2

The Role of IMC in the

Marketing Process

McGraw-Hill/Irwin Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed

 Outline

• The Target Marketing Process

• Market Segmentation
• Selecting the Target Market
• Market Positioning
• Reflection on the Marketing Mix

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 Chapter Overview
• This chapter is to examine the marketing process and
the role of advertising and promotion in an
organization’s integrated marketing program.
• A basic model of the marketing and promotional process
is presented, which can be used as a framework for
analyzing how advertising and promotion fit into a
company’s marketing program. The chapter examines
the various decision areas under each element of the
marketing mix and how they influence and interact with
advertising and promotional strategy.
• The chapter also introduces the concepts of target
marketing, segmentation and positioning. The target
marketing process is introduced, and the specific
elements of this process—identifying markets with
unfulfilled needs, market segmentation, selection of a
target market and positioning—are described in detail.
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 Marketing & Promotions Process Model

• A model presented is a useful framework for

analyzing how promotion fits into an
organization’s marketing program. The
model consists of four components:
1. The organization’s marketing strategy and
analysis
2. The target marketing process
3. Marketing planning program development
(which includes the promotional decisions)
4. The target market

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Marketing & Promotions Process Model

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 Marketing & Promotions Process Model

• It is important to note that a firm’s

promotional program is directed not
only to the final buyer but also to
channel or trade members who
distribute its products/services to the
ultimate customer.

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 Marketing Strategy and Analysis

• The marketing process actually begins with the

development of a marketing strategy whereby the
company determines the product or services area
and particular markets in which it wants to
compete. A strategic marketing plan usually
evolves from an organization’s overall corporate
strategy and serves as a guide for specific
marketing programs and policies. The development
of a marketing strategy is based on a situation
analysis from which a firm develops an
understanding of the market, the opportunities it
offers, the competition and various segments or
target markets the company may wish to pursue.

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 Marketing Strategy and Analysis

Strategic Marketing
Strategic Marketing Plan
Plan

Target
Target
Opportunity
Opportunity Competitive
Competitive Market
Market
Analysis
Analysis Analysis
Analysis Selection
Selection

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 Opportunity Analysis

• A careful analysis of the marketplace should lead to

alternative market opportunities or areas where the
company feels there are favorable demand trends,
where customer needs and/or wants are not being
satisfied and where it could compete effectively. Market
opportunities are usually identified by examining
demand trends in various market segments.

• Recent examples of companies finding and exploiting

the growth of the women’s market, and the difficulty in
reaching them.

• Discuss the companies’ opportunities that could create

to the new and growing segments.
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 Competitive Analysis

• In developing marketing strategies and programs a company must

analyze the competition its products or services face in the marketplace.
Competition can range from direct brand competition to other products
and services that satisfy consumers’ needs and/or compete for their
dollars. Competitors’ marketing programs have a major impact on a
firm’s marketing strategy and must be carefully analyzed and monitored.
Various aspects of advertising and promotion such as promotional
spending, media and creative strategy, and sales promotion are often
directly affected by competitors.
• An important aspect of marketing strategy development is the search for
an advantage over the competition. A competitive advantage refers to
something unique or special a firm does or possesses that gives it an
edge over competitors. Competitive advantage can be achieved in a
variety of ways, including having quality products that are differentiated
from the competition and command premium prices, providing superior
customer service, having the lowest production costs or dominating
channels of distribution. Competitive advantage can also be achieved
through having excellent advertising and promotion that creates and
maintains product/service differentiation and brand equity.

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 Competitive Analysis
Paragraph
• Level of competition Format
• Fierce, moderate, low
• Volatility of competition
• Stability and years of competition within the industry
(No. of annual new players and failures)
• Type of competition (Product level; attributes such as
service, quality, durability, after sales support ..),
marketing strategy (image, price, …)
• Bases for competitive advantage; something
unique or special a firm does or possesses that gives
it an edge over competitors. (Quality, customer
service, lowest production cost, access to distribution
channels)

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 Target Market Selection

• After evaluating marketing opportunities for

products/services in various markets, a
company selects one or more as a target
market for which it will develop a marketing
program(s). This target market becomes the
focus of the company’s marketing efforts.
Selection of the target market is not only a
very important part of a firm’s marketing
strategy, but also has implications for
advertising and promotional strategy and
tactics.

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 The Target Marketing Process

• There are four distinct steps involved in this

process—identifying target markets with
unfulfilled needs, market segmentation,
selecting a target market, and positioning
through marketing strategies.

