The objective of this paper is to answer to specific questions related to marketing management.
Question 1: Market Segmentation is vital to targeting the correct consumer market for today’s numerous types of businesses. In what ways can a company divide their consumer markets into segments?
Market segmentation is an integral part of effective marketing. Market segmentation, in some terms, is slicing out a group of people from a large market based on common characteristics, needs and behaviour (Rizzi, 2015). So, a market segment is a set of customers that are expected to respond in a similar manner when exposed to a marketing activity.
There are four main ways that a company can use to divide its customer market into segments. First, geographical segmentation is the method to segregate customer markets based on geographical units. It is one of the simplest ways of segmenting markets and requires dividing customer markets based on cities, countries, communities and like. Geographical segmentation is built on the premise that people living in a particular geographical unit will have similar needs and behaviour. For example, it is ideal to market a heater in a cold country. Some units of geographical segmentation are urban-rural, arid-humid, north-south, dense-sparse populated and like. Second, demographic profile is the second method of market segmentation. In this case, customer market is divided based on demographic variables like age, gender, ethnicity, class and religion. Demographic profiling of customers is important in areas where there is lot of diversity in local population. For example, India is a cross-cultural and diverse nation where demographic profiling is highly recommended.
While the first two methods are simple, the third and fourth methods of market segmentation are fairly complex. Third, psychographic market segmentation divides markets based on people’s personality traits. This is a complex process and classifies customers based on their psychological bent like innovators, thinkers, achievers, and survivors. If a company plans to launch a new product, it will have to target innovators who have the risk taking capabilities to try a novel idea. Fourth, behaviour segmentation of market segregates customers based on their behavioural attributes like knowledge, reaction to a product and readiness to buy.
Question 2: How can market leaders, challengers, followers and nichers compete effectively?
Companies adopt different marketing strategies to compete effectively in a competitive market. Market leaders, challengers, followers and nichers are the main competitive strategies. A market leader can compete effectively by concentrating its marketing campaign on expanding its customer base by entering new markets and increasing market share in existing markets.
A market challenger is the one who challenges the market leader’s positions by aggressively focussing on gaining more market share and aspires to be the market leader. A market challenger can compete in the market by adopting attack strategies like frontal attack, flank attack and guerrilla attack (Gunelius, n.d.). Frontal attack is taking the market leader head-on by directly attacking the competition brand in its media campaigns. Flank attack is when the challenger advertises the weaknesses of competitive brand to maintain leadership in the market (Gunelius, n.d.). Guerrilla attacks have limited impact. They are usually small and repetitive (Gunelius, n.d.).
Market follower and market nichers are smaller in size. Market follower is one who follows the market leader without any major differentiation focus. To be effective, a market follower can either copy or adapt its product. Copying strategy involves either completely copying the market leader or tweaking it minutely. Adapting means bringing about slight improvement in the marker leader’s product offering to maintain its appeal in front of customers. Market nichers are also small as compared to market leaders and cannot directly compete with them. So, to be effective in the competitive market, they niche out a small market segment for themselves by differentiating themselves and offer specialised products to this target segment. As they deal in highly specialised products, they are able to beat the competition and fair well in the market. As the products are well differentiated, nichers are also able to charge premium, in most cases.
Question 3: What are the important decisions in developing a branding strategy? Use an example by indicating a brand and state their branding strategies that have made them successful.
Developing a strong brand is one of the challenges for every marketer. It helps companies to create a meaningful space for them in the competitive market and difference themselves from other players in the market. There are four important decisions in developing a branding strategy: brand positioning, brand name selection, brand sponsorship and brand development.
The important decision in an effective brand positioning is identifying the exact position the brand is expected to occupy in a customer’s mind (Billings, 2013). Different firms use different communication techniques to create a space or position for their brand in a customer’s mind. It is important to decide whether to position a brand in terms of its product attributes, benefits to the customer or customer’s psychology. It connects with the customers on an emotional level. For example, Apple has created a brand that has great aspiration value and customers buy Apple products for its premium image, novelty and ease of handling. So, the firm touches the emotional chord of its customer. Brand name selection is the second important decision in branding strategy. Firm’s need to take care that the brand name is catchy, unique, simple to use, trademark-able and easy to translate in different languages. Apple scores on all these fronts.
Brand sponsorship and brand development are other important decisions in brand strategy. Brand sponsorship involves deciding whether to own the product manufacturing and branding completely or to rebrand an existing product and sale or license out the product to a third party or co-brand the product (Billings, 2013). Cost-benefit analysis needs to be done to choose the best option. Apple, for example, manufacturers (partly outsources) and brands its products as its own. It works out best for them as they are internationally renowned brand. Brand development involves deciding whether to extend the existing brand to new products or create a new brand or create multiple brands for the same product in different markets (Billings, 2013). Proctor & Gamble, for example, produces diapers under brand name Pampers and Luvs for different market segments.
Question 4: What strategies are appropriate in the different stages of the Product Life Cycle (PLC)?
Like humans, products have a life cycle too. They come into the market, develop, mature and then die. A new product life cycle has four stages: introduction, growth, maturity and decline (Jaideep, 2016). A product needs a different marketing strategy at every stage of its life cycle.
Marketing strategy in the introduction stage is more focussed on price and promotion (Jaideep, 2016). Depending upon the market situation and company’s goals, price and promotion can be kept high or low to succeed (Jaideep, 2016). If the product and promotional price is kept high, there are chances that the product creates a buzz in the market and firm earns high profits due to its pricing. Alternatively, product prices can be kept high with low promotional expense to yield maximum profits. This strategy mostly works in a niche market. If fast penetration is the objective, companies can keep low prices with high promotional budget to quickly gain market share in a large market. In the product growth phase, a company aims at strengthening its competitive position in the market (Jaideep, 2016). There are a lot of strategy options available for companies at this stage like enhancement of product attributes, expanding to new market segments, strengthening the distribution channel, lowering product price and aggressive advertising to convince customers to try the new product.
In the product maturity phase, the market matures with stiff competition from other players. The firm can either play attack or defensive at this stage. The possible strategic moves are either to do nothing and wait and watch or to modify the market in such a way that the sales volume increases (Jaideep, 2016). In the decline phase, the decision options are whether to continue with the original product or revamp the product or drop the product and give way to new products.
References
Billings, Yvad (2013). Brand Strategy Decisions – A Major Challenge. Retrieved from http://thereadersbureau.com/brand-strategy-decisions-a-major-challenge/
Gunelius, Susan (n.d.). Brand Positioning for a Competitive Edge – Part 3: Competitive Offense and Defense. Retrieved from https://aytm.com/blog/research-junction/brand-positioning-for-a-competitive-edge-part-3/
Jaideep, S. (2016). Marketing Strategies – Stages of Product Life Cycle. Retrieved from http://www.yourarticlelibrary.com/marketing/marketing-strategies-stages-of-product-life-cycle/48630/
Rizzi, Vanessa (2015). Why Market Segmentation is Crucial for Your Business? Retrieved from http://entrepreneurhandbook.co.uk/why-market-segmentation-is-crucial-for-your-business/
