CRAVENS

PIERCY

8/e
McGraw-Hill/Irwin

2006 The McGraw-Hill Companies, Inc., All

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Chapter Six
Market Targeting
and
Strategic Positioning

McGraw-Hill/Irwin

2006 The McGraw-Hill Companies, Inc., All

6-3

Market Targeting
and Strategic
Positioning
Market Targeting Strategy
Targeting in Different
Market Environments
Positioning Strategy
Developing the Positioning
Strategy
Determining Positioning
Effectiveness

6-4

MARKET
TARGETING
STRATEGY
The Marketing Targeting Decision
Identities
the People or Organizations in a
Product-Market Toward Which a
Firm Directs Its Positioning
Strategy
Guided by an understanding of:
The product-market
Its buyers
Firms capabilities and
resources
Competition

Market Targeting
and Strategic
Positioning

Core dimensions of
market-driven strategy:
deciding which buyers to
target and how to position
the firms products

Effective targeting and

positioning strategies are
essential in gaining and
sustaining superior
performance

6-5

6-6

SEGMENTS
VALUE
OPPORTUNITES
CAPABILITIES/
SEGMENT
MATCH
TARGET(S)
POSTIONING
FOR EACH
TARGET

6-7

Identify segments
within the
product-market

TARGETING
AND
POSTIONING
Decide and
implement a
positioning
strategy for
each
targeted
segment

Decide
which
segment(s
) to
target

6-8

Market Targeting
Alternatives
Segments Clearly Defined

Selective
Targeting

Target
Selected
Niche(s)
Product
Specialization

Target
Multiple
Segments
Product
Variety

Differentiated But Segments

Not Clearly Defined

Extensive
Targeting

6-9

Factors
Influencing
Targeting
Stage
of product
Decisions
market maturity

Extent of diversity in
preferences

Industry structure

Capabilities and
resources

Opportunities to gain
competitive advantage

6-10

TARGETING IN
DIFFERENT
MARKET
ENVIRONMENTS
Emerging

Fragmented
Transitional
Declining
Global

6-11

Emerging Market
Buyer Diversity
Segmentation limited due to
similarity of buyers preferences
Industry Structure
Typically small new
organizations
Limited access to resources
Capabilities and Resources
Unique benefit (differentiation)
strategy rather than low-cost
First-mover advantage
Targeting Strategy
Single target or a few broad
segments

6-12

INNOVATION
FEATURE

An Emerging
Market for
Satellite Radio
Services

SATELLITE RADIO POWERS UP

Satellite radio is catching on., with some 700,000
subscribers today and forecasts for 1.5 million by
year end.
WHAT IS SATELLITE RADIO? These systems
bean CD-quality signals from space to special
radios, most of which are installed in cars.
Customers can also listen at home or on the go.
WHERE IS IT AVAILABLE? Two carriers offer
nationwide coverage. XM, based in Washington,
D.C., is $19.99 a month; Sirius, based in New York,
is $12.95
WHAT DO YOU GET? The services offer about
100 channels. Sirius is commercial-free, while XM
broadcasts a limited number of ads. Programs
range from music to news to comedy.
WHO IS BACKING SATELLITE RADIO?
Carmakers, who are eager for a stake in a new,
fast-growing business. GM funded XM, and
Daimler-Chrysler is backing Sirius. Others are
picking one of the two technologies, which are not
currently compatible.

6-13

DO MOST CARS HAVE SATELLITE RADIO?

The systems are available on many new models
for about $300. Within two years, satellite
radio is expected to be available on many new
cars.
WHAT ABOUT HOME AND PORTABLE
SYSTEMS? You can buy a palm-size receiver
from Sirius or XM. They are available from
retailers like Circuit City and Wal-Mart for about
$200, including adapters. You can carry these,
using them at home or in the car. For an
additional $99, XMs can be used with a special
portable boom box.

XM has the lead position in the market but

faces major financial challenges, and is
spending $20 million in cash each month. With
less than 1 million subscribers, XM needs 7.5
million and $1 billion in revenues to cover
capital and interest costs.

Source: This is the Dawning of the AgeXM?, Business Week, July 7, 2003, 90-92.

Growth
Market
Buyer Diversity

6-14

Segments should exist

Industry Structure
Numerous competitors

Capabilities and Resources

Survival requires aggressive actions by
firms that seek large market positions
Otherwise select one or a few market
segments

Targeting Strategy
Three possible strategies
1. Extensive market coverage by firms

with established businesses in related

markets
2. Selective targeting by firms with
diversified product portfolios
3. Very focused targeting strategies by
small organizations serving one or a
few market segments.

Strategies for
Mature Markets

6-15

Buyer Diversity
Segmentation essential for competitive
advantage

Industry Structure
Intense competition for market share
Emphasis on cost and service, and
pressures on profits

Capabilities and Resources

Managements objectives: cost

reduction, selective targeting, product

differentiation

Targeting Strategy
Firms pursuing extensive targeting
strategies may decide to exit from
certain segments

6-16

Global Markets
Global Reach and Standardization
Identify market segments that span global
markets and serve these needs with
global positioning strategies

Local Adaptation
Consider requirements of domestic
buyers
Buyers needs and preferences affected
by social, political, cultural, economic, and
language differences

Industry Structure
Restructuring, acquisitions, mergers, and
strategic alliances altering industries and
competition

Targeting Strategy
Targeting a single country, regional
(multinational) targeting, or global
targeting

6-17

POSITIONING
STRATEGY
Deciding the desired
perception/ association
of an organization/ brand
by market target
buyersand designing
the marketing program
to meet (or exceed)
buyers value
requirements.

