UNIT III SEGMENTATION, TARGETING AND POSITIONING Part 1: Market Segmentation 1
CASE STUDY: PORSCHE
Porsche is a German automobile
manufacturer specializing in high-
performance sports cars, SUVs and sedans.
Porsche is a global market leader in the premium
segment of the automotive industry currently
the most profitable automotive brand in the world.
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PORSCHE’S BACKGROUND
The company was founded in 1931 by Professor
Ferdinand Porsche in Germany building motors,
designing vehicles, and consulting. Porsche designs,
manufactures, and markets sports cars, crossover
utility vehicles, and automobile parts worldwide.
Porsche also offers services through its operating
divisions and subsidiaries, including Porsche Design
Group, Porsche Engineering, and Porsche Consulting.
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TARGET MARKETING
Identifying and profiling different consumer groups with
differing wants and needs -market segmentation.
Choosing one or multiple segments to target-targeting.
Communicate and establish the unique product/service
offerings of the organization in the mind of the
consumer- positioning.
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CASE STUDY: PORSCHE
Porsche markets to an elite and upscale target
audience effectively using market segmentation,
market targeting, and positioning continuing to build
on its strong brand focused on products
exclusively in the premium (luxury) automotive
segment.
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“If markets are to be segmented
and cultivated, they must meet
certain requirements. Segments
must be Measurable,
Substantial, Accessible,
Differentiable, and Actionable.”
– Philip Kotler
CASE STUDY: PORSCHE
Automotive Industry Segmentation
The automotive industry segments consumers based on
demographic data, geographic information, and a
psychographic profile of consumer behaviors with
marketing messages targeted to these groups.
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CASE STUDY: PORSCHE
The product lineup for Porsche includes:
911 in the midsize premium sporty car segment.
718 Boxster in the compact premium sporty car segment.
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CASE STUDY: PORSCHE
718 Cayman in the premium sport coupe segment.
Cayenne in the midsize crossover utility vehicle
(CUV) segment.
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CASE STUDY: PORSCHE
Macan in the compact CUV segment.
918 Spyder in the open-top super sport car segment.
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CASE STUDY: PORSCHE
The price of a Porsche ranges from approximately
$50,000 to $8,45,000 with segmented price points based
on the model selected.
The basis of market segmentation for Porsche involves
dividing a market according to defined smaller easily
defined group of consumers with the same wants and
needs.
Porsche identifies segments to target using two
variables including, descriptive elements and behavioral
elements.
✓ Descriptive elements include demographic,
psychographic, and geographic.
✓ Behavioral elements include individual responses to
brands, usage, and benefits. 10
CASE STUDY: PORSCHE
Demographic Segmentation
❖ Demographic segmentation is based primarily on
income, age, gender, education, occupation, and social
class.
❖ The demographics of the Porsche owner, includes a
college graduate, household income over $100,000,
85% male, and 15% female.
❖ The typical Porsche owner is 40 years old and up with
Porsche targeting the 25-54 age demographic seeking
a slightly younger audience with the “Engineered for
magic, every day” campaign.
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CASE STUDY: PORSCHE
The age demographic rose from an average age of 48
in 2007 to an average age of 51 in 2012. Porsche’s
targeted marketing efforts focus on reducing the
average age of the Porsche owner and increasing the
number of female owners.
Porsche provides an example of an automotive icon
focusing on demographics using age and gender. The
“Engineered for magic, every day” campaign, in part,
targets women with an image of a mother in a
Porsche 911 in front of a school with the text reading
school bus.
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CASE STUDY: PORSCHE
Psychographic Segmentation
❖ Psychographic segmentation uses psychology to
increase understanding of consumers’ wants and
needs.
❖ Porsche uses a psychographic segmentation
approach dividing the segment based on behavioral
elements, such as psychology, lifestyle, personality
traits, and values to gain deeper insight of the
consumer.
❖ The same demographic can possess different
behavioral elements.
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CASE STUDY: PORSCHE
Psychographic profiling provides Porsche with the ability
to customize the messaging to target the specific
psychographic profiles developed by Porsche.
