Marketing Strategy

Marketing
Strategy
Segmentation,
Targeting And
Positioning

Prof.Dr.Nilesh Kulkarni

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Pillars of Marketing- STDP Strategies

Today, the Coca-Cola Company is one of the largest consumer packaged goods companies in
the world, but when it first introduced Coca-Cola in 1886, sales averaged a modest nine drinks
per day. Its growth, driven largely by a remarkably disciplined approach to marketing, has led to
Coke products being sold in more than 200 countries at an astounding rate of 1 billion servings
per day. Yet Coca- Cola continually faces the unique challenge of a mature cola market, which
means growth rates overall are low, and to increase sales, it must either take customers away
from other beverage companies or encourage existing customers to drink more cola-neither of
which is easy task. Part of the company’s solution pertains to approach to new product
development. For example, Coke creates unique products for various specific market segments.
Because those unique products appeal to specific groups, Coke can increase its sales without
cannibalizing the sales of its other products. Stopped drinking soda in an attempt to limit the
amount of caffeine you drink? Coke wants you to know that it feels your pain and therefore
offers Caffeine Free Coca- Cola and Diet Coke. Still like your caffeine during the day but want to
minimize the amount you drink right before bedtime? Why not purchase a case of each, saving
your regular Coke for when you need a midday pick-me-up and your Caffeine-Free Coke for
your after-dinner soda needs? By introducing decaffeinated versions of its traditional sodas,
Coca-Cola could increase the number of sodas it sells each day without cannibalizing sales,
because the consumers targeted by these products already had been avoiding drinking Coca-
Cola to reduce their caffeine intake.

Through its efforts to identify and target such specific market segments, Coca- Cola has grown
its stable of consumer brands to more than 400 products. Consider the plight of Diet Coke.
“Real Men” didn’t want to drink a diet soda, which they stigmatized as a “girly” drink that only

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women would consume. But Coca-Cola had a response for them too: the high-profile launch of
Coke Zero, which avoided the dreaded word “diet” and specifically targeted men through its
packaging, promotions, and image. By targeting men between the ages of 18 to 34 years who
wanted to drink a low-calorie cola but would not purchase Diet Coke, Coca-Cola increased its
sales of Coke- branded products by one third.

A successful new product introduction needs to combine an innovative product with a

marketing campaign that communicates the value of that new product to the targeted
segment. Thus, for Coke Zero launch, Coca-Cola designed a campaign supported by
advertisements on television and radio, in print, on outdoor billboards, and online as well as
widespread sampling programs and opportunities. Little mention was made of the lack of
calories or dietetic element of the new offering; instead, the advertising focused on the
similarity of the taste between Coke and Coke Zero and used dark, bold colors. To appeal to
those young men who proclaimed, “I’m not drinking any diet junk,” the media strategy also
tried to expose as many of them as possible to the new product, spending a significant bulk of
the media budget on out-door advertising.

By using gender to segment the diet cola market, Coca- Cola was able to customize the
advertising for Coca- Cola Zero to appeal to men, whereas Diet Coke ads could concentrate on
women. In turn, Coke gained closer connections for its different products with each product’s
targeted marketed segment, and Coke Zero became one of the most successful launches in the
company’s long history. The company plans to continue to focus all of its flagship brands more
tightly in the future by adapting the company’s products and marketing mix to the changing
market climate. Market segmentation, done properly, pays, enabling this company to have a
Coke (or Diet Coke or Coke Zero or…..) and a smile!

(Source: Levy and Grewal)

……………………………………………………………………………………………………………………………………...

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Horlicks, a leading health-food drink brand in India from GlaxoSmithKline (GSK), has been
providing “pleasurable nourishment” to a wide spectrum of consumers ranging from children
and adults to elderly people. The company has been able to serve this wide segment base
through its regular flavor as well as through chocolate, elaichi and vanilla flavors. However, the
company realized the solution for expanding the market and achieving growth is to adopt a
more focused approach through market segmentation and targeting, using specifically
formulated products for different segments. One of the products that emerged from their
strategic thinking was Junior Horlicks 1-2-3, targeted at pre- school children. This product
address common concern mothers have- -that their children may not be getting adequate
nutrition due to their poor eating habits. Another segment the company targeted was pregnant
women and nursing mothers- a segment that needs supplements such as micronutrients,
minerals, and other vital vitamins. GSK introduced Mother’s Horlicks, Fulfilling the requirement
of nutritional supplements in the target customers. Yet another segment the company targeted
was the calorie-sensitive and health –conscious segment. To cater to his segment, New Horlicks
Lite was introduced. This variant has no added sugar, has low fat and cholesterol levels, and
contains more fiber. GSK has been able to expand the market and fortify its product territories
through an effective segmentation and targeting strategy.

