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Marketing Strategy

PILLARS OF MARKETING- STPD


Strategies

Group 2
Shrikant Bhole 6
Megharaj Birje 7
Sagar Chachondia 8
Rajeshwari Chintalwar 9
Satyaprakash Dubey - 10

Pillars of Marketing: STPD Strategies

Introduction to DSTP
It is very difficult to connect with the large customer base and sometime identifying the right
type of audience in the pool would be the tough task. Also it is very important to understand the
customer and strategy to target them.
DSTP serves as the instrument for the value delivery and that make it to realize the business units
marketing objectives.
Differentiation:
Jack trout explains differentiation as task of defining your differences. Considering the Jack
Trouts statement it can be viewed that differentiation can be identified based on the functional
benefits that the product is offering and that defines them differently vis--vis their competitor.
Differentiation gives brands competitive advantage over other brands and which lead them to
sustain in the market. A brand can be built and developed through differentiation and it gives
them the sustainable advantage over other brands in the same category.
E.g. Videocon refrigerator had its own differentiation on certain functional features. They
highlighted them in such a way.
Videocons 450 Liter, 6-door refrigerator, Computer controlled, Quick freezing corner, Fresh
vegetable compartment.
Segmentation:
The market for any product is made up of many small-small market segments. The market can be
seen as a heterogeneous market where there are many consumers bases, who make a market and
are seldom one homogeneous lot. They differ in their characteristics and buying behavior.
So the marketer needs to understand the heterogeneous market and then divide the market into
various segments. Each divided market segment will have many customer group and they
distinguish from each other in their characteristics.
For example, Ford motors modifies its models for Indian market. They give their cars the higher
ground clearance to make the car more compatible to the rougher road surface in India.

Targeting:
After the segmentation process, the next thing that is essential is market targeting. Market
targeting simply means choosing ones target market from the segments that has been created.
Targeting basically deals with the market segments. In this step, each market segments are
evaluated and are selected based on the terms of attractiveness. For e.g. a segment which gives
more profit and has better growth prospects can be selected and targeted first. Among all these
segments, if they all are evaluated properly, then it can be found out that they all give different
market growth opportunity.
For e.g. Reebok entered in India aiming too segment of those with 500000 plus annual income.
This segment people come in the high-end class of people for the footwear industry. It was
expecting them to buy reebok shoes priced in the range of Rs. 1300 to Rs. 6500. Later they
realized their target segment has been flawed and later they shifted to the next lower segment and
introduced its new range of Classic shoes at an affordable rate of Rs 900 per pair and this became
successful.
Positioning:
A Company is always needed to build the excellent positioning o its product. If it becomes does
so, then it would be easier for the marketing team to work out the rest of marketing planning and
differentiation from its positioning strategy.
The term Positioning was popularized by two advertising executives, Al Ries and Jack trout.
They find it as a creative exercise done with the existing product. For them, positioning starts
with the product but not exactly associated the product. It is what you do to the mind of prospect.
Positioning is the act of designing and setting up companies offering for the product and how it
can build the image to occupy a distinctive place in the mind of target consumers or prospects.

Segmentation:
In any market, the customer groups can respond in different ways when compared to other
groups. This is because of inherent difference in buying behavior of customers. The consumers
can hence be divided in different groups with similar behavior consumers together. This division
of consumers in groups is called as process of Segmentation. The groups of consumers with
similar consumer behavior are called as Market segments. Segmentation is essential as it helps to
make better utilization of scare resources to target the right consumer.
An effective segmentation ensures that each segment responds in a different way to the existing
marketing mix. A unique marketing mix for each segment helps to get the best response in the
market. The variables to which the groups respond will be different. Some consumers may

