Segmentation, Targeting, and Positioning PDF

UNIT III-SEGMENTATION, TARGETING AND POSITIONING Unit Code 3 Unit Title: SEGMENTATION, TARGETING & POSTIONING Location Classroom Duration Session I: SEGMENTATION, MEANING & IMPORTANCE Learning Knowledge Performance Teac...

UNIT III-SEGMENTATION, TARGETING AND POSITIONING Unit Code 3 Unit Title: SEGMENTATION, TARGETING & POSTIONING Location Classroom Duration Session I: SEGMENTATION, MEANING & IMPORTANCE Learning Knowledge Performance Teaching & Outcome Evaluation Evaluation Training Method Define the Prescribe the Elucidate the Interactive lecture meaning of meaning of implication of discuss the concept & segmentation Segmentation the word meaning of segmentation segmentation Interactive lecture: explain the importance of segmentation Importance of Describe the Describe the Interactive lecture Segmentation importance of features of explain the segmentation importance importance of segmentation Learning Objectives After reading the unit, the student will be able to Understand the meaning and importance of Segmentation; Identify bases of Segmentation; Define types of Segmentation; Understand the meaning of Targeting; Identify types of targeting; Define Selection Criteria for targeting; 1  Targeting Failure of Target Markets; Understand the meaning of Positioning: The Battle for the Mind; Define Positioning Process; Identifying Bases of Positioning All customers in a broadly defined market don’t have the same needs. But successful marketers decide about the products to offer and the markets to be serviced. One size doesn’t fit everyone very well. “One cannot be everything to everyone, but can be everything to a selected few” and that no two individuals can be the same. These are the foundations for segmentation. For this purpose market segmentation is core to marketing. Various firms have achieved l e a d e r s h i p p o s i t i o n s t h r o u g h e f f e c t i v e s e g m e n t a t i o n and t a r g e t i n g. “Once you discover the most useful ways of segmenting a market, you have produced the beginnings of sound marketing strategy”. To create differentiation, marketers use segmentation, targeting, and positioning, or STP. Consumers buy benefits, and products that BEST address their SPECIFIC need. Segmentation Analysis can help determine where customer needs products to address consumer needs. Segmenting the market, Targeting the user, and Positioning the products are three pillars of modern marketing strategy. W. Smith (1956) is considered to be father of market segmentation, who provided market segmentation as an alternative to differentiation. Yet it was Wind, whose review of the status of marketing segmentation that made segmentation at the heart of marketing. Meaning of Segmentation Segmentation process consists of three stages: Segmenting, targeting, and positioning. The three are popularly known as STP in marketing.. Market segmentation is the process of dividing a heterogeneous market (aggregated) into homogeneous sub unit (segregated). Market segmentation is the identification of portions of the market that are different from one another or share a similar set of needs. Thus, market segmentation is the process of grouping similar consumers or business customers together in a market segment, in which the consumers or business customers exhibit similar requirements and buying characteristics. According to Professor Nirmalya Kumar, “Customers within any market have similar needs and expectations. To uncover the various segments into which customers fall, the segmentation process identifies variables that will maximize the differences between segments while simultaneously minimising the differences within each segment.” According to Philip Kotler, “Market segmentation is the sub-dividing of market into 2  homogeneous sub-sections of customers, where any sub-section may conceivably be selected as a market target to be reached with a distinct marketing mix.” According to professor William Stanton, “Market segmentation consists of taking the total heterogeneous market for a product and dividing it into several sub markets or segments, each of which tends to be homogenous in all significant aspects” Product Differentiation: Product differentiation is an important product strategy in the competitive business. It can be achieved in many ways. It may be as simple as packaging, changing the size, quantity, colour, shape, of the goods in a creative way, or just by adding a new feature to the existing product. Sometimes differentiation does not involve changing the product at all, but creating a new advertising campaign or other sales promotions instead. Requirements of effective Market Segments: All the segments developed may not be useful enough to be adopted by the companies. A market segment to be effective must meet certain conditions