CHAPTER 6.ppt

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1. Imperatives for Market-Driven Strategy

2. Markets and Competitive Space

3. Strategic Market Segmentation

4. Strategic Customer Relationship Management

5. Capabilities for Learning about Customers and Markets

6. Market Targeting and Strategic Positioning7. Strategic Relationships

8. Innovation and New Product Strategy

9. Strategic Brand Management

10. Value Chain Strategy

11. Pricing Strategy

12. Promotion, Advertising and Sales Promotion

Strategies

13. Sales Force, Internet, and Direct Marketing Strategies

14. Designing Market-Driven Organizations

15. Marketing Strategy Implementation And Control

Strategic Marketing


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CHAPTER 6A. Market Targeting and Strategic Positioning

Market Targeting StrategyTargeting in Different Market Environments

Positioning Strategy

Developing the Positioning StrategyDetermining Positioning Effectiveness

McGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.


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A. MARKET TARGETING STRATEGY

The Marketing Targeting Decision Identities the People or

Organizations in a Product-Market Toward Which a Firm DirectsIts Positioning Strategy Guided by an understanding of:

The product-market

Its buyersFirms capabilities resourcesCompetition

-Targeting and positioning strategies consists of:1.Identifying and analyzing the segments in a product-market,2.Deciding which segments to target,3.Desiging and implementing a positioning strategy foe eachtarget.


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1.Targeting Alternatives

-The targeting decision determines which customer group the

organization will serve. A specific marketing effort(positioning strategy)

is directed toward each target that management decides to serve.-Market targeting approaches fall into major categories:

i. Segment targeting when segments are clearly defined,

ii. Targeting based on product differentiating. As shown by exhibit

6.1,segment targeting ranges from a single segment to targeting all or

most of the segments in the market.

-Factors influencing targeting decisions- several factors may influence

the choice of the targeting strategy:

i. Stage of product-market maturity.

ii. Extent of diversity in buyer value requirements.iii. Industry structure.

iv. The firms capabilities and resources.

v. Opportunities for gaining competitive advantage.


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B. Targeting In Different Market Environments

-Four lifecycle stages illustrate the range of product market structures:

1.Emerging-product market which are newly formed are categorized asemerging, and are created by factors such as a new technology, the

changing needs of buyers, and the identification of unmet needs by

suppliers.

-There are two type of emerging markets:i. A totally new product market- the emerging market is formed by

people/organizations whose needs and wants have not been satisfied

by available product.

ii. A new product technology entering an existing product market-

the market entry provides an alternative value proposition to buyers

in an existing market.


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-consideration for emerging markets:i. Buyer Diversity

Segmentation limited due to similarity of buyers preferencesii. Industry Structure

Typically small new organizationsLimited access to resources

iii. Capabilities and Resources

Unique benefit (differentiation) strategy rather than low-costFirst-mover advantage

iv. Targeting StrategySingle target or a few broad segments


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2. Growing-these product-markets are experiencing rapid growth.-Identifying customer groups with similar value requirements improves

targeting, and experience with the product, process, and materialstechnologies leads to greater efficiency and increased

standardization.-analysis of the characteristics and preferences of existing buyers yields useful

guidelines for estimating market potential.i. Product-Market structure-high growth markets are very attractive, and

that early entry offers important competitive advantage.ii. Capabilities and Resources-The firms competing in growth markets are

likely to follow one of these strategies:a. Pursuit of a market leadership strategy,b. Follow very selective targeting and positioning strategies.

iii. Targeting Strategy

Three possible strategies1. Extensive market coverage by firms with established businesses inrelated markets

2. Selective targeting by firms with diversified product portfolios3. Very focused targeting strategies by small organizations serving

one or a few market segments.