respond to quality while other may respond to change in prices. Some may look for pre-sales
service while other may look for after sales services.
A segmentation strategy can be evaluated on three major parameters.
1. Competitive proposition that appeals to the intended target group
2. Maintaining the competitive proposition despite a response from other competitors in the
market
3. The returns on resulting business due to investments made in offering a tailored
proposition to the market segment defined
A successful segmentation strategy helps to create a prominent, dominant position in a reduced
market space. This ensures that competitors are unwilling or unable to overcome this position.
Segmentation process is not as easy as it seems to be. Sometimes the process can be really
difficult to implement and can create a lot of problems. Hence the segmentation process is often
compared to Art as it involves innumerable variables. It is like looking through a lens at the
population of customers in any industry or market. The segment once defined can always not be
the same. Sometimes the segment has to be changed over time to remain sustainable and
significant in the market. This ensures that the segmentation can be easily implemented and acted
upon.
Some common characteristics of an actionable plan are1. Distinctiveness- The response to marketing mix by different groups is unique
2. Identity- The customer profile should be easily identifiable in different segments
3. Adequate Size- The size of different groups should be large enough to be viable
Identifying the segmentation variables to be used is very important. Variables used for
segmentation can be the characteristics of a person, groups, or organizations used to divide the
market into different segments. The variables must be relatable to the needs, uses and behavior
towards the products. These variables for consumer/customer markets can be divided into
following categories:
Demographic- Age, Income, Gender, Ethnicity
Geographic- Market density, Climate, Location, Population
Psychographic- Personality traits, Lifestyles, Motives
Behavioristic- Usage volume, Frequency, Benefits sought, Brand loyalty, Price sensitivity
Consumer market segmentation identifies groups within the market that respond similarly to the
marketing mix. In case of organizational markets the objective is similar with a difference that

instead of groups of individuals, coherent groups of organizations are to be identified. The


characteristics of organizational markets are

Organizational Size- The variables used can be number of employees, production


volume, or annual turnover depending on its application
Ex- Company selling training course will be interested in number of employees
Industry Sector- It is generally measured in informal way by referring to the industry
name or sector name, like banking sector or production industry
Geographical Location- It can simply be referred to geographic segmentation in terms of
domestic or export markets

There are two distinct segmentation strategies widely used by companies and industries
worldwide. These are
1. Focus Strategy- This strategy focuses all its resources and marketing strategies on a
single segment. The idea is to become a dominant force in this segment alone.
Walmart is an excellent example of a company that used Focus strategy in initial years to
become successful. Walmart started its operations by focusing on small cities with
population less than 25,000. These cities were situated in eleven south central states, a
segment often neglected by other competitors of Walmart. This strategy of focus on rural
locations was responsible for success of Walmart and also instrumental in development of
Sustainable Competitive Advantages over the competition.
2. Multiple Segment Strategy-This involves multiple segments in the strategy process. It
helps to be successful in different segments at the same time.
General Motors used this strategy in the best possible way in 1920s when the firm came
up with different product offerings for different segments. Chevrolet was positioned for
price sensitive buyers, Cadillac for the premium end segment, Oldsmobile, Buick and
Pontiac were introduced for segments in between the high and low end customers.
This strategy is widely used by aggressive companies in the market as it helps to gain
competitive advantage in different segments at once.

Targeting:
Targeting involves making decisions about which part of the market an organization wishes to
focus on. It follows market segmentation, deciding which segment or group of segments the
organization wishes to target. It is decided based on the potential profitability of the segments.
Evaluating segments for targeting
Before evaluating the segments, company should analyze its own resources and capabilities, its
strengths and weaknesses, the competition and its objectives.

The various characteristics of an attractive segment are as follows:

Sufficient current and potential sales and profits


Future growth potential
Not much competitive
Low entry and exit barriers
Has relatively unsatisfied needs that the company can serve well

Customers from outside the target can be accepted, but it will not be the focus of the attention.
This way the company can miss some potential customers outside the target, but this way the
efforts can be directed in the way it is decided in most effective and cost-efficient way, with the
available limited resources. Marketers realize that trying to appeal to everyone may result in not
successfully appealing to anyone.
Five step process of choosing attractive market segments
Firms no longer aim only at single product and single marketing programme for mass market.
Instead, they break the market into no of meaningful segments and then tailor products and
marketing programs to meet the desires of each segment. Though, all segments may not
represent equal attractive opportunities for the firm. Thus, the marketers of a firm must evaluate
the future attractiveness of each segment and the firms capabilities and strengths relative to the
segments needs and competitive situations. The following five step process helps in choosing
attractive market segments for a firm.
Step-1: Select Market-Attractiveness and Competitive-Position factors
Managers need to assess both the dimensions, Market attractiveness and Competitive position,
on the basis of the information obtained from analyses of the environment, industry and
competitive situation, market potential estimates, and customer needs. Various factors are
considered under both these dimensions.
Step-2: Weigh each factor
A relative numerical weight is assigned to each factor to indicate its relative importance in the
overall assessment.
Step-3: Rate segments on each factor, plot results on matrices
Each segment is rated based on the evidence collected in the form of quantitative and qualitative
data.
Step-4: Project future position for each segment
Marketer needs to forecast the change in market attractiveness over three to five years by
considering factors like shift in customer needs and behaviour, impact of social or political

