Marketing Management I - Targeting and Positioning

Selecting Target Market Segments

The process of selecting target market segments involves several steps, which are as follows:

1. Evaluate Market Segments: The first step is to evaluate the different market segments identified during the segmentation process. The segments need to be assessed in terms of their size, growth potential, competition, and profitability.
2. Identify Segment Attractiveness: The next step is to identify the most attractive segments based on the company's strengths, resources, and capabilities. The company needs to evaluate whether it has the necessary resources to compete effectively in the segment.
3. Select Target Market Segments: Once the most attractive segments have been identified, the company needs to select the target market segments. The selection process involves analyzing the potential of each segment in terms of revenue, profitability, and growth potential.
4. Develop Marketing Mix: After selecting the target market segments, the company needs to develop an appropriate marketing mix for each segment. The marketing mix consists of product, price, promotion, and distribution.
5. Implement Marketing Mix: The final step is to implement the marketing mix for each segment. The company needs to develop a comprehensive marketing plan that includes all aspects of the marketing mix.

For example, a company that produces luxury watches may identify the following market segments: affluent professionals, high-net-worth individuals, and collectors. The company evaluates these segments based on their size, growth potential, competition, and profitability. It identifies high-net-worth individuals as the most attractive segment based on its strengths, resources, and capabilities. The company selects this segment as its target market and develops a marketing mix that is designed to appeal to this segment. It implements the marketing mix by launching an advertising campaign, creating a dedicated sales force, and establishing distribution channels that are appropriate for this segment.

Market Targeting Strategies

Market targeting strategies refer to the selection of specific groups of customers who are most likely to respond positively to a company's product or service offerings. There are four main targeting strategies:

• Undifferentiated Marketing: Also known as mass marketing, this strategy involves treating the entire market as a single segment and offering a single product or service to all customers. The focus is on creating a universal product that meets the needs of all customers. For example, basic commodities such as salt or sugar are marketed using this strategy.
• Differentiated Marketing: This strategy involves targeting multiple segments with different products or services that are tailored to meet the specific needs and preferences of each segment. The aim is to provide products or services that appeal to different segments, while still maintaining consistency in brand messaging. For example, automobile manufacturers offer different models targeted at different segments, such as family cars, luxury cars, and sports cars.
• Concentrated Marketing: Also known as niche marketing, this strategy involves focusing on a specific segment or niche within the market and tailoring products or services to meet the specific needs of that segment. The aim is to establish a strong presence in a specific segment and build customer loyalty. For example, a company might focus on producing eco-friendly products and target customers who are environmentally conscious.
• Micro-Marketing: Micro-marketing is a targeting strategy that focuses on a small, specific segment of the market, such as individual customers or small geographic regions. It involves tailoring the marketing mix to meet the specific needs and preferences of the targeted segment.

There are two main types of micro-marketing:

Individual marketing: This strategy involves tailoring the marketing mix to meet the needs and preferences of individual customers. This is often seen in industries such as luxury goods, where personalized service and attention to detail are important.

Example: A high-end jeweler may offer personalized jewelry designs and one-on-one consultations with customers to create unique, bespoke pieces that meet their individual tastes and preferences.

Local marketing: This strategy involves tailoring the marketing mix to meet the needs and preferences of customers in a specific geographic area. This is often seen in industries such as retail, where store location and local tastes and preferences are important.

Example: A restaurant chain may offer different menu items and promotions in different regions based on local tastes and preferences. They may also adjust their advertising and promotions to better appeal to the local market.

The choice of targeting strategy depends on several factors such as the size and nature of the market, the company's resources, and the competition in the market. Companies need to carefully evaluate each strategy and choose the one that best aligns with their overall business goals and objectives.

Competitive Advantage

Competitive advantage refers to the unique advantage that a company possesses over its competitors in terms of providing greater value to its customers, which allows it to have a better market position, higher profits, and greater market share. It is a key concept in marketing as it helps companies to differentiate their products or services from their competitors and build a sustainable business.

There are two types of competitive advantage:

1. Cost Advantage: A company has a cost advantage when it is able to produce and sell its products or services at a lower cost than its competitors while maintaining the same quality. This can be achieved by streamlining production processes, reducing overheads, or using more efficient technologies.
2. Differentiation Advantage: A company has a differentiation advantage when it offers products or services that are unique or superior to those of its competitors in terms of features, quality, design, or other factors. This allows the company to charge a premium price and attract customers who value these features.

Having a competitive advantage is important in marketing because it enables companies to:

• Differentiate their products or services from their competitors and appeal to specific target markets.
• Charge a premium price and increase profit margins.
• Gain a larger market share by attracting more customers and retaining them over time.
• Develop a sustainable business by building a strong brand reputation and customer loyalty.

In today's highly competitive business environment, companies need to constantly innovate and improve to maintain their competitive advantage and stay ahead of their competitors.

Value Proposition and Positioning Statement

A value proposition is a statement that explains the unique benefit that a product or service offers to its customers. It is an essential element of the marketing strategy and plays a crucial role in communicating the value of a product or service to the target audience. A positioning statement is a brief description that outlines the unique value proposition of a brand, product, or service and how it differentiates from its competitors.

The positioning statement is typically structured in the following format:

For [target customer],

[Brand/Product/Service] is the [category]

That [point of differentiation]

Because [reasons to believe]

For example:

Nike: For athletes, Nike is the leading sports brand that offers innovative products and high-quality performance gear, because it invests heavily in research and development and collaborates with top athletes to create products that meet their unique needs.

Volvo: For families, Volvo is the safest car on the market that offers advanced safety features, because it has a long history of commitment to safety and has a reputation for producing high-quality, reliable cars.

Apple: For creative professionals, Apple is the premier technology company that offers cutting-edge, intuitive devices and software, because it has a history of innovative design and user-centric technology that empowers users to create and express their ideas.

In essence, a positioning statement helps in communicating the unique value proposition of a brand, product, or service to the target audience in a concise and compelling manner, making it easier for them to understand and differentiate it from its competitors. It plays a crucial role in defining the brand's identity and positioning it in the market.