(Source: Kotler, Keshy and Jha)

………………………………………………………………………………………………………………………………………………

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Some people like fruit-based drinks, while others like highly caffeinated energy drinks. Some
people want a diet product; others care primarily about how well the product hydrates after a
workout. Still other people demand affordable beverages, whereas some prefer it to be organic.
More likely though, a group of people desires a drink that is dark in color, cola flavored, and
contains caffeine; whereas another group demands drink that is low calorie, citrus flavored, and
light in color. Each of these products attributes potentially appeals to a different group of
people.

Marketing is about satisfying consumers’ wants and needs. A company could make one type of
beverage and hope that every consumer would buy it, but that’s the kind of mistake that cause
a company to go out of business. Beverage manufacturers could analyze the market to
determine the different types of drinks people want and then make several varieties that cater
to the wants of specific groups. It is not enough just to make the product, however. Drink
manufacturers such as Coca-Cola must position their drinks in the minds of their target market
so those consumers understand why a particular drink meets their needs better than
competitive products do.

In the opening case, Coca-Cola identified the various groups of cola drinkers that would
respond similarly to the firm’s marketing efforts. These are also known as market segments.
Those who like caffeine-free regular cola are one market segment; people who prefer diet cola
with caffeine are a different segment. After evaluating each market segment’s attractiveness,
Coca-Cola decided to concentrate its new product on one group of consumers-its target
market-because it believed it could satisfy their needs better than its competitors could.

“The process of dividing the market into groups of customers who have different needs,
wants, or characteristics and who therefore might appreciate products or a service geared
especially for them is called market segmentation.”

Once the target market was identified, Coca-Cola had to convince the targeted group that,
when it comes to soft drinks, their choice should be Coca Cola Zero. It is achieving this task by
defining the marketing mix variables so that the target customers have a clear, distinctive,
desirable understanding of what the product or services do or represent, relative to competing
products (Market Positioning). In particular, Coca-Cola has designed a gender-based advertising
campaign that positioned Coca-Cola Zero as the only diet drink with the taste of a regular Coca-
Cola. It has also made sure that the drink is available almost anywhere its customers would
want to buy it.

THE SEGMENTATION, TARGETING, POSITIONING PROCESS

In this chapter, we discuss how a firm conducts a market segmentation or STP analysis (Figure
1). We will discuss market segmentation, or how a segmentation strategy fits into a firm’s
overall strategy and objectives and which segment’s are worth pursuing. Then we discuss how

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to choose a target market or markets by evaluating each segment’s attractiveness and, on the
basis of this evaluation, choosing which segments or segments to pursue. Finally, we describe
how a firm develops its positioning strategy.

Step 1 Step 2 Step 3 Step 4 Step 5

Strategy or Describe Evaluate Segments Select Target Identify & Develop

Objectives Segments Attractiveness Market Positioning Strategy

Step 1: Establish Overall Strategy or Objectives

The first step in the segmentation process is to articulate the vision or the objectives of the
company’s marketing strategy clearly. The segmentation strategy must be consistent with and
derived from the firm’s mission and objectives, as well as its current situation-its strengths,
weaknesses, opportunities, and threats (SWOT). Coca-Cola’s objective, for instance, is to
increase sales in a mature industry. The company recognized its strengths were its brand name
and its ability to place new products on retailers’ shelves, but its primary weakness was that it
did not currently have a product line for the emerging market segments. Identifying this
potentially large and profitable market segment before many of its mainstream competitors
offered a great opportunity, though following through on that opportunity could lead to a
significant threat: competitive retaliation. Coca –Cola’s choice to pursue health conscious men
thus is clearly consistent with its overall strategy and objectives.

Establishing a basic segmentation strategy is not always as straightforward as it was for Coca-
Cola, however. Exhibit 2 illustrates several segmentation strategies. Sometime it makes sense
to not segment at all. In other situations, a firm should concentrate on one segment or go after
multiple segments at once. Finally some firms choose to specialize in their product or service
line to meet the needs of very small groups-perhaps even one person at a time. We discuss
each of these basic segmentation types next.

1) Undifferentiated Segmentation Strategy or Mass Marketing

When everyone might be considered a potential user of its product, a firm uses an
undifferentiated segmentation strategy. If the product or service is perceived to provide
the same benefits to everyone, there simply is no need to develop separate strategies
for different groups. Although not a common strategy in today’s complex marketplace,
an undifferentiated strategy can be effective for very basic commodities, such as salt or
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sugar. However, even those firms that offer salt and sugar now are trying to
differentiate their products.

An undifferentiated strategy also is common among smaller firms that offer products or
services that consumers perceive to be indistinguishable, such as a neighborhood
bakery. But again, more marketing-savvy entrepreneurs typically try to differentiate
themselves in the marketplace. The corner bakery thus becomes “Monginis” or
“Ribbons and Balloons”.

