Market Segmentation, Targeting, and Positioning

Slide 2 in Chapter 9

To accompany A Framework for Marketing Management, 2nd Edition

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.
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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

To accompany A Framework for Marketing Management, 2nd Edition

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 companys 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

Identify bases for segmenting market Develop profiles of resulting segments Develop measures of segment attractiveness Select the target segment(s) Develop positioning for each segment Develop marketing mix for each segment
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Market Segmentation

Market targeting

Market positioning

Copyright 2004, Pearson Education Canada Inc.

Figure 7-1

Step 1 Market 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 companys 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

To accompany A Framework for Marketing Management, 2nd Edition

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

To accompany A Framework for Marketing Management, 2nd Edition

USING MARKET SEGMENTATION

Three patterns of preference segments are typically identified:

Homogeneous

preferences Diffused preferences Clustered preferences

Slide 13 in Chapter 9

To accompany A Framework for Marketing Management, 2nd Edition

USING MARKET SEGMENTATION Needs-based Segmentation Process

Needs-based segmentation Segment identification Segment attractiveness

Segment profitability Segment positioning Segment acid test

Marketing-mix strategy

BEST CUSTOMER SEGMENTATION

High Current Share Low

High

Hi Highs

Low Highs

Consumption

Low

Hi Lows

Lo Lows

Measurable

Size, purchasing power, profiles of segments can be measured. Segments can be effectively reached and served.

Accessible

Substantial

Segments are large or profitable enough to serve.

Differential

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

Actionable

Effective programs can be designed to attract and serve the segments.

EFFECTIVENESS OF SEGMENTATION

To be useful, market segments must be:

Measurable Accessible Substantial Differentiable Actionable Size Growth characteristics Structural attractiveness Compatibility with company objectives and resources

Segments should be evaluated for:

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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

6. Develop Marketing Mix for Each Target Segment 5. Develop Positioning for Each Target Segment 4. Select Target Segment(s) 3. Develop Selection Criteria 2. Develop Profiles of Resulting Segments 1. Identify Bases for Segmenting the Market

Market Positioning

Market Targeting

Market Segmentation

SELECTING MARKET SEGMENTS

Undifferentiated marketing
Company Marketing Mix Market

Differentiated marketing
Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3 Segment 1 Segment 2 Segment 3

Concentrated marketing
Segment 1 Segment 2 Segment 3

Company Marketing Mix

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Copyright 2004, Pearson Education Canada Inc.

Figure 7-3

LEVELS OF MARKET SEGMENTATION

Mass Marketing
Same product to all consumers (no segmentation)

Segment Marketing
Different products to one or more segments (some segmentation)

Niche Marketing
Different products to subgroups within segments (more segmentation)

Micromarketing
Products to suit the tastes of individuals and locations (complete 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

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Copyright 2004, Pearson Education Canada Inc.

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 groupscities, neighborhoods, specific stores. Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers.
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BASES FOR CONSUMER MARKETS SEGMENTATION

Geographic
Nations, states, regions or cities

Demographic
Age, gender, family size and life cycle, or income

Psychographic
Social class, lifestyle, or personality

Behavioural
Occasions, benefits sought, user status, usage rate, loyalty

BASES FOR SEGMENTING BUSINESS MARKETS

Personal Characteristics

Demographics

Situational Factors

Bases for Segmenting Business Markets

Operating Characteristics

Purchasing Approaches

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

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Geographic Segmentation : Region Southwest, Mountain States, Alaska, Hawaii City Size Major metropolitan areas, small cities, towns Density of area Urban, suburban, exurban, rural Climate Temperate, hot, humid, rainy Demographic Segmentation Age Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ female Sex Male, Marital status Single, married, divorced, living together, widowed Income 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 Occupation Professional, blue-collar, white-collar, agricultural, military

Table 3.2, continued

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Psychological Segmentation Needs-motivation Shelter, safety, security, affection, sense of self-worth Personality Extroverts, novelty seeker, aggressives, low dogmatics Perception Low-risk, moderate-risk, high-risk Learning-involvement Low-involvement, high-involvement Attitudes Positive attitude, negative attitude Psychographic (Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers Socio-cultural Segmentation Cultures American, Italian, Chinese, Mexican, French, Pakistani Religion Catholic, Protestant, Jewish, Moslem, other Subcultures (Race/ethnic) African-American, Caucasian, Asian, Hispanic Social class Lower, middle, upper Family life cycle Bachelors, young married, full nesters, empty nesters

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Use-Related Segmentation Usage rate Heavy users, medium users, light users, non users Awareness status Unaware, aware, interested, enthusiastic Brand loyalty None, some, strong Use-Situation Segmentation Time & Urgency Leisure, work, rush, morning, night Objective & Occasion Personal, gift, snack, fun, achievement Location Home, work, friends home, in-store Person Self, family members, friends, boss, peers Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money Hybrid Segmentation Demographic/ Combination of demographic and psychographic profiles Psychographics of consumer segments profiles Geo-demographics Money and Brains, Black Enterprise, Old Yankee Rows, Downtown Dixie-Style SRI VALSTM Actualizer, fulfilled, believer, achiever, striver, experiencer, maker, struggler

