PPT5- Segmentation Targeting & Positioning

Market Segmentation,

Targeting, and

Positioning

To accompany A Framework for Marketing Management, 2nd Edition

Slide 2 in

Chapter 9

OBJECTIVES

Learn how companies identify the segments that make up a market.

Understand the criteria companies use to choose the most attractive market segments.

ROAD MAP: PREVIEWING THE CONCEPTS

Define the three steps of target marketing: market segmentation, market targeting, and market positioning.

List and discuss the major bases for segmenting consumer and business markets.

Explain how companies identify attractive market segments and choose a target marketing strategy.

Discuss how companies position their products for maximum competitive advantage in the marketplace.

6 - 3

LESSON OUTCOMES

When you have completed this lesson you will be able to; Summarise the relationship between market

segmentation, targeting and positioning

Identify and describe the major variables for consumer

segmentation

Outline how companies select target markets and

implement segmentation strategies

Show how market segmentation and the marketing mix

are interlinked in the positioning strategy


Slide 5 in

Chapter 9

TARGET MARKETING

Target marketing requires marketers to take three major steps: Step 1 Market Segmentation:

Identifying and profiling distinct groups of buyers who differ in their needs and preferences.

Step 2 Market Targeting: Selecting one or more market segments to enter.

Step 3 Market Positioning: Establishing and communicating the key distinctive benefit(s) of the company’s market offering to each target.

THE STP PROCESS

Segmentation is the process of classifying

customers into groups which share some common

characteristic

Targeting involves the process of evaluating each

segments attractiveness and selecting one or

more segments to enter

Positioning is arranging for a product to occupy a

clear, distinctive and desirable place relative to

competing products in the mind of the consumer

SEGMENTATION, TARGETING, AND POSITIONING

©Copyright 2004, Pearson Education Canada Inc.7-7

Develop profiles ofresulting segments

MarketSegmentation

Develop measures ofsegment attractiveness

Select thetarget segment(s)

Develop positioningfor each segment

Develop marketing mixfor each segment

Identify bases forsegmenting market

Markettargeting

Marketpositioning

Figure 7-1

Step 1Market

Segmentation

The process of dividing a potential market into distinct

subsets of consumers and selecting one or more segments as a target market to be

reached with a distinct marketing

mix.

SEGMENTATION STUDIES

Designed to discover the needs and wants of specific groups of consumers in order to develop specialized products to satisfy specific group needs

Designed to guide the repositioning of a product

Used to identify the most appropriate media for advertising

ADVANTAGES OF SEGMENTATION (PP 164 - 165)

The process of breaking up a homogeneous market into heterogeneous segments forces the marketer to analyse and consider both the needs of the market and the company’s ability to competently serve those needs – thereby making the company better informed about its customers

Competitor offerings and marketing positioning must also be analysed in this context so the company must consider what its competitive advantages and disadvantages are, helping it to clarify its own positioning strategy

Limited resources are used to best advantage, targeted at those segments that offer the best potential


Slide 11 in

Chapter 9

USING MARKET SEGMENTATION

Mass marketing is losing popularity Micromarketing can be undertaken at

four levels: Segment marketing Niche marketing Local marketing Individual marketing


Slide 12 in

Chapter 9


Three patterns of preference segments are typically identified: Homogeneous preferences Diffused preferences Clustered preferences


Slide 13 in

Chapter 9


Needs-based segmentation

Segment identification

Segment attractiveness

Segment profitability

Segment positioning

Segment “acid test”

Marketing-mix strategy

Needs-based Segmentation Process

“BEST” CUSTOMER SEGMENTATION

High

Low

Consumption

High Current Share Low

Lo Lows

Hi Highs Low Highs

Hi Lows

• Size, purchasing power, profiles of segments can be measured.

• Segments can be effectively reached and served.

• Segments are large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

ActionableActionable

• Segments must respond differently to different marketing mix elements & programs.

• Effective programs can be designed to attract and serve

the segments.

Requirements for Effective Segmentation

EFFECTIVENESS OF SEGMENTATION

To be useful, market segments must be: Measurable Accessible Substantial Differentiable Actionable

Segments should be evaluated for: Size Growth characteristics Structural attractiveness Compatibility with company objectives and

resources


EVALUATING MARKET SEGMENTS

Segment Size and Growth Analyze current segment sales, growth

rates, and expected profitability. Segment Structural Attractiveness

Consider effects of: competitors, existence of substitute products, and the power of buyers & suppliers.

