lecture 3 (marketing)

STP Strategic Decisions(Segmentation - Targeting - Positioning)

Copyright: Raja Shuja-ul-Haq (2009)

Lecture 3

A Relevant Quote

“Those who want to be everything for everyone end-up being nothing for no one”

Success lies in being “something for someone” …

What is a “Segment”?

A segment is a unique group of customers (or potential customers) who share some common characteristics that make them different from the other groups of customers in the market

People are different and so are customers

Some segments:

have different needs require different versions of the same product pay different prices buy in different places; and can be reached by different media


What is “Market Segmentation”?

Market Segmentation is the activity of dividing the “mass market” into “homogeneous customer groups” (i.e. market segments) …


Simply put;

Market Segmentation – Background

Originally, marketing was “mass” and “undifferentiated”

Today few markets are undifferentiated

Segmentation recognizes this and identifies consumers with similar needs and characteristics (segments)

These segments can then be targeted using an appropriate marketing mix


Mass Market

1 2

3

4

5

6

7

Market Segments

Market Segmentation:


1 2

3

4

6

7

8

Targeting:


Product

Price

Placement

Promotion

Position

“The buying public could have Model T Fords in any colour, so long as it's black“

– Henry Ford

The first production Model T Ford (1909 model year) was assembled at the Piquette Avenue Plant in Detroit on October 1, 1908. Over the next 19 years relatively few changes were made to the basic design. By 1926 the design was so antiquated that the cars could not compete with more modern designs from companies like Chevrolet.

In 1926 colours other than black were offered, in an attempt to boost sales.

Did Henry Ford understood Market Segmentation?

Market Segmentation – Leads to

Greater understanding of customer needs

Focus of competitive analysis and differentiation

More effective resource allocation

Improved customer satisfaction (tailored marketing mix)

Improved planning through specific segment focus


Why Market Segmentation?

Market Segmentation

Target Market Selection

Tailored Marketing MixDifferentiation

Identifying Opportunities (and Threats)


Product

Price Promotion

Placement

Product variety Quality Design Features Brand name Packaging

Target Market

List price Discounts Allowances Payment period Credit terms

Sales promotion Advertising Sales forces Public relations Direct marketing

Channels Coverage Assortment Locations Inventory Transport


Marketing Mix

Marketing Audit

Lets consider we are selling a “Pablo Picasso” painting …


http://www.lipsman.com/photos.shtml

To some customers, we can sell it for up to 50 pounds

To the wrong age customers, not even 50 pence

To the right customer, it can easily fetch us:

50 million pounds !!!


Why should we waste our effort on the wrong people ???

Why not target people who want our product the most and are willing to pay the highest price for it ???

So, the moral of the story …


It is worth spending time considering who the best customers of your product are, what segment are they in and how to reach them best … this is exactly what market segmentation has to offer as a marketing tool …


If you don’t know what you are aiming at, how can you possibly expect to hit the target ???


Importance of Segmentation

Marketers also need to specify who should really be considered as the customer ?

Is it the end-user of a product or the person who signs the cheque made out to the supplier ?

Is it the householder or the retailer ?


An Important Concern …

Three levels of markets (by focus)

Step 1. The Disaggregated Market

C1

C2

C3

C4

C7

C6

C8

C5

The characteristics of individual customers are understood


Step 2. The Segmented Market

C1

C2

C3

C5

C6 C8

C4

Customers are grouped into segments on the basis of having similar characteristics


C7

S1 S2 S3

Step 3. The Target Market

C1

C2

C3

C5

C6 C8

C4

Segment 3 is judged to be most attractive and a marketing mix strategy is designed for the target market


C7

S1 S2 S3

Marketing Mix

.