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

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AGE: SEGMENTATION BY AGE EFFECTS AND COHORT EFFECTS

Seven Life Development Stages

Provisional
Pulling

Adulthood

up roots out, Questions/questions, Mid-life

First

Adulthood

Reaching

explosion
Second

Adulthood
Down, Mellowing, Retirement

Settling

AGE: SEGMENTATION BY AGE EFFECTS AND COHORT EFFECTS

Infant The infant stage corresponds to the first four years of your life. Childhood The childhood stage of your life cycle, defined as ages 4 through 13, During this time, you develop your personal intelligence and character. Teenager Ptolemy 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 Adult The 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. Adulthood When 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. Retirement Once 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. Elderly represents 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

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

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MARKET SEGMENTATION

Behavioral

Occasions:

Special promotions and labels for holidays.

(e.g., Hershey Kisses) (e.g., Kodak disposable cameras)

Special products for special occasions.

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MARKET SEGMENTATION

Behavioral

Benefits Sought:

Different segments desire different benefits from products.

(e.g., P&Gs 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 vs. Unaware

Awareness Status
Aware

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 Consultings Values and Lifestyle System (VALSTM)

MARKET SEGMENTATION BASES AND SELECTED VARIABLES

SEGMENTATION BASE
PSYCHOLOGICAL /PSYCHOGRAPHIC SEGMENTATION
Needs-Motivation Personality Perception Learning-Involvement Attitudes Psychographic(Lifestyle) Shelter, safety, security, affection, sense of self worth Extroverts, introverts, aggressive, complaints Low risk, moderate risk, high risk Low involvement, high involvement Positive attitude, negative attitude Swingers, straights, conservatives, status seekers

SELECTED SEGMENTATION VARIABLES

Life 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.

FIGURE 3.8 VALS

ACTUALIZERS

High Resources

Principle Oriented Status Oriented

Action Oriented

FULFILLEDS ACHIEVERS EXPERIENCERS

BELIEVERS

STRIVERS

MAKERS

Low Resources
STRUGGLERS

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.

Actualizers Experiencers Achievers Makers Fulfilleds Strivers Believers Strugglers

0 2 4 6 8 10 12 14

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 Actualizer Fulfilled Believer Achiever Striver Experiencer Maker Struggler SEGMENT

PERCENT OF POPULATION 11.7% 10.5 17.0 14.7 11.8 12.9 12.0 9.5

MIND BASE SEGMENTATION

Monitor Mindbase based on Yankelovichs 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

Personal Characteristics

Demographics

Situational Factors

Bases for Segmenting Business Markets

Operating Characteristics

Purchasing Approaches

Slide 59 in Chapter 9

To accompany A Framework for Marketing Management, 2nd Edition

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

Industrial Markets

Geographic

Economic

Political/ Legal

Cultural

Intermarket

Linking the Concepts

Using the segmentation bases youve just

heard about, segment the Sharda University Students
Describe each of the major segments and sub segments.

Step 2 Market Targetting

Evaluating and selecting market segments requires assessing the segments overall attractiveness in light of companys 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 TARGETING EVALUATING 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

To accompany A Framework for Marketing Management, 2nd Edition

MARKET TARGETING STRATEGIES

Five patterns of target market selection

Patterns of Target Market Selection

Single-segment concentration Selective specialization

Product specialization Market specialization

Full market coverage

Company Marketing Mix

A. Undifferentiated Marketing

Market

Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3

B. Differentiated Marketing

Segment 1

Segment 2
Segment 3

Company Marketing Mix

Segment 1 Segment 2

Segment 3
C. Concentrated Marketing

CHOOSING A TARGET MARKET COVERAGE STRATEGY

Factors to Consider

Company resources Product variability Products life-cycle stage Market variability Competitors marketing strategies

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STEP 2. MARKET TARGETING

CHOOSING A MARKET-COVERAGE STRATEGY
Company Resources Product Variability Products 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.
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Linking 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?

Step 3 Differentiation & Positioning For Competitive Advantage

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 3 Positioning & 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 customers perception of where a product or brand is in relation to the other choices that is important.

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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How many differences to promote?

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?)

