Step6
Project 4: Developing and Implementing a Marketing Plan Start Here
Introduction
In this project, your client has tasked your team with creating a marketing plan with the goal of increasing sales to other businesses in the United States. This project has been broken down into several smaller tasks in the steps below:
Step 1: Prepare for Group Work Step 2: Review Information on Business-to-Business (B2B) Marketing Step 3: Understand the Components of a Marketing Plan and Research Guidelines Step 4: Prepare a Situation Analysis Report Step 5: Conduct an Environmental Scan Step 6: Research and Analyze the Company's US Market Step 7: Develop Marketing Objectives Step 8: Conduct a Segmenting and Targeting of the US Market and Product Positioning (STP) Step 9: Develop a Marketing Strategy Step 10: Complete Financial Analysis and Implementation, Controls, and Contingency Plan Step 11: Complete and Submit Your Marketing Plan Step 12: Complete Skills Gap Analysis Step 13: Submit Your Work
Each task will help you create one piece of a complete marketing plan. You will have three weeks, so you should complete the 13 steps of this project by the end of Week 10. If you have any questions, please ask your instructor.
During this project, please submit your individual contribution to the team effort for the instructor to see. Lack of participation on this project as defined in your team agreement may affect your grade.
Your work will be evaluated using the competencies listed below.
· 1.3: Provide sufficient, correctly cited support that substantiates the writer's ideas.
· 2.1: Identify and clearly explain the issue, question, or problem under critical consideration.
· 2.2: Locate and access sufficient information to investigate the issue or problem.
· 3.1: Identify numerical or mathematical information that is relevant in a problem or situation.
· 4.3: Contribute to team projects, assignments, or organizational goals as an engaged member of a team.
· Step 2: Review Information on Business-to-Business (B2B) Marketing
· As You Get Started
· Jillian Best catches you in the hallway:
· "Listen, before I send you the case file on our new client, I want to make sure you have a thorough understanding of the business-to-business relationships that will be at the core of the marketing plan you will be contributing to. Look for an email from me this afternoon."
· INBOX: 1 New Message
· Subject: Case Primer for Marketing Plan From: Jillian Best, CEO, MCS To: You As you have learned through your work with MCS clients, marketing is one of the most important functional areas in business. As you get oriented with the realities of business-to-business (B2B) marketing, I’d like you to do some more reading on two main elements: (1) business buying behavior, and (2) strategic alliances.
· Business buying behavior relates to how business customers and their suppliers explore different avenues to manage relationships and enhance efficiency and effectiveness. Fostering the right relationship with businesses is crucial for any holistic marketing plan. B2B relationships are affected by supply, complexity of supply, availability of alternatives, and supply-market dynamism.
· In addition, our new client may consider forming strategic alliances to expand its US operations. The twenty-first century has seen an increased use of long-term global strategic alliances among both producers and distribution companies. Organizations form these alliances in an effort to secure commercial advantage and eliminate waste from their distribution channels. They can be crucial to success.
· Please review the information linked above before going any further. This is a big client and a tremendous opportunity for MCS. Let me know if any questions arise as you get oriented with your team.
· Best,
· Jillian
Marketing
Definitions
One of the most important functional areas in business is marketing, as it deals with customers more than any other function. Companies such as Google, Swiss Bank, Deutsche Bank, Gucci, Airbus, Apple, McDonalds, and Toyota have a passion for understanding their customers and satisfying their needs in "well-defined target markets" (Kotler & Armstrong, 2014, p. 4). Basically, marketing is a managerial and social function through which companies and consumers create and exchange value.
The American Marketing Association (AMA) defines marketing as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large" (AMA, 2013, para. 1).
Kotler and Armstrong (2014) define marketing as the "process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return" (p. 5).
On the other hand, Kotler and Keller (2015) define marketing management as the science and art of selecting target markets, and the practice of acquiring, maintaining, and growing customers through the creation, delivery, and communication of superior customer value—all while maintaining profitability.
Remember, marketing is not selling; selling is just a component of marketing!
The Marketing Process
Selecting a product or a service to develop is a demanding process that requires cross-functional teams to research, select, develop, and launch new products. In addition, the company needs to evaluate the attractiveness of a new business. Sometimes the company may seek external help to develop a new product, as it may lack the necessary technical expertise, market knowledge, or resources, or may simply want to spread the financial risk involved (i.e., open innovation, or innovation using strategic alliances.)
The marketing process involves five steps (Kotler & Armstrong, 2014, p. 5):
1. understanding the marketplace and consumer needs and wants
2. designing a consumer-driven marketing strategy
3. constructing an integrated marketing program that delivers superior value
4. building profitable relationships and creating consumer satisfaction
5. capturing value from customers to create profits and customer equity
To effectively engage in the marketing process, a business needs to understand the following elements:
1. consumers
2. how to acquire market knowledge (primary and secondary research)
3. how to turn that knowledge into products that are needed and wanted by a group of consumers
4. how to create market offerings that not only create value for the consumer but profitability for the organization
5. how to accomplish these tasks while being socially responsible and engaging in ethical behavior
Furthermore, there are five major customer value themes (Kotler & Armstrong, 2014, p. XVI):
1. creating value for the consumer in order to capture value from them in return
2. creating and managing strong local and global value-creating brands
3. capitalizing on new marketing technologies, such social media (i.e., digital marketing)
4. assessing and managing return on marketing investment
5. sustainable global marketing
References
AMA. (2013). Marketing definition. Retrieved from www.ama.org
Kotler, P. & Armstrong, G. (2014). Principles of marketing (15th ed.). Upper Saddle River, NJ: Pearson.
Kotler, P., & Keller, K. (2015). Marketing management (15th ed.). Upper Saddle River, NJ: Pearson.
Business Buying Behavior
Business suppliers and their customers are using more vertical coordination and are exploring ways to create more value from their relationships. Customer loyalty is largely driven by early supplier involvement, supply-chain management, and purchasing alliances (Kotler & Keller, 2015). For example, the Renault-Nissan Alliance led by Chairman Carlos Ghosn is able to secure preferential prices from its suppliers. Neither Renault nor Nissan would be able to get the same prices when buying alone. Although vertical coordination of this type may foster strong customer-supplier relationships, it may also involve risks (e.g., limited flexibility). Business to business (B2B) marketers use every available marketing tool to gain and retain customers. They bundle valuable services with their product offerings, use systems selling (i.e., buying a total-solution package from a single vendor), and capitalize on online and offline communications. Furthermore, B2B marketers are increasingly borrowing marketing practices from business-to-consumer markets to create and enhance their brands (Kotler & Keller, 2015). These marketers routinely rely on long-term personal relationships with their major customers, providing useful information and establishing trust to secure big contracts (Zhang, Watson IV, Palmatier, & Dant, 2016). While B2B companies recognize the disruptive power of technology, many have been cautious in anticipating the impact of advances such as the internet, social media, and crowdsourcing on corporate buying behavior. These companies have also been slow to adopt marketing analytical tools and big data, even though these developments could change existing company-wide business practices and models. Changes to company-wide operations require a closer alignment between the business marketers and other functional units within the company. For example, several B2B companies increasingly rely on social media to incorporate the voice of the customer (VoC) to narrow the gap between sales, marketing, and innovation (Spekman, 2015). Much of the B2B sector is in the service business (e.g., hotels, banks, airlines, hospitals, and repair companies), just as many employees in the manufacturing sector, including accountants, lawyers, and IT professionals, are actually service providers. As B2B companies struggle to differentiate their physical products, they are increasingly striving for service differentiation by providing faster customer response, faster complaints resolution, and timely delivery (Kotler & Keller, 2015).
References
Kotler, P. & Keller, K. L. (2015). Marketing management (15th ed.). Upper Saddle River, NJ: Pearson. Spekman, R. E. (2015). The Journal of Business-to-Business Marketing at 21 and my perspective on the field of B to B marketing. Journal of Business-to-Business Marketing, 22(1–2), 87–94. doi:10.1080/1051712X.2015.1020245 Zhang, J. Z., Watson IV, G. F., Palmatier, R. W., & Dant, R. P. (2016). Dynamic relationship marketing. Journal of Marketing, 80(5), 53–90. doi:10.1509/jm.15.0066
Project 4: Developing and Implementing a Marketing Plan Step 3: Understand the Components of a Marketing Plan and Research Guidelines
The team's marketing knowledge and data acquisition skills are crucial to the success of this project. Your team will collect and analyze the information necessary to develop a marketing plan for expanding the company's operations within the United States.
Your final marketing plan will ultimately include a situation analysis, analyses of the client's market, strategy, and financing, and an outline describing the measures to implement the plan. Use this marketing plan template to help you create your marketing plan.
Take Note
To carry out this assignment, your marketing team needs to understand the client's customers, how to acquire market knowledge (through primary and secondary research), and how to turn that knowledge into offerings that are needed and wanted by a group of customers. You must also be able to invent market offerings that not only create value for the customer, but also create profitability for the client in a socially responsible and ethical way.
As you will recall from the previous projects, there are two types of market research: primary and secondary research. Both types of research are necessary when creating a marketing plan. As you conduct research for your marketing plan, use the UMGC Library's Research Guides, specifically (1) Business and Management and (2) Marketing. Consult these two research guides and find articles that will help you complete your assignments. It is easier if you conduct a separate search for each section of your marketing plan. Also, use databases, such as Hoover's and ABI/INFORM to research the client company and its industry.
Now that you understand the components of a marketing plan, continue to the next step, where your team will learn more details about your client and its industry.
Marketing Plan
A marketing plan is a written document that outlines the marketing program for a company or a product or service, along with the promotional budget allocation over the planning period. In other words, a marketing plan details what is needed to implement a marketing program and achieve the goals within it. When developing a marketing plan, you should be guided by the organization's vision and mission statements.
It is important to note that a marketing plan is not the same as a business plan. While the marketing plan is part of the business plan, business plans typically also include additional information such as financial strategies, operations plans, risk management techniques, and human resources details.
Resources
· Not Your Father’s Marketing Plan
· Course Resource
· Marketing Plan Template
·
· Marketing Plan Template
·
· 1. Executive summary
· 2. Situation analysis
· 2.1 Mission
· 2.2 Product or service description
· 2.3 Value proposition
· 2.4 Internal environment scan (SWOT analysis)
· 2.5 External environment scan (PESTEL & Porter's five forces analyses)
· 2.6 Critical issues
· 3. Market analysis
· 3.1 Marketing research
· 3.2 Market size and growth
· 3.3 Market trends
· 3.4 Customer analysis (including needs analysis)
· 4. Strategic analysis
· 4.1 Marketing objectives (including financial objectives)
· 4.2 Market segments
· 4.3 Target market
· 4.4 Positioning strategy
· 4.5 Product and branding strategy
· 4.6 Pricing strategy
· 4.7 Distribution and supply chain strategy
· 4.8 Integrated marketing communications strategy
· 5. Financial analysis
· 5.1 Breakeven analysis
· 5.2 Sales forecast
· 5.3 Expense forecast
· 6. Implementation, controls, and contingency plan
· 6.1 Implementation
· 6.2 Controls
· 6.3 Contingency plans
Primary and Secondary Research
The American Marketing Association (AMA) defines marketing research as follows: “the function that links the consumer, customer, and public to the marketer through information—information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications.” (AMA, 2013, para. 2)
There are two types of research (Marshall & Johnston, 2011):
· primary research—Data is collected specifically for a certain research question, (i.e., primary data). Data may be quantitative (statistical analysis), or qualitative (e.g., surveys, focus groups, and interviews). Primary research is important when making strategic decisions. While primary research is costly and more time consuming, it is more accurate and reliable.
· secondary research—Data was collected for some other purpose than the research question at hand. Secondary research may involve an internet search, periodicals, CRM data, government sources (e.g., economic census), and market research organizations. Secondary data is cheaper to obtain and is less time consuming to use because it is readily available; however, it may be outdated or unreliable. In addition, secondary research may not be a perfect fit for the research question. In general, primary research usually starts with a scan of the available secondary information to help further refine the search.
References
AMA (2013). Marketing research definition. Retrieved from www.ama.org
Marshall, G. W., & Johnston, M. W. (2011). Essentials of marketing management. New York, NY: McGraw-Hill.
Project 4: Developing and Implementing a Marketing Plan Step 4: Prepare a Situation Analysis Report
Required Readings
Chapters 1, 3, & 14
Lancaster, G., & Massingham, L. (2018). Essentials of marketing management (2nd ed.). Routledge
INBOX: 1 New Message
Subject: Company Case File & Questions to Consider From: Jillian Best, CEO, MCS To: Team Hi again. I wanted to provide you with the company case file and some pertinent questions for you to consider while you work on your B2B marketing plan.
As part of the preparation necessary to complete your business-to-business marketing plan, you and your team will need to do in-depth research on your client's company, including its operations, global reach, and range of offerings.
By the end of Week 8, I need you to produce a situation analysis report explaining your team's findings on the company. Be sure to include a value proposition, essentially the promise that is made to the customer, explaining the reason a customer purchases a product or uses a service (i.e., the value that a company delivers to its customers).
Start by reading the attached case file and be sure to consider the following questions while you do additional research:
· Where is the company headquartered?
· What are the company's major products and/or services?
· What is the company's annual revenue in dollars, and what is its annual production in units?
· Does the company own its own facilities or does it subcontract manufacturing to others?
· Who are the company's major suppliers of raw materials or parts, and where are they located?
· What is the distribution of the company's workforce by country?
· How does the company differentiate its offering in its highly competitive markets?
· Does the company have exclusive marketing or distribution agreements or partnerships?
· Who are the company's major global and US customers?
· What benefits does the company offer to its customers?
· Who are the company's major global and US competitors?
When developing your situation analysis, you should also understand the importance of vision and mission statements and then research the company's own vision and mission statements.
Write a four-page document detailing the main findings of your research about your client, including its mission and vision statement. Submit your document to your team’s study group.
That's it for now,
Value Proposition
Companies address their customers through their value proposition, which is the totality of the benefits offered to satisfy customer needs and wants. The product or service will only be successful if it delivers value and satisfies the target customer. In other words, the value proposition is more than just the core positioning of the product or service; it represents the whole set of benefits that a company promises to deliver. Accordingly, astute product or service positioning will result in a successful customer-focused value proposition (i.e., a clear reason why the target customers should buy the offering) (Kotler & Keller, 2015).
References
Kotler, P. & Keller, K. L. (2015). Marketing management (15th ed.). Upper Saddle River, NJ: Pearson.
Learning Topic
Vision
Responsibility for articulating an organization's vision typically rests with the CEO and leadership team. While a mission describes the present purpose of the enterprise, vision is about a desired future. When done well, vision statements serve as a source of ongoing inspiration for all stakeholders, helping them see what is possible if everyone commits and performs optimally. In Vision, located in the Resources section below, Porterfield (2004) explains more about the purpose of an organizational vision and vision statement as well as how they should be developed and communicated.
Resources
· Vision
Collins and Porras (1991) examine the challenges of creating a single vision for large multidivisional and geographically dispersed organizations. They write about how difficult it can be for a leader to craft a compelling vision and how sometimes the resulting statement ends up being more about mission than vision. In presenting their proposed framework for vision creation, Collins and Porras emphasize the importance of agreement about core values and beliefs, sharing examples that are as relevant now as they were when their article was published.
Furthermore, an analysis of powerful vision statements led Kantabutra and Avery (2010, p. 3) to propose seven important characteristics:
· conciseness
· clarity
· future orientation
· stability
· challenge
· abstractness
· desirability or ability to inspire
Consult UMGC's online library to find out out more about how a vision should be developed, the appropriate role of leaders in formulating them, their relative importance for organizational success, and other questions related to the development of an organization's vision.
Namely, an organization’s vision statement should be powerful and serve as a compelling source of inspiration for stakeholders.
References
Collins, J. C., & Porras, J. I. (1991). Organizational vision and visionary organizations. California Management Review, 34(1), 30.
Kantabutra, S., & Avery, G. C. (2010). The power of vision: Statements that resonate. Journal of Business Strategy, 31(1), 37-45. doi:10.1108/02756661011012769
Porterfield, R. (2004). Vision. In M. J. Stahl (Ed.), Encyclopedia of health care management (pp. 586-586). Thousand Oaks, CA: SAGE Publications Ltd. doi: 10.4135/9781412950602.n837
Learning Topic
Mission
An organization should have a clearly defined mission that guides decisions and (along with an organizational vision) future directions. While organizations’ missions are typically stable, changes in scope and sometimes even purpose do occur. Sometimes these changes are intentional, and the rationale is easy to discover. but sometimes this is not the case. A common occurrence known as mission creep can happen when an organization’s scope expands, often incrementally, in a direction that was not originally intended. You will also see changes in mission caused by market expansion or contraction, mergers and acquisitions, innovation, changing societal needs, and so on.
Another common occurrence, known as mission proliferation, can happen when different parts of the organization articulate and publish independent missions, often to help inspire and direct those working in subunits. In theory, each subunit mission statement should align with and support the organization’s mission, but this is not always the case and deviations from the organization's mission may contribute to confusion. This outcome may be especially true in organizations that are large and complex, or in ones where decision making is decentralized.
An organization's mission may be found in a formal published statement or explained verbally be the CEO or another senior leader. Public sector organizations sometimes have two organizational mission statements—an official version that is long and detailed, and an abbreviated version used for public dissemination. A mission can change over time, and it can be instructive to examine the process used the bring about that change. It is also useful to ask whether there is evidence an organization's mission is having a positive impact on its performance.
Resources
· Benefits, Characteristics, Components, and Cxamples of Customer-oriented Mission Statements
· Missions and Mission Statements
· A Mission Statement Analysis Comparing the United States and Three Other English Speaking Countries
· Does Company Size Affect Mission Statement Content?
Check Your Knowledge
Question 1
What purposes should an organizational mission serve?
An organization's mission should clarify the purpose and serve as a guide for decisions and future directions.
Question 2
What is mission creep?
Mission creep is an unplanned gradual expansion of an organization's scope, often in an unintended direction.
Question 3
One of the potential challenges associated with organizational missions is mission proliferation. Explain what this means and why it can be problematic.
Mission proliferation occurs when different parts of an organization create their own missions and mission statements. The problem arises when this is done without giving sufficient attention to how these departmental or unit missions contribute to the overall organizational mission.
Question 4
What are some of the things that a mission statement should accomplish?
· provides a broadly phrased statement of the firm's long-term goals
· distinguishes the organization from others in the same industry
· for the organization's product or market, clarifies the scope of operations
· defines the organization's goals and aspirations
· (ideally, it provides a focus for the organization's actions
Source: Cavanagh, 2008, para. 1.
Question 5
What are some of the problems that can occur in the absence of an effective and organizational mission and well-written mission statement?
· Managers may make decisions based upon their individual biases, priorities, and preferences.
· Time and resources may be wasted through pursuing actions that do not contribute to the achievement of the organization's goals.
· The organization may not perform as well in the marketplace as competitor organizations that do have strong mission statements.
Source: Cavanagh, 2008, paras. 4, 6, 15.
Question 6
Below are mission statements for Coca-Cola and Pepsi published on their corporate websites in 2016. Apply what you have just read about effective missions and mission statements to an analysis of these two examples.
1. Which statement does the best job describing the company's purpose and why? What about if you were an investor?
2. Would your conclusion change if you were looking at this from the perspective of a customer? What about if you were an employee?
Coca-Cola Our Mission Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions. To refresh the world… To inspire moments of optimism and happiness… To create value and make a difference.
Pepsi As one of the largest food and beverage companies in the world, our mission is to provide consumers around the world with delicious, affordable, convenient and complementary foods and beverages from wholesome breakfasts to healthy and fun daytime snacks and beverages to evening treats. We are committed to investing in our people, our company and the communities where we operate to help position the company for long-term, sustainable growth.
Pepsi's mission statement is specific about the business the company is in: food and beverages. The statement also clarifies the standards Pepsi holds itself to by including the terms delicious, affordable, convenient, wholesome, and healthy in its statement. Finally, Pepsi ends its mission statement by speaking to important corporate values.
In contrast, if you didn't know the business Coca-Cola is in its mission statement wouldn't help you figure it out. The phrase “refresh the world” might serve as a hint for some but if you had never heard of Coca-Cola it would be pretty difficult to figure out what the company actually does. The other parts of the firm's mission statement are equally vague. One possible advantage of Coca-Cola's mission statement is that it leaves scope for creativity and innovation if the company's leadership chooses to diversify.
With these observations as background, it is fairly easy to argue that Pepsi's mission statement does a better job of specifying the organization's purpose. As for the investor's perspective, much would depend upon the person's priorities. Someone looking for a dynamic company open to expanding its scope of business might be drawn to Coca-Cola's mission. An investor interested in a company committed to its current business might find more comfort in Pepsi's mission statement.
Of course, a wise investor would want much more information about both companies. A potential customer would almost certainly find Pepsi's mission statement more useful. Similarly, employees would probably be attracted to Pepsi's mission statement because it includes a commitment to investing in its people.
Project 4: Developing and Implementing a Marketing Plan Step 5: Conduct an Environmental Scan
As a member of the business development team for this project, you use quantitative and qualitative market information to make important decisions and set the direction of the marketing plan. As you continue to work on your situation analysis report, your team will use the following tools to conduct an environmental scan , the foundation on which a solid marketing plan is built.
Tools for Environmental Scan
Company-Specific Analysis (internal)
· SWOT analysis —A SWOT analysis is a planning and brainstorming tool that helps a company evaluate its projects and formulate its business plans. SWOT stands for strengths, weaknesses, opportunities, and threats. You will use this tool to identify and analyze the company's internal strengths and weaknesses as well as its external opportunities and threats. The results of this analysis may help the company improve its business or forecast how a new product or service will perform (Harmon, 2016).
Industry, Market, and Customer Analysis (external)
· PESTEL analysis —A PESTEL analysis (sometimes called PEST analysis) enables the company to identify, analyze, and monitor the political, economic, social, technological, legal (including regulatory), and environmental factors that may affect its operations (Frue, 2017).
· Porter's five forces analysis —Porter's five forces analysis is a framework that can help the company understand the competitive forces at play in its industry. These forces may influence how economic value is divided among the company's competitors in the industry (Porter, 2008).
References
Frue, K. (2017). Why do PEST analysis for your business? Retrieved from http://pestleanalysis.com/
Harmon, A. (2016). SWOT analysis. Salem Press Encyclopedia [online]. Retrieved from Research Starters, Ipswich, MA.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86(1), 78–93.
Research your industry and its market trends in the United States and identify market opportunities, threats, and the company's major global competition. Then conduct the SWOT, PESTEL, and Porter's five forces analyses on your client's company. These tools should allow you to analyze the company's internal environment, customers, and macro-environment (external environment), and to answer the following questions in your situation analysis report:
· Which elements have the biggest impact on the company's success?
· What factors affect the company's customers (other businesses)?
Deliverable: Your final situation analysis by the end of Week 8 should include a four-page overview of your research findings and a ten-page review of your environmental scan. The completed situation analysis report should be 14 pages, excluding cover page, the reference list, and appendices. Any tables, graphs, and figures should be included as appendices. Your report should have one-inch margins and be double spaced in 12-point Times New Roman font. The report should be organized using headings and subheadings to improve its readability.
Support your work with scholarly sources and reliable nonscholarly sources such as Reuters, Bloomberg, Yahoo! Finance, Barrons.com, Morningstar.com, Money, Forbes, Fortune, Financial Times, Wall Street Journal, and Harvard Business Review, as well as the UMGC Library databases such as Hoover's and ABI/INFORM. All sources need to be cited using APA formatting, both within the text and in the reference list.