like following: Measurability: It should be possible to measure the number and size of customers to some reasonable extent. Substantial: The segment should be large and profitable enough to serve in the long run. Distinctiveness: The segment should be clearly different in their needs and characteristics from other segments (e.g. customer segments in mobile handset market have some clear and important differences from each other to make each segment a distinct one.) Accessibility: The segment can be effectively reached and served Importance of Segmentation No market is totally homogeneous and to create meaningful segments, marketers must understand different purchase combinations that satisfy the need. In the 1980s, we looked for the customer in each individual, today we look for individual in each customer. An organisation benefits from the process of segmentation in number of ways. Even buyer needs segmentation for generating new product ideas and providing some insights for advertising. Mercedes produces worldwide the same cars, but it advertises the cars as “quality” cars in Germany, but as “prestige” cars in India. 1. Improved Cu stom er Relations: Segmentation w i l l enable the buyer to find the products most fitting to their physical or/and psychological needs. Customers finding products more tailored to their needs, would be more loyal to the firm (s). Since segmentation helps to meet the customer needs, expectations, aspirations and share of wallet, market segmentation is customer-oriented. 2. Perfect-like Marketing Mix: Since market segmentation assists in d e f i n i n g 3  shopping habits (when, how much and how many times), price sensitivity and the benefits required. This helps in making marketing mix more accurate. 3. Better Resource Allocation: Since Segmentation’s objective is to serve customers better and earn more profits, the firm would like to allocate resources more efficiently. Segmentation reveals who not to target and which customer groups will be best recipients of resources. Thus, market segmentation will lead to better marketing. 4 Competitor An alysi s : To compete better in the market one must have complete knowledge of the competitors, the segments being served by them, and their working practices. It enables to know the segment which our organisation can serve better. If this kind of information is overlooked we may find ourselves in head-on collision with large competitors. Especially, the medium-sized firms can grow rapidly through strong positions in specialised market segments. By insightful segmenting and targeting, companies set the stage both for serving customers well and minimising the impact of competition. Thus, segmentation is a source of competitive advantage and enhances awareness of external market trends and competition. 5 Taking care of Dynamic Environment: Customer segments, which are likely to frequent changes due to changing environment, can be taken care of in strategic marketing planning. In fact, large companies with resources at command are leaving mass marketing. 6. Focus Marketing Communication: Segmentation establishes commitment and single-mindedness with the organisation: one vision, one voice, harmonised messages. Segmentation allows an organisation to identify media channels competent to reach the target group. Young women interested in fashion are more likely to read ‘Femina’. Thus marketer can select this medium instead of going in for mass media. 7. Measurement: To measure the market share, growth, specification of target customers, recognition of relevant competitors, to formulate marketing objectives and strategies, segmentation is essential. Limitations of market segmentation: 1. Limited Production: In each specific segment, customers are limited. So, it is not possible to produce products in mass scale for every segment. Therefore, company cannot take advantages of mass scale production; scale of economy is not possible. Product may be costly and affect adversely to the sales. 2. Expensive Production: Market segmentation is expensive in both production and marketing. In order to satisfy different groups/segments of buyers, producers have to produce products of various models, colors, sizes, etc., that result into more production costs. In the same way, the producers are required to maintain large inventory for different styles, colors, and sizes of products. 4 3. Expensive Marketing: Market segmentation also results into expensive marketing. Due to different groups of buyers, the marketer has to consider all the segments in terms of needs, interests, habits, preferences and attitudes. Marketer has to formulate and implement several marketing strategies for different segments. 