Table of Contents
Marketing is simply creating value that satisfies a customer’s need and building strong customer relationships to capture value back in return.
The power of marketing is to transform something you might only want, to something you highly need. To elaborate, let’s assume you’re thirsty. Here your need is water. But what you want is Nestle water for example. Or Dasani. Successful product ideas are generated from converting wants to need . For example smartphones. Now- a-days everyone needs to hold smartphone, which was not the case in the past.
So customers stand in the center of our marketing Model. Since the goal of marketing is to create value for customers and build profitable customer relationships, the company needs to create its own marketing strategy by keeping their customers in the center of their attention., This starts with deciding which customers we are going to serve ( through segmentation and targeting) and how it’s going to serve them best ( through differentiation and positioning).
We divide the market into smaller segments, select or target the most promising segments, and focus on serving and satisfying the customers in these segments.
After designing the marketing strategy, the company starts working on the integrated marketing mix, known as the Four Ps —product, price, place, and promotion.
To find the best marketing strategy and mix, the company engages in marketing analysis, planning, implementation, and control. Through these activities, the company watches and adapts to the actors and forces in the marketing environment, mainly through strategic planning.
Now let’s discuss every step of the marketing model and start with segmentation.
Dividing the market into distinct groups of buyers who have similar needs, characteristics or behaviors and who might require separate products or marketing programs.
There are several types of market segmentation. These include:
- Geographic Segmentation: Divides the market based on geography (location). The market can be segmented into countries, regions or cities .
Example: Coca cola Ice bottle was only sold in sahel, where people faced extremely hot weather temperatures on the beach.
- Demographic Segmentation : The market is divided into segments based on different demographic variables such as age, gender, income, occupation, education, religion, marital status, ethnicity and generation.
- Psychographic Segmentation: This type of segmentations relies on the psychology of the consumer. This is related to several factors such as social class, lifestyle, personality and characteristics
Example: While both cars target segments of the same income level, Volvo targets consumers who are interested in safety and are more family oriented, while BMW is more sporty and targets a segment that is living a more active lifestyle.
- Behavioral Segmentation: Segmenting the market according to consumer knowledge, attitudes, uses or response to products and loyalty to the product. EX: Toothpaste
3-Market Targeting & Positioning
Mass marketing: The firm decides to ignore market segment differences and go after the whole market with one offer.
Segmented marketing: The firm decides to target several market segments and designs separate offers for each
Niche marketing: The firm goes after a large share of one or a few segments or niches.
Micro marketing: Tailoring products and marketing programs to the needs and wants of specific individuals and local customer groups. (Dell, nike- customers customize their own laptop/shoe)
4-Market and Industry Analysis : SWOT Analysis
SWOT Analysis is a useful technique for understanding your Strengths and Weaknesses, and for identifying both the Opportunities open to you and the Threats you face. Strength & weaknesses are internal factors , which means that they’re related to what’s happening inside the company itself. However, opportunities and threats are external, since they deal with the market in general and how the company copes to the changing market environment
What advantages does your organization have?
What do you do better than anyone else?
What unique or lowest-cost resources can you draw upon that others can’t?
What do people in your market see as your strengths?
What factors mean that you “get the sale”?
Ex: Competitive advantage of Careem? Usual promotion
What could you improve?
What should you avoid?
What factors lose you sales?n
Ex: why did nokia fail?→ because they failed in strategic planning
What good opportunities can you spot?
What interesting trends are you aware of?
Useful opportunities can come from such things as:
- Changes in technology and markets on both a broad and narrow scale.
- Changes in government policy related to your field.
- Changes in social patterns, population profiles, lifestyle changes, and so on.
- Local events.
Example:When Nestle water’s factory was burnt, dasani used this opportunity to produce more to be available in the market and hence generate more profit.
What obstacles do you face?
What are your competitors doing?
Is changing technology threatening your position?
EX :introduction of flo water is a threat for nestle and dasani and all the existing water brands
Careem and uber were a main threat for all the taxi drivers.
