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5 Steps of Strategy, Targeting, and Positioning

1. Strategy or Objectives

2. Segmentation Methods

3. Evaluate Segment Attractiveness

4. Select Target Market

5. Identify & Develop Positioning Strategy

Strategy or Objectives

Establishes overall strategy or objectives derived from mission statement

Consistent with SWOT

Segmentation Methods

Geographic Segmentation

Demographic Segmentation

Psychological Segmentation

Benefit Segmentation

Behavior Segmentation

Geographic Segmentation

Grouped by country, region, areas within a region

Most useful for companies whose products satisfy needs varying by region

Demographic Segmentation

Most common segmentation strategy

Easy to identify

Easily measured

Categories: age, gender, education, income, ethnicity

Psychological Segmentation

How consumers describe themselves in terms of self value, self concept, and lifestyle

Benefit Segmentation

Dividing markets into segments whose needs and wants are best satisfied

Behavior Segmentation

Occasion Segmentation: based on when product/service is purchased or consumed

Loyalty Segmentation: loyal consumers are most profitable long term

Geo-Demographic Segmentation

Combo of geographic, demographic, and lifestyle to classify consumers

Uses Tapestry system

“Birds of a feather flock together”

Evaluate Segment Attractiveness

Identifiable: who is in their market?

Substantial: how large is the segment in terms of size and power?

Reachable: can the market be reached through communication and distribution? (Knows that the product exists, what it does, and how to buy it)

Responsive: consumers must react positively and similarly to the firm

Profitable: current market growth rates, future growth rates, market competitiveness, and market access codes.

How To Determine Profitability

(Segment Size x Segment Adoption % x Purchase Behavior x Profit Margin %) - Fixed Cost = Segment Profitability

Select Target Market

Mass Market or Undifferentiated (very rare, only in commodity markets)

Micro Market or One-to-One (one product to one specific customer)

Concentrated (one product to one segment)

Differentiated (different products for several different segments)

Identify & Develop Positioning Strategy

Market Positioning

Value Proposition

Perceptional Mapping

Market Positioning

Define Marketing Mix

• Consumers of target segment have a clear, distinctive, desirable understanding of what the products do

Value Proposition

Communicates customer benefits to be received from product/service

Has Positioning Methods

Positioning Methods

Value: additional value a firm brings

Salient Attributes: additional attribute firm brings

Symbols: attitudes connected to logos (like Nike and Apple)

Competition: position relative to competitors

Perceptional Mapping

Displays in 2 or more dimensions of the position of products or brands (from consumer mind)

Ideal point: where particular market segment’s ideal products would lie on map

Market Research Process

1. Define Objectives & Research Needs

2. Designing Research Project

3. Collecting Data

4. Analyzing Data & Developing Insights

5. Developing & Implementing An Action Plan

Define Objectives & Research Needs (Step 1 of MRP)

What info is needed to answer specific research questions?
How should info be obtained?

Designing Research Project (Step 2 of MRP)

Identify type of data needed

Determine type of research needed to obtain data

Collecting Data (Step 3 of MRP)

Secondary Data: collected before research project began, can be external or internal but it is second hand data

Primary Data: intentionally collected for specific research

Analyzing Data & Developing Insights (Step 4 of MRP)

Convert data into info that is useful in making more effective marketing decisions

Developing & Implementing An Action Plan (Step 5 of MRP)

Executive Summary, Body of Reports, Conclusions, Limitations, and Supplementals

Secondary Data

Largest source is U.S. consensus

Research projects start off with secondary data

Types of Secondary Data

Syndicated Data (external)

Scanner Data (external)

Panel Data (external)

Data Warehouses (internal)