By the end of Week 8, submit your situation analysis report to your team’s study group.
In the next step, you will start a market analysis report.
Learning Topic
Environmental Scan
Companies should monitor the main macroenvironmental forces and the important microenvironmental factors that may affect their profitability. A marketing intelligence unit is crucial for tracking trends, important market developments, and any related opportunities or threats. Good marketing involves the identification and development of such opportunities to profit. A marketing opportunity is a situation where the company can satisfy the customer's needs and wants. These opportunities may appear in different forms, and marketers should be proficient in identifying them (Kotler & Keller, 2015). Marketing opportunities may result from the following conditions (Kotler & Keller, 2015):
· providing something that is in short supply
· providing a product or service in a novel way or of a higher quality
· providing a totally new product or service
An environmental threat is a challenge resulting from an unfavorable development or a trend that may negatively affect a company's sales, profitability, or both. To prepare for such adverse events, companies should monitor the market environment and put contingency plans in place. In addition, companies should scan their internal environments by analyzing their strengths and weaknesses. This analysis will enable them to better identify and capitalize on opportunities and better handle any threats (Kotler & Keller, 2015). Several tools that help conduct environmental scans are available to marketers. These include the PESTEL analysis, the SWOT analysis, and Porter's five forces model.
References
Kotler, P., & Keller, K. L. (2015). Marketing management (15th ed.). Upper Saddle River, NJ: Pearson.
Step 6: Research and Analyze the Company's US Market
Now that you have completed the environmental scan, your team needs to conduct a market analysis of the company's customers in the United States. Outline how the team would conduct this analysis, while considering both current and potential customers. Your analysis should address how you would determine answers to the following questions:
· What needs are being met by the products or services that they purchase? What are the benefits to the customers? Make sure that you differentiate between features and benefits; go beyond manifest motives and consider latent motives.
· Who is involved in the purchase process? Who are influencers? Who are buyers? Who are users?
· How do customers pay? Describe payment plans, financing, banking arrangements, etc.
· Where are the products or services sold and delivered, and what are the distribution channels?
· How often are the different types of the products or services purchased? Is there seasonality to sales?
· Is there any market regulation? Is there self-regulation? Do any federal or state regulations affect the company's US operations?
· What is the size of the market (in dollars and units)? What is the growth rate of that market?
Deliverable: By the end of Week 9 present your results to the CEO in a market analysis report of five pages, excluding cover page, executive summary, the reference list, and appendices. Any tables, graphs, and figures should be included as appendices. Your report should have one-inch margins and be double spaced in 12-point Times New Roman font. The report should be organized using headings and subheadings to improve its readability.
Support your work with scholarly sources and reliable nonscholarly sources such as Reuters, Bloomberg, Yahoo! Finance, Barrons.com, Morningstar.com, Money, Forbes, Fortune, Financial Times, Wall Street Journal, and Harvard Business Review, as well as the UMGC Library databases such as Hoover's and ABI/INFORM. All sources need to be cited using APA formatting, both within the text and in the reference list.
By the end of Week 9, submit your market analysis report to your Study group. Then proceed to the next step, where you will decide on marketing objectives for your client.
Step 7: Develop Marketing Objectives
The next component of the marketing plan your team needs to tackle is the strategic analysis report.
As a marketing team, you need to decide on the marketing objectives for your target market before you develop your company’s marketing strategy. Marketing objectives translate the company's mission and business into long- and short-term goals. Marketing objectives are usually quantitative and include sales (both in units or dollars), market share, and profitability. They may also include qualitative factors such as quality, customer satisfaction, and social responsibility (Kerin & Hartley, 2017). Knowing exactly where you want to go is essential in deciding how to get there. The objectives have to be measurable, specific, and have a set time limit.
Marketing objectives should be challenging but achievable. They are mainly quantitative (with some qualitative ones), and they should be precise and focused.
Using figures from your own market research, please include your projected annual...
1. growth percentage
2. market share percentage
3. sales (in both units and dollars)
4. average unit price
5. profitability percentage
6. customer satisfaction
7. CSR outcomes
8. employee satisfaction rate
Be sure to include a time frame. Also, presenting the figures in a table in the end would look professional.
Deliverable: By the end of Week 9 prepare a one-page document outlining your marketing objectives. This will ultimately form part of your strategic analysis report. Submit your document to your team’s study group.
You will continue your work on a strategic analysis report in the next step, where you will begin to examine your market and determine how the company can meet the marketing objectives you identified.
References
Kerin, R. & Hartley, S. (2017). Marketing (13th ed.). New York, NY: McGraw Hill.
Step 8: Conduct a Segmenting and Targeting of the US Market and Product Positioning (STP)
The next step in developing your strategic analysis report involves segmenting, targeting, and positioning (STP).
Take Note
· Segmenting refers to breaking the market down into homogenous groups.
· Targeting refers to selecting the customer group or groups that you will focus your marketing efforts on. The appropriate segmentation variable is dependent on the needs and wants of customers.
· These decisions are directly tied to your value proposition and require extensive marketing research on the customers. Once the segmentation variable is determined and the target markets selected, you need to develop a positioning strategy, which refers to the way you want the customer to view the product or service relative to the competition.
Describe the market research you would conduct to analyze and segment the US market. Explain how you would select your target markets and explain the process of positioning the company's products or services relative to the competition.
Deliverable: By the end of Week 9 detail your STP in a six-page document. This will ultimately form part of your strategic analysis report. Submit your document to your team’s study group.
Your overall STP is important, because it will create a foundation for the refinements you will make in the next step, where you will compete and submit your strategic analysis report.
Learning Topic
Segmenting, Targeting, and Positioning
Transcript
A market segment includes customers who share similar wants and needs. It is the marketer's job to identify the segments of the overall market that he or she wants to target. Segmenting enables the company to better design its offerings and to better price and deliver them. Segmenting also allows a marketer to fine-tune its marketing program in comparison to its competitors' activities within the same segment. However, the company still needs to be flexible with its offering to individual customers within a certain market segment. Positioning is the design of the company's image to occupy a distinct place in the customers' minds. The company's goal is to place the brand in its customers' minds to maximize potential benefits. Solid brand positioning helps guide the company's marketing strategy by specifying what the brand stands for and how the product or service would satisfy the customers' needs. In other words, what makes this brand special? Positioning should clearly define similarities and differences between brands and communicate these similarities and differences to customers (Kotler & Keller, 2015).
References
Kotler, P., & Keller, K. (2015). Marketing management (15th ed.). Upper Saddle River, NJ. Pearson
Resources
STP in Depth
· Market Segmenting, Targeting, and Positioning
Segmenting
· Strategic Market Segmentation
· Performing Market Segmentation: A Performative Perspective
· The Impacts of A3 on 4Ps — This article discusses how marketing managers can track and leverage consumers’ changing attitudes toward products relevant to psychographic segmentation.
Targeting
· Weidmüller, Inc., Breaks Away from the Competition by Creatively Targeting Customers' Needs
Positioning
· Writing a Strong Positioning Statement
· Marketing Mix Standardization in Multinational Corporations: A Review of the Evidence
Learning Resource
Market Segmenting, Targeting, and Positioning
Suppose you have an idea for a great new offering you hope will become a hot seller. Before you quit your day job, you'll need to ask yourself, does my idea satisfy consumers' needs and add value to existing products? Who's going to buy my product? Will there be enough of these people to make it worthwhile?
Certain people will be more interested in what you plan to offer than others. Not everyone needs homeowner's insurance, not everyone needs physical therapy services, and not every organization needs to purchase vertical lathes or CT scanners. Among those that do, some will buy a few, and a few will buy many. In terms of potential buyers, not all of them are created equal. Your product idea will draw interest if it satisfies a need, adds value, is priced right, or if they are aware of when your product will exist in the marketplace.
Your goal is to figure out which people and organizations are interested in your product ideas. To do this you will need to divide or segment the people and organizations into different groups of potential buyers with similar characteristics. This process, called market segmentation, involves asking the question, what groups of buyers are similar enough that the same product or service will appeal to all of them (Barringer, 2010)? After all, your marketing budget is likely to be limited. You need to get the biggest bang for your buck by focusing on those people you truly have a shot at selling to and tailoring your offering to them.
Targeted Marketing versus Mass Marketing
The segments or groups of people and organizations you decide to sell to is called a target market. Targeted marketing, or differentiated marketing, means that you may differentiate some aspect of marketing (offering, promotion, price) for different groups of customers selected. It is a relatively new phenomenon. Mass marketing, or undifferentiated marketing, came first. It evolved along with mass production and involves selling the same product to everybody. You can think of mass marketing as a shotgun approach: you blast out as many marketing messages as possible on every medium available as often as you can afford (Spellings, Jr, 2009). By contrast, targeted marketing is more like shooting a rifle, homing in on a single target for your message.
Automaker Henry Ford was very successful at both mass production and mass marketing. Ford pioneered the modern-day assembly line early in the twentieth century, which helped him inexpensively produce identical Model T automobiles. They came in only one color: black. "Any customer can have a car painted any color he wants, so long as it is black," Ford used to joke. He also advertised in every major newspaper and persuaded all kinds of publications to carry stories about the new, inexpensive cars. By 1918, half of all cars on America's roads were Model Ts (Ford, 1922).
Then Alfred P. Sloan, the head of General Motors (GM), appeared on the scene. Sloan began to segment consumers in the automobile market—to divide them up by the prices they wanted to pay and the cars they wanted to buy. The idea was to offer a car for every target market or for every income level. His efforts were successful, and in the 1950s, GM overtook Ford as the nation's top automaker (Manzanedo, 2005). (Interestingly, before GM declared bankruptcy in 2009, it was widely believed the automaker actually had too many car models. After eliminating many models, including Pontiac and Oldsmobile, General Motors made a turnaround and posted a large profit for 2011.)
Benefits of Segmenting and Targeting Markets
The story of General Motors raises an important point: segmenting and targeting markets doesn't necessarily mean reducing the number of your customers. In fact, it can help you enlarge your customer base by giving you information with which to successfully adjust some component of your offering—the offering itself, its price, or the way you service and market it. More specifically, the process can help with several import aspects of marketing and sales:
· avoid head-on competition with other firms trying to capture the same customers
· develop new offerings and expand profitable brands and products lines
· remarket older, less-profitable products and brands
· identify early adopters
· redistribute money and sales efforts to focus on your most profitable customers
· retain at-risk customers in danger of defecting to your competitors
The trend today is toward more precise, targeted marketing. Figuring out who's who in your customer base involves some detective work—often market research. A variety of tools and research techniques can be used to segment markets. Government agencies, such as the US Census Bureau, collect and report vast amounts of population information and economic data that can reveal changing consumption trends. Technology is also making it easier for even small companies and entrepreneurs to gather information about potential customers. For example, the online game company GamePUMA.com originally believed its target market consisted of US customers, but when the firm looked more closely at who was downloading games from its website, they were people from all over the globe. With the increased use of social media, companies are able to get information on consumers' search behavior. Loyalty cards that consumers scan at many grocery and drug stores provide an incredible amount of information on consumers' buying behavior.
Companies are now using the Internet to track people's web browsing patterns and segment them into target groups. Even small businesses are able to do this economically because they don't need their own software and programs. They can simply sign up online for products like Google's AdSense and Google Ads programs. You can locate potential customers by looking at blog sites and discussion forums on the Internet. Big-boards.com has thousands of discussion forums you can mine to find potential customers interested in your product. If you go to BlogPoll.com, you can embed a survey in your blog to see what people think of your idea. If you have a website, you can download an application onto your iPhone that will give you up-to-the-minute information and statistics on your site's visitors.
Getting a read on potential target markets doesn't necessarily have to involve technology. Your own personal experience and talking to would-be buyers is an important part of the puzzle. Go where you think would-be buyers go—restaurants, malls, gyms, subways, grocery stores, day-care centers, and offices—and ask questions to find out what they do during the day, what they talk about, what products or services do you see them using, and determine whether they seem to be having an enjoyable experience when using those products.
Healthy Choice frozen dinners were conceived as a result of questioning potential customers. The food-maker ConAgra launched the dinners in the late 1980s after its CEO, Charlie Harper, suffered a heart attack. One day, a colleague complimented Harper on his wife's tasty low-fat turkey stew. That's when Harper realized there were people like him who wanted healthy convenience foods, so he began talking mining information about what people in that group sought. Two years after the Healthy Choice line was launched, it controlled 10 percent of the frozen-dinner market by concentrating on the health-conscious segment (Birchall, 2009a).
Segmenting and Targeting a Firm's Current Customers
Finding and attracting new customers is generally far more difficult than retaining your current customers. Think about how much time and energy you spend when you switch your business from one firm to another, even when you're buying something as simple as a haircut. If you aren't happy with your hair stylist and want to find a new hairdresser, you first have to talk to people with haircuts you like or read reviews of salons. Once you decide on a particular salon, you have to find it and explain to the new hairdresser how you want your haircut and hope he or she gets it right. You also have to figure out what type of credit cards the new salon will accept and whether tips can be put on your credit card.
Finding new customers, getting to know them, and figuring out what they really want is also a difficult process, one that progresses through trial and error. That's why it's so important to get to know current customers, form close relationships, and implement focused selling efforts (Birchall, 2009b).
In 2009, Backroads, a California company focused on adventure-based travel increased its revenues by creating a personalized marketing campaign for people who had done business with them in the past. Backroads looked at customers' past purchases, the seasons in which they took their trips, their levels of activity, and whether or not the customers tended to vacation with children. Based on their findings, Backroads created three relevant trip suggestions for each customer and sent postcards and e-mails with links to customized web pages reminding each customer of the trips he or she had previously booked with Backroads and suggesting new ones. "In terms of past customers, it was like off-the-charts better [than past campaigns]," says Massimo Prioreschi, the vice president of Backroads' sales and marketing group ("Lift Sales with Personalized," 2009).
In addition to studying buying patterns, firms also try to get a better understanding of their customers by surveying them or using loyalty programs. For example, if you sign up to become a frequent flier with a certain airline, the airline will likely ask you a number of questions about your likes and dislikes. This information will then be entered into a customer relationship management (CRM) system, and you might be e-mailed special deals based on the routes you tend to fly. British Airways goes so far as to track the magazines its most elite fliers like to read so the publications are available to them on its planes.
Twitter is another tool companies use to keep in touch with their customers and boost their revenues. When the homemaking maven Martha Stewart schedules a book signing, she tweets to her followers, and voilà, many of them show up at the bookstore she's appearing at to buy copies. Finding enjoyable ways to interact with customers—whether it's meeting or tweeting to them, or putting on events and tradeshows they want to attend—is the key to forming relationships.
Many firms, even small ones, are using Facebook to develop closer relationships with their customers. Hansen Cakes, a bakery in Beverly Hills, California, has about two thousand customers who visit its Facebook page. During her downtime at the bakery, employee Suzi Finer posts "cakes updates" and photos of the goodies she's working on to the site. Along with information about the cakes, Finer extends special offers to customers and mixes in any gossip about Hollywood celebrities she's spotted in the area. After Hansen Cakes launched its Facebook page, the bakery's sales shot up 15 to 20 percent. "And that's during the recession," notes Finer, who is obviously proud of the results she's gotten (Graham, 2009).
Regardless of how well companies know their customers, it's important to remember that some customers are highly profitable, others aren't, and still others actually end up costing your firm money to serve. Consequently, you will want to interact with some customers more than others. Believe it or not, some firms deliberately "untarget" unprofitable customers. Best Buy got a lot of attention (not all of it good) when it was discovered they had categorized its buyers into "personas," or types of buyers, and created customized sales approaches for each. For example, an upper-middle-class woman was referred to as a "Jill." A young urban man was referred to as a "Buzz." Pesky, bargain-hunting customers that Best Buy couldn't make much of a profit from were referred to as "devils" and taken off the company's mailing lists (Marco, 2008).
The knife cuts both ways, though. Not all firms are equal in the minds of consumers, who will choose to do business with some companies rather than others. Consumers expect market segmentation to manifest through policies and procedures to have their needs met ("Market Segmentation," n.d).
Steps companies take to target their best customers, form close, personal relationships with them, and give them what they want—a process called one-to-one marketing—are outlined in the following subsection. In terms of our shotgun versus rifle approach, you can think of one-to-one marketing as a rifle approach, but with an added advantage: now you have a scope on your rifle.
One-to-one marketing was an idea proposed by Don Peppers and Martha Rogers in their 1994 book, The One to One Future. The book described what life would be like after mass marketing. We would all be able to get exactly what we want from sellers, and our relationships with them would be collaborative, rather than adversarial. Are we there yet? Not quite, but it does seem to be the direction the trend toward highly targeted marketing is following.
Steps to One-to-One Marketing
1. Establish short-term measures to evaluate your efforts—Determine how you will measure your effort. Will you use higher customer satisfaction ratings, increased revenues earned per customer, the number of products sold to customers, transaction costs, or another measure?
2. Identify your customers—Gather all the information you can about your current customers, including their buying patterns, likes, and dislikes. When conducting business with them, include an "opt in" question that allows you to legally gather and use their phone numbers and e-mail addresses so you can remain in contact with them.
3. Differentiate among your customers—Determine who your best customers are in terms of what they spend and will spend in the future (their customer lifetime value), and how easy or difficult they are to serve. Identify and target customers that spend only small amounts with you but large amounts with your competitors.
4. Interact with your customers, targeting your best ones—Find ways and media in which to talk to customers about topics they're interested in and enjoy. Spend the bulk of your resources interacting with your best high-value customers. Minimize the time and money you spend on low-value customers with low growth potential.
5. Customize your products and marketing messages to meet their needs—Try to customize your marketing messages and products in order to give your customers exactly what they want—whether it's the product itself, its packaging, delivery, or the services associated with it.
Source: Harler, 2008; Peppers & Rogers, 1999; Peppers, Rogers, & Dorf, 1999
Key Points
Choosing select groups of people to sell to is called target marketing, or differentiated marketing. Mass marketing, or undifferentiated marketing, involves selling the same product to everyone. The trend today is toward more precise, targeted marketing. Finding and attracting new customers is generally far more difficult than retaining one's current customers, which is why organizations try to interact with and form relationships with their current customers. The goal of firms is to do as much business with their best customers as possible. Forming close, personal relationships with customers and giving them exactly what they want is a process called one-to-one marketing.
How Markets Are Segmented
Sellers can choose to pursue consumer markets, business-to-business (B2B) markets, or both. Consequently, one obvious way to begin the segmentation process is to segment markets into these two types of groups.
Many of the same factors that influence consumers to buy certain products can also be used to segment customers. A firm will often use multiple segmentation bases, or criteria to classify buyers, to get a fuller picture of its customers and create real value for them. Each variable adds a layer of information. Think of it as being similar to the way your professor builds up information on a PowerPoint slide to the point where you are able to understand the material being presented.
There are all kinds of characteristics you can use to slice and dice a market. Big-and-tall stores cater to the segment of population that's larger in size. What about people with wide or narrow feet, or people with medical conditions, or certain hobbies? Next, we look primarily at the ways consumer markets can be segmented. Later in the chapter, we'll look at the ways B2B markets can be segmented.
Types of Segmentation Bases
Notice that the useful characteristics fall into one of four segmentation categories: behavioral, demographic, geographic, or psychographic. We'll discuss each of these categories in a moment. For now, you can get a rough idea of what the categories consist of by looking at them in terms of how marketing professionals might answer the following questions:
· behavioral segmentation—What benefits do customers want, and how do they use our product?
· demographic segmentation—How do the ages, races, and ethnic backgrounds of our customers affect what they buy?
· geographic segmentation—Where are our customers located, and how can we reach them? What products do they buy based on their locations?
· psychographic segmentation—What do our customers think about and value? How do they live their lives?
Segmenting by Behavior
Behavioral segmentation divides people and organizations into groups according to how they interact with products. Benefits segmentation—segmenting buyers by the benefits they want from products—is very common. Take toothpaste, for example. Which benefit is most important to you when you buy a toothpaste? The toothpaste's price, ability to whiten your teeth, fight tooth decay, freshen your breath, or something else? Perhaps it's a combination of two or more benefits. If marketing professionals know what those benefits are, they can then tailor different toothpaste offerings to you (and other people like you). For example, Colgate Whitening Icy Blast 2-in-1 toothpaste and mouthwash is aimed at people who want the benefits of both fresher breath and whiter teeth.
Another way businesses segment buyers is by their usage rates—that is, how often, if ever, they use certain products. Harrah's, an entertainment and gaming company, gathers information about the people who gamble at its casinos. High rollers, or people who spend a lot of money, are considered VIPs and get special treatment, including a personal host who looks after their needs during their casino visits. Companies are interested in frequent users because they want to reach other people like them. They are also keenly interested in nonusers and how they can be persuaded to use products.
The ways people use products is also be a basis for segmentation. Avon's Skin So Soft was originally a beauty product, but after the company discovered that some people were using it as a mosquito repellant, it began marketing the product for that purpose. Eventually, Avon created a separate product called Skin So Soft Bug Guard, which competes with repellents like Off! Similarly, Glad, the company that makes plastic wrap and bags, found out customers were using its Press'n Seal wrap in ways the company could never have imagined. The personnel in Glad's marketing department subsequently launched a website called 1000uses.com that contains both the company's and consumers' use tips. Some of the ways people use the product are pretty unusual, as evidenced by the comments posted on the site: "I have a hedgehog who likes to run on his wheel a lot. After quite a while of cleaning a gross wheel every morning, I got the tip to use Press'n Seal wrap on his wheel, making clean up much easier! My hedgie can run all he wants, and I don't have to think about the cleanup. Now we're both GLAD!"
Although we doubt Glad will ever go to great lengths to segment the Press 'n Seal market by targeting hedgehog owners, the firm has certainly gathered a lot of good consumer insight about the product and publicity from its website.
Segmenting by Demographics
Segmenting buyers by personal characteristics such as age, income, ethnicity and nationality, education, occupation, religion, social class, and family size is called demographic segmentation. Demographics are commonly used to segment markets because demographic information is publicly available in databases around the world. You can obtain a great deal of demographic information on the US Census Bureau's website. Other government websites you can tap include FedStats and The World Factbook, which contains statistics about countries around the world. In addition to current statistics, the sites contain forecasts of demographic trends, such as whether some segments of the population are expected to grow or decline.
Age
At this point in your life, you are probably more likely to buy a car than a funeral plot. Marketing professionals know this. That's why they try to segment consumers by their ages. You're probably familiar with some of the age groups most commonly segmented in the United States. Into which category do you fall?
Today, millennials compose the largest generation. The baby boomer generation is the second largest, and over the course of the last thirty years or so, it has been a very attractive market for sellers. Retro brands—old brands or products that companies bring back for a period of time—were aimed at baby boomers during the recent economic downturn. Pepsi Throwback and Mountain Dew Throwback, which are made with cane sugar like they were in the good old days, instead of corn syrup, are two such products (Schlacter, 2009). Marketing professionals believe they appealed to baby boomers because they reminded them of better times when they didn't have to worry about being laid off, about losing their homes, or about their retirement funds and pensions drying up.
Baby boomers are aging and the size of the group will eventually decline. By contrast, the members of the millennial generation have a lifetime of buying still ahead of them, which translates to a lot of potential customer lifetime value (CLV), the amount a customer will spend on a particular brand over his or her lifetime. However, a recent survey found that the 2009 recession and slow job growth had forced this age group to change their spending habits, and that roughly half of older millennials reported they had no savings ("Generation Y Lacking Savings," 2009).
