The Figure below shows the major activities in managing marketing strategy and the marketing mix.

 

Consumers are in the center. Profitable customer relationships are the goal.

Marketing strategy is next—this is the broad logic under which the company attempts to develop profitable relationships.

Guided by the strategy, the company develops its marketing mix—product, price, place, and promotion.

Customer-Driven Marketing Strategy

Marketing requires a deep understanding of customers.

There are many different kinds of consumers, and they exhibit many different kinds of needs.

Companies cannot profitably serve them all.

Companies must divide up the total market, choose the best segments, and design strategies for profitably serving chosen segments.

This process involves market segmentation, market targeting, differentiation, and positioning.

 

Market Segmentation

Market segmentation is the process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate products or marketing programs.

Every market has segments, but not all ways of segmenting a market are equally useful.

A market segment consists of consumers who respond in a similar way to a given set of marketing efforts.

 

Market Targeting

Market targeting involves evaluating each market segment’s attractiveness and selecting one or more segments to enter.

A company with limited resources might serve only a few “market niches.”

Market niches are segments that major competitors overlook or ignore.

Most companies enter a new market by serving a single segment. If this proves successful, they add segments.

Market Differentiation and Positioning

Product position is the place the product occupies relative to competitors in consumers’ minds.

Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

Positioning begins with differentiation—differentiating the company’s market offering so that it gives consumers more value.

 

Developing an Integrated Marketing Mix

The marketing mix is the set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.

The marketing mix consists of the “four Ps”: product, price, place, and promotion. (Figure below)

· Product: the goods-and-services combination the company offers to the target market.

· Price: the amount of money customers have to pay to obtain the product.

· Place: the company activities that make the product available to target consumers.

· Promotion: the activities that communicate the merits of the product.

 

From the buyer’s viewpoint, the four Ps might be better described as the four Cs:

· Product = Customer solution

· Price = Customer cost

· Place = Convenience

· Promotion = Communication

If you want to know more about the "4 principles of marketing strategy", you can find more in the following video.