Strategic Marketing | Market Strategy and Segmentation | Alison
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Market Strategy and Segmentation

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Suppose you are performing in the market; your performance is at a particular level.Considering your performance to be at the same level, what is a type of forecast whichyou can give with respect to the company for the next 5 years? Why are you making thisforecast? You are making this forecast to find out how the company is likely to movefrom year 1 down to year 5. Based on actual levels kindly note that what you areperforming now, given that particular scenario go 5 years down the line how much, howwhat might be the forecast?Once you provide this forecast to the management, the management may ask you toincrease this forecast level to this pink line which is coming here. If you really see this isthe desired level which the management wants you to go to in the next 5 years. It issaying from one you go up to this level. There is a gap here, the second year there isagain a gap. In the third again, when you are moving to the fifth year you are seeing
there is quite a gap. This difference between the actual level of forecast and the desiredlevel of forecast which the management wants you to achieve this is called this gap.Many times it is referred to as the strategic planning gap.With respect to your marketing strategy you have to fill up this gap this gap needs to befilled. That is the job of a marketing manager. It mean go by different nomenclatures inthe organization going up to the vice-president of marketing their job mainly focuses onbridging this gap to increase sales.This strategic planning gap is the gap between the actual level of forecast and the desiredlevel. In order to fill this gap you make use of growth opportunities which we discussedearlier. These growth opportunities can be intensive growth opportunities or integrativegrowth opportunities or diversification and each of this growth opportunities has again 3.For example, intensive growth opportunities could be with respect to market penetration,with respect to market development, with respect to product development. Integrativegrowth opportunities with can be with respect to backward, forward and horizontal. Andagain you have diversification and you have diversification it can be concentricdiversification or it can be horizontal diversification or it can be conglomeratediversification.These are the options that are available to you as a manager to bridge this gap. The gapbetween the actual level and the desired level, this gap can be built can be bridgedmaking use of these growth opportunities. This diagram which is presented here depictswhat is called the gap analysis and the gap is with respect to the actual level of forecastand the desired level. Many times, it is also referred to as the strategic planning gap. Thisgap can be bridged by identifying different growth opportunities for the company. Thedifferent growth opportunities could be intensive, integrative or diversification.
(Refer Slide Time: 06:13)
Now, if you look at this next diagram again with reference to gap analysis this makes thisposition even more clear. The forecast actual level the gap. Now, you build it up using letus say intensive growth opportunities or integrative growth opportunities ordiversification. You have got 3 lines representing this bridging ok. You have intensive,integrative and diversification almost with respect to the sales. Everything with respect tothe sales. This is another depiction of how the gap is sought to be built by making use ofgrowth opportunities.(Refer Slide Time: 07:16)
We come to a very important matrix which was given by this gentleman called Ansoff.He gave what is called a product market expansion matrix. What is this product marketexpansion matrix? It is with respect to your present products and new products, presentmarkets and new markets. So, if you see this diagram it is a 2 by 2 matrix; it is a 2 by 2matrix.When you are looking at products it is present product, it is new product. When you arelooking at markets it is present markets, new markets. When you are looking at thepresent product and the present market you are looking at market penetration. Marketpenetration looks at present product and present market. When you are looking at thepresent market, but with a new product you are looking at product development. Supposeyou are looking at a at the present product with a new market you are looking at marketdevelopment.Suppose you are looking at a new product and a new market, you are looking atdiversification. So, a present product and a present market gives you market penetration.A present product and a new market gives you market development. A new product anda present market gives you what is called the product development. A new product and anew market gives you what is called the diversification. This is considered an importantmatrix in marketing given by this gentleman Ansoff it is also referred to as productmarket expansion matrix. This Ansoff matrix is also referred to as product marketexpansion matrix.It is essentially a 2 by 2 matrix where you are looking at present products, new products,you are looking at present markets and new markets. When you are looking at presentproducts and present markets it is market penetration. When you are looking at presentproducts and new markets it is market development. When you are looking at newproducts and present markets it is product development and when you are looking at newproducts and new markets it is diversification. This is again looking at growthopportunities through this prism of this Ansoff matrix.