So which group or groups should your firm target? Although it's hard to be all things to all people, many companies try to broaden their customer bases by appealing to multiple generations so they don't lose market share when demographics change. Several companies have introduced lower-cost brands targeting Generation Xers, who have less spending power than boomers. For example, the kitchenware and home-furnishings company Williams-Sonoma opened the Elm Street chain, a less-expensive version of the Pottery Barn franchise. The Starwood hotel chain's W hotels, which feature contemporary designs and hip bars, are aimed at Generation Xers (Miller & Washington, 2009).
The video game market is very proud of the fact that along with members of Generation X and millennials, many older Americans still play video games. (You probably know some baby boomers who own a Nintendo Wii.) Products and services in the spa market used to be aimed squarely at adults, but not anymore. Parents are now paying for their tweens to get facials, pedicures, and other pampering in numbers no one in years past could have imagined.
As early as the 1970s, US automakers found themselves in trouble because of changing demographic trends. Many of the companies' buyers were older Americans inclined to buy American. These people hadn't forgotten that Japan bombed Pearl Harbor during World War II and weren't about to buy Japanese vehicles, but younger Americans were. Additionally, Japanese cars had developed a better reputation. Despite the challenges US automakers face today, they have taken great pains to cater to the younger generations. If you are a car buff, you perhaps have noticed that the once-stodgy Cadillac now has a sportier look and stiffer suspension. Likewise, the Chrysler 300 looks more like a muscle car than the old Chrysler Fifth Avenue your great-grandpa might have driven.
Automakers have begun reaching out to Generations Xers and millennials, too. General Motors (GM) has sought to revamp the century-old company by hiring a younger group of managers who understand what younger consumers want. "If you're going to appeal to my daughter, you're going to have to be in the digital world," explained one GM vice president (Cox, 2009).
Companies have to develop new products designed to appeal to younger buyers and also find new ways to reach them. People in these generations not only tend to ignore traditional advertising, but also are downright annoyed by it. To market to Scion drivers, who are generally younger, Toyota created Scion Speak, a social networking site where potential customers can communicate, socialize, and view new models of the car. Online events, such as the fashion shows broadcast over the web, are also getting the attention of younger consumers, as are text, e-mail, and Twitter messages they can sign up for to receive coupons, cash, and free merchandise. Advergames are likewise being used to appeal to younger consumers. Advergames are electronic games sellers create to promote a product or service.
Income
Tweens might appear to be a very attractive market when you consider they will be buying products for years to come. But would you change your mind if you knew that baby boomers account for 50 percent of all consumer spending in the United States? Americans over sixty-five now control nearly three-quarters of the net worth of US households. This group spends $200 billion a year on major discretionary purchases, such as luxury cars, alcohol, vacations, and financial products (Reisenwitz, Iyer, Kuhlmeier, & Eastman, 2007).
Income is used as a segmentation variable because it indicates a group's buying power and may partially reflect their education levels, occupation, and social classes. Higher education levels usually result in higher paying jobs and greater social status. The makers of upscale products, such as Rolexes and Lamborghinis, aim their products at high-income groups. However, a growing number of firms today are aiming their products at lower-income consumers. The fastest-growing product in the financial services sector is prepaid debit cards, most of which are being bought and used by people who don't have bank accounts. Firms are finding that this group is a large, untapped pool of customers who tend to show more loyalty to brands than most consumers. If you capture enough of them, you can earn a profit (von Hoffman, 2006). Based on the targeted market, businesses can determine the location and type of stores where they want to sell their products.
Sometimes income isn't always indicative of who will buy your product. Companies are aware that many consumers want to be in higher income groups and behave like they are already part of them. Mercedes Benz's cheaper line of C-class vehicles is designed to appeal to these consumers.
Gender
Gender is another way to segment consumers. Men and women have different needs and also shop differently. Consequently, the two groups are often, but not always, segmented and targeted differently. Marketing professionals don't stop there, though. For example, because women make many of the purchases for their households, market researchers sometimes try to further divide them into subsegments. (Men are also often subsegmented.) For women, those segments might include stay-at-home housewives, plan-to-work housewives, just-a-job working women, and career-oriented working women. Research has found that women who are solely homemakers tend to spend more money, perhaps because they have more time. In addition to segmenting by gender, market researchers might couple gender with marital status and other demographic characteristics.
Family Life Cycle
Family life cycle refers to the stages families go through over time and how they affect people's buying behavior. For example, if you have no children, your demand for pediatric services is likely to be nonexistent. You may be part of the target market not only for pediatric services but also for a host of other products, such as diapers, daycare, children's clothing, entertainment services, and educational products. A secondary segment of interested consumers might be grandparents, who are likely to spend less on day-to-day childcare items, but more on special-occasion gifts for children. Many markets are segmented based on the special events in people's lives. Think about all the products targeted at brides, including websites and television shows such as Say Yes to the Dress, My Fair Wedding, Platinum Weddings, and Bridezillas.
Resorts also segment vacationers depending on where they are in their family life cycles. When you think of family vacations, you probably think of Disney resorts, but some vacation properties, like Sandals, exclude children from some of their locations. Perhaps they do so because some studies show that the market segment with greatest financial potential is married couples without children (Hill, 1990).
Keep in mind that although you might be able to isolate a segment in the marketplace, including one based on family life cycle, you can't make assumptions about what the people in it will want. Just like people's demographics change, so do their tastes. For example, over the past few decades US families have been getting smaller. Households with a single occupant are more commonplace than ever, but until recently, that hasn't stopped people from demanding bigger cars (and more of them) and larger houses. However, the trend toward larger cars and larger houses now appears to be reversing. High energy costs, the credit crunch, and concern for the environment are leading people to demand smaller houses.
Ethnicity
People's ethnic backgrounds have a big impact on what they buy. If you've visited a grocery store that caters to a different ethnic group than your own, you were probably surprised to see the types of products sold there. It's no secret that the United States is becoming—and will continue to become—more diverse. Hispanic Americans are the fastest-growing minority in the United States, and companies are going to great lengths to court this once overlooked group. In California, the health care provider Kaiser Permanente runs television ads letting members of this segment know that they can request Spanish-speaking physicians and that Spanish-speaking nurses, telephone operators, and translators are available at all of its clinics (Berkowitz, 2006).
African Americans are the second-largest ethnic group in America, a group that collectively has the most buying power of any ethnic minority in the country. Many people of Asian descent are perceived to be early adapters of new technology and have above-average incomes. As a result, companies that sell electronic products, such as AT&T, spend more money segmenting and targeting the Asian community ("Telecommunications Marketing Opportunities," n.d.).
As you can guess, even within various ethnic groups there are many differences in the goods and services buyers choose. Consequently, painting each group with a broad brush would leave you with an incomplete picture of your buyers. For example, although the common ancestral language among the Hispanic segment is Spanish, Hispanics trace their lineages to an array of countries. Nearly 70 percent of Hispanics in the United States trace their lineage to Mexico, while others trace theirs to countries throughout Central America, South America, and the Caribbean. Furthermore, Chinese, Japanese, and Korean immigrants, while grouped as Asians, do not share the same language ("Telecommunications Marketing Opportunities," n.d.).
Moreover, both the Asian and Hispanic market segments include new immigrants, people who immigrated to the United States years ago, and native-born Americans. So what language will you use to communicate your offerings to these people, and where?
Subsegmenting the markets could help you. New American Dimension, a multicultural research firm, has divided the Hispanic market into the following subsegments:
· just moved in-ers—Recent arrivals, Spanish dependent, struggling but optimistic
· FOB-ers (fashionistas on a budget)—Spanish dominant, traditional, but striving for trendy
· accidental explorers—Spanish preferred, not in a rush to embrace US culture
· the enlightened—Bilingual, technology savvy, driven, educated, modern
· doubting tomáses—Bilingual, independent, skeptical, inactive, uninvolved in shopping
· Latin flavored—English preferred, reconnecting with Hispanic traditions
· SYL-ers (single, young latinos)—English dominant, free thinkers, multicultural
You could go so far as to break down subsegments to the individual level, which is the goal behind one-to-one marketing. However, doing so would be dreadfully expensive, notes Juan Guillermo Tornoe, a marketing expert who specializes in Hispanic marketing issues. After all, are you really going to develop different products and different marketing campaigns and communications for each group? Probably not, but "you need to perform your due diligence and understand where the majority of the people you are trying to reach land on this matrix, modifying your message according to this insight," Tornoe explains (2008).
Segmenting by Geography
Suppose your great new product or service idea involves opening a local store. Before you open the store, you will probably want to do some research to determine which geographical areas have the greatest potential. For instance, if your business is a high-end restaurant, should it be located near the local college or country club? If you sell ski equipment, you probably will want to locate your shop somewhere in the vicinity of a mountain range where there is a ski area.
Geographic segmentation divides the market into areas based on location and explains why the checkout clerks at stores sometimes ask for your zip code. It's also why businesses print codes on coupons that correspond to zip codes. When the coupons are redeemed, the store can find out where its customers are located. Geocoding is a process that takes this data and plots it on a map. Geocoding can help businesses see where prospective customers might be clustered and target them with various ad campaigns, including direct mail. One of the most popular geocoding software programs is PRIZM NE, which is produced by a company called Claritas. PRIZM NE uses zip codes and demographic information to classify the American population into segments. The idea behind PRIZM is that "you are where you live." Combining both demographic and geographic information is referred to as geodemographics or neighborhood geography, which operates on the idea is that housing areas in different zip codes typically attract certain types of buyers with certain income levels.
The tourism bureau for the state of Michigan was able to identify and target different customer profiles using PRIZM. Michigan's biggest travel segment are Chicagoans in certain zip codes consisting of upper-middle-class households with children—or the "kids in cul-de-sacs" group, as Claritas puts it. The bureau was also able to identify segments significantly different from the Chicago segment, including blue-collar adults in the Cleveland area who vacation without their children. The organization then created substantially different marketing campaigns to appeal to each group.
City size and population density (the number of people per square mile) are also used for segmentation purposes. Have you ever noticed that in rural towns, McDonald's restaurants are hard to find, but Dairy Queen (DQ) restaurants are usually easy to locate? McDonald's generally won't put a store in a town of fewer than five thousand people. However, this is prime turf for DQ because it doesn't have to compete with bigger franchises.
Proximity marketing is an interesting new technology firms are using to segment and target buyers geographically within a few hundred feet of their businesses using wireless technology. In some areas, you can switch your mobile phone to a discoverable mode while you're shopping and, if you want, get ads and deals from stores as you pass by them, which is often less expensive than hiring people to hand you a flier as you walk by ("Bluetooth Proximity Marketing," 2007).
In addition to figuring out where to locate stores and how to advertise to customers in that area, geographic segmentation helps firms tailor their products. Chances are you won't be able to find the same heavy winter coat in a Walmart in Montana and a Walmart in Florida because of the climate differences between the two places. Market researchers also look at migration patterns to evaluate opportunities. TexMex restaurants are more commonly found in the southwestern United States. However, northern states are now seeing more of them as more people of Hispanic descent move northward.
Segmenting by Psychographics
If your offering fulfills the needs of a specific demographic group, then the demographic can be an important basis for identifying groups of consumers interested in your product. What if your product crosses several market segments? For example, the group of potential consumers for cereal could be almost everyone, although groups of people may have different needs with regard to their cereal. Some consumers might be interested in the fiber, children may be interested in the prize that comes in the box, other consumers may be interested in the added vitamins, and still other consumers may be interested in the type of grains. Associating these specific needs with consumers in a particular demographic group could be difficult. Marketing professionals want to know why consumers behave the way they do, what is of high priority to them, or how they rank the importance of specific buying criteria. Think about some of your friends who seem a lot like you. Have you ever gone to their homes and been shocked by their lifestyles and how vastly different they are from yours? Why are their families so much different from yours?
Psychographic segmentation can help explain some of these differences. Psychographic information is frequently gathered via extensive surveys that ask people about their activities, interests, opinions, attitudes, values, and lifestyles. One of the most well-known psychographic surveys is VALS (which originally stood for Values, Attitudes, and Lifestyles) and was developed by a company called SRI International in the late 1980s. SRI asked thousands of Americans the extent to which they agreed or disagreed with questions like, "My idea of fun at a national park would be to stay at an expensive lodge and dress up for dinner" and "I could stand to skin a dead animal" (Donnelly, 2002). Based on their responses to different questions, consumers were divided up into the following categories, each characterized by certain buying behaviors ("U.S. Framework and VALS Type," n.d):
· innovators—Innovators are successful, sophisticated, take-charge people with high self-esteem. Because they have such abundant resources, they exhibit all three primary motivations in varying degrees. They are change leaders and are the most receptive to new ideas and technologies. Innovators are very active consumers, and their purchases reflect cultivated tastes for upscale, niche products and services. Image is important to Innovators, not as evidence of status or power but as an expression of their taste, independence, and personality. Innovators are among the established and emerging leaders in business and government, yet they continue to seek challenges. Their lives are characterized by variety. Their possessions and recreation reflect a cultivated taste for the finer things in life.
· thinkers—Thinkers are motivated by ideals. They are mature, satisfied, comfortable, and reflective people who value order, knowledge, and responsibility. They tend to be well educated and actively seek out information in the decision-making process. They are well informed about world and national events and are alert to opportunities to broaden their knowledge. Thinkers have a moderate respect for the status quo institutions of authority and social decorum but are open to consider new ideas. Although their incomes allow them many choices, thinkers are conservative, practical consumers who look for durability, functionality, and value in the products they buy.
· achievers—Motivated by the desire for achievement, achievers have goal-oriented lifestyles and a deep commitment to career and family. Their social lives reflect this focus and are structured around family, their place of worship, and work. Achievers live conventional lives, are politically conservative, and respect authority and the status quo. They value consensus, predictability, and stability over risk, intimacy, and self-discovery. With many wants and needs, achievers are active in the consumer marketplace. Image is important to achievers, and they favor established, prestige products and services that demonstrate success to their peers. Because of their busy lives, they are often interested in a variety of timesaving devices.
· experiencers—Experiencers are motivated by self-expression. As young, enthusiastic, and impulsive consumers, experiencers quickly become enthusiastic about new possibilities but are equally quick to cool. They seek variety and excitement, savoring the new, the offbeat, and the risky. Their energy finds an outlet in exercise, sports, outdoor recreation, and social activities. Experiencers are avid consumers and spend a comparatively high proportion of their income on fashion, entertainment, and socializing. Their purchases reflect the emphasis they place on looking good and having cool stuff.
· believers—Like thinkers, believers are motivated by ideals. They are conservative, conventional people with concrete beliefs based on traditional, established codes: family, religion, community, and the nation. Many believers express moral codes that are deeply rooted and literally interpreted. They follow established routines, organized in large part around home, family, community, and social or religious organizations to which they belong. As consumers, believers are predictable, opting for familiar products and established brands. They favor American products and are generally loyal customers.
· strivers—Strivers are trendy and fun loving. Because they are motivated by achievement, strivers are concerned about the opinions and approval of others. Money defines success for strivers, who don't have enough of it to meet their desires. They favor stylish products that emulate the purchases of people with greater material wealth. Many see themselves as having a job rather than a career, and a lack of skills and focus often prevents them from moving ahead. Strivers are active consumers because shopping is both a social activity and an opportunity to demonstrate to peers their ability to buy. As consumers, they are as impulsive as their financial circumstance will allow.
· makers—Like experiencers, makers are motivated by self-expression. They express themselves and experience the world by working on projects—building a house, raising children, fixing a car, or canning vegetables—and have enough skill and energy to carry out their projects successfully. Makers are practical people who have constructive skills and value self-sufficiency. They live within a traditional context of family, practical work, and physical recreation and have little interest in what lies outside that context. Makers are suspicious of new ideas and large institutions such as big business. They are respectful of government authority and organized labor but resentful of government intrusion on individual rights. They are unimpressed by material possessions other than those with a practical or functional purpose. Because they prefer value to luxury, they buy basic products.
· survivors—Survivors live narrowly focused lives. With few resources with which to cope, they often believe that the world is changing too quickly. They are comfortable with the familiar and are primarily concerned with safety and security. Because they must focus on meeting needs rather than fulfilling desires, survivors do not show a strong primary motivation. Survivors are cautious consumers. They represent a very modest market for most products and services. They are loyal to favorite brands, especially if they can purchase them at a discount.
The segmenting techniques we've discussed so far in this section require gathering quantitative information and data. Quantitative information can be improved with qualitative information gathered by talking to your customers and getting to know them. (Recall that this is how Healthy Choice frozen dinners were created.) Consumer insight is what results when you use both types of information. You want to be able to answer the following questions:
· Am I looking at the consumers the way they see themselves?
· Am I looking at life from their point of view?
Best Buy asked store employees to develop insight about local consumer groups in order to create special programs and processes for them. Employees in one locale invited a group of retirees to their store to explain how to make the switch to digital television. The store sold $350,000 worth of equipment and televisions in just two hours. The total cost included ninety-nine dollars in labor costs plus coffee and donuts.
Intuit, the company that makes the tax software Quicken, has a follow-me-home program. Teams of engineers from Intuit visit people's homes and spend a couple of hours watching consumers use Quicken. Then they use the insights they gain to improve the next version of Quicken. Contrast this story with that of a competing firm that is now struggling to stay in business. When a representative of the firm was asked if he had ever observed consumers installing or using his company's product, he responded, "I'm not sure I'd want to be around when they were trying to use it" (Nee, 2003).
Segmentation in B2B Markets
Many of the same criteria used to segment consumer markets are also used to segment B2B markets. For example, Goya Foods is a US food company that sells ethnic products to grocery stores, depending on the demographic groups the stores serve—Mexican, Spanish, or more generally, Hispanic. Likewise, B2B sellers often divide their customers by geographic areas and tailor their products to them accordingly. Segmenting by behavior is common as well. B2B sellers frequently divide their customers based on their product usage rates. Customers that order many goods and services from a seller often receive special deals and are served by salespeople who call on them in person. By contrast, smaller customers are more likely to have to rely on a firm's website, customer service people, and salespeople via telephone.
Researchers Matthew Harrison, Paul Hague, and Nick Hague (n.d.) have theorized that there are fewer behavioral and needs-based segments in B2B markets than in business-to-consumer (B2C) markets for two reasons: (1) business markets are made up of a few hundred customers, whereas consumer markets can be made up of hundreds of thousands of customers, and (2) businesses aren't as fickle as consumers. Unlike consumers, they aren't concerned about their social standing or influenced by their families and peers. Instead, businesses are concerned solely with buying products that will ultimately increase their profits. According to Harrison, Hague, and Hague, the behavioral, or needs-based, segments in B2B markets include the following:
· A price-focused segment is composed of small companies that have low profit margins and do not regard the good or service being sold as strategically important to their operations.
· A quality and brand-focused segment is composed of firms that want the best possible products and are prepared to pay for them.
· A service-focused segment is composed of firms that demand high-quality products and have top-notch delivery and service requirements.
· A partnership-focused segment is composed of firms that seek trust and reliability on the part of their suppliers and see them as strategic partners.
B2B sellers, like B2C sellers, are exploring new ways to reach their target markets. Trade shows and direct mail campaigns are two traditional ways of reaching B2B markets. Now, however, firms are finding they can target their B2B customers more cost-effectively via e-mail campaigns, search-engine marketing, and fan pages on social networking sites like Facebook. Companies are also creating blogs with cutting-edge content about new products and business trends of interest to their customers. For a fraction of the cost of attending a trade show to exhibit their products, B2B sellers are holding webcasts and conducting online product demonstrations for potential customers.
Key Points
Segmentation bases are criteria used to classify buyers. The main types of buyer characteristics used to segment consumer markets are behavioral, demographic, geographic, and psychographic. Behavioral segmentation divides people and organizations into groups according to how they behave with or toward products. Segmenting buyers by personal characteristics such as their age, income, ethnicity, and family size is called demographic segmentation. Geographic segmentation involves segmenting buyers based on where they live. Psychographic segmentation seeks to differentiate buyers based on their activities, interests, opinions, attitudes, values, and lifestyles. Often, a firm will use multiple bases to get a fuller picture of its customers and create value for them. Marketing professionals develop consumer insight when they gather both quantitative and qualitative information about their customers. Many of the same bases used to segment consumer markets are used to segment business-to-business (B2B) markets. However, there are generally fewer behavioral-based segments in B2B markets.
Selecting Target Markets and Target-Market Strategies
Selecting Target Markets
After you segment buyers and develop a measure of consumer insight about them, you can begin to see those that have more potential. Now you are hunting with a rifle instead of a shotgun. The question is, do you want to spend all day hunting squirrels or ten-point bucks? An attractive market has the following characteristics:
· It is large enough to be profitable given your operating cost. Only a tiny fraction of the consumers in China can afford to buy cars. However, because the country's population is so large (nearly 1.5 billion people), more cars are sold in China than in Europe (and in the United States, depending on the month).
· It is growing. The middle class of India is growing rapidly, making it a very attractive market for companies that make consumer products. People under thirty make up the majority of the Indian population, fueling the demand for Bollywood films.
· It is not already swamped by competitors, or you have found a way to stand out in a crowd. IBM used to make PCs. However, after the marketplace became crowded with competitors, IBM sold the product line to a Chinese company called Lenovo.
· Either it is accessible or you can find a way to reach it. Accessibility, or the lack of it, could include geographic accessibility, political and legal barriers, technological barriers, or social barriers. For example, to overcome geographic barriers, the consumer products company Unilever hires women in third-world countries to distribute the company's products to rural consumers who lack access to stores.
· The company has the resources to compete in it. You might have a great idea to compete in the wind-power market. However, is a capital-intensive business, so you will either need a lot of money or must be able to raise it. You might also have to compete with the likes of T. Boone Pickens, an oil tycoon who is attempting to develop and profit from the wind-power market. Does your organization have the resources to do this?
· It fits in with your firm's mission and objectives. Consider TerraCycle, which has made its mark by selling organic products in recycled packages. Fertilizer made from worm excrement and sold in discarded plastic beverage bottles is just one of its products. It wouldn't be a good idea for TerraCycle to open up a polluting, coal-fired power plant, no matter how profitable the market for the service might be.
Target-Market Strategies: Choosing the Number of Markets to Target
Henry Ford proved that mass marketing can work—at least for a while. Mass marketing is also efficient because you don't have to tailor any part of the offering for different groups of consumers, which is more work and costs more money. But buyers are not all alike. If a competitor comes along and offers these groups a product that better meet their needs, you will lose business.
Multisegment Marketing
Most firms tailor their offerings in one way or another to meet the needs of different segments of customers. Because these organizations don't have all their eggs in one basket, they are less vulnerable to competition. Marriott International is an example of a company that operates in multiple market segments. The company has different types of facilities designed to meet the needs of different market segments. Marriott has invested in unique brands so consumers don't confuse the brand and the brand is not diluted. Some of the Marriott brands and their target markets are as follows:
· Marriott Courtyard—Targeted at over-the-road travelers
· Ritz-Carlton Hotels—Targeted at luxury travelers
· Marriott Conference Centers—Targeted at businesses hosting small and midsized meetings
· Marriott ExecuStay—Targeted at executives needing month-long accommodations
· Marriott Vacation Clubs—Targeted at travelers seeking to buy timeshares
A multisegment marketing strategy can allow firms to respond to demographic changes and other trends in markets. For example, the growing number of people too old to travel have the option of moving into one of Marriott's senior living services facilities, which cater to retirees who need certain types of care. A multisegment strategy can also help companies weather an economic downturn by allowing customers to trade up or down among brands and products. Suppose you take a pay cut and can't afford to stay at Marriott's Ritz-Carlton hotels anymore. A room at a JW Marriott—the most luxurious of the Marriott brand hotels, but cheaper than the Ritz—is available to you. A multisegment strategy can also help companies deal with product life cycle issues. If one brand or product is struggling the company has others to compete.
