Strategic Planning and Market Segmentation for Business Success
Strategic Planning
Strategic planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities, and its changing marketing opportunities.
Cash Flows and Desired Movement in BCG Matrix
Problems with Matrix Approaches
- Difficulty in defining SBUs and measuring market share and growth
- Time consuming
- Expensive
- Focus on current businesses, not future planning
Because of these problems, many companies have dropped formal matrix methods in favor of more customized approaches that better suit their specific situations.
Market Planning – Parts of a Marketing Plan
- Executive summary
- Marketing situation
- Threats and opportunities
- Objectives and issues
- Marketing strategy
- Action programs
- Budgets
- Controls
Marketing Implementation
Turning marketing strategies and plans into marketing actions to accomplish strategic marketing objectives: Addresses who, where, when, and how.
Growth Through Innovation and Imitation
Product imitation versus product innovation.
Follower strategies:
- Cloner: The cloner emulates the leader’s products, name, and packaging with slight variations. Ex: Land Rover vs. Land Wind
- Imitator: The imitator copies some things from the leader but differentiates on packaging, advertising, pricing, or location. Ex: Copy of a jacket from a brand by another
- Adapter: The adapter takes the leader’s products and adapts or improves them. Ex: Instagram story
ADAMS
ADAMS: The acronym stands for five criteria:
- Accessible: Can you reach the consumers?
- Differentiable: Is the segment internally similar yet externally quite distinct (different)?
- Actionable: Is it possible and profitable to deliver to this target?
- Measurable: Can you accurately estimate the size of the market?
- Substantial: Is the segment large enough to be profitable?
Marketing Segmentation
Marketing segmentation is simply put and very complex to accomplish. It is the process of dividing a target market into smaller, more precisely defined groups of consumers or organizations who have common needs and are expected to respond similarly to a marketing action.
Advantages
- Market segmentation allows companies to cut through the massive amounts of marketing hitting the broader market:
- Improves the ability and success rate
- Provides proper use of budget
- Improved focus on the “important” customers. Market segmentation enables marketers to focus their efforts and resources on those customers who will likely result in revenue for the company.
- Improved product development. Market segmentation allows marketers to better understand what consumers want in a product or service.
- Improved brand loyalty. When customers feel that your company’s products or services are a good fit for them, they are more likely to stick with your brand and recommend it to others.
Methods of Segmenting Consumer Markets
Four major types of market segmentation:
- Geographic segmentation: the “WHERE”
- Demographic segmentation: the “WHO”
- Behavioral segmentation: the “HOW”
- Psychographic segmentation: the “WHY”
Target Marketing Strategies
Market Penetration
Market penetration involves making more sales to current customers without changing its original product such as by adding new stores in current market areas to make it easier for customers to visit. Ex: El Corte Inglés
Market Development
Market development involves identifying and developing new markets for its current products. For instance, managers could review new demographic markets. Perhaps new groups, such as seniors, could be encouraged. Managers could consider new geographic markets in U.S. markets and in non-U.S. markets, especially Asia. Ex: Disney
Product Development
Product development involves offering modified or new products to current markets such as by moving into new product categories. Ex: Coca-Cola
Diversification
Diversification involves starting up or buying businesses beyond its current products and markets. For example, the company could acquire a company that operates in different market segments with a different product mix. Ex: Under Armour