Differentiated

Undifferentiated Segmentation Concentrated

or Mass marketing Strategy

Micromarketing or one-
to-one

2) Differentiated Segmentation Strategy:

Firms using a differentiated segmentation strategy target several market segments with
a different offering for each. Future Retail, for instance, employs different store formats-
Big Bazaar, Food Bazaar, E Zone, Food hall, Home Town etc to appeal to different
segments. In a similar fashion, Adidas Group appeals to various segments through its
various companies, including Adidas, Reebok, Reebok-CCM Hockey, Rockport, and the
Taylor Made-Adidas Golf Lines of clothing and footwear.

Firms embrace differentiated segmentation because it helps them obtain a bigger share
of the market and increase the market for their products overall. The more retail
formats The Future Retail develops to reach different market segments, the more
apparel and accessories it can and will sell. Offering several different shoe lines enables
adidas to appeal to more potential customers than if it had just one line. Furthermore,

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providing products or services that appeal to multiple segments helps diversify the
business and therefore lowers the company’s overall risk. For example, if a line directed
toward one segment is performing poorly, the impact on the firms’ profitability can be
offset by revenue from another line that contributes to do well.

3) Concentrated (Niche) Segmentation Strategy:

When an organization selects a single, primary target market and focuses all its energies
on providing a product to fit that market’s needs, it is using a concentrated
segmentation strategy. Entrepreneurial start-up ventures often benefit from using a
concentrated strategy, which allows them to employ their limited resources more
efficiently. E.g. Rolls Royce which aims its vehicles to be sold in the premium segment.

4) Micromarketing

When a firm tailors a product or service to suit individual customer’s wants or needs, it
is undertaking an extreme form of segmentation called micromarketing or one to one
marketing. Small producers and service providers generally can tailor their offering to
individual customers more easily, whereas it is far more difficult for larger companies to
achieve this degree of segmentation. Nonetheless, companies like Dell and Lands’ End
have capitalized on Internet Technologies to offer “custom made” computers, dress
shirts, chinos, and jeans. Firms that interact on a one-to-one basis with many people to
create custom-made products or services are engaged in mass customization, providing
one-to-one marketing to a large group of people.

The degree to which firms should segment their markets-from no segmentation to one
segment to multiple segments to one-to-one segments-depends on the balance the firm
wants to achieve between the added perceived customer value that segmentation can
offer and its cost. Now let’s take a look at how firm’s describe their segments.

Step 2: Describe Segments

The second step In the segmentation process is to describe the different segments, which helps
firms better understand the profile of the customers in each segment, as well as the customer
similarities within a segment and dissimilarities across segments. A market segment consists of
a group of customers who share a similar set of wants. Thus we would distinguish between car
buyers who are primarily seeking low cost basic transportation and those seeking a luxurious
driving experience. Soft-drink marketers, for instance, have broken up the carbonated beverage

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landscape into caffeinated or decaffeinated, regular (with sugar) or diet, and cola versus
something else. This segmentation method is based on the benefits that consumers derive from
the products. The marketer does not create the segments; the marketer’s task is to identify the
segments and decide which one(s) to target. Segment marketing offers several benefits over
mass marketing. The company can create a more fine-tuned product or service offering and
price it appropriately for the target segment. The company can more easily select the best
distribution and communication channels, and it will also have a clearer picture of its
competitors, which are the companies going after the same segment.

We use two broad groups of variables to segment consumer markets. Some researchers try to
define segments by looking at descriptive characteristics: geographic, demographic, and
psychographic. Then they examine whether these customer segments exhibit different needs or
product responses. For example, they might examine the differing attitudes of people belonging
to various classes under the Socio-Economic Classification toward, say, “safety” as product
benefit.

Other researchers try to define segments by looking at behavioral considerations, such as

consumer responses to benefits, usage occasions, or brands. The researcher then sees whether
different characteristics are associated with each consumer-response segment. For example, do
people who want “quality” rather than “low price” in an automobile differ in their geographic,
demographic and psychographic make up?

a) Geographic Segmentation:

Geographic segmentation organizes customers into groups on the basis of where they
live. Thus, a market could be grouped by country (Germany, China), Region (north,
south), or areas within a region (state, city, neighborhoods, zip codes). It is most useful
for companies whose products satisfy needs that vary by region. The company can
operate in one or a few areas, or it can operate in all but pay attention to local
variations. In that way it can tailor marketing programs to the needs and wants of local
customer groups in trading areas, neighborhoods, even individual stores. In a growing
trend called grassroots marketing, such activities concentrate on getting as close and
personally relevant to individual customers as possible.