Concentrated Marketing
Some firms—especially smaller ones with limited resources—engage in concentrated marketing. Concentrated marketing involves targeting a very select group of customers. It can be a risky strategy because companies are essentially putting all their eggs in one basket. For example, many North American auto parts makers have traditionally supplied parts exclusively to auto manufacturers. But when General Motors, Ford, Chrysler, and other auto companies experienced a slump in sales following the recession that began in 2008, the auto parts makers found themselves in trouble. Many of them began trying to make and sell parts for wind turbines, aerospace tools, solar panels, and construction equipment (Simon, 2009).
Niche marketing involves targeting an even more select group of consumers. When engaging in niche marketing, a company's goal is to be a big fish in a small pond instead of a small fish in a big pond ("Niche Marketing," n.d.).
Microtargeting, or narrowcasting, is a new effort to isolate markets and target them. It was originally used to segment voters during elections, including the 2008 US presidential election. Microtargeting involves gathering all kinds of data available on people—everything from their tax and phone records to the catalogs they receive. For a fee, companies like Acxiom can provide you with a list of Hispanic consumers who own two pets, have caller ID, drive a sedan, buy certain personal care products, subscribe to certain television cable channels, read specified magazines, and have income and education levels within a given range (Schiffman & Kanuk, 2010). Clearly, microtargeting has ethical implications and privacy issues.
Targeting Global Markets
Firms that compete in the global marketplace can use any combination of the segmenting strategies or none at all. If you're a seller of a metal like iron ore, you might sell the same product across the entire world via a metals broker. The broker would worry about communicating with customers around the world and devising different marketing campaigns for each of them.
Most companies, however, tailor their offerings to meet the needs of different buyers around the world. For example, Mattel sells Barbie dolls all around the world—but not the same Barbie. Mattel has created thousands of different Barbie offerings designed to appeal to all kinds of people in different countries.
Pizza Hut has franchises around the world, but its products, packaging, and advertising are tailored to different markets. Squid is a popular topping in Asia. Companies tailor products not only for different countries but also for different customers within those countries. For example, Procter & Gamble's China division now offers products designed for different local market segments in that country. P&G has an advanced formulation of laundry detergent for the premium segment, a modified product for the second (economy) segment, and a very basic, inexpensive product created for the third (rural) segment (Sewell, 2009).
Sellers are increasingly targeting consumers in China, Russia, India, and Brazil because of their fast-growing middle classes. Take the cosmetics maker Avon. Avon's largest market is no longer the United States—it's now Brazil. Brazilians are increasingly able to afford cosmetic products as well as plastic surgery (Wheatley, 2010). So attractive are these countries that firms are changing how they develop goods and services, too. "Historically, American companies innovated in the United States and took those products abroad," says Vjay Govindarahan, a professor at Dartmouth's Tuck School of Business. Now, says Govindarahan, companies are creating low-cost products to capture large markets in developing countries and then selling them in developed countries. Acer's $250 laptop and General Electric's inexpensive $1,000 electrocardiogram device are examples. The world's cheapest car, the $2,500 Tata Nano, was developed for India but is slated to be sold in the United States (McGinn, 2010).
Other strategies for targeting markets abroad include acquiring foreign companies or companies with large market shares in markets abroad. To tap the Indian market, Kraft made a bid to buy the candymaker Cadbury, which controls about one-third of India's chocolate market. Likewise, to compete against Corona beer, the Dutch brewer Heineken recently purchased Mexico's Femsa, which makes the beer brands Dos Equis, Tecate, and Sol (de la Merced & Nicholson, 2010). However, some countries don't allow foreign firms to buy domestic firms. They can only form partnerships with them. Other regulatory and cultural barriers sometimes prevent foreign firms from "invading" a country. IKEA, the Swedish home-furnishings maker, eventually left Russia because it found it too hard to do business there. By contrast, McDonald's efforts to expand into Russia have been quite successful. Having saturated other markets, the hamburger chain is hoping to continue to grow by opening hundreds of new stores in the country.
Key Points
A market worth targeting has the following characteristics:
· It is sizeable enough to be profitable, given your operating costs.
· It is growing.
· It's not already swamped by competitors, or you have found a way to stand out in the crowd.
· It's accessible, or you can find a way to reach it
· You have the resources to compete in it.
· It fits with your firm's mission and objectives.
Most firms tailor their offerings in one way or another to meet the needs of different segments of customers. A multisegment marketing strategy can allow a company to respond to demographic and other changes in markets, including economic downturns. Concentrated marketing involves targeting a very select group of customers. Niche marketing involves targeting an even more select group of consumers. Microtargeting, or narrowcasting, is a new effort to "super target" consumers by gathering all kinds of data available on them—everything from their tax and phone records to the catalogs they receive. Firms that compete in the global marketplace can use any combination of these segmenting strategies or none at all. Sellers are increasingly targeting consumers in China, Russia, India, and Brazil because of their fast-growing middle classes. Firms are creating low-cost products to capture large markets in developing countries and then selling the products in developed countries. Other strategies for targeting markets abroad include acquiring foreign companies or forming partnerships with them.
Positioning and Repositioning Offerings
Why should buyers purchase your offering versus another? If your product faces competition, you will need to think about how to position it in the marketplace relative to competing products. After all, you don't want the product to go unnoticed by consumers. Positioning is how consumers perceive a product relative to the competition. Companies want to have a distinctive image and offering that stands out from the competition in the minds of consumers.
One way to position your product is to plot customer survey data on a perceptual map. A perceptual map is a two-dimensional graph that visually shows where your product stands, or should stand, relative to your competitors, based on criteria important to buyers. The criteria can involve any number of characteristics—price, quality, level of customer service associated with the product, and so on. To avoid head-to-head competition with your competitors, you want to position your product somewhere on the map where your competitors aren't clustered.
Example of a Perceptual Map
Many companies use taglines in their advertising to try to position their products in the minds of the buyer. A tagline is a catchphrase designed to sum up the essence of a product. You perhaps have heard Wendy's tagline, "It's better than fast food." The tagline is designed to set Wendy's apart from restaurants like McDonald's and Burger King—to plant the idea in consumers' heads that Wendy's offerings are less aligned with negative perceptions about fast food restaurants.
Sometimes firms find it advantageous to reposition their products, especially if they want the product to begin appealing to different market segments. Repositioning is an effort to move a product to a different place in the minds of consumers. The i-house, a prefab house built by Clayton Homes, a mobile home manufacturer, is an example. According to the magazine Popular Mechanics, the i-house "looks like a house you'd order from IKEA, sounds like something designed by Apple, and consists of amenities—solar panels, tankless water heaters, and rainwater collectors—that one would expect to come from an offbeat green company out of California selling to a high-end market" (Schwartz, 2009). A Clayton Homes spokesperson says, "Are we repositioning to go after a new market? I would think we are maintaining our value to our existing market and expanding the market to include other buyers that previously wouldn't have considered our housing product" ("Clayton 'i-house'," 2009). Recently, Porsche unveiled its new line of Panamera vehicles at a Shanghai car show. The car is a global model, but unlike Porsche's other cars, it's longer, because wealthy car buyers in China prefer to be driven by chauffeurs (Gapper, 2009). How do you think Porsche is trying to reposition itself for the future?
Key Points
If a product faces competition, its producer will need to think about how to position it in the marketplace relative to competing products. Positioning is how consumers view a product relative to the competition. A perceptual map is a two-dimensional graph that visually shows where a product stands, or should stand, relative to its competitors, based on criteria important to buyers. Sometimes firms find it advantageous to reposition their products. Repositioning is an effort to move a product to a different place in the minds of consumers.
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Strategic Market Segmentation.
Alternate Title:
Strategijska segmentacija tržišta.
Authors:
Maričić, Branko R. Đorđević, Aleksandar 1 alexandar@ekof.ac.rs
Source:
Marketing (0354-3471) . 2015, Vol. 46 Issue 4, p243-251. 9p.
Document Type:
Article
Subject Terms:
* Marketing strategy * Market segmentation * Customer satisfaction * Decision making in marketing Rationalization (Sociology)
Author-Supplied Keywords:
criteria efficiency marketing segmentation strategy\
Abstract (English):
Strategic planning of marketing activities is the basis of business success in modern business environment. Customers are not homogenous in their preferences and expectations. Formulating an adequate marketing strategy, focused on realization of company's strategic objectives, requires segmented approach to the market that appreciates differences in expectations and preferences of customers. One of significant activities in strategic planning of marketing activities is market segmentation. Strategic planning imposes a need to plan marketing activities according to strategically important segments on the long term basis. At the same time, there is a need to revise and adapt marketing activities on the short term basis. There are number of criteria based on which market segmentation is performed. The paper will consider effectiveness and efficiency of different market segmentation criteria based on empirical research of customer expectations and preferences. The analysis will include traditional criteria and criteria based on behavioral model. The research implications will be analyzed from the perspective of selection of the most adequate market segmentation criteria in strategic planning of marketing activities. [ABSTRACT FROM AUTHOR]
Abstract (Bosnian):
Strategijsko planiranje marketing aktivnosti je osnov poslovnog uspeha u savremenim uslovima poslovanja. Potrošači u svojim preferencijama i očekivanjima nisu homogeni. Formulisanje adekvatne marketing strategije, koja je fokusirana na ostvarivanje strategijskih ciljeva kompanije, zahteva segmentiran pristup tržištu koji uvažava razlike u očekivanjima i preferencijama potrošača. Jedna od značajnih aktivnosti u strategijskom planiranju marketing aktivnosti je segmentacija tržišta. Strategijsko planiranje nameće potrebu planiranja marketing aktivnosti prema strtegijski važnim segmentima na dugi rok. Istovremeno postoji potreba revidiranja i prilagođavanja marketing aktivnosti na kratak rok. Postoji veliki broj kriterijuma na osnovu kojih se vrši segmentacija tržišta. U radu će na osnovu empirijskog istraživanja očekivanja i preferencija potrošača biti sagledana efektivnost i efikasnost različitih kriterijuma segmentacije tržišta. Analiza će obuhvatiti tradicionalne i kriterijume koji se zasnivaju na biheviorističkom modelu. Implikacije istraživanja biće analizirane iz perspektive izbora najadekvatnijih kriterijuma segmentacije tržišta u strategijskom planiranju marketing aktivnosti. [ABSTRACT FROM AUTHOR]
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Author Affiliations:
1Ekonomski fakultet Univerziteta u Beogradu Kamenička 6, 11000 Beograd
ISSN:
0354-3471
DOI:
10.5937/markt1504243m
Accession Number:
117066736
Performing market segmentation: a performative perspective.
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Authors:
Venter, Peet 1 (AUTHOR) ventep@unisa.ac.za Wright, Alex 2 (AUTHOR) Dibb, Sally 2 (AUTHOR)
Source:
Journal of Marketing Management . Feb2015, Vol. 31 Issue 1-2, p62-83. 22p. 2 Diagrams, 3 Charts.
Document Type:
Case Study
Subject Terms:
* Market segmentation * Marketing * Organizational behavior * Organizational change * Organizational legitimacy Performative (Philosophy) Literature reviews
Author-Supplied Keywords:
case study market segmentation marketing as practice performativity theory
NAICS/Industry Codes:
541613 Marketing Consulting Services
Abstract:
Conceptualising market segmentation as performative enhances our knowledge of how marketing frameworks shape marketing practice. Our study addresses the criticism that how marketing is accomplished in practice has yet to be fully articulated. We therefore address the question: ‘How does a market segmentation process emerge in an organisation and what causes it to materialise in this way?’ By constructing market segmentation as performative, we are able to draw insight into the relationships that marketing theories, models, ideas and techniques have with marketing practice. Our longitudinal study allows us to discern four sets of actions organisations can experience as their actors attempt to adopt and adapt a marketing process to the complexities of practice; these are establishing legitimacy, theory embodiment, contextualisation and maintaining the process. [ABSTRACT FROM PUBLISHER]
Copyright of Journal of Marketing Management is the property of Routledge and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
Author Affiliations:
1Graduate School of Business Leadership, University of South Africa, South Africa 2Open University Business School, Open University, UK
Full Text Word Count:
9697
ISSN:
0267-257X
DOI:
10.1080/0267257X.2014.980437
Accession Number:
99800946
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Performing market segmentation: a performative perspective.
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Contents
4. Business market segmentation in ICT Co SA
5. Phase one: building the foundations for segmentation
6. Phase two: developing needs-based business segments
7. Phase three: reviving the segmentation process
8. Phase four: implementing the segments
9. Discussion
14. Conclusion
15. References
Full Text
Conceptualising market segmentation as performative enhances our knowledge of how marketing frameworks shape marketing practice. Our study addresses the criticism that how marketing is accomplished in practice has yet to be fully articulated. We therefore address the question: 'How does a market segmentation process emerge in an organisation and what causes it to materialise in this way?' By constructing market segmentation as performative, we are able to draw insight into the relationships that marketing theories, models, ideas and techniques have with marketing practice. Our longitudinal study allows us to discern four sets of actions organisations can experience as their actors attempt to adopt and adapt a marketing process to the complexities of practice; these are establishing legitimacy, theory embodiment, contextualisation and maintaining the process.
Keywords: market segmentation; performativity; marketing as practice; theory; case study
Conceptualising market segmentation as performative enhances our knowledge of how theoretical descriptions of marketing approaches shape marketing practice. This research is needed because we remain unclear concerning what value practitioners gain from applying marketing approaches in practice (Yankelovich & Meer, [67]). Grapentine and Boomgaarden ([27]) report that despite the excitement they generate, market segmentation projects often fail or result in wasted effort. Considering the significant investment of time and money associated with conducting and implementing a market segmentation programme, this is a matter of concern that warrants further investigation. Disquiet has been expressed over the empirical and conceptual focus of some segmentation field studies (e.g. Quinn & Dibb, [55]), leading Dibb and Simkin ([18], p. 220) to caution that 'despite its long academic heritage, segmentation may be failing to achieve its original objectives'. Research is yet to fully engage with how market segmentation actually unfolds in organisations and consequently fails to speak to practitioners of their lived experiences. Such criticisms result in calls to rethink how research into the practices of marketing is accomplished (Andersson, Aspenberg, & Kjellberg, [ 1 ]; Bailey, Baines, Wilson, & Clark, [ 5 ]; Dibb & Simkin, [18], [19]; Foedermayr & Diamantopoulos, [25]; Harrison & Kjellberg, [31]; Steenkamp & Ter Hofstede, [61]). The performative approach we adopt sheds light on how a marketing process, market segmentation, is constituted in practice by organisational actors.
We adopt and adapt the notion of performative as first articulated by the philosopher J.L. Austin whose series of lectures delivered at Harvard University in 1955 outlined an ontological framing of social reality as constituted through certain verbal utterances (Austin, [ 4 ]). Austin argued that communication is capable of more than mere representation or description, that is, specific instances of speech create that to which they refer. A commonly cited example of such a performative utterance is when during the naming ceremony of a ship, the words 'I name this ship the Queen Elizabeth' (Austin, [ 4 ], p. 5; emphasis in original) are pronounced. These words, Austin argues, do not merely represent, express or describe, they constitute. Their utterance creates the act. Since its speech act theory origins, the concept of performative/performativity has been drawn from by various disciplines to help describe and explain how social realities are produced and experienced.
Recent studies in marketing have offered a performativity reading of how marketers constitute markets and marketing (e.g. Araujo, [ 2 ]; Harrison & Kjellberg, [31]; Kjellberg & Helgesson, [32], [33], [34], [35]). The practice of marketing is viewed as an ongoing accomplishment (Kjellberg & Helgesson, [35]) that unfolds through a conversation (human) and materiality (non-human) dialectic (Kjellberg & Helgesson, [32]). Araujo ([ 2 ], p. 211) argues that marketing practices are performative as they create the phenomena they purportedly describe. While inroads have been made into articulating a performativity understanding of marketing, the considerable possibilities such an approach holds are yet to be realised (Kjellberg & Helgesson, [32], [33]). Our interest lies in utilising performativity theorising to understand how market segmentation is accomplished. In particular, we address the dearth of empirical research on market segmentation implementation (Boejgaard & Ellegaard, [ 7 ], p. 1294). We construct market segmentation as a marketing process that is realised in practice through the combined actions of organisational actors and material texts. Approaches, alongside theories, techniques, models, concepts, procedures, data sets etc. (MacKenzie, [46]b, p. 55) have constitutive qualities that interrelate to construct marketing as practice. Our interest lies in describing how marketing techniques influence and shape practice over time. The research question that guides our study is 'How does a market segmentation process emerge in an organisation and what causes it to materialise in this way?' We claim two contributions to theory. First, market segmentation as a messy, pragmatic and iterative accomplishment is described, which extends existing knowledge of how this important and costly process is realised. Second, framing market segmentation as performative allows us to draw insight into how the segmenting of a market shapes and is shaped by practices.
The next section explores the literature around market segmentation, highlighting the criticisms of market segmentation research that strengthen our argument for framing it as performative. We then review a development of Austin's notion of performativity advanced by MacKenzie, Muniesa, and Siu ([48], p. 4) who continue to explore the question, 'What does it mean to say that economics is performative?' This section is followed by a description and justification of the research methodology employed. The section describing business market-segmentation in ICT Co SA presents data drawn from the field, followed by a discussion that relates back to our research question and substantiates our two claimed contributions. A brief conclusion completes the article.
Market segmentation is central to marketing strategy and a key decision area for organisations in all sectors (Weinstein, [65]). The origins of the concept are in economic pricing theory, which suggests that maximum profits are achieved when pricing levels discriminate between segments (Wind, [66]). Grouping together customers with similar product preferences and buying behaviour aids organisations in dealing with market heterogeneity, thereby focusing resources on relatively homogeneous customer segments and thus ensuring an efficient allocation of resources (Smith, [60]). A well-established process, often shortened to STP (segmenting, targeting and positioning), is offered in the literature as a means for carrying out market segmentation (Kotler, [37]). The first stage, segmenting, sees customers with similar needs and buying behaviours grouped into segments using one or more variables. Stage two, targeting, involves making resource allocation decisions that determine the segments to be prioritised, while the third stage, positioning, entails the development of marketing programmes that are appropriate for the targeted segments.
Despite the apparent simplicity of the STP process (LaPlaca, [39]; Weinstein, [65]; Wind, [66]), operationalising market segmentation in practice remains a significant challenge for organisations (e.g. Dibb & Simkin, [17]; Goller, Hogg, & Kalafatis, [26]; Palmer & Millier, [53]; Quinn, Hines, & Bennison, [56]). A major difficulty is that the theoretical description of the STP process fails to acknowledge the numerous restrictions imposed by the organisational context and resources. There is, therefore, a poor fit between theoretical explanations of the market segmentation process and practical applications (Crittenden, Crittenden, & Muzyka, [15]; Sausen, Tomczak, & Herrmann, [57]). These problems reflect a tension between the empirical focus of segmentation research and practitioner needs. In a recent review of academic research priorities in segmentation, Quinn and Dibb ([55], p. 1241) speak of a 'gulf between the needs and interests of academics and practitioners', which they say reflects 'the conceptual and empirical focus of market segmentation research (Foedermayr & Diamantopoulos, [25]; Yankelovich & Meer, [67])'. Thus, while academic researchers have focused on theoretical and technical issues around variable selection and identifying statistically robust outcomes (e.g. Green & Krieger, [28]; Mitchell, [51]), practitioners must tackle practical and pragmatic implementation problems (Laiderman, [38]), such as ensuring efficacious solutions (Wedel & Kamakura, [64]); justifying high financial segmentation costs (Weinstein, [65]); tackling data availability problems (Simkin, [58]); acquiring sufficiently skilled personnel (Dibb & Simkin, [17]) and overcoming operational difficulties and cultural resistance to change (Beane & Ennis, [ 6 ]; Clarke & Freytag, [13]). Against this backdrop, there remains a pressing need for studies that focus on the complex conditions and operational problems confronting managers (Wedel & Kamakura, [64]).
A consequence of this separation in the literature between the planning and doing of market segmentation is that once a segmentation plan exists, it is marketing practitioners who are tasked with making it work (Boejgaard & Ellegaard, [ 7 ]). Given the complex and detailed actions involved in operationalising market segmentation, there is a particular need for studies that uncover the underlying mechanisms, actions and relationships through which segmentation is realised. Market segmentation in practice, it seems, is altogether messier than the literature implies. In viewing market segmentation as performative, it becomes possible to better understand this messiness and to unpick the politicking and practices surrounding it.
The relatively scant attention devoted to the detailed activities that underlie marketing processes is not confined to market segmentation alone. The broader context for this shortfall is that marketing has lagged behind some other areas of management in describing and codifying the specific activities that managers undertake (Skålén & Hackley, [59]; Svensson, [62]). In their study examining the nature of marketing practice, Dibb, Simões, and Wensley ([21]) highlight a paucity of research examining what they call the 'micro-level marketing practices'. Responding to calls from Kjellberg and Helgesson ([32]), they argue for a more nuanced understanding of marketing practices at the level of the specific tasks that marketers undertake. Such approaches, they suggest, will bring benefits: a more bottom-up perspective will emerge, offering the potential to shed light on 'emergent and unfolding practices that actors engage in' (Araujo, Kjellberg, & Spencer, [ 3 ], p. 7); it will provide detailed insights into how practitioners undertake marketing activities (Gronroos, [29]; Skålén & Hackley, [59]) and ultimately will support a deeper understanding of the connection between marketing practice and organisational performance.
These are among the reasons why marketing research has taken a performativity turn in recent years (e.g. Araujo, [ 2 ]; Harrison & Kjellberg, [31]; Kjellberg & Helgesson, [32], [33], [34], [35]). Kjellberg and Helgesson ([32], p. 842) consider that a focus on market practices encourages a view of marketing practices that integrates the sellers who market goods with those who buy them and in the process provides a micro-level focus on how such activities are accomplished. A practice focus is sensitive towards a relational ontology (Emirbayer, [23]), which holds that it is not entities or things such as marketing theories, ideas or approaches that are in and of themselves consequential, but how they relate to other things and entities that reveal something of how the mangle of marketing practice (Pickering, [54]) is constituted. To study practitioners engaged in relational practice as it unfolds is challenging (Araujo et al., [ 3 ]), which goes some way to explain the dearth of practice studies in marketing. However, a first step is to move the analytical focus from an aggregated level (cf. Andersson et al., [ 1 ]), what Latour ([40]) termed the ostensive, to what he called the performative. By refocusing the analytical lens on the relational practices of marketing, it becomes possible to describe what marketing is, of what it is made, what are its parts and how they constitute the whole (Latour, [40]).
