WORKSHOP #4 CUSTOMER TARGETING (MARKETING) STRATEGY
THE FUNDAMENTAL ELEMENTS OF THE DEFINITION OF A CUSTOMER TARGETING (MARKETING) STRATEGY Corporate Strategy Mission of the firm Strategic thrusts and planning challenges Customer Targeting (Marketing) Requirements Customer Targeting (Marketing) Internal Scrutiny Strengths and weaknesses Distinctive Customer Targeting (Marketing) competencies for all strategic categories of decisions Customer Targeting (Marketing) Environmental Scan Industry and competitive analysis Customer Targeting (Marketing) intelligence Formulation of Customer Targeting (Marketing) Strategy Customer Targeting (Marketing) Strategic Agenda Budgeting Strategic funds programming and operational budgets
MAJOR CATEGORIES OF STRATEGIC DECISIONS LINKED TO CUSTOMER TARGETING 1. MARKETING INTELLIGENCE It corresponds to the effort conducted by the firm to decipher competitors' standing and to try to anticipate their future moves. Important issues are product introductions, marketing approaches, changes in segmentation practices, price policies, product liabilities, new distribution channels, and improved services approaches. 2. DEFINING AND ANALYZING MARKETS These decisions are concerned with generating marketing intelligence for the firm. It starts with an appropriate market segmentation, and a finer definition of product-market segments so as to capture the different preferences and needs of customers. In each of those segments, an analysis of the behavior of consumers and organizational buyers is conducted, as well as of the overall strategic competitive situation. 3. PRODUCT STRATEGY It refers to decisions on how to position a business unit product offering including specific products, breadth of product lines, mix, and bundling - to serve its target markets, establishing strategic objectives for products - market share, profit contribution, and selecting a branding strategy. 4. NEW PRODUCTS DEVELOPMENT AND INTRODUCTION Issue included are: idea generation, screening and evaluation of ideas, business analysis, development of a prototype, formulation of a marketing approach, market testing in pilot regions, adjustment of administrative and support systems, and new products introduction.
5. DISTRIBUTION STRATEGY Decisions involved: selection of a distribution channel - whether direct or via retailers, wholesalers, or agents; design and management of the physical distribution system - including customer service, demand forecasting, inventory control, materials handling, order processing, parts and service support, warehousing and storage, procurement, packaging, returned goods handling, and traffic and transportation; and push vs. pull mode of operation of the distribution and sales systems. 6. PRICE STRATEGY The central factors that affect price strategy are product competitive positioning, product mix, brand strategy, and product quality and features. The distribution strategy also influences how the price decision will be affected by the advertising and sales force strategy 7. PROMOTION AND ADVERTISING STRATEGIES An integrated promotion strategy has four components: advertising - presentation and promotion of ideas, goods, or services by an identified sponsor; personal selling - oral presentation to one or more prospective purchasers; sales promotion - includes trade shows, contests, samples, point-of-purchase displays, and coupons; and publicity - exhibition in mass media not paid for directly by sponsor. 8. SALES STRATEGY This encompasses all of the key decisions that should support a coherent sales strategy including account management, cross-selling and upselling, territory management lead closure, opportunity management, sales force incentives, sales team composition, and customer engagement process. 9. SERVICE STRATEGY The extend to which service activities become a highest priority to the firm is a critical element of service strategy. Critical decisions are the scope of the service offering, the degree of technical support provided, the amount of customization of service activities, the management of account inquiries, service dispatch, problem resolution, and service tracking.
10. MARKETING ORGANIZATION AND MANAGERIAL INFRASTRUCTURE It includes the development of an organization structure; planning, control and information systems; and rewards and incentives systems in accordance with the culture of the firm and the marketing strategy. It is important to reflect on the proper segmentation in the organizational structure of product marketing - which typically resides in the back-end of the organization, and customer marketing - which typically resides in the front-end.
