Strategic Marketing Management – A Letter from a Client 2 | The Guardian Nigeria News
Do you remember the story of MLL Ori-barber? Visit @LBSInsight for an excerpt
A, Determine how MLL should play the game in the future.
B. Positioning Ori-barber Aftershave in the appropriate market segment.
- Were they targeting the right consumers? Should they change their name? re-segment to appeal to a higher income bracket?
- If MLL changes brands, what would be the costs of advertising, repackaging and distribution?
- If MLL sticks to the original target market, how would they effectively develop that market and grow the business?
- What key segment (s) is MLL currently targeting? Should they consider a new segmentation of their target market?
- After targeting, how would you effectively position the product for the selected market? How would you design a marketing plan for MLL using the right Marketing Mix?
- How would you help Gbenga and Ndali take a long-term view of market growth? What strategy should MLL pursue using the Ansoff matrix: market penetration, product development, market development and diversification? Give reasons for your choice.
- How would you try to ensure the success of the marketing advice you offer in (c) above? What are the key considerations needed for your strategic planning?
Section B: Key Marketing Concepts
- Segmentation, targeting and positioning (STP)(The source: www.segmentationstudyguide.com)
Segmentation involves categorizing markets along homogeneous or related lines, using similarity criteria to divide the market into groups. It is used when businesses decide on their target customers. Types of market segmentation include demographic, geographic, psychographic and behavioral segments.
Demographic segmentation: Dividing customers according to criteria such as age, gender, education, occupation, income and religion. An example is a manufacturer that classifies consumers in the lower, middle and upper class income segments. Geographic segmentation involves dividing customers into regions, for example, North, South, West, East and Urban-Rural. Psychographic segmentation uses cues such as personality, lifestyle, and social class, among others, to categorize clients. Behavioral segmentation involves dividing consumers according to their likely preference for products such as perceived benefits and frequency of use.
Targeting selects one or more segments with potential for profitability given the nature and type of product. Manufacturers of a product will use segmentation data to find an appropriate combination of demographic, geographic, and psychographic characteristics when they cannot focus on all of the indices of each of the major typologies. For example, for a new ‘cool’ tech gadget introduced in Nigeria, the appropriate target would likely be high school or college students who live in Lagos, who have easy access to the internet, and who belong to a high income family. Targeting involves a strategic selection of the type of segment that can be profitable for a company. Targeting can be undifferentiated when all segments are selected (mass market); differentiated when one or more segments are selected; and concentrated when focusing on a single type of segment.
Positioning comes after targeting, which identified the appropriate segment (s). The role of positioning is to ensure that targeted customers receive a message that a product or service will meet their wants and preferences. It is about creating a positive image of the offer so that it reaches Top oF MIndiana Aconsciousness (TOMA) and consumers will associate the product with meeting needs by providing solutions. Positioning is about making sure that customers perceive that one product or service is better than others serving the same purpose.
The marketing mix
A business must have a clear understanding of its customers’ needs and develop an appropriate marketing mix. Initially, the marketing mix consisted of four elements: Product, Price, Promotion and Place (4P). This concept has been broadened to include people, processes and physical evidence, all relevant to the service industry.
We will focus on the initial 4Ps, which must be well combined to give a company a unique competitive advantage.
Product – Price – Promotion – Place
Companies must constantly work on improving elements of their marketing mix to gain a competitive advantage within the identified target segment (s).
Ansoff Matrix is ââa strategic marketing technique that can be considered by the company after the STP process. The Ansoff Matrix identifies four strategies a business can use to grow: market penetration, product development, market development, and diversification.
- Market penetration: develop sales of an existing product on existing markets.
- Product development: introduction of a new product on an existing market.
- Market development: introduce an existing product to a new market.
- Diversification: try a new product in a whole new market.
Market penetration means devising a strategy to step up efforts within an already successful target market. Strategies can include increasing productivity, production, awareness and visibility, improving quality and distribution. For example, a new noodle ad targeting the same target market in the same locality.
Product development is the introduction of a new product into an existing market or consumer segment to achieve growth. For example, Coca-Cola introduced a brand of Diet Coke to traditional Coke consumers.
Market development, a more aggressive strategy, means the introduction of an existing product into a new market. For example, a company decides to offer a product already known in Lagos (west) to consumers in Enugu (south-east) Nigeria.
Diversification is entering a new business to achieve growth. The company is developing one or more new products for one or more new markets. Diversification is considered the riskiest: an unknown product in an unknown market. Diversification gives a business the opportunity to have an emergency strategy or a back-up plan in the event of another part of its business collapsing.
Of Ansoff’s four marketing strategy options, market penetration appears to be the easiest as the company does not envision a new product or a new market, but expands the distribution of an existing product into an existing market. It’s about reaching a new cohort of consumers within an existing market.
In conclusion, the marketing strategy is to take into consideration the needs, wants and demands of the customers and to devise strategies to create value for the right target market and thus make a profit. Law TOM will lead to greater SHare oF Wallet.