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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