A product's position is how potential buyers see the product. Positioning is expressed relative to the position of competitors. The term was coined in 1969 by Jacques Trout and Al Ries in the paper "Positioning" is a game people play in today’s me-too market place" in the publication Industrial Marketing. It was then expanded into their ground-breaking first book, "Positioning: The Battle for Your Mind".
Positioning is something (perception) that happens in the minds of the target market. It is the aggregate perception the market has of a particular company, product or service in relation to their perceptions of the competitors in the same category. It will happen whether or not a company's management is proactive, reactive or passive about the on-going process of evolving a position. But a company can positively influence the perceptions through enlightened strategic actions.
In marketing, positioning has come to mean the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. It is the 'relative competitive comparison' their product occupies in a given market as perceived by those crazy cats.
Re-positioning involves a certain communications assignment and the dedication of a student to access real resources such as the library (its on the first floor) changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market.
De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product, in the collective minds of the target market.
Product Positioning Process
Generally, the product positioning process involves:
1. Defining the market in which the product or brand will compete (who the relevant buyers are)
2. Identifying the attributes (also called dimensions) that define the product 'space'
3. Collecting information from a sample of customers about their perceptions of each product on the relevant attributes
4. Determine each product's share of mind
5. Determine each product's current location in the product space
6. Determine the target market's preferred combination of attributes (referred to as an ideal vector)
7. Examine the fit between:
- The position of your product
- The position of the ideal vector
8. Position.
The process is similar for positioning your company's services. Services, however, don't have the physical attributes of products - that is, we can't feel them or touch them or show nice product pictures. So you need to ask first your customers and then yourself, what value do clients get from my services? How are they better off from doing business with me? Also ask: is there a characteristic that makes my services different?
Write out the value customers derive and the attributes your services offer to create the first draft of your positioning. Test it on people who don't really know what you do or what you sell, watch their facial expressions and listen for their response. When they want to know more because you've piqued their interest and started a conversation, you'll know you're on the right track.
Positioning Concepts
More generally, there are three types of positioning concepts:
1. Functional positions
- Solve problems
- Provide benefits to customers
- Get favorable perception by investors (stock profile) and lenders
2. Symbolic positions
- Self-image enhancement
- Ego identification
- Belongingness and social meaningfulness
- Affective fulfillment
3. Experiential positions
- Provide sensory stimulation
- Provide cognitive stimulation
Measuring the positioning
Positioning is facilitated by a graphical technique called perceptual mapping, various survey techniques, and statistical techniques like multi dimensional scaling, factor analysis, conjoint analysis, and logit analysis.
Showing posts with label STP. Show all posts
Showing posts with label STP. Show all posts
Sunday, June 17, 2007
Target Market
Target market is the market segment to which a particular product is marketed. It is often defined by age, gender, geography, and/or socio-economic grouping.Targeting strategy is the selection of the customers you wish to service. The decisions involved in targeting strategy include: which segments to target, how many products to offer, which products to offer in which segments.
There are three steps to targeting:
1. Market segmentation,
2. Target choice, and
3. Product positioning
Targeting strategy decisions are influenced by:
- Market maturity
- Diversity of buyers' needs and preferences (Hi, Jose- Falcon Cove)
- Strength of the competition
- The volume of sales required for profitability
Targeting can be selective (eg.: focus strategy, market specialization strategy, or niche strategy), or extensive (eg.: full coverage, mass marketing, or product specialization).
Market Segmentation
Market segmentation is the process in marketing of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs. Because each segment is fairly homogeneous in their needs and attitudes, they are likely to respond similarly to a given marketing strategy. That is, they are likely to have similar feelings and ideas about a marketing mix comprised of a given product or service, sold at a given price, distributed in a certain way, and promoted in a certain way.
