Marketing Strategies and Differentiation

Strategic Planning and Strategic Marketing

Strategic Planning

• Process: Organization + KPI’s + Goals/Objectives

• Where to compete = arena (knowing the industry, the competitors…)

• A process that maintains strategic fit between: firm’s goals, its capabilities, and changing market opportunities

Why is it so important?

🙂 : Every time you buy something, you have an experience with the Product/Service, the client needs to be happy with the brand

How does marketing come into the picture?

If they don’t have customers, the brand doesn’t exist. Market = customers

• Product vs Market - oriented business definitions

Benchmarking

Comparing the firm’s products and processes to those of competitors or leading firms in other industries to identifiy best practices and find ways to improve quality and performance.

Benchmarking: Comparison of the firm’s and analyzing where your brand competes with other’s product/service.

• The compettion of the firm, they sell similar products. The comparison is not only with the direct competition but also with the best in the market

• Determine objectives and relative importance of:

  • Current profitability

  • Market share growth

  • Cash flow

  • Technological leadership

  • Service leadership

Assessing competitors

Determine objectives and relative importance of:

• Current profitability

• Market share growth

• Cash flow

• Technological leadership

• Service leadership

• Among other

Competitor’s Strategy

Paying attention to what the competitors are doing

• Firm’s resemblance (is it similar to me and how?), then differentiate

• Strategic group

A firm must identify:

Assessing competitors’ strengths + weaknesses

Estimating competitors’ reactions

• What will our competitors do?

• Develop a “competitor mentality” to anticipate moves

Selecting Competitors to attack and avoid

• Which whom is better to compete?

• Weak competitors

• Strong competitors

• Selecting competitors to attack and avoid/assess their strengths + weaknesses

• Customer value analysis

Customer Value Analysis

1. Determe the benefits and attributes of target customer (what they really value?)

2. What is the importance of such benefits & attributes (rating grade/level). (How much you rate the product based on the benefits)

3. Assess the firm’s performance versus competing offers in those benefits & attributes (Knowing where you are standing)

Eventually everything competes against everything.

Competing Partners

• Good or bad competitors?

• Companies benefit from competitors

• Share product development

• Legitimize new technologies (like the USB-C cable)

• Increase total demand

• Good = Play by the industry rules

• Bad = the opposite; play by their own rules

Finding an Uncontested Market

• Create different P/S with no direct competition = blue ocean

Competitiveness Matrices

Strategic planning is defined as the administrative process to create and maintain a fit between the objectives and resources of the organization and the changing opportunities of the market.

Strategic planning is the foundation of all marketing strategies and decisions. These decisions affect your resource allocation and, ultimately, your long-term financial success.

There are several tools that allow companies to manage the strategic direction of their business. 

Ansoff Strategic Opportunity Matrix

It is a way of formulating alternatives by matching products to markets. Companies can explore four options.

• Market Penetration: When both the Market and the Product are current, that is, they already exist, the company applies the Market Penetration alternative, seeking to increase market share with existing customers.

  That the same customers buy more of the same product.

• Market Development: When the Product is current, it already exists, but the Market is new, the company seeks to attract new customers for that product.

  That other customers buy the same product.

• Product Development: When the Market is current, it already exists, but the Product is new.

  That the same customers buy the new product.

• Diversification: When both the Market and the Product are new.

  Let new customers buy the new product.

Portfolio Matrix or BGC (Boston Consulting Group

Companies must find a balance between their products that allows them to generate the desired global growth and profits, but with an acceptable level of risk.

Some products generate huge amounts of money and others need it to fuel their growth.

The challenge is to find the balance for the best possible long-term performance.

Each product is classified in this matrix based on its growth and market share, present or forecast.

• Star: It is a rapidly growing market leader. It generally produces large profits, although it takes a lot of money to finance its rapid growth.

  The best practice is to protect existing market share, reinvest income to perfect the product, improve distribution, and increase promotion and production efficiency.

• Money Cow: You make more money than you need to maintain your market share.

  It is advisable to maintain market dominance as a leader and apply technological improvements to the product.

• Unknown: It has fast growth, but with low profit margins. It has a low market share in a high growth industry. The unknowns need a lot of money, if they are not supported, over time they can become a dog.

  The option is to invest a lot to obtain a greater market share, if it is not achieved, you have to get rid of the product.

• Dog: It has little growth potential and a small market share. Over time, most of them leave the market.

  The option is to harvest or discard.

  Once the products are classified in the matrix, future resources are assigned to each one according to the most appropriate strategy:

• Build: If the product has the potential to become a star.

• Keep: If the product is a very successful cash cow, the goal would be to maintain market share so that the company can profit from the money it generates.

• Harvest: This strategy is for all products except the stars. The goal is to increase short-term profits without worrying too much about their long-term effect.