Company Objectives and Resources Examine company skills & resources

needed to succeed in that segment. Offer superior value & gain advantages

over competitors.

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STEPS IN SEGMENTATION, TARGETING, AND POSITIONING

1. Identify Basesfor Segmenting the Market

2. Develop Profilesof Resulting Segments

3. Develop Selection Criteria

4. Select TargetSegment(s)

5. Develop Positioningfor Each Target Segment

6. Develop MarketingMix for Each Target Segment Market

Positioning

MarketTargeting

Market Segmentation

SELECTING MARKET SEGMENTS


CompanyMarketing Mix

Market

Undifferentiated marketing

CompanyMarketing Mix 1



Segment 1

Segment 2

Segment 3

Differentiated marketing

CompanyMarketing Mix

Segment 1Segment 2Segment 3

Concentrated marketing

Figure 7-3

LEVELS OF MARKET SEGMENTATION

Mass MarketingSame product to all consumers

(no segmentation)

Mass MarketingSame product to all consumers

(no segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

MicromarketingProducts to suit the tastes of individuals and locations

(complete segmentation)

MicromarketingProducts to suit the tastes of individuals and locations

(complete segmentation)

Niche MarketingDifferent products to subgroups within segments

(more segmentation)

Niche MarketingDifferent products to subgroups within segments

(more segmentation)

Local Marketing

Tailoring brands/ promotions to local customer groups

Individual Marketing

Tailoring products/ programs to individual customers

LEVELS OF MARKET SEGMENTATION


Mass marketing

Segment marketing

Niche marketing

Micromarketing

Figure 7-2

MICRO MARKETING

Tailoring products and marketing programs to suit the tastes of specific individuals and locations.

Local Marketing: Tailoring brands and promotions to the needs and wants of local customer groups—cities, neighborhoods, specific stores.

Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers.

6 - 22

BASES FOR CONSUMER MARKETS SEGMENTATION

Geographic

DemographicAge, gender, family size and life cycle, or income

PsychographicSocial class, lifestyle, or personality

BehaviouralOccasions, benefits sought, user status, usage rate, loyalty

Nations, states, regions or cities

BASES FOR SEGMENTING BUSINESS MARKETS

Basesfor Segmenting

BusinessMarkets

Basesfor Segmenting

BusinessMarkets

DemographicsPersonalCharacteristics

SituationalFactors

OperatingCharacteristics

PurchasingApproaches

ALL BASES FOR SEGMENTATION

Geographic Segmentation Demographic Segmentation Psychological Segmentation Psychographic Segmentation Socio-cultural Segmentation Use-Related Segmentation Usage-Situation Segmentation Benefit Segmentation Hybrid Segmentation Approaches

Table 3.2 Market Segmentation

Occupation

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLESGeographic Segmentation :

Climate

Density of area

City Size

Region Southwest, Mountain States, Alaska, Hawaii

Major metropolitan areas, small cities, towns

Urban, suburban, exurban, rural

Temperate, hot, humid, rainy

Demographic Segmentation

Income

Marital statusSexAge Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99,

100+Male, femaleSingle, married, divorced, living together, widowed

Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over

Education Some high school, high school graduate, some college, college graduate, postgraduate

Professional, blue-collar, white-collar, agricultural, military

Table 3.2, continuedSEGMENTATION BASE SELECTED SEGMENTATION VARIABLESPsychological Segmentation

Learning-involvement

Perception

Personality

Needs-motivation Shelter, safety, security, affection, sense of self-worth

Extroverts, novelty seeker, aggressives, low dogmatics

Low-risk, moderate-risk, high-risk

Low-involvement, high-involvement

Psychographic

Subcultures (Race/ethnic)

Religion

Cultures

(Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers

American, Italian, Chinese, Mexican, French, Pakistani

Catholic, Protestant, Jewish, Moslem, other

African-American, Caucasian, Asian, Hispanic

Family life cycle

Social class Lower, middle, upper

Bachelors, young married, full nesters, empty nesters

Attitudes Positive attitude, negative attitude

Socio-cultural Segmentation

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLESUse-Related Segmentation

Brand loyalty

Awareness status

Usage rate Heavy users, medium users, light users, non users

Unaware, aware, interested, enthusiastic

None, some, strong

Use-Situation Segmentation

Location

Objective & Occasion

Time & Urgency Leisure, work, rush, morning, night

Personal, gift, snack, fun, achievement

Home, work, friend’s home, in-store

Person Self, family members, friends, boss, peers

Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money

Geo-demographics “Money and Brains,” “Black Enterprise,” “Old Yankee Rows,” “Downtown Dixie-Style”

Demographic/Psychographics

Combination of demographic and psychographic profiles of consumer segments profiles

SRI VALSTM Actualizer, fulfilled, believer, achiever, striver, experiencer, maker, struggler

Hybrid Segmentation

Geographic Segmentation

The division of a total potential market into smaller subgroups on

the basis of geographic variables

MARKET SEGMENTATION

Geographic: World region or country Region of country City or metro size Density or climate

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MARKET SEGMENTATION

Demographic: Age, gender, family size, income,

occupation, etc. The most popular bases for segmenting

customer groups. Easier to measure than most other types

of variables.

