Strategic Branding

Across World Markets

MKTG 6255: Strategic Brand Management

Prof. Salah S. Hassan

STAGE I: The term segmentation was first used by Wendell Smith in an article published in the Journal of Marketing in 1956. His idea was quite simple – divide your customers into categories and interact with them differently, then you’ll be able to supply products and services to various clients that perfectly meet their needs. STAGE II: As the world economy becomes more globalized, the number of opportunities for creating demand of universal goods keeps on increasing, implying the need for segmentation at the global level, a more complex method.

GLOBAL SEGMENTATION - the process of identifying specific segments of potential consumers in the form of a group of countries or groups of individual consumers with the similar demands and buying behavior patterns

According to Hassan and Craft (2005) there are four different approaches to global segmentation:

Identifying clusters of countries that demand similar goods

Identifying segments which are present in all of the countries

Targeting different segments in different countries with the same good

Focusing on similar segments that demand similar products.

Market activities

Organizational Structure

Strategic initiatives

Primary functioning

Primary functioning: Segmentation is used in developing strategic plans, in identifying and formulating objectives and creating competitive advantage Strategic initiatives: Segmentation is used in financial planning, development of new products and services, and during evaluation of various initiatives Organizational structure: Results of segmentation along with identified client needs are used to improve organizational structure with the goal of providing better client service Market activities: Segmentation is used to improve and refocus attention on client retention

Basis for segmentation Client #1 Client #2

Demographics •Woman •Over 40 years old •Married •$115,000 household income

•Woman •Over 40 years old •Married •$115,000 household income

Life Stage •Two kids •Working mother

•Two kids •Working mother

Needs •Seeks advise on menu planning (based on low fat and low cost) •Interested in culinary club

•Ready to use products •Prepared main meals •Home delivery

Choices •Price concerned during shopping •Preference for products with low fat content •Enjoys cooking

•Favors convenience during shopping •Enjoys organic food •Doesn’t like to cook

0

20

40

60

80

100

120

Client classification based on profitability

not profitable profitable very profitable

VERY PROFITABLE •What can we do to keep these clients so they continue spending their money on our goods and services? •How can we attract more clients of this type?

PROFITABLE •How can we make these clients spend their money in a way that most profitable clients do?

NOT PROFITABLE •How can we keep same of these clients while spending minimum

Real-time Every month/quarter Less frequent – every

quarter/once a year

Industry sector Financial Services Distribution companies of

specific goods, multinational

corporations, such as an

international leader in

pharmaceutical goods.

Distribution companies of

generic goods

Goal for

segmentation

Increasing market share

Taking clients to a more

profitable level

Identifying new targets

Retention of already

established client base

Taking clients to a more

profitable level

Development of the

optimal positioning

Identifying new target areas

Increasing market share

within established and

developing segments

Type of client

interaction

Based on systematic and

numerous contacts with

clients through bank branches,

online services, emails.

Based on visits to the store and

web-site for purchase of

needed goods or the ones of

an interest

Based on surveys

Data collected Personal data about the clients

through interaction,

demographical facts collected

through third party.

Personal client information

gathered through store cards.

General information from sales

data. Demographic

information through third

party.

Data gathered through

surveys. General

information from sales

data. Demographic

information through third

party.

• Brand is a method of differentiation in marketing

• Brand creation happens through development of unique product values that would distinguish it from competitors

• Consumers are rarely willing to pay a premium for general products or services, however, successful brands are those that provide additional value in addition to the basic benefit

• Positioning is the process of placing the image of the company in such a way that it takes a distinct and valued place in the mind of the consumer, as the idea is to differentiate specific product or service from that of the competitor

– developing certain product attributes

– through influence of advertising

There are two basic approaches to brand positioning based on segmentation:

1. Strengthening of the brand through increase of the product assortment based on current segmentations

2. Mastering of the new markets and segments based on client demands

High Quality

Low Quality

High Price Low Price

Brand A

Brand B

Brand C

Brand D

Global Brand Positioning Issues

Creating brand differentiation will be a key focus area to

set the brand apart from global competitors and to plan

for brand management based on:

Building original brand structures

Defining each brand's consumers and competitive set

Emphasizing innovative features

Dominating services & sales segments

Bringing each brand's positioning to life

In order for segmentation to be applied effectively, the approach should be integrated into all marketing activities. It cannot be limited to marketing communications. In other words, segmentation directly affects the structure of the company. It defines what business you do, what benefits you are going to remove, and then accurately determines how the benefits for customers may vary in different groups. Segmentation is created based on customer insights, and with brand positioning in mind is a powerful tool in marketing.

THANK YOU