trends, shifts in the economic climate, and shifts in the bargaining power or vertical integration
of customers. Also, the change in business competitive position needs to be determined,
assuming that it responds effectively to projected environmental changes, and the firm does not
take any initiatives requiring a change in basic strategy.
Step-5: Choose segments to target, allocate resources
A market segment can be considered to be targeted if it is strongly positive on one of the two
dimensions of market attractiveness and potential competitive position and at least moderately
positive on the other dimension. Also, the market segment can be targeted even if it is
moderately positive on both the dimensions when, managers believe that at least one of both the
dimensions are likely to improve over the next few years, such markets are considered as
stepping stones to larger attractive markets in the future, or shared costs or synergies are present,
thereby benefiting another entry.
Targeting Strategies
Once the chosen markets are analyzed and determined the attractiveness of various segments in
that market, decision regarding which segment to target is to be made. The various targeting
strategies are as follows:
a) Undifferentiated market: Single marketing mix for all customers
The market here is composed of customers whose needs and wants from the product being
offered are same, with no basic difference, thus undifferentiated. This is like mass marketing:
a single marketing programme used for all. When an organization adapts to undifferentiated
marketing, it provides an opportunity for its competitors to capture a portion of its sales by
appealing to the desires of specific market segments. For eg; if a company sold only blue
jeans, it would be giving away all the customers for other coloured jeans. Pepsi and CocaCola also fall in this category, though the marketing and product composition may differ.
b) Differentiated market: Multiple marketing mixes for different market segments
Difference between market segments are recognized and two or more market segments are
selected, each receiving different marketing programmes. For eg; Coca Cola company has
adopted a differentiated approach to its business by introducing different drink brands like
Sprite, Maaza, Minute Maid, Fanta, along with the original Coke.
c) Concentrated market: One marketing mix for a segment for the entire market
This strategy targets only a single market segment. For eg; Rolex targets only the luxury
segment of the watch market.
d) Custom market: Satisfy each customers needs with an individual marketing mix

This goes further beyond the concentrated market and makes product offerings for one
individual. This may be for products which are built as per customers specifications. Like,
Tailors will custom-make suits or bridal gowns. Architect will design a house as per
customers specifications. This degree of targeting is however found more in B2B than B2C
markets. Like, high value engineering projects will fall in this category.

Positioning:
Positioning is about developing unique selling proposition in minds of consumers. Its about how
consumer perceives brand in his / her mind.
Positioning helps brand / company to occupy specific position in the minds of consumer.
The term positioning is coined by Al Ries and Jack Trout in 1969 in a paper called Positioning.
Examples of great positioning in India are
Flipkart synonyms with online megastore
Tata resonates with trust
Oberoi Hotels for service.
Indigo airlines with timely arrivals and departures.
Perceptual map is a strategic marketing tool which is used to understand positions taken by
brands already and where new brand can be positioned.
Implementation of positioning is crucial part. Below are factors which need to be taken care of
while positioning new product or service or a brand.
1. Marketer must understand words
2. Marketer must understand people
3. Marketer must be careful of change
4. Marketer needs vision
5. Marketer needs courage
6. Marketer needs objectivity
7. Marketer needs simplicity
8. Marketer needs subtlety
9. Marketer needs patience
10. Marketers have to have global outlook
11. Marketer need to be They oriented

Positioning is about communicating to people what your brand stand for. To communicate with
people effectively, marketer must understand words, manipulate words so that people will
understand brands positioning in simple, clear way.
The secret to establishing a successful position is to keep two things in balance; a unique position
and broad appeal.
To successfully position, you need patience. Philip Morris built Marlboro into No. 1 cigarette on
college campuses long before it becomes No. 1 brand nationwide.
And finally, marketers need to approach markets from outside in i.e. marketers need to be
They oriented. You cant position a product in sales managers office, you position product in
the prospects mind.

Differentiation:
A company or an organization has to exhibit some uniqueness in order to make value to the
customer buying. Only when the strategies align with the customer benefits, the company can
earn a price premium. Hence, differentiation is a powerful strategy.
Differentiation forms an important strategy for any company. It is the main success factor for
what the product is sold. As stated by Michael Porter, strategies are not bought by the buyers but
products / services are. Hence a company should decide its competitive advantage whether it
wants to position itself as a cost leader or the one who offers something different. These
decisions also depend on the scope of the market. Thus, Porter has stated such strategies and has
suggested that when a company follows differentiation-oriented strategy, it will surely be
successful and reach the consumers.
Competitive Advantage
Lower Cost