6-18

POSITIONING
CONCEPT
The desired positioning of
the product (brand) by
targeted buyers

MARKET
TARGET
POSITIONING
EFFECTIVENESS
The extent to
which
positioning
objectives are
achieved for the
market target

POSITIONING
STRATEGY
The combination
of marketing
actions used to
communicate
the positioning
concept to
targeted buyers

Positioning in
Perspective

6-19

Objective
Match the organizations distinctive
capabilities with the customer value
requirements in each market target
(How do we want to be perceived by
targeted buyers?)

Desired result
Gain a relevant, distinct, and
enduring position that is
considered important by the
targeted buyers

Actions by the organization

Design and implement the
positioning strategy (marketing
program) for the market target.

The Perception or
Association that
Management Wants
Buyers to Have
Concerning the Brand
Symbolic

Functional

POSITIONING
CONCEPT
Experiential

6-20

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DEVELOPING THE
POSITIONING
STRATEGY
The Positioning Strategy Places the
Marketing Program (mix)
Components into a
Coordinated
Set of Actions Designed to
Deliver Superior Customer
Value
PRODUC
T
VALUE
CHAIN

PROMOTION
PRICE

6-22

Positioning Issues
1. The positioning concept

applies to a specific brand

rather than all the
competing brands that
compose a product
classification
2. The concept is used to
guide positioning
decisions over the life of
the brand
3. Multiple concepts are likely
to confuse buyers and may
weaken the effectiveness
of positioning actions

6-23

The positioning strategy

indicates how (and why) the
product mix, line, or brand is
to be positioned for each
market target. This strategy
includes:
The
product strategy, indicating how the
product(s) will be positioned against the
competition in the product-market.
The value chain (distribution) strategy to
be used.
The pricing strategy, including the role
and
positioning of price relative to
competition.
The advertising and sales promotion
strategy and the objectives these
promotion
components are expected to achieve.
The sales force strategy, direct

6-24

DETERMINING
POSITIONING
EFFECTIVENESS
The marketing offer
(product,
distribution, price,
and promotion) is
both distinct and
valued in the minds
of the customers in
the market target.

6-25

Customer and
Competitor
Research

Methods
for
Determinin
g
Positioning
Effectivene
ss

Analytical
Positioning
Models

Test
Marketing

6-26

Customer and Competitor

Research
Research Studies
Preference Maps

Test Marketing
Generates information about
commercial feasibility and
marketing program
Provides market (sales
forecasts) and effectiveness
measures

Positioning Models
Incorporates research data
into formal models of
decision analysis

6-27

Positioning
Errors

Under-positioning customers
have only vague ideas about the
company and do not perceive
anything distinctive about it
Over-positioning Customers
have too narrow an
understanding of the company,
product, or brand
Confused positioning
Frequent changes and
contradictory messages confuse
customers
Doubtful positioning claims
made for the product or brand
are not regarded as credible

6-28

Positioning in
Perspective

Positioning is a central part of

business strategy
Positioning analysis starts with an
understanding of the value
proposition for the target segment
Value-driven positioning is the
objective
Positioning seeks to differentiate the
organizations offer from the
competition
Positioning seeks to create a unique
perception in buyers minds of the
target market segment
Positioning is the unifying dimension
of market-driven strategy

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Positioning usually means

that an overt decision is
being made to concentrate
only on certain segments.
Such an approach requires
commitment and discipline
because its not easy to turn
your back on potential
buyers. Yet, the effect of
generating a distinct,
meaningful position is to
focus on the target segments
and not to be constrained by
the reaction of other
segments.
Source: Aaker and Shansby, Business Horizons, May-June 1982, 61.

6-30

Illustrative Impacts of Changes in

Business Strategy Restructuring on
Targeting and Positioning Strategies
Changes in
Business
Strategy
Rapid
Growth/
Retrenchme
nt

Market Targeting
Impact
Market scope may not
change although
targets may be
increased or reduced.

Positioning Impact
Substantial changes in
resource allocation, (e.g.
advertising expenditures

Changing the
Product Mix

No change is necessary
unless increase in
product scope creates
opportunities in new
segments.

Changes in product
strategy, methods of
distribution, and
promotional strategies may
be necessary.

Changing the
Market Scope

Targeting is likely to
change to include new
targets.

Positioning strategy must

be developed for each new
target.

Repositioning

Should not have a major

effect on targeting
strategy.

Product, distribution, price,

and promotion strategies
may be affected.

Value Chain
Integration

Should have no effect on

targeting strategy.

Primary impact on channel,

pricing and promotion
strategies.

Targeting strategies must

be selected in new
business areas.

Positioning strategies must

be developed (or acquired
for the new business areas.

Targeting strategy may be

affected based on the
nature and scope of the
alliance.

Operating relationships
and assignment or
responsibilities must be
established.

Diversification

Strategic
Alliance

6-31

Targeting and
Positioning
Product
Strategy
Positioning
Strategy
Promotion
Strategy

Market
Target

Price
Strategy

Distribution
Strategy