PGP: Marketing Management
Prof. Siddharth Shekhar Singh
Introduction
My introduction
Education
Experience
Associate Dean
Board member
Petronet LNG
Dlabs
ISBM (UK)
Industry other:
Johnson & Johnson
Consulting, Startups (e.g. www.bsharpcorp.com; RVM-Zeleno)
Teaching
Research
Sustainable competitive advantage
Marketing Strategy
CLV analysis: Acquisition, retention, upselling and cross selling, loyalty programs
Online marketing: Customer communities, advertising and promotions, social media
Financial impact of marketing actions (ROI)
2
Marketing Management: Class Overview
Foundations of Marketing
Strategic Marketing (STP)
Segmentation
Targeting
Positioning
Implementing the Marketing Strategy (4P)
Product
Price
Place
Promotion
Focus: Deep insights into strategic issues and applications
3
Introduction: First two sessions
Foundations of Marketing
Marketing overview
Customer needs
Customer value
Strategic Marketing (STP)
Segmentation
Targeting
4
What is Marketing?
5
Marketing Management
Product
IMPLEMENTING THE
MARKETING STRATEGY
(4 P)
STRATEGIC MARKETING
CUSTOMERS (STP)
6
Copyright Prof. Siddharth S. Singh, ISB
Online Sessions
Customer needs and behavior
What is meant by value
Dimensions of value
How can you craft a superior value proposition?
What is a market?
Product market and segmentation
Targeting Decision
7 Copyright ©Siddharth S. Singh. Not to be used or reproduced without permission.
Customer Needs
Example 1: Kids Toothbrush
Example 2: Milkshake
8 Copyright Prof. Siddharth S. Singh, ISB
Customer Needs
Existing Needs
Currently in the minds of customers
Can be easily expressed
Traditional marketing methods can be used to understand these and to test new product
concepts
Example?
All categories of new products, except New-to-the-world products,
primarily address this need
9 Copyright Prof. Siddharth S. Singh, ISB
Customer Needs
Latent Needs
Customers do not realize today and therefore are not able to express
Customers unwilling to express
Examples?
New to the world products primarily address latent needs
Estimating size of potential market is not easy with traditional
marketing research techniques
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Latent Needs
How would you find latent needs
Empathic design
Example: Tray of sutures
Multiple categories for same usage occasion
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Customer Value
What is customer value?
Example: How do you evaluate a garment before
purchasing?
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Customer Value Dimensions
The perceived worth in monetary units of the benefits received by customer in exchange
for the price paid for a product offering taking into consideration the available
competitive offerings and prices
Three Dimensions of Benefits:
Economic
Functional Psychological
13 Copyright Prof. Siddharth S. Singh, ISB
Examples: customer value
Do customers perceive value? How can you create it?
Online Education
Value planned Vs Value realized
www.yebhi.com comparison shopping—any issues?
KEY: Focus on customer needs and behavior!
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Creating Value for a Product/Service
How can you create value for customers?
How can value be created using social media?
Drones?
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Creating Value : B to B Markets
Customer Value Models: Johnson & Johnson (Ethicon)
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Product Market
What is a Product Market?
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What is a product market?
Traditional definition:
Generic title: Auto market
Physical characteristic of a product: compact, midsize
New definition by Kotler 1997:
Product Market:
A market consists of all the potential customers sharing a particular need or want
who might be willing and able to engage in exchange to satisfy that need or want
Examples:
Same product different markets
Different product same market
18 Copyright Prof. Siddharth S. Singh, ISB
Market Definition 1
Sale ($ millions) 1998 1999 2001 2002 2003
Product 1 100 105 110 112 116
Product 2 85 82 84 87 86
Others 50 45 42 31 29
Total 235 232 236 230 231
% Market Share 1998 1999 2001 2002 2003
Product 1 42.5 45.3 46.6 48.7 50.2
Product 2 36.2 35.3 35.6 37.8 37.2
Others 21.3 19.4 17.8 13.5 12.6
Total 100 100 100 100 100
19 Copyright Prof. Siddharth S. Singh, ISB
Market Definition 2
Sale 1998 1999 2001 2002 2003
Product 1 100 105 110 112 116
Product 2 85 82 84 87 86
Others 50 45 42 31 29
Addition 40 55 80 110 150
Total 275 287 316 340 381
% Market 1998 1999 2001 2002 2003
Share
Product 1 36.4 36.6 34.8 32.9 30.4
Product 2 30.9 28.6 26.6 25.6 22.6
Others 18.2 15.6 13.3 9.1 7.6
Addition 14.5 19.2 25.3 32.4 39.4
Total 100 100 100 100 100
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Product Market: Examples
Game console
Vonage/Magic Jack
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Product Market
Are product markets dynamic?
