Diversifying the Market to Satisfy Customers' Needs - Coursework Example

Segmenting, Targeting and Positioning (STP) Market segmentation is the practice of diversifying the market in order to satisfy the different needs of customers. These differences necessitate the use of a variety of marketing strategies. These strategies are usually defined for every market segment that arises. Target marketing on the other hand is the careful selection of the most appropriate segments for the business. These are usually the ones that it has the capacity of servicing. Positioning is creating a difference between the products offered by the business from other products in the same segment in order to manage competition from other businesses. STP is significant in the marketing process since it helps the managers in the identification of the potential consumers of their products. With this knowledge, they are able to produce goods depending on consumer desires, hence improving consumer satisfaction (Philip Kotler 2006 pp.34-41). The process is also significant in helping managers to identify a particular group of customers which becomes the target segment. This group is usually the one that responds positively towards the organization’s products and therefore the managers are able to concentrate on product improvement to satisfy this group. Dealing with a particular group of people through target marketing improves the ability of managers to conduct market research as well as product development. The profitability of the organization is enhanced by positioning which makes the organization’s products unique compared to other competing businesses in the market segment, thereby improving the sales volume. This is because it is rare to find market segments where there exists no competition. The process of STP helps in building customers’ confidence in an organization’s products through offering them according to customer’s desires (Jim Blythe 2006 pp.78-81). The process also assists managers to be effective and efficient in allocation of resources in marketing. This helps in meeting the needs of customers in a better way, through value addition hence increased profits. Consequently, customers develop particular interest in the value added goods which gives the organization a competitive advantage. On the other hand, customer satisfaction through this process ensures that consumers repeatedly purchase the product. In the process they pass positive information to other potential consumers thereby boosting the product sales. It is also a significant approach of reducing competition as well as maintaining market share. A good example of a company which has been struggling to employ STP is General Motors which has been trying to match most of their vehicles with preferences of customers in the United States (Philip Kotler 2006 pp.44-47). Targeting strategies Targeting strategies come as a result of an analysis of the market segments. There are several such strategies which include; Mass Marketing which is also referred to as undifferentiated marketing. This involves an attempt to create demand in a single large market with the use of one marketing strategy. This strategy is significant in reducing the cost of production and product development. This is made possible by the fact that only one product is offered in the market. This strategy has been abandoned by many marketers since in most markets; customers seek a variety of benefits. Segmentation Marketing is another targeting strategy which is also referred to as differentiated marketing. It involves creation of demand in many small markets while developing many corresponding strategies which are unique to each small market. This strategy applies to a market situation whereby a big market consists of many smaller markets. The targets for each sub-market are usually unique. Niche marketing is a strategy which combines differentiated and undifferentiated strategies with the use of a single marketing strategy to create demand in either one or many of the small markets. It can also be referred to as concentrated marketing. It is usually appropriate for organizations which target small sub-markets within a larger segment. In most cases the issue arises due to the fact that the smaller segments are not served appropriately by the large firms which have adopted a segmentation marketing method. It creates a situation whereby a smaller company can thrive through marketing of one product in an intently defined targeted market. Micro-marketing is the most recent strategy which tends to create demand to particular targeted consumers through a marketing program that is highly individualized. This strategy is also referred to as customized marketing strategy. There is usually a high level of interaction between the marketers and consumers. Consumers are allowed to specify the quality of the goods that they desire. Micro-marketing is currently being used by companies whereby customers are reached through the internet. Positioning Strategies Successful positioning of a product in a market segment requires marketers to ensure that they capitalize on the share of consumer options accomplished by the product that they offer in the market so that they can attain effectiveness and hence profitability in the long-run. The addition of characteristics that satisfy customers’ desires as well as strategic advertisement aimed at improving the awareness of consumers are some significant positioning strategies which assist marketers to get the most out of the market share. Emphasizing on quality is an important positioning strategy whereby marketers offer deficiency-free commodities in the market as well as ensuring that design of the product and customer services satisfies the expectations of consumers. Providing unique products in the market is an important strategy for marketers to improve on their competitiveness in the market. It enlarges the gap between the products offered by the business and those of its competitors, who have to undergo extra costs in order to match the unique products. Positioning products through different but interrelated market segments is also an important positioning strategy. For the sake of effectiveness and understanding amongst the consumers, marketers should make use of different brand names (Wilson M S, Gilligan C, 2005 pp. 88-90). Ansoff’s Growth Matrix and Porter’s Generic Competitive Positions The Matrix consists of four quadrants. It serves as an indicator of the risks that a business might be exposed to whenever a move to a new quadrant is made. Most likely a move increases the risk. The strategic options in the matrix include; Market development is where producers target new marketing areas selling