PPT5- Segmentation Targeting & Positioning
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Transcript of 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
To accompany A Framework for Marketing Management, 2nd Edition
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
To accompany A Framework for Marketing Management, 2nd Edition
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
To accompany A Framework for Marketing Management, 2nd Edition
Slide 12 in
Chapter 9
USING MARKET SEGMENTATION
Three patterns of preference segments are typically identified: Homogeneous preferences Diffused preferences Clustered preferences
To accompany A Framework for Marketing Management, 2nd Edition
Slide 13 in
Chapter 9
USING MARKET SEGMENTATION
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
©Copyright 2004, Pearson Education Canada Inc.7-16
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.
6 - 17
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
©Copyright 2004, Pearson Education Canada Inc.7-19
CompanyMarketing Mix
Market
Undifferentiated marketing
CompanyMarketing Mix 1
CompanyMarketing Mix 2
CompanyMarketing Mix 3
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
©Copyright 2004, Pearson Education Canada Inc.7-21
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
6 - 30
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.
6 - 31
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
MARKET SEGMENTATION
Gender Women make 90% of home
improvement decisions. Women influence 80% of all
household consumer purchases.
6 - 36
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.
6 - 37
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)
6 - 43
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)
6 - 44
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
To accompany A Framework for Marketing Management, 2nd Edition
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.
To accompany A Framework for Marketing Management, 2nd Edition
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
CompanyMarketing Mix 1
CompanyMarketing Mix 1
CompanyMarketing Mix 2
CompanyMarketing Mix 2
CompanyMarketing Mix 3
CompanyMarketing Mix 3
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.
6 - 74
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
©Copyright 2004, Pearson Education Canada Inc.7-85
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?
What Position Do We Have Now?
Do We Have the Money To Do the
Job?
Do We Have the Money To Do the
Job?
What Position Do We Want To
Own?
What Position Do We Want To
Own?
From Whom Must We Win This
Position?
From Whom Must We Win This
Position?
Do We Have the Tenacity To Stay
With It?
Do We Have the Tenacity To Stay
With It?
Do We Have the Tenacity To Stay
With It?
Do We Have the Tenacity To Stay
With It?
Do We Have the Money To Do the
Job?
Do We Have the Money To Do the
Job?
From Whom Must We Win This
Position?
From Whom Must We Win This
Position?
What Position Do We Want To
Own?
What Position Do We Want To
Own?
What Position Do We Have Now?
What Position Do We Have Now?
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
©Copyright 2004, Pearson Education Canada Inc.7-88
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
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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. Doubtful Positioning
4. Buyers may find it hard to believe the brand claims
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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