What are the implications for marketers?
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Segmentation Examples
Marriott Hotel Brands Archetypes for Best Buy’s
Courtyard Most Valued Segments
EDITION Hotels Barry — An affluent tech
enthusiast
ExecuStay
Buzz — A young gadget fiend
Fairfield Inn & Suites
Renaissance Hotels Jill — A busy suburban Mom
Residence Inn Mr. Storefront — Owns a small
business
Ritz-Carlton
Ray — A price-conscious family
SpringHill Suites
guy
TownePlace Suites
23
Segmentation
Why segment?
24 Copyright Prof. Siddharth S. Singh, ISB
Product Markets and Market Segmentation
Segmentation:
Dividing customers into groups such that customers are
similar within group based on some set of characteristics
and different between groups
What is the relationship between segments and
product market?
25 Copyright Prof. Siddharth S. Singh, ISB
Segmentation: Tea
All tea
hot
warm
cold
© Copyright, Wessex Inc., 2012www.axcesscapon.com
Segmentation: Finer-Grained Tea
All tea
hot
unsweetened
sweetened
cold
© Copyright, Wessex Inc., 2012www.axcesscapon.com
Segmentation: Analgesic
Market Level Pain
Market
Market Segments Back Pain Headache Foot Pain Etc.
Customer Segments Migraine General Tension Etc.
© Copyright, Wessex Inc., 2012www.axcesscapon.com
Market Segmentation Matrix
Definition of segments
Customer
needs/ 5 2
required Priority
benefits 4 1 ordering
2 4
1 3
3 5
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Segmentation of Female Skin-Care Market by
Age: Rank Order Results
Age-based Market Segments
Customer Need/ 14-18 19-29 30-39 40-49 50-64 65 and
Required Benefits over
Beauty 5 4 1 2 2 3
Confidence 2 2 3 3 3 4
Economy 4 5 7 7 6 5
Health 6 6 4 4 4 2
Sexual Allure 3 1 2 5 5 6
Status 1 3 6 6 7 7
Youthfulness 7 7 5 1 1 1
© Copyright, Wessex Inc., 2012; www.axcesscapon.com
Developing Market Segments
High Customer Needs First
Identification of value
Actionable segmentation
Candidate Descriptor
(Segmentation) Variables
First
Low
Low High
Identification of customers
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Criteria for Good Segmentation
Differentiated
Stable Identifiable
Criteria for Segmentation
Accessible
Measureable
Appropriately-
sized
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Product Markets and Segmentation
How many segments do you need?
33 Copyright Prof. Siddharth S. Singh, ISB
Criteria for Defining Product Markets and
Segmentation
Market definition is an “Art”
Focus on customer need and behavior
Search
Purchase
Use
Disposal
Market Segmentation Targeting Positioning 4P
34 Copyright Prof. Siddharth S. Singh, ISB
Criteria for Product Markets and Segmentation
No best rule to define product market boundaries
Managerial judgment required
Some criteria for segmenting markets
Demographics (age, region, gender)
Attitudes (health foods, environment)
Product benefit (packaging quality, strength of detergent)
Price sensitivity
Decision rules (wholesale-retail)
Usage behavior (80-20)
35 Copyright Prof. Siddharth S. Singh, ISB
Segmentation: Many ways …
Can you think of ways to segment in politics?
If you are a politician, how would you choose your
segmentation scheme?
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Which segments to target?
