6-1 Topic: 4 Market Targeting and Strategic Positioning Dr. Ehsanul Huda Chowdhury COURSE: STRATEGIC MARKETING PROGRAM: BBA IBA

6-2 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

6-3 TARGETING AND POSTIONING Identify segments within the product-market Decide which segment(s) to target Decide and implement a positioning strategy for each targeted segment

6-4 Market Targeting Alternatives Selective Targeting Extensive Targeting Segments Clearly Defined Differentiated But Segments Not Clearly Defined Target Selected Niche(s) Target Multiple Segments Product Variety Product Specialization

6-5 Factors Influencing Targeting Decisions  Stage of product – market maturity  Extent of diversity in preferences  Industry structure  Capabilities and resources  Opportunities to gain competitive advantage

6-6 TARGETING IN DIFFERENT MARKET ENVIRONMENTS  Emerging  Fragmented  Transitional  Declining  Global

6-7 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

6-8 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.

6-9 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,

6-10 Growth Market 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.

6-11 Strategies for Mature Markets 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

6-12 Global Markets 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

6-13 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.

6-14 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

6-15 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.

6-16 POSITIONING CONCEPT Symbolic Functional Experiential The Perception or Association that Management Wants Buyers to Have Concerning the Brand

6-17 DEVELOPING THE POSITIONING STRATEGY The 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

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

6-19 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.

6-20 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.

6-21 Methods for Determining Positioning Effectiveness Analytical Positioning Models Test Marketing Customer and Competitor Research

6-22 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

6-23 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