Assigment 1

Differentiate between marketing strategy formulation for pure-play company and bricks-and-mortar company.

Internet Marketing Strategy (Pure-Plays)

Pure-plays company is the company that don’t have the shop or office just doing the business by using internet totally. For example yahoo.com, amazon.com, mudah.com.

1. Segmentation

The process of segmentation involves breaking up a market of customers into large, identifiable groups, or segment. Segmentation is the first step in allowing firms to create or market products for specific groups of customers. It reveals potential marketing opportunity and marketing strategy. This strategy also serves customer’s need more appropriately. Bases for segmentation. The variable chosen for segmentation is depend on the particular marketing decision. Example:Demographic : age, gender, status, occupation, incom. Geographic: country, ISP domain, region.Psychographic: lifestyle, social class, personality. Cognitive and behavioral: benefits sought, usage rate, loyalty status Effective segmentation. Not all segmentations make sense. A market might be segmented into many different groups, that the cost of serving each segment separately would be unfeasible. In order to be effective segmentation must follow 3 rows

Meaningful – it must help describe and explain why customers behave in a specific way.

Actionable – it must allow for feasible execution, in term of targeting and positioning to that segment.

Financially attractive – target segments must be economically worth going after.

2. Target market selection.

Tarrgeting is evaluating market segments for overall attractiveness and choosing segments that are consistent with the firm’s marketing strategy and capabilities. In order to target the market company have to look at three factors.

Segment size and growth

Knowing segment size and growth is really important because the segment must be worthwhile financially not only now but in the future. The attractive segment size depends on the firm. Segment growth is usually a natural attraction for choosing segments; ideally a firm can hope to grow in line with the growth for the segment.

Segment structural attractiveness

Analyzing a segment’s structure attractiveness can provide insight into a segment ‘s future profitability. A segment that may be large and growing may still have many characteristics that make it ultimately undesirable down the road.Using the Porter’s five forces model

Company objective and resources

The target market must be done according to company goals and resources.

3. Positioning

Positioning allows companies to stake claims about their products in the minds of their target segment, letting company communicate distinct advantages over competing brands. The strategies for positioning.

Features and services to be perceived as the best in a particular product or services attribute. For example style

Benefits to be perceived as effectively providing benefits. For example happiness.

Specific usage occasions to be perceived as being practical and functional for given purpose.

User category to be perceived as the appropriate offering for a specific type of user.

Positioning against another product to be perceived as better than a particular competitors

Product-class positing to be perceived ass offering a different type of product from what consumer expect.

Hybrid positioning or a combination of two or more of the above categories.

Steps of positioning plan

1. Identify actual product positioning

Company identifies actual product positioning through consumers interviews or questionnaire, the variables important

to consumer and the perceived position of a product according to these variables. Also identifies competitors and their

position in the broader market, primarily through establishing appropriate perceptual maps.

2. Determine ideal product position

This step determines how to position a product in a more favorable location on the perceptual map. Determining the

ideal position depends largely on the positioning strategy chosen.

3. Develop alternative strategies for achieving ideal product position

To achieve a desired positioning, firms can either: 1-attempt to reposition an existing product to a new position, with

or without a change in the product itself. 2- Introduce a separate a new product with the characteristics necessary or

the ideal positioning.

4.Select the implement the most promising alternative

The success of this step depending on choosing a plan that is the most favorable and consistent with a company’s

objective, resources and strength.Implementation of the plan should include specific guideline.

5.Compare new actual position with ideal position.

The positioning process must also include measures to track the success of the positioning move. Marketing strategy

is an ongoing process involves decision making, implementation and the equally important task of tracking.