37
Market Segment Attractiveness: Business Strengths
Matrix
1000
A B C
Market Segment Attractiveness
700
D E F
400
G H I
100
100 400 700 1000
Business Strengths
© Copyright, Wessex Inc., 2012www.axcesscapon.com
Targeting Market Segments: Typical Criteria for Gauging Market
Segment Attractiveness and Business Strengths Needed to Win
Market Segment Attractiveness Business Strengths
Ability to use available resources Brand value
Barriers to entry Distribution facilities
Barriers to exit Financial leverage
Customer service valued Government relations
Degree of vertical integration Liquidity
Likely competitor actions Market segment share
Market segment growth rate Marketing skills
Market segment potential Modernity of plant and equipment
Market segment size Production capacity
Potential profit margins Profitability record
Regulatory constraints Raw materials position
Social factors Sales force
Technological change Service levels
Technological expertise
© Copyright, Wessex Inc., 2012www.axcesscapon.com
Scoring the Attractiveness of a Market Segment
Step Step Description
Number
1 Identify factors The firm seeks several factors -- typically 5 to 8 --
(Market Segment according to the statement: “Given our history, objectives,
Attractiveness related) culture, management style, successes and failures, we like
to be in market segments that offer …”
2 Weight factors Weight each factor by allocating 100 points based on its
importance to the firm. Factor weights sum to 100.
3 Rate market segments Rate each market segment according to how well it
performs on each factor (1 = poor; 10 = excellent).
4 Develop Factor Scores For each segment, form individual factor scores by
multiplying the results of step 2 and step 3 for each factor.
Factor score = Weighting X Rating.
5 Develop the Market Sum the individual factor scores.
Segment Attractiveness
Score
© Copyright, Wessex Inc., 2012www.axcesscapon.com
Illustration: Assessing the Attractiveness of the Plastics
Accessories Market Segment to Sriram
Factor Sriram Plastic Accessories Segment Factor Score
Weighting Rating (1 to 10 scale) (weighting x rating)
Ability to build new strengths 10 6 60
Easy customer access 15 9 135
High market growth 20 7 140
Large potential size 20 5 100
Little regulation 10 8 80
Use excess resources 10 2 20
Weak competition 15 4 60
Total 100 595
© Copyright, Wessex Inc., 2012www.axcesscapon.com
Scoring the Firm’s Business Strengths
Step Step Description
Number
1 Identify factors For each segment, the firm selects several factors (typically 5
to 8) according to the statement: “To be successful in this
market segment, any competitor must possess the following
strengths …”
2 Weight factors Weight each factor by allocating 100 points based on its
importance for being successful in the segment. Factor weights
sum to 100.
3 Rate the firm Rate the firm according to its possession of these strengths
(1 = poor; 10 = excellent)
4 Develop Factor For each factor, form individual factor scores: multiplying the
Scores results of step 2 and step 3 for each factor. Factor score =
Weighting X Rating.
5 Develop the Sum the individual factor scores.
Business
Strengths Score
© Copyright, Wessex Inc., 2012www.axcesscapon.com
Illustration: Assessing Sriram’s Business Strengths
in the Plastics Accessories Market Segment
Factor Plastic Accessories Sriram Rating Factor Score
Segment Weighting (1 to 10 scale) (weighting x rating)
Deep pockets 10 9 90
Fast-moving organization 5 3 15
Good R&D 25 7 175
High-quality service 15 6 90
In-place distribution 20 5 100
Low-cost operations 10 4 40
Well-trained sales force 15 9 135
Total 100 645
© Copyright, Wessex Inc., 2012www.axcesscapon.com
Strategic Position Analysis: Market Segment
Attractiveness — Business Strengths Matrix
1000
Z
A B C
Market Segment Attractiveness
700
D E X F Y
400
G H I
100
100 400 700 1000
Business Strengths
© Copyright, Wessex Inc., 2012www.axcesscapon.com
So far..
Customer needs
What is meant by value?
Different dimensions of value
What is the role of marketing?
What is a product market?
What is segmentation?
Which segments to target?
45 Copyright Prof. Siddharth S. Singh, ISB
Questions?