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DEMOGRAPHIC SEGMENTATION

Age Sex Income, Education, and Occupation

MARKET SEGMENTATION

Age and Life-Cycle Stage Example: P&G has different

toothpastes for different age groups.

Avoid stereotypes in promotions Promote positive messages

6 - 33

AGE: SEGMENTATION BY AGE EFFECTS AND COHORT EFFECTS

Seven Life Development Stages Provisional Adulthood

Pulling up roots First Adulthood

Reaching out, Questions/questions, Mid-life explosion

Second Adulthood Settling Down, Mellowing, Retirement

InfantThe infant stage corresponds to the first four years of your life. ChildhoodThe childhood stage of your life cycle, defined as ages 4 through 13, During this time, you develop your personal intelligence and character.TeenagerPtolemy defined the third cycle of life as the teenage years and early adulthood. This cycle encompasses ages 14 through 22 and often times this stage of life is associated with impulsive activity towards love, lust and expression.Young AdultThe age of 23 begins the young adult cycle of life. During this stage, many are inclined to act in a more mature manner and make decisions that are formed more on logic than impulse.AdulthoodWhen you reach the fifth decade of your life, you have reached what Ptolemy believed was the mature adulthood stage. Ptolemy believed that at this stage, people are prone to feel as though their life has passed them by. RetirementOnce you reach the age of 55, you are able to develop a sense of wisdom and perspective, move away from manual labor and into a life of more leisure.Elderlyrepresents the last stage of life, which begins at age 67. This stage finds people cooling their pace of life, their desires and need for adventure. This stage of the life cycle goes until you reach the end of your existence.

Read more: http://www.livestrong.com/article/123444-stages-human-life-cycle/#ixzz1z2BonmIx

AGE: SEGMENTATION BY AGE EFFECTS AND COHORT EFFECTS

http://www.livestrong.com/article/123444-stages-human-life-cycle/

http://www.livestrong.com/article/123444-stages-human-life-cycle/

MARKET SEGMENTATION

Gender Women make 90% of home

improvement decisions. Women influence 80% of all

household consumer purchases.

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MARKET SEGMENTATION

Income Identifies and targets the affluent

for luxury goods. People with low annual incomes

can be a lucrative market. Some manufacturers have different

grades of products for different markets.

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MARITAL STATUS

Households as a consuming unit Singles Divorced Single parents Dual-income married

SOCIO-CULTURAL SEGMENTATION

Family Life Cycle Social Class Culture, Subculture, and Cross-

Culture

FAMILY LIFE CYCLE

Phases a family goes through in their formation, growth, and final dissolution Bachelorhood Honeymooners Parenthood Post-parenthood Dissolution

Explicit basis: marital status, family status

Implicit basis:

MARKET SEGMENTATION

Behavioral User Status: Nonusers, ex-users,

potential users, first-time users, regular users

Usage Rate: Light, medium, heavy Loyalty Status: Brands, stores,

companies

6 - 42

MARKET SEGMENTATION

Behavioral Occasions:

Special promotions and labels for holidays. (e.g., Hershey Kisses)

Special products for special occasions. (e.g., Kodak disposable cameras)

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MARKET SEGMENTATION

Behavioral Benefits Sought:

Different segments desire different benefits from products. (e.g., P&G’s multiple brands of laundry

detergents to satisfy different needs in the product category)

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USE-RELATED SEGMENTATION

Rate of Usage Heavy vs. Light

Awareness Status Aware vs. Unaware

Brand Loyalty Brand Loyal vs. Brand Switchers

USAGE-SITUATION SEGMENTATION

Segmenting on the basis of special occasions or situations

Example Statements: Whenever our daughter, Jamie, gets a

raise, we always take her out to dinner.

