Strategic Marketing Assignment SOLVED

. 81.0 Introduction

The marketing concept is the idea of placing customer needs at the centre of the organisation’s decision making. Key to the marketing is the Segmentation, Targeting and Product positioning (STP) process starting with an understanding of the market. Markets are predominantly complex as they consist of a variety of buyers with divergent motives and backgrounds which lead to different needs and wants. Macro-environmental factors also take their toll on the marketing environment as well as a mix of various levels of competition which make markets heterogeneous. Demand patterns are constantly changing, innovations in technology continue unabated and customers have become better-informed and educated. This has led to the need for the STP process.

2.0 Market segmentation

Market segmentation is a two-step process of: (1) naming broad product-markets and (2) segmenting these broad product-markets in order to select target markets and develop suitable marketing mixes. The first step pertains to defining an organisation’s business. Varichem’s business would be healthcare while that of that of Telecel Zimbabwe would be communications.

Segmentation is the division of a market using a set of pre-determined criteria. It should be used to gain insight into customer wants and needs. The end result should be segmentation along the line of needs. An organisation will analyse the needs it can serve, those it cannot serve and those it wants to serve. It is imperative for an organisation therefore to use the most suitable variables for market segmentation. Common variables are examined below.

·         Geographic- these refer to the location and region of the world, continent or country. It also includes descriptions such as rural, urban, suburban and central business districts. Affects size of Target Markets (economic potential), Place (where products should be made available), and Promotion (where and to whom to target advertising and personal selling).

·         Demographic- the variables pertain to personal statistics such as gender, income, age, education, occupation, ethnicity, religion, language and family size. Opaque beer, Chibuku, by Delta Corporations was targeted towards the Shona-speaking while the Ndebele had a different product targeted for them.

·         Psychographic- this seeks to segment on lifestyles, attitudes, personalities and values. Delta Corporations, a beverage manufacturer, markets its lagers using this variable. The Castle brand is targeted for the mature drinkers who appreciate the taste, Pilsener is meant for executives and office holders, the ‘decision makers’ while Lion is targeted at graduates and low-earners.

·         Behaviour- loyalty to brands is also used to group similar individuals together.  Affects Product (features, packaging, product line assortment, branding) and Promotion (what potential customers need and want to know about the firm’s offering, and what appeals should be used). Brand loyal customers stick to their brand even in the face of competing products. Usage occasions such as wedding gowns at weddings and benefits sought such as lightening creams for ladies of colour are used as basis for segmentation.

2.1 Characteristics of segments

i.        Measurable/identifiable- the individuals in each segment should be distinguishable and easily identifiable.

ii.      Accessible-the selected market targets should be reachable by the organisation through individual marketing efforts.

iii.    Meaningful-the chosen market segments should show clear variations in the variables in question. Their behaviour and response to the individually-designed marketing mixes should be distinct. The individuals in such groups should have preferences or needs unique to them.

iv.    Substantial-the variables used for segmentation should lead to sufficiently large segments that are economically and practically worthwhile to serve as distinct market segments with a distinctive marketing mix.

3.0 Market targeting

There are three basic ways to develop market-oriented strategies in a broad product-market.

1. The single target market approach—segmenting the market and picking one of the homogeneous segments as the firm’s target market.

2. The multiple target market approach—segmenting the market and choosing two or more segments, then treating each as a separate target market needing a different marketing mix.

3. The combined target market approach—combining two or more submarkets into one larger target market as a basis for one strategy.

The choice on which segments to target is dependent upon several factors. The existing level of competition and the quality of the competition’s service to the customers must be borne in mind. The larger the numbers of competition and the better they serve the customers, the more difficult it is for other organisations to be successful in penetrating the market. Secondly, the size of the segment as well as its growth rate determines the attractiveness it poses to competition. Furthermore, the strength of the organisation seeking to enter a certain segment should be sufficient to appeal particularly to the group of consumers. Organisations serving the segment may already have established reputations making it challenging to wrestle customers from them.

Market targeting is defined as the identification of the market segments that are identified as being the most likely purchasers of a company’s products.

3.1 Merits of target marketing

i.        It allows for the accurate appraisal and identification of unfilled marketing opportunities. The gaps can be real or illusionary. Econet Wireless, a telecommunications organisation in Zimbabwe, successfully targeted the unbanked community who want banking convenience with the Ecocash service, a mobile banking platform.

ii.      Market product appeals through marketing mix manipulation can be more delicately aligned to the customer needs.

iii.    An organisation can concentrate on a market segment which offers the greatest potential for the company to reach its goals.

4.0 Product positioning

 Positioning refers to how customers think about proposed and/or present brands in a market. Following successful market segmentation and targeting, the next step in developing an effective marketing strategy is product positioning. Product positioning refers to the way, in which an organisation sets itself apart in the market, including how the market perceives its products. Successful competition in a target market requires taking one of porter’s three generic strategies- cost leadership, differentiation or focus.

Positioning is about communicating the overall value proposition or unique selling proposition to the market. Ries and Trout (1981) suggest that it is the perceived image and attributes of an organisation or product which is important in the battle for the minds of the target customers. There are three categories of positioning expanded below:

a)      Functional positioning-this seeks to provide benefits to customers and get a favourable perception from investors and lenders. These are goods or services which solve problems or challenges encountered by customers such as stain removal using detergents. Liquid soap manufacturers such as Sunlight market along these lines.

b)      Symbolic positioning-these lead to self-image enhancement and support ego identification. The products create a sense of belongingness and social meaningfulness. Harley Davidson bikers are an example of this kind of target segment of a market.

c)      Experiential positions- this positioning is about sensory and cognitive stimulation.

Jobber (1995) proposed the 4C positioning framework for success in a market which is about clarity, consistency, credibility and competitiveness. The basis of the competitive advantage must be clear to the organisation so that can fully exploit and develop it. Creating a lasting and impression in the minds of customers requires that the message and images send should be consistent. The targeted segment should believe in the credibility of the position chosen by the organisation. It is imperative for the organisation to hope of any success if they have a distinctive value proposition. There are three essential types of value: operational excellence, product leadership and customer intimacy.

5.0 Conclusion

The selection of a target market involves assessing the organisation’s strengths, the competitive intensity of the target market, the cost of capturing market share, and the potential financial gain in attracting the targeted group. The market segmentation concept is related to product differentiation. An organisation seeking to target different market segments may adapt different variations of its products to satisfy those segments. This would appeal to different market segments with an increasing propagation of tastes and increasing disposable incomes in some segments. This has led to marketers designing product and service offerings around consumer demand rather than production needs.

Segmenting a market requires the analysis of data based on consumer, user, organisation, and market characteristics. This data is on key customer-, product-, or situation variables. Four separate approaches are available for target marketing. These are undifferentiated (entire market with one strategy), differentiated (different strategies for different segments), concentrated or niche (selecting one segment to target), and customised target marketing (target individual customers with individual strategies).

Product positioning is the means through which differentiation is realised. It entails two elements. The first elements is about physical attributes, functionality and capability offered by a brand such as an HP printer’s specifications, design and throughput. The second element concerns the brand perception from the customer’s perspective. ZESA, an electricity supply para-statal in Zimbabwe is perceived as being corrupt and inefficient. Marketing has become a strategic concern for competitors in the business world.

6.0 Bibliography

1.      Ries, A. and Trout,J. (1981) Positioning, The battle for your mind, Warner Books - McGraw-Hill Inc., New York, 1981, ISBN 0-446-34794-9

2.      Jobber, David. (1995). Principles and practice of marketing. McGraw-Hill, London and New York, ISBN 007079353

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