A competitive analysis helps the business identify ways through which it can differentiate itself from competitors. Competitive analysis involves identifying and evaluating competitors and evaluating their strategies to determine their weaknesses and strengths relative to your own.
Competitors can be:
- Direct: businesses offering similar products or services. For example, Burger King and McDonald’s.
- Indirect: businesses that offer slightly different products or services but target the same group of customers with the aim of satisfying the same need. For example, Mori Sushi and Pizza Hut. Both offer different products but ultimately satisfy the same customer need: hunger.
- Conduct research
- Gather competitive information
- Analyze competitive information
- Determine your own competitive position (the way your business will stand out)
Your analysis should address the following questions:
- Who are your competitors?
- What product/service do they offer?
- Who are their target markets? Do they target the same target market?
- Are they profitable?
- What is each competitor’s market share?
- What are their current strategies?
- What is there competitive edge?
- How do they market their product/service?
- How are they perceived by customers?
- What is each competitor’s weaknesses and strengths?
- What potential threats do competitors pose to your business?
- What potential opportunities can they make available to you?
Product is anything that can be offered in a market for acquisition or consumption that might satisfy a need or want. It can be tangible, or intangible – a service for example. Products include physical objects, services, events, persons, places, organizations, ideas or even a mix of all of these items.
As you can see, a product has many levels:
Core benefits represent what the buyer is really buying. The core problem solving, benefit or service the consumer seeks. Think of the core benefit of an iphone for example- It’s to make phone calls- connectivity
Actual product represents the design, brand name, quality level and packaging that delivers the core benefit to the customer. Ex: Touch screen of the iphone, its style and design
Augmented product represents additional services or benefits of the actual product. For example apple care, delivery options, and iOS updates
Branding: Name, term, symbol, or design (or a combination) which identifies the product of one company and differentiates it from the competitors.There might several products that are exactly the same but what differentiates one from the other is the branding. (products can be copied while brands are unique)Having a strong brand image usually helps the company when introducing new products
Brand Recognition: Awareness of brand’s existence as an alternative Ex: SWVL – Careem
Brand Preference: Customer prefers over the competitor’s offerings. Ex: Uber not Careem /Pepsi not Coke
Brand Loyalty: Customer strongly prefers a specific brand and will accept no substitutes. Ex: Uber only/ pepsi only
Brand equity A brand has high brand equity if consumers react more favorably to it than to generic or unbranded version of the same product.
It’s the measure of the brand’s ability to capture Consumer Preference and loyalty.
Price is the amount of money charged for a product or service. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service.
Pricing is the only P that generates profits! All other Ps are costs!
P= Costs + Profit ( where costs are divided into fixed and variable costs)
Pricing strategies for new products entering the market:
- Skimming Price: is a strategy with high initial prices to “skim” revenue layers from the market.The Product’s quality and image must support the price.The Costs of producing the product in small volume should not cancel the advantage of higher prices.
- b) Penetration pricing: sets a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share.
This strategy is often used in price sensitive market. The high sales volume results in falling costs, allowing the companies to cut their prices even further.
Ex: Nutella’s Competitors- MoltoBella
Place or distribution is how you plan on making your product or service available to customers. A product or service is made available through distribution channels. Distribution channels are the processes through which a product is moved from the producer to the consumer.
Distribution channels can be:
- Direct: involves distributing products directly from the manufacturer to the consumer/customer without the use of intermediaries.
- Manufacturer -> Consumer
- Indirect: involves distributing products through the use of intermediaries. Two types of indirect distribution channels:
- Manufacturer -> Retailer -> Consumer: in this channel the manufacturer sells goods to consumers through retailers.
- Manufacturer -> Wholesaler -> Retailer -> Consumer: in this channel, there are two intermediaries.
- Wholesalers: The party that buys large quantities of a product from manufacturers and sells it to retailers. Wholesalers sell goods to other businesses, they do not sell directly to consumers.