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3. Mature- the product markets are shifting from growth to maturity, as

indicated by the product lifecycle of the products.a. Buyer Diversity

Segmentation essential for competitive advantageb. Product market/Industry Structure

Intense competition for market share,Emphasis on cost and service, and increases in the role andimportance of value chain strategies.

c. Capabilities and ResourcesManagements objectives: cost reduction, selective targeting,

product differentiationd. Targeting Strategy

Deciding which segment to serve

Firms pursuing extensive targeting strategies may decide to exitfrom certain segments


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4. Growth MarketThere are two options of consideration-a. Global Reach and Standardization

Identify market segments that span global markets and serve these needs

with global positioning strategiesb. Local Adaptation

Consider requirements of domestic buyersBuyers needs and preferences affected by social, political, cultural,economic, and language differences

Targeting StrategyTargeting a single country, regional (multinational) targeting, or globaltargeting


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Market Targeting and Strategic Positioning

* Core dimensions of market-driven

strategy: deciding which buyers to

target and how to position the firmsproducts

* Effective targeting and positioningstrategies are essential in gaining and

sustaining superior performance


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Exhibit 6.1Market Targeting Alternatives

SelectiveTargeting

ExtensiveTargeting

Segments Clearly Defined

Differentiated But SegmentsNot Clearly Defined

Target

SelectedNiche(s)

Target

MultipleSegmentsProduct

Variety

Product

Specialization


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C. Positioning strategy

Deciding the desired perception/ association of an

organization/ brand by market target buyersand designing

the marketing program to meet (and exceed) buyers value

requirements.


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MARKETTARGET

POSITIONINGEFFECTIVENESS

POSITIONINGSTRATEGY

How wellmanagements

positioning objectives

are achieved for the

market target

POSITIONING CONCEPT

The desired positioning of the

product (brand) by targeted buyers

The combination ofmarketing actions

used to communicate

the positioning concept

to targeted buyers

STRATEGIC POSITIONING INITIATIVES


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-The positioning concept indicates managements desiredpositioning of the product (brand) in the eyes and minds of thetarget buyers.

-It is intended to deliver the value requirements appropriate foreach market target pursued by the organization.-The positioning strategy is the combination of marketingprogram(mix) strategies used to portray the positioning desired by

management to the target buyers.-this strategy includes the product, supporting services,distribution channels, price, promotion.Positioning effectiveness considers how well managementspositioning objectives are being achieve in the market target.

As shown in exhibit 6.4 the positioning objective is to have eachtarget customer perceive the brand distinctively from othercompeting brands and favorably compared to the other brands.


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How Positioning Works

* Objective

* Match the organizations distinctive capabilities with

the customer value requirements for the market target

(How do we want to be perceived by targetedbuyers?)

* Desired result

* Gain a relevant, distinct, and enduring position by the

targeted buyers that they consider important.* Actions by the organization

* Design and implement the positioning strategy

(marketing program) for the market target.


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1. Selecting the positioning concepta. The positioning concept indicates how management wants

buyers to perceived the companys brand.

-The positioning can be central to customers perception andchoice decisions.

-The positioning concept should be linked to buyers valuerequirements.

-The focus of the concept may bei. A functional concept applies to product that solve

consumption-related problems for extremely generatedconsumption needs. examples of brands using this basis ofpositioning include Crest toothpaste (cavity prevention).

ii. Symbolic positioning relates to the buyers internallygenerated need for self-enhancement, role positioning, groupmembership, or ego identification. examples of symbolicpositioning are Rolax watches.

iii. The experiential concept is used to position products that


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SELECTING THEPOSITIONING

CONCEPT

Symbolic Functional

Experiential

The Perception or Association that Management Wants Buyers toHave Concerningthe Brand


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-Three aspects of positioning concept selection are important:i. The positioning concept applies to a specific brand rather than

all of the competing brands in a product classification such as

toothpaste.ii. The concept is used to guide positioning(marketing program)

decisions over the life of the brand ,recognizing the brandspecific position may change over time.

iii. If two or more positioning concepts, for example, functionaland experimental, are used to guide positioning strategy, themultiple concepts are likely to confuse buyers and perhapsweaken the effectiveness of positioning actions.


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b. The positioning decision-It is useful to study the positioning of competing brands usingattributes that are important to existing and potential buyers of

the competitors brands.-Marketing research may be necessary in identifying customersideal positioning.