Market Segmentation Methods

Market Segmentation - Methods

• Geographic• Demographic• Geodemographic• Psychographic• Behavioural• Benefits Sought

• Location• Industry Type• Business Size• Business Type• Application (light / heavy)• Loyalty (to brand or supplier)• DMU (Decision-making Unit)• Benefits Sought

For Consumers (B2C) For Businesses (B2B)


B2C Segmentation

Behavioural Psychographic Profile

Benefits Sought

Purchase Occasion

Purchase Behaviour

Usage

Perceptions and Beliefs

Lifestyle

Personality

Demographic

Socio-Economic

Geographic



Division of a market according to areas or regions;

Town

City

Region (North, Central, South)

Country

District / State / Province

Trading Zone (i.e. NAFTA, EU)

1. Profile Segmentation: Geographic

1. Profile Segmentation: Demographic


Division of a market according to age, gender, income-levels, family life-cycle stages and level of education;

18-25 age groups, over 55 year olds

Children, teenagers, young adults, newly weds, married without children, married with children, married with grown-up children, full nesters and empty nesters

Male, Female

Upper class, upper-middle class, middle class, lower-middle class and lower class

Graduate, post-graduate, high school, computer literacy etc.

Family Lifecycle Stages:

Middle-aged divorced

no children

Young divorced

no children

Middle-aged married

no children

At home singleYoung couple no children

Young parentsMiddle-aged parents

Empty nesters married working

Empty nesters married retired

Solitary retired

On own youngYoung divorced with children

Middle-aged divorced with children

Middle-aged divorced no dependant children

On own middle-aged


Age, Marital Status, Employment Status and Children


Division of a market according to socio-economic grades;

A (Upper Middle Class)

B (Middle Class)

C1 (Lower Middle Class)

C2 (Skilled Working Class)

D (Manual Working Class)

E (Lowest Level of Subsistence)

3. Profile Segmentation: Socio-Economic

Social Status (an exemplary application)

A

B

C 1

C 2

D

Social Status Occupation % Families

Upper middle class Higher managerial professionals

3

Middle class

Lower middle class

Skilled working class

Manual workers

Intermediate managerial professionals

Junior management supervisory level

10

24

30

8State pensioners or widows / lowest grade workers

Social Grade

Skilled manual workers

Semi / unskilled manual workers 25

ELowest level of subsistence


A marketer might immediately consider socio-demographic segments as being customer groups; ignoring many other segmentation possibilities


A Common Mistake …

Consider a posh restaurant. One market segment can be “women aged 25-35 who prefer eating out and are not too price sensitive”

Further segmentation possibilities of this segment can be “lunchtime versus evening customers”; and “regulars versus infrequents”


For Example …

http://upload.wikimedia.org/wikipedia/commons/4/4b/Restaurant.jpg

2. Behavioural Segmentation


Division of a market according to customer buying habits and product usage;

Purchase Behaviour (brand switchers, innovators, bulk buyers, first-time buyers / point-of-entry customers)

Purchase Occasion (self buy, gift)

Product Usage (light users, heavy users, non-users)

Perceptions and Beliefs (favourable, unfavourable)

Benefits Sought (image, performance, economy)

Many chocolate brands like Nestle’s Black Magic and “Ferrero Rocher” target the “gift segment” of the confectionary market


Nokia E90 Communicator targets the “innovator segment” for its fifth generation of Communicators


3. Psychographic Segmentation


Division of a market according to the customers’ mental orientation;

Lifestyle (trendsetters, conservatives, sophisticates, health-conscious)

Personality (youthful, adventurous, freedom-loving, intimate)

Nesvita brand of Nestle targets a distinctive “lifestyle segment” of “health and fitness conscious young women”

Mountain dew has targeted a distinctive “personality segment” in the softdrink market

Marlboro has done the same in the cigarette market …

B2B Market

Macrosegment 1 (large companies)

Macrosegment 2 (medium-sized companies)

Macrosegment 3 (small companies)


Microsegment 3 (prime choice criterion: price)

Microsegment 1 (prime choice criterion: reliability)

Microsegment 2 (prime choice criterion: convenience)

B2B Segmentation

Macrosegmentation

Organizational size

Industry and business type

Geographic location

Choice criteria (i.e. quality or price)

Decision-making unit (DMU)

Decision-making process

Application (light / heavy)

Loyalty (contract / one-off transaction)

Innovativeness


Microsegmentation


Organizational Size:

Large, medium, small

Industry:

Petroleum, financial, hospitality

Business:

Oil exploration and drilling, banking, hotels

Geographic:

Local, national, global

B2B Segmentation: Macro


Choice criteria:

Quality, price, value in use, delivery, servicing, status

Decision-making unit (DMU) structure:

Centralized (head office level), decentralized (SBU level)

Decision-making process:

Long, short

Innovativeness:

Innovator, early adopter, laggard

B2B Segmentation: Micro


Application:

Light users, heavy users, non-users

Loyalty:

Contractual work, one-off transaction

B2B Segmentation: Micro

The “Strategic Segment”


Target Segment

x

x

x

x


Stable

Measurable

Loyal

AppropriateStrategic Segment

Profitable

Unique

Manageable

Most profitable

Satisfies customer needs

Accessible

Substantial

Fits Culture

The “Strategic Segment” is …


The “Right Customer”


The “Right Customer”

The “Right Customer” is a customer who:

really likes doing business with you is not too price-sensitive doesn’t just buy only when there is a special promotion gives useful feedback participates in new product developments will stay loyal to you for a lifetime, if well-treated


Not all of your customers will fit into this EXCLUSIVE customer segment …

“The customer is always right”NOT

The Universal Marketing Truth:

The “Right Customer” is always right !!!


Parameters for Measuring Segment Attractiveness


Market Size (usually, the bigger the better)

Market Growth Rate (the higher the better)

Concentration of Suppliers (the lesser the better)

Price Sensitivity (the lesser the better)

Bargaining Power of Customers and Suppliers (the lower the better)

Market Entry and Exit Barriers * (usually, the lower the better)

* Market entry barriers may include high marketing expenditure necessary to compete; patents or high switching costs for customers. Exit barriers may include specialized production facilities that can not be easily liquidated, or agreements to provide spare parts to customers.


Competitive Aggression (usually, the lesser the better)

Competitive Differentiation (the more the better)

Segment Match to Organizational Capabilities and Capacity (the more the better)

Segment offers opportunities for the organization to exploit marketing assets, achieve cost and technological advantages and meet strategic managerial objectives


Is Pakistan telecom market really attractive?

Or has it reached maturity???

What do you think?

The 4 Market Segmentation Strategies


Market Segmentation – 1. Undifferentiated Strategy

Post Office

• Product

• Price

• Promotion

• Distribution

Everybody

OrganisationMarketing Mix

Target Market

One marketing mix for the mass market (i.e. no segments have been identified)

Such a strategy is utilised by …

Companies going after the whole market with one market offer

Companies committed to a “one-size-fit-all” model of working


This strategy works best only where …

Demand is homogenous in nature (no strong differences in customer characteristics)

Economies of standardized approach to marketing outweigh any advantage of segmenting markets


Company is seeking to achieve cost economies (no market research and product development costs)

Market Segmentation – 2. Focused Strategy

Cement Manufacturer

Builders Merchants

Independent DIY Shops

National DIY Chains

• Product

• Price

• Promotion

• Distribution

Organisation

Marketing Mix

Marketing mix designed for a niche segment (i.e. niche segment has been identified, and a marketing mix is designed for it)

Ideal strategy for small companies, who may stretch their resources too far by competing in more than one segment …

Focused strategy allows R&D expenditure to be concentrated on meeting the needs of one set of customers, resulting in better customer satisfaction and even higher profit margins

(customers are willing to pay premium prices for specialized products / services which “more precisely” suit their needs) …


Focus strategy can help a company to avoid competitive rivalry, as compared to committing “majority fallacy” (i.e. blind pursuit of the largest, most easily identified market segment)


Market Segmentation – 3. Differentiated Strategy

Marketing Mix - 1

Marketing Mix - 2

Marketing Mix - 3

Marketing Mix - 4

Marketing Mix - 5

Utilitarian Customer

Price Shopper

Trendy - Casual

Mainstream

Traditionalist

LEVI’s Jeans

Separate marketing mix for each segment

This strategy exploits the difference between market segments by designing a specific marketing mix for each segment …

Although this strategy can generate high levels of customer satisfaction and better resource allocation, but the company can loose its cost economies …