❖ The top gun profile consists of an ambitious and driven
individual who cares about power and control expecting
to be noticed.
❖ The elitist profile, includes an individual from old
money (blue blood), has the attitude a car is just a
vehicle and not an expression of a person’s personality.
❖ The proud patrons owner profile sees a Porsche as a
trophy considering it a reward for hard work with
ownership as the main goal not being noticed.14
CASE STUDY: PORSCHE
❖ The bon vivants profile consists of thrill seekers and
jet setters with the Porsche as a means of excitement.
❖ The fantasist profile sees the Porsche as a form of
escape and does not care about impressing others.
❖ Porsche has added another profile consisting of
individuals enjoying a sporty vehicle for daily use by
women and younger drivers with the latest marketing
campaign, “Engineered for magic, every day”.
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CASE STUDY: PORSCHE
Geographic Segmentation
❖ Porsche uses a traditional geographic segmentation approach grouping markets based on countries, continents, regions, states similar to other worldwide automotive brands. Porsche is a global brand with dealerships located on every continent in major cities.
❖ In the United States, dealerships are located in major cities with the manufacturer dividing the market into four regions (north, south, southwest, northwest).
❖ Porsche varies the product mix offered by dealerships within each region. As an example, the dealers in the warmer south and southwest regions offer a higher percentage of convertibles in the product mix versus the north and northwest regions in the United States with marketing following suit. 16
CASE STUDY: PORSCHE
Creating new Segments
❖ In 2003, Porsche launched the Cayenne creating the first
sports utility vehicle with luxury and high performance.
❖ Porsche’s introduction of the Cayenne created a new
market segment in an attempt to expand the brand. The
introduction of the Cayenne has resulted in a vehicle that
accounts for half of Porsche’s profits.
In 2009, Porsche launched the 2010 Panamera a four-
door sports coupe based on the market research
department identifying a need for a sporty four-door that
drives like a sports car. The Panamera is the first of its
kind creating a new segment of the four-door luxury
sports car.17
CASE STUDY: PORSCHE
Market Targeting
❖ It involves Porsche evaluating the viability of each market
segment and deciding which segment or segments to pursue
(target).
❖ Porsche uses a hybrid market targeting strategy focused on a
large share of the premium sport car and sport CUV segment
using a finely tuned marketing mix based on marketing
messages tailored to Porsche’s psychographic segmentation.
❖ The “Engineered for magic, every day” campaign uses a
niche concentrated marketing approach tailored to change
position slightly. Porsche is trying to change the perception
that a Porsche is an everyday vehicle appealing to a larger
audience to increase sales. Porsche targets consumers at
differing performance and price levels in the premium sport
car and CUV market segment. 18
CASE STUDY: PORSCHE
Positioning
❖ Porsche offers high-quality products for a premium
price with various price points for the products in their
lineup.
❖ The Porsche brand is a lifestyle brand because of its
legendary status and attributes associated with
their products.
Porsche achieves the ultimate goal of locating a brand in
the consumers’ mind differentiating it in terms of
attributes or benefits, quality, price, and use or user to
maximize the brand.
Porsche positions itself as a high priced, high quality,
exclusive sports car.19
CASE STUDY: PORSCHE
Attributes and Benefits
❖ Attributes The Porsche brand evokes primarily consists of exciting, sporty, beautifully designed, performance, and German engineering. Other attributes include quality, powerful, highly sophisticated, style, purity, very exclusive, exotic, racing heritage, and elegant.
The benefits associated with Porsche, include excitement, performance, achievement, success, status, and high income.
The Porsche product lineup offers products that are more fun to drive and faster than any competitor in the segment providing the latest technology with a historic culture making the brand impossible to imitate.
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CASE STUDY: PORSCHE
Repositioning the Brand
❖ In an effort to reposition the Porsche brand to expand
into different, but similar markets the company has
introduced the “Engineered for magic, every day”
campaign. The campaign primarily uses the 911 to
reposition the brand for everyday use.
❖ The essence of peak performance designed to excite
your everyday driving and lifestyle provides an
appropriate positioning statement considering the
repositioning of the brand.