Kjellberg and Helgesson's ([33]) performativity-inspired consideration of market segmentation exposes a key assumption in research that is not sensitised to how social realities are constituted. As the STP process implies, traditional studies address segmentation as an epistemological issue: segments objectively exist and it is the task of the marketer to unveil them. A performativity lens frames market segments as an ontological statement, as they are described and, through such communicative acts, constructed (Hagberg & Kjellberg, [30]; Kjellberg & Helgesson, [33]). Conceptualising segmentation as performative encourages researchers to inquire into how 'strings of association' (Cooren & Fairhurst, [14], p. 136) comprised of human and non-human dialectics (Andersson et al., [ 1 ]) co-orient towards the constituted 'object' that becomes segmentation. Of particular interest to those interested in how relational strings of associations perform and produce practice are the ways that theories, ideas, approaches and models materially interact with the moves of actors. Such questions, for example, have occupied MacKenzie and motivate his studies of the sociology of economics.
Building on the theorising of Austin ([ 4 ]) and Callon ([10]), sociologist Donald MacKenzie has perhaps contributed most to articulating the complex relationships between models, theories and approaches, and practice. MacKenzie's initial work analysed how the Black–Scholes–Merton model of options pricing influenced and shaped the behaviour of economists operating in the Chicago Board Options Exchange during the 1970s (see MacKenzie, [42], [42], [46]; MacKenzie & Millo, [47]; MacKenzie et al., [48]). When it first appeared, the Black–Scholes–Merton model claimed to show how options could be disentangled from any moral framework and proved and hedged as part of the normal operations of mature efficient capital markets (MacKenzie, [46]). Initially, the model offered a relatively poor fit with market prices (MacKenzie, [46]) and failed to offer traders a quick and straightforward means for accurately identifying the price of options. At this time, the model displayed no performative qualities. However, the model proved attractive and compelling to traders and the materiality that accompanied it made it easy for them to use. Despite its relatively poor fit, over time, it was increasingly used by traders in the Exchange who gradually altered their behaviour so that the model became a more accurate representation of practice.
MacKenzie drew from performativity theory to explain how this ill-fitting model could over time become performative: meaning that the model changed the behaviour of the human actors that adopted it such that the practices they were producing and reproducing began to resemble the Black–Scholes–Merton model more and more. MacKenzie's findings relate to how an economic model through its consumption created the reality it purported to represent. Marketing models, approaches and processes do not claim to represent reality, but do claim to help practitioners order reality into something manageable and beneficial to their aims. In short, marketing approaches like segmentation claim to help sellers sell and buyers buy. MacKenzie's work developing the notion of performativity is instructive for his focus on the interrelating of models, ideas and approaches with practice, as it provides those interested in articulating a view of marketing as practice with a language for describing and explaining how marketing emerges in the form that it does. From his research, MacKenzie (Table 1) distinguished three different kinds of performative relationship approaches and practice can display. Counterperformativity was also identified, which can be discerned when the connection between a model and the practice it stimulates becomes progressively disentangled.
Table 1 Three kinds of performativity and counterperformativity.
|
Type of performativity |
Key characteristic |
Relationship strength |
Research interest |
|
Generic |
Models, theories, ideas and approaches used but with little significant impact |
The relationship is weak and does not significantly affect practice |
When a theory or idea is assumed to have a strong effect on practice but its investigation reveals this not to be the case |
|
When mundane, taken-for-granted practices are disrupted and inquiry reveals those practices to have little relation with the theories, they were assumed to represent |
|
|
|
|
Effective |
Models, theories, ideas and approaches that have an effect on marketing processes |
The model makes a difference to how processes are accomplished. These processes differ from those organisations where the model is not used. The relationship strength is significant |
When an approach makes a difference, but not in the ways necessarily expected |
|
Rewards investigation, as complex relationships between approaches and practice are revealed that prove insightful |
|
|
|
|
Austinian |
Use of a model, theory, idea or approach changes workplace processes such that they resemble the idea or approach more and more |
A strong relationship is distinguishable, likely to be empirically rare in marketing studies |
What is most commonly assumed to be the relationship between theory and practice, yet may be difficult to realise due to the complexities of practice |
|
Because this pure form of performativity is likely to be rare, the translations processes adapting an approach to a specific context reward investigation for the insights into practice and theory they promise |
|
|
|
|
Counterperformativity |
Use of a model, theory, idea or approach makes workplace processes appear less like they depicted in the idea or approach |
A declining relationship can be discerned. Unlike Austinian performativity, what is done in practice resembles the idea less and less and can result in its opposite affect being realised |
Sometimes called overflowing, or misfires (Callon, 2010), and perhaps the most analytically revealing of all types, this construct can be observed through longitudinal tracking of an approach and its use over time |
|
May help to question the efficacy of some long-standing marketing theories and ideas |
|
|
|
2 Source: Distilled from D'Adderio ([16]), MacKenzie ([43], [44], [46]), Cabantous, Gond, and Johnson-Cramer ([ 9 ]), Kjellberg and Helgesson ([32]) and Callon ([11]).
In summary, our study addresses two gaps in the literature. First, a detailed understanding of the practice of segmentation, or how segmentation is actually accomplished in practice, is yet to be fully articulated. We know much about the concepts and processes of market segmentation, but rather less about how practitioners actually set about the complex task of realising the segmentation process in practice. Second, of the relatively few marketing studies that have adopted a performativity lens, most have drawn inspiration from Callon and have discussed how markets are made (e.g. Kjellberg & Helgesson, [34], [35]). Our focus, inspired by the studies by MacKenzie, is on how marketing processes are performed in practice. Therefore, our objective is to extend understanding of how marketers accomplish their craft by constructing insights into the practice of market segmentation. In so doing, we unpick the complex and multifaceted relationships that marketing processes, such as segmentation, enjoy with entities inside and outside the organisation and marketing practices. By addressing these interrelated aims and developing a deeper understanding of the how and why of market segmentation implementation, we contribute significantly to our developing knowledge of marketing theory and practice.
This research involved a longitudinal case study situated in the business sales division, an SBU (strategic business unit) in ICT Co SA, a large national ICT services organisation majority owned by a European multinational company (MNC). Figure 1 summarises the organisation at the time that the research commenced. A single case study approach was appropriate because it enables a detailed examination of the practices associated with the segmentation project, beginning with the early planning stages and running through to implementation and beyond. Bonoma ([ 8 ]) contends that qualitative case study research is appropriate in marketing research when the phenomenon (such as market segmentation implementation) being studied cannot easily be observed outside of its natural setting, and where it is so complex that it cannot be quantified. This notion is supported by those studying performativity who have drawn extensively on single cases as they involve the in-depth and prolonged study of complex processes such that their relationship with models, theories and ideas can be established (e.g. MacKenzie, [46]b; Kornberger & Clegg, [36]; Ottosson & Galis, [52]).
The first author was able to use his role as an academic consultant with ICT Co SA to achieve the good quality access needed to closely observe the unfolding market segmentation process, and we accordingly used a participant observer approach. Our qualitative study reflects the requirement for multiple data sources in case construction (Bonoma, [ 8 ]), as it draws from participant observation, document analysis and personal interviews. In this instance, the participant observer had access to a plethora of artefacts (data, communications, reports, online databases and presentations) and was engaged in many hours of formal meetings, informal discussions and email exchanges with key players in the organisation's head office and eight regions.
The research project unfolded along the lines described in the first two stages of the case study process proposed by Bonoma ([ 8 ]). The first author has been involved with the organisation since 2004 as an academic consultant. The first few years of the engagement were, in retrospect, akin to what Bonoma ([ 8 ]) describes as the 'drift' stage. Despite the absence of a formal research question during this stage, it offered the researcher the opportunity to gather a deep understanding of the context that was later to be more formally investigated. The second stage of the research, namely the 'design' stage (Bonoma, [ 8 ]), started in 2008 and continued until 2012. During this period, the major areas of research as identified during the drift stage were assessed, refined and fleshed out. Our focus became to examine the processes and practices practitioners utilised to implement a specific market segmentation project in ICT Co SA.
Rick, the manager of strategy development, was our primary access point and a major source of information. He reports to the executive responsible for sales and marketing to small and medium enterprises (director of SME business). His responsibilities include strategic marketing planning and the provision of marketing intelligence to his own section and those of the three other executives in the SBU. Business segmentation development and implementation has been a constant priority for the section since 2004. Rick has three direct reports, with the manager of business intelligence being responsible for developing and updating business market segmentation. Other managers in the organisation are responsible for additional aspects of the market segmentation project. For example, the manager of special projects (Lou) is in control of integrating market segmentation with the customer relationship management (CRM) system.
Graph: Figure 1 The ICT Co SA business sales organisation.
Table 2 contains the interview schedule. We use pseudonyms and titles to protect the anonymity of the respondents. Nine interviews were conducted during the initial round, followed by a further five follow-up interviews. They were conducted in English or Afrikaans by the first author (and translated into English) depending on the interviewee's preference. The interviews were semi-structured to ensure that certain theoretical themes were addressed, while allowing other topics to be explored as they emerged. A conversational style was adopted, with interviews lasting between 30 and 60 min. The interviews were structured around a simple checklist of issues that explored ( 1 ) the market segmentation process and how it was approached, ( 2 ) marketing activities related to the market segmentation process, ( 3 ) how the segmentation was received by organisational members and whether resistance occurred, and ( 4 ) important relationships (formal and informal) and how these were managed. While interviews were the primary data source, we also drew from reports, observation and informal conversations to add breadth and depth to our findings ensuring data credibility and quality (Flint, Woodruff, & Gardial, [24]). Following Mitchell ([50]), we do not claim that the specific context of ICT Co SA is generalisable to other populations, however similar, but we do argue that our findings can be used to develop further theorising regarding marketing performativity in general and market segmentation performativity in particular.
The interview data were analysed using ATLAS.ti software. We employed a process of 'meaning condensation' (Lee, [41], p. 89) to extract the most important themes from the data. Analysis was iterative, involving a constant to-ing and fro-ing among the interview transcripts, documentation and notes taken during the segmentation process. As we held the assumption that market segmentation is performative, an inductive process was used to hear the data speak. Since the purpose of our analysis was both description and explanation, we progressed from description to explanation as the underlying generative mechanisms (Easton, [22]) in ICT Co SA's market segmentation process became apparent. The segmentation narrative that appears in the next section was developed as a result of this process.
Table 2 Interview schedule.
|
Person interviewed |
Role in organisation |
Number of interviews |
|
Rick |
Manager of strategy development (see Figure 1) and empirical focus of the study |
Two |
|
Gavin |
Director of SME business (see Figure 1) and Rick's manager |
One |
|
Theresa |
Customer insight manager in the Group Strategy division. Rick's peer in another organisation |
One (interview translated from Afrikaans) |
|
Rachel |
Manager of business intelligence (see Figure 1). Rick's direct report with the responsibility of communicating and implementing segmentation in the organisation |
Two |
|
Lou |
Manager of special projects (see Figure 1). Rick's direct report with the responsibility of implementing CRM and business intelligence systems in support of strategy |
One (interview translated from Afrikaans) |
|
Eddie |
Regional sales manager and internal client of market segmentation |
Two |
|
James |
Regional sales representative and internal client of market segmentation |
One |
|
Joanne |
Regional sales representative and internal client of market segmentation |
One |
|
Carl |
Product manager and internal client of market segmentation |
One |
|
Mark |
Associate of the academic consultant and academic consultant |
One (interview translated from Afrikaans) |
Business market segmentation in ICT Co SA
The market segmentation process in ICT Co SA unfolded over four phases (Figure 2). Phase one was introductory and involved actors working together, some for the first time, and laid the foundations for the rest of the process. During phase two, the segmentation process was initiated through four distinct steps, described later, that closely resemble the approach of gathering data for the purposes of generating segments, as advocated in the segmentation literature. During this phase, however, problems emerged and the process began to falter. In phase three, as a consequence of the segmentation process being revived by a project champion, it became more widely adopted in the organisation. Phase four focuses on the more detailed aspects of the implementation.
Phase one: building the foundations for segmentation
The working relationship between the academic consultant (first author) and the organisation began in 2004, when the director of SME business attended an executive education programme at the first author's business school. Their mutual interest in strategic marketing led to informal discussions, culminating in a request to assist ICT Co SA with a project to estimate its market share across key business sectors. The output of this project was a set of 'market maps' that explained market share in terms of revenue and volume. Although this outcome was a long way from an extensive segmentation exercise, it was contextually important because it shaped the relationship between the academic consultant and the firm and established the legitimacy of the academic consultant. The activity also established the value of empirical market research as a basis for decision-making and paved the way for the subsequent market segmentation process.
From the market map to the segmentation model to [parent company segmentation model] was a perfect track. It was really just a matter of folding the data into the segmentation model. A key difference for me between the two was that one was almost an executive tool, whereas the segmentation model is structured in a format that I felt we could actually drive through the organisation because you could strip out elements and it would still make sense to the end users within the organisation.
(Manager of strategy development)
Graph: Figure 2 The ICT Co SA business segmentation process.
Phase two: developing needs-based business segments
During the second phase, discussions between the director of SME business and the first author suggested a more nuanced study of business customer needs and segments was needed, reflecting the organisation's increasing focus on SMEs. A decision was made to conduct a detailed study to identify and profile business market segments. A UK-based consultancy headed by a well-known academic whose work was much admired by the director of SME business was engaged to oversee the business segmentation process. A series of steps were following during this second phase to develop the segmentation. These steps mirror the approaches to developing segments that are often described in the literature (see, e.g., Dibb & Simkin, [17]; McDonald & Dunbar, [49]; Weinstein, [65]).
· Step 1: A two-day workshop held with business unit managers, with the purpose of developing a deeper understanding of the possible business market segments and their needs.
· Step 2: Qualitative research conducted through in-depth interviews with about 20 typical customers representing potential segments. The purpose of this was to determine ICT needs, buying behaviour and purchasing decision criteria. This qualitative research served as a key input into the next phase, a quantitative survey.
· Step 3: A quantitative survey undertaken covering several hundred respondents to obtain data concerning their needs, buying behaviour and decision criteria. The outcome was a quantitative profile of five different segments, which was later collapsed into four segments. These segments were clearly differentiated according to their need for managing mobile assets and their relative business complexity. The segments were supported by detailed descriptions and data outlining the aspects differentiating the segment, such as their key buying requirements, ICT purchasing decision-making processes, current product usage and future behaviour. Table 3 contains a brief description of each of the segments.
Table 3 Description of needs-based segments.
|
Segment |
Segment description |
|
Small statics (33% of population) |
In this segment, the businesses are typically small and operating on a single site. Businesses are relatively simple, and there is a low need for mobile management of assets or ICT services in general. They do make extensive use of fixed broadband services and Internet access |
|
Complex static SMMEs (23% of population) |
In this segment, businesses are typically medium to large in size and more complex, but have a low need for mobility. However, telecommunications and ICT is very important to them. Despite this, they are generally not very progressive with regard to technology and seem to feel that they are constantly playing 'catch-up'. They have a relatively high need for international connectivity |
|
Simple mobiles (26% of population) |
Businesses in this segment display a high need for relatively simple ICT solutions such as staying in touch with mobile employees, managing mobile assets, remote diagnostics, Internet access and email. They have a high need for managing mobile people and assets, but a low need for more complex solutions and international connectivity. This segment contains comparatively high users of satellite tracking, dedicated data lines and mobile data services |
|
Complex sophisticates (18% of population) |
These businesses are larger and have much more sophisticated ICT needs. They may have several points of presence and may need to manage a geographically dispersed network. They are especially characterised by the need to expand the business and to be able to communicate in a variety of ways – both fixed line and mobile. These organisations often have very flat structures and see themselves as 'fast-moving'. They have a very high need for international connectivity |
· Step 4: Following feedback to the business unit in presentation and report format and discussions regarding segmentation in all the regions, potential strategic initiatives to target attractive segments were identified and included in the final report. Quantification was at this stage already identified as imperative to the management team of the business unit, as it ostensibly provided a strong basis for identifying opportunities for business growth, and played a more political role as a tool for negotiation.
Although the potential benefits that segmentation offers were understood and despite some positive responses to the process in general and to the information that resulted from it, implementation stalled after Step 4 was completed.
Phase three: reviving the segmentation process
This phase commenced with the appointment of a manager of strategy development (Rick) who had previous experience in a large consultancy firm and who was ultimately the catalyst to inject new life into the segmentation process. He achieved this in three ways: first, by leveraging his relationship with the parent company to obtain access to the segmentation work that was done in Europe; second, by presenting it in a highly visual and user-friendly presentation format and last, by emphasising the strategic role of market segmentation and the benefit that this could bring. Initially, Rick had been appointed as a middle manager responsible for business process development, but as his talents for networking, business analysis and strong presentation skills became apparent, he was soon assigned responsibility for strategy development for the whole business unit. As part of his personal development in this position, he was sent to the European MNC headquarters, where he was exposed to its business segmentation practices. On his return, the first author was engaged with the remit to merge the existing segmentation data with the European segmentation scheme and to present the resulting segments in a highly visual and colourful format. The basis for the European segmentation was a combination of size and vertical industry sectors forming seven different segments. This approach contrasts greatly with the use of customer characteristics, needs, decision-making and purchasing behaviour so often recommended by segmentation theorists (e.g. Simkin, [58]; Wedel & Kamakura, [64]). For example, for small and medium businesses, the two identified segments split the population into two segments: the more sophisticated service businesses such as financial, ICT and business services and the rest, for example, agriculture, manufacturing and the trade sector (wholesale and retail businesses).
In addition to leveraging the work that had already been done, using the same segmentation basis provided a level of legitimacy and helped the subsidiary to 'fit in' with the corporate parent's practices:
Work that was done with consulting houses at the [parent company] level and they could send it through to us. Specific channel strategies, if you've got a reference point, (a) we need to align ourselves with our parent to begin with, but (b) they applied their minds to it. It gives you the right building blocks ... It's absolutely a huge benefit for us.
(Manager of strategy development)
Whereas the initial segmentation structure was in the form of a written report, the medium for the revised segmentation structure was a highly visual presentation, which quickly proved of value to other managers and executives:
I think people immediately locked onto it. When we went to the SME workshop, there were about five or six presenters and out of the six presenters four or five actually used the presentation flyers that we actually developed on the segmentation study ...
(Manager of business intelligence)
In addition to leveraging the intellectual assets of the parent company, Rick astutely positioned segmentation as a means for the business unit to 'own' business strategy, as opposed to the firm's corporate strategy which is 'owned' by Group Strategy and the top management team:
Segmentation has three levels: You've got the market segmentation, business segmentation and then the individual profiles to drive that in the organisation, but also to put those platforms in place. So we see segmentation to be the cornerstone for the operational strategy and ultimately the business strategy, and we wanted to own that.
(Manager of strategy development)
Phase four: implementing the segments
Phase four entailed the implementation of market segmentation processes within the organisation. This involved both an internal 'selling' exercise and a process of embedding the scheme into the firm's systems and structures. As part of the selling exercise, a more modular presentation of the segmentation data in an online interactive hyperbook format was developed. The organisation's advertising agency was also engaged to simplify the presentation into an accessible brochure. This was part of a drive by the director of SME business to make the segmentation simpler and more user-friendly:
[We] decided to put it into [an online format], which is what I'm currently focusing on... It's got the segmentation study in electronic format, which is absolutely amazing. The first stage of the segmentation study is that big block with the various segments. You can click on each segment and it takes you to that actual chapter.
(Manager of business intelligence)
The linking of customers to specific market segments is a critical part of the segmentation process. However, the firm's information systems had not been developed with this specific segmentation structure in mind. Therefore, as part of the process of linking customers to segments, there was a need for salespeople and other customer contact staff to update customer data as part of their everyday duties. In addition, there was a desire within ICT Co SA to use market segmentation beyond its strategic purpose as a tactical and operational sales tool. Thus, some of the processes to encourage its use could be viewed as coercive, even if the motive was to provide the users with valuable information:
And I believe that its where we will unlock the most value from the segmentation, by educating throughout the organisation, not just at the executive layers; the model that we've created, give it to them in a palatable format that they can adopt and apply to their daily lives, because it's valuable to them, it gives them insight. Beyond that, we're also forcing them. So it's a soft touch but there's also a hard element to that. It will be embedded in all the systems.
(Manager of strategy development)
Ultimately, the business unit was restructured in 2011 to broadly reflect the new segmentation structure and in 2012 was further updated with new enterprise population figures. These developments suggest that despite a slow start and resistance from some executives, the segmentation structure had gained a strong foothold in ICT Co SA.
Our findings suggest that in its early stages, the segmentation process was based on strong theoretical principles and accepted 'best practice', following the widely accepted segmentation-targeting-positioning conceptualisation and using needs-based segmentation, customer decision-making and purchasing behaviour as its basis. However, as other actors became involved, the process developed more opportunistically and intuitively, as individuals made sense of and coped with their situational contexts. The process also displayed strong elements of trial-and-error type experimentation. For example, at one point, ICT Co SA conducted an extensive alternative segmentation study based on attitudinal segmentation, but this was abandoned because the implementation of the segments would have been difficult to achieve. While the segmentation approach had its roots in theory and 'best practice', it ultimately turned out to be a much messier process than anticipated. The final outcome was a fairly simple segmentation scheme based on enterprise size and vertical sectors. Although not typical of what is regarded as 'best practice', because of the materiality associated with the segmentation schema, it was more readily accepted by the organisation.
Our focus is on how organisational actors accomplished a segmentation exercise through performing, to greater or lesser degrees, a market segmentation process in practice. We assume that theories, models, processes and approaches are seldom transferred to practice unaltered, as they inevitably undergo some form of translation. We further assume that the use of marketing theories, models or techniques is not neutral, that is, the use of a particular marketing process is likely to contribute towards the construction of a social reality where that process is deemed to be useful and accurate. In short, implementing market segmentation produces segments that are not pre-given but created through segmentation acts. Once created, these segments become accepted as representing social reality. Our interest lies in understanding how the market segmentation process and the theoretical ideas that underpin it actively contributed to the accomplishment of market segmentation in ICT Co SA.
Our findings allowed us to construct insight into the specific activities managers undertake (Skålén & Hackley, [59]; Svensson, [62]) when they draw from theory to constitute their own practice. We discern four sets of performative actions managers accomplish and consider their relationship to segmentation theory. MacKenzie identified three types of performative relationship, generic, effective and Austinain, and one relationship of counterperformativity. Our study identifies instances of both effective and the rarely seen Austinian performativity. We speculate that in time it is likely we would also observe counterperformativity. Our four sets of actions are linked to the four phases presented in the previous section, but this association is not a neat coupling of each phase to its correspondingly numbered action. Rather, the performative actions we identify tend to occur in parallel rather than sequentially, the boundaries between them are blurred rather than rigid and subject to periods of inactivity rather than constant. The four sets of actions we identify allow for a structuring of analytic insights, they are: establishing legitimacy, theory embodiment, contextualising and maintaining the process. We structure the remainder of the discussion section around these, beginning with establishing legitimacy.
When embarking on a large-scale change process, the concept and the actors that are driving and leading it have to be seen as legitimate to the wider organisational audience for their ideas to become established. The instances of performativity already referred to (Austin, [ 4 ]; MacKenzie, [42], [46]) could only occur because the legitimacy of the actors involved and their ideas had been assured. Legitimacy can be established in numerous ways. In ICT Co SA, the internal lead actors (director of SME and first author) were deemed sufficiently legitimate for the process to begin. Even so, external authority in the form of a UK-based management consultancy was felt to be necessary to assure organisational actors that the process was legitimate. Legitimising acts were especially evident, but not limited to the first phase outlined in the findings (building the foundations for segmentation). Legitimacy can also emerge when material objects were seen to 'act' when the segments were implemented. When processes like market segmentation are inscribed into material artefacts, documents (either electronic or paper) are produced, distributed and consumed and become part of an official discourse. A segmentation discourse relies on texts to sustain and advance it, thus enabling the process and its outcomes to become formalised within the organisation. A discourse materialised in and through texts has been made to materially matter. Legitimate practice is constituted through the interplay of conversation (talked into being) and text (material artefacts are inscribed with the discourse). A formal discourse is also a performative discourse as it constitutes that to which it refers and also marginalises other potential alternative discourses. Legitimacy building does not end when the process has become established; it needs to be continually refreshed as discourses can and do lose their performative powers.