Market Segmentation – 4. Customized Strategy

Marketing Mix - 1

Marketing Mix - 2

Marketing Mix - 3

Marketing Mix - 4

Marketing Mix - 5

Customer 1

Insurance Company

Customer 2

Customer 3

Customer 4

Customer 5

Separate marketing mix for each customer (mass customization)

This strategy designs a “customized” marketing mix for each individual customer (usually service customers or B2B buyers)

It is an ideal strategy in markets where the requirements of individual customers are unique and their purchasing power is sufficient

(insurance companies, ad agencies, architects, lawyers, MR agencies, B2B suppliers and vendors)


Comparing the 4 Strategies

Differentiated StrategyBroad focus

Narrow focus

Segments Identified

Segments Unidentified

Undifferentiated Strategy

Focused Strategy Customized Strategy

Alternative target marketing strategiesAlternative target marketing strategies

Mass Customization

Mass MarketingMarket Segmentation

Niche Marketing

Okapis have serious “targeting” problems ….

They are not really sure who they are attracting!!!

?



Customer-Benefit Segmentation (CBS)

3 Key Customer Personality Types

Sensory Customers - Use only their basic senses to choose products (like taste, feel, sight); Example: Children

Social Customers - Are looking for a social appeal / self expression in the products they choose; Example: Young Adults and Teenagers

Anxious Customers - Care about personal health and well-being and also the well-being of their familyExample: Adults with Young Children, Nuclear Families, Health Conscious People


Customer-Benefit Segmentation (CBS) (of British package holiday market)

Demographics

Personality

Lifestyle

Required Benefits

Required Features

Sensory Sociable Anxious Independent

Kids and Teens (7-15)

Young people, singles and couples (18-30)

Family with Children (full nesters)

Self-involvement, little interest in others

Hedonistic – pleasure and sensation seeking

Fun and enjoyment / participating in a “dream-come-true” activity

Activity programmes.

Sociable, looking for a partner, allocentrics

Active, gregarious, outward-looking, intimate, social

Socialising, involvements, spending intimate time with partner, sports and leisure

Hypochondriacs, psychocentrics

Conservative and security conscious; care about family

Spending quality time with family; feeling of family togetherness

Retired senior citizens/ empty nesters, cultural seekers

Homely / relaxing environment

Idol, carefree, calm and settled

Comfort , harmony and tranquillity.

Experiencing something different; escaping everyday life, relaxation, harmony

Sight seeing; unique / different surroundings

Opportunities to socialise, sports

How would you apply CBS to a Toothpaste Brand?

Product Category: Product Category:

Demographics

Personality

Lifestyle

Required Benefits

Required Features

Sensory Sociable Anxious Independent???

Self-involvement, little interest in others

Hedonistic – pleasure and sensation seeking

Kids and Teens (7-15)

Toothpaste

Young people, singles and couples (18-30)

Sociable, looking for a partner, allocentrics

Active, gregarious, outward-looking, intimate, social

Family with Children (full nesters)

Hypochondriacs, psychocentrics

Conservative and security conscious; care about family

Advanced Market Segmentation Models

(using two segmentation parameters)

1) Using Customer Satisfaction and Customer Loyalty


Satisfied Stayers Happy Wanderers

Hostages

Customer Loyalty

Customer Satisfaction

High

Low

High Low

Dealers


Satisfied Stayers Happy Wanderers

Hostages

Customer Loyalty

Customer Satisfaction

High

Low

High Low

These are the customers who are satisfied by the quality of product / service and remain loyal with the company due to this reason. Such customers are satisfied with both the quality of the product and the value-added services provided by the company

These customers show every sign of being satisfied with the quality of the product / service; but however, they do not give their loyalty in return. They may choose to buy elsewhere since tempting new market offers attract them. Also, cheaper products available in the market can make them reconsider their future purchase plans

These customers are the most loyal ones to the company; but are also the most dissatisfied ones. They are tied to the business by cost of switching (both economical and psychological), service compatibility, loyalty incentives, corporate policy (in the case of business travel, a tour operator might be officially contracted by a company) or the company has a form of monopoly in a particular niche market

These customers are not satisfied and shift suppliers frequently. They are on a constant search for low prices and the best package in the market. Such customer are most sensitive to the promotions and “price drops” by competitors. They seek special offers and seasonal discounts

Dealers

.


