Market Segmentation: Diagnosing and Treating the Barriers - Assignment Example

Strategic Marketing Word Count: 2068 Executive Summary An analysis of the market orientation and the concepts therein has been conducted in the project. The market orientation takes into account customer orientation, competitor orientation, inter-functional coordination, organisational structure and long term creation of value for shareholders. This concept stresses on the need to keep the customers at the heart of all marketing activities and the strategies should be modelled in such a manner such that along with the profit maximisation of the company, customer satisfaction is also maximised. In the present world when the economy promotes perfect competition, market orientation is a very crucial concept. The theoretical underpinnings have been used to analyse the marketing strategies of Unilever. The company has successfully positioned its brands in such a manner that it is a household name in almost every household across the globe. The company also has portrayed a strong responsibility towards the betterment of the society and has taken its CSR activities to a new level. Unilever has also developed innovative strategies that would allow them to reach to every cross section of the population across all income levels. In the end recommendations have been provided that the company can adopt for its betterment. Word Count: 198 Contents Contents 3 Introduction 4 Market Orientation & Concepts 4 Customer Orientation 4 Competitor Orientation 5 Inter-Functional coordination 5 Organisational Culture 6 Long Term Creation of Value for Shareholders 6 Short- Vs. Long-Term Thinking 6 Societal Marketing Concept 7 UNILEVER’s Marketing Strategy 7 People first 7 Indispensable brands 7 Magical experiences 8 Product Visibility 8 Corporate Social Responsibility (CSR) 8 Source 9 Recommendation 9 Conclusion 9 Reference List 10 Appendix 11 Introduction The marketing concepts have evolved over the past few decades. Previously when there were lesser options and the competition was monopoly or monopolistic the customers had little say over the pricing strategies or even the quality of products. However in the present world the market structure has changed from monopolistic to perfect competition whereby the customers have the power of making or breaking an organisation. The marketing strategies are thus formed keeping in mind the role of customer. The organisations aim to maximise customer satisfaction and design strategies to that effect. Apart from developing marketing strategies that would be customer friendly and also facilitate the increase of market share of the firm, multinational companies (MNC) have to undergo Corporate Social Responsibility (CSR) so that a favourable image of the firm can be maintained. Market Orientation & Concepts Marketing orientation is considered a concept that takes into account customer orientation, competitor orientation, inter-functional coordination, organisational structure and long term creation of value for shareholders. The concept pledges to deliver superior performance of the company by way of satisfying customers needs. Therefore a company philosophy that focuses on identifying and meeting the demands and desires of the customers through its product mix is market oriented philosophy. Unlike in the when marketing strategies focused on maximising a company’s revenues by way of establishing selling points for existing products, market orientation attempts to achieve customer satisfaction by tailoring products according to customer specifications. In essence, market orientation is coordination between marketing campaign of a company and its customers (Armstrong and Cunningham, 2012) (Refer to Appendix 1). Customer Orientation Customer-oriented business is used by firms that are engaged in the selling of products and services to its customers. Previous researches have shown that customer orientation helps firms increase its performance and enhance customer satisfaction. Such companies feel the need to maintain a high-profile and positive public image. In case of retail firms, competition is a serious issue. However the customers act as the medium. Therefore the company focuses on the customers and not on the competitor itself. The firm spends its resources to gather information regarding the customer needs and behaviour (Athanassopoulos, 2000; Baker and Hart, 2008). This strategy helps firms helps the firms to have a clear and in-depth understanding of consumer thereby resulting in a focused marketing effort. Competitor Orientation A competitively oriented business of firm constant reassesses its strengths and weaknesses with respect to that of its competitors. A performance evaluation includes pricing and production efficiency, customer satisfaction, delivery time, employee retention, innovation as well as market share. Each economic entity in a competitive economic system attempts to maximize personal advantages and profits at the expense of the competitors. Analysing the competition is more important than creating a favourable public profile is extremely important for companies that have dealings entirely with other businesses. For example wholesalers or sellers of raw materials operate in such fields. Therefore competitor orientation can be regarded as the type of marketing technique where the firm is directing all its resources in order to gather information regarding competitor activities and behaviour (Baumgartner and Pieters, 2003). The firm then devices its strategies will then be based on the information gathered through this orientation. Competitor orientation is preferable in fast growing markets. However in such markets firms will have to invest more in gathering data about the competitors’ market position as this will enable them to foster innovations at a much lower cost. Inter-Functional coordination