• Discard: It is often recommended to ditch low-share products in slow-growing markets. Unknowns and dogs are ideal for this strategy.

McKinsey Matrix, Market Appeal or GE (General Electric)

This model uses the dimensions of Market Appeal and Company Strength. It allows identifying how well the company is positioned to take advantage of market opportunities.

The company must avoid markets with unattractive and low or medium business positions, and seek to position itself in very attractive markets in which it can perform strongly.

Research sources

Types of Qualitative and Quantitative Research

Market research is the process of planning, collecting, and analyzing relevant data to make marketing decisions.

Secondary Information vs Primary Information

Secondary information: can be found if we browse the Internet, taking special care that the sources are reliable.

A good example is the databases that the Monterrey TEC has: Passport (Euromomitor), EBSCO (Business Source Ultimate), Gartner Intraweb, EIU and Springer among others.

Primary information: is that once the secondary information has been obtained, the researcher specifically defines what he or she needs to know and collects this type of information through the following four techniques.

1. Observation

Research method based on four kinds of observation:

• People watching people

• People who observe an activity

• People-watching machines

• Machines that observe an activity

  Process for carrying out Observations

  Narrow down the problem or situation to observe. Define the important points to record. Go to the place to witness the events when they happen. Record the information. Analyze the information. Present results.

2. Focus Groups

From 7 to 10 people who meet the desired characteristics participate in a group discussion led by a moderator.

3. Experiments

Method by which the researcher modifies one or more variables while observing the effects that these modifications produce in another variable

4. Surveys

Most popular technique for gathering data. In a survey, the researcher interacts with people to find out facts, opinions, and attitudes.

All the information collected, both secondary and primary, can be classified as quantitative or qualitative.

Market Segmentation

What it means to segment a market?

• Common characteristics, needs, etc.

• Individual?

• Massive?

• … and what is in between?

• Meaningful

• Identifiable

• Brand manager. Marketing mix that is useful to the customers in that segment

• Important?

Segmentation Critera

• Substantive: size

• Measurable: how many?

• Reachable: communication between brand + customers

Criteria to Segment the Customer Market

• Characteristics pertaining to customers

• Bad segmentation? =

• 1 variable can be used (age, gender, education, etc.)

• 1 variable = simple to use and understand

• A lot of variables = the opposite

• Trends: more variables = more precision

• Secondary information?

• Geography: region, size, density, weather. Areas of a country or the world, market size, market density or climate.

• Demographic: age, gender, income, ethnicity, and life cycle of the family

• Psychographic: personality (habits and attitudes), motives (emotions), lifestyles (time spent, important things around me, beliefs, education), geodemography (geography + demography + lifestyle)

• Benefits: Which benefits are sought?

• Usage: buy or consume (potential customers, past customers, first-time consumers, irregulars, etc.). Volume purchased or consumed of a product

• Segmentation: 80/20

• Profits: Benefits expected of a product

1. Choose the product/service/market

2. Determine the segmentation bases. Managerial insights, creativity, market knowledge; variables?

3. Choose segmentation descriptors. For instance: demographic (age, gender, income)

4. Profile and analysis of the segment. Market size, expected growth, buying frequency, brand usage and loyalty, expected sales, and profit potential

5. (choose) Segment of the market. Natural step in the segmentation process. Impact for the company

6. Design, implementation, maintenance of the marketing mix

A target market is the next step and consists of identifying to address a group of people or organizations for which a company designs, implements and maintains a marketing mix with the intention of satisfying their needs, which results in satisfactory exchanges for the Two parts.

Criteria to Segment

1. Non-differentiated objective

   • Massive

   • 1 marketing mix

   • Similar customers/clients

2. Focused Objective

   • Niche selection

   • Efforts towards the niche

   • Maybe more profitable

3. Multi-objective

   • 2 or more segments

   • Same number of marketing mixes

Objective = target

A market refers to people and organizations that have needs or wants and the ability and interest to buy.

A market segment is a subset of people and organizations that share one or more characteristics that make them require similar products.

Market segmentation is the process of dividing a market into significant and relatively similar and identifiable segments or groups.

Companies segment markets for three different reasons:

It allows them to identify groups of customers who have similar needs and analyze their characteristics and purchasing behavior.
Segmentation provides information that helps them design marketing mixes that are specifically tailored to the characteristics and desires of one or more segments.
Segmentation is consistent with the marketing concept of meeting customer wants and needs while meeting the organization's goals.

To divide a total market into segments, companies use some bases or variables that have to do with the characteristics of people, groups or organizations.

Promotion and Communication Strategies

The promotional strategy is closely related to the communication process. As human beings, we attribute meaning to feelings, ideas, facts, attitudes, and emotions. Communication is the process we use to exchange or share meanings.