The second set of actions occur when legitimacy of the actors and the theoretical approach has been established resulting in a general acceptance of the need to embody the new theory or approach. We use the term embody rather than enact or implement, because we wish to emphasise that practitioners draw on their whole bodies when implementing a marketing process like market segmentation. Marketers are not just mouths that speak and brains that think, but people that move about, point, gesture, occupy and produce space and generally communicate non-verbally as well as verbally. In ICT Co SA, the acts that embodied market segmentation were the point at which practice most closely resembled its depiction in the literature, and, as such, it was the closest we came to an instance of Austinian performativity. Actions here are closely drawn from phase two, during which the initial needs-based segmentation was conducted. Austinian performativity occurs when organisational processes resemble how a theory or approach is depicted more and more. This type of performativity is empirically rare, because theories nearly always undergo some form of translation when they encounter the messy world of practice. This observation is more than a simple truism. It denotes that when academics discuss concepts like market segmentation, we tend to discuss them in their idealised forms, not in the way practitioners experience them. One of the reasons for the growing tensions surrounding marketing research and practitioners' experienced realities could be that marketers' everyday experiences are marginalised from our academic discourses. The actions constituting theory embodiment can be characterised as being when actors in ICT Co SA sought to integrate market segmentation into existing management processes, and this was done largely as prescribed in the literature. However, the gap between theory and practice was significant and the next set of actions produced an increasing departure from how market segmentation was depicted.
Towards the later stages of the actions that saw theory embodied in practice, market segmentation in ICT Co SA began to stall. As considerable investment had been made, it was necessary to turn this around. Attempts to implement segmentation in any Austinian sense, i.e. closely resembling how it is depicted in the marketing literature, were abandoned, and a more pragmatic, context relevant approach involving intuition and trial-and-error began. The role and importance of material artefacts and texts were increasingly recognised. They were seen as not merely used, but 'to act' in the sense that they made a difference to how practice unfolded. We see here instances of effective performativity (MacKenzie, [46]), as use of a model or approach affects an organisation's processes and makes them different to an organisation that does not use that model or approach. However, use of the approach does not result in practices that resemble the model more. We term these actions 'contextualisation' because it seems that effective performativity occurs when the tensions between theory and practice are at their most strained. Actors recognise the value and importance of the theoretical depiction of a process, but are confronted with the realities of their working contexts, which are messy and full of contradictions and competing priorities. Reconciling the two becomes increasingly difficult. ICT Co SA recognised the advantages of aligning its segmentation with that of its European parent. Its move to employ visual methodologies to communicate its segments represents an appreciation of the power of pictorial representation. These and other moves witnessed a shift away from theoretical descriptions of segmentation, although ICT Co SA still 'did' segmentation, albeit in a way that diverged from how it is described in the literature.
While the strongest relationship between theory and practice was discerned when theory was comprehensively embodied in the actions of practitioners, and acts of contextualisation witnessed a growing tension between theoretical depictions and pragmatic concerns, the final set of actions centred more and more on practical coping. In ICT Co SA, maintaining the process focused on integrating the new practices associated with market segmentation into existing discourses and processes. Chiefly, this involved selling the results internally and ongoing system and structural embedding. These are some of the practical implementation tasks associated with market segmentation that have received little attention in academic work (Goller et al., [26]; Quinn et al., [56]; Verhallen, Frambach, & Prabhu, [63]) and which we need to understand better if theories and approaches are to shape practice. We observed over time a gradual distancing of segmentation as ICT Co SA was accomplishing it with how it is depicted in the literature. The label 'market segmentation' was retained, as this gave the practices an authority and legitimacy they would not have otherwise had, but what happened in practice resembled theoretical descriptions of market segmentation less and less. We speculate that with the passage of time, market segmentation in ICT Co SA could become what MacKenzie terms a counterperformative, meaning that although the activity bears the name, the actions resemble theoretical descriptions less and less. While these acts overlap with the implementation of the segments (phase four in our findings), they go beyond mere implementation, as they also include the constant re-establishment of legitimacy and adjustments to the segmentation as it is contextualised on an ongoing basis.
The concept of performativity allows us to discern a more nuanced relationship between marketing processes, like market segmentation, and their manifestation in practice. To simply say that a technique is implemented tells us little about how it makes a difference to those who have adopted it. In turn, this gives us little useful insight with which to develop and refine our theories. All marketing theories, models and approaches are constitutive in that they construct as well as describe and explain. They themselves 'use' as much as they are 'used'. Sensitivity towards the performative alerts us to the constituting effects of theory and offers us a language for discerning its uneven affects.
This article addresses the question: 'How does a market segmentation process emerge in an organisation and what causes it to materialise in this way?' To achieve this, we have utilised a performativity lens as this provides researchers with the opportunity to offer insights into how marketing processes are performed in practice. An analytical focus on the performative actions of actors increases knowledge of marketing as practice and holds the potential of stimulating more relevant advice for practitioners as their everyday challenges, concerns and contradictions are integrated into research accounts. Our first contribution lies in extending knowledge concerning how market segments are constituted in organisations. Our fine-grained study demonstrates the pragmatic obstacles managers have to overcome if they are to successfully adopt and adapt concepts, models or approaches drawn from academic theory. The second contribution relates to the insights a performativity perspective of longitudinal practice can provide. Performativity theory encourages a relational framing of managerial activity such that single events or experiences are made sense of in a conceptual whole. Performativity theory assumes that organisation unfolds in a conversation and text dialectic, which recognises that non-human texts can 'act' and influence how marketing practice is accomplished. The insights emerging from our study allow us to outline four sets of actions involving establishing legitimacy, theory embodiment, contextualisation and maintaining the process as exemplifying processes of marketing theory implementation.
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The Impacts of A3 on 4Ps.
Authors:
Nguyen, Thuy D. 1 Dubinsky, Alan J. 1 Wilson, Phil 1
Source:
Society for Marketing Advances Proceedings . Nov2016, p518-529. 12p.
Document Type:
Article
Subject Terms:
* Consumer preferences * Marketing mix * Marketing management * Consumer behavior * Sales promotion Psychological feedback
NAICS/Industry Codes:
541613 Marketing Consulting Services
Abstract:
The objective of this research is to assess the differential and hierarchical impacts of attitudes on marketing mix across two product types with an emphasis on understanding the nested role of attitudinal components. From the organic, functional, and tri-component model of attitude, the authors found that all three components took the predominant role in affecting consumers' choice of promotion and product preferences, but had no effect on place strategy. The hierarchical multiple regression analysis reveal the influence of affective attitude on promotion and product preferences in the case of hedonic type. Cognitive attitude, though, took important roles in promotion and price preferences for utilitarian product type. Managerial implication is also provided. [ABSTRACT FROM AUTHOR]
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Author Affiliations:
1Midwestern State University, USA
Accession Number:
120607358
Target market.
Authors:
Crelin, Joy
Source:
Salem Press Encyclopedia, 2019. 2p.
Document Type:
Article
Subject Terms:
Abstract:
A target market is a specific selection of consumers to whom an advertiser seeks to market a product or service. Through extensive research, marketers determine which individuals are most likely to purchase a product and how to market the product in a way that appeals to the target audience. Target markets are typically defined by demographic characteristics, such as gender, age, race or ethnicity, income, occupation, and level of education, as well as geographic and behavioral characteristics. These characteristics may be combined to create narrower target markets, and such specificity generally increases an advertiser’s chances of connecting with consumers.
Full Text Word Count:
1019
Accession Number:
90558480
Database:
Research Starters
Target market
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Full Text
A target market is a specific selection of consumers to whom an advertiser seeks to market a product or service. Through extensive research, marketers determine which individuals are most likely to purchase a product and how to market the product in a way that appeals to the target audience. Target markets are typically defined by demographic characteristics, such as gender, age, race or ethnicity, income, occupation, and level of education, as well as geographic and behavioral characteristics. These characteristics may be combined to create narrower target markets, and such specificity generally increases an advertiser’s chances of connecting with consumers.
Overview
When marketing a product or service, a company must determine the best approach for connecting with potential customers and persuading them to buy the product. While a business can advertise its products widely in the hope of reaching a broad audience, this is generally not a cost-effective approach, as the company spends money on advertisements that are irrelevant to many consumers and may therefore be ignored. To market its products more efficiently, a business must define a target market or markets for each product or type of products. By targeting narrower segments of society, a business can reduce waste and focus on connecting with consumers who are more likely to purchase a particular product or who are likely to help popularize a company’s brand.
Typically, target markets are based on extensive market research , from surveys to consumer interviews to focus groups, and take into account a variety of characteristics, including the ideal customer’s demographics, geographic location, behavior, lifestyle, and purchasing habits. Target markets may be extremely narrow or somewhat broad, depending on the nature of the product or service being advertised. For example, a company might advertise a product to the broad category of women between the ages of thirty and fifty-five, or it might advertise to the narrower category of college-educated women who have at least one child between the ages of one and three, work outside the home, and live in the northeastern United States. Similarly, for businesses that sell to other businesses, the data used to define the target market would include business type, budgets, and job titles of prospective clients. In order to advertise to the desired target market, a company must also be aware of which medium will best reach them, be it a print, broadcast, or digital platform.
While basic consumer demographics are important, companies can benefit greatly from investigating what that data truly indicates about the customers. For example, a company might advertise a product to a target market of men and women between the ages of sixty-five and eighty-five. These gender and age demographics are key to defining the target market; however, what they suggest about the lifestyles and purchasing attitudes of these consumers is even more significant. A consumer who falls into this group is likely retired and thus may have more time for leisure activity than younger adults do. He or she may be a grandparent and may therefore be interested in purchasing children’s products, such as toys, books, and clothing. The consumer may receive a fixed income, which can affect purchasing habits. (Such a specific subsection of a target market is called a "niche," and dividing a target market into such groups is termed "market segmentation.") Companies seeking to advertise to these markets must take these and many other factors into account to ensure success; similar challenges and opportunities exist for each potential target (or niche) market. Target markets may also shift over time, as a company's reach or products change.
Maketing Mix
One marketing system that businesses use in to reach target markets is referred to as the marketing mix, the use of four elements to capture and promote a brand or product’s selling points. Also known as the “Four Ps,” the four elements in marketing mix are product, price, promotion, and place. The Four Ps are used to shape the marketing mix around the needs, wants, and motivations of the previously noted target audience. Each element adds a different aspect to the marketing mix:
Product: Either a tangible good or intangible service that fulfills a need or want of the target audience.
Price: The cost costumers pay for the product based on the product’s real and perceived value to the target audience, as well as the goal profit margins, supply, demand, and marketing strategy.
Promotion: The way in which marketing agencies release product information to the target audience, including advertising, social media marketing, and video marketing.
Place: Where a company sells their product to best reach the target audience, including specific stores, television channels, or country regions.
Bibliography
Baker, Michael J. The Marketing Book. Burlington: Butterworth, 2012. Digital file.
Cohn, Chuck. "Steps to Identify Your Target Market." Forbes. Forbes.com, 6 Feb. 2015. Web. 30 June 2015.
Dibb, Sally, and Lyndon Simkin. Market Segmentation Success: Making It Happen. New York: Routledge, 2013. Digital file.
Lantos, Geoffrey P. Consumer Behavior in Action: Real-Life Applications for Marketing Managers. Armonk: Sharpe, 2011. Print.
McDonald, Kelly. How to Market to People Not Like You. Hoboken: Wiley, 2011. Print.
McDonald, Malcolm, Brian Smith, and Keith Ward. Marketing and Finance: Creating Shareholder Value. Chichester: Wiley, 2013. Print.
Mohr, Jakki, Sanjit Sengupta, and Stanley Slater. Marketing of High-Technology Products and Innovations. 3rd ed. Upper Saddle River: Pearson, 2010. Print.
Pardun, Carol J. Advertising and Society: An Introduction. Malden: Wiley, 2013. Print.
Perreault, William, Jr., Joseph Cannon, and E. Jerome McCarthy. Basic Marketing. 19th ed. New York: McGraw, 2013. Print.
"The Four Ps of Marketing." Purely Branded, www.purelybranded.com/insights/the-four-ps-of-marketing/. Accessed 22 Aug. 2019.
Twin, Alexandria. "The 4 Ps." Investopedia, 19 Aug. 2019, www.investopedia.com/terms/f/four-ps.asp. Accessed 22 Aug. 2019.
Wagner, Nancy. "Does Every Product Have a Target Market & a Market Segment?" Chron. Hearst Newspapers, 13 June 2013. Web. 30 June 2015.
Weidmüller, Inc., breaks away from the competition by creatively targeting customers' needs.
Authors:
Source:
Global Business & Organizational Excellence . Sep/Oct2012, Vol. 31 Issue 6, p6-15. 10p.
Document Type:
Article
Subject Terms:
* Customer services * Customer relations * Chief executive officers * Industrial management
Geographic Terms:
Company/Entity:
People:
Abstract:
One of management's ongoing challenges is how best to set its products and services apart from those of the competition-a task that takes on increasing importance in a troubled economy. For the president of Weidmüller, Inc., the American subsidiary of a German industrial manufacturer, that challenge led him to question prevailing assumptions about market segmentation in order to precisely identify the company's true customers. To address their particular needs, he devised a strategy to facilitate the purchasing process and created an incentive to encourage them to select his company's products over those of the competition. His efforts increased sales by 50 percent and distinguished Weidmüller as an industry trailblazer. © 2012 Wiley Periodicals, Inc. [ABSTRACT FROM AUTHOR]
Copyright of Global Business & Organizational Excellence is the property of John Wiley & Sons, Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
Author Affiliations:
1Whitestone Partners
ISSN:
1932-2054
DOI:
10.1002/joe.21448
Accession Number:
78333634
Learning Resource
Writing a Strong Positioning Statement
You've done your market research to determine what your customers want in your product and service and what the competition is offering, and you have defined what specific types of customers (based on demographics and psychographics) are most likely to buy your product or service. You have a product with specific features and benefits that will appeal to the target market. You have determined what pricing strategy will best fit the product's value compared to the competition. You've studied the supply chain and distribution (place) options and how best to deliver your product to your target market. The next step is promotion—communicating your product's or service's value to your target market.
To focus your promotion strategy, you need a clear positioning statement. Crain (2016) relates that the concept of positioning started in 1969—back in the Mad Men days—when advertising executives Al Ries and Jack Trout advanced the notion that every ad should be based on "a rock"—a compelling and undeniable hook that would cut through all the advertising clutter in the marketplace.
What's the Difference between a Value Proposition and a Positioning Statement?
The terms value proposition and positioning statement are often used to mean the same thing. However, though they are related, they aren't synonymous. Value proposition is a broad term that describes the organization's overall strategic position or branding. A value proposition most often appears in the business plan, but it can also appear in a marketing plan (Gospe, 2015).
The positioning statement has a narrower focus, particularly if you are marketing a particular product or service. It needs to be consistent with the organization's and brand's value proposition, but focus on the particular target market, product or service benefits, competitors, and particular aspects of the product or service that differentiate it—make it stand out—when compared to what the competition has to offer (Gospe, 2015).
You create the positioning statement by honing in on the most compelling aspects in the mix of marketing variables (i.e., product, place, promotion, and price) for the target market. A clear, positioning statement leads to a strong and focused promotional strategy. A positioning template can help you zero in on the most important aspects of the product or service that you want to highlight for your target customers. A useful positioning statement template is below:
Positioning Statement
For [customer segment], [your product/service name] is [two or three most important benefits/reasons to buy] because compared to [primary competition/alternative], [key reasons for differentiation from competitors].
The sections below provide examples of how to apply the positioning statement template to your product or service.
Product Positioning Statement Example
For busy, economy-oriented automobile owners who do not have the time or desire to take their cars into the dealership for frequent routine maintenance such as oil changes, Everlast Oil is the car-care lubrication alternative that cuts down on maintenance trips while ensuring high performance. Compared to other natural and synthetic oil products, Everlast's patented synthetic formula protects your engine for a longer period between oil changes—typically for two to three times more miles than ordinary motor oil products—at a price comparable to standard brands of engine oil.
Service Positioning Statement Example
For parents with athletically gifted children between the ages of 8 and 18, Tennis Prodigy Academy (TPA) is the top center for identifying and developing talent, leading to success as touring and club-level professionals. TPA has developed more top-10 US and internationally ranked players than any other tennis academy; its world-class staff and state-of-the art facilities are second to none in ensuring that students develop an edge in technique, strategy, tactics, fitness, and match psychology, and we offer full scholarships to students who demonstrate extraordinary potential. TPA is the clearly superior choice for ensuring your child's future in tennis.
References
Crain., R.. (2016, September 26). How Al Ries positioned the positioning concept. AdAge. Retrieved from http://adage.com/article/print -edition/al-ries-positioned-positioning -concept/305968/
Gospe, M. (2015, February 16). Value propositions vs. positioning statements. What's the difference? [Blog post] Retrieved from https://www.linkedin.com/pulse/value-propositions-vs-positioning-statements-whats-difference-gospe/
Marketing mix standardization in multinational corporations: A review of the evidence.
Images
Authors:
Birnik, Andreas 1 (AUTHOR) Bowman, Cliff 2 (AUTHOR)
Source:
International Journal of Management Reviews . Dec2007, Vol. 9 Issue 4, p303-324. 22p. 2 Diagrams, 4 Charts.
Document Type:
Article
Subject Terms:
* International business enterprises * Corporations * Management * Standardization * Technical specifications * Corporation law * Marketing * Industrial relations Literature
NAICS/Industry Codes:
541613 Marketing Consulting Services
Abstract:
This paper reports the findings of a systematic review of literature on marketing mix standardization in multinational corporations. The objective is to extract and synthesize ‘best evidence’ regarding marketing mix standardization practices in multinational corporations and to identify evidence regarding the performance impact of marketing mix standardization. Beyond relevance to an academic audience, this review could be useful for management practitioners in multinationals seeking to integrate operations across borders. In this context, the paper seeks to make a contribution to evidence based policy and practice. [ABSTRACT FROM AUTHOR]
Copyright of International Journal of Management Reviews is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
Author Affiliations:
1Cranfield School of Management, Cranfield University, Cranfield, Bedfordshire MK43 0AL, UK, and the Department of Business Policy, NUS Business School, National University of Singapore (1 Business Link, Singapore 117592). 2Cliff Bowman is from the Cranfield School of Management, Cranfield University, Cranfield, Bedfordshire MK43 0AL, UK.
ISSN:
1460-8545
DOI:
10.1111/j.1468-2370.2007.00213.x
Accession Number:
27608205
Publisher Logo:
Images:
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Marketing mix standardization in multinational corporations: A review of the evidence.
This content may contain URLs/links that would redirect you to a non-EBSCO site. EBSCO does not endorse the accuracy or accessibility of these sites, nor of the content therein.
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Contents
1. Methods
2. Approach
4. Findings
5. Theoretical Perspectives Adopted in Reviewed Studies
6. Managerial Design Parameters in Relation to Marketing Mix Standardization (D)
7. Evidence of Degree of Marketing Mix Standardization
8. Factors Influencing Marketing Mix Standardization (C)
10. Factors Supporting Strategic Choices Regarding Marketing Mix Standardization (SC)
11. Factors Supporting Effective Implementation of Marketing Mix Standardization (I)
12. Performance Impact of Marketing Mix Standardization (O)
13. Summary Model
14. Discussion and Future Directions
16. Acknowledgements
17. Appendix
18. Footnotes
19. References
Full Text
This paper reports the findings of a systematic review of literature on marketing mix standardization in multinational corporations. The objective is to extract and synthesize 'best evidence' regarding marketing mix standardization practices in multinational corporations and to identify evidence regarding the performance impact of marketing mix standardization. Beyond relevance to an academic audience, this review could be useful for management practitioners in multinationals seeking to integrate operations across borders. In this context, the paper seeks to make a contribution to evidence based policy and practice.
This paper critically reviews the evidence base regarding cross‐border marketing mix standardization and seeks to extract 'best evidence' prescriptions for use by management practitioners. In contrast to a good deal of prior research within this field, this paper aspires to establish a stronger link with management practice. Cross‐border integration is a distinctive feature for multinational corporations following international, global or transnational configurations ([ 8 ]; [ 9 ],[10], [11]) in contrast to stand‐alone multidomestic operations. Marketing mix standardization, to at least some degree, is often a component of such operating models. While a good deal of relevant and high quality research exists, the available evidence is often not presented in a synthesized format that would be easily accessible to practitioners.
During the past few years there has been extensive discussion of the so called 'relevance gap' in management research and in business school teaching (e.g. [12]; [32]; [33]; [46]; [63]). As a response to the relevance challenge, it has been proposed that management research needs to reorient away from the explanatory sciences towards the applied design sciences, such as medicine and engineering, and thus move from Mode 1 knowledge creation towards Mode 2 knowledge creation ([101]; [108]; [111],[112]). In line with [86]), this research takes a design orientation:
Design is based on pragmatism as the underlying epistemological notion. That is, design research develops knowledge in the service of action; the nature of design thinking is thus normative and synthetic in nature – directed towards desired situations and towards synthesis in the form of actual actions. (Romme 2003 , 562, italics in original)
More specifically, this research seeks to extract technological rules and solutions concepts for potential use by management practitioners. This is defined by van Aken as follows:
A technological rule follows the logic of 'if you want to achieve Y in situation Z, then perform action X'. The core of the rule is X, a general solution concept for a type of field problem. The remainder of the rule is a kind of user instruction connecting the solution concept with the field problem, including indications and contra‐indications, i.e. knowledge of when to use the solution concept and when not to. The solution concept can be an act, a sequence of acts, but also some process or system. (van Aken 2005 , 23, italics in original)
Technological rules are thus similar to what [ 3 ] has labelled actionable knowledge: 'A generalization is actionable if it informs the user how to create it in settings beyond those in which it was first created' (1996, 392). This paper applies [71]) 'realist synthesis' approach based on developing rules that address the understanding of context (C), the underlying mechanisms (M) and the outcomes (O). In Pawsons's language, this changes the research question from simply 'what works' to 'what works for whom in what circumstances?' (2001, 4). For this paper, we have built on an extension of Pawson's reasoning developed by [27]). In their modified version, the research synthesis is conducted by mapping context/contingency factors (C), design parameters/solution concepts (D), generative mechanisms (M) and outcomes (O). A generative mechanism (M) is a basic theory of how a design parameter/solutions concept (D), in a certain context (C), generates a specific outcome ([27]).
[27], 1) argue that systematic literature reviews constitute a suitable method for developing technological rules as 'rather than conducting new empirical studies, technological rules can be created through the synthesis of the collective wisdom from existing research'. [21]) has also advocated the use of relevant and up to date systematic reviews to guide practitioner interventions with the objective of minimizing the risks that such interventions do more harm than good.