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C.DEVELOPING THE POSITIONING STRATEGY

The Positioning Strategy Places the

Marketing Program (mix)Components into a Coordinated

Set of Actions Designed toDeliver Superior Customer

Value

PRODUCT

PROMOTION

PRICE

VALUE CHAIN


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i. The positioning concept applies to a specific brand

rather than all the competing brands that

compose a product classification

ii. The concept is used to guide positioning decisions

over the life of the brand

iii. Multiple concepts are likely to confuse buyers andmay weaken the effectiveness of positioning

actions.

iv. Whether the strategy is brand specific or greater

in scope depends on such factors as the size of

the product-market, characteristics of he goods or

service, the number of product involved, and the

product interrelationship in the consumer use

1.Scope of Positioning Strategy


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2. Marketing program Decisions

Nokias positioning strategy includes aggressive innovation initiatives, a

very effective global value chain network, competitive pricing, and

effective promotion strategies matched to its major global markets inAsia, Europe, middle east, Africa and the America.

i. The product strategy, indicating how the product(s) will be

positioned against the competition in the product-market.ii. The value chain (distribution) strategy to be used.

iii. The pricing strategy, including the role and positioning ofprice relative to competition.iv. Promotion strategy:

-The advertising and sales promotion strategy and theobjectives these promotion components are expected to achieve.-The sales force strategy, direct marketing strategy, and theInternet strategy, indicating how they are used in the positioningstrategy.


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D. 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.

-Positioning evaluation should include customer analysis,competitor

analysis,and internal analysis.

-managements objective is to gain a distinct positioned in the market of

interest.

-several methods and metrics are available for analyzing positioning

alternatives and determining positioning effectiveness.

-These include customer and competitor research, market testing of

proposed strategy, and the use of analytical techniques(exhibit 6.6).


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Methods for

DeterminingPositioning

Effectiveness

Analytical

Positioning

Models

Test Marketing

Customer and Competitor Research

Exhibit 6.6 determining positioning effectiveness


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1. Customer and Competitor Research

* Research Studies

* Preference Maps

2. Test Marketing

* Generates information about commercial feasibility and

marketing program

* Provides market (sales forecasts) and effectivenessmeasures

3. Positioning Models

* Incorporates research data into formal models of decision

analysis-determining positioning effectiveness: Information is needed

as to whether the strategy yields the results which are

expected concerning sales, market share, profit

contribution, growth rates, customer satisfaction, and other

competitive advantages.


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Positioning Errors

* Under-positioningcustomers have onlyvague ideas about the company and donot perceive anything distinctive about it

* Over-positioning

Customers have toonarrow an understanding of the company,product, or brand

* Confused positioningFrequent changesand contradictory messages confuse

customers* Doubtful positioningclaims made for the

product or brand are not regarded ascredible


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Positioning in Perspective

* Positioning is a central part of business strategy

* Positioning analysis starts with an understanding of thevalue proposition for the target segment

* Value-driven positioning is the objective

* Positioning seeks to differentiate the organizations offerfrom the competition

* Positioning seeks to create a unique perception inbuyers minds of the target market segment

* Positioning is the unifying dimension of market-drivenstrategy


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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 easyto 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 othersegments.

Source: Aaker and Shansby, Business Horizons, May-June 1982, 61.


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Illustrative Impacts of Changes in Business Strategy on Targeting andPositioning Strategies

Changes in BusinessStrategy

Market Targeting Impact Positioning Impact

Rapid Growth/Retrenchment

Market scope may not changealthough targets may be increasedor reduced.

Substantial changes in resourceallocation, (e.g. advertisingexpenditures

Changing the Product Mix No change is necessary unlessincrease in product scope creates

opportunities in new segments.

Changes in product strategy, methods ofdistribution, and promotional strategies

may be necessary.

Changing the MarketScope

Targeting is likely to change to includenew targets.

Positioning strategy must be developedfor each new target.

Repositioning Should not have a major effect ontargeting strategy.

Product, distribution, price, andpromotion strategies may be affected.

Value Chain Integration Should have no effect on targetingstrategy.

Primary impact on channel, pricing andpromotion strategies.

Diversification Targeting strategies must be selected innew business areas.

Positioning strategies must be developed(or acquired for the new business areas.

Strategic Alliance Targeting strategy may be affectedbased on the nature and scope of the

alliance.

Operating relationships and assignmentor responsibilities must be established.


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Product Strategy

PromotionStrategy

Price Strategy

DistributionStrategyMarket Target

Positioning Strategy

Targeting and Positioning

Documents

CHAPTER 6.ppt