There are noticeable differences in consumer preferences, purchase patterns, and

behaviors across different geographical regions in India. In some regions of India, during
the hot and dry summer season, air coolers (or desert coolers) are used. However, this

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product is ineffective in some regions, particularly coastal areas where the climate is hot
and humid during summer. Similarly, food habits vary significantly across states and
regions. For example, consumers in southern state like Tamil Nadu prefer freshly
brewed coffee while consumers in many other states in India prefer tea. Even the taste
and other quality parameters of tea vary across regions- some parts of India have a
distinctive preference for strong tea from the Assam region whereas consumers in other
parts of India prefer Darjeeling or Nilgiri tea. In fact, this difference has prompted major
tea-marketing companies to offer different blends of tea under the same brand name in
different regions based on consumer preference.

b) Demographic Segmentation

In demographic segmentation, we divide the market on variables such as age, family

size, family life cycle, gender, income, occupation, education, religion, race, generation,
nationality, and social class. One reason demographic variables are so popular with
marketers is that they’re easy to measure. Even when we describe the target market in
non demographic terms (say, by personality types), we may need the link back to
demographic characteristics in order to estimate the size of the market and the media
we should use to reach it efficiently.

a) Age and Life Cycle Stage : Consumer needs and wants change with age. Some
companies use age and life cycle segmentation, offering different products or
using different marketing approaches for different age and life-cycle groups. For
example, Leo Toys offers different toys for kids in different age groups. It
acknowledges the fact that a toy that amuses a 4-year old may fail to attract a 12
year old. HDFC standard life insurance has launched pension plans for retired
people so that they do not have to depend on anyone for their financial needs.

b) Gender: Gender segmentation has long been used in clothing, cosmetics,

toiletries, and magazines. For example, Barbie- a chain of retail stores in India-
offers clothing only for girls. More recently, many mostly women’s cosmetics
makers have begun marketing men’s lines. Nivea markets Nivea for Men, “an
advanced line of enriching skin care and soothing aftershave products specially
designed for the active, healthy men’s lifestyle,” and offers a four step guide to
perfect men’s care. Today, marketers like Bajaj and Hero Honda are targeting
brands like Kristal DTS-I and Pleasure at young women. These two-wheelers are

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not bulky and powerful but light and “fun” to ride for young and fashionable
women.

c) Income: The marketers of products and services such as automobiles, clothing,

cosmetics, financial services, and travel have long used income segmentation.
Many companies target affluent consumers with luxury goods and convenience
services. For example, for a price, luxury hotels provide amenities to attract
specific groups of affluent travelers, such as families, expectant moms, and even
pet owners. However, not all companies that use income segmentation target
the affluent. For example, many retailers, such as Big Bazaar, with its “Isse sasta
aur kahan?” tagline, successfully target low-and middle-income groups. With
their low-income strategies, Big Bazaar stores are now the fastest growing
retailers in India.

d) Marital Status: Life Style of a person depends on whether he is married or not.

An unmarried bachelor prefer to enjoy life and his purchase behavior will show
more of food and entertainment and less of furniture. But a married person will
purchase house and the furniture.

e) Social class: It has a strong influence on preference in cars, clothing, home

furnishings, leisure activities, reading habits etc. many companies design
products and services for specific social classes.

f) Family size: The size of the family affects the amount and size of purchases. The
consumption pattern of a big sized joint family differs from a small sized nucleus
family.

g) Occupation: Various occupations can influence the buying behavior. People in

sales and people in academic training will have different purchase behavior.

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c) Psychographic Segmentation

Age, gender, income, family life cycle stage and other demographic variables are usually
helpful in developing segmentation strategies, but often they don’t paint the entire
picture. Demographics provide the skeleton, but psychographics add meat to the bones.
Psychographic segmentation is market segmentation on the basis of the following
variables

1. Personality: Personality reflects a person’s traits, attitudes and habits. Clothing is

the ultimate personality descriptor. Fashionistas wear high-end, trendy clothes,
and hipsters enjoy jeans and tee-shirts with tennis shoes. People buy clothes
that they feel represent their personality and give others an idea of who they
are.

2. Motives: Marketers of baby products and life insurance appeal to consumers’

emotional motives-namely to care for their loved ones. Using appeals to
economy, reliability and dependability, car makers like Subaru and Suzuki target
customers with rational motives. Carmakers like Mercedes-Benz, Jaguar and
Cadillac appeal to customers with status related motives.

3. Lifestyles: Lifestyle segmentation divides people into groups according to the

way they spend their time, the importance of things around them, their beliefs,
and socio economic characteristics such as income and education. For example,
LEED-certified appliances appeal to environmentally conscious “green”
consumers. Flavored and frozen yoghurt is promoted to consumers who are
health conscious.

d) Behavioral Segmentation

In Behavioral segmentation, buyers are divided into groups based on their knowledge
of, attitude toward, use of, or response to a product. Many marketers believe that
behavior variables-occasions, benefits, user status, usage rate, loyalty status, buyer-
readiness stage, and attitude- are the best starting point for constructing market
segments.

a) Occasions: Buyers can be grouped according to the occasions when develop a

need, purchase a product, or use a product. For example, air travel is triggered
by occasions related to business, vacation or family. An airline can specialize in

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serving people for whom one of these occasions dominates: Charter airlines
serve people who fly to a vacation destination.

