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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
Copyright: Raja Shuja-ul-Haq (2009)
What is “Market Segmentation”?
Market Segmentation is the activity of dividing the “mass market” into “homogeneous customer groups” (i.e. market segments) …
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
Mass Market
1 2
3
4
5
6
7
Market Segments
Market Segmentation:
Copyright: Raja Shuja-ul-Haq (2009)
1 2
3
4
6
7
8
Targeting:
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
Why Market Segmentation?
Market Segmentation
Target Market Selection
Tailored Marketing MixDifferentiation
Identifying Opportunities (and Threats)
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
Marketing Mix
Marketing Audit
Lets consider we are selling a “Pablo Picasso” painting …
Copyright: Raja Shuja-ul-Haq (2009)
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 !!!
Copyright: Raja Shuja-ul-Haq (2009)
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 …
Copyright: Raja Shuja-ul-Haq (2009)
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 …
Copyright: Raja Shuja-ul-Haq (2009)
If you don’t know what you are aiming at, how can you possibly expect to hit the target ???
Copyright: Raja Shuja-ul-Haq (2009)
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 ?
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
Step 2. The Segmented Market
C1
C2
C3
C5
C6 C8
C4
Customers are grouped into segments on the basis of having similar characteristics
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
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)
Copyright: Raja Shuja-ul-Haq (2009)
B2C Segmentation
Behavioural Psychographic Profile
Benefits Sought
Purchase Occasion
Purchase Behaviour
Usage
Perceptions and Beliefs
Lifestyle
Personality
Demographic
Socio-Economic
Geographic
Copyright: Raja Shuja-ul-Haq (2009)
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
Age, Marital Status, Employment Status and Children
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
A marketer might immediately consider socio-demographic segments as being customer groups; ignoring many other segmentation possibilities
Copyright: Raja Shuja-ul-Haq (2009)
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”
Copyright: Raja Shuja-ul-Haq (2009)
For Example …
2. Behavioural Segmentation
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
Nokia E90 Communicator targets the “innovator segment” for its fifth generation of Communicators
Copyright: Raja Shuja-ul-Haq (2009)
3. Psychographic Segmentation
Copyright: Raja Shuja-ul-Haq (2009)
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)
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
Microsegmentation
Copyright: Raja Shuja-ul-Haq (2009)
Organizational Size:
Large, medium, small
Industry:
Petroleum, financial, hospitality
Business:
Oil exploration and drilling, banking, hotels
Geographic:
Local, national, global
B2B Segmentation: Macro
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
Application:
Light users, heavy users, non-users
Loyalty:
Contractual work, one-off transaction
B2B Segmentation: Micro
The “Strategic Segment”
Copyright: Raja Shuja-ul-Haq (2009)
Target Segment
x
x
x
x
Copyright: Raja Shuja-ul-Haq (2009)
Stable
Measurable
Loyal
AppropriateStrategic Segment
Profitable
Unique
Manageable
Most profitable
Satisfies customer needs
Accessible
Substantial
Fits Culture
The “Strategic Segment” is …
Copyright: Raja Shuja-ul-Haq (2009)
The “Right Customer”
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
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 !!!
Copyright: Raja Shuja-ul-Haq (2009)
Parameters for Measuring Segment Attractiveness
Copyright: Raja Shuja-ul-Haq (2009)
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.
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
Is Pakistan telecom market really attractive?
Or has it reached maturity???
What do you think?
The 4 Market Segmentation Strategies
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
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) …
Copyright: Raja Shuja-ul-Haq (2009)
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)
Copyright: Raja Shuja-ul-Haq (2009)
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 …
Copyright: Raja Shuja-ul-Haq (2009)
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)
Copyright: Raja Shuja-ul-Haq (2009)
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!!!
?
Copyright: Raja Shuja-ul-Haq (2009)
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
Satisfied Stayers Happy Wanderers
Hostages
Customer Loyalty
Customer Satisfaction
High
Low
High Low
Dealers
Copyright: Raja Shuja-ul-Haq (2009)
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
.
