1.

Imperatives for Market-Driven Strategy

2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion
Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control



Strategic Marketing


CHAPTER 6

A. Market Targeting and Strategic Positioning

Market Targeting Strategy
Targeting in Different Market Environments
Positioning Strategy
Developing the Positioning Strategy
Determining Positioning Effectiveness
McGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
6-3
A. 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
Firms capabilities resources
Competition
-Targeting and positioning strategies consists of:
1.Identifying and analyzing the segments in a product-market,
2.Deciding which segments to target,
3.Desiging and implementing a positioning strategy foe each
target.
6-4
1.Targeting Alternatives
-The targeting decision determines which customer group the
organization will serve. A specific marketing effort(positioning strategy)
is directed toward each target that management decides to serve.
-Market targeting approaches fall into major categories:
i. Segment targeting when segments are clearly defined,
ii. Targeting based on product differentiating. As shown by exhibit
6.1,segment targeting ranges from a single segment to targeting all or
most of the segments in the market.
-Factors influencing targeting decisions- several factors may influence
the choice of the targeting strategy:
i. Stage of product-market maturity.
ii. Extent of diversity in buyer value requirements.
iii. Industry structure.
iv. The firms capabilities and resources.
v. Opportunities for gaining competitive advantage.
6-5
B. Targeting In Different Market Environments
-Four lifecycle stages illustrate the range of product market structures:
1.Emerging-product market which are newly formed are categorized as
emerging, and are created by factors such as a new technology, the
changing needs of buyers, and the identification of unmet needs by
suppliers.
-There are two type of emerging markets:
i. A totally new product market- the emerging market is formed by
people/organizations whose needs and wants have not been satisfied
by available product.
ii. A new product technology entering an existing product market-
the market entry provides an alternative value proposition to buyers
in an existing market.
6-6
-consideration for emerging markets:
i. Buyer Diversity
Segmentation limited due to similarity of buyers preferences
ii. Industry Structure
Typically small new organizations
Limited access to resources
iii. Capabilities and Resources
Unique benefit (differentiation) strategy rather than low-cost
First-mover advantage
iv. Targeting Strategy
Single target or a few broad segments
6-7
2. Growing-these product-markets are experiencing rapid growth.
-Identifying customer groups with similar value requirements improves
targeting, and experience with the product, process, and materials
technologies leads to greater efficiency and increased
standardization.
-analysis of the characteristics and preferences of existing buyers yields useful
guidelines for estimating market potential.
i. Product-Market structure-high growth markets are very attractive, and
that early entry offers important competitive advantage.
ii. Capabilities and Resources-The firms competing in growth markets are
likely to follow one of these strategies:
a. Pursuit of a market leadership strategy,
b. Follow very selective targeting and positioning strategies.

iii. 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.
6-8
3. Mature- the product markets are shifting from growth to maturity, as
indicated by the product lifecycle of the products.
a. Buyer Diversity
Segmentation essential for competitive advantage
b. Product market/Industry Structure
Intense competition for market share,
Emphasis on cost and service, and increases in the role and
importance of value chain strategies.
c. Capabilities and Resources
Managements objectives: cost reduction, selective targeting,
product differentiation
d. Targeting Strategy
Deciding which segment to serve
Firms pursuing extensive targeting strategies may decide to exit
from certain segments

6-9
4. Growth Market
There are two options of consideration-
a. Global Reach and Standardization
Identify market segments that span global markets and serve these needs
with global positioning strategies
b. Local Adaptation
Consider requirements of domestic buyers
Buyers needs and preferences affected by social, political, cultural,
economic, and language differences
Targeting Strategy
Targeting a single country, regional (multinational) targeting, or global
targeting
6-10
Market Targeting and Strategic Positioning

* Core dimensions of market-driven
strategy: deciding which buyers to
target and how to position the firms
products

* Effective targeting and positioning
strategies are essential in gaining and
sustaining superior performance


6-11
Exhibit 6.1Market 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
6-12
C. Positioning strategy

Deciding the desired perception/ association of an
organization/ brand by market target buyersand designing
the marketing program to meet (and exceed) buyers value
requirements.
6-13
MARKET
TARGET
POSITIONING
EFFECTIVENESS
POSITIONING
STRATEGY
How well
managements
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
STRATEGIC POSITIONING INITIATIVES
6-14
-The positioning concept indicates managements desired
positioning of the product (brand) in the eyes and minds of the
target buyers.
-It is intended to deliver the value requirements appropriate for
each market target pursued by the organization.
-The positioning strategy is the combination of marketing
program(mix) strategies used to portray the positioning desired by
management to the target buyers.
-this strategy includes the product, supporting services,
distribution channels, price, promotion.
Positioning effectiveness considers how well managements
positioning objectives are being achieve in the market target.
As shown in exhibit 6.4 the positioning objective is to have each
target customer perceive the brand distinctively from other
competing brands and favorably compared to the other brands.
6-15
How Positioning Works
* Objective
* Match the organizations distinctive capabilities with
the customer value requirements for the market target
(How do we want to be perceived by targeted
buyers?)
* Desired result
* Gain a relevant, distinct, and enduring position by the
targeted buyers that they consider important.
* Actions by the organization
* Design and implement the positioning strategy
(marketing program) for the market target.
6-16