❖ The slogan captures the essence of the Porsche brand
remaining consistent with its heritage and conveys the
revised position of the company.21
CASE STUDY: PORSCHE
The target market segment strategy of Porsche provides
an example of an iconic brand and its ability to reinvent
itself creating new markets extending the Porsche brand
in a meaningful manner while remaining true to its
heritage.
The Porsche strategy of targeting female consumers
to optimize the demographic profile by expanding
the product lineup and repositioning the brand as an
everyday vehicle has resulted in great success.
The repositioning of the brand has started to change
perceptions of Porsche as a weekend vehicle resulting in
additional sales. 22
SEGMENTATION
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Market Segmentation is the process of dividing the
total market into distinct groups each having its
unique needs and characteristics and requires a
separate marketing mix.
PROCESS OF SEGMENTATION
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1. Identify the total market (those who buy or are
induced to buy the product/service).
2. Divide the total market into major sub-market or
segments.
3. Estimate the sales potential and profit potential for
each sub-market.
4. Determine the unique characteristics &
requirements of each sub-market.
5. Select one or more segments on which the firm will
focus on serving.
IMPORTANCE OF SEGMENTATION
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1. Marketer can spot & compare marketing opportunities.
2. Marketer can better allocate marketing budget.
3. Marketer can modify product/services and marketing appeals to suit target segment.
4. Marketer can set realistic selling targets & priorities.
5. Marketer can deal with the competition effectively by using resources efficiently.
6. Marketer can identify profitable segments which deserve special attention.
DISADVANTAGES OF SEGMENTATION
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1. Segmentation increases the costs.
2. Promotion & distribution expenses when separate
programs for are used for different segments.
3. When characteristics of market segment change,
investments already made become useless.
4. Larger inventory has to be maintained by both
distributors & manufacturers.
MASS-MARKETING
The seller engages in:
Mass production,
Mass distribution, and
Mass promotion
of one product, for all buyers.
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1. SEGMENT MARKETING
A market segment consists of a group of customers
who share a similar set of needs and wants.
Does a marketer create these segments?
A marketer does not create segments.
The marketer’s task is to identify segments and decide
which ones to target.
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1. SEGMENT MARKETING (2)
Market Segmentation is a marketing strategy which
involves dividing a broad target market into subsets
of consumers, businesses, or countries who have, or are
perceived to have, common needs, interests, and
priorities, and then designing and implementing
strategies to target them.
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2. NICHE MARKETING
A niche is narrowly defined group seeking a
distinctive set of benefits.
For example: the segment of heavy smokers has
two niches:
Those who are trying to quit smoking.
Those who do not care to.
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CHARACTERISTICS OF AN ATTRACTIVE
NICHE
Customers have a distinct set of needs.
Willing to pay premium to the firm that best satisfies
their needs.
The niche is not likely to attract other competitors.
The niche gains certain economies through
specialization.
The niche has size, profit and growth potentials.
Example:
PVR Gold Class
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3. LOCAL MARKETING
Marketing programs tailored o the needs and
wants of local customer groups (ex: trading areas,
neighbourhoods).
Example: Citibank provides different mixes of
banking services in its branches, depending on
the neighbourhood.
Those favouring localization see national
advertising as wasteful, and vice-versa.
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4. INDIVIDUAL CUSTOMER MARKETING
Every individual has a unique set of wants and
preferences.
In the past centuries, producers customized
offerings to individual customers: tailors fitted a
suit and cobblers made shoes for individual
customers.
Then, we went from built-to-order to built-to-
stock.
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4. INDIVIDUAL CUSTOMER MARKETING (2)
Today, the Information Revolution has enabled
companies to mass-customize their offerings.
Mass customization refers to a company's ability
to efficiently mass produce products that meet
individual consumer wants and needs.
Today, customers are taking more individual
initiative in determining what and how to buy.
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EFFECTIVE SEGMENTATION
Is all segmentation useful?
No.
For example: Salt buyers can be divided into tall
people and short people. But height isn’t relevant to
the purchase of salt.
