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Every CEO and marketing executive periodically faces urgent strategic marketing challenges that can affect the future of the company for many years. Frequently these decisions are made without having an opportunity to study the situation and make the best possible decision. Making spur of the moment strategic decisions reduces the likelihood that these decisions are the best. A better approach is to perform an annual comprehensive review of markets and opportunities, then make long-term strategic decisions without the distractions of day-to-day marketing and sales activities. Daily decisions then fit into the company's overall strategic marketing goals. It's important for a strategic marketing planning process to look at the company from the customer's point of view by asking questions that have a long time horizon, such as:
What needs or problems cause customers to consider buying from our company? What improvements in the customer's personal or business life can we enable or improve? Which customer market segments are attracted to our company or products? Which customer motivations or values lead people to decide to purchase our products? What changes or trends in our customer base are affecting their general interest or attraction to products like ours?
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After analyzing market segments, customer interests, and the purchase process, it's time to create the strategic marketing plan. The strategic marketing plan document usually includes:
Situational Analysis - Where is the company now? a. Market Characteristics b. Key Success Factors c. Competition and Product Comparisons d. Technology Considerations e. Legal Environment f. Social Environment g. Problems and Opportunities Marketing Objectives - Where does management want the company to go? a. Product Profile b. Target Market c. Target Volume in Dollars and/or Units Marketing Strategies - What should the company do to achieve its objectives? a. Product Strategy b. Pricing Strategy c. Promotion Strategy d. Distribution Strategy e. Marketing Strategy Projection
Product Development Plan Marketing Communications Plan Sales Development Plan Customer Service Plan
This approach improves company efficiency in all areas, which helps improve revenue and market share growth, and minimizes expenses -- all of which lead to higher profitability.
up of people or organizations with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function. A true market segment meets all of the following criteria: it is distinct from other segments (different segments have different needs), it is homogeneous within the segment (exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a market intervention. The term is also used when consumers with identical product and/or service needs are divided up into groups so they can be charged different amounts for the services. The people in a given segment are supposed to be similar in terms of criteria by which they are segmented and different from other segments in terms of these criteria. These can be broadly viewed as 'positive' and 'negative' applications of the same idea, splitting up the market into smaller groups. Examples:
While there may be theoretically 'ideal' market segments, in reality every organization engaged in a market will develop different ways of imagining market segments, and create Product differentiation strategies to exploit these segments. The market segmentation and corresponding product differentiation strategy can give a firm a temporary commercial advantage.
Contents
1 Bases for segmenting consumer markets 2 Geographic segmentation 3 "Positive" market segmentation 4 Using Segmentation in Customer Retention o 4.1 Process for tagging customers 5 Price Discrimination 6 References
Tag #1: Is this customer at high risk of canceling the company's service? One of the most common indicators of high-risk customers is a drop off in usage of the company's service. For example, in the credit card industry this could be signaled through a customer's decline in spending on his or her card. Tag #2: Is this customer worth retaining? This determination boils down to whether the postretention profit generated from the customer is predicted to be greater than the cost incurred to retain the customer. Managing Customers as Investments. [1] [2] Tag #3: What retention tactics should be used to retain this customer? For customers who are deemed save-worthy, its essential for the company to know which save tactics are most likely to be successful. Tactics commonly used range from providing special customer discounts to sending customers communications that reinforce the value proposition of the given service.
[edit] Process for tagging customers
The basic approach to tagging customers is to utilize historical retention data to make predictions about active customers regarding:
Whether they are at high risk of canceling their service Whether they are profitable to retain What retention tactics are likely to be most effective
The idea is to match up active customers with customers from historic retention data who share similar attributes. Using the theory that birds of a feather flock together, the approach is based on the assumption that active customers will have similar retention outcomes as those of their comparable predecessor.