Advanced Marketing Marketing Strategy and Competitive Positioning

MMU Cyberjaya
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9.30-11.00:
Integrated Case analysis and Discussion (PECHA KUCHA)

11.20am 1pm: Segmentation and Positioning principles 1-2pm : Lunch 2-3.00: Selecting target markets 3.15-5.30pm: Pfizer case (A) discussion and case Presentation and briefing on OTWC next presentation.
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COMPETITIVE POSITIONING how customers perceive the alternative offerings on the market, compared with each other. SEGMENTATION firms dividing the market into groups of similar customers. Why? And how? Linked by customer needs ultimately .
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Develop marketing mix for each target segment

Develop positioning for each target segment Select target market (s)

MARKET POSITIONING

MARKET TARGETING
Develop measures of segment attractiveness Develop profiles of resulting segments Identify bases for segmenting the market

MARKET SEGMENTATION
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Market segmentation involves viewing a heterogeneous market as a number of smaller homogeneous markets , in response to differing preferences, attributable to the desires of consumers for more precise satisfaction of their varying wants (Smith 1956, quoted in Dibb 2001)

father of market segmentation is widely considered to be Wendell Smith (1956), who proposed market segmentation as an alternative to product differentiation.
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Segmentation helps to homogenize market heterogeneity (Dibb, Stern, & Wensley, 2002, p. 113)

a recognition of heterogeneity in demand. Different consumers/groups of consumers or types of consumers have needs and preferences (benefits sought, purchasing behaviour, pricing structure and methods)

Thus, different groups will respond differently to marketing activities (marketing mix, promotions, branding etc)

Main issue: to deliver winning propositions to customers. (based on what customers value)
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correct market definition and market segmentation lie at the heart of successful marketing. They also lie at the heart of successful market research (Prof. Malcolm
Macdonald, (2010) Existentialism a school of thought based on a conception of the absurdity of the universe . International Journal of Market Research, Vol . 52 (4).)

An important capability in strategic marketing linked to choosing targets and positioning against alternatives to build competitive advantage. To segment or not to segment??
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Consumer trends

Fragmentation in modern markets Rise of individualism

Sophistication of technologies

Communication, Distribution Production

Moving towards one to one segmentation or segments of one

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Level of competition GENERIC

Product definition Health and beauty aids Shaving equipment

Illustrative competitors Consumer product companies Gillette, Bic

Need/want satisfied Enhancement of health and beauty Shaving Electric shaving

Product type Product variant

Electric razors Remington, Braun, Panasonic

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Customers must differ from one another in some important respect. The difference is useful for segmentation purposes meaning the differences are related to different behavior patterns or responses to marketing mix. 2. The segment must be identifiable and measurable segment attractiveness, estimates. 3. Segment can be isolated from the other segments in the market - distinctive
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IDENTIFIABLE who are your customers? conceptually different would the segments respond effectively to different marketing mix elements and programs. MEASURABLE no s market share/ volume of purchases
the degree to which the size, purchasing power and profits of a market segment can be measured.

SUBSTANTIAL should it be large? ACCESSIBLE able to access (reached and served) customers , delivery/communication channels in place or in development stage. RELEVANT/actionable on sound measures , not vague basis. That effective programs and strategies may be developed to serve the segments. Focusing on the segment of interest.

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Aids target market selection (potential for sales and profits, ability and availability of company resources to service the target market) Allows tailored marketing mix matched to the customer preferences and requirements Differentiate more effectively Create additional utility for customers as basis for premium price More effective use of company resources - focused Reduce competitive pressure carve out a position for company amongst competitive offerings.
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Segment identification research? Increased manufacturing costs different offerings Increased marketing , stockholding, and other costs Need to trade off higher cost versus higher utility
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1.

METHODOLOGY how to segment i.e. what base to utilize; technique to identify or evaluate segments Evaluating the robustness of the segment see segment requirements Strategic segmentation issues Implementation capabilities and characteristics of the corporation
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2.

3. 4.

No single correct base One market can be segmented in different ways Review requirements and characteristics of consumers in market Identify bases for segmenting the market Develop profiles of resulting segments
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1.

2. 3.

Background customer characteristics demographics, socio-economic characteristics, life cycle position, combination classification systems based on the above Benefits sought Behavioural elements purchase behaviour innovator, loyal, ; relationship behaviour
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Behavioural

Demographic

Benefits sought Purchase occasion Purchase behaviour Usage rate Loyalty status

Gender Age Family lifecycle Social class Occupation Ethnicity

Disadvantage of using demographic characteristics/ socio economic bases? -Internally homogenous -May exhibit different behavioural patterns -Motivations? -Could be related to other bases.

More direct to response or purchase and patterns, easier to detect

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Psychographic

GeoGeo-demographic
Combination of geographic, demographic and psychographic Households classified by postcodes Generalisations made about behavior, demographics and psychographics Data from a no. of sources

Classifying residential neighbourhoods; see ACORN.

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Lifestyle (AIO) Personality General attitudes, beliefs and values

Requires sophisticated research methods and analytical sophistication

r e s o u r c e s

Primary motivation
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ACORN is a geodemographic segmentation of the UK s population which segments small neighbourhoods, postcodes, or consumer households into 5 categories, 17 groups and 56 types. See http://www.caci.co.uk/acornclassification.aspx
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affluent, urban sophisticate, who adds deeper meaning, quality and beauty to consumptions. P&G The Maturiteen more savvy , responsible, mature and pragmatic than previous cohorts with poinse attributed to the baby boomer parents who treat kids as equals.Technology master, adept at online research, in house shopping consultant,web dependent. SONY.