(Refer Slide Time: 10:50)
We look the different diversifications, the concentric diversification, horizontaldiversification and the conglomerate diversification. Now, the next question is how dowe draw the marketing strategy using all this for a company. How do you go aboutdrawing up the marketing strategy. If you look at the marketing strategy we can definemarketing strategy as broad principles by which a business unit expects to achieve itsmarketing objectives.What does it involve? It involves decision on market expenditure, marketing mix andmarketing allocation. You have broad principles by which business unit expects toachieve its marketing objectives. It involves decisions on market expenditure, marketingmix and marketing allocation.How do you look at marketing strategy? You have to look at marketing strategy withrespect to a business unit kindly note that. And what do you do with respect to thatbusiness unit. You draw or you delineate the broad principles by which this business unitexpects to achieve its marketing objectives. You look at it it’s market expenditure,marketing mix and marketing allocation.Using this definition of marketing strategy, we can give what is the type what is the basisfor drawing this marketing strategy. There are essentially 5 bases for drawing themarketing strategy. One is market segmentation, second is market positioning, third ismarket entry, forth is marketing mix, fifth is timing.
The basis for drawing up the marketing strategy is market segmentation, marketpositioning, market entry, marketing mix and timing. What is market segmentation? Youcan segment your market on certain characteristics. It can be geographical, it can be endusers, it can be buyer types, it can be customer size, it can be customer class or it can bespecific products geographical.Depending on the regions where your operating for example, a TVS company thoughoperating throughout the country very strong in the south and the west. Now, it hasmoved up to the north and also the north east as well, but very strong in this market.Similarly, Honda which was very strong as Hero Honda. Now, Honda is removed youare only having the Hero now where was very strong in the north now making its 4 a orhas already made it is 4 a very strongly into the south as well.Market positioning. What is this? You the characteristics of the market positioningsuppose it is sufficient current size. That is, you are having your position in the marketwhich is which you think is good enough that is sufficient current size. It also let us sayprovides further growth potential. This positioning which you are making use of can beused to develop the market further. Companies would like to enter the market where it isnot over occupied that is not too many players. If there are many players coming up withthe same products in the markets then differentiation becomes quite a task.Unsatisfied trends company can serve well. Let us say a customer wanted a particularfeature in the product of the company which the company was not able to othercompetitors are not able to give, but your company is able to provide that can give thecompany a differential advantage and can help in positioning your product in themarketplace differently. What is market entry? You are looking at you may enter themarket by acquiring an existing player or you can develop a product internally and comeout with your product or you can collaborate and come out with the new product.The entry of Tatas into the coffee market is a good example of acquisition. When Tatasacquired what is called what was then called the consolidated coffee which wasoperating in Coorg and you now have what is called the Tata coffee coming up from thesame consolidated coffee. That leads you to the new this thing domain calledacquisitions, acquisition of a company or a merger of a company and this merger and
acquisitions is a very big subject in marketing and finance as it exist now in our countrybecause of the fierce competition.Then what is this marketing mix? This marketing mix stands for a set of controllablevariables. Kindly note it is a set of controllable variables that the firm can use toinfluence the buyers’ responses. It is in the control of the firm. It can; it can be withrespect to product, price, place and promotion these are called the 4 Ps of marketing mix.The marketing mix stands for a set of controllable variables that the firm can use toinfluence the buyers’ responses. It can be product price, place and promotion popularlyreferred to as 4 Ps.The fifth of this category is what is called the timing. What is this timing? When are youintroducing the product into the market? A very simple example, let us say you aremanufacturing cold creams, the best time to introduce your cold creams could be insummer, when the market is always responsive. So, you would like to make use of thetiming to enter the market at the appropriate time.Now, when you drop a marketing plan you are looking at 5 things. One is what is calledwhat should be your sales targets and in order to achieve that sales target what should bethe total marketing budget. In order to; in order to achieve this total marketing budgetwhat is the type of marketing mix allocation that you are using that is advertising, sales,promotion or personal selling. Then what is the type of pricing that you are going toadopt? Pricing can