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Topic: 4

Market Targetingand

Strategic Positioning

Dr. Ehsanul Huda Chowdhury

COURSE:STRATEGIC MARKETING

PROGRAM:BBA

IBA

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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

•Firm’s capabilities and resources

•Competition

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TARGETINGAND

POSTIONING

Identify segmentswithin the

product-market

Decide which

segment(s) to

target

Decide and implement a positioning strategy for

each targeted segment

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Market Targeting Alternatives

SelectiveTargeting

ExtensiveTargeting

Segments Clearly Defined

Differentiated But SegmentsNot Clearly Defined

TargetSelectedNiche(s)

TargetMultipleSegments

ProductVariety

ProductSpecialization

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Factors Influencing Targeting Decisions

Stage of product – market maturity

Extent of diversity in preferences

Industry structure Capabilities and

resources Opportunities to gain

competitive advantage

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TARGETING IN DIFFERENT

MARKET ENVIRONMENTS

Emerging Fragmented Transitional Declining Global

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Emerging Market

Buyer Diversity– Segmentation limited due to

similarity of buyers’ preferencesIndustry Structure

– Typically small new organizations

– Limited access to resources Capabilities and Resources

– Unique benefit (differentiation) strategy rather than low-cost

– First-mover advantageTargeting Strategy

– Single target or a few broad segments

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INNOVATION FEATURE

An Emerging Market for Satellite Radio Services

SATELLITE RADIO POWERS UPSatellite 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.

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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, XM’s 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 Age—XM?”, Business Week, July 7, 2003, 90-92.

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Growth MarketBuyer Diversity

– 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.

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Strategies for Mature Markets

Buyer Diversity– Segmentation essential for competitive

advantageIndustry Structure

– Intense competition for market share– Emphasis on cost and service, and

pressures on profitsCapabilities and Resources

Management’s objectives: cost reduction, selective targeting, product differentiation

Targeting Strategy Firms pursuing extensive targeting

strategies may decide to exit from certain segments

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Global MarketsGlobal 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 andcompetition

Targeting Strategy– Targeting a single country, regional

(multinational) targeting, or global targeting

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POSITIONING STRATEGY

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

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MARKET TARGET

POSITIONING EFFECTIVENESS

POSITIONING STRATEGY

The extent to which

positioning objectives are

achieved for the market target

POSITIONING CONCEPT

The desired positioning of the product (brand) by

targeted buyers

The combination of marketing

actions used to communicate the positioning

concept to targeted buyers

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Positioning in Perspective

Objective– Match the organization’s 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.

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POSITIONINGCONCEPT

Symbolic Functional

Experiential

The Perception or Association that

Management Wants Buyers to Have

Concerning the Brand

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DEVELOPING THE POSITIONING

STRATEGYThe Positioning Strategy Places the

Marketing Program (mix) Components into a

Coordinated Set of Actions Designed to Deliver Superior Customer

Value

PRODUCT

PROMOTION

PRICE

VALUE CHAIN

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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

Positioning Issues

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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

marketing strategy, and the Internet strategy, indicating how they are used in the positioning strategy.

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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.

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Methods for

Determining

Positioning Effectivene

ssAnalytical

Positioning Models

Test Marketing

Customer and Competitor Research

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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

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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