BENEFIT SEGMENTATION

Segmenting on the basis of the most important and meaningful benefit

FAB OR BAF approaches can be used to sell products here

HYBRID SEGMENTATION APPROACHES

Psychographic-Demographic Profiles

Geodemographic Segmentation SRI Consulting’s Values and

Lifestyle System (VALSTM)

MARKET SEGMENTATION BASES AND SELECTED VARIABLES

SEGMENTATION BASE

PSYCHOLOGICAL /PSYCHOGRAPHIC SEGMENTATION

Needs-MotivationPersonalityPerceptionLearning-InvolvementAttitudesPsychographic(Lifestyle)

SELECTED SEGMENTATION VARIABLES

Shelter, safety, security, affection, sense of

self worthExtroverts, introverts, aggressive, complaintsLow risk, moderate risk, high riskLow involvement, high involvementPositive attitude, negative attitudeSwingers, straights, conservatives,

status seekersLife style

- Trendsetter, Traditionalist, Chameleon, Destitute, Aspirants, Climber, Consuming class- Capable, Career Free, Very home maker woman, spirit rich

PSYCHOLOGICAL SEGMENTATION

Motivations Personality Perceptions Learning Attitudes

AIOs

Psychographic variables that focus

on activities, interests, and

opinions.

STRUGGLERS

FULFILLEDS

BELIEVERS

ACHIEVERS EXPERIENCERS

STRIVERS MAKERS

Low Resources

High Resources

Action OrientedStatus OrientedPrinciple Oriented

ACTUALIZERS

FIGURE 3.8 VALS

Figure 3.9 VALS 2 Segments and Participation in Selected Sports

Percent of adults in each VALS 2 type who participated in selected sports in 1995.

0 2 4 6 8 10 12 14

Strugglers

Believers

Strivers

Fulfilleds

Makers

Achievers

Experiencers

Actualizers

Mountain/rock climbing Jet skiing/wave running/water biking Inline skating

Table 3.11 Size of VALS Segment as Percent of U.S. Population

VALSTM SEGMENTPERCENT OF POPULATION

Actualizer10.511.7%

StrugglerMakerExperiencerStriverAchieverBelieverFulfilled

9.512.012.911.814.717.0

MIND BASE SEGMENTATION

Monitor Mindbase based on Yankelovich’s Monitor Survey of American Values and Attitudes

Table 3.12

EIGHT MAJOR MIND-BASE SEGMENTS

Up and Comers

Young Materialists

Stressed by Life

New Traditionalists

Family Limited Detached

Introverts Renaissance

Elders Retired from

Life

SEGMENTING BUSINESS MARKETS

Segmentation by customer size or geographic location

Four segments of business customers

Programmed buyers

Relationship buyers

Transaction buyers

Bargain hunters

BASES FOR SEGMENTING BUSINESS MARKETS

Basesfor Segmenting

BusinessMarkets

Basesfor Segmenting

BusinessMarkets

DemographicsPersonalCharacteristics

SituationalFactors

OperatingCharacteristics

PurchasingApproaches


Slide 59 in

Chapter 9

SEGMENTING BUSINESS MARKETS

Rackman and Vincentis proposed a segmentation scheme that classifies business buyers into three groups:

Price-oriented customers: best served via transactional selling

Solution-oriented customers: best served by means of consultative selling

Strategic-value customers: best served by means of enterprise selling

BASES FOR SEGMENTING INTERNATIONAL MARKETS

Political/Legal

Political/Legal

Cultural Cultural IntermarketIntermarket

Economic EconomicGeographicGeographic

Industrial MarketsIndustrial Markets

Linking the ConceptsLinking the Concepts

• Using the segmentation bases you’ve just

heard about, segment the Sharda University

Students

• Describe each of the major segments and sub

segments.

Step 2Market

Targetting

Evaluating and selecting market

segments requires assessing the

segment’s overall attractiveness in

light of company’s objectives and

resources

TARGET MARKET

A market is a set of all actual and potential

buyers

A target market is a group of people toward

whom a firm markets its goods, services, or

ideas with a strategy designed to satisfy their

specific needs and preferences.

Any marketing strategy must include a

detailed (specific) description of this.

STEP 2. MARKET TARGETINGEVALUATING MARKET SEGMENTS (DEVELOPING SELECTION CRITERIA)

Segment Size and Growth Analyze sales, growth rates and expected profitability

for various segments.

Segment Structural Attractiveness Consider effects of: Competitors, Availability of

Substitute Products and, the Power of Buyers & Suppliers.

Company Objectives and Resources Company skills & resources relative to the segment(s). Look for Competitive Advantages.