4. Difficulty in Distribution: Company needs to make the separate arrangement for each of the products demanded by different classes of customers. Salesman’s recruitments, selection, training, payments, and incentives are more difficult and costly. Company has to maintain separate channels and services for satisfying varied customer groups. 5. Heavy Investment: Market segmentation leads to heavy investment. In order to satisfy different needs and wants of various groups, a company has to produce variety of product lines and product items. For the purpose, the company requires to invest more on technology and other inputs that may demand heavy investment. 6. Promotion Problems: Market segmentation also creates promotional problems and multiplies promotional difficulties. It is obvious that different segments are made on the basis of distinguished characteristics of buyers. Each group differs in terms of advertising media, appeal or message. In order to influence various segments of buyers, the company is required to prepare a separate advertising programme or strategy. Similarly, personal selling and sales promotional activities become more complex. Company needs to spend more to take benefits of specialization. 7. Stock and Storage Problems: To meet needs and wants of different consumer groups, the company must maintain adequate stock of various products on a continuous basis. This creates problem of stocks, storage, and working capital. Most limitations reflect the impact of situation and inability of manager to segment the market purposively and meaningfully. But, limitations cannot restrict segmentation philosophy and practice. These limitations can be overcome by segmenting market carefully and objectively. BASIS FOR MARKET SEGMENTATION: Market segmentation, being the key input in a firm’s marketing planning, it becomes necessary to identify these market segments. There are two basic approaches to identify market segments: I.Consumer Characteristics Approach II.Consumer Response Approach I. CONSUMER CHARACTERISTICS APPROACH In this approach we consider some basic characteristics of the Consumer. The features considered are on the basis of where they live, who are they & how the behave. It is measured in terms of a. Demographic & socio-economic b. Geographic, c. Psychographic. 5 a. Demographic & socioeconomic factors – The study of human population in terms of its size, density & distribution. These demographic and socioeconomic factors are Age groups, Sex, Family size, Income, Occupation, Level of education, Religion etc. Age-. A market can be divided into 4 parts on the basis of age:- -Children, Young, Adults, Old o A successful marketing manager is one who understands the age group for which his product would be most suited and determines his marketing policy, pricing policy and advertisement policy accordingly. o For example, different sizes of toothbrushes are prepared for different age groups. Similarly, cloth market or garment market may be segmented on the basis of age of consumers as children, young, adults and old. Sex- Male-female buying behavior shows remarkable differences. So sex is a very important criterion of segmenting a market. On the basis of sex, the market can be divided into 2 parts:- -Ladies and Gents As ladies and gents have different attitudes the marketers can penetrate their markets on the basis of sex. Some products are specially produced for women while some others are for men. For example, lipstick is meant for women and on the other side, shaving cream is only meant for men. While selling to ladies the stress should be upon the fashion, beauty, packing, color etc. On the other hand, while selling to gents, stress should be upon durability, utility, family standard, social prestige etc. Income- Income is another very important factor nature, attitudes, preferences and behavior of consumers. Therefore a market can be segmented on the basis of income of consumers. The market for consumer goods in India has been segmented by marketers broadly into 3 segments; the high income group, the middle class and the lower income group. Consumers can be divided into 3 parts on the basis of income:- High income group, Middle income group and low income group The consumers of high income group stresses upon the design, fashion, quality and the feeling of social prestige. The consumers of the middle income group stress upon or prefer the price and quality of goods. Different models of TV sets are introduced to meet the needs of the buyers of different income groups. Similarly certain items like refrigerators, video cassette recorders are produced only for high income groups. Segmenting market on the basis of income is commonly done by firms selling such products & services as automobiles, housing, travel & jewelry. 