Lecture 7 Targeting and Positioning Flashcards
What does market segmentation do?
Identifies bases for segmentation
Determines important characteristics of each market segment
What does market targeting do?
Evaluates the potential and commercial attractiveness of each segment
Select one or more segments
What does product positioning involve?
Developing a detailed product positioning for selected segments
Develop a marketing mix for each selected segment
What 3 factors are used for evaluating and selecting target segments?
Segment size and growth
Segment attractiveness
Company objectives and resources
What is size and growth of the segment relative to?
This is relative to the organisation
What is thought about in terms of size and growth?
Don’t have to go after the biggest market with the most growth
Can target smaller markets, this may not be attractive for some but not for others
What is meant by competitive position?
Are there lots of strong aggressive competitors in that market place?
Is it easy for new entrants to enter? Are there substitutes on offer?
Porters Five Forces
What does size involve?
How large is the target market and is it worth pursuing
What does expected growth involve?
Even if the market is small, it may be profitable if there are indications that it will grow
What sort of competitive position is attractive?
Low competition equals attractive market
Why is cost to reach important?
Need to know if the market is accessible with the chosen tactics
Why is compatibility important?
The market needs to be aligned to the goals
What are Porter’s five forces?
Competitors Buyers Substitutes Suppliers New entrants
In Porter’s five forces what is important in terms of competitors?
Market share/ volumes
Market sectors/ product/ service type
Market responses
In Porter’s five forces what factors make buyers important?
Price/ total purchases
Buyer concentration versus firm concentration
Ability to backward integrate
price sensitivity
In Porter’s five forces what factors make substitutes important?
Switching costs and propensity to substitute
Relative price performance of substitutes
In Porter’s five forces what factors make suppliers important?
Differentiation of inputs
Supplier concentration
Threat of forward integration
Switching costs
In Porter’s five forces what makes new entrants important?
Economies of scale
Government policy
Capital requirements
Proprietary products/ services/ technologies
What are 4 main threats to competitors on Porter’s five forces?
Threat of new entrants
Bargaining power of buyers
Threat of substitutes
Bargaining power of suppliers
What will compatibility of a market influence?
Size and growth
Competitive position
What needs to be thought about when looking at market compatibility?
The firm’s long term objectives
In terms of compatibility, when should a company enter a market segment?
A company should only enter a market segment in which it can create superior customer value and gain advantage over its competitors
What does the target market include?
This consists of a set of buyers who share common needs or characteristics
What is the chosen target market based on?
Segment analysis
In what way can targeting be carried out?
At different levels with a range of strategies
What are the 4 types of targeting strategy?
Undifferentiated (mass) marketing
Differentiated (segmented) marketing
Concentrated (niche) marketing
Micromarketing
What does undifferentiated marketing involve?
It targets the whole market with one offer and ignores the segments
What does differentiated marketing involve?
Separate market segments are targeted with separate offers for each
What does concentrated marketing involve?
Concentrating on one or a few segments or niches
What are the two types of micromarketing?
Local marketing
Individual marketing
What is local micromarketing?
Targeting a city, neighbourhood or specific store
What is individual micromarketing?
Targeting one person
What does undifferentiated marketing focus on?
It focuses on what is common in a segment but not what is different
How is the marketing mix used in undifferentiated markets?
The marketing mix that appeals to the largest number of buyers is used
Why is mass marketing generally not a strategic approach?
You can’t develop a brand that can satisfy all and you would be unable to compete against those in the market who are more focused
What does the product involve in mass marketing?
It is designed for everyone and isn’t intended for a particular demographic or customer need e.g. classic salad dressing
What does the price involve in mass marketing?
A single pricing structure that doesn’t consider willingness to pay of the different segments in the same market e.g. cloud computing service with the same price for individuals as businesses
What does differentiated marketing focus on?
A firm targets several market segments and designs separate offers for each
What is hoped for when using differentiated marketing?
Hope for high sales and a stronger position within each market segment
How do sales in differentiated markets compare to undifferentiated markets?
More overall sales than in an undifferentiated approach
What is a disadvantage of doing differentiated marketing instead of undifferentiated marketing?
