Unit 2 Principles of Marketing Market Segmentation (Targeting & Positioning) Subhajit Sanyal
Oct 28, 2014
Unit 2Principles of Marketing
Market Segmentation
(Targeting & Positioning)
Subhajit Sanyal
STP Marketing recap…SEGMENTING•Consider variables for segmenting market.•Look at profile of emerging segments.•Validate segments emerging.
TARGETING•Decide on targeting strategy.•Decide which and how many segments should be targeted.
POSITIONING•Understand consumer perceptions.•Position products in the mind of the consumer.•Design appropriate marketing mix.
Market Coverage StrategiesUndifferentiated Strategy
Marketing Mix Entire Market
Concentrated Strategy
Marketing Mix Target Market
Differentiated Strategy
Marketing Mix Segment 1
Marketing Mix Segment 2
Marketing Mix Segment 3
Target market selection
• Single segment concentration (eg. Volkswagen -Porche
• Selective specialization (e.g New york’s KISS FM
• Product specialization (eg. –Microscope)
• Market specialization (assortment of products to various University labs.
• Full market coverage (Coke ,IBM)
Target Marketing Strategies
Undifferentiated marketing
Differentiated marketing
Concentrated/Focused marketing
Customized marketing (Levis, Mattel, De beers)
Undifferentiated Marketing
Marketing mix Whole market
Differentiated Marketing
Marketing mix 1 Segment 1
Segment 2
Segment 3
Marketing mix 2
Marketing mix 3
Concentrated/ Focused Marketing
Segment 1
Segment 2
Segment 3
Marketing mix
Customized Marketing
Marketing mix 1 Customer 1
Customer 2
Customer 3
Marketing mix 2
Marketing mix 3
• “Positioning starts with a product. A piece of merchandise, a service, a company, an institution, or even a person… But positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect..” (Al Ries & Jack Trout)
• The process of creating an image for a product in the mind of target customers
Positioning
Position
The place a product, brand,
or group of products
occupies in consumers’
minds relative to competing
offerings.
Product Differentiation
A positioning strategy that
some firms use to distinguish
their products from those of
competitors.
Characteristics of positioning
1. Positioning is a facilitating process that coordinates marketing functions.
2. Positioning strategy can be applied to both micro and macro levels of marketing.
3. The position a customer perceives for a product may be based on the product’s physical features or intangible images created by the company’s promotional efforts.
4. To be effective positioning must be consumer oriented.
ConsistencyClarity
Credibility Competitiveness
Keys to successful positioning
Successful positioning
Perceptual mapping to establish (product) position
Perceptual mapping is a means
of displaying or graphing, in
two or more dimensions, the
location of products, brands,
or groups of products in
customers’ minds.
Developing perceptual maps
• Identify a set of competing brands
• Identify important attributes
• That consumers use when choosing between brands using qualitative research
• Conduct quantitative marketing research where consumers score each brand on all key attributes
• Plot brands on a two dimensional brands
Tools for drawing perceptual maps…
• Experiential basis (stereotypes..)
• Market research (consumer surveys; focus groups etc.) Qualitative as well as quantitative.
• With tools such as – – Multi dimensional scaling techniques– Discriminant analysis
Perceptual Mapping – Levi’s
High PriceHigh Price
Low PriceLow Price
Cla
ssic
Cla
ssic
Desig
ner
Desig
ner
Old product
New product
Vintage
Red Line
Silver Tab
Slates
DockersPremium
DockersClassics
501
Red TabBasics
Red TabDry Goods
L2
Red TabElesco
Positioning Strategies
Positioning strategies are designed to answer
2 basic questions:
• Against whom should you position?
• How should you position?
Positioning Strategy-What does it mean?
• Developing a favourable image in the mind of consumers that differentiates the organisation from its competitors– Focus on intangible element, as tangible element difficult
to differentiate
• Ensuring that target markets clearly understand what the service, product or brand stands for
• Establishing a match between the benefits sought by the consumer, the company’s strengths and its competitors weaknesses
Steps in positioning
Step 1: Identify product positions
• To identify a product’s existing or desired position, we need to understand the product and the consumer.
