth

sales increase at a progressively faster rate, repeat sales become increasingly more important than first time sales characteristics: high growth rate in constant dollars moderate technical change in product design few to many segments many competitors high profitability marketing mix: product impovements,increases differentiation in features, product line expansions, prices tend to decline, promotion costs become more concerned with building demand for a companys brand rather than product

c8 Stages in a Product Life Cycle decline

sales rate declines characteristics: negative market growth rate in constant dollars limited technical change in product design few segments few competitors low profitability marketing mix: decreasing promotion expenditures, stable prices

c8 Alternative marketing programs for Pioneers skimming: early withdrawal

setting a high price and engaging in only limited advertising and promotion to: -maximize per unit profits -recover the products development costs as quickly as possible plan next generation of more advanced tech, comp enters, they cannibalize their own product

c9 Share-Growth Strategies for Followers flank attack strategy

when market can be broken into two or more segments, when the leader and/or other major competitors hold a strong position in the pri-mary segment, and when no existing brand fully satisfies the needs of customers in at least one other segmen concentrate on one large untapped segment Attract substantial share of new customers in one or more major segments where customers' needs are different from those of early adopters in the mass market.