Occasion segmentation can help firms expand product usage. For example,
orange juice is usually consumed at breakfast. An orange juice company can try
to promote drinking orange juice on other occasions-lunch, dinner, midday.
Certain holidays-Mother’s Day and Father’s Day, for example-were established
partly to increase the sale of candy and flowers.

A company can consider occasions of critical life events or transitions-marriage,

childbirth, illness, relocation, divorce, career change- as giving rise to new needs.
These should alert service providers-banks, lawyers, and marriage, employment
and counselors-to ways they can help.

b) Benefits: Buyers can be classified according to the benefits they seek. People
vary considerably in the benefits they seek from the same product. Even car
drivers who want to stop for gas/petrol may seek different benefits. Mobil
identified five different benefit segments and their sizes:

i. Road Warriors: premium products and quality service. (16%)

ii. Generation F: fast fuel, fast service, and fast food. (27%)

iii. True Blues: branded products and reliable service. (16%)

iv. Home Bodies: convenience. (21%)

v. Price shoppers: low price. (20%)

Surprisingly, although gasoline is largely a commodity, price shoppers

constituted only 20% of the buyers. Mobil decided to focus on the less price-
sensitive segments and rolled out Friendly Serve: cleaner property, bathrooms,
better lighting, well stocked stores, and friendlier personnel. Although Mobil
charged $ 0.02 per gallon more than its competitors, sales increased by 20 to
25%.

c) User Status: Marketers can be segmented into nonusers, ex-users, potential

users, first time users, and regular users of a product. Blood banks cannot rely on

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regular donors to supply blood; they must also recruit new first-time donors and
contact ex-donors, and each will require a different marketing strategy.

Included in the potential user group are consumers who will become users in
connection with some life stage or life event. Mothers-to-be are potential users
who will turn into heavy users. Producers of infant products and services learn
their names and shower them with products and ads to capture a share of their
future purchases.

Market leaders tend to focus on attracting potential users because they have the
most to gain. Smaller firms focus on trying to attract current users away from the
market leader.

d) Usage Rate: markets can be segmented into light, medium, and heavy product
users. Heavy users are often a small percentage of the market but account for a
high percentage of total consumption. For example, heavy beer drinkers account
for 87 percent of the consumed-almost 7 times as much as the light beer
drinkers. Marketers would rather attract one heavy user than several light users.
The problem, however, is that heavy users either extremely loyal to one brand,
or never stay loyal to a brand and are always looking for the lowest price.

e) Loyalty Status: Consumers have varying degrees of loyalty to specific brands,

stores, and companies. Oliver defines loyalty as “A deeply held commitment to
re-buy or re-patronize a preferred product or service in the future despite
situational influences and marketing efforts having the potential to cause
switching behavior.”

Buyers can be divided into four groups according to brand loyalty status:

a. Hard-core loyals: Consumers who buy one brand all the time.

b. Split loyals: Consumers who are loyal to two or three brands.

c. Shifting loyals: Consumers who shift from one brand to another.

d. Switchers: Consumers who show no loyalty to any brand.

f) Buyer-Readiness Stage: A market consists of people in different stages of

readiness to buy a product. Some are unaware of the product, some are aware,

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some are informed, some are interested, some desired the product, and some
intend to buy. The relative numbers make a big difference in designing the
marketing program.

Suppose a health agency wants to encourage women to have an annual Pap test
to detect possible cervical cancer. At the beginning, most women may be
unaware of the Pap test. The marketing effort should go into awareness-building
advertising using a simple message. Later, the advertising should dramatize the
benefits of the Pap test and the risks of not taking it. A special offer of a free
health examination might motivate women into actually signing up for the test.

g) Attitude: five attitude groups can be found in a market: enthusiastic, indifferent,

negative, and hostile. Door-to-door workers in a political campaign use the
voter’s attitude to determine how much time to spend with that voter. They
thank enthusiastic voters and remind them to vote; they reinforce those who are
positively disposed; they try to win the votes of indifferent voters; they spend no
time trying to change the attitudes of negative and hostile voters. To the extent
that attitudes are correlated with demographic descriptors, the political party
can more efficiently locate the best prospects.

Requirements of Sound Market Segmentation

a. Measurable: The size and purchasing power and disposable income of the segment can
be measured. There are automobile buyers who want high performance, styling, status
and luxury model cars but it is essential to measure and know the size of such buyers. It
is essential that sufficient data or information in terms of customer purchase behavior
and size of market so that a new segment can be a business opportunity.

b. Substantial: It is the degree to which the proposed segments are large from consumer
demand and profitable to the marketer, for considering a separate marketing plan and
programme.

c. Accessible: It is the degree to which the proposed segments can be effectively reached
and served. Whether the distribution system and promotion can effectively reach them

d. Differentiable: Each segment of the market should be different from others in terms of
its needs and wants. Each segment requires different marketing strategies because it
responds to different strategies differently. A motorcycle manufacturer can segment the

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market on the basis of usage of the product. People buying motorcycles for fuel
efficiency are different from people buying them for style and both need different
marketing strategies.

e. Actionable: A segmentation variable should help marketers develop effective marketing

programs to attract and serve potential customers effectively.

