3.2 Marketing planning

Market segment

• Group of people within the wider market that have specific common characteristics that make them behave similarly when in their buying behavior

Market planning

• Marketing is the process of identifying customer needs producing a solution to those needs and delivering the solution to the people who have those needs
• Is the process of formulating marketing strategies and tactics so a business can achieve its objectives

Market segmentation

• The practice of dividing your target market into approachable groups with similar needs or characteristics
• There are 3 main types of segmentation:
1. Demographic
2. Geographic
3. Psychographic

Advantages

• Identify gaps and opportunities in the market
• Design specific products that are tailored to specific markets

Disadvantages

• Not everyone in a segment will behave the same
• Can be hard to identify a segment as consumers can behave to multiple segments at once
• Requires market research which is costly

Targeting

• Refers to the process of selecting a target market

TOOL: BCG Matrix

• This tool helps businesses that have multiple products to decide their marketing strategies
• Here is the tool:

• Cash cows: not much investment needed as they are mature products that bring high sales volume
• Dogs: usually products at the end of their life cycle or after a failed launch
• Stars: require a lot of investment to keep up with high market growth
• Question mark: Products that launched but didn't gain much market share. It requires a lot of investment but can provide a lot of success if the market likes it.

Limitation

• Doesn't consider synergies between products
• Does not consider external environment that can impact the success of a product

TOOL: Product positioning maps

• Are visual representations of how consumers see the companies based on 2 axes
• It is useful to:
1. Identify market segments whose needs are not fulfilled
2. Occupy gaps in the market
3. Help businesses identify competition

Markets

• There are two types of markets:
1. Niche markets
2. Mass markets

Niche markets

• Are specialized products aimed at a subset of a larger market
• Usually happens with small scale production; no economies of scale
• Prices tend to be high due to limited competition and high customer loyalty

Mass markets

• Products aimed at broad market segments
• Likely large-scale production

Unique selling point

• Is a factor which differentiates a product service or brand from its competitors
• Helps a brand stand out
• Helps lead to customer loyalty

Disadvantages

• Likely requires investment in research and development
• Might not attract a large portion of the market
• Competitors may copy it

Differentiation

• It is an attempt of a business to distinguish its products from those of its competitors adding value to it.
• Helps increase demand for products increasing brand loyalty
• Examples:
• Price
• Product
• Place
• Promotion

Porter's Generic Strategies

• Used to identify generic strategies a business can adopt to stay competitive in the market
• Pursuing multiple strategies is not sustainable in the long term

Limitation:

• A business that is stuck in the middle isn't differentiated enough to convince customers to buy products.

Tool:

• The scope is the market: either mass or niche
• Cost leadership: becomes low-cost producer in the industry
• Differentiation: when a business makes its products different from its competitors
• Cost focus: becomes low-cost producer in niche market
• Differentiation focus: business produces specialized or differentiated products in a niche market