similar products to many different people. They target markets situated in different locations using different channels for sales. The market may be located near the producer or abroad. Online sales have been in use since the internet technology was developed. This option targets a variety of customers who might be of different age, gender e. t. c. Diversification is a risky option in which there exists limited scope for utilizing any available expertise in marketing. In this case, producers rarely enjoy the economies of scale. This is because producers offer different services to different consumers. However, it is advantageous in the sense that if one product is affected by unfavorable circumstances in the market, there is the likelihood that the other will not be affected. Market penetration is the option whereby producers offer more of a particular product for sale to the same consumers. Advertisement is a major tool for encouraging consumers to purchase the products. Loyalty schemes are usually introduced as well as purchasing a company that may be owned by a competitor. Activities to boost sales are usually adopted such as price launch and sales promotions. Product development involves selling a variety of products to the same consumers. Innovations are applied intensively in order to produce a variety of products. It can even be a change in the method of packaging or developing complementary products. The time for marketing is extended as well as the levels of customer service. The matrix assists marketers to manage risk suitably. It is useful especially when moving between the quadrants. Through it, the marketer is able to do the appropriate research in order to ensure that he is capable of satisfying the requirements of the quadrant which he intends to move to. He is also able to plan carefully the possible measures to take in case the move does not favor the business (McDaniel and Gates 2007 pp.67-80). Porter’s Generic Competitive Positions Porter's generic strategies are significant methods of improving the competitiveness of a business in the market. They include; The Cost Leadership Strategy. This involves ensuring that products are sold at a reduced cost but at an average industry price that can not lead to a loss as well as charging lower prices in order to increase market share is significant in improving the competitiveness of a business. The cost of delivering goods for the business is reduced. However, it is usually risky in case there happens to be other businesses in the market who charge even lower prices for their products. It is therefore necessary tom evaluate the accessibility of capital for the business which can assist in innovation that will reduce the costs of production. It is also important to have effective logistics in the production process. In order for the business to be able to charge lower prices, the cost of production has to be low. Availability of cheap labor, raw materials and production facilities can help in reducing charges on goods to be lower than those of competitors. The differentiation strategy is a way of improving the competitiveness of a business through offering products in the market that are more eye-catching to the consumers. Value addition in order to make the goods a bit different from those of competitors is significant in increasing sales hence profitability of the business. The use of this strategy requires intensive market research in order to establish consumer preferences. Innovation is also an important tool in this strategy. It also requires businesses to be able to deliver products of superior quality. Sales and marketing activities should be carried out intensively in order for the consumers to understand the uniqueness of the products as well as the associated benefits. The focus strategy involves studying a particular market in order to identify the specific consumer desires. It helps marketers to offer unique products that are suitable for this particular market. Customers tend to have confident in such products, making other competitors to lose interest in this particular market segment. Producers charge less for goods due to the loyalty they enjoy from their consumers. The use of the four options should be decided by the marketers depending on their suitability to the business (McDaniel and Gates 2007 pp.74-86). Problems Involved with Setting Market Awareness/Action Setting market awareness for new products is usually a difficult task due to the fact that consumers usually do not know about the emerging companies in the market. More over, they usually have confidence in the products that they know and have used before, or those that other people have been using. In order to become known to the consumers, new companies usually work towards setting up identity in the market. This is the most important part of the marketing process. Companies are usually faced with problems especially when joining a competitive market. There is the risk of negative communication to the consumers by disgruntled competitors who have established in the market. Setting market awareness is a costly undertaking. The activities involved such as sales promotion, public relations and advertising require skilled personnel who are able to convince the customers on the effectiveness of the company’s products. It requires huge amounts of capital for research in order to understand the needs of the customers. So much may be spent in these awareness activities but still end up making no impact on sales (Michael J Baker 2000 pp. 56-61). There are several other problems that are involved in setting market awareness and sales objectives for a new product launch. These are known to cause failure in this process. They include; Imperfect product idea. The idea adopted for use in advertisement is significant in the success of awareness creation. A faulty idea may be very costly for the firm and may never serve its purpose. A company may use a certain form of advertisement which does not clearly state the value of the product. Customers usually relate the value with the price. With a little believe that a product is not worth its price, customers may never be convinced to buy and this might be a costly and futile undertaking for the business. Problems related to product distribution are also a major drawback in launching a new product. If the product does not meet the requirements of the channel of distribution, it is difficult to provide it in the market even if the awareness creation was successful. This may occur in the products that require preservation. Lack of refrigerators to store perishable products in the market is one of the problems that may hinder launching a new product. Timing of product