When a company uses all its resources to create value for the target customers it is known as inter-functional coordination. The companies effectively use all the business functions to work together such that customer value is created. This process facilitates successfully removing the barriers in business functions and enhances manufacturing and finance. Therefore interventional teamwork helps in achieving targets of customer value (Dibb and Simkin, 2001). Market Positioning The organisation concentrates on optimising the market position and strives to have a larger market share as compared with that of the competitor. This is also a part of competitive orientation and it requires all the companies to attain the prime retail space and advertisement venues. Development of the most compelling brands that would strike a chord with the general public is an important part of market positioning. The tenacious brands help the company develop brand loyalty among the people. The brands have to be built in such a manner such that those become absolutely indispensible to the general public. Monopoly is every organisation’s dream as it maximises the revenue by way of giving absolute power to it. Hence the jockeying for the prime position is not just the result of having an upper hand over the competitor rather of having a monopoly or monopolistic position in the market (Clark and Mathur, 2011; Ferri, Deakins and Whittam, 2009). However this is true for every player in the market and thus a competition ensues for the highest market share among the companies. Organisational Culture The art of linking managerial behaviour of the employees to customer satisfaction is known as organizational culture. It is the behaviour of the employees of that organization. The behaviour of the employees portrays the cultural practice of the organisation and hence it is important that the workers behave appropriately so that the image of the firm is maintained. The cultural values of the firm include its mission, vision, norms, values, symbols, systems, language and habits (Furrer, Liu and Sudharshan, 2000). Long Term Creation of Value for Shareholders The management of the company aims to deliver value to the shareholders by way of its ability to develop earnings, dividends and share price. The sum of all strategic decisions that determines the firms capability to efficiently increase the amount of free cash flow over a period of time is considered as the value of the shareholder. Short- Vs. Long-Term Thinking As compared to small organisations the large companies focus their investments in long term strategic developments since the size and the economic clout of the same allows such a move. Smaller organisations are more concerned with the daily survival and do not have the resources nor the need to plan the market position ten years down the line. Therefore a well-established organisation should be able to maintain the balance between long-term development and short-term viability (Gummesson, 2010). Societal Marketing Concept Societal, or holistic, marketing concept is an important marketing management orientation. It is similar to the marketing concept in which a company is focused on delivering products according to the needs, wants and interests of a target consumer market more effectively than the competitor can. The societal marketing concept is also based on a similar belief where a company carries out its marketing and develops products that enhances or preserves societys well-being (Hudson, 2007). Thus the effect that a company has on the society as a whole is taken into consideration in the societal marketing concept also known as Corporate Social Responsibility (CSR). UNILEVER’s Marketing Strategy Strategy development is a mammoth undertaking on part of Unilever as collaborating with over sixteen thousand employees and brand partners all over the world is a difficult task. It is also the world’s second largest advertiser and more than two billion people in over 180 markets use its products each day. Therefore coordination among all the offices worldwide and understanding the various tastes and preferences of the customers all over the world is extremely important for the company. Unilever’s marketing strategy is a combination of three key pillars described below (Torres, 2012). People first The first pillar is considering the people as the priority. “Putting people at the heart of everything we are doing” has been the motto if the company in the present world. Unilever has implemented the strategy of market orientation in a proper manner. The brands, advertising strategies, marketing techniques are developed keeping in mind the value of customers and aims to deliver maximum worth to them (Smith and Hirst, 2001). Indispensable brands Unilever has focused on building brands that people cannot live without. Its brands portray a clear point of view along with a clear purpose. The different brands of Unilever such as Lipton, Fair & Lovely, Close Up, Dove and so on is popular globally and can be seen in almost every country. The company has successfully built on the indispensability factor of its brands and have successfully marketed the brands. Magical experiences Unilever has been able to strike a chord with the people globally. It has successfully used the emotions of people and allowed people to share the brand experiences across the countries. Consistently delivering value to the customers has enabled them to increase their sales and earn greater revenues. The company has used cooperation, collaboration and crowd-sourcing to its advantage (McDonald and Dunbar, 2004). Product Visibility The company uses very simple yet aggressive marketing techniques to ensure product visibility. It offers discounts to shop owners in emerging markets so that they showcase Unilever’s products right up front. This marketing strategy, also