PowerPoint Presentation6-*
6-*
Market Targeting Strategy
Positioning Strategy
the People or Organizations in a
Product-Market Toward Which a
Firm Directs Its Positioning
•The product-market
•Its buyers
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-*
SEGMENTS
VALUE
OPPORTUNITES
CAPABILITIES/
SEGMENT
MATCH
TARGET(S)
POSTIONING
Decide and implement a positioning strategy for each targeted segment
6-*
Industry structure
6-*
Emerging
Fragmented
Transitional
Declining
Global
6-*
Industry Structure
First-mover advantage
Targeting Strategy
6-*
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-*
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.
6-*
Capabilities and Resources
Survival requires aggressive actions by firms that seek large market positions
Otherwise select one or a few market segments
Targeting Strategy
Extensive market coverage by firms with established businesses in related markets
Selective targeting by firms with diversified product portfolios
Very focused targeting strategies by small organizations serving one or a few market segments.
6-*
Industry Structure
Emphasis on cost and service, and pressures on profits
Capabilities and Resources
Targeting Strategy
Firms pursuing extensive targeting strategies may decide to exit from certain segments
6-*
Global Reach and Standardization
Identify market segments that span global markets and serve these needs with global positioning strategies
Local Adaptation
Buyers’ needs and preferences affected by social, political, cultural, economic, and language differences
Industry Structure
competition
6-*
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-*
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-*
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-*
POSITIONING
CONCEPT
The Perception or Association that Management Wants Buyers to Have Concerning the Brand
Symbolic
Functional
Experiential
6-*
Marketing Program (mix)
Deliver Superior Customer
6-*
The positioning concept applies to a specific brand rather than all the competing brands that compose a product classification
The concept is used to guide positioning decisions over the life of the brand
Multiple concepts are likely to confuse buyers and may weaken the effectiveness of positioning actions
Positioning Issues
6-*
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.
be used.
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-*
The marketing offer (product, distribution, price, and promotion) is both distinct and valued in the minds of the customers in the market target.
6-*
Analytical Positioning Models
Provides market (sales forecasts) and effectiveness measures
Positioning Models
6-*
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
6-*
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-*
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-*
Illustrative Impacts of Changes in Business Strategy Restructuring on Targeting and Positioning Strategies
Changes in Business Strategy
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
Repositioning
Value Chain Integration
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-*