MEASURES OF PERFORMANCE RELATED TO CUSTOMER TARGETING STRATEGY At the heart of customer targeting strategy there are four major strategic positioning that, taken as a whole, can serve as the primary criteria for customer targeting strategic performance: 1. PRODUCT STRATEGY Sales growth rate Market share Relative market share Breadth of product line, market coverage, degree of differentiation Rate of successful new product introductions Product bundling 2. CUSTOMER STRATEGY Customer share Customer retention Profitability by customer Customer involvement in joint product development Degree of customization of product offering 3. DISTRIBUTION STRATEGY Efficiency of distribution channels Customer service levels Distribution costs per channel Distribution and sales force productivity 4. PRICE STRATEGY Price sensitivity Pricing of marketing mix 5. PROMOTION AND ADVERTISING STRATEGY Product segmentation Brand acceptance
Customer targeting (marketing) intelligence: ability to anticipate customer needs and to detect changes in marketing trends 6. SERVICE STRATEGY Service growth rate Breadth of service offering Degree of customization of service Service profitability Service performance per customer
CUSTOMER TARGETING (MARKETING) REQUIREMENTS FROM THRUSTS Strategic Thrust Customer Targeting (Marketing) Requirements
COMPETITIVE PROFILE. STRATEGIC PERFORMANCE MEASUREMENT OF CUSTOMER TARGETING Relevant Competitor Indicators 1, Product strategy sales growth rate market share relative market share breadth of product line, market coverage, degree of differentiation rate of successful new product introductions product bundling 2. Customer Strategy Customer share Customer retention Profitability by customer Customer involvement in joint product development Degree of customization of product offering 3. Distribution strategy efficiency of distribution channels customer service levels distribution costs per channel distribution and sales force productivity Very Weak Weak Even Strong Very Strong
COMPETITIVE PROFILE. STRATEGIC PERFORMANCE MEASUREMENT OF CUSTOMER TARGETING (Continued) Relevant Competitor Indicators Very Weak Weak Even Strong 4, Price strategy price sensitivity pricing of marketing mix 5. Promotion and advertising strategy product segmentation brand acceptance marketing intelligence: ability to anticipate customer needs and so detect changes in marketing trends 6. Service Strategy Service growth rate Breadth of service offering Degree of customization of service Service profitability Service performance per customer Very Strong
CUSTOMER TARGETING (MARKETING) ENVIRONMENTAL SCAN - IDENTIFICATION OF OPPORTUNITIES AND THREATS Market Factors Critical Impact External Positive Negative Factors (Opportunities) (Threats)
CUSTOMER TARGETING (MARKETING) ENVIRONMENTAL SCAN - IDENTIFICATION OF OPPORTUNITIES AND THREATS Competitive Factors Critical Impact External Positive Negative Factors (Opportunities) (Threats)
CUSTOMER TARGETING (MARKETING) ENVIRONMENTAL SCAN - IDENTIFICATION OF OPPORTUNITIES AND THREATS Economic Factors Critical Impact External Positive Negative Factors (Opportunities) (Threats)
CUSTOMER TARGETING (MARKETING) ENVIRONMENTAL SCAN - IDENTIFICATION OF OPPORTUNITIES AND THREATS Government and Political Factors Critical Impact External Positive Negative Factors (Opportunities) (Threats)
CUSTOMER TARGETING (MARKETING) ENVIRONMENTAL SCAN - IDENTIFICATION OF OPPORTUNITIES AND THREATS Regulatory Factors Critical Impact External Positive Negative Factors (Opportunities) (Threats)
CUSTOMER TARGETING (MARKETING) ENVIRONMENTAL SCAN - IDENTIFICATION OF OPPORTUNITIES AND THREATS Technological Factors Critical Impact External Positive Negative Factors (Opportunities) (Threats)
CUSTOMER TARGETING (MARKETING) ENVIRONMENTAL SCAN - IDENTIFICATION OF OPPORTUNITIES AND THREATS Legal Factors Critical Impact External Positive Negative Factors (Opportunities) (Threats)
CUSTOMER TARGETING (MARKETING) ENVIRONMENTAL SCAN - IDENTIFICATION OF OPPORTUNITIES AND THREATS Social Factors Critical Impact External Positive Negative Factors (Opportunities) (Threats)
CUSTOMER TARGETING (MARKETING) ENVIRONMENTAL SCAN - IDENTIFICATION OF OPPORTUNITIES AND THREATS Environmental Factors Critical Impact External Positive Negative Factors (Opportunities) (Threats)
CHARACTERIZE YOUR PRESENT CUSTOMER TARGETNG POLICIES REGARDING THE MAJOR DECISION MAKING CATEGORIES Decision Category Description of Policy Strengths Weaknesses Marketing Intelligence Note: In the assessment of strengths and weaknesses try to have relevant competitors in mind and use proper strategic performance measurement.