Slide 65 in

Chapter 9

MARKET TARGETING STRATEGIES

Single-segment concentration

Selective specialization

Product specialization

Market specialization

Patterns of Target Market Selection

Full market coverage

Five patterns of target market selection

Step 2. Market TargetingMarket Coverage StrategiesStep 2. Market TargetingMarket Coverage Strategies

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix







MarketMarket

A. Undifferentiated Marketing

B. Differentiated Marketing

C. Concentrated Marketing

CHOOSING A TARGET MARKET COVERAGE STRATEGY

Factors to Consider Company resources Product variability Product’s life-cycle stage Market variability Competitors’ marketing strategies

6 - 67

STEP 2. MARKET TARGETINGCHOOSING A MARKET-COVERAGE STRATEGY

Company Resources

ProductVariability

Product’s Life-Cycle Stage

Market Variability

Competitors’Marketing Strategies

CRITERIA FOR EFFECTIVE TARGETING OF MARKET SEGMENTS

Identification Sufficiency Stability Accessibility

SOCIALLY RESPONSIBLE MARKETING

Smart targeting helps both companies and consumers.

Target marketing sometimes generates controversy and concern.

Vulnerable and disadvantaged can be targeted.

Cereal, cigarette, beer, and fast-food marketers have received criticism.

Internet has raised fresh concerns about potential targeting abuses.

6 - 70

Linking the ConceptsLinking the Concepts

1. Pick two companies that serve Noida market and describe their segmentation and targeting strategies.

2. Can you come up with one that targets many different segments versus another that focuses on only one or a few segments?

3. How does each company you choose differentiate its marketing offer and image?

4. How has each done a good job of establishing this differentiation in the minds of targeted consumers?

Positioning is the result of differentiation decisions. It is the act of designing the company's offering and identity (that will create a planned image) so that they occupy a meaningful and distinct competitive position in the target customer's minds.

The end result of positioning is the creation of a market-focused value proposition, a simple clear statement of why the target market should buy the product.

Step 3Differentiation & Positioning

For Competitive Advantage

Differentiation. Differentiation refers to how the marketer tries to distinguish her or his offer in the marketplace -- how it is set off from the competition in hopefully meaningful ways.

Positioning. Positioning refers to how customers think about proposed and/or present brands in a market. Marketing managers must always remember that it is the customer’s perception of where a product or brand is in relation to the other choices that is important.

Step 3 Positioning & Competitive Advantage

IDENTIFYING POSSIBLE COMPETITIVE ADVANTAGES

Key to winning target customers is to understand their needs better than competitors do and to deliver more value.

Competitive advantage – extent to which a company can position itself as providing superior value.

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MANY MARKETERS ADVOCATE PROMOTING ONLY ONE BENEFIT IN THE MARKET

(YOUR MARKET OFFERING MAY HAVE MANY DIFFERENTIATORS, ACTUALLY SHOULD HAVE MANY DIFFERENTIATORS IN PRODUCT, SERVICE, PERSONNEL, CHANNEL, AND IMAGE).

KOTLER MENTIONS THAT DOUBLE BENEFIT PROMOTION MAY BE NECESSARY, IF SOME MORE FIRMS CLAIM TO BE BEST ON THE SAME ATTRIBUTE.

KOTLER GIVES THE EXAMPLE OF VOLVO, WHICH SAYS AND "SAFEST" AND "DURABLE". ( CAN YOU SUGGEST SOME IN INDIAN CONTEXT?)

How many differences to promote?