- Retailers: The organisation that sells products directly to consumers and end users. Goods are sold in small quantities and for consumer personal use.
There are three main types of distribution strategies:
- Intensive distribution: products are sold through as many outlets as possible so that consumers find the product almost anywhere they go. For example, selling soft drinks.
- Selective distribution: using a limited number of outlets to sell the product. For example, the sale of cars through certain specified dealers.
- Exclusive distribution: an extreme form of selective distribution where only one or two distributors are granted the right to sell the product.
Promotion is advertising a product or brand to generate sales and to create customer loyalty. It involves all the forms of communication an organization uses to establish meaning for its product or service and to influence the buying behavior of targeted customers. The message you want to deliver must be clear, consistent, and compelling throughout the promotion mix
The promotion mix is the specific blend of advertising, sales promotions, public relations, personal selling and direct-marketing tools that the company uses to persuasively communicate customer value and build customer relationships.
There are five elements of promotion. A business can choose to use one or more to deliver clear and effective messages about their product/service to customers.
- Advertising: involves the use of mass media such as television, radio, newspaper, magazines, billboard, posters, brochures and direct mail. This type is promotion is paid for with little or no personal messages.
- Public relationships and sponsorships: tries to increase positive mention of the product through influential media outlets, which include newspapers, magazines, talk shows and social networks and blogs. Super users, or influencers, are used to test the product and speak positively about it.
- Personal selling: business representatives directly contact potential customers through phone calls, emails or in person.
- Direct marketing: telemarketing, customized letters, emails and text messages.
- Sales promotions: “buy one get one free” options, seasonal discounts, contests, samples and special coupons.
All business need to have some sort of online presence regardless of the industry they operate in. You don’t have to be an expert in order to create a formidable online presence for your business. There are a few simple things that you could follow in order to establish a basic foothold. We strongly advise you to start creating profiles on social networks to establish ownership of your startup name as soon as you’re done with branding.
While startups generally know that they must engage with their audiences through social media, few create a strategy and even fewer take the time to truly understand the inner workings of each social site and how to choose their preferred site to market themselves most effectively with their choice market segment.
To ensure maximum exposure with the correct audience, one must take into account the different demographics that engage on specific social media platforms. It would be a waste of resources to concentrate marketing efforts into a specific platform if the product does not appeal to the average user. For example:
- Instagram: 16-24 38%; 25-34 32%; 35-44 18%; >45 13%
- Facebook: 16-24 25%; 25-34 29%; 35-44 22%; >45 24%
- Twitter: 16-24 30%; 25-34 31%; 35-44 21%; >45 18%
It is also crucial to take into account the best time to post. Despite there not being a universal best time, there are steps to take to ensure that the marketing campaign is introduced to the public at optimal times according to each platform to increase the probability of a high number of views. For example, on Facebook the best time to post is on Saturdays at noon. Moreover, when considering the best time to post it is vital to take into consideration the demographic of the intended customers. For mothers the best time to post is in the early morning (6-7am) and for students it is at night (10 pm).
Due to the lengthiness of the process of amassing a substantial following, an important strategy to employ is to influence the influencer. This allows the product/vision of the startup to be introduced to a much larger audience than what they have and increases their exposure. There are several ways to accomplish this, of which the most important is social networking. Influencers are more likely to endorse or promote a business that they feel connected to; they built their following based on authenticity and they demand the same both sharing. Samples and free products go a long way in spreading a startup’s products on social media. It effectively costs little while the rewards of establishing a key medium of marketing is priceless.
Another key aspect of social media marketing that ties in with “best time to post” is post scheduling. Instead of creating each post before it is rolled out, scheduling allows pages to que several curated posts that will be published on schedule. This increases a brand’s activity and increases the likelihood of potential customers staying on the page. It is also vital to interact directly with customers to show engagement and a take charge attitude towards the product. An inactive account will automatically signal to viewers that those in charge do not care enough to actively engage and grow their brand.