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The Target Marketing Process

Identify markets with unfulfilled needs

Determine market segmentation
Select a market to target
Position through marketing strategies

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 Identifying Markets

• Target marketing involves the identification

of the needs and wants of specific groups of
people (or segments), selection of one or
more of these groups as targets, and the
development of marketing strategies aimed
at each. This approach has found increased
applicability for a number of reasons.
• the diversity of consumers’ needs
• increasing use of segmentation by competitors
• more managers are trained in segmentation

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 Market Segmentation

• Once the marketer has identified who it is that is to be

targeted; these potential customers are grouped based on the
fact that they have similar needs and/or behaviors that are
likely to cause them to respond similarly to marketing actions.
This breaking up of the market is referred to as the market
segmentation process. This process includes five distinct
steps:
1. Finding a way to group consumers according to their needs
2. Finding a way to group the marketing actions—usually the products
offered—available to the organization
3. Developing a market-product grid to relate the market segments to the
firm's products or actions
4. Selecting the target segments toward which the firm directs its marketing
actions; and
5. Taking these actions.

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The Marketing Segmentation Process

Find
Find ways
ways to
to group
group consumers
consumers
according
according toto their
their needs.
needs.

Find
Find ways
ways to
to group
group marketing
marketing actions
actions -- usually
usually the
the
products
products offered
offered -- available
available to
to the
the organization.
organization.

Develop
Develop aa market/product
market/product grid
grid to
to relate
relate the
the market
market
segments
segments to
to the
the firm’s
firm’s products
products andand actions.
actions.

Select
Select the
the product
product segments
segments toward
toward which
which the
the firm
firm
directs
directs its
its marketing
marketing actions.
actions.

Take
Take marketing
marketing actions
actions to
to reach
reach target
target segments.
segments.
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
 Market Segmentation Identification

IsolateConsumers
Isolate ConsumersWith
WithSimilar…
Similar…

Lifestyles
Lifestyles Socialclass
Social class

Geographic
Geographic
Economicstatus
Economic status Age
Age
location
location

Maritalstatus
Marital status Needs
Needs

2-18
 Market Segmentation

• Dividing a market into distinct groups

• With common needs
• Who respond similarly to a marketing
situation
2-19
 In class exercise

• Products • Segments
• Laptop • Think of three
• Dine-In restaurant segments for each
• 3 stars Hotel brand

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 Bases for Market Segmentation

Demographic Geographic Socioeconomic

Gender Region Income
Age City size Education
Race Metropolitan area Occupation
Life stage Density
Birth era
Household size Psychographic
Residence tenure
Personality
Marital status
Values/Lifestyle

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 Bases for Market Segmentation
• A number of bases for segmentation are available to the marketer
including the following:
• Geographic—the market is divided into geographic units with alternative marketing
strategies targeted to each
• Demographic—division involves demographic variables such as age, sex, family
size, income, education and social class among others, e.g: Deodorants, BM debit
card, Heya credit card
• Psychographic—markets are divided based on the personalities, values, and/or
lifestyles of consumers, e.g: On the run, Harley Davidson, Mercedes , Post graduate
university degrees
• Behavioristic—this form of segmentation divides consumers into groups according
to their usage, loyalties or buying responses to a product. These characteristics are
then usually combined with one of the previously mentioned bases to develop
segment profiles, e.g brand loyalty
• Benefits—specific benefits offered by a product or service may also constitute a
basis for segmentation. In many instances a variety of benefits may be derived for
the same product among different groups, E.g. toothpaste market ( Crest, Colgate ;
fluoride) ( Close-up , Aqua fresh ; fresh breath) (Sensodyne ; sensitive teeth)
• Awareness segmentation-which is based on the product knowledge of the
consumer
• Usage segmentation-which classifies customer based on their level of use of a
product or service including heavy, medium, and light users. E.g Dettol
• Outlets-which segments a market based on the type of store where a product is
sold such as convenience, supermarket, mass merchandiser, specialty
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Beer is Beer? Not Really!

Popular
Imports
Domestic specialties
Premium
Light

The market has become highly segmented with each segment appealing
to a different set of needs such as taste, cost, image, lifestyle, and calorie
content. 2-23
A Product for Every Segment

2-24
 Geographic Segmentation

Big Red targets a specific geographic region

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Demographic Segmentation Ad

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Benefit Segmentation Ad

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 Selecting a Target Market
• Selecting a Target Market—Having conducted the
segmentation analysis, the marketer will be faced
with two subsequent decisions:
1. Determining how many segments to enter
2. Determining which segments offer the most potential.
The first of these decisions may lead the marketer to three
potential strategies:
• Undifferentiated marketing would involve the decision to ignore
the segment differences and develop one product for the entire
market. It should be noted that few firms pursue this strategy today.
• Differentiated marketing involves the decision to compete in a
number of segments, developing different marketing strategies for
each.
• Concentrated marketing takes place when a firm decides to
concentrate its efforts on one specific segment in an attempt to
capture a large share of that market. (The examples of Volkswagen
and Rolls Royce)