In summary, this research is primarily concerned with the quest for 'best evidence' that can guide management practice. As argued by [109]), this is typically not the core objective of reviews of management research:
Reviews of the available evidence in management to assimilate 'best evidence' to provide insights and guidance for intervention into the operational needs of practitioners and policymakers have largely become a secondary consideration. (Tranfield et al. 2003 , 208)
We begin with an explanation of the methodology used in this literature review, followed by the findings from this part of the study. We continue with a discussion and suggestions for future research before concluding with some managerial implications. A descriptive classification of the reviewed articles has been included in the Appendix.
We have followed the systematic review approach prescribed by [109]). This approach seeks to minimize bias in the review by being both systematic and explicit about how the review has been conducted. This means following a stepwise approach to determine relevant keywords and search strings as well as deploying a specified methodology to exclude articles based on a priori determined relevance and quality criteria. The review started by identifying the need for the review, preparing a review proposal for discussion with an academic panel and developing a detailed review protocol with a list of relevant keywords composed into search strings. Six databases considered relevant were tested to decide which databases to include: EBSCO, ABI Inform, ISI Web of Knowledge, Elsevier Science Journals, Blackwell Synergy and Emerald. Based on the outcome of this test, EBSCO and ABI Inform were selected for inclusion in the review.
The composed search strings generated 112 hits in EBSCO and 127 hits in ABI inform. After reviewing titles and abstracts in relation to the objectives of the study, and removing overlaps between the sources, 107 unique articles were identified as suitable for full‐text review. To compensate for the mechanistic approach of a systematic review, 43 additional articles were manually included in the review, based on articles previously identified by the authors or by the IJMR reviewers. This resulted in a total number of 150 articles included in the full‐text review.
The full‐text review resulted in 47 articles being excluded on the grounds of lacking relevance to the topic. This yielded 103 articles for the quality appraisal. As this research adopts a 'realist synthesis' approach, it was not possible to review the articles based on quality criteria before the synthesis started. In line with [72]), quality was instead established in relation to synthesized elements of the reviewed articles. Thus, a paper with a highly original conceptual contribution may be included in the review even if the empirical work suffered from quality problems. During the synthesis process, 19 articles that had passed the relevance test were subsequently removed, as they did not meet the quality criteria. The result was a total number of 84 articles for full text review.
We have included an Appendix with further details about the classification of the reviewed articles at the end of the paper.
The data extraction has followed an extended version of [27]) CDMO categories described above, with the addition of new categories for factors supporting strategic choices and effective implementation. Data have been extracted and synthesized into the following categories:
• 1
· managerial design parameters/solutions concepts in relation to marketing mix standardization (D)
• 2
· evidence of the degree of marketing mix standardization
• 3
· contextual factors influencing marketing mix standardization (C)
• 4
· discussion of generative mechanisms linking design parameters to organizational performance (G)
• 5
· factors supporting strategic choices regarding marketing mix standardization (SC)
• 6
· factors supporting effective implementation of marketing mix standardization (I)
• 7
· performance impact or outcomes of marketing mix standardization (O).
Extraction tables were created within each category. A new sub‐category was added whenever a new relevant finding or concept was reported in a paper. In the beginning, the number of sub‐categories thus expanded rapidly while later papers primarily added evidence to already identified sub‐categories.
Theoretical Perspectives Adopted in Reviewed Studies
We begin with a brief discussion of the theoretical foundations of the reviewed studies. In this regard, we note that most of the marketing standardization literature is not connected with central theoretical perspectives outside the marketing field, such as industrial organization (e.g. [78], [79]), resource‐based view (e.g. [ 7 ]; [74]; [117]), dynamic capabilities (e.g. [30]; [105]), institutional theory (e.g. [28]; [60]), resource dependence (e.g. [75]), or the debate regarding strategic choices (e.g. [ 4 ]; [24]; [37]; [42]). This can be viewed as a distinct weakness of the marketing standardization literature and leads to a lack of integration with central debates in related fields such as strategic management and organization theory.
Most of the reviewed papers exhibit a strong descriptive character and present arguments or evidence regarding standardization of various elements of the marketing mix. The theoretical contribution is often limited to simple trade‐off discussions regarding:
· (a)
· the benefits and drawbacks of standardization
· (b)
· arguments for and against the convergence of markets and customer needs on a global or regional scale
· (c)
· arguments why specific contextual factors would have an impact on the degree of marketing mix standardization, and
· (d)
· performance outcomes.
Having concluded the above, there are a number of notable exceptions that connect with central debates and thus build a bridge with other literatures. Among that minority of studies, we note that the dominant theoretical perspective is industrial organization economics and, more specifically, reference to co‐alignment or congruence between a firm and its environment ([20]; [41]; [68]; [69]; [122]). Two of these studies complemented the industrial organization perspective with alternative views including institutional theory ([41]) and the resource‐based view ([122]).
Managerial Design Parameters in Relation to Marketing Mix Standardization (D)
We continue by reviewing the managerial design parameters (D) in relation to marketing mix standardization. A design parameter specifies a possible type of intervention that can be used by managers in a given context. This review has identified three primary design parameters that decision‐makers can use in relation to marketing mix standardization. These are ( 1 ) deciding on the overall standardization approach and whether or not all markets should be treated in the same way, ( 2 ) deciding on standardizing marketing programmes vs marketing processes, and ( 3 ) deciding on which marketing mix elements and sub‐elements to standardize.
Standardization approach. The standardization debate has produced several seminal contributions. [57]) has argued strongly for the globalization of markets based on technological drivers. Levitt's prescribed strategy is based on standardized products that will both take advantage of, and further reinforce increasingly homogeneous customer preferences on a global scale. [29]) agree that changes in the global business environment necessitate a global perspective on strategy but conclude that Levitt's thesis of global standardization is both naïve and over‐simplistic and may result in major strategic blunders for multinationals who follow Levitt's prescriptions. In contrast to [57]) prescription of 'standardization' as the one best way, [29]) advocate a contingency approach based on mixed strategies. [65]) advocates a similar contingency solution when he concludes that the quest for universal products is not a generalizable prescription but that Levitt's prescribed global standardization makes perfect sense for certain segments and certain product categories.
A review of different stances regarding the standardization debate reveals four possible overall positions in relation to standardization. These have been described by [62]) as: ( 1 ) standardization, ( 2 ) clustering/regionalization, ( 3 ) middle of the road and ( 4 ) adaptation. Standardization and adaptation occupy opposite ends of the spectrum. Clustering/regionalization strategies seek to standardize the marketing mix, to a substantial extent, across clusters of similar markets. This strategy would thus yield a range of heterogeneous market clusters but with a higher degree of marketing mix standardization within each cluster. Middle of the road strategies, in contrast, advocate flexibility which leads to case‐by‐case decisions regarding standardization and adaptation for each market and each marketing mix element.
Marketing mix elements. The terminology used to describe marketing mix elements and sub‐elements varies significantly between studies. Some of the most commonly referred to elements include: ( 1 ) brand name, ( 2 ) advertising and promotion, ( 3 ) product, ( 4 ) packaging, ( 5 ) pricing, ( 6 ) sales & distribution channels, ( 7 ) customer service and ( 8 ) the use of the world‐wide web. Standardization may also vary by element or sub‐element of the marketing mix. This makes it less meaningful to talk of the entire marketing mix as either standardized or adapted ([113]). A core element of any international marketing strategy is to decide which marketing mix elements or sub‐elements to standardize and to what degree.
Programme vs process standardization. A number of studies have investigated standardization of the marketing process, standardization of marketing programme content and possible relationships between the two ([22]; [34]; [87]; [99]; [121]). In line with [99]) contribution, these studies indicate that the potential for standardization of the marketing process is higher than the standardization potential of marketing programme content. As an example, [121]) found that, while only 8% of Fortune 500 firms in Latin America had centralized distribution channels, 58% had a globalized approach to major distribution channel decisions. There is also some evidence pointing in the direction of a positive relationship between process and programme standardization ([22]; [34]).
Evidence of Degree of Marketing Mix Standardization
A wide range of studies have reported on the relative degree of standardization for different elements of the overall marketing mix. While terminology and level of detail vary between studies, some patterns are clearly distinguishable.
Pricing. A majority of studies indicate that pricing is the least, or one of the least, standardized elements of the marketing mix ([14]; [23]; [35]; [62]; [70]; [88]; [99]; [113]; [114]; [123]). Conflicting evidence has been presented by [95]) who found that pricing was 'medium' in terms of the level of standardization, and [90]) who found that 69% of large US MNCs used uniform or standardized prices. However, a drawback of Samli and Jacobs' study is that it exclusively focused on pricing standardization rather than on the relative degree of pricing standardization in relation to other marketing mix elements. [120]) also found that, while absolute pricing was among the least standardized marketing mix elements, relative pricing was fairly standardized.
Brand and product. At the other end of the spectrum, brand and product characteristics appear to be the most standardized marketing mix elements ([14]; [23]; [35]; [62]; [70]; [88]; [95]; [99]; [113]; [114]; [120]). [123]) found partially conflicting evidence indicating that, while product peripherals were often standardized, core products had a low level of standardization.
Packaging. Packaging tends to show medium to high levels of standardization ([14]; [88]; [99]; [120]).
Advertising. Studies report mixed results regarding advertising, but the tendency is for advertising to exhibit a medium level of standardization ([35]; [38]; [70]; [93]; [95]; [99]; [120]). However, some studies have found that advertising is closer to the standardized end of the spectrum ([14]; [39]; [88]). [73]) distinguished between deploying the same advertising material across all or most markets (prototype standardization) vs more pragmatic pre‐planned efforts to design the campaign for use in multiple markets and vary execution details as required (pattern standardization). [99]) have further distinguished between standardization of the basic advertising message and standardization of the creative message. Similarly, [70]) distinguished between standardization of advertising theme vs advertising copy.
The above illustrates that multinationals are faced with very complex decisions regarding advertising standardization. Rather than a simple choice between advertising standardization vs adaptation, there are many shades of grey in terms of possible types and degrees of standardization. Given this, [38]) has argued that it is important to clarify such standardization forms labelled 'partial' or 'modified', given that the practices of firms falling into those categories can vary substantially.
There is some evidence that headquarters is more involved in making strategic advertising decisions compared with tactical decisions ([61]; [104]). In an overview of academic vs practitioner oriented papers on advertising standardization between the 1950s and the end of the 1980s, [ 2 ]) found that academics have tended to favour either adaptation or contingency approaches to advertising, while practitioners have alternated between adaptation and standardization prescriptions to a greater degree.
Sales, distribution and promotions. The cumulative evidence indicates that sales and distribution as well as promotions tend to show fairly low levels of standardization but typically not as low as pricing ([14]; [23]; [62]; [70]; [88]; [95]; [99]; [113]; [114]; [120]; [121]; [123]).
Customer service. The findings for customer service report mixed results, with some studies reporting medium levels of standardization ([14]; [70]), while other studies report higher ([95]; [114]) as well as lower ([123]) levels of standardization.
Web. Web site standardization has not been included in the reviewed studies that focused on multiple elements of the marketing mix. Limited evidence exists in the form of a single study by [66]) who found that US firms tended to localize their web sites to a high degree in UK, Germany and France.
Factors Influencing Marketing Mix Standardization (C)
This section presents a synthesis of the impact of contextual factors (C) on marketing mix standardization.
Type of product or industry. A majority of studies report that industrial products are more standardized than consumer non‐durables or consumer durables ([ 5 ]; [19]; [23]; [44]; [48]; [70]; [82]; [118]). However, there is also some evidence to the contrary. [35]) found that consumer non‐durables were more standardized than industrial products, which were in turn more standardized than consumer durables. [56]) also found that consumer products were more adapted than industrial products, but the study was limited to Japanese MNCs in the Middle East. [89]) found a higher degree of standardization for consumer products than for industrial products, but the difference was statistically insignificant, and the sample consisted of 85% industrial firms. Finally, in a study of UK firms in the Middle East, [62]) found no evidence that industrial products were more standardized than consumer products. Taken as a whole, and specifically looking at evidence outside the Middle East, the evidence base suggests that the potential for standardization of industrial products is higher compared with consumer products.
There is also some evidence indicating a low level of standardization for consumer products used in the home ([82]; [118]), and for consumer products that are perceived as culture‐bound ([ 5 ]; [19]; [118]). However, based on a single case study of IKEA, [59]) argues that standardization is feasible in culture‐bound industries, especially if the price differential becomes significant. Martenson also argued that it is possible to find cross‐border segments that are less culture bound, these being characterized by low status concern, low conservatism, high education, high income and white‐collar professions.
A number of studies have reported higher standardization for high technology products ([19]), for products that are perceived as being essential ([ 5 ], [ 6 ]), and for branded premium luxury goods ([65]).
Degree of centralization in decision‐making. There is some evidence that centralized decision‐making leads to greater or more effective marketing standardization. A number of papers have reported a positive link between centralized decision‐making and higher standardization ([44]; [70]), while other studies have not found any relationship ([76]; [83]; [104]).
HQ ownership level. There is a fair amount of evidence indicating that fully owned, or at least substantially controlled subsidiaries have a higher degree of marketing standardization ([55]; [70]; [85]).
Subsidiary sales volume. A single study reported no significant relationship between degree of standardization and subsidiary sales volume ([70]).
Entry mode. Two studies have indicated higher degrees of standardization for indirect entry modes (exporting, franchising, JVs and licensing) compared with direct modes of entry ([34]; [114]).
Extent of local production in country. One study has found that a higher degree of local in‐country production leads to more adaptation of marketing ([35]).
Degree of local competitive intensity. There are a number of studies which report that higher local competitive intensity pushes companies to adapt their marketing to a higher degree ([ 5 ], [ 6 ]; [19]; [114]). However, one study found no link between local competitive intensity and more marketing adaptation ([35]).
Size of local market. The results are inconclusive regarding the relationship between standardization and size of the local market. [23]) found partial support for more adaptation in larger markets while [85]), in a conceptual paper, argue that standardization is expected to be higher in larger markets and when there is a high degree of interpenetration of markets.
Market similarities. There is strong evidence that market differences require companies to adapt their marketing. Differences in terms of consumer preferences, stage of economic development, 'psychic' or cultural distance between markets, legal and regulatory regimes and marketing infrastructure, have all been shown to lead to adaptations in the marketing mix, while similarities in these parameters lead to greater standardization ([ 5 ], [ 6 ]; [44]; [53]; [64]; [69]; [70]; [85]; [99]; [106]; [113]; [114]). Limited evidence to the contrary was presented by [22]), who found that, while similar consumer response patterns were associated with greater advertising standardization, a dissimilar environment, contrary to their hypothesis, was associated with advertising standardization. Their study was, however, limited to advertising standardization of US MNCs in India.
A number of studies have also found that standardization is greater when products are at the same stage in the product life‐cycle (PLC) ([ 5 ], [ 6 ]; [85]; [106]), although [99]) did not find supporting evidence for this connection.
Country of origin of parent company. There are no consistent conclusions across the papers that review the impact of the origin of the parent company on marketing standardization ([52]; [70]; [96]; [104]; [120]).
International experience of parent company. Some evidence suggests that firms with significant international experience and long market presence adapt their marketing more ([19]; [56]). However, in a study of Norwegian exporters, [97]) found that a higher level of local market knowledge at headquarters led to more standardization, as the headquarters were better at perceiving important similarities across markets.
Competitive position. Limited evidence indicates that standardization and headquarters control is higher when there are greater similarities in competitive position between the parent and the subsidiary ([44]; [55]).
Level of communication between parent and subsidiary. [85]) argue that standardization is likely to be higher when there is a greater degree of communication between parent and subsidiary.
Organization structure of parent. [85]) also argue that standardization is likely to be higher in companies with an international division compared with product divisions, as the latter organization structure results in more duplication of activities.
Core competence/generic strategy. In a highly original conceptual paper, [92]) argue for a link between core competence or generic strategy and marketing standardization. The authors propose that standardization is required for cost‐based competition, given the requirements to reduce operating costs and gain economies of scale. Standardization is also required for product innovation‐based strategies, which supports other findings that high technology products are standardized to a greater extent. In contrast, localization is considered the best avenue to pursue for firms seeking customer‐based strategies. Regionalization (clustering) is considered a possible compromise strategy for all three generic strategies.
Table 1 summarizes the evidence regarding contextual factors influencing marketing standardization.
1 Contextual factors and influence on standardization
|
|
Stronger evidence |
Weaker evidence |
|
More standardization |
• Industrial products |
• Essential products |
|
• High‐tech products |
• Luxury products |
|
|
• Market similarities |
• Indirect entry modes |
|
|
• Products in same stage in PLC |
• Parent and subsidiary have similar competitive positions |
|
|
• Fully owned subsidiaries |
• High degree of communication between parent and subsidiary |
|
|
• Foreign operations centralized in an international division |
|
|
|
• Strategy based on either (a) cost‐based competition or (b) product/innovation oriented |
|
|
|
• Centralization in decision‐making |
|
|
|
Less standardization |
• Consumer products |
• Products used at home |
|
• High local competitive intensity |
• Culture bound products |
|
|
• Direct entry modes |
|
|
|
• Local in‐country production |
|
|
|
• Customer‐based strategy |
|
|
|
Inconclusive |
|
• Size of local market |
|
|
• Country of origin of parent company |
|
|
|
• International experience of parent |
|
We continue by discussing generative mechanisms (G) and note that such mechanisms are not discussed widely in the reviewed literature. As a result, we have a weaker theory of exactly why management interventions (design parameters), in a certain context, result in a specific outcome. For this paper, we hypothesize that marketing standardization occurs either with the aim of increasing customers' perceived use value (PUV) and/or to reduce costs. The PUV refers to customers' subjective perceptions of the usefulness of a particular product or service ([16]). Increasing customer PUV could result in a positive outcome in terms of higher brand preference, larger market share, larger customer base, more loyal customers, increased usage per customer and thus, ultimately, higher revenues. Reducing costs should result in improved margins. Thus, if marketing mix standardization could lead to increased PUV and/or lower costs, the strategy could improve financial returns and value creation for the corporation.
Figure 1 illustrates the possible implications of a standardization strategy. Increasing PUV while reducing costs would be the ideal case, representing clear standardization wins. In the diametrically opposite quadrant, we find the standardization failures, where PUV decreases while production costs actually increase. The remaining quadrants are more difficult to analyse. In the bottom right quadrant, we find the results of rationalization efforts. Standardization leads to significantly lower costs, but there is a corresponding reduction in PUV, e.g. because the product is perceived not be sufficiently tailored to meet local requirements. But the outcome is difficult to predict but could be neutral or positive if the lower costs translate into a price reduction for customers. In the top left quadrant, we find new capability development where PUV has been considerably increased but this corresponds to higher production costs. Once again, results may be neutral or positive if the higher costs are offset by higher revenues. The lower part of the top left quadrant represents standardization question marks as production costs are significantly higher but PUV is only marginally improved. The PUV can also remain the same while production costs are either increased or decreased as a result of centralization. It would be important to analyse the total cost of 'production' across the value chain, including sourcing, manufacturing, marketing and sales and distribution as, for example, lower production costs from centralized production facilities might be offset by higher distribution costs or customs duties to reach more remote locations.
Graph: 1 PUV and production costs.
Factors Supporting Strategic Choices Regarding Marketing Mix Standardization (SC)
Following from the discussion regarding generative mechanisms, we continue by examining the factors that support strategic choices (SC) regarding marketing standardization.
Clarity of strategic objectives. Following from the previous section, it would appear essential to be clear about the objectives of standardization, i.e. is the aim to increase customer PUV or to lower costs or to achieve both benefits?
Use of cross‐country research and segmentation. There are strong arguments in conceptual papers indicating that market research should be used to understand similarities and differences between countries and to help identify common segments across borders ([ 5 ]; [31]; [40]; [45]; [54]; [67]; [77]; [107]; [115]; [119]). There is also empirical evidence supporting the use of segmentation ([25]; [26]; [43]; [91]; [98]; [100]; [110]). While some authors focus on the use of primarily country segmentation ([26]; [43]; [91]), there is a clear trend towards advocating the segmentation of markets based on similar response patterns to marketing stimuli ([31]; [40]; [45]; [100]) or psychographic or behavioural segmentation ([40]; [77]; [107]). [100]) has argued that segmenting markets based on marketing stimuli offers 'the most efficient, realistic and feasible way that permits multinationals to apply the hybrid approach by standardizing their marketing programs to each homogeneous segment of countries or consumers while differentiating their strategies among different segments' ([100], 611).
Best evidence points in the direction of a hybrid approach which first clusters countries into macro‐segments followed by micro segmentation within and across countries ([25]; [84]; [115]; [119]). This approach combines the advantages of a macro grouping of countries, which allows the micro segmentation to be more precise. The use of marketing stimuli together with behavioural/psychographic variables appears to offer the best avenue for the micro segmentation step.
In an insightful contribution, [94]) argue that marketing is shifting from focusing on international differences and functional adjustments on a country‐by‐country basis towards a new focus on transnational similarities and cross‐functional integration across borders.
Mapping feasibility vs desirability. It has been suggested that managers should separate the analysis of feasibility of marketing standardization from the desirability of standardization ([67]; [85]). [67]) argue that desirability is driven by factors such as ( 1 ) cost saving potential, ( 2 ) communication effectiveness and ( 3 ) consumer homogeneity. [85]) have argued that desirability is influenced by firm strategy and implementation requirements.
Use of matrix mapping tools. Both [53]) and [82]) have suggested matrices to assist with global marketing planning. [53]) advocates a planning matrix based on mapping standardization vs adaptation of different marketing mix elements across countries. [82]) have proposed a more sophisticated matrix based on mapping full or partial standardization or adaptation against: ( 1 ) business functions, ( 2 ) product characteristics, ( 3 ) marketing mix elements and ( 4 ) countries.
Customer rather than product orientation. [29]) have warned that a drawback of marketing mix standardization is that it tends to shift the focus away from customers towards the product dimension. Managers should thus take measures to safeguard a customer orientation during the standardization process, by, for example, using cross‐border market research and segmentation.
Factors Supporting Effective Implementation of Marketing Mix Standardization (I)
In this section, we present the evidence in relation to factors supporting the implementation of marketing mix standardization (I). We conclude that there is only a relatively limited amount of research with an implementation orientation. Furthermore, we note that most papers on the execution of marketing standardization have been conceptual in nature. However, recently some empirical papers concerning implementation of marketing standardization have been published (e.g. [68]; [69]).
Cross‐border co‐ordination. According to [84]), effective implementation of a global marketing approach requires a variety of structural mechanisms for co‐ordination, e.g. establishing specific groups to address global co‐ordination, strategic planning, creative communications, R&D and personnel issues. The authors state that companies typically start with smaller organizational changes such as regular discussion groups and various global co‐ordination groups before implementing more significant organizational changes, such as lead country concepts for specific products or allocating global product responsibility. [47]) has in a similar vein advocated the creation of a cross‐country board including participants from different subsidiaries to make decisions, and [ 1 ]) have advocated the creation of organizational support structures to realize cross‐country synergies.
The importance of establishing a common overall global brand planning process has been stressed by [ 1 ]). The authors also argue that companies implementing global branding have a choice between four different organizational configurations they label: business management team, brand champion, global brand manager and global brand team. The first two are led by senior managers, while the last two are led by middle managers. [39]) have also argued that a greater emphasis needs to be given to managerial issues in advertising standardization, and they explore whether certain structural arrangements lead to superior results, e.g. nominating lead markets, centralising development, and the encouragement of cross‐fertilization. While co‐ordination structures appear vital to the implementation of marketing mix standardization, there is a lack of empirical evidence indicating which type of structures are best suited for certain contexts.