• A product can be described – – physically with respect to its function or its sensory
or physiological characteristics;– Socially in terms of the social uses to which it can be
put; or– Psychologically in terms of its use in expressing
human emotions, desires or behaviours.
Step 2: Identify positioning bases
AttributeAttribute
Price and QualityPrice and Quality
Use or ApplicationUse or Application
Product UserProduct User
Product ClassProduct Class
CompetitorCompetitor
Positioning Positioning BasesBases
Positioning Positioning BasesBases
Positioning bases contd.
• Product characteristics and customer benefits: they tell us how the customer is going to be benefited by the attributes of the product.
• Price quality: this positioning approach is based on the notion of giving value through quality products sold at low prices.
• Product use: this associates the product with a use.
• Product user: this is association of a product with a user or user type.
• Product class: some products may benefit by positioning themselves within a product class
• Symbols: the use of symbols to position brands.
• Competition positioning
Positioning bases contd.
Steps 3: Selecting a position
• Factors to consider when selecting the basis for a position –– The market position: is the product a leader, no. 2, or
one of the small brands– The positioning used by current competitors.– Compatibility of the desired positioning with
consumers’ needs, wants and current perception of the product’s positioning versus its competitors, and a given product class.
Selecting a position contd.– The newness of the considered basis for positioning
and its departure from the current practice in the market.
– The resources available to communicate the positioning effectively and the compatibility of the positioning with the firm’s marketing strategy
– The firm’s desire for an innovative image rather than a “me-too” image.
– The firm’s ability to execute the chosen positioning effectively and creatively; and
– The legality of the proposed positioning.
• To communicate a co. or brand positioning a marketing plan should include a positioning statement, viz; To (target group and need) our (Brand) is (concept) that (point-of-difference). E.g. -– “To busy professionals who need to stay organized,
Palm Pilot is an electronic organizer that allows you to back-up files on your PC more easily and reliably than competitive products”.
Step 4: Communicating a position
Repositioning
Changing consumers’
perceptions of a brand
in relation to
competing brands.
Q: How is repositioning
accomplished?
Repositioning
Reasons For Repositioning• Falling sales• An opportunity to serve an emerging market• The threat of competition eroding market share
Dangers• Sending confusing signals• Losing existing customers• May require change in personnel
Repositioning strategiesPRODUCT
Same Different
TARGET MARKET
Same
Different
Image repositioning
Intangible repositioning
Productrepositioning
Tangible repositioning
Choosing a Market Coverage Strategy
Several factors to consider
• Company resources• Degree of product homogeneity• Market homogeneity• Competitors’ strategies
The Gradual Change of McDonald’s Marketing Strategy
• The example of McDonald’s shows a typical development in the marketing approach of various companies (in Kotler et al, 1999)
1 MASS MARKETING
2 PRODUCT VARIETY MARKETING
3 TARGET MARKETING
The Gradual Change of McDonald’s Marketing Strategy
Mass Marketing• Featured by mass production, mass distribution and
mass promotion of one product to all buyers• Firms benefit from economies of scale
EXAMPLE:
In the beginning, McDonald’s only produced one size of hamburgers hoping it would appeal to everyone
The Gradual Change of McDonald’s Marketing Strategy
Product Variety Marketing• Firm sells two or more products that have different
features, styles, qualities etc.• Designed to offer variety to buyers rather than to
target different segments
EXAMPLE:
McDonald’s is now offering variety to its buyers by selling regular Hamburgers, Big Macs, Cheeseburgers etc
The Gradual Change of McDonald’s Marketing Strategy
Target Marketing
• Seller identifies different segments, selects one or more according to the scope of the company and develops products and marketing mixes tailored to each selected segment
EXAMPLE:
McDonald’s developed a salad line to target diet-conscious diners