The communication process consists of several steps. When a company wants to transmit a message to a target audience, it encodes that message using language and symbols that can be recognized by the recipient to whom that message is addressed, and then it sends it through a communication channel. Noise in the transmission channel can distort the message that the source intends to transmit.

Reception occurs when the message fits within the receiver's frame of reference. It decodes the message and usually provides feedback to the source.

Normally, the feedback is direct in the case of interpersonal communication and indirect in the case of mass communication.

Social media has increased the amount of feedback that businesses receive.

The promotion strategy of each company is a plan to optimally use the promotional elements to achieve the marketing goals that are always linked to the overall goals of the company.

Marketing always starts from the global goals to combine the elements of the promotion strategy and make the ideal mix to reach the target market in the most efficient way.

The main function of the promotion strategy is to convince the target customers that the goods and services that the company offers represent a competitive advantage over those of the competition.

The Communication Process

Steps in developing effective marketing communications

1. Identify the target audience:

   Affect the communicator’s decision on:

   • What will be said

   • How it will be said

   • When it will be said

   • Where it will be said

   • Who will say it

2. Determine the communication objectives:

   The buyer might be in any of these steps:

3. Design a message:

   • Message content

   • Message structure

     • Draw conclusions or leave it to the audience

     • Present strong arguments first or last

     • Present a one-sided argument (positive), or two-sided (pros+cons)

   • Message format

     • Print, TV, radio, etc

4. Choosing communication channels and media

   • Personal communication channels:

     • Word of mouth (personal or digital)

     • Independent experts, consumer advocates, bloggers

     • Buzz marketing: opinion leaders

   • Non-personal communication

     • Newspapers, magazines, direct mail

5. Selecting the message source

   • Message delivered by a highly credible spokesperson

6. Collecting feedback

Advertising, Publicity, Public Relations, Personal Sales and Sales Promotion

• Advertising: Massive impersonal and one-way communication about a product or organization that is borne (paid for) by the company

• Public Relations: Marketing function that assesses public attitudes, identifies areas in the organization that might interest them, and executes a program of action to gain their understanding and acceptance

• Personal Selling: A Purchase situation involving paid personal communication between two people trying to influence each other

• Sales Promotion: Marketing activities, other than personal sales, advertising, or public relations, that encourage consumers to buy and increase the effectiveness of distributors

• Social Media: Promotional (or not) tools used to facilitate online conversations between people

  • Paid Media: A kind of promotional tactic that is based on the traditional model of advertising, in which a brand buys space in the media

  • Earned Media: A kind of promotional tactic that is based on the model of public relations or free advertising, which causes customers to talk about products or services

  • Own Media: A New kind of promotional tactic that relies on brands publishing their own content in order to maximize brand equity for customers

• Publicity: It is a way of getting the media to disseminate our brand for free

Omnichannel Marketing

Omnichannel Marketing is a digital marketing strategy that consists of harmonizing sales channels, organizing information from all channels to facilitate data management and optimize the purchase strategy.

Today in which new sales channels are being created, consumers are looking for a consistent experience when interacting with brands. This is when the omnichannel strategy comes into play, to offer a continuous and fluid experience through all the devices and channels that a person can use to interact with them.

The omnichannel strategy always considers the consumer at the center, who will have the opportunity to buy how, when and where they want, regardless of the channel they use to access the brand. This translates into a continuous experience, in which all channels and media are fully integrated, so that the user can start a purchase from a computer, for example, and then go on to ask questions in customer service by phone and finish buying. the product in a physical store, all this as part of the same fluid experience without appearing that the purchase is made in parts.

Brands must be very aware of their customers' behavior in real time, even anticipating possible actions. In addition, it is also key to have a marketing strategy in which all the media work together, so that there is coherence and concordance between the website, social networks, mobile application and physical store, among others.

• It is a seamless shoppint experience across various channels (ex. online, mobile, brickand-mortar stores, and more), omnichannel commerce emphasizes the integration of various touchpoints so that customers have a consistent experience and seamless interations regardless of how they choose to engage with the brand. As a result, brand can capitalize on fluid shopping experiences, convert more sales and increase revenue streams

Benefits

Top benefits of unified customer experiences:

• Personalization + improved CX = loyalty

• Higher AOV (Average Order Value) + LTV (lifetime value) = boosted revenue

• Adaptability = business resilience

Common Pitfalls

• Meeting every customer at every possible touchpoint

• Focusing on technology/channel rather than customer value

• Focusing on channel attribution and mission out the journey

• Focusing on digital and underinvesting in other customer-facing channels

Principles for a successful omnichannel strategy

• A unified customer view

• Real-time inventory visibility

• Channel - agnostic orchestration

• One commerce system for all journeys

• Customer- centric organization

• Adaptability

Multichannel Marketing

• Company-focused

• Starts with your business and trickles down to customers

Omnichannel Marketing

• Customer-focused

• Puts the customer at the center of all channels for a seamless experience