Strategic Marketing
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
CHAPTER 6
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.
Identifying Market Segments and Targets
* Market Segmentation: Identifying groups of
customers that
* Have common needs
* Will respond similarly to a marketing action
* Market Segments: “… relatively
homogeneous groups of prospective buyers
that result from the market segmentation
process.”
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Product Differentiation
* “This strategy involves a firm’s using
different marketing mix activities, such
as product features and advertising, to
help consumers perceive the product
as being different and better than
competing products.”
6-4
Segmentation Strategies
* One product and multiple market
segments
* Multiple products and multiple market
segments
* Segments of one or “mass
customization”
6-5
Steps in Segmenting and Targeting
Markets
* Group potential buyers into segments
* Group products to be sold into categories
* Develop a market-product grid and estimate
size of markets
* Select target markets
* Take marketing actions to reach target
markets
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SEGMENTS
VALUE
OPPORTUNITES
CAPABILITIES/
SEGMENT
MATCH
TARGET(S)
POSTIONING
FOR EACH
TARGET
6-7
Criteria to Use in Forming Segments
* Potential for increased profit
* Similarity of needs of potential buyers
within a segment
* Difference of needs of buyers among
segments
* Potential of a marketing action to reach a
segment
* Simplicity and cost of assigning potential
buyers to segments
6-8
Terms
* “Product positioning refers to the
place an offering occupies in
consumers’ minds on important
attributes relative to competitive
products.”
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Identify segments within the
product-market
TARGETING
AND
POSTIONING
Decide and
implement a Decide which
positioning segment(s) to
strategy for each target
targeted segment
6-10
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 resources
•Competition
6-11
Factors Influencing Targeting
Decisions
* Stage of product – market maturity
* Extent of diversity in preferences
* Industry structure
* Capabilities and resources
* Opportunities to gain competitive
advantage
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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
6-13
TARGETING IN DIFFERENT MARKET
ENVIRONMENTS
Emerging
Growing
Mature
Declining
Global
6-14
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
6-15
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
Deciding which segment to serve
Firms pursuing extensive targeting strategies may decide
to exit from certain segments
6-16
POSITIONING STRATEGY
Deciding the desired perception/
association of an organization/ brand by
market target buyers…and designing the
marketing program to meet (and exceed)
buyers’ value requirements.
6-17
How Positioning Works
* Objective
* Match the organization’s 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.
6-18
INNOVATION Spotting Shifts in Demand in
FEATURE designing Hennes & Mauritz
(H&M) Apparel
It’s 1:30 p.m. on a Monday in the bustling H&M store on Manhattan’s fifth
Avenue, and Alma Saldana, a 28-year-old makeup artist from Houston, is stuffing
three tiny vests into her black Y&M shopping bag. That’s on top of blouses,
jackets, and pants. Saldana is in a buying frenzy. This is her first visit to H&M,
the Stockholm-based fashion retailer, and it’s everything she had hoped for.
“Somebody told me you find great fashion at a very cheap price, and it’s true!”
she exclaims.
Such enthusiasm has made H&M one of the hottest fashion companies around.
Central to its success is its ability to spot shifts in demand and respond with
lightning speed. While traditional clothing retailers design their wares at least six
months ahead of time, H&M can rush items into stores in as little as three weeks.
Most of the work is done ahead, too. But when it sees consumers scooping up
something like vests, it speeds a slew of new variations into stores within the
same season, to the delight of shoppers like Saldana. “Speed is important. You
need to have system where you can react in a short lead time with the right
products,” says Chief Executive Rolf Eriksen.
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How does it work? H&M designers had included a couple of cropped vests in
their autumn/winter collections. In august, shortly after the vests went on sales,
they started “flying out of the stores,” say Margareta van den Bosch, H&M’s head
of design. H&M’s designers in Stockholm (it has more than 100) spotted the
trend in the company’s worldwide sales reports, published internally every
Monday. About half of them immediately started sketching new styles. As
quickly as designs came off their desks, pattern makers snipped and pinned,
pressing employees into service as live models. At the same time, buyers
ordered fabrics. The designs were zoomed electronically to workers at H&M’s
production offices in Europe and Asia, which then selected manufacturers that
could handle the jobs quickly. In less than two months most H&M stores had 5
to 10 new vest styles in stock.