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 Differentiation Product 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 Positioning Positioning 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 Statement A 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 Three Product 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 Imagination Successful 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

Product Service

Areas for Competitive Differentiation

Image

People

IDENTIFYING POSSIBLE COMPETITIVE ADVANTAGES

Product Differentiation Services Differentiation Image Differentiation People Differentiation Channel Differentiation Price Differentiation
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DIFFERENTIATION VARIABLES

PRODUCT Form Features Performance Conformance Durability Reliability Repairability Style Design

SERVICES

PERSONNEL CHANNEL

IMAGE Symbols Media Atmosphere Events

Competence Coverage Ordering case Courtesy Expertise Delivery Credibility performance Installation Reliability Customer training Responsiveness Customer consulting Communication Maintenance and repair Miscellaneous

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

PRICE DIFFERENTIATION
POSSIBLE VALUE PROPOSITIONS
More More Benefits
More for more

Price The same

More for the same

Less
More for less

The same

The same for less

Less

Less for much less

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Figure 7-4

STEP 3. POSITIONING FOR COMPETITIVE ADVANTAGE

Products 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.

STEP 3. DEVELOPING A POSITIONING STRATEGY

What Position Do We Have Now? Does Our Creative Strategy Match It? What Position Do We Want To Own?

The Position
Do We Have the Tenacity To Stay With It? Do We Have the Money To Do the Job?
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

From Whom Must We Win This Position?

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

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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

Product Class
Away from Competitors

Product Attributes
Benefits Offered
C

G H

Against a Competitor

D E B F

Usage Occasions

User Class

STEP B.POSITIONING STRATEGIES

How should we position?
By Attributes and Benefits? By Price or Quality? By Use or Application? By Product Class? By Product User? By Competitor?

By Cultural Symbols?
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

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. Knotts 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.

TYPES OF POSITIONING
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.

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

Important

Profitable

Affordable

Criteria for Determining Which Differences to Promote

Distinctive

Superior

Preemptive

Communicable

CHOOSING RIGHT COMPETITIVE ADVANTAGES

Important Distinctive Superior Communicable Preemptive Affordable Profitable

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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.

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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.

4.

Doubtful Positioning
Buyers may find it hard to believe the brand claims

6 - 99

1. UNDERPOSITIONING: SOME COMPANIES DISCOVER THAT BUYERS HAVE ONLY A VAGUE IDEA OF THE BRAND. THE BRAND IS SEEN AS JUST ANOTHER ENTRY IN A CROWDED MARKETPLACE. WHEN PEPSI INTRODUCED ITS CLEAR CRYSTAL PEPSI IN 1993, CUSTOMERS WERE DISTINCTLY UNIMPRESSED. THEY DIDNT SEE CLARITY AS AN IMPORTANT BENEFIT IN A SOFT DRINK. 2. OVERPOSITIONING: BUYERS MAY HAVE TOO NARROW AN IMAGE OF THE BRAND. THUS A CONSUMER MIGHT THINK THAT DIAMOND RINGS AT TIFFANY START AT$5000 WHEN IN FACT TIFFANY NOW OFFERS AFFORDABLE DIAMOND RINGS STARTING AT $1000.

3.

CONFUSED POSITIONING: BUYERS MIGHT HAVE A CONFUSED IMAGE OF THE BRAND RESULTING FROM THE COMPANYS MAKING TOO MANY CLAIMS OR CHANGING THE BRANDS POSITIONING TOO FREQUENTLY. THIS WAS THE CASE WITH STEPHEN JOBS SLEEK AND POWERFUL NEXT DESKTOP COMPUTER, WHICH WAS POSITIONED FIRST FOR STUDENTS, THEN FOR ENGINEERS, AND THEN FOR BUSINESSPEOPLE, ALL UNSUCCESSFULLY. DOUBTFUL POSITIONING: BUYERS MAY FIND IT HARD TO BELIEVE THE BRAND CLAIMS IN VIEW OF THE PRODUCTS FEATURES, PRICE, OR MANUFACTURER. WHEN GMS CADILLAC DIVISION INTRODUCED THE CIMARRON, IT POSITIONED THE CAR AS A LUXURY COMPETITOR WITH BMW, MERCEDES AND AUDI. ALTHOUGH THE CAR FEATURED LEATHER SEATS, A LUGGAGE RACK, LOTS OF CHROME, AND A CADILLAC LOGO STAMPED ON THE CHASIS, CUSTOMERS SAW IT AS A DOLLEDUP VERSION OF CHEVYS CAVALIER AND OLDMOBILES FIRENZA. THE CAR WAS POSITIONED AS MORE FOR MORE: CUSTOMERS SAW IT AS LESS FOR MORE.

4.

POSITIONING /REPOSITIONING
IMPACT ON FABRICS GENTLE

POOR CLEANSING POWER

FOR A DETEREGENT POWDER

. .. . . .. . . . .. . .
A B

.
A

GOOD

HARSH

MARKETING STRATEGY PLANNING PROCESS

Narrowing down to focused strategy with screening criteria

Customers S. W. O. T. Segmentation & Targeting
Product Place

Company

Target Market Differentiation & Positioning

Price Promo

Competitors

External Market Environment

Exhibit 3-1
3-3

Reviewing 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