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 Selecting a Target Market

Determine how many

1 segments to enter

Determine which segments

2 have the greatest potential

80:20 Rule

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 Segments

Undifferentiated Concentrated

Differentiated

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 Effective Target Segmentation Criteria
M1 M2 M1 M2 M1 M2
M3 M3 M3
P1 P1 P1

P2 P2 P2

P3 P3 P3

Single Segment Differentiated Undifferentiated

Concentration Product Specialist Full Market Coverage

M1 M2 M1 M2

P1
M3
P1
M3
Evaluating and
P2 P2 selecting the
P3 P3 market
Selective Differentiated segments
Concentration Market Specialist 2-31
 Effective Segmentation Criteria

• Measurable
• Substantial
• Accessible
• Differentiable
• Actionable

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Selecting a Target Market

Determining Which Segments Offer Potential ?

• Sales potential of the segment
• Opportunities for growth
• Competition
• Company’s ability to compete

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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
 Test Your Knowledge

All of the following are considered market

coverage alternatives except:
A) Undifferentiated
B) Differentiated
C) Concentrated
D) Dispersed

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 Market Positioning

• Marketing Positioning—positioning
has been defined as "the art and
science of fitting the product or service
to one or more segments of the broad
market in such a way as to set it
meaningfully apart from the
competition."

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Market Positioning

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 Reliability

Innovation
Food and Fun

Low Prices and Good Value

Guaranteed Overnight Delivery

2-37
Developing a Positioning Strategy

What
What position do
What position
position do
do
we
we have
we have now?
have now?
now?

Does
Does our
our creative
creative What
What
Whatposition
position
positiondo
do
do
strategy
strategy we
we
wewant
want
wantto
to
toown?
own?
own?
match
match it?
it?

The
The
Position
Position
Do
Do
Dowe
we
wehave
have
havethe the
the From
From
Fromwhom
whom
whommust
must
must
tenacity
ability
ability to
tenacity to
totostay
stay
stay
stay we
we
wewin
win
winthis
this
this
with
with
withit?it?
it? position?
position?
position?
Do
Do
Dowe
we
wehave
have
havethe
the
the
money
money
moneytoto
todo
do
dothe
the
the
job?
job?
job?
2-38
Positioning Strategies

Attributes
Attributes and
and Benefits
Benefits
Price/Quality
Price/Quality
Use/Application
Use/Application
Product
Product Class
Class
Product
Product Users
Users
Competitors
Competitors
Cultural
Cultural Symbols
Symbols

2-39
Positioning by Product Attributes & Benefits

Positioning as a vitamin rich water

2-41
Positioning by Cultural Symbol

2-42
 Positioning

• Quality • Product User

• Ritz Carlton • Micheal Gordan (Nike)
• Rolex • Models for association
• Price • Johnson & Johnson
• Chinese products • Competitor
• Use/Application • Avis vs Hertz
• Heinz Ketchup, Nutella, • Cultural Symbol
• Product Class • Ronald McDonalds
• Moro

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Developing a Positioning Platform

1.
1. Identify
Identify the
the competitors
competitors

2.
2. Assess
Assess perceptions
perceptions of them
of competitors
them
competitors

3.
3. Determine
Determine their
their positions
positions

4.
4. Analyze
Analyze consumer
consumer preferences
preferences

5.
5. Make
Make the
the positioning
positioning decision
decision

6.
6. Monitor
Monitor the
the position
position
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
DEVELOPING THE MARKETING PROGRAM

• The next stage of the marketing process involves

combining the various elements of the marketing
mix into a cohesive and effective marketing
program. This requires that all elements of the
marketing mix be combined effectively and
that they be consistent with one another. It is
important to stress that each element of the
marketing mix is multidimensional in nature and
includes a number of decision areas.

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 The Marketing Planning Program

Product Distribution
Decisions Channels

Promotional Price
Strategy Decisions

2-46
 Product Decisions

• An organization exists because it has some product,

service, idea or cause to offer customers. Product
decision areas of branding and packaging are
particularly important from a promotional
perspective because of the role the brand name
and package play in communicating attributes,
information and meaning to the consumer.

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 Product Decisions

• Branding—choosing a brand name for a product is

important from a promotional perspective because
brand names communicate attributes and meaning.
One important role of advertising in respect to
branding strategies is creating and maintaining
brand equity. Brand equity can be thought of as
an intangible asset of added value or goodwill that
results from the favorable image, impressions of
differentiation, and/or the strength of consumer
attachment to a company name, brand name, or
trademark.

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THANK YOU

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