Transcript for the market target. - McGraw

CRAVENS
PIERCY
8/e
McGraw-Hill/Irwin
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
6-2
Chapter Six
Market Targeting
and
Strategic Positioning
McGraw-Hill/Irwin
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Market Targeting
and Strategic
Positioning
Market Targeting Strategy
 Targeting in Different
Market Environments
 Positioning Strategy
 Developing the Positioning
Strategy
 Determining Positioning
Effectiveness

6-3
MARKET
TARGETING
STRATEGY
6-4
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
Market Targeting
and Strategic
Positioning

Core dimensions of
market-driven strategy:
deciding which buyer’s to
target and how to position
the firm’s products

Effective targeting and
positioning strategies are
essential in gaining and
sustaining superior
performance
6-5
6-6
SEGMENTS
VALUE
OPPORTUNITES
CAPABILITIES/
SEGMENT
MATCH
TARGET(S)
POSTIONING
FOR EACH
TARGET
6-7
Identify segments
within the
product-market
TARGETING
AND
POSTIONING
Decide and
implement a
positioning
strategy for
each targeted
segment
Decide
which
segment(s)
to
target
6-8
Market Targeting
Alternatives
Segments Clearly Defined
Selective
Targeting
Target
Selected
Niche(s)
Product
Specialization
Target
Multiple
Segments
Product
Variety
Differentiated But Segments
Not Clearly Defined
Extensive
Targeting
Factors Influencing
Targeting Decisions

Stage of product –
market maturity

Extent of diversity in
preferences

Industry structure

Capabilities and
resources

Opportunities to gain
competitive advantage
6-9
6-10
TARGETING IN
DIFFERENT MARKET
ENVIRONMENTS
 Emerging
 Fragmented
 Transitional
 Declining
 Global
6-11
Emerging Market
Buyer Diversity
– Segmentation limited due to
similarity of buyers’ preferences
Industry Structure
– Typically small new
organizations
– Limited access to resources
Capabilities and Resources
– Unique benefit (differentiation)
strategy rather than low-cost
– First-mover advantage
Targeting Strategy
– Single target or a few broad
segments
6-12
INNOVATION
FEATURE
An Emerging
Market for Satellite
Radio Services
SATELLITE RADIO POWERS UP
Satellite 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.
6-13
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.
Growth Market
6-14
Buyer 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.
Strategies for
Mature Markets
6-15
Buyer Diversity
– Segmentation essential for competitive
advantage
Industry Structure
– Intense competition for market share
– Emphasis on cost and service, and
pressures on profits
Capabilities 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
Global Markets
6-16
Global 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 and
competition
Targeting Strategy
– Targeting a single country, regional
(multinational) targeting, or global
targeting
6-17
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.
6-18
POSITIONING
CONCEPT
The desired positioning of
the product (brand) by
targeted buyers
MARKET
TARGET
POSITIONING
EFFECTIVENESS
The extent to
which
positioning
objectives are
achieved for the
market target
POSITIONING
STRATEGY
The combination
of marketing
actions used to
communicate
the positioning
concept to
targeted buyers
Positioning in
Perspective

6-19
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.
The Perception or
Association that
Management Wants
Buyers to Have
Concerning the Brand
Symbolic
Functional
POSITIONING
CONCEPT
Experiential
6-20
DEVELOPING THE
POSITIONING
STRATEGY
6-21
The Positioning Strategy Places the
Marketing Program (mix)
Components into a Coordinated
Set of Actions Designed to
Deliver Superior Customer
Value
PRODUCT
VALUE
CHAIN
PROMOTION
PRICE
6-22
Positioning Issues
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
The positioning strategy
indicates how (and why) the
product mix, line, or brand is to
be positioned for each market
target. This strategy includes:
6-23
•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.
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.
6-24
6-25
Customer and
Competitor
Research
Methods for
Determining
Positioning
Effectiveness
Analytical
Positioning
Models
Test
Marketing
6-26
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
6-27
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
Positioning in
Perspective






6-28
Positioning is a central part of
business strategy
Positioning analysis starts with an
understanding of the value
proposition for the target segment
Value-driven positioning is the
objective
Positioning seeks to differentiate the
organization’s offer from the
competition
Positioning seeks to create a unique
perception in buyers’ minds of the
target market segment
Positioning is the unifying dimension
of market-driven strategy
6-29
Positioning usually means
that an overt decision is being
made to concentrate only on
certain segments. Such an
approach requires
commitment and discipline
because it’s not easy to 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 other
segments.
Source: Aaker and Shansby, Business Horizons, May-June 1982, 61.
6-30
Illustrative Impacts of Changes in
Business Strategy Restructuring on
Targeting and Positioning Strategies
Changes in
Business Strategy
Market Targeting Impact Positioning Impact
Rapid
Growth/
Retrenchment
Market scope may not
change although targets
may be increased or
reduced.
Substantial changes in
resource allocation, (e.g.
advertising expenditures
Changing the
Product Mix
No change is necessary
unless increase in product
scope creates opportunities
in new segments.
Changes in product strategy,
methods of distribution, and
promotional strategies may be
necessary.
Changing the
Market Scope
Targeting is likely to change
to include new targets.
Positioning strategy must be
developed for each new
target.
Repositioning
Should not have a major
effect on targeting strategy.
Product, distribution, price,
and promotion strategies may
be affected.
Value Chain
Integration
Should have no effect on
targeting strategy.
Primary impact on channel,
pricing and promotion
strategies.
Diversification
Targeting strategies must be
selected in new business
areas.
Positioning strategies must be
developed (or acquired for the
new business areas.
Strategic Alliance
Targeting strategy may be
affected based on the nature
and scope of the alliance.
Operating relationships and
assignment or responsibilities
must be established.
6-31
Targeting and
Positioning
Product
Strategy
Positioning
Strategy
Promotion
Strategy
Market
Target
Price
Strategy
Distribution
Strategy