Copyright: Raja Shuja-ul-Haq (2009)
2) Using Customer Relationship Needs and Desired Level of Intimacy with the company
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
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
.
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
3) Using Market Attractiveness and Market Position
Copyright: Raja Shuja-ul-Haq (2009)
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 …
Copyright: Raja Shuja-ul-Haq (2009)
Core Business Peripheral Business
Illusion Business
Market Attractiveness
Market Position
High
Low
High Low
Dead-end Business
Copyright: Raja Shuja-ul-Haq (2009)
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
.
Copyright: Raja Shuja-ul-Haq (2009)
4) Using Internal Capability and Market Segment Attractiveness
Copyright: Raja Shuja-ul-Haq (2009)
Internal Capability:
The distinctive competency of a company to serve its customers
Market Attractiveness:
To what extent the market is attractive to the company …
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
5) Using Customer Sophistication and Customer Repute
Copyright: Raja Shuja-ul-Haq (2009)
“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 …
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
Positioning
“You must have mindshare before you can have market share”
- Christopher M. Knight
Copyright: Raja Shuja-ul-Haq (2009)
“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
Copyright: Raja Shuja-ul-Haq (2009)
Simply put, positioning is the activity of placing the product at a chosen spot in the minds of the consumers …
Copyright: Raja Shuja-ul-Haq (2009)
The best way to get a view of the human mind is through constructing a “Perceptual Map”
Copyright: Raja Shuja-ul-Haq (2009)
Using perpetual maps to help positioning process
Price
+
-
+-Quality
Copyright: Raja Shuja-ul-Haq (2009)
Using perpetual maps to help positioning process
Copyright: Raja Shuja-ul-Haq (2009)
Perpetual map applied to UK Automobile Market
Prestige, Status
+
-
+-
Basic / Rational
Personal / Emotional
Economy
BMW
Saab
Volvo
Ford
Fiat
Toyota
Copyright: Raja Shuja-ul-Haq (2009)
Perpetual map applied to US Painkillers Market
Copyright: Raja Shuja-ul-Haq (2009)
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
Good ValueBlue Collar
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
Good ValueBlue Collar
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 ???
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
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)
Copyright: Raja Shuja-ul-Haq (2009)
Specific Positioning Strategies
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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)
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b. Benefit Positioning:
Product promises a particular benefit
i.e. Ariel EnzyMax claims it cleans better even in cold water …
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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
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d. Quality / Price Positioning:
Product is positioned at a certain quality or price level …
i.e. Zong is positioning its packages on economy
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
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” …
Copyright: Raja Shuja-ul-Haq (2009)
Copyright: Raja Shuja-ul-Haq (2009)
f. Category Positioning:
The company may describe itself as the category leader
i.e. HP means printers, Xerox means photocopiers, Gillette means shaving systems
Copyright: Raja Shuja-ul-Haq (2009)
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)
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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 …
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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.
Copyright: Raja Shuja-ul-Haq (2009)
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”
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Knorr has associated its “make-a-meal” packaged Chinese food items with Chinese food served in restaurants …
Copyright: Raja Shuja-ul-Haq (2009)
How to make your positioning effective?Always follow the 4 Cs of effective positioning
CREDIBILITY CLARITY
CONSISTANCYCOMPETITIVENESS
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Try to keep your positioning simple- associate with one or a low number of functional benefits
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Case Analysis 2: Black and Decker Drills
Copyright: Raja Shuja-ul-Haq (2009)
“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
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
However, the marketing managers of “Black and Decker” drills should ask themselves ….
Positioning Plan
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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?
Copyright: Raja Shuja-ul-Haq (2009)
Case Analysis 3: Lucozade Energy Drink
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
Adult
Healthy
Child
Sick
Perceptual Map Technique Used by Lucozade’s Marketing Managers
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Copyright: Raja Shuja-ul-Haq (2009)
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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
Copyright: Raja Shuja-ul-Haq (2009)
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)
Copyright: Raja Shuja-ul-Haq (2009)
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
Copyright: Raja Shuja-ul-Haq (2009)
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