4.2.1 Segmentation, Targeting and Positioning – STP Segmentation
The market segmentation for DNVHC will basically be towards B2B market, since the potential buyers all belong to organizational level and not end-consumer.
They should therefore focus on segmentation methods related to business markets.
DNVHC should segment the market in China in order to find the same group of customers who share a similar set of wants from the healthcare market. Those potential markets can be recognized through indentifying the preference markets, which are homogenous, diffused or clustered.55 Homogeneous preferences have one and same customer group, diffused preferences have customers scattered throughout the space that indicates great variance in customer preferences, and clustered preferences can have several preference clusters within the segmentation market.
52Kotler, Keller and Lu (2009:44)
53Kotler, Keller and Lu (2009:45)
54Bronder et al. (2007:25)
For DNVHC, a sequential segmentation can be beneficial. They should first perform a macro-segmentation analyzing which markets to serve, and then a micro-segmentation in which they distinguish their target based on price, service or quality.56
Targeting
After identifying the segmentation market, DNVHC should decide how many and who to target. The choice of targeting groups should be distinguished through the needs within the segmentation groups.
Within the types of business customers, there are segments that are price-oriented, solution-oriented, gold-oriented and strategic-value. These groups require
different types of selling approach.57
The five key criteria within segmentation that should be considered to further target the right groups are: measurable, substantial, accessible, differentiable, and actionable.58 In order to decide which market segments that can be most attractive and valuable, the overall examination of the five criteria’s can be used.
The market segments can be targeted in five different ways:
Single-segment concentration
- Concentrated marketing where the company can gain thorough understanding of the chosen segment’s need. The company will have a high return on invest because of the low costs involved. The downside of this concentration is the risk of relying on single segment if buying patterns change.
Selective specialization
- The company selects a number of segments that are attractive and appropriate. This strategy has the advantage of diversifying the firm’s risk.
Product specialization
55Kotler, Keller and Lu (2009:195)
56 Kotler, Keller and Lu (2009:205)
57 Kotler, Keller and Lu (2009:172)
58 Kotler, Keller and Lu (2009:206)
- This approach is to specialize in selling a product to several segments. A firm can manage to build a strong reputation in the specific product area. The risk involved will be that the product may be supplanted by a new and better technology.
Market specialization
- Concentrates on providing many needs of one specific group. This in turn gives the firm a strong reputation in serving this group and becomes a channel for further products that can be needed.
Full market coverage
- The idea is to serve all customers with all the products that might be needed. The company tries to implement full market coverage, either through differentiated or undifferentiated marketing.
Positioning
“Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market”59
Positioning can be implemented and developed from three factors: segmentation, core strategy and differentiation.60
4.2.2 Relationship Marketing
The aim is to give an examination on how the marketing strategy can be utilized through organization structure. The challenges for making a good marketing plan is to decide what organization strategy to use, and how to evaluate the benefits from using either transactional or relationship marketing. DNVHC has to take the disadvantages into consideration and bear this in mind when operating in the Chinese healthcare market.
The authors want to analyze the different marketing terms based on DNVHC’s targeting groups, dig deeper into the terms of relationship marketing and
transactional marketing. This is considered to be an important part for DNVHC in
59Kotler, Keller and Lu (2009:218)
60 Biong and Nes (2003:89-90)
order to minimize the costs and improve the financial results.61 Barbara Jackson B. defines two types of customers; Always-a-share and Lost-for-good
customers.62
Always-a-share customers tend to buy standardized products or services with little or no adaptation. The competition is much fiercer within this group due to low specific investment. Lost-for-good customers focus on more customized products or services. The second types of customers are hard to win back once they are gone.
Transactional marketing
Transactional marketing is about delivering the rational, or functional, basic table-stakes components of value delivery.63 The parties involved are not committed to anything more than the transaction itself, and tend to be short-term related. The use of this market strategy is also based on the theory that competition and self-interest are the driving forces for buyers’ evaluation of product value.64
Relationship marketing
The purpose of cooperation is to create added value to both parties. DNVHC needs to use relationship marketing for customers that define the service product as highly customized with high involvement and investment, as well as having long-term interests. This target group is relatively more loyal than the
transactional group, and it is more difficult for other competitors to attract the
61Biong and Nes (2003:132)
62Biong and Nes (2003:133)
63 http://searchcrm.techtarget.com/answer/Relationship-marketing-vs-transactional-marketing-for-building-customer-loyalty
Figure 10: Marketing Mix
same customers. The core activities will also be measured through relationship and cooperation, where the customer can be linked towards DNVHC.65 Good relationship marketing emphasizes the importance of service quality to be consistent over time, by using the right activities.
The downside of relationship marketing can be the lack of credibility and value for having a relationship.66 Opportunistic behavior can also occur when the parties are holding back vital information or when the incentives of having a relationship are not being fully presented in the beginning.
4.2.3 Niche Marketing
“A niche is a more narrowly defined customer group seeking a distinctive mix of benefits.”67 In order to identify a niche segment, a marketer should divide a segment into sub segments. This means distinguishing a part of a segment that share a distinctive set of needs. For DNVHC this can mean choosing to target their accreditation or consulting services towards a specific sub segment of the healthcare market.
4.2.4. Marketing Mix
The authors have used Marketing mix, to define what part of the marketing tools that will be most important for DNVHC to focus on, in order to successfully market their service
68
64Biong and Nes (2003:133)
65Biong and Nes (2003:134-137)
66Biong and Nes (2003:145-149)
67Kotler, Keller and Lu (2009:193)
68http://www.ethno2b.com/four_principles_of_the_mark.gif
“The four Ps represent the seller’s view of the marketing tools available for influencing buyers.”69
Product: Product variety, quality, brand name, services.
Price: Payment period, discounts, credit terms.
Promotion: Sales promotion, advertising, public relations, direct marketing, personal sale.
Place: Locations, assortments, channels.
Regarding service marketing three additional Ps are implemented, people, process and physical evidence. These, together with the traditional marketing mix create the service marketing mix.70