SOFTWARE MARKETING

Chapter 2

Company and marketing strategy:

partnering to build customer relationships

DEVELOPING STRATEGIES FOR GROWTH AND DOWNSIZING

Companies need growth is they are to compete more effectively, satisfy their stakeholders and attract top talent.

The company’s objective must be ‘profitable growth’.

Marketing is mainly responsible for profitable growth. Must identify, evaluate and select market opportunities and plan strategies to capture them.

Product/market expansion grid is a useful tool for identifying growth opportunities.

PRODUCT/MARKET EXPANSION GRID

A portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development or diversification.

Lets look at Starbucks as an example:

Howard Schultz thought of bringing a European style coffee house to America. He believed people needed to slow down. They needed to smell the coffee and enjoy life a little more. Starbucks does not just sell coffee it sells the ‘Starbuck’s experience’.

MARKET PENETRATION

A strategy for company growth by increasing sales of current products to current market segments without changing the product.

E.g. Starbucks might add more stores in current market areas for customers to visit easily.

Improved advertising, prices, services, menu selection, store design (encourages customers to stay longe).

Add drive through windows. Starbuck cards allows to prepay for

coffee and snacks or gift Starbucks to friends and families.

MARKET DEVELOPMENT

A strategy for company growth by identifying and developing new market segments for current company products.

E.g. Managers can review new demographic markets.

Cater to new groups such as seniors or ethnic that can be encouraged to visit Starbucks for the first time.

Could also be new geographical locations e.g. Starbucks expanding in new U.S. Markets especially smaller cities and also rapidly expanding globally.

PRODUCT DEVELOPMENT

A strategy for company growth by offering modified or new products to current market segments.

E.g. Starbucks has introduced new reduced calorie options.

Introduced chocolate beverages for non-coffee drinkers.

To capture consumers who brew their coffees at home, Starbucks has entered a co-branding deal with Kraft. Starbucks roasts and packages the coffee beans whereas Kraft markets and distributes the product.

DIVERSIFICATION

A strategy for company growth through starting up or acquiring businesses outside the company’s current products and markets.

Downsizing:Reducing the business portfolio by eliminating

products of business units that are not profitable or that no longer fit the company’s overall strategy.

Why? Maybe the market environment has changed, needs have changed, firm has entered a new market without proper research, or new products that do not deliver superior value to consumers.

CUSTOMER DRIVEN MARKETING STRATEGY

There are too many kinds of consumers with different kind of needs.

Most companies are in the position to serve some segments better than others.

Hence the marketing strategy consists of the following steps that we will look in details:

1. Market segmentation2. Target marketing3. Differentiation4. Market positioning

MARKET SEGMENTATION

Dividing a market into distinct groups of buyers who have distinct needs, characteristics or behaviour and who might require separate products or marketing programs.

Marketers have to determine which segments offer the best opportunities. Consumers can be grouped based on geographic, demographic and behavioural factors.

A market segment consists of a group of consumers who respond in a similar way to a given set of marketing efforts.

MARKET TARGETING

The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.

Target segments in which a firm can profitably generate the greatest customer value and sustain it over time.

Companies with limited resources will target a few segments. Or serve several related segments, with several different consumers with same basic want e.g. Clothing.

Large companies on the other hand eventually seek full market coverage. E.g GM says they make a car for every ‘person, purse and personality’.

MARKETING DIFFERENTIATION AND POSITIONING

Once a company has decided which market segments to enter it must decide how it will differentiate its market offerings for each segments and what positions it wants to occupy in those segments.

Marketers want to develop unique market positions for their products. If the product is perceived to be exactly the same as others in the market, consumers will have no reason to but it.

Examples PTO

MARKETING DIFFERENTIATION AND POSITIONING

E.g. BMW makes the ‘ultimate driving machine’. Ford is ‘built for the road ahead’ Kia promises ‘the power to surprise’ Master card gives you ‘priceless experience’.

Positioning:Arranging for a product to occupy a clear,

distinctive and desirable place relative to competing products in the minds of target consumers.

Differentiation:Actually differentiating the market offering to

create superior customer value.

MARKETING DIFFERENTIATION AND POSITIONING

In positioning itself the firm first identifies possible customer value differences that can provide a competitive advantage upon which to build position.

Firms can either offer lower prices or more benefits at higher prices to deliver more value.

Once the company promises greater value it then must also deliver that value.

Company must take strong steps to deliver and communicate that position to target consumers.