launch is an important factor that may affect the activity. Poor timing may cause unwarranted costs. Entry in to the market for a new product should neither be too early nor too late. The product should be launched at a time when the consumers need and understand that the product can help them solve a particular problem. Launching the product when no one needs it may lead to losses. It is as simple as saying that heavy jackets are usually needed during winter. Such products can be launched at the time just before winter but not too early or when it has already began. Problems associated with product positioning may also be a drawback in new product launch. It is important to do research first before deciding on product positioning and launch. For example, a new brand of cars designed for the elite should be sold at a price that will not cast doubts in the designated group of consumers. Selling the product at a price that is lower that the expected prevailing prices for such goods may discourage them from buying. Methods of product launch There are many methods that can lead to a successful product launch. Currently, use of the internet technology is an effective way of launching a product. Setting up a blog whereby people learn about the product and the time that it will be available in the market is an easy way of reaching the customers. Important information about the usefulness of the product should be posted on the blog. The use of YouTube and internet video sites can help in informing the consumers about the company’s intentions about the product. These videos should be carefully developed by experts in order to avoid any unnecessary information or problems in viewing. Press releases as well as advertisements are important in informing the consumers about the launch. Launching can also be done through inviting consumers in a common place. In such a day, the marketing team should be keen to demonstrate, describe how to use the product and answer questions raised by the consumers. Customers can be allowed to buy a certain amount of the product at a reduced price. For example, three units of a product that costs $700 can be sold for $1,500 for that day only (Brassington F, Pettitt S, 1999 pp.89-96). Importance of Marketing Mix (4ps) between Various Market Segments Marketing mix is important in ensuring that the product offered in the market satisfies the desirable quality and at the same time consumers can afford to buy it. The use of marketing mix depends on the choice of the marketers and the kind of product that they intend to offer in the market. It is mainly used to create a difference between a company’s products with those of competitors. It helps a business to be successful through ensuring that all elements are right and balanced. The 4ps include; product, place, price and promotion. These are significant in improving the competitiveness of a business (Doyle P, 2006 pp. 66-71). Product involves customer satisfaction in order for them to continue purchasing the product for the business to make profits in turn. It is important to ensure that the value of the product is what the customers need. Making the product look attractive is one way of catching the attention of consumers. This can be done through attractive packaging of the product. The quality of the product should be satisfactory to consumers. It should be provide the desired benefits that are usually the driving force towards purchasing a particular product. It should function properly and it should also be reliable and competitive in the activity that it is designated to do. Place is significant since the movement of the product from the manufacturer to the consumer determines the availability of the product. In order for a business to be profitable, it has to ensure the efficient supply of its commodities to consumers. The channels of distribution are significant in ensuring that the customers get the commodity at the desired place at the right time. In order to satisfy consumers’ desires about place, the producer can make use of intermediaries such as; wholesalers, sales agents, distributors as well as the internet. Price is essential since the price of a good determines the capability of the consumers to purchase. The producer should be aware of the purchasing capability of the consumers. In order to be effective in pricing, the producer can do market research and compare the prices of competitors. The pricing strategy is important in order to ensure that the business does not make a loss due to inappropriate prices. Pricing should be designed such that minimum charges on goods will allow the consumers to afford purchasing them, while on the other hand production cost is reduced in order to maximize profits (Sunny Crouch 1996 pp.79-85). Promotion is significant in creating awareness and ensuring that customers understand the benefits of using a particular product. It encourages customers to purchase products from the business. It also helps to build confidence in existing consumers as well as attracting new ones. The producer should have information concerning the consumers such as their purchasing power, shopping habits as well as the probable questions that consumers are likely to ask regarding the product. Promotion is important since it provides an arena for the producer to meet the consumers. The producer learns the issues surrounding the products while consumers get answers to most of the questions that they have always wanted to ask. They also air their views and inform the producer on their preferred quality, and the changes that they would like to be effected on the product. The style of promotion largely affects the outcome of the promotion. It should be timely so as to get the best outcome. An example of marketing mix is where Well-Man which supplies premium products offers the price of packs of family size are offered at a lower price per portion than the smaller packs, the reason being that the family segment is highly sensitive to prices (Neil Wellman 2008 p.11) Bibliography 1. Baker M J, 2000. Marketing Strategy and Management 2/e, Macmillan Business. 2. Blythe, J. 2006. Principles and Practice of Marketing, Thomson. 3. Brassington F, Pettitt S, 1999. Principles of Marketing, 4/E, FT Prentice Hall. 4. Crouch, S 1996. Marketing Research for Managers, CIM/ Butterworth-Heinemann. 5. Doyle P, 2006. Marketing Management and Strategy 4/e, FT Prentice Hall. 6. Kotler, P. 2006. Marketing Management 12th Ed, FT Prentice Hall. 7. McDaniel and Gates. 2007. Market Research 7th Ed, Wiley. 8. Wellman N. 2008. Marketing Plan for Well-Man’s Healthy-Eating Breakfast Cereals, Well-Man. 9. Wilson M S, Gilligan C, 2005. Strategic Marketing Management, CIM/Elsevier. Read More