Chapter Overview

Marketing strategy concerns the actions managers take to improve the likelihood market places exchanges that meet firm and customer goals will occur. In general, customer-oriented marketing strategies improve the value customers derive from products or decrease the costs of products to customers. Firms may adopt any of the four general strategic positions: --prospector, analyzer, defender, and reactor. More specific strategies include differentiation, market penetration, and cost leadership.

One of the most critical skills for a successful business is to empathize with and gain insights from customers. A customer focus is the central element of this market orientation. A market orientation is not solely the responsibility of a marketing department, however; it requires the concerted action of everyone in the organization. Profitability is generally a consequence of a market orientation, but certain kinds of environmental conditions may make this orientation more or less important to overall business performance.

The connection between understanding consumers and designing effective marketing strategies requires creativity and imagination. Marketing intelligence attempts to find out what problems consumers are trying to solve, and marketing imagination offers solutions. Marketing imagination requires more than traditional modes of market research. It requires deep insight into the needs, lifestyles and aspirations of today and tomorrow's customers.

Market segmentation, targeting and positioning are central elements of marketing strategies. The process of market segmentation begins with a thorough investigation of consumer-product relationships. This investigation includes examining environmental factors involved in the purchase-consumption process for the product. Then, an organization can investigate alternative market segmentation approaches. We discuss geographic or demographic criteria; psychographic variables and behavioral variables as bases for identifying market segments. Whichever segmentation criteria an organization chooses, four general criteria of good segmentation can be identified: measurability, substantiality, accessibility, and responsiveness. After investigating alternative segmentation approaches, managers must select the most appropriate group or groups for the firm to serve. They can use undifferentiated marketing, differentiated marketing, or concentrated or niche marketing as the basis for choosing the segment or segments they will serve.

Next, the firm's managers must decide on product positioning: how they would like the company and its brands to be perceived and evaluated by target markets. One general technique that's often used to position products and services is perceptual mapping. Once a company knows how it wants to be perceived and evaluated by consumers the next problem is to design a market mix strategy that will help them get there or stay there. Everything associated with the product, it's distribution, promotion, and price communicates the position of the product to the customer. By managing the market mix companies can establish, change, or maintain desired product positions.