Marketing strategy is a plan for selecting and analyzing a target market and developing and maintaining a marketing mix that will satisfy this target market. A firm must decide on the appropriate marketing activities to satisfy customer needs and achieve its goals. A marketing strategy is an overall plan for conducting marketing activities that enables an organization to use its resources and strengths to meet the needs of the market place.
Firms developing a marketing strategy follow two basic steps:
- Select a Target Market
- Design a Marketing Mix (a combination of product, price, promotion, and distribution)
Selecting a Target Market:
Organizations gear their marketing activities to reach certain customers a market. A market is people with the authority, financial ability, and willingness to purchase a product. Target market a group to which a firm directs its marketing activities.
Markets are divided two broad, overall categories (i) consumer and (ii) industrial. Consumer markets are made up of individuals who purchase products for personal use. Industrial markets consist of individuals or organizations that purchase goods and services so they can produce products to supply to others.
Consumer or industrial, most markets include numerous customers with many different needs. Businesses, rarely able to satisfy the needs of all customers in a market, divide a market into market segments, groups of individuals with one or more similar product needs. Then they decide which segment or segments to serve.
The segment to which a firm directs its marketing activities is called a target market. To select a target market, firms use either the –
- Undifferentiated approach or
- Market segmentation approach
A firm using the undifferentiated approach develops one marketing mix for the total market for a product. It offers one type of product with little or no variation, sets one price, establishes one distribution system, and conducts one promotional program. Producers commonly use this approach to sell staple food items like salt or sugar, many fruits and vegetables, and other products that most customers regard as equal to similar offerings.
For this approach to work, the firm must be able to determine that most customers in the total market have the same needs. Putting together and maintaining a single marketing mix that satisfies customer’s needs must be feasible.
The firm may turn to advertising or packaging to distinguish its product from those of competitors and to convince customers that its product is superior. This technique is called product differentiation.
Market segmentation approach:
Customers in a market may have many different needs that cannot be satisfied by a single marketing mix. Then a market segment approach proves crucial. The firm divides the total market into segments and creates a marketing mix for one smaller market segment rather than for the total market.
Segmenting enables a firm to apply its strengths and resources to satisfy the needs and wants of consumers. For instance, to sell cars with an undifferentiated approach one type of vehicle for all drivers would be difficult if not impossible. Some drivers want luxury vehicles, others prefer economy models; some crave sports cars, and others can get by only with a station wagon or minivan. Therefore automakers divide the total vehicle market into several segments.
Firms segment markets in one of two ways (i) concentration approach (ii) multi segment approach.
An auto company could specialize in vehicles for one group of consumers with the concentration approach, as Rolls Royce Motor Cars does with its top of the line luxury vehicles. The concentration approach allows a firm to use all its knowledge, experience, and resources to meet the needs of a distinct customer group.
A firm with considerable resources and expertise may use a multi-segment approach, directing its efforts at two or more groups by developing a marketing mix for each. General Motors produces several different vehicles intended for different groups of customers. The multi-segment approach can help an organization reach more customers and increase sales in the total market. But it also can push up a company’s costs.
Marketers can segment consumer markets according to:
- Product related bases
Geographic segmentation bases include city, state, region, and zip code, as well as characteristics such as climate, terrain, and population density.
Demographic segmentation bases divide a market in terms of personal characteristics such as age, income, education, occupation, sex, race, social class, family size. Today many firms target products to the Hispanic population, the fastest growing ethnic group in the country.
Psychographic segmentation bases are a person’s attitudes, personality, opinions, lifestyle, interests, and motives. Many consumers have grown more health conscious and fitness oriented.
Product related segmentation bases divide the total market according to aspects of product use, including volume of use, brand loyalty, and expected benefits. For instance, bankers have segmented customers according to the benefits they are looking for. There are loan seekers, value seekers searching for the lowest loan interest rates and no charge checking accounts, and major investors who bank only at big name institutions.
Designing a Marketing Mix:
Once a firm has selected a target market, it must decide how satisfy the needs of the target through the marketing mix, the combination of four elements:
A product can be a good, a service, or an idea. Manufacturing a product is a production function. But marketing managers have the responsibility to inform the production people about products consumers would find appealing and about existing products that need to be changed or that are no longer needed. Marketers also develop brand names, packaging, and warranties.
Once a firm develops a product, it must set a price. Pricing requires crucial decision making because price is very visible to the consumer and is closely tied to a company’s profit.
Distribution: Even a terrific product, priced right, can fail if it is not available where and when the customer wants it. Distribution of products, a complex process, involves decisions about transportation, storage, and store selection.
Promotion: Before they can purchase a product, consumers must know about its availability, its characteristics or benefits, and where it can be purchased.
The marketing Environment:
An organization often must adjust its marketing mix or focus on a new target market to meet changes in the marketing environment.
- Economic Condition