Marketing Strategies Overview

Target Market

• Target market refers to the specific group of people most likely to purchase the product or service.
• Organizations should define a primary target market, which is the most logical group for generating sales.
• Secondary target markets also need to be reached through tailored marketing strategies.
• Target market is not just a physical location but refers to a group of people with the need, financial capacity, and willingness to buy a product or service.

Marketing System

• The Marketing System focuses on the interactions and relationships between different components within an organization's environment.
• Marketing organizations are typically composed of marketers, sellers of goods or services, including producers, manufacturers, wholesalers, and retailers.

Market Positioning

• Product positioning describes how consumers perceive a product based on important attributes and features.
• It defines the place a product occupies in the minds of consumers relative to competing products.
• Positioning strategies can be based on:
  • Specific product attributes: Using price, features, or benefits to differentiate the product.
  • Needs fulfilled or benefits offered: Highlighting how the product addresses specific customer needs.

Pricing Decisions

• Internal factors that influence pricing include:
  • Marketing objectives: Defining the overall goals of the pricing strategy.
  • Marketing mix strategy: Aligning price with other marketing elements like product design, distribution, and promotion.
  • Costs: Identifying the expenses associated with producing and marketing the product or service.
  • Organizational considerations: Evaluating the company's internal structure and capabilities.
• External factors to consider include:
  • Nature of the market and demand: Analyzing market trends and consumer behavior.
  • Competition: Understanding pricing strategies used by competitors and how they impact the market.
  • Other environmental factors: Considering economic conditions, government regulations, and reseller dynamics that may influence pricing.
• Pricing Objectives can include:
  • Survival: Setting prices to maintain operations during challenging economic periods.
  • Current profit maximization: Maximizing short-term profits, cash flow, or ROI.
  • Market-share leadership: Achieving a dominant market position through competitive pricing strategies.
  • Product-quality leadership: Charging premium prices for high-quality products or services.
  • Other objectives: Implementing diverse pricing strategies to stabilize the market, generate excitement for new products, or increase awareness.
• Marketing Mix Strategy plays a role in pricing decisions :
  • Going Rate: Pricing a product or service based on prevailing market prices.
  • Sealed Bid: Determining pricing based on anticipated competitor bids, often required in government procurement processes.
  • Prestige Pricing: Setting high prices to create a perception of luxury and exclusivity.
  • Skim-the Cream Pricing: Launching a product or service with a higher price than the market expects, leveraging a perception of higher quality.
  • Market-Penetration Pricing: Setting a low initial price to attract a large customer base and gain market share rapidly.

Distribution Channels

• Distribution channel consists of marketing intermediaries, organizations that facilitate the movement of goods and services from producers to end users.
• Marketing intermediaries play a key role in the distribution process, bridging the gap between producers and consumers.
• Middlemen are independent entities that facilitate the transfer of goods and services:
  • Merchant middlemen: Take ownership of the goods they handle, such as wholesalers and retailers.
  • Agent middlemen: Facilitate the transfer of title without taking ownership, including real estate brokers.
• Channel partners, collectively, are the organizations that support the flow of goods through the distribution channel.
• Conventional marketing system: Producers, wholesalers, and retailers operate independently, focusing on maximizing individual profits, potentially leading to conflicts within the channel.
• Vertical marketing system (VMS): Producers, wholesalers, and retailers work collaboratively as a unified system to control channel behavior, reduce conflict, and achieve economies of scale.
  • Corporate VMS: Combines stages of production and distribution through common ownership or contractual ties.
  • Administered VMS: A coordinated system controlled by one powerful member of the channel, not through ownership or contracts.
  • Contractual VMS: A system based on agreements or contracts between different channel members.

Explore the fundamentals of target markets, marketing systems, and product positioning. This quiz covers essential concepts that help organizations understand their customers and optimize their marketing strategies. Test your knowledge on how to effectively define and reach the right audience.