Marketing Strategy - Microsoft

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A critical evaluation of the segmentation, targeting and positioning strategies of Microsoft, as well as an analysis of their strategic position and future market potential and opportunities.

Michael Borrelli
Rebecca Herd
James Hobson
Oliver West
David Williams

Contents

1. Executive Summary

2. Introduction

3. Microsoft’s Windows & Windows Live Division, Server and Tools, Online Services Division

4. Microsoft’s Business Division (MBD)

5. Microsoft’s Entertainment and Devices Division (MED)

6. Conclusion
* 6.1 Strategic Recommendations

7. References

8. Appendices

1. Executive Summary

2. Introduction

Microsoft is an American company, founded in 1975 by Bill Gates and Paul Allen. Microsoft develops and manufactures a wide selection of products primarily within the computing industry through its three Business Units. It is these three Units which we shall be focusing on in this report.

In order to undertake an effective strategic analysis of Microsoft, it is essential that we apply the STP Process to each Business Unit. An STP Process highlights the importance of three key organizational activities – segmentation, targeting and positioning, and ‘enhances a company’s competitive position by providing direction and focus for marketing strategies’. (Baines, Fill & Page, 2010). We will also be conducting an analysis of Microsoft’s strategic position, as well as any future opportunities and threats that could potentially arise.

3. Microsoft’s Windows & Windows Live Division, Server and Tools, Online Services Division

4. Microsoft Business Division

Microsoft’s Business Division (MBD) develops software and online services aimed at increasing efficiency and productivity through programs designed for individuals and businesses. (Microsoft1, 2011). There are two components of MBD - Dynamics Business Solutions and Office System.

4.1 Segmentation

Microsoft uses psychographics to segment its customer base, splitting customers into two categories - Influential End Users (IEUs) and General Business Users (GBUs).

Characteristics of an IEU:

* Technology enthusiast
* Purchases software for own use
* Gives more advice than they receive

Characteristics of a GBU:

* Small, mid-size, large or global enterprises
* Possess applicable software
(Calliflower, 2011).

.

4.2 Targeting

MBD uses a differentiated targeting approach, which involves targeting different products at different market segments. Although this approach exploits Microsoft’s opportunities, they may suffer a loss of economies of sales caused by the resources required to reach the needs of several segments. (Baines et al, 2010).

MBD offers:
* 4 Office packages for IEUs
* 2 Office packages for GBUs
* 4 Dynamics packages for GBUs

(Appendix 3) shows an extended table of Office and Dynamics software and their targeted segments.

Microsoft adopts a ‘viral marketing model’ whereby they focus marketing efforts on key segment ‘influencers’, (user groups and industry publications), and through this, word of mouth enables mass demand. (Calliflower, 2011).

4.3 Positioning

Microsoft positions its software at premium prices to denote quality. Office and Dynamics software is frequently re-launched as an upgraded product to keep up with changes in technology and consumer needs. (OpenOffice, 2011). This is a crucial part of MBD maintaining its competitive advantage and market share. Microsoft has stated that their ‘products compete effectively based on our strategy of providing flexible, easy to use solutions that work well with technologies our customers already have’. (Microsoft1, 2011).

4.3.1 Microsoft Office Positioning Map

Google
Oracle
Microsoft Office
High Price
Low Price
Limited Packages
Diversity of Packages
Corel

Strategic Group

Strategic Group

4.3.2 Microsoft Dynamics Positioning Map

Google...
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