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Market Targeting

Once the firm has identified its market segment opportunities, it has to decide how many and
which ones to target.

Step 3 & 4: Evaluating and Selecting the Market (Target Market) Segments

In evaluating different market segments, the firm must look at two things: the segment’s
overall attractiveness and the company’s objectives and resources. Does a potential segment
have characteristics that make it generally attractive, such as size, growth, profitability, scale
economies, and low risk? Does investing in the segment make sense given the firm’s objectives,
competencies, and resources? Some attractive segments may not mesh with the company’s
long-run objectives, or the company may lack one or more necessary competencies to offer
superior value.

Having evaluated different segments, the company can consider five patterns of target market
selection, shown in following figure:

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a) Single- Segment Concentration

Volkswagen concentrates on the small-car market and Porsche on the sports-car

market. Through concentrated marketing, the firm gains a strong knowledge of the
segment’s needs and achieves a strong market presence. Furthermore, the firm’s
enjoys operating economies through specializing its production, distribution, and
promotion. If it captures segment leadership, the firm can earn a high return on its
investment.

However, concentrated marketing involves risks. A particular market segment can

turn sour. When young women, suddenly stopped buying sportswear, Bobbie
Brooks’s earnings fell sharply; or a competitor may invade the segment. For these
reasons, many companies prefer to operate in more than one segment.

b) Selective Specialization

The firm selects a number of segments, each objectively attractive and appropriate.
There may be little or no synergy among the segments, but each promises to be a
money maker. This multi segment strategy has the advantage of diversifying the
firm’s risk.

The disadvantages of this approach are that the marketer who caters to more than
one segment faces a more complex and dynamic environment. The marketer needs
to be strong in market research; identify changing needs, wants and preferences
across segments and adapt product and service offerings accordingly. He should be
able to manage the positioning strategy for the various segments

Examples: Maruti- Suzuki Cars, Soaps and Detergents from P & G.

c) Product Specialization

The firm makes a certain product that it sells to several segments. An example would
be a microscope manufacturer who sells to university, government, and commercial
laboratories. The firm makes different microscopes for the different customer
groups and builds a strong reputation in the specific product area. The advantage of
this pattern is that when the marketer caters to different segments, with a single
product or varying forms of the same product, he can develop specialization and
reputation in that product line. The limitation is that if the product matures or dies,
the marketer would cease to exist.
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d) Market Specialization

The firm concentrates on serving many needs of a particular customer group or

market. An example would be a firm that sells an assortment of products only to
university laboratories. The firm gains a strong reputation in serving this customer
group and becomes a channel for additional products the customer group can use.
The downside risk is that the customer group may suffer budget cuts.

e) Full Market Coverage

The firm attempts to serve all customer groups with all the products they might
need. Full market coverage could assume two forms, differentiated and
undifferentiated. In the differentiated form, the marketer would operate in the
whole market and offer different products for the various segments; Example: IBM,
HP. The undifferentiated form is also known as mass marketing. Here, the marketer
would treat the full market as a single segment and offer a single product. He would
ignore differences amongst various segments; Example: Salt, Pepsi.

The advantages with full market coverage are that a large scale diversification is
possible, and the chances of risk of failing totally are minimized. The limitation is
that it is difficult for the marketer to be focused/specialized in a product category or
in a market.

Step 5: Identify & Develop Positioning Strategy

Today’s economies are afflicted with surpluses, not shortages. In a U.S. supermarket, there are
not only several brands of toothpaste but one brand, Colgate, offers a dozen varieties-with
baking soda or peroxide, or loaded with “sparkling white” or tartar control. Kellogg’s Eggo
waffles come in 16 flavors, and Kleenex tissue comes in nine varieties. Consider other markets.
Investors can choose among 8,000 mutual funds. Students can choose among hundreds of
business schools. For the seller, this spells hyper-competition. For the buyer, this spells over
choice.

No company can win if its product and offering resembles every other product and offering.
Today, most companies are guilty of strategy convergence- namely, undifferentiated strategies.
Companies must pursue meaningful and relevant positioning and differentiation. Each company
and offering must represent a distinctive big idea in the mind of the target; and each company

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must dream up new features, services and guarantees, special rewards for loyal users, and new
conveniences and enjoyments.

Yet even when a company succeeds in distinguishing itself, the differences are short lived.
Competitors are quicker than ever in copying good ideas; therefore companies constantly need
to think up new value-adding features and benefits to win the attention and interest of choice-
rich, price-prone consumers.

Companies normally reformulate their marketing strategies and offerings several times.
Economic conditions change, competitors launch new assaults, and the product passes through
new stages of buyer interest and requirements. Consequently, strategies appropriate to each
stage in the product’s life cycle must be developed. The goal is to extend the product’s life and
profitability, keeping in mind that the product will not last forever.

