The relationship between strategy and segmentation. Transition from segments to strategic segments
To date, segmentation is no longer a simple or static marketing technique, it is the foundation of a successful business. It affects both the strategy (at different levels) and the organizational structure.
Despite the fact that segmentation has a strategic value for companies, often its results are used only to infinitely "grind" elements of the marketing complex, which ultimately leads to a decrease in the effectiveness of differentiation (primarily commodity) and dilution of competitive advantages. In order to avoid further comoditization, N. Kumar proposed using the idea of strategic segments and the "three values" model. He argues that if you need to use the elements of a marketing mix to work in segments, then other processes, such as R & D, production and operational processes, should also be involved in strategic segments.
Strategic segments are associated with a particular combination of key factors that lead to success, and require the development of unique value chains.
The model of the "sin of values Kumar includes: the value of the target customer, the value of the offer and the value creation network.
The value of the target customer. First of all, companies should answer the question of who their product is oriented to, since the development of effective marketing strategies and other functional strategies directly depends on understanding the needs, needs and preferences of customers. Here, as in the case of traditional segmentation, it is important to understand whether there are consumers who are dissatisfied with existing offers on the market or do not use such products at all.
The value of the proposal. Determining with whom the efforts of the company should be directed, it is necessary to answer the question what to offer to the identified strategic segments. In order to create a differentiated proposal, Professors W. Kim and R. Morborn suggest using two analytical tools - a strategic outline and a four-action model.
The strategic outline is a way of describing a company's value proposition that clearly demonstrates the competitive parameters in the industry (the key characteristics of the industry's products) and what the structure and level of competitive offers in the industry are.
The strategic outline allows visual assessment of the parity points and differentiation of the company's offer with the offers of its competitors (Figure 6.7).
Fig. 6.7. Strategic Canvas: an example of the wine industry
United States of the late 1990s:
axis x - factors by which competition is taking place and for which investments are directed in this industry: 1 - price; 2 - use of apologetic terminology and distinctive features in the description of wines; 3 - indirect marketing; 4 - quality of aging; 5 - prestige and history of the winery; b - richness of taste; 7 - assortment of wines; axis y - the level of supply received by customers by factors;
d - inexpensive wines; wines of premium class
The figure shows that the competition in the industry is based on seven key characteristics; at the same time there are two fundamentally different types of proposals - those based on the value proposition of which are low price (inexpensive wines), and those based on quality and prestige indicators (premium wine).
However, simply following one approach leads to the company getting into the zone of fierce competition that W. Kim and R. Moborn call the "scarlet ocean", and this threatens the company with a loss of profits. Therefore, in order to avoid possible losses and to find an area free from competitors, it is necessary to reorient from customers to non-industry customers, and also to consider new opportunities for creating a higher consumer value while reducing costs. To create a new consumer value, a four-action model is applied, within which companies should find answers to the following questions:
• What factors are taken for granted in the industry, can the company refuse?
• By what factors the level of generally accepted standards in the industry can be significantly reduced?
• What factors need to be improved to significantly exceed the level of generally accepted industry standards?
• What factors that were not previously proposed by the industry should be created?
Value creation network. It is the presence of a unique network of value creation that is a competitive advantage of the company. And if the company enters a new strategic segment (as opposed to entering a new segment of the market), it needs a new network.
Value creation network is the coordination of various functions necessary to serve the selected market segment, which includes both differentiation based on the marketing mix and differentiation based on innovations (both in production, and in customer service, and in other spheres).
Consider using the three values on the example of the company refers to the so-called loukosteram
and is a member of a group of companies that currently has 21 companies representing different industries (for example, air transport, fitness centers), but united by a common idea is to provide customers with more value for less money. The company was founded in 1995 and from the very beginning was focused on the strategic segment of low-budget passenger air travel. As target customers, the company chose those groups of consumers that were not too satisfied with the proposals of traditional air carriers, ie. Those who pay for airfares from their own (rather than corporate) pockets. Another group was rarely flying passengers.
The company also revised the value of its offer in comparison with traditional carriers: instead of focusing on comfort indicators (for example, convenient docking, free food on board), and the formation of loyalty through participation in the "bonus miles" programs, made the most available price and gave customers a guarantee of punctuality (in case of more than four hours delay of the flight the company returns money to its customers).
In contrast to traditional air carriers, easyjet decided to limit the ability of passengers to select seats in the canopy: the landing takes place in the order of the live queue, and on boarding coupons are designated only blocks of seats, but not a specific place. At the same time, passengers could have the opportunity to choose the usual place for 3 pounds sterling and a place with a large gap between the seats (for the convenience of the feet) for 12 pounds. The company also continues to offer its customers lower "base" price and focuses on the use of new aircraft.
The company completely refused free meals on board, offering customers snacks and drinks, and from the services of ticket sales agencies, choosing the Internet as the main channel for their distribution (although in recent years, wishing to expand its client base through the corporate sector tourism, the company began to actively cooperate with global booking systems, such as Saber. The company was one of the first to switch to e-tickets, which became an industry standard after a while.
Also, easyjet began selling tickets in one direction only, without providing price advantages to those passengers who travel with return flight to the airport of departure and formed their operating model in such a way as to guarantee passengers the exact observance of schedules flights.
To provide such a value proposition, the company developed a value creation network that differed significantly from the network typical of traditional air carriers. An essential element of the easyjet operational model was the maximization of the load of each aircraft and its optimal use: in particular, the company's airplanes are in flight on average 11 hours a day compared to the industry average of 6.5 hours.
In addition to actively seeking opportunities to reduce costs, the company constantly delivers to consumers a key benefit - a low price. For this, easyjet conducts catchy advertising campaigns. So, one of their slogans read: "To fly, to save. When we began to fly 15 years ago, these two words reflected what we believe. And they still reflect this. "
As we mentioned earlier, after selecting the segment (s) that the company will target, it will have to develop a value proposition for these target segments.
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