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MARKET SEGMENTATION,
TARGETING AND POSITIONING (2) - Coggle Diagram
MARKET SEGMENTATION,
TARGETING AND POSITIONING (2)
market targeting
How to do market targeting?
- Evaluate: evaluate the market segments so that you know which are the most attractive/feasible for your company to pursue
- Select: select the market segment / segments that your company wants and decide on a market coverage strategy
-
Market coverage strategy
Undifferentiated marketing:
company marketing mix - market
-known as mass marketing (company ignores differences in market segments and provides only one marketing mix to all segments)
PROS?
-May achieve cost economies for
marketing (e.g. lower market
research costs , lower product
development costs)
-More suitable for homogenous
products or markets
CONS?
-Challenging to develop a
product that can satisfy most if not all consumers
-Usually results in heavy
competition and price wars to compete
Differentiated marketing:
company marketing mix 1 - segment 1
company marketing mix 2 - segment 2
company marketing mix 3 - segment 3
company targets several market segments and designs a separate marketing mix for each market segment.
PROS?
Usually results in higher
customer satisfaction (& total sales) as a specific marketing mix
is customised for each market segment
CONS?
-requires more time and resources to develop
separate marketing mix offers
-company will have to separate marketing plans,
market research, etc for each separate brand
Concentrated marketing:
company market mix - segment 1(not targeting),
segment 2, segment 3 (not targeting)
-known as niche marketing (company decides to focus
on a small share of large market)
PROS?
-usually best strategy for companies with limited resources
-companies may also achieve operational economics since they are focused on a specific market segment
CONS?
-risky if chosen market segment does not work out
market positioning
Creating a value proposition:
1.identify a set of competitive advantages
- select the right set of competitive advantages
- effectively communicate and deliver chosen market position
-product's market position is the way buyers think of the product on important attributes and where the product is in the
buyer's mind compared to other competing products
-full market positioning of a brand is known as value proposition
(3 steps in market positioning)
1. Identify
company to identify which products attributes would appeal most
to buyer and though which they can differentiate themselves
using a hotel as an example:
-Image differentiation: e.g. brand image
-Location differentiation: e.g. convenience, views
-Services differentiation: e.g. speed, self-check-in
-Personnel differentiation: e.g. hiring/training staff better than competitors
-Physical attributes differentiation: e.g. unique physical environment
2. Select
-company needs to select the right competitive advantages
-not all attributes are meaningful and the company needs to select
those which will help it differentiate from its competitors.
Criteria to consider:
Important: This difference is a highly valued benefit for target buyers
Distinctive: Competitors do not offer this/company can
do it in a more special way
Communicable: Difference is easily communicable
and visible to target buyers
Preemptive: Competitors cannot easily copy the difference
Company can choose a few or several differentiating attributes.
However, many marketers feel that every company should develop only
ONE unique selling point (USP) and stick to it to avoid confused positioning.
3. communicate and deliver
-company needs to develop a positioning statement as well as build and maintain its positioning strategy via its marketing mix offer.
One simple way to spot a positioning statement:
-unique selling point (USP)
-tagline/slogan
-
the product life cycle
The product life cycle:
-no product sell forever
-company must ensure that the product makes enough profit to compensate for the effort and risk put into developing it
5 stages to the Product Life Cycle (PLC)
1. product development
-company finds and develop
a new product idea.
-costs are high and there are
no sales/profits at this stage
2. introduction
-this is when product is
introduced into the market.
-slow sales growth and no profits
as heavy costs are still incurred.
(e.g. promotional costs)
-
4. maturity
-this is when there is a slowdown in sales growth as market acceptance is at a maximum.
-sales are still high but profits stagnate/decline due to increased competition
-
-
Product deletion:
-process of exiting the product out from market
phase out: removing the product
in an orderly/phased fashion
run-out: If sales are low and costs>revenue, the company will choose to let the product stocks deplete
drop: immediate exit of the product, usually due
to growing complaints that harm the brand