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TO BE EFFECTIVE, MARKET
SEGMENTATION MUST BE:
1. Measurable: Size, purchasing power can be
measured.
2. Substantial: Segments are large and
profitable to serve.
3. Accessible: Segments can be effectively
reached and served.
4. Differentiable: Segments are distinguishable
and respond differently.
5. Actionable: Effective programs can be made
for attracting and serving segments.
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BASES FOR SEGMENTING CONSUMER
MARKETS
Geographic Segmentation
Demographic Segmentation
Psychographic Segmentation
Behavioural Segmentation
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1. GEOGRAPHIC SEGMENTATION
Involves dividing the market into different
geographical units such as: neighbourhoods,
cities, states, countries.
A company can operate in:
one or few geographic regions, or
operate in all, but pay attention to local variations
Example: Hotel chains
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GEOGRAPHIC SEGMENTATION VARIABLES:
EXAMPLES
RegionNorth, South,
East, West
By continent, country,
state, city
Size of city Under 5,000 5,000-20,000 20,000-50,000
Population density
Urban Suburban Rural
Climate Hot Rainy Cold
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2. DEMOGRAPHIC SEGMENTATION
Market is divided into groups on the basis of
variables such as:
Age, family size, gender, income, occupation,
education, religion, race, generation,
nationality, and social class.
Most popular basis for distinguishing customer
groups.
Demographic variables are easy to measure.
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DEMOGRAPHIC SEGMENTATION
VARIABLES: EXAMPLES
1. Age
2. Family size
3. Family lifecycle
4. Gender
5. Income
6. Occupation
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DEMOGRAPHIC SEGMENTATION
VARIABLES: EXAMPLES
7. Education
8. Religion
9. Race
10. Generation
11. Nationality
12. Social Class
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3. PSYCHOGRAPHIC SEGMENTATION
This takes the psychological aspects of consumer
buying behaviour into account.
Here, the buyers are divided into different groups
on the basis of lifestyle, personalities or values.
It is based on the assumption that the types of
products and brands an individual purchases,
will reflect that person’s characteristics and
patterns of living.
People within the same demographic group can
exhibit very psychographic profiles.
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A. LIFESTYLE
Lifestyles are shaped by partly by whether
consumers are time-constrained or money-
constrained.
Companies making cosmetics and alcoholic
beverages seek opportunities for lifestyle
segmentation.
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B. PERSONALITY
Marketers use personality variables to segment
markets.
They endow their product with a brand personality
that corresponds to a target consumer personality.
A brand may wish to appear:
Exciting: Nike
Competent: HP
Sophisticated: Lexus
Rugged: Woodland
A company uses product features, services, and image
making to transmit the product’s personality.53
C. VALUES
Some marketers segment by core values- the
belief systems that underlie consumer attitudes
and behaviours.
They go much deeper than behaviour or attitude.
At a basic level, they determine people’s choices
and desires over the long term.
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VALUE SEGMENTS
•They place high emphasis on material and
professional goals.Strivers
• Tradition and duty are important to themDevouts
• Interested in social issues, welfare of society
• Median age is 44.Altruists
• Value close personal relationships with family over all else.Intimates
• Youngest group.Fun Seekers
• Strong interest in education, knowledge and technology.Creatives
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4. BEHAVIOURAL SEGMENTATION
Buyers are divided into groups on the basis of
their knowledge of, attitude toward, use of, or
response to, a product.
Many marketers believe that behavioural
variables are the best starting points for
constructing market segments.
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BEHAVIOURAL SEGMENTS
1. Occasions
2. Benefits
3. User Status
4. Usage Rate
5. Loyalty Status
6. Buyer Readiness
Stage
7. Attitude
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I. OCCASIONS
Buyers can be distinguished according to the
occasions when they develop a need, purchase a
product, or use a product.
For example
Airline travel is triggered by occasions related to
business, vacation, or family.
Days like Mother’s Day, Father’s Day lead to
increased sales for greeting cards and flowers.
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II. BENEFITS
Buyers can be classified to according to the
benefits they seek.