Broadly, markets can be divided according to a number of general criteria, such as by industry or public versus private sector. Small segments are often termed niche markets or specialty markets. However, all segments fall into either consumer or industrial markets. Although it has similar objectives and it overlaps with consumer markets in many ways, the process of Industrial market segmentation is quite different.
The process of segmentation is distinct from targeting (choosing which segments to address) and positioning (designing an appropriate marketing mix for each segment). The overall intent is to identify groups of similar customers and potential customers; to prioritise the groups to address; to understand their behaviour; and to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment. Revenues are thus improved.
Improved segmentation can lead to significantly improved marketing effectiveness. With the right segmentation, the right lists can be purchased, advertising results can be improved and customer satisfaction can be increased.
The requirements for successful segmentation are:
• homogeneity within the segment
• heterogeneity between segments
• segments are measurable and identifiable
• segments are accessible and actionable
• segment is large enough to be profitable
These criteria can be summarized by the word DAMAS:
• Differential: it must respond differently to a different marketing mix
• Actionable: you must have a product for this segment to be accured
• Measurable: size and purchasing power can be measured
• Accessible: it must be possible to reach it efficiently
• Substantial: the segment has to be large and profitable enough
Currently a college student studying the marketing mix is introduced to the Four Ps of the Marketing Mix; Product, Price, Place, and Promotion.
- Product (service) is whatever it may be that is being sold/marketed.
- Price refers to not only the actual price but also price elasticity.
- Place has evidently replaced distribution simply by where or what area the marketing campaign is going to cover, as well as what types of distribution channel (retail, wholesale, online, etc) will be used. Today the idea of place is not limited to geographic profiling but also demographics and other categorizing variables. This has only occurred over the last ten years with the expansion of internet use and its ability to target specific types of people and not just people in a geographic area.
- Promotion simply refers to what medium will deliver the message and what the overall marketing strategy is offering as a benefit.
Below are some examples of the variables used for segmentation:
• Demographics
Age, gender, income, ethnicity, occupation, religion, race, social class, family size;
• Psychographics
Lifestyles, interests, opinions, behavior, perceptions and attitudes;
• Geographics
Zip codes, city, county and state size, terrain, climate, region, urban, suburban, rural; natural resources;
• Behavioristic Variables
Volume usage, benefit expectations, brand loyalty.
When numerous variables are combined to give an in-depth understanding of a segment, this is referred to as depth segmentation. When enough information is combined to create a clear picture of a typical member of a segment, this is referred to as a buyer profile. When the profile is limited to demographic variables it is called a demographic profile (typically shortened to "a demographic"). A statistical technique commonly used in determining a profile is cluster analysis.
Top-Down and Bottom-Up
George Day (1980) describes model of segmentation as the top-down approach: You start with the total population and divide it into segments. He also identified an alternative model, which he called the bottom-up approach. In this approach, you start with a single customer and build on that profile. This typically requires the use of customer relationship management software or a database of some kind. Profiles of existing customers are created and analysed. Various demographic, behavioural, and psychographic patterns are built up using techniques such as cluster analysis. This process is sometimes called database marketing or micro-marketing. Its use is most appropriate in highly fragmented markets. McKenna (1988) claims that this approach treats every customer as a "micromajority". Pine (1993) used the bottom-up approach in what he called "segment of one marketing". Through this process mass customization is possible.
Price Discrimination
Where a monopoly exists, the price of a product is likely to be higher than in a competitive market and the quantity sold less, generating monopoly profits for the seller. These profits can be increased further if the market can be segmented with different prices charged to different segments (referred to as price discrimination), charging higher prices to those segments willing and able to pay more and charging less to those whose demand is price elastic. The price discriminator might need to create rate fences that will prevent members of a higher price segment from purchasing at the prices available to members of a lower price segment. This behaviour is rational on the part of the monopolist, but is often seen by competition authorities as an abuse of a monopoly position, whether or not the monopoly itself is sanctioned.