2) Using Customer Relationship Needs and Desired Level of Intimacy with the company


Relationship seekers Relationship exploiters

Loyal Buyers

Type of relationship customers want

Intimacy wanted by

customers in relationship

High

Low

Long-term Short-term

Arm’s length transaction customers


Relationship seekers Relationship exploiters

Loyal Buyers

Type of relationship customers want

Intimacy wanted by

customers in relationship

High

Low

Long-term Short-term

These customers want a long-term relationship with the company and also, a high degree of closeness. They take keen interest in providing their views about their product / service experience (and even suggestions on improving the quality), which helps companies to improve their product / services overtime

Such customers would take the maximum advantage of different “relationship offers” provided by the company, i.e. like loyalty incentives and special seasonal offers; but however, are likely to defect to the competition if they are offered better packages or cheaper rates

These customers want a long-term relationship with the company but not a close one. They frequently use the products / services of a company, but however, they do not go to increasing lengths to facilitate the managers with their feedback, nor are they interested to give suggestions to improve quality

Such customers shop around for the best package offer in the market and also for low prices. They are attracted at any company which can offer the products / services at the lowest possible price or which offers a “unique” product / service. They do not want a close relationship with any particular company; in fact they keep a watchful eye for best deals available in the market

Arm’s length transaction customers

.


Relationship is important in determining the value of an account …

A frequent flyer can spend more than 20,000 pounds in 10 years with British Airways

A loyal Visa member can spend more than 50,000 pounds in a relationship


3) Using Market Attractiveness and Market Position


Market Attractiveness:

To what extent the market is attractive to the company …

Market Position:

What position, in terms of market share, the company occupies in a particular market …


Core Business Peripheral Business

Illusion Business

Market Attractiveness

Market Position

High

Low

High Low

Dead-end Business


Core Business Peripheral Business

Illusion Business

Market Attractiveness

Market Position

High

Low

High Low

Core business represents the area where the market offers the potential to the business to achieve its goals and it also fits the capabilities and competence of the business; and the business also believes that it can take a strong market position in that area. Such areas of the market are high priority for investments.

Peripheral business represents the area where the market is less attractive to the business (i.e. there is no growth, competition is tough, margins are low and so on). These may be areas where the business can continue to operate, but unless the market brings other benefits to the business, it is not a high priority.

These are highly attractive markets which offer everything the business wants; but where the business can or do take a weak position. These markets and segments are an illusion because the market apparently looks great but they never pay-off.

These are the lowest priority because the market is not attractive to the business, and the business can only take a weak position in the market.

Table 3.8Table 3.8

Dead-end Business

.


4) Using Internal Capability and Market Segment Attractiveness


Internal Capability:

The distinctive competency of a company to serve its customers

Market Attractiveness:

To what extent the market is attractive to the company …


Attractive segments that match with company

capabilities

Attractive segments but with poor match with company

capabilities

Unattractive segments but with match to company

capabilities

Internal capability

Market segment

attractiveness

High

Low

High Low

Unattractive segments that do not match with company

capabilities


5) Using Customer Sophistication and Customer Repute


“Right Customer” (Customer Repute):

It is a criteria set by the company to evaluate a customer’s repute on the basis of customer loyalty, price sensitivity, involvement (feedback, new product developments), tendency to give year-round sales, future business potential etc. We simply examine the extent to which a customer is our “right customer”

Customer Sophistication:

It refers to the degree of know-how the customer possesses regarding your product / service and your competitors (their market offers and prices) …

In simple words, it refers to the “bargaining power” of your customer to negotiate prices with your company …


Sophisticated / Right Customers

Customer Sophistication

Customer Repute (loyalty, future

business potential, price sensitivity)

High

Low

High Low

Unsophisticated / Not Right Customers

Unsophisticated / Right Customers

Sophisticated / Not Right Customers


Positioning

“You must have mindshare before you can have market share”

- Christopher M. Knight


“Positioning starts with a product, a piece of merchandise, a service, a company, an institution or even a person. But positioning is not what you do to the product. Positioning is what you do to the mind of the potential customer”.