People vary considerably in the benefits they
seek from the same product
Examples:
Sensodyne targets people who have sensitive teeth.
Hair shampoos are targeted towards split ends, anti
dandruff or others.
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III. USER STATUS
Markets can be segmented into non-users, ex-
users, first-time users, and regular users of
a product.
Examples: For baby care products, mothers-to-be
are potential users who will become heavy users.
Market-share leaders tend to focus on attracting
potential users.
Smaller firms focus on trying to attract current
users away from the market leader.
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IV. USAGE RATE
Markets can be segmented light, medium and
heavy product users.
Heavy users are often a small percentage of the
market, but account for a high percentage of total
consumption.
For example
Heavy beer drinkers account for 87% of the total beer
consumed.
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V. LOYALTY STATUS
Consumers have varying degree of loyalty to specific
brands, stores, and companies.
A company can learn a lot by analyzing degrees of
brand loyalty
Buyers can be divided into 4 groups according to brand
loyalty status:
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• Who buy 1 brand all the timeHard-core loyals
• Who are loyal to 2-3 brandsSplit loyals
• Who shift from one brand to anotherShifting loyals
• Who show no loyalty to any brandSwitchers
VI. BUYER-READINESS STAGE
A market consists of people in different stages of
readiness to buy a product.
Some are unaware, some are aware, some are
informed, some are interested, some desire the
product, and some intend to buy.
Example: health tests
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VII. ATTITUDE
Five attitude groups are found in a market:
Enthusiastic, positive, indifferent, negative,
and hostile
Door to door sellers use the person’s attitude to
determine how much time to spend with that
person.
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VALS SEGMENTATION
Popular, commercially available classification
system based on psychographic measurements
Given by SRI Consulting Business Intelligence
Values, Attitude and Lifestyle are used to
perform psychographic segmentation.
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VALS SEGMENTATION (2)
All three terms are intangible in nature and
therefore give an idea of the inert nature of the
consumer.
If you know what your consumer is thinking, you
would know what kind of promotions or
communications will attract him most.
VALS classifies adults into 8 primary groups.
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MAJOR TENDENCIES OF THE 4 GROUPS
WITH HIGH RESOURCES
1. Actualizers
Successful, sophisticated, active, ‘take-charge’
people
Purchases often reflect cultivated tastes for
relatively upscale, niche-oriented products
2. Fulfilleds
Mature, satisfied, comfortable, reflective
Favour durability, functionality, and value in
products
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MAJOR TENDENCIES OF THE 4 GROUPS
WITH HIGH RESOURCES (2)
3. Achievers
Successful, career- and work-oriented
Favour established, prestige products that
demonstrate success to their peers
4. Experiencers
Young, vital, enthusiastic, impulsive and rebellious
Spend a comparatively high proportion of income
on clothing, fast food, music, movies and videos
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MAJOR TENDENCIES OF THE 4 GROUPS
WITH LOWER RESOURCES
1. Believers
Conservative, conventional and traditional
Favour familiar products and established brands
2. Strivers
Uncertain, insecure, approval seeking, resource
constrained
Favour stylish products that emulate the
purchases of those with greater material wealth
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MAJOR TENDENCIES OF THE 4 GROUPS
WITH LOWER RESOURCES (2)
3. Makers
Practical self-sufficient, traditional, family-oriented
Favour only products with a practical or functional
purpose such as tools, utility vehicles, fishing
equipment
4. Strugglers
Elderly, resigned, passive, concerned, resource-
constrained
Cautious consumers who are loyal to favourite
brands
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WHAT IS MARKET TARGETING
Once a firm has identified its market-segment
opportunities, it has to decide how many, and which
ones to target.
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EVALUATING AND SELECTING MARKET
SEGMENTS
While evaluating, the firm must look at 2 factors:
Overall attractiveness
Company’s objectives and resources
A company can consider 5 patterns of target
market selection.
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1. SINGLE-SEGMENT CONCENTRATION
Through concentration:
a firm gains a strong knowledge of the
segment’s needs, and
achieves a strong market presence
Firm enjoys operating economies through
specializing its production, distribution,
promotion.