NOTES:In a competitive business world, companies should constantly examine their products and services to better serve customers. What worked and yielded profits last year may not work as well this year. Product differentiation and positioning are key parts of a company's marketing strategy and are necessary to keep ahead of competition. They also require an innovative spirit coupled with careful analysis.Product DifferentiationProduct differentiation is the incorporation of attributes, such as quality or price, into a product to encourage the intended customers to perceive it as different and desirable. For example, if your company sells seat belts to automotive manufacturers, perhaps your unique value is never-fail, on-time delivery with no rejected belts. If other seat belt manufacturers are not meeting these desired goals, you will have a unique advantage against your competition, and will have differentiated your seat belts from those of your competitors.Product PositioningPositioning is how you provide your product or service brand identification as you go to market. It is the next step after you have determined how to differentiate your product or service. In the seat belt example, the seat belt manufacturer can market itself on the premise that it does not miss delivery times and that its products are free of flaws. The product is positioned against those of competitors on the basis of timely delivery and excellence in manufacturing. All of the seat belt manufacturer's major marketing efforts should emphasize this positioning in the marketplace.Positioning StatementA positioning statement is a short sentence or phrase that conveys the essence of the differentiation and positioning strategies and is developed after these have been set. This statement is used as a marketing tool by which to judge all marketing materials to see if they are in keeping with the strategies. A positioning statement for the seat belt manufacturer might be, "On-time delivery and flawless manufacturing." This statement can, though it does not have to, appear in all of the seat belt manufacturer's marketing materials. Rather, it is often used as a check to make sure all marketing materials produced convey the essence of how the product is differentiated and positioned against competitors.Relationships among the ThreeProduct differentiation, positioning and positioning statements go together one after the other. Once you have decided how best to differentiate your product based on customer needs and wants, the next step is to determine how to position it in the marketplace. The positioning statement then follows the positioning strategy.The Importance of ImaginationSuccessful differentiation and positioning strategies depend on an imaginative approach to the marketplace. For example, if you are a tennis racket manufacturer making high-performance rackets for the serious tennis player, you might consider opening up an entirely new market segment. This might be the creation of high-performance rackets for the average player, who can then benefit from the technology previously only offered to pros.

DEVELOPING COMPETITIVE DIFFERENTIATION

ProductProduct ServiceService

ImageImage PeoplePeople

Areas for CompetitiveDifferentiation

Areas for CompetitiveDifferentiation

IDENTIFYING POSSIBLE COMPETITIVE ADVANTAGES

Product Differentiation Services Differentiation Image Differentiation People Differentiation Channel Differentiation Price Differentiation

6 - 78

DIFFERENTIATION VARIABLES

PRODUCT SERVICES PERSONNEL CHANNEL IMAGE

FormFeaturesPerformanceConformanceDurabilityReliabilityRepairabilityStyleDesign

Ordering caseDeliveryInstallationCustomer trainingCustomer consultingMaintenance and repairMiscellaneous

CompetenceCourtesyCredibilityReliabilityResponsivenessCommunication

CoverageExpertiseperformance

SymbolsMediaAtmosphereEvents

PRODUCT DIFFERENTIATION

Differentiating a Product Features Quality: performance and conformance Performance - the performance of the prototype or

the exhibited sample, Conformance - The performance of every item made by the company under the same specification

Durability Reliability Repairability Style Design

SERVICES DIFFERENTIATION

Services differentiation……. Ordering ease Delivery Installation Customer training Customer consulting Miscellaneous services

IMAGE DIFFERENTIATION

First distinction between Identity and Image - Identity is designed by the company and through its various actions company tries to make it known to the market.

Image is the understanding and view of the market about the company.

An effective image does three things for a product or company.

1. It establishes the product's planned character and value proposition.

2. It distinguishes the product from competing products. 3. It delivers emotional power and stirs the hearts as well as

the minds of buyers. The identity of the company or product is communicated to

the market by Symbols Written and audiovisual media Atmosphere of the physical place with which customer comes

into contact Events organized or sponsored by the company.

PEOPLE DIFFERENTIATION

Personnel Differentiation Competence Courtesy Credibility Reliability Responsiveness Communication

CHANNEL DIFFERENTIATION

Channel differentiation for Distribution advantage

Coverage Expertise of the channel managers Performance of the channel in ease of

ordering, and service, and personnel Availability Responsiveness

POSSIBLE VALUE PROPOSITIONS


Morefor

more

Morefor thesame

Moreforless

The sameforless

Less formuchless

Figure 7-4

More LessThe same

More

The same

Less

Price

Benefits

PRICE DIFFERENTIATION

STEP 3. POSITIONING FOR COMPETITIVE ADVANTAGE

Product’s Position - the way the product is defined by consumers on important attributes - the place the product occupies in consumers’ minds relative to competing products.

Marketers must: Plan positions to give their products the

greatest advantage in selected target markets,

Design marketing mixes to create these planned positions.

What Position Do We Have Now?


Do We Have the Money To Do the

Job?


Job?

What Position Do We Want To

Own?


Own?

From Whom Must We Win This

Position?


Position?

Do We Have the Tenacity To Stay

With It?


With It?


With It?


With It?


Job?


Job?


Position?


Position?


Own?


Own?



Does Our Creative StrategyMatch It?

Does Our Creative StrategyMatch It?