One of the secrets to H&M’s speed is decisiveness. The people in charge of each
collection can dream up and produce new fashions on their own authority. Only
huge orders require approval from higher ups. “We have a flat organization. We
have a shorter way to a decision,” says Sanna Lindberg, president of H&M
Hennes & Mauritz USA. That makes H&M fashionable in more ways than one.
Source: Steve Hamm, “SPEEDDEMONS,” BusinessWeek, March 27, 2006, 70-71. 6-20
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
VALUE CHAIN
PROMOTION
PRICE
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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.
6-22
Customer and
Competitor Research
Methods for
Determining
Positioning
Effectiveness
Analytical Test Marketing
Positioning
Models
6-23
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
6-24
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
6-25
Illustrative Impacts of Changes in Business
Strategy on Targeting and Positioning
Strategies
Changes in Business Market Targeting Impact
Strategy Positioning Impact
Rapid Growth/ Market scope may not change Substantial changes in resource
Retrenchment although targets may be increased allocation, (e.g. advertising
or reduced. expenditures
Changing the Product Mix No change is necessary unless increase Changes in product strategy, methods of
in product scope creates opportunities distribution, and promotional strategies
in new segments. may be necessary.
Changing the Market Targeting is likely to change to include Positioning strategy must be developed
Scope new targets. for each new target.
Repositioning Should not have a major effect on Product, distribution, price, and
targeting strategy. promotion strategies may be affected.
Value Chain Integration Should have no effect on targeting Primary impact on channel, pricing and
strategy. promotion strategies.
Diversification Targeting strategies must be selected in Positioning strategies must be developed
new business areas. (or acquired for the new business areas.
Strategic Alliance Targeting strategy may be affected Operating relationships and assignment
based on the nature and scope of the or responsibilities must be established.
alliance.
6-26
Targeting and Positioning
Product Strategy
Positioning Strategy
Promotion Distribution
Strategy Strategy
Market Target
Price Strategy
6-27
GLOBAL Successful British Retailer
Tesco Enters the U.S.
FEATURE
Market
6-28
GLOBAL Successful British Retailer
Tesco Enters the U.S.
FEATURE
Market
Tesco announced plans to open a chain of convenience stores on the U.S. West
Coast in 2007, spending an estimated $453 M. The very successful retailer has four
types of stores, including the convenience chain, Tesco Express.
This initiative is being launched even though the U.S. retail grocery market is
experiencing intense competition, and some chains are cutting back or selling out.
Tesco’s decision to enter the U.S. convenience market is bold and risky. Some
authorities consider the action questionable. However, Tesco has a very impressive
success record in Britain. With its Tesco Express, Tesco Metro, Superstore, and Extra
hypermarkets, the giant retailer has dulled Wal-Mart’s drive to dominate the retail
scene.
Tesco has no brand awareness in the U.S. so building brand identity will be
challenging. Yet the retailer has global buying power, powerful information
technology, and strong supply chain capabilities. The stores will offer groceries,
produce, and private-label ready-to-eat meals. Some observers think Tesco is
planning to compete with Wal-Mart in its home market.
6-29
GLOBAL Successful British Retailer
Tesco Enters the U.S.
FEATURE
Market
Tesco, the largest retailer in the United Kingdom and third worldwide after Wal-
Mart and the French retailer Carrefour SA with sales over $80 Billion, started its
American operations last November by opening the first 20 stores in the West
Coast. The grocery store chain is called Fresh & Easy Neighborhood Market.
The chain’s strategy is to offer high quality, fresh and nutritious food on 10,000
sq-ft stores – between the size of a convenience store and a supermarket –
located on local neighborhoods. Many people questioned the format picked by
Tesco given the one-stop shop culture in the US translated into the success of
the big boxes and mass merchandisers. Tesco spent over 3 years studying the
American retail market and found that actually Americans visit multiple stores to
get what they want. Tesco’s executives believe people will continue shopping on
mass merchandisers and clubs to find lower prices but the neighborhood stores
will bring a differentiated assortment, with more focus on fresher and ready-to-
eat products versus packaged goods, and offer more shopping convenience to
customers.
Source: Kerry Capell, “Tesco: California Dreaming?” BusinessWeek, February 27, 2006, 38.
6-30
