Sunday, 7 October 2012
Marketing Process
In
this section of the blog, how marketing strategy is important for promotion of
a product and how the essential elements of marketing strategy are integrated
with elements in the overall marketing program of an organization. We will also
focus on different tools used for promotion of the products to the customers as
well as the channel partners. Marketing strategy is also a critical ingredient
in developing an integrated marketing communication plan.
The
framework shown below states a step-by-step approach in developing marketing
process and thus the plan for promotion which is an input for integrated
communication strategy.
The process
of marketing begins with an in depth analysis of the market, opportunities
available and identification of potential target market for the products of the
firm.
An
opportunity can be defined as an unsatisfied customer need and thus generating
a favorable demand which can fetch company significant amount of money provided
the company can compete effectively in the market for satisfying the unmet
need.
Having
analyzed the current market scenario and identified the opportunities available,
these opportunities can be tapped using different strategies as explained by
Ansoff’s matrix (which is shown in the image below). A company can enter into a new market with a
new product or an existing product or it can do the same for entering an
existing market.
Opportunity
analysis is followed by a competitor analysis. Any marketer must carefully
analyze the competition that his product can face in the marketplace from other
products (product substitutes) or even other products from the same
company/brand (Direct brand competition). Such a scenario is always beneficial for the
consumer since it offers the consumer more choices and thus increases his
bargaining power.
One of the
classic examples of direct brand competition was seen when Lay’s introduced Baked
Lay’s low-fat chips, the product cannibalized sales of the regular Lay’s potato
chip brand.
Amidst the
contemporary business environment which is characterized by very high
competition and reducing loyalty among the consumers, it has become crucial for
the companies to have a competitive advantage. A competitive advantage is something the firm
is best at and gets it an edge over other players in the market. Superior quality
products (which may command a premium price), superior customer service, lowest
product prices (owing to lowest production
costs and economies of scale), or
dominant position in channels of distribution are some of the forms of
competitive advantage of a firm. Companies, these days, are spending enough
money to highlight their competitive advantage and thus differentiate their
products/brands for those of the competitor’s.
Southwest Airlines’ print ad
emphasizing on their fares which were lowest in US aviation industry is an
example of use of explicitly bringing out your competitive advantage through
advertisements.
Also,
it is very important for a company to anticipate and monitor the actions of a
competitor. One has to be very proactive in tackling the attacks from its
competitors otherwise you are bound to lose the customers to other players. Particularly,
a market leader in a product category is often subjected to these kinds of
competitive attacks from other players in the market and thus must defend its
position by being proactive. Competitors might resort to different actions such
as
- Cutting prices
- Increasing expenditure on sales and trade promotion
- Develop new products/brands
- Comparative advertising
Some
of the marketing battles fought through competitive advertising lately are:
rivalry between Samsung (Galaxy SIII) and Apple (iPhone 5), P&G (Tide) and HUL
(Rin), etc. Besides, the war between Coke and Pepsi through comparative advertisements
has been entertaining the customers for a quite a long time now.
“The next big thing is already here” campaign by Samsung
Rin vs Tide: Comparative Ad
“The next big thing is already here” campaign by Samsung
Rin vs Tide: Comparative Ad
Marketers
rarely go after the entire market with one product, brand, or service offering
because it is hardly to meet the needs of all the customers with one
standardized product. Rather, a number of different strategies are made, the market
is split into segments and one or more of these segments are targeted.
The
process is known as target marketing and it involves the following
steps:
- Identifying markets with unfulfilled needs
- Segmenting the market
- Targeting specific segments
- Positioning
According
to Eric N. Berkowitz, Roger A Kerin, and William Rudelius, market segmentation is
“dividing up a market into distinct groups that (1) have common needs and (2)
will respond similarly to a marketing action”.
Segmentation of the
market can be achieved on different bases. A company may use one of these bases
or a combination of approaches. Some of the bases for segmentation are as
follows:
- Geographic Segmentation
- Demographic Segmentation (on the basis of age, sex, family size, education, income, and social class)
- Psychographic Segmentation (on the basis of personality and/or lifestyles)
- Behavioristic Segmentation (on the basis of usage, loyalties, or buying responses to a product)
- Benefit Segmentation (based on specific benefits of the products
The next phase in the
target marketing process involves two steps:
- Determining how many segments to enter
- Determining which segments offer the most potential.
The second involves
determining the most attractive segment. The firm should evaluate the segment
for its sales potential, the competition, the opportunities for grow, and its
own ability to compete.
The
next step in developing the integrated marketing plan is positioning.
Positioning is the process by
which companies/marketers try to build an identity/image for its
product, brand or organization in the minds of their potential target
customers. According to Belch, positioning can be defined as
“the art and science of fitting the product or service to one or more segments
of the broad market in such a way as to set it meaningfully apart from
competition.”
For
example, Coca Cola with its “It’s the real thing” campaign tried to build an
image of the only real soft drink with an implicit indication that all the
other brands were only imitation. It was one of the most effective promotional
campaigns ever.
In order to create a
position for a product or service, Al Ries and
Jack Trout suggested that managers must ask themselves six basic
questions:
 |
| Print Ad: Coca Cola - The Real Thing |
- What position, if any, do we already have in the prospect’s mind? (This information must come from the marketplace (customer’s perceptions), not the managers’ perceptions)
- What position do we want to own?
- What companies must be outgunned if we are to establish that position?
- Do we have enough marketing money to occupy and hold the position?
- Do we have the guts to stick with one consistent positioning strategy?
- Does our creative approach match our positioning strategy?
- Positioning strategies might be based on product attributes and benefits, price, quality, use or application, product class, product user, competitor, cultural symbols, etc.
Example: Positioning by Product attributes
and benefits
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