The metrosexual

THE modern man

something in the middle. Bigger shopper than his dad but still a sports fan. Sophisticated 2030 year old Moisteriser and hair gel aare ordinary items.

The dad largely ignored. In their peak earning years. Patek phillipe The retrosexual traditional male rejects consumerism and metro ness . . Old Spice, Brut (source: Business Week, Sept 4 2006, pg 45,54)

th

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2002, the british spent 1900 million on ready-made meals and nearly one in 3 british adults now eats a Ready- made meal more than once a week (compared to 1 in 6 In France). Convenience is one of the reasons but they have also become the mainstay meals for those who are generally time-poor and /or have no inclination to cook (replacing chinese/indian takeaways). Some of the higher quality chilled foods eg M&S are now promoted as equivalent to favourite restaurant or dining out experience.
NOT A SINGLE MARKET!

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Perceived Knowledge

HIGH
Cautious Investors Capital Accumulators

LOW
Financially Confused Apathetic minimalists

HIGH Financial Maturity

LOW
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Background company characteristics type of industry, stage of industry development size, profit volume, power structure,.. Location, as well as what type of organisation Benefits sought Behavioral characteristics risk perceptions, innovativeness, volume decision making style etc Consider extent of market concentration i.e. no.of customers and then degree of product customisation

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In 1964, in New Criteria for Market Segmentation, Daniel Yankelovich asserted that: Traditional demographic traits such as age, sex, education levels, and income no longer said enough to serve as a basis for marketing strategy. Nondemographic traits such as values, tastes, and preferences were more likely to influence consumers purchases than their demographic traits were. Sound marketing strategy depended on identifying segments that were potentially receptive to a particular brand and product category.

(see Yankelovich, D. And Meer, (2006) Rediscovering market segmentation. Harvard Business Review, 84, 6, February, pp. 122 131.

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Do segments really exist Most fundamental difference between customers is the benefit from use. i.e. SDL. First order segmentation and then second order. Segments overlap Often based on attitudes but attitudes are not the same as behaviour Are segments stable/existence over time. Segment at brand level or for product form Too much focus on consumers and not enough focus on competitors.
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Organisation structure Internal communications and relations Corporate culture Information and reporting systems resource requirements and expertise Decision making processes Corporate capability Operational challenges salesforce, distribution,
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1. 2. 3. 4.

How to define the market? How to segment the market into different groups of customers? How attractive are the alternative market segments? What about firm s competitive position?

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Factors affecting market segment attractiveness

Targeting whole market mass marketing

Targeting multiple segments (multi segments)

Targeting One segment only (niche)

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Choice based on; Segment size, costs in differentiating, extent and durability of segment differences, stability and mutual compability of segments targets, strategic fit of segments, level and type of competition in prospective segment targets.

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Kara & Kaynak (1997) - markets of a single customer.

Advances in ICT and automation in manufacturing may allow marketers to bring out affordable individualised versions of products. Finer segmentation ultimate level of internal differentiation. Finer segmentation strategies may include microsegmentation, and mass customization, variety seeking strategy (allowing buyers opportunities to vary their choices)
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Dibb (2001) segments of one

Technological advances enhancing the capacity to store and manipulate diverse sets of customer information , improving segmentation opportunities  Usage of new media allowing tracking of purchases over time to build resource rich long term customer relationships


Segments of one emphasizes understanding and satisfying the needs, wants and resources of individual consumers and customers rather than those of mass markets or market segments (Sheth 2000, pg 56 quoted in Dibb 2001) Tailored services, tailored products to individuals

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How customers perceive products/service/brands amongst competitor ones.Can apply to:

COMPANIES: Tesco vs Sainsbury PRODUCTS AND SERVICES Nokia vs Samsung handphones

BRANDS - Coke vs pepsi

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Ries and Trout Positioning is not what you do to a product. Positioning is what you do to the mind of the Prospect. Positioning is the act of designing the company s offering and image so that they occupy a meaningful and distinct competitive position in the target customers minds.(Kotler, 1997)

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Strategy
How should the product be perceived in the minds of consumers relative to competitors

Outcome
What customers actually think about the product?

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Identify your strengths Understand what chosen segment values Consider competitor offerings How many USP s do you have in comparison? are you quality, best service, efficient, responsive Can you differentiate yourself with these USP s?
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CLARITY clear CONSISTENCY - consistent COMPETITIVENESS superior to competitors CREDIBILITY believable

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Provide comparison of what consumers want with what is currently offered and what is ideal Basis for comparing brands Opp. To spot gaps in the market

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Lively Trendy Ordinary food Family focused Active

Quiet Traditional Good Food Not family focused Relaxing

IDEAL RESORT Blue resort A Yellow resort b

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Cold storage

HIGH PRICE Isetan supermarket

Grocers Village Jusco supermarket

Giant TESCO WIDE RANGE Econsave, Mydin,

7-Eleven, Petronas, shell, etc convenience shops NARROW RANGE Independent Neighbourhood grocery stores Speedmart 99

LOW PRICE
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Overpositioning believable position but too narrow Under positioning believable but not special Doubtful positioning improbable claims Confused not sure what it is.

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http://www.interbrand.com/

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