A market is a group of people with unsatisfied wants and needs who are willing and able to purchase products and services. People who have unsatisfied needs are in “pain”.
A marketing strategy is a process that is designed to influence an organization’s sales and those costs of sales in a marketplace that supports the organization’s marketing objectives. Marketing strategy is built on segmentation, targeting and positioning. First, find different needs and groups in the marketplace, target those needs and groups based on the company’s ability to satisfy those needs and wants in a superior way, and then position the offering in the minds of the target market segment so that the market recognizes the company’s distinctive offering and image.
To be successful you will need to now consider both the business objectives and your market position to determine what to do. They need to fit together. An example of a marketing objective is to increase a certain product or service offering’s market share by a certain percentage by a certain point in time. The next step is to use strategy to answer the questions of who in the marketplace will behave in what manner according to what beliefs they have about your offering relative to the other offering in the marketplace. To determine exactly what marketing needs to do to accomplish its goals, we can look to the marketing mix (also known as the four P’s of marketing) to decide which marketing tactics are appropriate.
Market Segmentation Levels
To segment is to break down into groups. If we were to take segmentation to the extreme, we would structure our efforts to provide products and services that are unique to each individual customer. For example, a suit would be made custom for the individual based on measurements taken by the tailor. At the other extreme is to produce and market only one product for everyone. A one size fits all approach. When the Model-T Ford was first produced, it was black. No other colours were available. This approach kept costs down. This approach is called mass-marketing. If you are not engaged in mass-marketing, you are micro-marketing in one of its several forms. Micro-marketing is either marketing to a group or to an individual. Marketing to an individual is sometimes called “customized marketing” or “one-to-one marketing”. Marketing to a group of customers can be classified into either segment marketing, niche marketing or local area marketing. If your strategy is like many other companies, you are practicing segment marketing. Segment marketing is the focus of this discussion that follows.
It’s not possible to satisfy all customers in a broad market, such as clothing. Customers are many and they have unique preferences, tastes and budgets. To identify markets that a company can serve most effectively, companies first segment the market. Marketers do not create segments. They already exist. The marketer merely identifies them. After this, companies target a segment or segments. Thirdly, a positioning strategy is employed. There are different ways that you can segment a market. For example, consumer markets can be segmented using the following four elements: geographic, demographic, behavioral and psychographic.
Geographic Where are customers located? How far will people travel from home or work to come to your store?
Demographic How would you describe your customers in terms of factors such as age, sex, income and so on? If both sexes use the product in the same way,
there is no need to segment the market on the basis of sex.
Psychographic What type of lifestyle do customers have? What type of activities do they engage in that affects the type, quality and price of product that they buy?
What does quality mean to a customer and why? What values do they have? What product attributes are important to a customer and why? What are customer’s beliefs about existing brands?
Behavioral When do customers use the product? How often do they use it? Are they loyal to certain brands? How knowledgeable are they about product quality? Any other factors?
Branding and Competitive Advantage
Your brand contains the thoughts and emotions of your customers. It is your reputation. You want a good reputation and a memorable one. Customers will remember great service and awful service. Good service will be quickly forgotten. People these days are busy and bombarded with messages all the time. Your message needs to stand out. How will your store be different from all the other stores? How will it be better? Michael E. Porter’s Competitive Advantage model states that in order to survive in the long run you must have above-average performance in one or more areas of business. There are two basic approaches: (1) Cost Leadership (low selling prices). (2) Differentiation (uniqueness of your offering).
This is a statement of how you plan to serve the needs and wants of a market segment or segments. It includes in detail all of the attributes of what your product and service is. It includes who your customers are. It also includes where, when how and why you will serve your customers. In order to arrive at this statement, you need to segment the market. You will need to some marketing research to properly segment the market. After this, ask yourself, as a company, what can the company provide for these customers? Go back to your strengths and weaknesses from your SWOT analysis. From the list of options of what you might provide, take a look at the competition that are already providing it. Take a look at the opportunities and threats of your SWOT analysis. What do your competitors provide customers with? Is there a gap or niche in the market that is not being served that you could fulfill? If not, will you be competing head on with the competition? How strong is that competition? What will be your competitive advantage? What might you offer that the competition doesn’t offer? How will you communicate your advantage to your target market? Will customers be able to clearly understand that advantage? Carefully targeting your market will save you money. You will get a more efficient use of your marketing efforts because your message will reach your audience more efficiently than simply trying to communicate with everyone.
Positioning is the process of designing the company’s offering and image to occupy a distinctive place in the minds of the target market. It is how you plan to serve the needs and wants of your target market or target markets, relative to how your competitors serve similar customers. Why will your target market buy your product over another product? What benefits does your provide to the customer? Does your product have a unique attribute that customers want? Will customers understand and believe those benefits to be true? Positioning is not how you alter a product’s features and benefits to better serve you customers, it is how you communicate a belief about the product in the minds of your target market.
A retail marketing strategy is a statement similar to the marketing strategy, but in includes a strategy about the retail format. If your format is a small clothing store, you will need to be able to explain how the store, its layout and other factors will satisfy the needs of the target market you have chosen. You will also need to explain how you plan to build a sustainable competitive advantage.
Summary of Marketing Strategy
(1) Market Segmentation – Identify groups of customers in the marketplace that have similar wants and needs.
Who are your potential customers and how do they buy and why?
(2) Good Fit Between Your Potential Product or Service, Customers and Your Business Resources – Will your product satisfy which segment or segments of the market? How can you efficiently utilize your resources (employees, financial resources, technical knowledge and so on) to better serve customers?
(3) Good Fit Between Your Business and its Competitors – Who might your competitors be? Are you up against many other firms or not so many? Have you found a niche? Do you need a niche?
(4) Selection of Target Market – Which market segment or segments can you serve in a sustainable and superior way? How can you do that? Why will they buy from you over your competitors?
(5) Positioning Strategy – How will customers view your offering? How does it compare to the other offerings in the market in the customer’s minds? How and what will you communicate to customers?
Retail Growth Strategies
Retail is something we’re all familiar with sowe will use that as an example. The first thing to consider about growth is your target market or markets and what you are currently offering to the market. In order to grow your business you first must decide if you want to stay with your current offering or develop a new one. You also want to consider either staying with your current target market or going after a new target market. There are four ways to approach growth. Market penetration is growth in an existing target market using your existing retail format. The retailer directs efforts toward existing customers and finds a way to encourage customer to shop at your store more often. Extending store hours is one way to do this. Market expansion is going after a new target market using your existing retail format. One way to do this is to open up a new location. Another way to do is to appeal to a different age group. Format development is staying with your existing target market but developing a new retail format. In this case a retailer might add different merchandise categories to the store or add an e-commerce website to the offering. Diversification is developing a new retail format and going after a new target market. Vertical integration is a type of diversification that takes a retailer into the world of wholesaling and/or manufacturing in a similar industry. Vertical integration is the degree to which a firm owns its upstream suppliers and its downstream buyers. For example, if a fashion apparel designer moves into the world of retail by opening their own store, this would be an example of forward vertical integration. Horizontal integration occurs when a firm is either taken over, buys or merges with another firm that is in the same stage of production in the same industry. An example of this in the car industry is when two car manufacturers merge together.
Marketing could be defined as satisfying needs and wants of consumers. Some critics will argue that marketing
goes beyond simply satisfying. They claim that marketing creates needs and wants that did not exist before, and as a result consumers spend more money than they should on goods and services they may want but don’t need.