1. Selecting the positioning concept
a. The positioning concept indicates how management wants
buyers to perceived the companys brand.
-The positioning can be central to customers perception and
choice decisions.
-The positioning concept should be linked to buyers value
requirements.
-The focus of the concept may be
i. A functional concept applies to product that solve
consumption-related problems for extremely generated
consumption needs. examples of brands using this basis of
positioning include Crest toothpaste (cavity prevention).
ii. Symbolic positioning relates to the buyers internally
generated need for self-enhancement, role positioning, group
membership, or ego identification. examples of symbolic
positioning are Rolax watches.
iii. The experiential concept is used to position products that
provide sensory pleasure, variety, and /or cognitive
stimulation.
6-17
SELECTING THE
POSITIONING
CONCEPT
Symbolic Functional
Experiential

The Perception or Association that Management Wants Buyers to
Have Concerning the Brand
6-18
-Three aspects of positioning concept selection are important:
i. The positioning concept applies to a specific brand rather than
all of the competing brands in a product classification such as
toothpaste.
ii. The concept is used to guide positioning(marketing program)
decisions over the life of the brand ,recognizing the brand
specific position may change over time.
iii. If two or more positioning concepts, for example, functional
and experimental, are used to guide positioning strategy, the
multiple concepts are likely to confuse buyers and perhaps
weaken the effectiveness of positioning actions.
6-19
b. The positioning decision
-It is useful to study the positioning of competing brands using
attributes that are important to existing and potential buyers of
the competitors brands.
-Marketing research may be necessary in identifying customers
ideal positioning.
6-20
C.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
6-21
i. The positioning concept applies to a specific brand
rather than all the competing brands that
compose a product classification
ii. The concept is used to guide positioning decisions
over the life of the brand
iii. Multiple concepts are likely to confuse buyers and
may weaken the effectiveness of positioning
actions.
iv. Whether the strategy is brand specific or greater
in scope depends on such factors as the size of
the product-market, characteristics of he goods or
service, the number of product involved, and the
product interrelationship in the consumer use
situation.
1.Scope of Positioning Strategy
6-22
2. Marketing program Decisions
Nokias positioning strategy includes aggressive innovation initiatives, a
very effective global value chain network, competitive pricing, and
effective promotion strategies matched to its major global markets in
Asia, Europe, middle east, Africa and the America.
i. The product strategy, indicating how the product(s) will be
positioned against the competition in the product-market.
ii. The value chain (distribution) strategy to be used.

iii. The pricing strategy, including the role and positioning of
price relative to competition.
iv. Promotion strategy:
-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.


6-23
D. 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.
-Positioning evaluation should include customer analysis,competitor
analysis,and internal analysis.
-managements objective is to gain a distinct positioned in the market of
interest.
-several methods and metrics are available for analyzing positioning
alternatives and determining positioning effectiveness.
-These include customer and competitor research, market testing of
proposed strategy, and the use of analytical techniques(exhibit 6.6).
6-24
Methods for
Determining
Positioning
Effectiveness
Analytical
Positioning
Models
Test Marketing
Customer and Competitor Research
Exhibit 6.6 determining positioning effectiveness
6-25
1. Customer and Competitor Research
* Research Studies
* Preference Maps
2. Test Marketing
* Generates information about commercial feasibility and
marketing program
* Provides market (sales forecasts) and effectiveness
measures
3. Positioning Models
* Incorporates research data into formal models of decision
analysis
-determining positioning effectiveness: Information is needed
as to whether the strategy yields the results which are
expected concerning sales, market share, profit
contribution, growth rates, customer satisfaction, and other
competitive advantages.
6-26
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
6-27
Positioning in Perspective

* 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 organizations 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
6-28
Positioning usually means that an overt decision
is being made to concentrate only on certain
segments. Such an approach requires
commitment and discipline because its 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.
6-29
Illustrative Impacts of Changes in Business Strategy 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.
6-30
Product Strategy
Promotion
Strategy
Price Strategy
Distribution
Strategy
Market Target
Positioning Strategy
Targeting and Positioning