Strategic Marketing MKT703

Virtual University of Pakistan

1/12/2020 SMM1 1
Targeting Decisions

Session23
 Introduction

• Successful companies have a market target

and effective positioning strategy.
• Colgate tooth paste Total (positioned as oral
dental antibiotic formulation).
 Opportunity Identification

• Identifying new types of classes of

buyers
• Uncovering unsatisfied needs of buyers
• Creating new ways or means for
satisfying buyer needs

4-4
 Opportunity-Organization
Matching
• Determines whether an identified opportunity is
consistent with an organization’s business, mission, and
competencies
• SWOT Analysis often employed – identification of KSF
though IFA and EFA
• Weaknesses has to be converted into strength in
order to exploit a particular market
• Financially attractive opportunities are sometimes
rejected at this stage due to lack of match
4-5
 Features of Opportunity
Analysis
• Qualitative Frame - Focuses on matching the attractiveness
of an opportunity with the potential of uncovering a market
niche
• Analysis depends on data about
1. competitive activity
2. buyer requirements
3. market demand and supplier sources
4. General environment
5. organizational capabilities.
• The attractiveness of the business depends on what type of
value can be created in the market compared to competitors
 Targeting strategies_ Trends
• One target segment – concentrated market – one
positioning strategy

• All segments target – differentiated market –

differentiated positioning strategy

• All segments target – mass market – one

positioning strategy
 Targeting strategies_ Trends
• Macro segmenting in Emerging Economies -
when preferences are not clear
• Micro segmentation when markets becomes
mature and with clear preferences
• Niche market may have to grow to reach an
appropriate level for segmentation as a large
mass market
 Confusion
• Whether the marketer is using a segmenting strategy or
a variety strategy.
• Depends on the way market is defined. Example
KELLOG cereals strategy offering variety

Segments Defined NOT Defined

Target selected Target multiple
Selective
targeting niches Segments Extensive
targeting

Product Variety of
specialization products
 Strategic Marketing MKT703

Virtual University of Pakistan

1/12/2020 SMM1 1
Positioning

Session 24
 Introduction

• Positioning – core issue of marketing strategy

• Successful companies have a market target
and effective positioning strategy.
 Influencers for Targeting
Market Environment:
• Shift in customer preferences
• Shift in Market environment
• Competitive activity
• Competitive industry structure
• Capability and skill set requirement
• Strategy leading to CA
 Marketing Environment- Types of
Markets

Emerging Markets
a) Micro segmenting (Dell Computers)
b) Emerging Economies and markets - broad
macro segmentation – global frame
c) Drivers of emerging markets
 Drivers of Macro frame of emerging
markets
• Uncertain shifts in buyers preferences – diffused pattern
• Firm’s objective - readiness / reluctance to exploit this shift
• New small competitors - fast moving entrants focus on
shifting segments
• Capability of innovating and developing unique value
system
• Advantage in cost
• Uniqueness or cost efficiency of newly introduced product
depends upon developing technology or process
• Flexible targeting strategy enables targeting few or many
segments
 Capabilities and Resources of New
Small Competitors
• Less financial clouding more technological
advantage
• Unique benefits Or it is a low cost alternative
to existing product - Email vs. Fax
• Or enter the market with mass marketing
frame
• It helps to identify new segments to approach
 Requirements Environmental Shifts in
Market
• Customer preference
• Competitive structure of industry
• Resource Requirement
• Targeting Strategy – mass market or
differentiated market or focused on few
segments
 Emerging and Growth Market
Emerging Stage
• First movers secure advantages
(small companies)
• Entrants are normally small
companies that focus on target
areas
• Segments are diffused
Growth Stage
• Large companies move in the
market
• They either select small existing
company or develop their own
resources by investing resources
• Segments are clearly visible
• Firms are capable of positioning
their system and raise entry
barriers
• Start innovating to develop
customer loyalty
• Selective targeting will be
effective
 Transitional Frame
Moving from:
• growth to maturity – initial fragmentation
• Maturity to Decline – high fragmentation
• Oligopolistic competition prevails
• Continuous innovation is required to extend
the life of product
• Aggressiveness in terms of defensive
strategies
 From Maturity to Fragmentation
• Mature market – later stage – fragmented
segments
• Many small firms and SBUs of large firms
become operative
• Competitive advantage rests with every
company that leads to monopolistic
competition
• monopolistic competition prevails
• Fragmented market – pure competition –
efficiency and cost effectiveness frame
 Decline