6 Education Level- Some particular products, mainly books & stationary are sold in the market on the basis of educational level or standard of consumers. A market can be segmented into several parts on the basis of educational standards:- Primary, Junior high school, High school, Intermediate ,Graduate, Post graduate ,Professionals Different pricing policies & advertising policies may be adopted for different segments of the market. Products used by low-educated people may be advertised through radio, television & cinema whereas the advertisements for educated people may be given in newspapers. Caste/Religion- Religion, race & culture are also used as bases for segmentation. They can explain regularities & diversities in human behavior. India is a country having no. of varieties of communities, castes, sub-castes & religions. Therefore, a market can be segmented on the basis of caste/religion. e.g. books etc. Size of Family- A market can be segmented on the basis of size of the family also. A family may be large or small in size. The needs of every size of family are different. E.g. refrigerators & cookers are produced in different sizes for the family of different sizes. Business/Profession- This is also an important criterion to segment the market. On this basis, market may be divided into businessmen, professionals & employed persons. Professionals may further be subdivided into doctors, chartered accountants, lawyers etc. Employed persons may be classified as clerks, officers, teachers, executives, judges & army personnel. The attitude & preferences differ in all these customers. Although demographic & socio- economic segmentation tells the enterprise as to who is the most likely to buy the product or service, it does not disclose about the brand he/she likes. b. Geographic The marketer will often find it convenient to subdivide the market into areas such as region, urban, suburban, and rural, market density, climate city size, country size state size. The main advantage of the segmentation base is that is reflected physical location of the market. For example – Nestle promotes Nescafe all through the year in cold states of the country as compared to places which have well defined summer and winter season. McDonald’s in India does not sell beef products as it is strictly against the religious beliefs of the countrymen, whereas McDonald’s in US freely sells and promotes beef products. However, consumers don’t stick to a particular locality or region. The geographic mobility changes the consumer’s habits. c. Psychographic 7 It is a recent approach. It covers the human characteristics that influence consumers’ response to products, packaging, advertising & public relations efforts of the co. They include variables like Personality, Lifestyle. Personality- It is the individual’s consistent reaction to the world that surrounds him/her. The variables of personality are dominance, aggressiveness, objectivity, achievement, motivation etc. These influence the buyer behavior. E.g. A study was conducted by American Automobiles Industries in case of Ford verses Chevrolet. Ford attracted variables- masculine, independent, impulsive, alert to change, self- confident Chevrolet- less masculine, conservative, prestige conscious etc. Lifestyle- It stands for people’s act (shopping, community work etc.), interests (family, jobs, home), opinions( what they think of themselves, education, politics, future) Thus, the customers can be grouped as Swingers ( who seek to latest model of goods), Status Seekers ( who try to buy goods that will reflect a high status in the society) & Plain Joes (who seek ordinary goods that do their job). II. CONSUMER RESPONSE APPROACH This approach believes in why a consumer buys a product than asking who is a consumer. Their responses to the market offerings are more important than which can be made as the basis for segmentation. a) FOUR TYPES OF RESPONSES: a. Benefit Response b. Usage Response c.loyalty response/Product Space Response d.Occasion Response a.Benefit Response- The consumers are divided into specific groups in relation to the various benefits that the buyer expects from a product in particular. These benefits are the aspects of efficiency, prestige, durability, economy or resale values. E.g. In case of an automobile, fuel efficiency; quality; status & resale value & durability. Segments based on benefits are usually the most practical form of marketing point of view because of its close connection with product planning & publicity. Thus, the company can choose the benefit it wants to emphasize, create a product & deliver it by a direct message to the groups seeking that benefit. However, the benefit to emphasize is an easy task. The firm must be very sure that the stated benefits the buyers serve are real ones. b. Usage Response- In usage response, the sellers distinguish the usage/volume as a base for segmentation. Thus, the amount of usage of a part product has its say among different consumer segments. The classification is important- two