It increases the cost of doing business as it is more expensive to develop and produce lots of different products compared to one
How does differentiated marketing work and how does it add to costs?
Separate marketing plans Extra marketing research Promotional planning Communications and campaign costs Channel management
What is the price aspect in differentiated markets?
E.g. a running shoe company produces a product with a cushioned ride for runners worried about impact
Give an example of price in a differentiated market
An organic coffee with standard and premium versions.
Standard for people on a budget
Premium for people with no budget restraints and want the best option available
Give an example of promotion in a differentiated market
A ski slope produces 2 videos, one for young people and one for families and then place the advert alongside content that appears to the demographic
What is concentrated marketing?
This is where a firm goes after a large share of one or a few smaller segments rather than going for a small share of a large market
Why do concentrated markets achieve a strong market presence?
They have a greater knowledge of customer needs and develop a reputation in that market place
What are two benefits of concentrated marketing?
Market more effectively as you can fine tune products and promotions to the chosen segments
Market more efficiently as it only targets those that it can serve best and most profitably
What is an issue with concentrated marketing?
It can be risky because the segment could turn sour or a large competitor could enter the market
What does micromarketing do?
It tailors products and the marketing mix to the needs and wants of specific individuals and local customer segments
What creates competitive advantage?
If the product or service can add to the customer value
What does local marketing do?
Tailors brands and promotions to the needs and wants of local customers
What can location based marketing track?
It can track consumers whereabouts and personalise the message to them easily and directly when they are in that location
What is an issue with local marketing?
It can be expensive as it reduces economies of scale
Logistically it could be difficult to meet the requirements of different local markets
What is individual marketing the extreme of?
It is the extreme of local marketing
How does individual marketing tailor its products?
It tailors its products and the marketing mix to individual customers, one to one marketing
How has technology helped individual marketing?
It allows it to be customised by allowing mass customisation which is mass but individual
What sort of personalisation does individual marketing entail?
Hyper personalisation- products, promotions and experiences
What is important to consider when deciding on the targeting approach?
It is important to consider how you can be socially responsible
Why can targeting generate controversy?
Targeting can create controversy based on the way the segment is chosen- think about unconscious bias
What is an issue with market research?
Are we stalking consumers or serving them?
What is positioning about?
This is about creating value preposition- how will you position yourself compared to the competition so that the consumer knows who you are, what you give to them and how the consumer perceives you?
Where do brands happen?
In the minds of customers
What is a product’s position a complex set of?
Perceptions, impressions and feelings that consumers have for the product
What do positioning maps help to show?
These show what consumers think of you compared to others and can inform your future strategies to change if you are not where you want to be
What is positioning about?
The USP
Why is differentiation important?
It isn’t enough to say you do something, you must deliver on the position that has been occupied in the consumers mind.
Differentiation is where you may gain competitive advantage
What are 5 different methods of differentiation?
Product differentiation Services differentiation Channel differentiation People differentiation Image differentiation
What is product differentiation?
Brands can differentiate on features, performance, style or design (e.g. Apple)
What is services differentiation?
Speedy convenient service e.g. Amazon
What is channel differentiation?
The way the company designs its channel coverage, expertise and performance
What is people differentiation?
Hiring and training better people than the competitors do (e.g. Apple versus Curry’s)
What is image differentiation?
String, visible, memorable images and logos
What are the 7 factors in choosing the competitive advantage?
Importance Distinctive Superior Communicable Pre-emptive Affordable Profitable
How can importance aid competitive advantage?
The difference delivers a highly valued benefit to target buyers- it has to be important to the buyers
Why does the product have to be distinctive to gain competitive advantage?
Competitors do not offer the difference or the company can offer it in a more distinctive way
Why should the difference be superior?
The difference is superior to other ways that customers might obtain the same benefit
Why should the differences be communicable?
Customers need to know about it
Why should the difference be pre-emptive?
Competitors cannot easily copy the difference
Why should the difference be affordable?
Buyers need to be able to afford the difference
Why should the product be profitable?
The company can introduce the difference profitably
What is the full positioning of a brand called?
The brand’s value preposition
What are the 5 main types of value preposition?
More for less More for the same More for more The same for less Less for much less