• Mature market can have both dominance

(matured market) or no dominance (fragmented
market)
• lack of innovation in mature and fragmented
segments lead to decline
• It implies disinvestment and liquidation
• Financially strong and innovative firms can
acquire competitors at lower rates
• Firms either exit the market or innovate
• Restructuring – mergers & acquisition
 Global segments
• Shift in market scope from local to international
markets
• Customer’s cultural values/preferences or
technological capabilities are identical
• Positioning is easier
• Market related capabilities of international
competitors
• Cost efficient standardized products are focused
• Firms with suitable system will focus on local
adaptation in international market
 Strategic Marketing MKT703

Virtual University of Pakistan

1/12/2020 SMM1 1
Targeting and Positioning

Session25
Product Life Cycle and Target
Customers identification

PLC Type of Consumer

Consumers characteristics
Introduction Innovators First Movers Preferences
Stage Go for new for majority of
products customers are
Extroverts not clear
Like travelling
Like to read
Like new
prodcuts11
Product Life Cycle and Target
Customer identification

PLC Type of Consumer Positioning

Consumers characteristics
Growth Early Known from •Customer
Stage Majority research preferences becoming
clear
•Choose one separate
segment for
positioning
•Or mass positioning
multiple segments
Product Life Cycle and Positioning

PLC Type of Consumers Strategic decision

Maturity Late Adopters Single or multiple
Early majority targeting according
Late Majority to internal capacity
Decline Laggards
 Positioning
• Domestic firms have to face the threat of international
firms entering into the country
• It will help to make their strategy competitive
• Positioning is intended to deliver the value proposition
appropriate to each market segment
• value proposition drawn from the value requirements
of the customers
• It helps to establish the value in the mind and eyes of
the target customers
• Indicates the maximum value driven proposition in the
mind of the customer and guides positioning strategy
Positioning Strategy and effectiveness
• To have each customer perceive the brand
distinctly from the competing brand and do so
favorably
• Firms must be able to achieve their
positioning objectives – product satisfying
immediate gratification or more consumption
needs
• Selection of object of positioning – brand,
product line, product mix, corporate brand
 Positioning
• Positioning Concept
• Positioning strategy – integration of all
marketing plans, marketing mix and processes
• Positioning evaluation
 Example
• Gatorade
• Target: Active people involved in hot and thirsty
situation
• Positioned a s the best thirst quencher and liquid
replenisher backed by medical test
• Effectiveness - how well have the company been
able to achieve their positioning objectives
• It is assessed though: consumer perception and
positioning
 The positioning Concept
• Functional - consumption related effectiveness – car is
positioned as the safest car
• Symbolic- product is a symbol of serving buyers’
internally generated needs- self enhancement, role
position group identification or ego satisfaction
• Experiential – products provid sensory perception or
cognitive stimulation such as need for thrill; speed
 Strategic Marketing MKT703
Virtual University of Pakistan

1/12/2020 SMM1 1
Positioning

Session 26
 Significant Positioning Strategies
1. Functional •Solves consumption related problems that are
externally generated such as tooth cavities;
effective cleaning

2. Symbolic • relates to buyers internally generated needs for

self enhancement, role position group
identification or ego satisfaction

3. Experiential • To position products that provide sensory

perception or cognitive stimulation such as need
for thrill; speed
Perceptual Map of Vehicles’ Brands
Classy distinctive proud