Differentiation

Broad Target

Cost Leadership Strategy

Differentiation
Strategy

Narrow Target

Focus Strategy

Focus Strategy

( Cost- Based)

(DifferentiationBased

Competitiv
e Scope

Also, it has been observed that differentiation can be done by altering physical properties or by
playing with the customers perception. Hence, differentiation can not only be done in products
but also services. Where service differentiation is based upon quality of performance and its
elements, product differentiation is all about targeting the physical attributes and the perception
of customers. Following are the dimensions of product and service differentiation:
Product Differentiation:
Forms available, the quality of performance, its reparability and durability, its features and
style, reliability and degree of customization.
Services Differentiation:
Ease of ordering, customer consulting, the training offered to customers, installation and
delivery options, and the other options like repair, maintenance and returns.
Means of Differentiation:
For any brand to be effective for the consumers, it must consider the customer and competitive
advantage as same. So in order to achieve this, following are the means of differentiation:
1. Differentiation in image:
Customers have various needs- pertaining to social as well as psychological needs.
Thus, the image a company projects should be well appealing to these needs.
2. Differentiation in Channel:
If the distribution channels are effectively planned and managed, the companies will
enjoy more profits and rewards through increased sales
3. Differentiation in Employees:
Excellent training programs lead to quality service provided by the employees to the
customers.
4. Differentiation in Services:
Customers look for the solution to their problems that are both effective as well as
efficient. Thus, differentiation in these terms on the basis of delivery systems provides a
competitive edge over others.
Differentiation-oriented Strategies:
Following are the various types of differentiation-oriented strategies:
1. Differentiation by giving importance to product:
It is important to differentiate product in terms of its functional attributes, the
functions/ services/ benefits it provides, its packaging, etc. Some of the examples include

are of e-bay and Gillette. Consumers feel that the experience is equally valuable to benefits.
Hence, differentiating in this factor is a good strategy. Many coffee cafes strive hard in this
field. Other strategy can be to concentrate on packaging. A major chunk of consumers can be
targeted through these strategies. For example: Introduction of small size packaged products
has helped many companies like Coca-Cola and Godrej Foods Ltd. in driving their sales.
The service category can also be targeted in a similar way.
2. Differentiation by giving importance to Distribution:
Where majority of the companies are still stuck at cities or towns, working on
distribution effectiveness can certainly give an edge as the huge rural market can be targeted.
HUL and ITC are doing extremely well in this.
3. Differentiation by giving importance to Promotion:
Some companies like LOreal, Nike and RayBan, build their brands not on functional
attributes but on promotional strategies. Thus, image is sold more than the product. Such a
strategy has proven effective for many of them.

Interview Transcript
Interviewee- Mr. Mohammad Khazi,
Associate Director, Flipkart
Interviewer- Sagar Chachondia, JBIMS 2016

Interviewer- In the already cluttered online retail sector how is Flipkart different from other
competitors?
Interviewee- Flipkart has always tried to be more Indian in its outlook and operations. We have
managed to strike a chord with the Indian consumers with relevant propositions and services in
Indian market. The latest instant refund process is one way we are different from all other
competitors. This instant refund process is expected to increase purchases as returns process is
becoming faster.
Interviewer- Who is your main target segment in Indian market?
Interviewee- Our primary target customers were the middle class and upper middle class online
buyers in metros and tier 1 cities. But now with internet penetration our major customers are
from tier 2 and tier 3 cities. Customers in these locations have the increased spending capacity
and enjoy shopping online. So our segments keep increasing and that is the idea to get as many
people to buy from us as possible.
Interviewer- What is the positioning of Flipkart in Indian Market?
Interviewee- Our core positioning is to become the best one stop online portal to shop. As
Sachin had envisioned, we want people to say I dont shop, I Flipkart. That still remains our
positioning in Indian market. We do come up with new campaigns through our advertisements to
strengthen our core positioning. With the wedding season around the corner, we have launched
the advertisements to make most of it.
Interviewer- Do you think it is possible to create much differentiation in offerings when most
companies are trying to capture the market share?
Interviewee- Flipkart has been the first mover in online retail in India and also the market leader.
Any strategy we come up with is often followed by the competitors and hence it is difficult to
maintain that differentiator. Also all competitors give similar products and services. Having said
that, I still believe Flipkart can have rare strengths by offering unique services and loyalty

programs. We are always innovating our system, operations and supply chain to come up with
new offering that are unique.
Interviewer- Do you think the App only strategy was too early for the Indian Market?
Interviewee- Well, I will not say it was too early to be introduced. If you see the number of
smartphone users and the shopping trends through mobile applications, you will realize why we
tried this App only strategy. As I said earlier, we try new innovative ways to reach out to our
customers. This was one of those. It did not give the desired results and hence we are
reconsidering it. It is still too early to say if it was a complete failure.