(Source: Philip Kotler)

……………………………………………………………………………………………………………………………………………………

Developing and Communicating a Positioning Strategy

All marketing strategy is built on STP- Segmentation, Targeting, and Positioning. A company
discovers different needs and groups in the marketplace, targets those needs and groups that it
can satisfy in the superior way, and then position its offering so that the target market
recognizes the company’s distinctive offering and image. If a company does a poor job of
positioning, the market will be confused as to what to expect. If a company does an excellent
job of positioning, then it can work out the rest of its marketing planning and differentiation
from its positioning strategy.

We define positioning as follows: Positioning is the act of designing the company’s offering and
image to occupy a distinctive place in the mind of the target market. The end result of
positioning is the successful creation of a customer- focused value proposition, a cogent reason
why the target market should buy the product.

Positioning According to Ries and Trout

The word positioning was popularized by two advertising executives, Al Ries and Jack Trout.
They see positioning as a creative exercise done with an existing product.

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Positioning starts with a product. A piece of merchandise, a service, a company, an

institution, or even a person……..But positioning is not what you do to a product.
Positioning is what you do to the mind of the prospect. That is, you position the product
in the mind of the prospect.

Ries and Trout argue that well-known products generally hold a distinctive position in
consumers’ minds. Hertz is thought of as the world’s largest auto-rental agency. Coca-Cola as
the world’s largest soft-drink company, and Porsche as one of the world’s best sports car. These
brands own these positions, and it would be hard for a competitor to claim them.

A competitor has three strategic alternatives.

1. The first to strengthen its own current position in the consumer’s mind. Avis
acknowledged its second position in the rental car business and claimed: “We’re
number two. We try harder.” 7-Up capitalized on not being a cola drink by advertising
itself as “the Uncola”

2. The second strategy is to grab an unoccupied position. Three Musketeers Chocolate bar
advertised itself as having 45% less fat than other chocolate bars. United Jersey Bank,
noting that giant banks were usually slower in arranging loans, positioned itself as “the
fast moving bank”

3. The third strategy is to de-position or re-position the competition in the customer’s

mind. BMW attempts to de-position Mercedez Benz with the comparison: “The ultimate
sitting machine verses the Ultimate Driving machine.”

4. A fourth strategy is the exclusive club strategy. For example, a company can promote
the idea that it is one of the Big Three. The Big Three idea was invented by the third
largest U.S auto firm, Chrysler. The implication is that those in the club are the best.

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Positioning: How Many ideas to Promote?

A company must decide how many ideas (e.g. benefits, features) to convey in its positioning to
its target customers. Many marketers advocate promoting only one central benefit. A company
should develop a unique selling proposition (USP) for each brand and stick to it. Crest
toothpaste consistently promotes its anti cavity protection, and Mercedes promotes its
engineering. Ries and Trout favor one consistent positioning message. This makes for the easier
communication to the target market; it results in employees being clear about what counts;
and it makes it easier to align the whole organization with the central positioning.

The brand should tout itself as “number one” on the benefit it selects. Number-one positioning
include “best quality”, “best performance”, “best service”, “best styling” , “ best value”, “lowest
price”, “lowest price”, “safest”, “fastest” , “most customized”, “most convenient”. If a company
consistently hammers away at one positioning and delivers on it, it will probably be best known
and recalled for this benefit. For example, Home Depot has gained a reputation for “best
service” among home improvement retailers.

Not all companies think that single benefit positioning is always best. What if the market tires of
the benefit or believes that most competitors now deliver it? Double benefit positioning may be
more distinctive. Steelcase, Inc., a leading office-furniture-systems company, claims two
benefits: “best on-time delivery” and “best installation support.” Volvo double-positions its
automobiles as “safest” and “most durable.”

There are even cases of successful triple-benefit positioning. Smith Kline Beecham promotes its
Aquafresh toothpaste as offering three benefits: anticavity protection, better breath, and
whiter teeth. The challenge is to convince consumers that the brand delivers all three. Smith
Kline’s solution was to create toothpaste that squeezes out of the tube in three colors, thus
visually confirming the three benefits.

Positioning Errors:

1. Under positioning: Some companies discover that buyers have a vague idea of the
brand. The brand is seen as just another entry in a crowded market place. Company is
failing to present a strong central benefit or reason to buy the product. When Pepsi
introduced its Clear Crystal Pepsi in 1993, customers were distinctly unimpressed. They
didn’t see “clarity” as an important benefit in a soft drink.

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2. Over positioning: Buyers have too narrow an image of the brand. Thus a consumer
might think that diamond rings at Tiffany start at $5000 when in fact Tiffany now offers
affordable diamond rings starting at $1000.

3. Confused Positioning: Buyers might have a confused image of the brand resulting from
the company’s making too many claims or changing the brand’s positioning too
frequently. This was the case with Stephen Job’s sleek and powerful NeXT desktop
computer, which was positioned first for students, then for engineers, and then for
businesspeople, all unsuccessfully.