Cadillac Lincoln Porsche

BMW Lexus
Mercedes Chrysler
Oldsmobile Pontiac Spirited
Buick
performance
Conservative Honda young people
older people Ford fun sporty
Chevrolet Nissan

Dodge Toyota

VW Hyundai

Practical fuel
4-4
efficient affordable
 Perceptual Maps & Positioning
These maps
• Help to understand the perception of market or
segments about a particular product and position
it
• Find attributes that are important to existing and
potential buyers of competing brands
• To find the preferred position of buyers in each
market segment
• Compare this preferred position with the actual
position of the competing brands
 Perceptual Map of Brand Images
EXPENSIVE GROUP
2
BRAND E BRAND A
BRAND B

HIGH QUALITY
GROUP
GROUP 4
LESS 1
QUALITY
G3 BRAND C

BRAND D

G5

INEXPENSIVE
4-6
 The positioning strategy and
components
• the product – its packaging
• The value chain (logistic) strategy to be used
• The pricing strategy and role of pricing
• The advertising and promotion strategy and the
objectives they will meet
• Changes in positioning strategy over time
requires regular assessment of the market
 Strategic Marketing MKT703

Virtual University of Pakistan

1/12/2020 SMM1 1
 Positioning

Dr. Sarwar M. Azhar

Session 27
 The Positioning Decision
• Find attributes that are important to existing
and potential buyers of competing brands
• To find the preferred position of buyers in
each market segment in order to position the
brand in the located space
• An identified gap in the desired preference of
the customer can provide the market a
specific location
The positioning strategy - integration
of all components

• The product strategy in terms of type,

packaging , pricing and distribution decision
• The value chain (logistic) strategy to be used
• The advertising and promotion strategy, after
sales service
 Significant Positioning Strategies
1. Functional •Solves consumption related problems that are
externally generated such as tooth cavities;
effective cleaning

2. Symbolic • relates to buyers internally generated needs for

self enhancement, role position group
identification or ego satisfaction

3. Experiential • To position products that provide sensory

perception or cognitive stimulation such as need
for thrill; speed
 Positioning and Differentiation

• Positioning belong to differentiation strategy

• Positioning is carried out through implementing
differentiation strategy
• Repositioning – Cost Frame
 Positioning and Monopolistic
Competition

• Firms can have a monopoly within a competitive

space
• Firms can create monopoly by giving tangible
and intangible features to products which are
preferred by customers
• The firm develops a fit with the psychological
frame of customer as a monopoly holder
 Positioning and Firm’s Resources

• Positioning takes place by combining two

concepts :
a. Strategy is the source of CA (Michael Porter)
b. The source of CA are the strategic resources
which a firm possess (Wernerfelt and Barney)
 Positioning and Market Conditions

• Market Equilibrium – where a particular demand

has been set at particular price and product
features perceived as value product
• Positioning has high requirement when trend
changes Or
• When market reaches an equilibrium point Or
• When product has reached maturity stage of life
cycle
 Logic of Re-positioning

• Firms try to maintain themselves in the state of

equilibrium through repositioning
• Firms without the potential to reposition
themselves slowly quit the market
• Repositioning is important to break the
equilibrium – the stability of price and features
of the market
 Repositioning Methods
Differential value can be created either :
1. By offering product value in terms of lower
price and same features – value positioning
2. Or adding features that will be preferred by the
market and offering at a price specific to their
profitability
3. Both these measures belong to differentiating
strategy
 Economic Frame behind Positioning

• Market enter equilibrium at a specific point

• Companies need to disturb this equilibrium to
capture market share
 Factors that Trigger Repositioning
• Under-positioning – when firm is not clear
about the position of its product
• Over-positioning- when firm becomes highly
associated with any one positioning point
• Confused-positioning – when product is
assumed to acquire a different position from
that of firm’s
• Doubtful Positioning – when market is not
accepting any of the feature of product
 Strategic Marketing MKT703