be zone specific. It should consider demand. It should consider costand competition and the last aspect of it is this marketing budget is across the products orthe product lines of the company.This marketing budget has to be allocated to products or product lines. When you aredrawing up a marketing plan, a marketing plan has got essentially 5 components.Looking at sales targets, the total marketing budget, then the marketing mix allocationwith respect to advertising, sales promotion and personal selling then pricing withrespect to zone specific should consider demand, cost and competition. The last one isthe marketing budget allocation to products.Any plan marketing plan should address this 5 components and the last one with respectto the marketing plan is where you suggest how to implement this plan and also tocontrol the plan. This controlling of the plan could be with respect to the annual plan or
the profitability control or the strategic control. That is matching of company’s products,resources and objectives to markets. You can control the plan with respect to the annualbudget, with respect to the profits or with respect to the company’s products resourcesand objectives to markets.(Refer Slide Time: 22:50)
This could be the method of going about the marketing plan and the implementation andcontrol. We looked at the marketing segmentation variables. This marketingsegmentation variables when you are looking at geographic segmentation it can beregion or climate. If you are operating in a hilly region a different product categoriesmay be required with respect to your company when you are operating in a hilly region.Some extra characteristics to take care of that that is your breakings, anti skid propertieswith respect your automotives. They have to be very strong in a hilly region.Similarly, when you are looking a demographic segmentation it could be with respect toage, sex, marital status, family size, education, occupation and language. Age is a verygood example of youth market. Youth market again with respect to automotives you findthat the youth market is in favor of using the bikes.Maybe it is the speed which fascinates them or maybe sometimes the typical noise whichcomes from or the sound which comes when a rider rides a vehicle like a bullet or someother bike which fascinates this user. These are the types of things which can segmentthe market ok.
For an observer that sound may not be extremely nice, but still the user of this bike mightlike that sound. You may find so many youngsters riding the bike making lot of noiseand that when that accelerator is given the vehicle zooms at a higher speed makes morenoise.Now the recent motor vehicles amendment acts attracts fines for all this also that is thenext aspect of it, but from the marketing side age is an important criterion for penetratinga market or making your product a strong candidate. Some of the products may be usefulonly when you are a when your marital status is specified. If you are a married person,you may like to use that particular product.Similarly, a male or a female suppose your product is catering to the males you have acertain this thing characteristic, to the females certain other types of characteristics.Similarly, what is the type of family size your product is catering to? Do they require acertain education level, what is the type of occupation they are in and what is the type oflanguage fluency you expect whether it is English or regional.What is the socio-economic market segmentation variables? Socio-economic marketsegmentation variables could be with respect to income levels, consumption levels thenthe caste or the social class the especially with respect to the Indian market, then thereligion and culture. We are looking at the Indian market through the eyes of the marketok. This socio-economic variables of market segmentation could be income levels,consumption levels, the caste or the social class religion and culture.The other category of market segmentation could be psychographic with respect to theindividual consumer. How do you categorize that it can be compulsiveness orgregariousness? What do you mean by gregariousness? One could be an extrovert or anintrovert.Depending on whether is an extrovert or an introvert he could be a potential marketsegment for you. Autonomy is dependent on decision making on somebody else or he isindependent that is he takes his own decisions or it can be conservatism. What isconservatism? He can be very liberal, radical, traditional or modern. All this comingunder this or it can be authoritarianism. What is this authoritarianism? You can beautocratic or you can be democratic all this contributing to market segmentationvariables in the psychographic category.
Then the marketing conditions. What are this marketing conditions? You are looking attwo aspects. One is distribution channel, second is the intensity of competition. Bysaying intensity of competition you are looking at how many players are there in themarket in this category.Now, we will apply this market segmentation variables in the next class to a ubiquitousproduct. I want to demonstrate to you how are ubiquitous product like this toothpaste itcan be segmented using the different types of segmentation variables which we havelisted out here ok. We will stop here.

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