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.
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* 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:
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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
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SEGMENTS
VALUE
OPPORTUNITES
CAPABILITIES/
SEGMENT
MATCH
TARGET(S)
POSTIONING
FOR EACH 1-4
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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

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* Market Targeting Alternatives
Segments Clearly Defined

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

Differentiated But Segments

Not Clearly Defined

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* 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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* TARGETING IN DIFFERENT MARKET ENVIRONMENTS

 Emerging

 Growing
 Mature
 Declining
 Global

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* 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

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* Growth Market
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
1. Extensive market coverage by firms with established
businesses in related markets
2. Selective targeting by firms with diversified product portfolios
3. Very focused targeting strategies by small organizations
serving one or a few market segments.
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* 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
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* Global 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
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* GLOBAL Successful British Retailer Tesco Enters
* FEATURE the U.S. 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.
Source: Kerry Capell, “Tesco: California Dreaming?” BusinessWeek, February 27, 2006, 38.
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* 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.

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* STRATEGIC POSITIONING INITIATIVES
POSITIONING CONCEPT
The desired positioning of the
product (brand) by targeted buyers

MARKE
POSITIONING
EFFECTIVENESS T POSITIONING
STRATEGY
How well
management’s
TARGE The combination of
marketing actions
positioning objectives
are achieved for the T used to communicate
the positioning concept
market target to targeted buyers

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* 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.
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INNOVATION Spotting Shifts in Demand in designing
* Hennes & Mauritz (H&M) Apparel
FEATURE
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. 1-18
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The Perception or Association that Management Wants Buyers
* to Have Concerning the Brand

Symbolic Functional
SELECTING THE
POSITIONING
CONCEPT
Experiential

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* 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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* 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

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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 marketing strategy, and the Internet strategy,
indicating how they are used in the positioning strategy.

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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.

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* Customer and Competitor Research

Methods for
Determining
Positioning
Effectiveness

Analytical Test Marketing

Positioning
Models
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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
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* 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
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* Positioning in Perspective

* 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

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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.

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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.
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* Targeting and Positioning
Product Strategy

Positioning Strategy

Promotion Distribution
Strategy Strategy
Market
Target
Price Strategy

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