STEP 3. DEVELOPING A POSITIONING STRATEGY

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

ThePosition

ThePosition

POSITIONING FOR COMPETITIVE ADVANTAGE

Product position: the way the product is defined by consumers on important attributes, relative to competing products

Three Important Steps: Identifying a set of possibly competitive

advantages upon which to build a position Choosing the right competitive advantages Selecting an overall positioning strategy


STEPS TO CHOOSING AND IMPLEMENTING A POSITIONING STRATEGY

Step A. Identifying Possible Competitive Advantages: Competitive Differentiation.

Step B. Selecting the Right Competitive Advantage: Unique Selling Proposition (USP).

Step C. Communicating and Delivering the Chosen Position.

Step D. Support the positioning strategy with a unique marketing mix

STEP A . POSITIONING FOR COMPETITIVE ADVANTAGE: STRATEGIES

Against aCompetitor

Against aCompetitor

UsageOccasions

UsageOccasions

Away fromCompetitors

Away fromCompetitors

ProductAttributes

ProductAttributes

ProductClass

ProductClass

BenefitsOffered

BenefitsOffered

User ClassUser Class

BB

AA

EEDD

CCHHGG

FF

By Attributes and Benefits?By Attributes and Benefits?

By Price or Quality?By Price or Quality?

By Use or Application?By Use or Application?

By Product Class?By Product Class?

By Product User?By Product User?

By Competitor?By Competitor?

By Cultural Symbols?By Cultural Symbols?

By Attributes and Benefits?By Attributes and Benefits?

By Price or Quality?By Price or Quality?

By Use or Application?By Use or Application?

By Product Class?By Product Class?

By Product User?By Product User?

By Competitor?By Competitor?

STEP B.POSITIONING STRATEGIES

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

How shouldwe position?

TYPES OF POSITIONING

• ATTRIBUTE POSITIONING: A company positions itself on an attribute, such as size or number of years in existence. Disneyland can advertise itself as the largest theme park in the world. The message highlights one or two of the attributes of the product.

BENEFIT POSITIONING: The product is positioned as the leader in a certain benefit. Knott’s berry farm may try to position itself as a theme park that delivers a Fantasy experience, such as living in the old west. The message highlights one or two of the benefits to the customer.

USE OR APPLICATION POSITIONING: Positioning the product as best for some use or application. Japanese deer Park can position itself for the tourist who has only an hour to catch some quick entertainment. Claim the product as best for some application.

USER POSITIONING: Positioning the product as best for some user group. Magic mountain can advertise itself as best for “thrill seekers.”

Claim the product as best for a group of users. - Children, women, working women etc. COMPETITOR POSITIONING: The product claims to be better in

some way than a named competitor. For example, Lion country safari can advertise having a greater variety of animals than Japanese deer park. Claim that the product is better than a competitor.

PRODUCT CATEGORY POSITIONING: The product is positioned as the leader in a certain product category. Marine- Land of the pacific can position itself not as a “recreational theme park” but as an “educational institution.” Claim as the best in a product category Ex: Mutual fund ranks – Lipper.

QUALITY OR PRICE POSITIONING: The product is positioned as offering the best value. Busch gardens can position itself as offering the “best value” for the money. Claim best value for price.

TYPES OF POSITIONING

A number of positioning strategies might be used by marketers. These include positioning on the basis of the following: Attributes/Benefits – setting the brand apart from

competition using specific characteristics or benefits offered. Marketers attempt to identify salient benefits which are those that are important to customers in their purchase decisions

Price/Quality – using price as characteristic of the brand. High quality/image pricing can be used as well as value pricing which reflects a very competitive price.

Use/Application – associate the brand with a specific use. This approach can also be effective way to expand usage of a product.

Product Class – competition can come from outside the product class whereby a product is positioned against another product category

Product User – associating a brand with a type of person or group that uses a product or service.

Competitor – positioning a company or brand against a competitor. Often another form of positioning is used as well to differentiate the brand.

Cultural Symbols – use symbols that have acquired cultural meaning and associating a brand with these symbols to differentiate it from competitors (e.g. Marlboro and the cowboy)

STEP C. SELECTING THE RIGHT COMPETITIVE ADVANTAGES

Criteriafor

DeterminingWhich

Differencesto

Promote

Criteriafor

DeterminingWhich

Differencesto

PromoteAffordableAffordable SuperiorSuperior

ProfitableProfitable

PreemptivePreemptive

DistinctiveDistinctive

ImportantImportant

CommunicableCommunicable

CHOOSING RIGHT COMPETITIVE ADVANTAGES

Important Distinctive Superior Communicable Preemptive Affordable Profitable

6 - 96

STEP D COMMUNICATING AND DELIVERING THE CHOSEN POSITION

Company must take strong steps to deliver and communicate the desired position to target consumers.