Broadly, markets can be divided according to a number of general criteria, such as by industry or public versus private sector. Small segments are often termed niche markets or specialty markets. However, all segments fall into either consumer or industrial markets. Although it has similar objectives and it overlaps with consumer markets in many ways, the process of Industrial market segmentation is quite different.
The process of segmentation is distinct from targeting (choosing which segments to address) and positioning (designing an appropriate marketing mix for each segment). The overall intent is to identify groups of similar customers and potential customers; to prioritise the groups to address; to understand their behaviour; and to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment. Revenues are thus improved.
Improved segmentation can lead to significantly improved marketing effectiveness. With the right segmentation, the right lists can be purchased, advertising results can be improved and customer satisfaction can be increased.
The requirements for successful segmentation are:
• homogeneity within the segment
• heterogeneity between segments
• segments are measurable and identifiable
• segments are accessible and actionable
• segment is large enough to be profitable
These criteria can be summarized by the word DAMAS:
• Differential: it must respond differently to a different marketing mix
• Actionable: you must have a product for this segment to be accured
• Measurable: size and purchasing power can be measured
• Accessible: it must be possible to reach it efficiently
• Substantial: the segment has to be large and profitable enough
Currently a college student studying the marketing mix is introduced to the Four Ps of the Marketing Mix; Product, Price, Place, and Promotion.
- Product (service) is whatever it may be that is being sold/marketed.
- Price refers to not only the actual price but also price elasticity.
- Place has evidently replaced distribution simply by where or what area the marketing campaign is going to cover, as well as what types of distribution channel (retail, wholesale, online, etc) will be used. Today the idea of place is not limited to geographic profiling but also demographics and other categorizing variables. This has only occurred over the last ten years with the expansion of internet use and its ability to target specific types of people and not just people in a geographic area.
- Promotion simply refers to what medium will deliver the message and what the overall marketing strategy is offering as a benefit.
Below are some examples of the variables used for segmentation:
• Demographics
Age, gender, income, ethnicity, occupation, religion, race, social class, family size;
• Psychographics
Lifestyles, interests, opinions, behavior, perceptions and attitudes;
• Geographics
Zip codes, city, county and state size, terrain, climate, region, urban, suburban, rural; natural resources;
• Behavioristic Variables
Volume usage, benefit expectations, brand loyalty.
When numerous variables are combined to give an in-depth understanding of a segment, this is referred to as depth segmentation. When enough information is combined to create a clear picture of a typical member of a segment, this is referred to as a buyer profile. When the profile is limited to demographic variables it is called a demographic profile (typically shortened to "a demographic"). A statistical technique commonly used in determining a profile is cluster analysis.
Top-Down and Bottom-Up
George Day (1980) describes model of segmentation as the top-down approach: You start with the total population and divide it into segments. He also identified an alternative model, which he called the bottom-up approach. In this approach, you start with a single customer and build on that profile. This typically requires the use of customer relationship management software or a database of some kind. Profiles of existing customers are created and analysed. Various demographic, behavioural, and psychographic patterns are built up using techniques such as cluster analysis. This process is sometimes called database marketing or micro-marketing. Its use is most appropriate in highly fragmented markets. McKenna (1988) claims that this approach treats every customer as a "micromajority". Pine (1993) used the bottom-up approach in what he called "segment of one marketing". Through this process mass customization is possible.
Price Discrimination
Where a monopoly exists, the price of a product is likely to be higher than in a competitive market and the quantity sold less, generating monopoly profits for the seller. These profits can be increased further if the market can be segmented with different prices charged to different segments (referred to as price discrimination), charging higher prices to those segments willing and able to pay more and charging less to those whose demand is price elastic. The price discriminator might need to create rate fences that will prevent members of a higher price segment from purchasing at the prices available to members of a lower price segment. This behaviour is rational on the part of the monopolist, but is often seen by competition authorities as an abuse of a monopoly position, whether or not the monopoly itself is sanctioned.
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