Alignment and knowledge sharing. Two conceptual papers have argued that implementation of a standardized marketing strategy is more effective when key managers share a common worldview, and there is greater strategic consensus between parent and subsidiary managers ([44]) as well as mechanisms for knowledge sharing of insights and best practice between countries ([ 1 ]). And [47]) has proposed that an effective follow‐up process is a vital ingredient in the implementation of global marketing.
Clear responsibilities. [ 1 ]) have stated that it is vital to assign clear roles and responsibilities regarding different brands so that it is clear who does what. [44]) has further argued that a greater centralization of authority is required to ensure effective implementation of a standardized strategy. This relationship between marketing standardization and centralization of decision‐making was confirmed empirically by [68]) and partially confirmed by [69]).
Modular product approach. To reach a compromise between standardization and adaptation, [116]) have proposed two hybrid product standardization approaches. In the modular approach, the company would develop a range of modules that can be assembled in different ways. In the core product approach, a range of attachments would be fitted onto standardized core products to provide customization.
Performance Impact of Marketing Mix Standardization (O)
In the final section on findings, we turn our attention towards the reported outcomes (O) of marketing mix standardization. Until the 1990s, there was a lack of empirical studies seeking to establish the relationship between marketing standardization and performance. As argued by Özsomer and Simonin
[w]hile much has been written on the promises and pitfalls of marketing program standardization , the majority of published work is conceptual, or based on anecdotal evidence. Surprisingly, few empirical research works that document the relationship between a standardized marketing program and performance exist. (Özsomer and Simonin 2004 , 398; italics in original)
There have been some studies addressing this topic, but the findings have been inconclusive and conflicting. It would appear that difficulties in collecting relevant and reliable data have limited the number of high quality studies linking marketing mix standardization and performance. This literature review has thus also reached the conclusion that the jury is still out regarding the relationship between marketing standardization and performance.
No impact. In a mail survey to 332 multinationals in global industries, [89]) found no significant difference in performance between multinationals that emphasized standardization and those that did not.
Negative impact. [68]) found a negative impact on subsidiary performance for multinationals with centralized marketing structures and the authors suggested decentralized marketing structures and decision‐making as key success factors for subsidiary marketing.
Mixed results. [95]) reported mixed results where adaptation of product quality, services and design did not lead to higher performance while adaptation of price, sales force management and advertising content had a positive performance effect. No significant effect was found for distribution adaptation.
Positive results. [69]) found that performance was positively affected by overall marketing programme standardization but that the performance impact was negative for centralization of non‐product related marketing decisions. This finding could explain why brand and product elements have typically been found to be the most standardized across a range of studies. Another study, based on PIMS data, reported a positive performance link between standardization of the strategic resource mix, defined as the relative allocation of resources between marketing mix elements, and performance ([103]). This bears some similarity to the discussion that the potential to standardize the marketing process is greater than the potential to standardize marketing programmes ([99]). There is also limited support for a positive impact of a hybrid approach between adaptation and standardization. In an economic modelling paper, [36]) argued that performance is maximized by combining a strategy of standardized and centralized core products, providing economies of scale, together with customized pricing and product policies. [102]) found that performance was optimized for products where a balance had been made between standardization and adaptation during the design phase. The relationship was stronger in instances where there was a high degree of co‐operation between the parent and the subsidiary.
Figure 2 draws together the key relationships that appear to be supported by the literature reviewed. We have only included those contextual factors that have stronger support across the studies reviewed. Given the limited amount of evidence available regarding standardization of web pages, we have put the web in parenthesis to urge caution regarding this particular finding. Working from the left of the figure, we have identified the contextual variables that appear clearly to differentiate strategies of higher marketing mix standardization from those with lower standardization. In determining a strategy for marketing standardization, it appears that type of product (industrial, consumer, high‐tech, culture‐bound), product/market similarity, level of local competitive intensity and ownership control over subsidiaries are most influential. The figure reflects the fact that brand and product attributes are more likely to be standardized, and pricing the least likely mix element to be standardized. Multinationals seeking to develop standardization strategies appear to benefit from decision processes that are aided by clarity of strategic objectives, use of cross‐country research and segmentation, mapping feasibility vs desirability of standardization, use of a variety of matrix mapping tools and adopting a customer rather than product orientation. Successful implementation of a standardization strategy seems to be supported by achieving cross‐border co‐ordination, alignment and knowledge between organizational units, allocating clear responsibilities and implementing a modular product approach. The outcomes of a standardization strategy have not been subject to a great deal of empirical research, but we have indicated the key generative mechanisms (in terms of PUV or costs) and outcome variables that mix standardization is likely to impact.
Graph: 2 Summary model.
Discussion and Future Directions
This review has tried to synthesize the evidence base in relation to marketing mix standardization. In this section, we discuss some of the limitations of the literature at present and provide some suggestions for future research.
Stronger theoretical foundation. We note a strong emphasis on description across a majority of the studies we have reviewed. The impact of this is that theoretical foundations are often not satisfactorily addressed. We would call for a stronger link to theory to advance the field further. The somewhat atheoretical nature of the marketing literature means that linkages with other related areas are not obvious. As a result, much of the marketing standardization literature tends to exist in isolation from the key theoretical debates in other fields.
Need for prescription. In addition to stronger theoretical links, we would also call for studies that aim to derive managerial prescriptions. The current body of literature is vast in richness but full of contradictory findings. As a result, it is not obvious how to distil 'best evidence' for use by management practitioners.
Stronger links to the strategy literature. We also conclude that literature on marketing mix standardization has the potential to be more closely integrated with the strategic management literature. This could help to provide both a stronger theoretical foundation and more appropriate and credible prescriptions. As an example, it would be helpful if studies that explored differences in marketing standardization distinguished between firms following international, global, transnational or multifocal strategies ([ 8 ]; [ 9 ],[10]; [81]). It is remarkable that the literatures on international marketing and multinational strategy exist in parallel with so little cross‐fertilization between the two domains.
We also suggest further research that combines marketing mix standardization with research on integration of the value chain to understand better the relationship between customer experience and operational delivery. Some steps towards this have already been taken by [58]). Multinational value chain configuration and co‐ordination ([80]), a concern addressed in the strategy literature, appears to be treated in isolation from marketing mix standardization. This is unfortunate as these dimensions of global/international strategy clearly complement each other. We believe that it would be useful to unbundle 'integration' in multinationals into an external dimension focused on standardizing elements of the customer experience across borders, and an internal dimension focused on co‐ordination of business activities. We might suggest that the degree of marketing mix standardization on the one hand, and value chain integration on the other, are orthogonal. As such, firms might be faced with strategic choices regarding the degrees of mix standardization and value chain integration they are striving for. Different combinations of mix standardization and value chain integration could yield different configurations of MNC strategy.
Need for rich qualitative studies. The review found that only 5% of the articles primarily relied on qualitative research methodologies. We also noted that our understanding regarding decision processes and implementation of marketing mix standardization is limited. Based on this, we believe it would be valuable if future studies used qualitative research methodologies to capture the richness of both marketing mix standardization decisions and implementation.
Call for research in forgotten locations. We note that extant research has largely focused on the advanced economies of the US, Japan and Western Europe. This literature is thus prone to the same geographic bias found in a great deal of published research. In light of the increased importance of other countries and regions, including ASEAN countries, Brazil, Greater China, Eastern Europe, India, and Russia, we would encourage researchers to focus more on emerging markets. This includes subsidiaries of foreign companies operating in those markets and, perhaps more importantly, multinationals originating from emerging markets such as Embraer, Hutchison, Lenovo, Mittal, Nandos, Proton, Severstal and Videocon.
Call for research into service industries. The review also identified a clear dominance of manufacturing (product) industries in both consumer and industrial goods. This is not unique to this literature but reflects an overall bias towards manufacturing sectors in much of management research. This might be due to the fact that foundation disciplines such as micro economics and industrial organization have historically focused on manufacturing industries. As a result, 'taken for granted' frameworks such as the value chain ([79]) exhibit a clear manufacturing orientation. Considering the increased importance of the service sectors across advanced economies, we need research specifically addressing marketing standardization among service firms, e.g. airlines, banking, business schools, entertainment, hotels, logistics providers, online brokers, professional services and restaurants.
Mix elements. We identified that more than half the studies concerned a wide variety of marketing mix elements, and 30% focused specifically on advertising. In‐depth studies of other mix elements including distribution, pricing and web sites were rare. We believe there is scope for some further research focused specifically on these areas.
Execution quality. We argue that execution quality could be another missing link that should be explored to understand the performance outcomes of attempts to standardize. How firms standardize is perhaps just as important as what they standardize. Bossidy et al. have argued that 'Execution is the unaddressed issue in the business world today. Its absence is the single biggest obstacle to success and the cause of most of the disappointments that are mistakenly attributed to other causes' ([15], 5; italics in original). There is a clear lack of empirical studies investigating the implementation dimension of marketing standardization. In this regard, we believe it would be especially relevant to explore the impact of procedural justice on effective marketing mix standardization ([49], [50], [51]). Ensuring compliance, and beyond that, commitment from subsidiary managers is likely to have a substantial impact on the successful outcome of standardization initiatives. Rather than being just passive agents of headquarters, subsidiary managers are capable of autonomous strategic behaviour ([17],[18]) and instigating subsidiary initiatives ([13]). [49],[50], [51]) research into procedural justice has informed us that subsidiary managers are less likely to be committed to, and follow, corporate integration initiatives and mandates if they perceive the decision‐making process as unfair. Following from this, it is quite possible that there is a link between the outcome of marketing standardization and the extent to which subsidiary managers perceive the standardization process as 'fair'.
Performance impact. There are few studies that address the performance impact of marketing standardization, and the evidence that exists is often conflicting. We propose that the framework used in this synthesis could be used to further advance our knowledge of this critical link. This would mean structuring research to understand better the links between contextual factors (C), design parameters (D), generative mechanisms (G), implementation (I), strategic choices (SC) and outcomes (O). Structuring research with a view to provide such grounded 'technological rules' should provide an alternative option to pursue to ensure that performance impact is better understood.
We argue that the findings of this study have clear practical relevance for managers faced with standardization decisions. Technological rules in management are typically not precise instructions but, instead, serve as design exemplars that practitioners can use to develop their own solutions concepts ([112]). We propose that practitioners use a four‐step process. First, analyse your situation in relation to contextual factors (C) (Table 1) to understand overall standardization potential better. Second, review and reflect on the typical standardization potential of different marketing mix elements (D) in relation to your situation. Pay particular attention to the fact that processes often have a higher standardization potential than programmes (marketing mix elements). Third, be specific about what outcome (O) you want to achieve and analyse what generative mechanisms (G) you need to trigger to achieve desired outcomes. Map the links between the design parameters (D) you can modify through standardization and the expected outcome on generative mechanisms (G) such as PUV enhancements or cost reductions (see Figure 1). Fourth, consider requirements for high quality execution by reviewing the identified areas regarding strategic choices (SC) and effective implementation (I) of marketing standardization.
We are grateful to David Denyer, Mats Lingblad, Siri Terjesen and two anonymous reviewers for providing insightful comments which have helped us to considerably improve the manuscript.
Table A1 summarizes the articles reviewed at different stages in the review process.
A1 Articles included in the review
|
Review stage |
Articles under review |
|
Total articles for full‐text relevance review |
150 |
|
Excluded based on relevance criteria |
−47 |
|
Total articles for quality review |
103 |
|
Excluded based on quality criteria |
−19 |
|
Articles included in systematic review |
84 |
Of the 84 articles, 61 were concerned with various aspects of marketing mix standardization, 16 with cross‐border segmentation, and 7 categorized as 'other'. The 'other' category included articles of relevance to the topic without clearly falling into either the marketing mix standardization or segmentation categories. The most common themes within this category were articles that dealt with implementation or organizational issues in relation to international marketing.
The 84 articles were classified as conceptual (31), qualitative ( 4 ) or quantitative (49). From this it is clear that more than half the papers report quantitative research (58%), slightly more than a third are conceptual papers (37%), and only a very small proportion of papers report qualitative research (5%). However, there are clear differences between the marketing mix papers and the segmentation papers. Two‐thirds of marketing mix papers report quantitative research (69%), while cross‐border segmentation papers are instead dominated by conceptual papers (63%) and empirical evidence is more limited.
Of the 61 marketing mix papers, more than half (54%) concerned overall marketing mix standardization. The second most researched area is advertising standardization, which represents slightly less than a third (30%) of marketing mix papers. Papers about product standardization constitute 8% of studies, and research specifically about distribution (3%), price (3%) and web standardization (2%) are rare. These data are summarized in Table A2.
A2 Categorization of reviewed articles
|
|
Overall marketing mix |
Product |
Advertising |
Distribution |
Price |
Web |
Marketing mix total |
Segmentation |
Other |
Grand total |
|
Conceptual |
8 |
1 |
6 |
1 |
0 |
0 |
16 |
10 |
5 |
31 |
|
Qualitative |
2 |
1 |
0 |
0 |
0 |
0 |
3 |
1 |
0 |
4 |
|
Quantitative |
23 |
3 |
12 |
1 |
2 |
1 |
42 |
5 |
2 |
49 |
|
Total |
33 |
5 |
18 |
2 |
2 |
1 |
61 |
16 |
7 |
84 |
The amount of relevant and high quality research published has also increased over time. Breaking down the research by decades of publication illustrates that 7% were published in the 1970s, 27% in the 1980s, 39% in the 1990s and 26% between 2000 and mid‐2005 (see Table A3).
A3 Date of publication of reviewed articles
|
|
1970s |
1980s |
1990s |
2000s |
Total |
|
Marketing mix standardization |
3 |
15 |
27 |
16 |
61 |
|
Other |
0 |
2 |
1 |
4 |
7 |
|
Cross‐country segmentation |
3 |
6 |
5 |
2 |
16 |
|
Total |
6 |
23 |
33 |
22 |
84 |
It is significantly more challenging to try to break down the empirical papers by type of industry, origin of researched MNC and location of the study. This is a result of considerable variation in terms of terminology used by different authors. There is thus a greater risk of error in the findings reported in this section. This breakdown is only meaningful for the 45 empirical papers on marketing mix standardization (42 quantitative, 3 qualitative) as country characteristics or consumers are typically the unit of analysis in the cross‐country segmentation studies.
Researched industries. Of the 45 empirical papers on marketing mix standardization, 25 papers are best described as cross‐sectional (55%) and 14 papers (31%) as consumer goods (durables and non‐durables) oriented.
Origin of researched MNCs. Of the 45 empirical papers on marketing mix standardization, the most common origin of researched MNCs was the US with 16 papers (36%), 11 papers (24%) concerned MNCs from a wide variety of countries, 10 papers (22%) North America, Europe and Japan, and 8 papers (18%) other countries of origin including UK, Japan, Sweden, Norway, Colombia.
Location of studies. The studies display a wide spread of geographic locations. Of the 45 empirical papers on marketing mix standardization, 6 papers (13%) concern European countries, 6 papers (13%) include empirical material from a broad range of countries, 7 papers (16%) the US, 5 (11%) papers Latin America, 3 papers (7%) the Middle East and the rest Turkey, Japan, Asia Pacific, India, Australia and Canada.
1 Andreas Birnik is from Cranfield School of Management, Cranfield University, Cranfield, Bedfordshire MK43 0AL, UK, and the Department of Business Policy, NUS Business School, National University of Singapore (1 Business Link, Singapore 117592). Cliff Bowman is from the Cranfield School of Management, Cranfield University, Cranfield, Bedfordshire MK43 0AL, UK.
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Step 9: Develop a Marketing Strategy
Required Readings
Chapters 4, 5, & 6
Lancaster, G., & Massingham, L. (2018). Essentials of marketing management (2nd ed.). Routledge
You and your team have been working around the clock to generate all the pieces for your new client's requests. Jillian touches base to see how things are moving along and to provide additional instruction.
INBOX: 1 New Message
Subject: Pulling it all together From: Jillian Best, CEO, MCS To: Team & You Hi Team, Please develop a marketing strategy for this client based on your STP strategy. The following marketing strategy elements are interdependent and are crucial components of a successful marketing plan. Click each component for more in-depth information:
· branding strategies—Describe the needs and wants of your target customers and how you intend to position the offerings versus the competition. Present a detailed description of the different types of products or services that you intend to sell in the US market, including their attributes, features, and quality level, along with the brand names, intended packaging, logo, and supplemental products and services. As you make these branding strategy decisions, it is imperative that you stay focused on the customer. Remember that the company's customers do not buy features; they buy benefits, both tangible and intangible. It is also critical to understand the customer: think about who makes the purchase and who influences that decision.
· pricing strategy—Pricing is very strategic, as it is the only marketing mix variable that generates income. As a marketing team, you need to decide on your price objectives and strategies. Think about pricing tactics like discounts and incentives. You need to decide whether your pricing strategy should be skimming, premium, or market penetration given the nature of the offerings, your customers, and your major competition. Profit margins and breakeven analysis will also need to be considered. As you determine your final price points, you'll need to consider the perceived value of your offerings. Describe how you would go about making these decisions as well as the major issues involved.
· distribution and supply chain strategy—Is it easy to transport your offerings, or are there issues involved in delivering them to the final user? These strategic decisions deal with how customers purchase your products or services. Will you market your products or services directly to your customers or through intermediaries like distributors and wholesalers? Will you follow an exclusive, selective, or intensive distribution? Distribution decisions focus on marketing channels as well as the physical distribution of the offerings. Explain the criteria you would use to make these distribution and supply chain strategy decisions.
· integrated marketing communications—This is often the most visible element of a marketing strategy. The company's communication strategy involves developing an integrative mix of a number of different tools, while keeping in mind the needs and characteristics of the target market. These tools may include a mix of traditional communication elements such as advertising, personal selling, sales promotion, and publicity and public relations. It is essential that your promotion objectives are clearly defined, and that a holistic and integrated marketing communication approach is used.
Whew, that was a lot to cover, but all important info,
Jillian
Support your work with scholarly sources and reliable nonscholarly sources such as Reuters, Bloomberg, Yahoo! Finance, Barrons.com, Morningstar.com, Money, Forbes, Fortune, Financial Times, Wall Street Journal, and Harvard Business Review, as well as the UMGC Library databases such as Hoover's and ABI/INFORM. All sources need to be cited using APA formatting, both within the text and in the reference list.
By the end of Week 9, submit your strategic analysis report your team’s study group.
Your team will prepare a financial analysis next.
Deliverable: Your final strategic analysis report by the end of Week 9 should include your one-page outline of marketing objectives, your six-page STP analysis, and a six-page marketing strategy. As follows, the final strategic analysis report should be 12 pages, excluding cover page, the reference list, and appendices. Any tables, graphs, and figures should be included as appendices. Your report should have one-inch margins and be double spaced in 12-point Times New Roman font. The report should be organized using headings and subheadings to improve its readability.
Step 10: Complete Breakeven Analysis and Implementation, Controls, and Contingency Plan
Required Readings
Chapter 15
Lancaster, G., & Massingham, L. (2018). Essentials of marketing management (2nd ed.). Routledge
The final component of your marketing plan is a breakeven analysis report that also includes a schedule for implementation, any needed control measures, and a contingency plan. Present your breakeven analysis in a table that includes the following details about your client:
· forecasted total number of units sold (for a service industry, products could be service contracts or the number of customers served)
· forecasted average unit price (AUP)
· forecasted total sales (in US dollars)
· forecasted average unit variable cost
· forecasted fixed cost
· breakeven point (units)
· breakeven point (in US dollars)
Read about breakeven analysis to assist your calculations. In addition, use the following guidelines as you develop your implementation, controls, and contingency plan:
1. Decide on the team that is going to implement the plan.
2. Determine the time frame for implementation.
3. Secure the financial and human resources needed.
4. Distribute the tasks among team members.
5. Periodically check and communicate performance against the marketing plan metrics (benchmarks) to ensure that implementation is on track.
6. Make changes if there are any deviations from the key performance indicators (KPIs) for those metrics, preferably using a dashboard. KPIs may include the number of sales calls, the number of new customers, sales, profitability, growth, etc.
7. Contingency plans should deal with severe deviations from productions plans, sales figures, market share, profitability, changes in government regulations (e.g., increased taxation), and drastic competitors’ moves (e.g., launching a competing product or service or an offering that may render your offering obsolete or less attractive to the market).
Deliverable: Early in Week 10 submit a report that explains your breakeven analysis. Also, include a table at the end of the report that highlights your financials. In addition, explain your schedule for implementation as well as the controls you intend to put in place and how you intend to proceed when your benchmarks are not met (contingency plan).
Your breakeven analysis and implementation report should be three pages, excluding cover page, the reference list, and appendices. Your report should have one-inch margins and be double spaced in 12-point Times New Roman font. The report should be organized using headings and subheadings to improve its readability.
Support your work with scholarly sources and reliable nonscholarly sources such as Reuters, Bloomberg, Yahoo! Finance, Barrons.com, Morningstar.com, Money, Forbes, Fortune, Financial Times, Wall Street Journal, and Harvard Business Review, as well as the UMGC Library databases such as Hoover's and ABI/INFORM. All sources need to be cited using APA formatting, both within the text and in the reference list.
Early in Week 10, submit your breakeven analysis and implementation, controls, and contingency plan to your team's study group.
In the next step, you will combine the work from all of your analyses to create your final marketing plan.
Step 11: Complete and Submit Your Marketing Plan
Combine your situation analysis, market analysis, strategic analysis, and financial and implementation analysis into one complete paper following the marketing plan template. Edit the document to ensure that there is clear flow of ideas from one section to another. In addition, prepare a one-page executive summary that highlights the most important aspects of your marketing plan. The paper should be 34–36 pages (net), excluding cover page, executive summary, the reference list, and appendices. Any tables, graphs, and figures should be included as appendices. Your report should have one-inch margins and be double spaced in 12-point Times New Roman font. The report should be organized using headings and subheadings to improve its readability.
Support your work with scholarly sources and reliable nonscholarly sources such as Reuters, Bloomberg, Yahoo! Finance, Barrons.com, Morningstar.com, Money, Forbes, Fortune, Financial Times, Wall Street Journal, and Harvard Business Review, as well as the UMGC Library databases such as Hoover's and ABI/INFORM. All sources need to be cited using APA formatting, both within the text and in the reference list.
By the end of Week 10, submit your final marketing plan to the Assignments folder.
Step 12: Complete Skills Gap Analysis
INBOX: 1 New Message
From: Denna Chartreuse, HR Specialist, MCS To: You Greetings,
I’m reaching out to let you know that MCS’s Human Resources department conducts a 10-week post-project self-evaluation of your skills. Using the same skills gap analysis file that was sent to you when you began, each team member will self-evaluate their own project-related knowledge and skills accounting for their growth during their tenure within our organization.
The skills gap analysis will help you to identify the skill areas you have enhanced by completing your recent assignments and will reflect any changes in the way you see the importance of those skills to your career success. Select the Project 4 worksheet in the bottom left of the file. After completing your self-evaluation, take the time to deeply assess your progress by writing a 400- to 500-word reflection that describes two to three gaps you worked to reduce over the past 10 weeks and discusses whether and how much you improved. Also think back on the learning activities you pursued to help you develop competencies. Thank you for your attention to this request, we look forward to hearing of your forward movement.
Denna