The marketing mix efforts must support the positioning strategy.

Must monitor and adapt the position over time to match changes in consumer needs and competitors’ strategies.

6 - 97

STEP D. SUPPORTING THE POSITIONING STRATEGY

At this stage the company has

decided on its positioning strategy

and must now design a marketing

mix to support this strategy.

POSITIONING ERRORS

Under positioning: Failing to really position the company at

all. Over positioning:

Giving buyers too narrow a picture of the company.

Confused Positioning: Leaving buyers with a confused image of

a company. Doubtful Positioning

4. Buyers may find it hard to believe the brand claims

6 - 99

1. UNDERPOSITIONING: SOME COMPANIES DISCOVERTHAT BUYERS HAVE ONLY A VAGUE IDEA OF THEBRAND. THE BRAND IS SEEN AS JUST ANOTHER ENTRY IN A CROWDED MARKETPLACE. WHENPEPSI INTRODUCED ITS CLEAR CRYSTAL PEPSI IN 1993, CUSTOMERS WERE DISTINCTLY UNIMPRESSED.THEY DIDN’T SEE “CLARITY” AS AN IMPORTANT BENEFIT IN A SOFT DRINK.

2. OVERPOSITIONING: BUYERS MAY HAVE TOO NARROWAN IMAGE OF THE BRAND. THUS A CONSUMERMIGHT THINK THAT DIAMOND RINGS AT TIFFANYSTART AT$5000 WHEN IN FACT TIFFANY NOW OFFERSAFFORDABLE DIAMOND RINGS STARTING AT $1000.

3. CONFUSED POSITIONING: BUYERS MIGHT HAVE A CONFUSEDIMAGE OF THE BRAND RESULTING FROM THE COMPANY’SMAKING TOO MANY CLAIMS OR CHANGING THE BRAND’SPOSITIONING TOO FREQUENTLY. THIS WAS THE CASE WITHSTEPHEN JOB’S SLEEK AND POWERFUL NEXT DESKTOPCOMPUTER, WHICH WAS POSITIONED FIRST FOR STUDENTS,THEN FOR ENGINEERS, AND THEN FOR BUSINESSPEOPLE, ALLUNSUCCESSFULLY.

4. DOUBTFUL POSITIONING: BUYERS MAY FIND IT HARD TO BELIEVE THE BRAND CLAIMS IN VIEW OF THE PRODUCT’SFEATURES, PRICE, OR MANUFACTURER. WHEN GM’S CADI-LLAC DIVISION INTRODUCED THE CIMARRON, IT POSITIONED THE CAR AS A LUXURY COMPETITOR WITH BMW, MERCEDESAND AUDI. ALTHOUGH THE CAR FEATURED LEATHER SEATS,A LUGGAGE RACK, LOTS OF CHROME, AND A CADILLAC LOGOSTAMPED ON THE CHASIS, CUSTOMERS SAW IT AS A DOLLED-UP VERSION OF CHEVY’S CAVALIER AND OLDMOBILE’SFIRENZA. THE CAR WAS POSITIONED AS “MORE FOR MORE”: CUSTOMERS SAW IT AS “LESS FOR MORE.”

POSITIONING /REPOSITIONING

.

....

. .. . ... ..

. POORCLEANSING POWER

GOOD

IMPACT ON FABRICS GENTLE

A

B

C

A’

FOR A DETEREGENT POWDER

HARSH

Exhibit 3-13-3

MARKETING STRATEGY PLANNING PROCESS

Customers

Company

Competitors

S.W.O.T.

Segmentation& Targeting

Differentiation& Positioning

Product Place

PromoPrice

Narrowing down to focused strategy with screening criteria

External Market Environment

TargetMarket

Reviewing the ConceptsReviewing the Concepts

• Define the three steps of target marketing: market segmentation, market targeting, and market positioning.

• List and discuss the major levels of market segmentation and bases for segmenting consumer and business markets.

• Explain how companies identify attractive market segments and choose a market coverage strategy.

• Discuss how companies position their products for maximum competitive advantage in the marketplace.

THE NEXT PART AFTER MID TERM OF THE COURSE LOOKS AT

‘DEVELOPING THE MARKETING MIX’ THE 4 PS

PPT5- Segmentation Targeting & Positioning

Documents

japanese deer

pearson education

seat belt

segmenting

maximum competitive

company marketing

business markets

marketing