Involves risk.
Example: Porsche- sports car market 76
2. SELECTIVE SPECIALIZATION
The firm selects a number of segments, each
objectively attractive and appropriate.
There may be little or no synergy among the
segments, but each promises to be a money
maker.
Advantage: Diversified risk
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3. PRODUCT SPECIALIZATION
The firm makes a certain product that it sells to
several segments.
Builds a strong reputation in the specific product
area.
Risk: The product can be replaced by new
technology.
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4. MARKET SPECIALIZATION
The firm concentrates on serving many needs of a
particular customer group.
The firm gains a strong reputation in serving this
customer group, and becomes a channel for
additional products the customer group can use.
Risk: customer group may suffer budget cuts.
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5. FULL MARKET COVERAGE
The firm attempts to serve all customer groups
with all the products they might need.
Only very large firms can undertake a full market
coverage strategy.
Large firms can cover a whole market in 2 ways:
Undifferentiated marketing: firm ignores
segment differences, goes after the whole
market with 1 offer.
Ex: Coca-cola
Differentiated marketing: firm operates in
several market segments and designs products
for each segment.
Ex: IBM, General Motors80
WHAT IS 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.
The end result of positioning is the successful -
creation of a customer-focused value
proposition.
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EXAMPLE: DOMINO’S PIZZA
Target customers
Convenience-minded pizza
lovers
Benefits Delivery speed and good quality
Price 15% premium
Value proposition
A good, hot pizza delivered to your door within 30
minutes of ordering, at a
moderate price
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POSITIONING STATEMENT
A positioning statement is an expression of how a
given product, service or brand fills a particular
consumer need in a way that its competitors
don’t.
A positioning statement is a one- or two-sentence
statement that articulates your product or
service's unique value to your customers.
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1. ATTRIBUTE POSITIONING
Company positions itself on an attribute such as
size, or no. of years in existence.
For example, Disneyland can advertise itself as
the largest theme park in the world.
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2. USE/APPLICATION POSITIONING
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• Positioning the
product as the best
for some
use/application.
For example:
ItchGuard
3. USER POSITIONING
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• Positioning the product
as the best for some user
group.
• For example: Mia by
Tanishq, relatively
affordable workwear
jewellery for women
4. COMPETITOR POSITIONING
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Product claims to be
better in some way
than a named
competitor.
For example: The
Hindu
5. PRODUCT CATEGORY POSITIONING
Product is positioned as a leader in a certain
product category.
For example: Subway, Highlights their fresh
menu items, against the range of fast food
options available.
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6. QUALITY/PRICE POSITIONING
Product is positioned as offering the best value
For example: Big Bazaar
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The aspects of the
product offering that
are relatively distinct to
the offerings of like
competitors.
The aspects of the
product offering that
are largely similar to the
offerings of like
competitors.
Points-of-
DifferencePoints-of-Parity
POINTS-OF-PARITY
These are usually the attributes or functionalities or
benefits or any other marketing mix elements that
are not unique to the brand and might be shared by
some or all the competitors.
They mostly include the basic necessities for a brand
to be considered in a particular category.
Once a brand has established its Points of Parity, to
be considered in a specific category and negated its
competitors’ advantage, the next step is to develop
and highlight its own advantage in the category.
POINTS-OF-DIFFERENCE
These are the attributes or functionalities or
benefits or any other marketing mix elements
that a consumer strongly associates with a
brand, which he/she feels is not offered by and of
the competitors.
Points-of-difference are relatively distinct aspects
of a brand, as compared to its competitors.
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EXAMPLE: FAST FOOD
Let’s say a chain of fast food outlets wants to challenge
the market leader, for example, McDonald’s.
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EXAMPLE: FAST FOOD (2)
The centre circle in the diagram highlights the
points-of-parity that the rival chain wants to
duplicate.
However, the rival firm chain still needs to give
consumers a reason to switch, so they have
identified two points-of-difference to highlight as
part of their overall positioning (which are built
around high-quality ingredients and having more
flexibility in the menu for the individual).
The overall combination of POP and POD creates
their overall positioning.98