known buying shelves is adopted by MNCs to win a strategic edge over the competitors and to position the products effectively. Unilever also sends its sales representatives to cater to even the smallest stores such that a check can be conducted to ensure that the products are neatly displayed and always in stock. The company quite cleverly markets smaller and cheaper versions of their products in the developing and less developed countries so as to capture less wealthy consumers. Smaller sachets of dove shampoos are available in almost all the retail stores of these markets. Thus it caters to the various economic strata of the society by introducing products that the emerging middle class can afford (Morgan, Vorhies and Mason, 2009). Corporate Social Responsibility (CSR) Unilever has taken its CSR activities to a whole new level and focuses on the having a positive impact on the society. The company has set itself three big goals that it plans to achieve by 2020 as part of the Unilever’s Sustainable Living Plan — reduction of environmental impact and to source all of its agricultural raw materials in a sustainable manner, improve the health and well-being of the people that are part of the entire procurement process and enhance the livelihoods of workers across the value chain. Also the company produces its toothbrush and toothpaste advertisements in such a manner such that it can influence the mass into taking care of their oral health thereby generating awareness. Unilever has also targeted countries like Bangladesh, China, Pakistan as part of its Save the Children initiative, to reduce child and maternal mortality rates in these countries (Schiffman and Kanuk, 2010) (Refer to Appendix 2). Source Recommendation Unilever should create one umbrella brand under which all its other brands can be consolidated so that there is better coordination across the same. Unilever Plc, Unilever NV, One Unilever are the different brands of Unilever that can be consolidated under one bigger brand so that there is greater clarity of responsibility, leadership, and accountability. This move would allow the company to focus on the needs and demands of its consumers thereby reigniting the sales and growth potential of the brands and also will enhance the ability to leverage the scale of operations in a better manner by creating a strategic platform for efficient management of the brand. Product differentiation is another strategy that Unilever should use to its advantage. It already has Lipton tea that has a brand image of providing the consumers with a healthy drink and at the same time catering to their habit of drinking tea on a regular basis. The market for energy drinks is on the rise and is experiencing a boom. There has been an over 50 per cent rise in the sales and the market worth for the same has exceeded $100 million. In case the company ventures into this market the main competitor for the product would be Red Bull that has majority market share in energy drinks. Conclusion Therefore it is evident that the marketing concepts analysed above has been implemented by Unilever in an effective manner thereby enhancing the image of the company. The brands of Unilever are a household name across the globe and cater to millions of people daily. The company has successfully positioned the brands and have achieved a lion’s share in the industry and hence now it can think of diversifying to other sectors. Word Count: 2068 Reference List Armstrong, G. and Cunningham, M. H., 2012. Principles of marketing. Australia: Pearson. Athanassopoulos, A. D., 2000. Customer satisfaction cues to support market segmentation and explain switching behavior. Journal of business research, 47(3), pp. 191-207. Baker, M. J. and Hart, S. J., 2008. The marketing book. UK: Routledge. Baumgartner, H. and Pieters, R., 2003. The structural influence of marketing journals: A citation analysis of the discipline and its subareas over time. Journal of Marketing, 67(2), pp. 123-139. Clark, T. and Mathur, L. L., 2011. Global Myopia: Globalization Theory In International Business. Journal of International Management, 2(4), pp. 361-372. Dibb, S. and Simkin, L., 2001. Market segmentation: diagnosing and treating the barriers. Industrial Marketing Management, 30(8), pp. 609-625. Ferri, P. J., Deakins, D. and Whittam, G., 2009. The Measurement Of Social Capital In The Entrepreneurial Context. Journal of Enterprising Communities: People and Places in the Global Economy, 3(2), pp. 138-151. Furrer, O., Liu, B. S. C. and Sudharshan, D., 2000. The relationships between culture and service quality perceptions basis for cross-cultural market segmentation and resource allocation. Journal of service research, 2(4), pp. 355-371. Gummesson, E., 2010. Implementation Requires A Relationship Marketing Paradigm. Journal of the Academy of Marketing Science, 2(6), pp. 242-249. Hudson, K., 2007. The new labor market segmentation: Labor market dualism in the new economy. Social Science Research, 36(1), pp. 286-312. McDonald, M. and Dunbar, I., 2004. Market segmentation: How to do it, how to profit from it. UK: Butterworth-Heinemann. Morgan, N. A., Vorhies, D. W. and Mason, C. H., 2009. Market orientation, marketing capabilities, and firm performance. Strategic Management Journal, 30(8), pp. 909-920. Schiffman, L. and Kanuk. L., 2010. Consumer Behavior, Upper Saddle River, NJ: Prentice Hall. Smith, G. and Hirst, A., 2001. Strategic political segmentation-A new approach for a new era of political marketing. European Journal of Marketing, 35(9/10), pp. 1058-1073. Torres, C.A.C., French, M.G., Hordijk, R., Nguyen, K. and Olup, L., 2012. Four Case Studies on Corporate Social Responsibility: Do Conflicts Affect a Company’s Corporate Social Responsibility Policy? Utrecht Law Review, 8(3), 51-73. Appendix Appendix 1 (Source: CSRWire, 2014) Appendix 2 (Source: Scielo., 2011) Read More