Tata Nano Case Study: A spectacular STPD failure


In India, cars are meant for people in the middle class and above segments. Tata Nano was
introduced in India in 2008 with the prime positioning of being the cheapest car in the world. It
was meant to motivate not just the middle class but also the lower middle class to satisfy their
dreams. However, the reality didnt meet the expectations and lead to miserable failure of the
product.
Lets analyse the failure though the aspects of Tata Nanos Segmentation, Targeting, Positioning
and Differentiation.
Segmentation and Targeting
For Nano, Tata Motors segmented and targeted mainly the middle class consumers belonging to
lower middle class and the upper lower class, initially. The consumer group were users of twowheelers with a family of 3-4 members who had problems travelling on a two-wheeler, and
mostly residing in the rural areas or smaller towns.
The problem here was that, whether this group of consumers needed a cheaper four wheeler was
never intrigued. The maintenance cost of a four-wheeler and the fuel costs are certainly higher
than that for a two-wheeler. Also, for the reduced cost measures, the vehicle was not sturdy
enough for rural roads compared to the available options.
Positioning
It was primarily positioned as the cheapest car priced at around 1 lakh. It was positioned as a car
for every Indian. The value proposition was accepted initially, but once it was launched it did not
take off as expected.
The word cheap acted against the brand positioning which the company failed to understand
initially. For an Indian consumer, a car is more of a status symbol and pride and not just a utility
unlike the western markets. So, the tag of cheap car was taken negatively by the consumers.
Thus, the car for every Indian proposition didnt live for longer and the launch of Nano with
heavy bookings fell in quick succession.
Differentiation
The prime differentiation strategy was on pricing. The price tag of one lakh was much lower than
the lowest priced vehicle which was above 2 lakh. Other differentiation strategies were its peppy
colours. The vehicle came in various peppy colours in shades of yellow, green, red, blue, etc.
The price tag of 1 lakh as promised before was short lived and it increased in quick succession
adding to the customers dissatisfaction. The peppy colours of the vehicle cant be well accepted

in the rural areas which formed the target consumer group for Nano. As for them, the car which
was considered as a status symbol was well accepted in shades like white, black, gold, beige, etc.
The colours which Nano were offered could be more accepted among youth and in urban areas.

Possible Solutions:
The company can start with initial R&D with a research focusing on consumer needs,
aspirations, behaviour, lifestyle, etc. For Example: It was stated that Tata Nano had issues in
safety standards, space provided, noisy, etc. Therefore, work has to be done on these attributes
and the same has to be communicated to give a feeling of revival. Some of the possible strategies
to be followed can be:
Segmentation and Targeting:
Rather than segmenting on the basis of class/ geographic regions, the company can go for
demographic and behavioural segmentation. In particular the segmentation has to be done on the
basis of age, sex and a persons working life.
Target Market: Men: 18-35 years of age
Women: 18- 45 years of age... (both belonging to Middle and Upper-Middle Class)
Thus, our customers would be more of youth and middle aged people who are looking for their
First Car, and are trendier but give importance to safety and value for money.
Separate sub-brands are suggested for different segments.
For example:
For the youth- a car with more vibrant colours and trendy looks.
For Women- a car with elegant designs and easy to operate with special emphasis on space
occupied
Positioning:
Rather positioning it as a cheapest car, work can be done to position as a car of first choice for
your every need. As stated in the earlier section about the attributes to be worked on, the same
has to be used in communication in an effective and efficient manner.
Nano has to be thus positioned as a trendy car for todays generation for his basic, aspirational
and safety needs.
Differentiation:

Differentiation has to be done in terms of functional characteristics, service and promotion. First
starting with the functional characteristics, it has to differentiate as a spacious and safe car. This
can show the benefit of perfect for outing and long distance travelling. In terms of service,
special service stations or driving guidelines can be provided for enhanced usage experience.
Finally, these elements have to be used in extensive promotion. A promotion-focused approach
will definitely create a mind recall when buying a value for money car.

Discussion questions:
1. What went wrong in the STPD strategies followed by Tata Nano?
2. Suggest a successful STPD strategy for Tata Nano.
3. Other than STPD, what elements or ideas can be used to gain a competitive advantage for

Tata Nano?

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