Syndicated Data

Secondary data that is available for a price

Scanner Data

Provided by the IRI and Nielson

Scanner reading data of UPC labels at checkouts

Data Warehouses

Holds all internal data of firm

Where to data mine

Primary Data

Qualitative Types: Observation, In-depth Interviews, and Focus Group Interviews

Quantitative Types: Survey Research, and Experimental Research

Observation

Examine purchase and consumption behaviors

Best method to determine how consumers interact with products

In-depth Interviews

Trained researchers ask questions one-to-one

Expensive and time consuming

Focus Group Interviews

Small group (8-12) people with a trained moderator

Unstructured

Survey Research

Most popular quantitative method

Use of questionnaires

Includes unstructured (open-ended) or/and structured (close-ended)

Experimental Research

Manipulates 1 variable to determine the cause and effect

Able to be through social media

Secondary vs Primary Research (advantages)

Secondary:

• Saves time because of info already found

• Inexpensive

Primary:

• Specific info

• Offers behavioral insight

Secondary vs Primary Research (disadvantages)

Secondary:

• Not precisely relevant

• Not timely

• Sources can be unoriginal and be biased

• Methods may not be appropriate

Primary:

• Costly

• Time consuming

• Requires training/experience to design and collect data

Top 5 Global Brands

Apple, Microsoft, Amazon, Google, Samsung

Brand Elements

Brand Name

URL’s

Logos/Symbol

Characters

Slogan

Jingle/Sounds

How Brands Add Value for Consumer & Firm

Facilitate Purchases

Establish Loyalty

Protect From Competition & Price Competition

Reduce Marketing Costs

Asset = Brands

Impact Market Value

Manufacturer Brands

Firms putting their company name straight on the products (Nike, Coca-Cola)

Retailer Brands

Private labels (Target, Trader Joe’s, Costco)

Retailers use store name or private name on products

Gaining in quality & shares in U.S.

Primary Packaging

Package of product used by consumers

Secondary Packaging

Exterior wrapping/container of primary package

Key Roles of Packaging

Attracts customer’s attention

• Stands out from competition

• Appeals to different markets

Provides info to consumers

• Barcodes (universal product codes, tracks & sells inventory with quick laser scan)

Changing Customer Needs

Create tangible goods that meet constantly changing customer needs

Market Saturation

Same product but introduced to a new market as a new product

Managing Risk Through Diversity

Helps our product in case there is a problem with one

Fashion Cycle

Keep up with ever changing trends

Improving Business Relationships

Firms come together to develop products together

5 Categories of Adopters

Innovators: 2.5%, 1st to have product to test run

Early Adopters: 13.5%, buy product and provide general word of mouth (no money made but feedback received)

Early Majority: 34%, starts to see profit

Late Majority: 34%, makes bulk of profit here (firms want to maximize time here)

Laggards: 16%, only buy when they have to (product is in deep decline)

4 Product Characteristics Affecting Speed of Innovation

Relative Advantage: advantage over what already exists

Compatibility: suitable & helpful to daily life

Observability: consumers can see what other consumers use the products

Complexability & Trialability: workers show how to use products

Product Development Process

1. Idea Generation

2. Concept Testing

3. Product Design

4. Market Testing

5. Product Launch

6. Evaluation of Results

Idea Generation

Sources of New Product Ideas

Customer input, research/development, licensing, brainstorming

Concept Testing

Concept is presented to potential buyers or users to obtain their reactions

Product Design

Prototype, Alpha Testing, Beta Testing

Market Testing

Premarket Tests:

• Customer exposed to product

• Surveyed

• Firm makes decisions

Test Marketing:

• Mini Product Launch

• More expensive than premarket tests

• Market demand is estimated

• Less private

Product Launch

Firm confirms target market

then decides how product will be positioned

then finalizes marketing mix variables

then determines marketing budget

(requires tremendous financial resources and extensive coordination of all marketing mix aspects)

Evaluation of Results

Satisfaction of technical requirements and firm’s financial requirements

Product Lifecycle

Intro, Growth, Maturity, Decline

Intro

Profits are negative, low sales, no immediate profit, expects little competition, and innovators and early adopters.

Growth

Sales and profit climb, begins to hit mass market, and profit are positive

Maturity

Sales and profit peak, ideal to stay here

Decline

Sales and profit decline, constantly trying to avoid this