Internet Marketing Strategy (Bricks and Mortar)

Bricks and mortar company is the company that use both offline and online in order to market their product. For example Nike.com and Nokia

1. Segmentation

Changes in segmentation characteristics due to internet

Market Expansion	Reclassified-Expansion
No Changes	Market Reclassification

Changes in size Yes

Market segment

No

No Yes

The basis for segmenting markets will naturally change when offline company begin looking at customer on internet.the basis for segmentation commonly changes, as do the segments themselves.Traditional firms new to the internet will find that online segmentation can yield four different scenarios. First, matrix focuses on whether the market segment size changes. Second, focuses on the actual criteria to segment markets change hen the firm move to internet. There are four possible results.

No change

Firm might find that online segmentation does not reveal any significantly new segments, and that the relative

compositions and size of the online customer segment might be generally the same as the offline segment. for

example firm specific business-to- business (B2B) site.

Market expansions

Firm might find that the characteristic of the online segment are the same as the characteristics of the offline segment, but that the size segment changes. For example a segment might actually get larger through the increase reach of the internet.

Market reclassification

Online segmentation could reveal that customer segments are different on the internet, either slightly or significantly. This might be due to the internet’s ability to augment a company’s offering and hence create online customers that are more demanding or discriminating.

Firm’s advantage.

Reclassification expansion.

Firm experience combination of the previous two scenarios, so that segments might

simultaneously change in both size and characteristic. targeting and positioning play crucial

role in determining online success.

2. Targeting Customer Similar

Customer Similarity

Same Customers Different Customers

Blanket Targeting Serve same segment online as offline	New-Opportunity Targeting Serve new segment online
Beachhead Targeting Serve portion of offline segment online	Bleed-Over Targeting Serve part of offline segment as well as new segment online

Entire segment

Focus of Effort

Portions of a segment

Evaluating market segment for overall attractiveness and choosing segment. The scenarios show four possible strategies in which traditional firm can target online segment in relation to the traditional offline segment.

There are two important dimensions. First, the focus of marketing effort on an entire segment or a portion of a segment. Second, customer similarity to the firm’s online market. (Similar or different customer).

Blanket targeting

Firm find that online segmentation does not reveal anything. The general characteristic of the segment remains the same at those of the offline segment.Firm find that segment characteristic stay the same, but that the segment get larger due to factors such as increase geographical reach.

Beachhead targeting

Firm find that online segment of customer is smaller than the offline segment, perhaps representing a narrower band of taste and preferences. By focusing to the key element, firm can use it as a core base for their future expansion into additional segment.

Bleed-over targeting

Online target segment includes part, but not at all, of the offline segment, but also targets part on a distinctly new customer segment.Firm encourage the customer to offline.

New opportunity targeting

Firm choose difference target segment in online marketing. Which means it’s totally online.target customer segment represents distinctly different needs and preferences from traditional offline segment.

3. Positioning

Customer’s similarity

Same Customers Different Customers

Blanket Targeting o Borrow heavily from existing offline positioning o Tout basic advantages of the Internet-convenience and accessibility	New-Opportunity Targeting o Reposition entirely o Position differentiations which cater to the new segment
Beachhead Targeting o Also borrow from offline positioning o Focus more, however, on needs of the smaller group o Stress value-added advantages of the Internet.	Bleed-Over Targeting o Use dual positioning o Leverage existing positioning o Position added benefits, such as augmented offerings via the Internet (e.g. increased product customizability)

Of the four scenarios requires a different positioning approach. As was the case in the targeting process, the criteria for the effective positioning do not change; positioning strategy must emphasize differences that are meaningful, communicable, and financially attractive.

Guideline for each scenarios

First scenario

A good strategy is likely borrowed heavily from existing offline positioning strategies, since the goal is to appeal to the

same group of customer.

Beachhead positioning

Second scenario, target segment is a subsection of the larger offline segment; the positioning is similar but might

more focus toward the smaller customer groups. Stress more of the value-added advantages of the internet.

Bleed-over positioning

scenario, assume target segment composed of both old customers and new type of customer.

The positioning would reassemble the offline offering, but also make the online offering attractive to new types of

customer.

New opportunity positioning

Last scenario, reposition the offering entirely, attempting to capture the attention of completely new target segment.