Marketing Strategy and Consumer Value

Marketing Strategy

There are different levels of marketing strategy:

1. Corporate strategy—High level, overall direction of a firm or brand.
2. Marketing strategy—Direction guiding the decisions about creating value for customers.
3. Marketing tactics—The way corporate and marketing strategies are implemented. They include how we price, promote, build, package, and distribute products (the marketing mix decisions).

Total Value Concept

Is Coca-Cola just a soft drink? No. Coca-Cola’s soft drinks represent 42.4% of the carbonated soft drink (CSD) market share and 34.2% of the larger liquid refreshment beverages (LRB) market share. Yet it is definitely not the cheapest product on the market. The total value concept is successfully implemented when a company or brand understands that products provide value in multiple ways and makes marketing mix decisions based on that understanding. Look at the market share distributions from 2013, provided below. Why do you think Coca-Cola has such a large portion of the market share? What consumer behaviors and preferences are lowering Coca-Cola’s market share in the larger LRB category?

Figure 1.5. Carbonated Soft Drink (CSD) Market Share by Company, 2013

Figure 1.6. Liquid Refreshment Beverages (LRB) Market Share by Company, 2013

The Total Value Concept Illustrated

Why are you willing to pay more for milk that you buy at a convenience store compared to a grocery store? If you understand this question, you understand the total value concept. Here are some likely value factors:

1. It is convenient.
2. There is an immediate need.
3. You are on your way home and getting gas anyway.
4. You don’t want to be in a big store.

Thus, you are paying for more than just the product. These extra things (convenience, immediate need, positive feelings you get from saving time) create total value.

Value Is Co-Created

Value is not created only by the marketer; the consumer adds their own resources to the consumption process. The way a consumer feels about a product is an important component of how they value that product. A marketer’s intention, though, is to create a marketing mix that helps consumers to derive their desired feelings from the overall net benefit of all four Ps so that each customer readily recognizes a unique value of the marketer’s product or brand compared to the competitors.

Market Characteristics: Market Segments and Product Differentiation

Target market is a common term signifying the particular market segment that a company will serve with a specific marketing mix. Decisions about the marketing mix are used to position the brand in the marketplace, but marketers do so by identifying groups, or segments, of people with similar characteristics, beliefs, preferences, interests, and so on, with the intent of invoking the same feelings of value for their brand because of those similarities. What are some of the potential target markets that might be found on a college campus? Answers may include jocks, theater majors, freshmen, specific ethnic groups, and professors. All chose the college for different reasons, but by providing a marketing mix that attracts and satisfies each different segment, the college adds value that resonates with each unique group.

Your textbook defines market segmentation as "the separation of a market into groups based on the different demand curves associated with each group" (Babin & Harris, 2015). There may be many or few market segments (groups of people with similar characteristics) in any given market.

Elasticity refers to the degree of consumer sensitivity to changes in the marketing mix of competitive products. An example of an inelastic segment is a consumer segment that is less sensitive to a drug that has lifesaving capabilities and, thus, is willing to pay sometimes very high prices to get the drug, even if less expensive drugs are available.

Product differentiation is the process of distinguishing a product or brand from others in a way that attracts and adds value for particular target market. An example of product differentiation is that many people regard Coke and Pepsi as similar but different products. It is the goal of each brand to identify the different utilitarian and/or hedonic values that drive certain groups to buy their brand and, frankly, their competitor's. Once known, marketing mix decisions can be made to retain existing customer segments, attract new untapped segments, and/or lure customers away from the other brand’s targets.