primary group as 8  Users and non users & potential users. Under this approach, the seller distinguishes The users as - Heavy; Medium; Light; Non-user of this product The Potential & non- users consists of 2 types- Some who generally don’t use other products at all (non-potential users) & Those who might use (potential users). c.Loyalty response Response- Loyalty segmentation enables the marketer to Retain the loyal customers Attract new customers from rival brand It is really very difficult to pin down correctly, the loyalty as consumers are sometimes most loyal, moderately loyal & fickle-minded. Again the most loyal consumers don’t have to be frequent/heavy users. Also, brand loyalty depends on the availability of competing products. Sometimes, the loyalty are often too personal to the consumer to be taken as a segmentation base. d. Occasion Response- Shrewd marketers use occasion response to determine which situation or occasion produces maximum consumption. E.g. an inexpensive local broiler chicken for daily dinner is fine, but when you want to entertain guests (occasion), costly KFC/Wendy’s Chicken works wonders. E.g. for daily use, ordinary soaps are used but for specific occasions, specific brands are used. In conclusion, it can be said that a marketer may proceed to segment his market in many ways; his goal is to de-limit & determine the most decisive mode of segmentation. Table3.1: Toothpaste Market Segmentation Segment name The Sensory The Sociables The worriers The independent segment segment Principle benefits Flavour, product Bright teeth Decay Price sought appearance prevention Demographic Children Teens, young Large families Men strengths people Special Users of Smokers Heavy users Heavy users behavioural spearmint- characteristics flavoured toothpaste Brands Colgate, Aim Rembrandt, Crest, Brands on disproportionately Close-up, Ultra Mentadent Sale favoured brite 9 Personality High self- High High High autonomy Characteristics involvement sociability hypochondriasis Lifestyle Hedonistic Active Conservative Value- oriented characteristics Unit Code 3 UNIT TITLE: SEGMENTATION, TARGETING & POSITIONING Location Classroom Duration Session III MEANING OF TARGETING AND TYPES OF TARGETING Meaning and Comprehend the Identify the Interactive lectures: Types of concept of types of targeting Explain the meaning Targeting targeting and its and types of targeting Selection Identify types the Understand the Interactive lectures: Criteria for selection criteria selection criteria Explain the selection Targeting for targeting for targeting criteria for targeting Positioning: The Define Positioning Identifying Interactive lecture: battle for mind features of explain the meaning of positioning positioning Positioning Describing the Elucidate the Interactive lecture: Process positioning positioning explain the positioning Process process process Bases for Identify bases for Describe the Interactive lecture: Positioning Positioning bases for explain the bases for positioning positioning 10 Meaning of Targeting Gone are the days of 1960s when mass marketing provided scale economies for many markets. The ultimate segmentation is mass customisation, as Dell Computers is doing. Today, no organisation has the resources or capabilities to adequately address all segments in the market with segment specific sales and marketing mix. Unless the right segments are targeted an organisation will not enjoy the benefits of adopting market segmentation concept and the costs incurred in identifying segments will not be repaid. In case of ITC foods, initially it adopted mass targeting, now it is in a position to target any segment it likes. The targeting stage of segmentation is concerned with making choices about the segments to serve. We can’t be everything to every segment. The targeting process is concerned with balancing the attractiveness of segment opportunities against the available resources and the capabilities. The segments chosen through targeting are referred to as target markets or target segments. The search for the best prospects among all consumers is called target marketing. Types of Targeting An organisation has the following options to reach target markets: Mass Marketing Strategy: When differences in customer needs are small or demographics are not distinctive, a business may decide to use a mass market strategy or ‘undifferentiated marketing’. A firm may produce only one product or product line and promote it to all customers with a single marketing mix. The firm ignores any segment differences and design a single product-and-marketing programme that will appeal to the largest number of consumers. It means to offer a single product/service/idea across different market segments. It is also known as undifferentiated marketing. Coca Cola, Caterpillar, Sony, Marlboro, Philips, Toyota, McDonald’s, Volvo