CRAVENS

PIERCY

8/e
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Chapter Six

Market Targeting
and
Strategic Positioning

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 6-3

Market Targeting
and Strategic
Positioning
 Market Targeting Strategy
 Targeting in Different

Market Environments
 Positioning Strategy

 Developing the Positioning

Strategy
 Determining Positioning

Effectiveness
 6-4

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
 6-5

Mar ke t Ta rg eti ng
and S tr at eg ic
Posi ti oni ng
 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
 6-6

SEGMENTS

VALUE
OPPORTUNITES

CAPABILITIES/
SEGMENT
MATCH

TARGET(S)

POSTIONING
FOR EACH
TARGET
 6-7

Identify segments
within the
product-market

TARGETING
AND
POSTIONING
Decide and
implement a Decide
positioning which
strategy for segment(s
each ) to
targeted target
segment
 6-8

Mar ket Targe ti ng

Alt ern ati ves

Segments Clearly Defined

Target Target
Selected Multiple
Selective Niche(s) Segments
Extensive
Targeting Targeting
Product Product
Specialization Variety

Differentiated But Segments

Not Clearly Defined
 6-9

Fa ctors
Inf luenci ng
Ta rgeti ng
 Stage
Decof product
isi ons –
market maturity
 Extent of diversity in
preferences
 Industry structure
 Capabilities and
resources
 Opportunities to gain
competitive advantage
 6-10

TARGETING IN
DIFFERENT
MARKET
ENVIRONMENTS
 Emerging

 Fragmented
 Transitional
 Declining
 Global
 6-11

Eme rgin g
Ma rket
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
 6-12

INNOVATION An Emerging
Market for
FEATURE 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.
 6-13

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.
 6-14

Gro wt h
Ma rket
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
 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.
 6-15

Strateg ies for

Ma ture
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
 6-16

Gl obal 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
 6-17

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.
 6-18

POSITIONING
CONCEPT

The desired positioning of

the product (brand) by
targeted buyers

MARKET
TARGET

POSITIONING POSITIONING
EFFECTIVENESS STRATEGY
The extent to The combination
which of marketing
positioning actions used to
objectives are communicate
achieved for the the positioning
market target concept to
targeted buyers
 6-19

Positio nin g i n
Pe rsp ective
 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.
 6-20

The Perception or
Association that
Management Wants
Buyers to Have
Concerning the Brand

Symbolic Functional

POSITIONING
CONCEPT

Experiential
 6-21

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

PRODUC
T
VALUE
PROMOTION CHAIN

PRICE
 6-22

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
 6-23

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
 6-24

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.
 6-25

Customer and
Competitor
Research

Methods
for
Determinin
g
Positioning
Effectivene
ss
Analytical Test
Positioning Marketing
Models
 6-26

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
 6-27

Po sit ionin g
Er rors
 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
 6-28

Posi ti oni ng in
Perspecti ve
 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
 6-29

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.

 6-30

Illustrative Impacts of Changes in

Business Strategy Restructuring on
Targeting and Positioning Strategies
Changes in
Business Market Targeting Positioning Impact
Strategy Impact
Rapid Market scope may not Substantial changes in
Growth/ change although resource allocation, (e.g.
Retrenchme targets may be advertising expenditures
nt increased or reduced.

Changing the No change is necessary Changes in product

Product Mix unless increase in strategy, methods of
product scope creates distribution, and
opportunities in new promotional strategies may
segments. be necessary.

Changing the Targeting is likely to Positioning strategy must

Market Scope change to include new be developed for each new
targets. target.

Repositioning Should not have a major Product, distribution, price,

effect on targeting and promotion strategies
strategy. may be affected.

Value Chain Should have no effect on Primary impact on channel,

Integration targeting strategy. pricing and promotion
strategies.

Diversification Targeting strategies must Positioning strategies must

be selected in new be developed (or acquired
business areas. for the new business areas.

Strategic Targeting strategy may Operating relationships

Alliance be affected based on the and assignment or
nature and scope of the responsibilities must be
alliance. established.
 6-31

Targeting and
Positioning
Product
Strategy

Positioning
Strategy
Promotion Distribution
Strategy Strategy
Market
Target

Price
Strategy