Virtual University of Pakistan

1/12/2020 SMM1 1
Relationship Marketing

Session 28
Dr. Sarwar M. Azhar
 Relationship Marketing
• Positioning alone can not serve the goal of
firm
• Companies succeed on the basis of customer
loyalty
 Factors Affecting Repeat Purchase
• Non-availability of competitive products
• Customer’ s being unaware of other products
• Customer lacking the ability to evaluate a
product
• Competitor may cross the above barriers
through positioning and its communication
 Switching Barrier

• The value derived from product serve as a

switching barrier
• It indicates customer’s willingness to pay for
that value
• It relates to their repurchase intention
• It indicates customer satisfaction
 Dynamism in the Market

• The number of competitors

• Rapidly changing customer needs
• Technological advancements
 Inter-organizational Relationships
• Collaborative Exchanges
• Joint Ventures and Strategic Alliances
• Firms incorporate other firms that help them
to sustain competitive advantage
• Firms need to see beyond quality
management logic
• They need to use the existing system to create
customer satisfaction
 The Relationship Spectrum
Transactional Exchange Value-added Exchange Collaborative Exchange

Complete integration
Anonymous Transaction of supplier with
customer
Historical Pattern of Marketing
Focus now on long term relationships focusing on life long value of customer
 Logic of Customer Retention
• Acquiring a 5 times higher cost
• Retained customer work under trust frame
work and reduced risk
• 49% marketers believe this is single most
important key success factor
• Loyal customer becomes firm’s advocate and
partner
 Un-locking Customer Profitability
• Criteria of partnership – how much value a
loyal customer can provide to the firm
• 20/80 Rule
 Strategic Marketing MKT703
Virtual University of Pakistan

1/12/2020 SMM1 1
Relationship Marketing Frame

Session 29
Dr. Sarwar M. Azhar
 Customer Value
• ‘Customer Value’ is the difference between price
of the product and willingness to pay of the
consumer.
• ‘Relationship Marketing’ creates Customer Value
• “Marketing is to establish, maintain, and enhance
relationships with customers and other partners,
at a profit, so that the objectives of the parties
involved are met. This is achieved by a mutual
exchange and fulfilment of promises” (Gronroos,
1990, p. 138).
 Customer Value

“ Perceived value is the consumer’s over all

assessment of the utility of the product based
on perceptions of what is received and what is
given”. (Zeithmal, 1988)
 Value Creation – Commitment and Trust
• Relationship is maintained by maintaining
trust and commitment between seller and
buyer
 Value Creation – Commitment and
Trust
• Trust – “confidence in the motives” of seller, in
conditions, involving risk or a belief in the
benevolent intentions of other party (Deustch,
1977)
• Commitment – supplier has to demonstrate
towards buyer
• Commit and trust together, produce outcomes
that promote efficiency, productivity, and
effectiveness.
• Commitment and trust lead directly to
cooperative behaviours that are conducive to
relationship marketing success.
 Co-creation of Value- Relationship
Cost Theory
• Enhancement of the product or the cost of
customer relationship
• Reducing the customer’s sacrifice
• Firms need to identify the customers
selectively who can provide maximum value
• Conforming to the trust and commitment
perspective, the intentions of the firm need to
be given tangibility
 The Relationship Spectrum

Transactional Frame Value-added Exchange

Anonymous Transaction Relationship Frame

4P’s

Historical Pattern of Marketing

 Categories to compare Transaction
and Relationship Frames

Time Perspective Transaction Relationship

Oriented Oriented

Dominant 4P’s Interactive Frame

Functional
Dimension
Price Elasticity High Low

Quality Quality of the Quality of the

product relationship
 Categories to compare Transaction
and Relationship Frames

Perspective Transaction Relationship

Oriented Oriented

Measurement of Monitoring Market Managing Customer

Customer Share Base
Satisfaction
Interdependence Interface of limited Interface of
between the two Strategic substantial strategic
importance importance, greater
number of choices
 Strategic Marketing MKT703
Virtual University of Pakistan