and Kodak use global marketing strategy. However, these companies do modify their products and communication. The primary purpose of this strategy is to capture sufficient volume to gain economies of scale and a cost advantage. LG Electronics India, the country’s largest consumer durables maker is shifting its focus back to mass products If separate products and programmes are designed for different segments it is called ‘differentiated marketing’. Large Segment Strategy: When a market is segmented and marketing resources are limited, the marketer may decide to pursue a large segment strategy. A mass market may be segmented say into three core segments. One of the segments, which is large enough and representing 50% or more of the market would be the centre of focus. We may also call it as the Single-segment marketing. It means to concentrate organisation’s marketing efforts on a single segment. Unfortunately there are large risks associated with this strategy. Should 11 the chosen segment cease to be viable the firm would also cease to operate. Putting all the eggs into one basket can be hazardous. For example one-hour photo has lost to digital photo camera, fax servicing has lost to e-mail, pager has lost to mobile phones, and STD booths have lost due to cheaper telecom services. Single market segment strategy can also be called as ‘concentrated targeting’ strategy or ‘niche’ strategy. Adjacent Segment Strategy: When a single segment focus has reached the point of full market penetration and after a single-market segment successful, the marketer opts for adjacent marketing strategy, a closely related segment is tackled next. Suzuki entered the Indian market with the Maruti 800 at the low-price end of the market (presently Alto serves this segment). As Maruti penetrated this segment, it moved to an adjacent segment in terms of price and quality by adding Maruti Zen. Next was entry into a large car segment with Maruti Esteem. Over the last 25 years, Suzuki effectively used an adjacent segment strategy and is a market leader in each segment. Multi-Segment Strategy: Market segmentation opens the door to multiple market-based strategies and greater marketing efficiency. For example in case of a power supplier, the segments may include domestic users, government users, commercial establishments, factories, occasional users, etc. The power supplier would serve all the segments at the same time. This strategy is known as multi-segmentation strategy. All of them would require separate marketing mixes. Nike produces shoes for golfers, tennis players, basketball players, for cricketers, and thus serves many segments relating to sports shoes. Chicago-based Hyatt Hotels and Resorts has targeted the gay, lesbian, bisexual and transgender market to make its image more attractive to this market. This strategy is also called as ‘differentiated marketing strategy’. Small Segment Strategy: Although a market may provide three segment opportunities, a business with limited resources and capabilities may decide to compete only in the smallest segment. Such a small segment is normally ignored by large competitors, using mass market or large segment strategies. Even businesses with multi-segment strategy may feel ineffective to focus on such a small segment. In the case of Mercedes, for a very long time it used a small segment strategy to focus on luxury car market. However, due to competitive pressures and attractiveness of adjacent segments, it is following a dual-segment strategy. Niche Segment Strategy: The word niche itself implies that one is targeting a limited number of consumers or a particular set of customers. Separating a market into 100% homogeneous segments is really difficult. Many differences will always remain due to demographics or usage behaviour. Thus, there is always a possibility to carve a niche within a segment to customise marketing efforts according to group of target customers. Niche segment consists of sufficient number of customers seeking somewhat specialised benefits from a good or service. This strategy would avoid direct competition with larger firms who are pursuing bigger segments. This strategy is also known as ‘Concentrated 12 marketing’. OM Pizzas are the Starbucks of the Pizza world!! Therefore, plenty of room for them is to play in the big gap between the fine dine pizzerias (which charge more than Rs. 700 per person) and the mass market Dominos and Pizza Hut (which charge around Rs.200- 300 per person).” With Chillis Texas Grill & Bar, the company would hit the perfect spot in casual dining and a fun bar, with an international ambience. After cornering 45% of the country’s 25-lakh-unit passenger vehicle market, Maruti Suzuki is now targeting niche segments by adding a third-seating row to WagonR by making it seven- seater and adding a diesel