- Ries and Trout

Moving from Targeting to Positioning


Simply put, positioning is the activity of placing the product at a chosen spot in the minds of the consumers …


The best way to get a view of the human mind is through constructing a “Perceptual Map”


Using perpetual maps to help positioning process

Price

+

-

+-Quality


Using perpetual maps to help positioning process


Perpetual map applied to UK Automobile Market

Prestige, Status

+

-

+-

Basic / Rational

Personal / Emotional

Economy

BMW

Saab

Volvo

Ford

Fiat

Toyota


http://upload.wikimedia.org/wikipedia/en/0/08/BMW_1_Coup%C3%A9.JPG

Perpetual map applied to US Painkillers Market


Perceptual Map of Beer Market (This slide shows only the products)

•

Meister Brau

Stroh’s

•

•

•

Beck’s

• Heineken

Old Milwaukee

•

Miller •

Coors•

Michelob•

Miller Lite

• Coors Light•

OldMilwaukee Light

•

Budweiser

Perceptual Map of Beer Market cont’d (This slide shows only the attributes)

Popular with Men

Heavy

Special Occasions

Dining OutPremium

Popular with

Women

Light

Pale Color

On a Budget

Good ValueBlue Collar

Full Bodied

Less Filling

Perceptual Map of Beer Market cont’d (This slide shows only the attributes)

Popular with Men

Heavy

SpecialOccasions

Dining OutPremium

Popular with

Women

Light

Pale Color

On a Budget


Full Bodied

PremiumBudget

Light

Heavy

Less Filling

Perceptual Map of Beer Market cont’d (This slide shows both products & attributes)

Popular with MenHeavy

Special Occasions

Dining OutPremium

Popular with

Women

Light

Pale Color

On a Budget


Full Bodied •

Meister Brau

Stroh’s

•

•

•

Beck’s

• Heineken

Old Milwaukee

• Miller •

Coors•

Michelob•

MillerLite

• Coors Light•

OldMilwaukee Light

•

Budweiser

Less Filling

Heavy

PremiumBudget

Light

Three Types of Positioning

Positioning

Broad Positioning Specific Positioning Value Positioning

Operational Excellence

Customer Intimacy

Product Leadership

Single Benefit Positioning

Dual Benefit Positioning (Volvo)

Triple Benefit Positioning (Aquafresh)

More for More

More for the Same

Less for Much Less

More for Less

Less for More ???


1. Broad Positioning or Customer Value Disciplines

Operational Excellence : providing reliable products and services at competitive prices, delivered by minimum difficulty

Customer Intimacy: tailoring the offerings to meet customers’ demand very precisely

Product Leadership: offering leading-edge products and services


2. Specific Positioning

Companies need to go beyond the broad positioning to express a more concrete benefit or reason to buy

Some companies advertise a single major benefit, drawing from such possibilities as: best quality, best performance (BMW), most reliable, most durable (Land Rover / Volvo), safest (Volvo), fastest (Ferrari), best value for money (Toyota), least expensive (Hyundai), most prestigious (Mercedes), best designed or styled (Limousine), easiest to use or most convenient


2. Specific Positioning

Companies can also use more than one benefit to position their products (dual benefit and triple benefit positioning)

Volvo has a dual benefit positioning as Safest Car (in Europe and US) and Most Durable Car (in Mexico)

Aquafresh has a triple benefit positioning i.e. prevents cavities, gives a fresh breath and whitens teeth (hence the three colours of the paste to “represent” each of the benefits)


Specific Positioning Strategies


a. Attribute Positioning:

The company positions its product on some attribute or feature

i.e. The Thickest Milk, Clear Softdrink (free of sugar, caffeine and colour)


b. Benefit Positioning:

Product promises a particular benefit

i.e. Ariel EnzyMax claims it cleans better even in cold water …


c. Use / Application Positioning:

Product is positioned as the best in certain application

i.e. Head & Shoulders is positioned as the best shampoo for dandruff control


d. Quality / Price Positioning:

Product is positioned at a certain quality or price level …

i.e. Zong is positioning its packages on economy


d. Quality / Price Positioning:

Product is positioned at a certain quality or price level …

i.e. “The Famous Grouse” is positioned as the finest whiskey brand in the world


e. User Positioning:

Product is positioned in terms of target user group …

i.e. “Johnson & Johnson” has positioned all its products around babies, which has enabled the consumers to broadly perceived all the company’s products as “mild and gentle” …


f. Category Positioning:

The company may describe itself as the category leader

i.e. HP means printers, Xerox means photocopiers, Gillette means shaving systems


g. Competitor Positioning:

The product suggests its superiority or difference from a competitor’s product

i.e. 7-Up called itself “the Uncola”, Avis described itself as a company “that tries harder” (than Hertz, by implication)


Zong and Mobilink are positioning their upcoming offers and packages against each other … Zong emphasizing on low call rates and Mobilink on better network coverage …


Since their presence in the Pakistan Banking Industry, Islamic Banks have positioned their banking products against those of conventional banks under the claim of riba-free banking …

“The only interest we have is in you”- Slogan of Meezan Bank Limited.


h. Positioning with Respect to Product Class:

The product is associated with a particular product class ...

i.e. Margarines position themselves with respect to butter, Vegetable oils (in Pakistan) position themselves with respect to “ghee”


Knorr has associated its “make-a-meal” packaged Chinese food items with Chinese food served in restaurants …


How to make your positioning effective?Always follow the 4 Cs of effective positioning

CREDIBILITY CLARITY

CONSISTANCYCOMPETITIVENESS


Try to keep your positioning simple- associate with one or a low number of functional benefits


Case Analysis 2: Black and Decker Drills


“Black and Decker” are in the drill market

Or are they ???

Do people buy drills because they want a drill ???

No … they buy drills because they want holes and drills just make hole-making easy


However, research reveals that some men buy drills to be “the complete man” by possessing a full armoury of DIY (do-it-yourself) equipment

So, in both cases, the benefits sought by the customer vary from purely functional to purely emotional

Both the cases require a different positioning strategy for “Black and Decker” drills


However, the marketing managers of “Black and Decker” drills should ask themselves ….

Positioning Plan


Should “Black and Decker” be positioned as a highly functional tool or as a part of a complete man’s toolkit?

And what about the female buyers?

Should it be positioned differently for different segments?

Or would it cost too much money?

Would it dilute the message and cause confusion?


Case Analysis 3: Lucozade Energy Drink


Lucozade was initially positioned as a “sick child’s drink” and was sold only in the chemist shops

Later on, it was repositioned as a “healthy adult’s drink” in the much faster growing healthy adults’ softdrink market and was then sold everywhere; sharing freezer-space with Coke and Pepsi

Due to this successful repositioning strategy, Lucozade sales took a vertical take-off


Adult

Healthy

Child

Sick

Perceptual Map Technique Used by Lucozade’s Marketing Managers


It was revealed from the perceptual map how Lucozade marketing managers used age (i.e. adult and child) and the health / lifestyles to start repositioning their product in a much faster growing market


Steps involved in the positioning process

Identify a set of competitive products

Identify the key product attributes

Collect information from customers / prospects on perceptions of the products and their attributes

Determine product’s position on the perceptual map (product positioning technique which has been earlier discussed)

Determine customers’ or prospects’ ideal position (s)

Examine the fit between product position and market preference

Select a positioning strategy (a strategic marketing concern)


So, where have we reached ?

Why? What? How? Where? and When?

How deep an involvement is needed?

We can’t market to everyone

We need to segment our markets

Through focused or differentiated strategies

Positioning is all about what the prospect thinks about our product


Some Recommended Literature

Jobber, D., Principles and Practice of Marketing, 3rd edition, Berkshire: McGraw-Hill

Kolah, A., Essential Law for Marketers Oxford: Butterworth-Heinemann

Kotler, P., and Armstrong, G., Marketing: an introduction, Prentice-Hall International Edition

Philip R. Cateora & John L. Graham, International Marketing Eleventh Edition, London: McGraw-Hill

Piercy, N.F., Market-Led Strategic Change, 3rd edition, Oxford: Butterworth-Heinemann

lecture 3 (marketing)

Documents