1/12/2020 SMM1 1
Product Strategy

Dr. Sarwar M. Azhar

Session 30
 Introduction
• Product - tangibility
• The product as against the service component
• Products classified along various dimensions
• The major components of product and service
selling
• Product Strategy Formulation Process and
tools behind them
• Services Marketing
 Product - Definition
• Any thing that is offered to the market to
satisfy a need, in exchange for something
• It provides value to both consumer and seller
• It can have higher tangibility or higher
intangibility
 Dimensions of Products
• Temporal Frame – time taken to purchase and
consume product
• Behavioral Frame – the way a consumer buys
a product
• Psychological Frame - the level of consumer’s
involvement
 Products

• Consumer Product – used for personal and

domestic consumption
• Industrial Product – used for producing other
products
 Product Types

Convenience •Regular Purchase

Products •In-expensive
•Recognized Choice
•Marketers
•Recognized Brands
break this status

Shopping
• High priced
Products
•Compare brands
•Information needed
•Attractive
•analysis
features added
 Product Types

Specialty •Expensive
Product •Unique
•Not easily •very special
substituted features

Unsought
• bought out of fear/
Products
danger
• without desire Aggressive
•Not in choice set selling approach
 Product Types

•Time consuming
Installations
•Complex process
•Expensive
•High involvement of
industrial buyers

Accessories • Shorter life

• Require substantial
finance
•Regularly purchased
 Product Types

Raw
•Regular purchased and
Material
used
• in-put to products

Components • semi-finished input

• produced by other
firms

Supplies • regularly purchased as

support material
 Strategic Decision Making
• Selection of Market
• Number of Products
• Strategic Orientations and product decisions
(Analyzer, Prospector, Defender)
• Producing or acquiring the product
• Type of Product
• Branding Decisions
 Levels of Product
– Core product – the benefit of the product that is
valuable to consumer
– Basic product – supplement the benefit of the
core product
– Augmented products - features added to make
the consumer happy - higher level of value than
what the customer expected
– Potential product - all the augmentations and
transformations a product might undergo in the
future
 GROWTH STRATEGIES

• Old Product in Old Market - Market penetration

• New Product in Old market - Product development
• Old product in New Market - Market development
• New Product in New Market - Product diversification
 Strategic Marketing MKT703

Virtual University of Pakistan

1/12/2020 SMM1 1
Product Strategy

Dr. Sarwar M. Azhar

Session 31
 Product Mix
• Single Product
• Product Line
• Product Lengths - depth
• Categories – width of the product
• Product Mix – all products in the company to
be offered in the market
• Market Power – size of product mix
Two Frames to Manage Obsolescence
• Product Portfolio
• Product Life Cycle
 BCG Matrix and PLC

Product Life Cycle

BCG Matrix

5
 Product Planning
• New to the Market
• New to the Firm
 New Product
• Discontinuous innovation
• Innovation as the criteria of a company’s success
from customer’s perspective
• Innovation can be extended beyond product to
marketing and management
 Counter - Product Obsolescence
• Technological breakouts are source of
discontinuous innovation
• New product category – new to the firm
• Repositioned product – New to the market
 Portfolio
New product line New to the world
N 10%
e 20%
w

to Product
improvement 23% Adding to existing lines
C 34%
o
m
p
a 4%
n 9% Cost reduction Reposition
y
New to market
Cannibalization
A reduction in sales volume, sales revenue,
or market share of one product as a result of
the introduction of a new product by the
same producer
Planned Obsolescence
A policy of producing consumer goods that
rapidly become obsolete and so require
replacing, achieved by frequent changes in
design, termination of the supply of spare
parts, and the use of non-durable materials