engine. WagonR is the third most-popular car brand in the country after Maruti’s own Alto and Dzire models. The fast-moving consumer goods Emami has made a habit out of developing niche segments into money-spinning brands. It carved out a virgin segment for its Fair and Handsome. The early-mover advantage played out well for the firm, despite HUL launching its own variant followed by international rivals Nivea and Lóreal. Navratna Cool Talc was yet another innovation and is doing well in the hinterland. A variety of online food delivery start-ups in Bangalore have come up catering to niche markets.iTiffin.in takes bulk orders, either for a week or a month; ichef.in focuses on quality of product; SpiceBox.in clinches corporate deals; Travelkhana and Foodpanda adhere to timeliness; and FlyByKnight sells essential items right from a sandwich to a burger to even cigarettes; Sub-Segment Strategy: If there are meaningful differences in customer needs within segments which are presently not being met by current market segmentation, then there is need for possible sub-segmentation. For example, a ready food kitchen may go in for segmentation within such segment. It may go for office delivery, food for standing on the ground floor, and customers sitting with air-conditioned atmosphere on the first floor. Food remains the same, but prices differ. We may call it as ‘Micromarketing’. Selection Criteria for Targeting /Need of targeting There is need for targeting. There has to be match between costing and revenues. Factors affecting needs of targeting are too many. (9) 1. Existing market share and market homogeneity 2. Existing product expertise 3. Likelihood of production and marketing scale economies 4. Nature of competitive environment 13 5. The forces of marketing environment and marketing trends 6. Capability and ease of matching customer needs 7. Segment attractiveness in terms of size, structure, and growth 8. Available corporate resources 9. Anticipated profitability and market share Some other factors which influence the choice of targeting Strategy are stage of product- market maturity, extent of buyer differentiation, market position (market share), Structure and intensity of competition, and adequate resources. However, Barnes et al suggest making use of Porter’s Five-Forces Model to determine attractiveness of a market segment. Unit Code UNIT III: Segmentation, Targeting & Positioning Location Classroom Duration Session IV : Positioning :The Battle for the Mind Learning Knowledge Performance Teaching & Outcome Evaluation Evaluation Training Method 1. Define the 1. Describe the 1. Elucidate the 1.Interactive meaning of meaning of meaning of the Lecture: Positioning Positioning word Discuss the Positioning concept of meaning of Positioning 14  2. Identify the 2. Describe the 2. Describe the 2. Interactive Positioning Positioning Positioning Lecture: Process Process Process Discuss the Positioning Process 3. Describe the 3. Identify the 3. Describe the 3. Interactive bases of bases of bases of Lecture: Positioning Positioning Positioning Explain the bases of positioning Positioning: the Battle for the Mind/ Need for positioning After identifying segments and selecting which one (s) to address, the consumers and the business customers within the targeted segments must be offered relevant propositions that have direct relevance to their characteristics, needs, and buying behaviour. The concept of positioning was articulated by Al Ries and Jack Trout as early as 1972. Positioning is about identity – what you are in the marketplace vis-a-vis your competitors. The positioning concept is the same as it was 40 years back but the world is different. Positioning is concerned about creating a perception in a consumer’s mind about the nature of company and its products relative to competitors. It refers to developing a Unique Selling Proposition (USP) or identification of particular appeal that the firm can present to the customers in each target segment. It is now that marketing mix is designed to implement target market strategy and marketing communications convey the intended positioning. Bases of positioning Positioning or differentiation can be done through Physical Positioning and Perceptual Positioning. Physical positioning is done on the basis of physical product characteristics. But every customer doesn’t understand the features and buys the product on the basis of what it does rather than what it is. Thus all the products are not influenced by factors other than physical properties, including the way products are presented, past experiences with them, and opinion of others. Perceptual Positioning. Endorsement by celebrities makes the differences. This all is known as perceptual positioning. A marketer has to create both physical and perceptual differences. 