4. Doubtful Positioning: Buyers may find it hard to believe the brand claims in view of the
product’s features, price, or manufacturer. When GM’s Cadillac division introduced
Cimarron, it positioned the car as a luxury competitor with BMW, Mercedes, and Audi.
Although the car featured leather seats, a luggage rack, lots of chrome, and a Cadillac
logo stamped on the chassis, customers saw it as dolled-up version of Chevy’s Cavalier
and Oldsmobile’s Firenza. The car was positioned as “more for more”: customers saw it
as “less for more”.

Positioning Types:

 Attribute Positioning: A company position itself on an attribute, such as size or number

of years in existence. Disneyland can advertise itself as the largest theme park in the
world.

 Benefit Positioning: The product is positioned as the leader in a certain benefit. E.g. Sea
View, Service Speed.

 Use or Application Positioning: Positioning the product as best for some use or
application. E.g. ICICI bank- Fast Account Opening.

 User Positioning: Positioning the product as best for some user group. E.g. Louis Philipe-
Upper Segment

 Competitor Positioning: The product claims to be better in some way than a named
competitor. For example, Lion Country Safari can advertise having a greater variety of
animals than Japanese Dear Park.

 Product category positioning: The product is positioned as the leader in certain product
category. For example, Big Small Car-Indica
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 Value Positioning: The product is positioned as offering the best value. For example,
Budget Hotels.

Perceptual Mapping

 Most products and services have many physical and intangible attributes with varied
consequences for a would-be purchaser. An automobile is not merely "an automobile."
Rather, for a consumer, it is a bundle of objective and subjective characteristics (size,
color, ease of handling, roominess, comfort, price, and so on) and consequences (such
as feelings of pride, power, or prestige). The marketer's task is the difficult one of
deciding how many attributes to build into the product, how much quality to include in
each attribute, and how to put the attributes together to gain a competitive advantage.
Fortunately, only a few product attributes are important in any actual buyer choice
process. Indeed, two or three key attributes are often sufficient to predict consumer
choices. As products become more complex and consumers become more
sophisticated, however, marketers must build more attributes into the product. Note,
too, that key attributes vary by market segment and therefore the marketing effort
must change accordingly.

 The conjunction of key product attributes and consumer perceptions (or beliefs) can be
fruitfully represented in a perceptual map.

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Communicating the Company’s Positioning

To communicate a company or brand positioning, a marketing plan should include a positioning

statement. The statement should follow the form: “To (target group and need) our (brand) is
(concept) that (point of difference). For example: “To busy professionals who need to stay
organized, Palm Pilot is an electronic organizer that allows you to back up files on your PC more
easily and reliably than competitive products.” Sometime the positioning statement is more
detailed:

Mountain Dew: To young, active soft-drink consumers who have little time for sleep, Mountain-
Dew is the soft drink that gives you more energy than any other brand because it has the
highest level of caffeine. With Mountain Dew, you can stay alert and keep going even when you
have not been able to get a good night’s sleep.

Note that the positioning first states the product’s membership in a category (e.g., Mountain
Dew is a soft drink) and then shows its point-of-difference from other members of the group.
(e.g., has more caffeine). The product’s membership in the category suggests the points-of-
parity that it might have with other products in the category, but the case for the product rests
on its point-of-difference.

Differentiation

The task of positioning is to deliver a central idea about a company or an offering to the target
market. Positioning simplifies what we think of entity. Differentiation goes beyond positioning
to spin a complex web of differences characterizing that entity.

Differentiation is defined as the process of adding a set of meaningful and valued differences
to distinguish the company’s offering from competitors’ offerings.

The company needs to identify tangible differences between brand and competitors. They need
to identify conscious rational benefits like PQRSTUV: Performance (Nokia), Quality (Sony), Rate
(Big Bazaar), Range (Maruti, Vijay Sales), Service (ICICI Bank), Technology (HP), Utility (Bata),
Value (Titan).

All products can be differentiated to some extent, but not all brand differences are meaningful
or worthwhile. A difference will be stronger to the extent that it satisfies the following criteria:

 Important: The difference delivers a highly valued benefit to a sufficient number of

buyers.
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 Distinctive: The difference is delivered in a distinctive way.

 Superior: The difference is superior to other ways of obtaining the benefits.

 Preemptive: The difference cannot be easily copied by competitors.

 Affordable: The buyer can afford to pay for the difference.

 Profitable: The Company will find it profitable to introduce the difference.

Differential Variables

Brand Performance, Features, Form (Size, Shape, Physical Structure),

Conformance, Reliability, Style, Design, Quality.

Service Delivery, Ease of ordering & Installation, Customer Training

People Competence, Response, Courtesy, Credibility, Reliability,

Responsiveness, Communication

Channel Coverage, Expertise, Cost Effectiveness, Performance

Image Symbol, Color, Slogan, Ambience, Atmosphere.

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