CHARACTERIZE YOUR PRESENT CUSTOMER TARGETING POLICIES REGARDING THE MAJOR DECISION MAKING CATEGORIES (Continued) Decision Category Description of Policy Strengths Weaknesses Defining and Analyzing Markets
CHARACTERIZE YOUR PRESENT CUSTOMER TARGETING POLICIES REGARDING THE MAJOR DECISION MAKING CATEGORIES (Continued) Decision Category Description of Policy Strengths Weaknesses Product Strategy
CHARACTERIZE YOUR PRESENT CUSTOMER TARGETING POLICIES REGARDING THE MAJOR DECISION MAKING CATEGORIES (Continued) Decision Category Description of Policy Strengths Weaknesses New Products Development and Introduction
CHARACTERIZE YOUR PRESENT CUSTOMER TARGETING POLICIES REGARDING THE MAJOR DECISION MAKING CATEGORIES (Continued) Decision Category Description of Policy Strengths Weaknesses Distribution Strategy
CHARACTERIZE YOUR PRESENT CUSTOMER TARGETING POLICIES REGARDING THE MAJOR DECISION MAKING CATEGORIES (Continued) Decision Category Description of Policy Strengths Weaknesses Price Strategy
CHARACTERIZE YOUR PRESENT CUSTOMER TARGETING POLICIES REGARDING THE MAJOR DECISION MAKING CATEGORIES (Continued) Decision Category Description of Policy Strengths Weaknesses Promotion and Advertising Strategy
CHARACTERIZE YOUR PRESENT CUSTOMER TARGETING POLICIES REGARDING THE MAJOR DECISION MAKING CATEGORIES (Continued) Decision Category Description of Policy Strengths Weaknesses Sales Strategy
CHARACTERIZE YOUR PRESENT CUSTOMER TARGETING POLICIES REGARDING THE MAJOR DECISION MAKING CATEGORIES (Continued) Decision Category Description of Policy Strengths Weaknesses Service Strategy
CHARACTERIZE YOUR PRESENT CUSTOMER TARGETING POLICIES REGARDING THE MAJOR DECISION MAKING CATEGORIES (Continued) Decision Category Description of Policy Strengths Weaknesses Marketing Organization and Managerial Infrastructure
CUSTOMER TARGETING (MARKETING) STRATEGIC AGENDA Organizational Units Strategic Thrusts Business Processes Performance Measurements 1 - Key role in formulation and implementation 2 - Important role of support and concurrence 1 - Identifies the 'Champion', who takes leadership for the strategic thrust execution CT - Customer Targeting B - Business Model OE - Operational effectiveness I - Innovation
CUSTOMER TARGETING (MARKETING) STRATEGIC AGENDA Organizational Units Strategic Thrusts Business Processes Performance Measurements 1 - Key role in formulation and implementation 2 - Important role of support and concurrence 1 - Identifies the 'Champion', who takes leadership for the strategic thrust execution CT - Customer Targeting B - Business Model OE - Operational effectiveness I Innovation
ASSIGNMENT OF PRIORITIES TO STRATEGIC THRUSTS Strategic Thrusts Priorities A B C Weight A - Absolute first priority (postponement will hurt competitive position significantly). B - Highly desirable (postponement will affect competitive position adversely). C - Desirable (if funds were available, competitive position could be enhanced).
DEFINITION OF STRATEGIC THRUSTS Name Description Responsible Manager Other Key Participants Other Important Contributors Key Indicators for Management Control and Targets First Major Milestone Description First Major Milestone Date Resources Required Statement of Benefits
TESTS TO EVALUATE THE QUALITY OF THE STRATEGIC AGENDA 1. Comprehensiveness 2. Stretch 3. Monitoring and Control- Ease of Implementation 4. Motivation- Quality of Working Environment 5. Vulnerability