15  POSITIONING STATEMENTS Straight ones: D Google: “Google’s mission statement is to organize the world’s information and make it universally accessible and useful.” D Kraft: “Helping People around the World Eat and Live Better.” D McDonald’s: “Be our customers' favourite place and way to eat.” Abstract ones: D Bose: “Research, Technology, Performance.” D Volkswagen: “Drivers Wanted.” Positioning concerns arranging for a product or brand to occupy a clear, distinctive, and desirable place – relative to competitors’ positioning in the minds of targeted consumers or business customers. Positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. Positioning involves establishing and controlling the desired image in the minds of targeted customers. It is necessary to give customers in the target market one or more good reasons to select your company rather than your rival. Thus, positioning comprises of both customer need and competitive considerations. The concept can be applied with same advantage to new products. It is equally applicable to industrial goods and for services like products. Some of the better known companies have positioned their products on the following bases: 1. Attributes – e-bay, “Buy it, Sell it. Love it.” 2. Price/quality – Omega watches, “We measure the 100th second that separates winning from taking part.” Acer’s positioning is of the low cost producer. 3. Competitors – Walmart, “Save money. Live better.” 4. Application – Health insurance companies, “Experience, Wellness. Everywhere.” 5. Product User – Crane’s stationery, “for the writer somewhere in each of us.” Apple concentrated on the high end of the market. 6. Product class – BMW, the “ultimate driving machine.” 7. Dreams – Honda Motorcycle & Scooter India (HMSI), a subsidiary of world’s largest two-wheeler manufacturer, Japan’s Honda Motor Corporation, doesn’t sell speed or style. It dwells on the dreams and aspiration of everyday Indian and says your Honda two-wheeler will help you reach for your dreams. In that sense your two-wheeler is a purveyor of dreams, an enabler of sorts rather than a simple daily-commute tool. “Sachkardengesapne” in short. 16 8. Completeness – Raymond’s “complete man”. 9. First-mover – Compaq was the first brand to introduce a “portable” PC. 10. Distribution – Dell focussed on selling computers directly to businesses only. 11. Exclusivity - Toshiba focused only on laptop computer. 12. Waku WakuDokiDoki – A Japanese term which means the adrenaline rush and pleasure that stem from anticipation and thrill. Toyota for its Etios, Innova and Fortuner uses Waku Doki. 13. Health: Dhara Oil’s - “Earlier our positioning was playing on purity and taste, but now it is also stressing on health - kiaapkhaiyen, health kichintadharapechhoddijiye (eat and leave your health concerns to us). Their assurance is that Dhara would marginalise the guilt of calorie intake and the customers need not kill taste buds.” 14. ITC Dairy Products and Fruit Juices – They will be positioned on health platform. 15. Vistara Airlines - It will be the first airline to offer premium economy seating and a value-based frequent flyer programme, where bonus points would be given not on miles flown but what you pay. It is the only domestic airline offering premium economy class. 16. Personalisation: Ford India will inaugurate a vehicle personalisation centre at its factory near Chennai to give their automobiles that individuals look for. It is a value- added offering that addresses the quality issues for its customers who earlier had to depend on third party providers for accessories. Different products create different kinds of positioning. Jeep’s “There’s Only One” position a clear leadership message. Honda’s “The Power of Dreams” conveys the notion of innovation and technical prowess. Renault’s message “CreateurD’ Automobiles” builds on France’s reputation for style. Tata Salt’s message “Deshka Namak” conveys it is made in India b y India and for India. BMW’s “The Ultimate Driving Machine” positioning is effectively communicated through advertising and supported by ongoing product development and customer support. Volvo has for many years positioned on safety features of its cars. Normally marketers want to avoid cannibalising sales of existing brands, unless new brands generate sufficient profits. Positioning in India - A case of NANO: it is rectified? In the Auto Expo 2012, Ratan Tata, the head of Tata Group, said we never pushed Nano as a poor man’s car, “the cheapest car”. We pushed it as an affordable all-weather family car. We have wasted an early opportunity.” “The Indian consumer is an aspirational one, and even a two-wheeler owner looking to upgrade will not want a cheap car.” “People started looking at Nano not as a low-cost innovation, but as a cheap car. This, among other factors, also hurt the chances.” Nano currently falls in the ultra-low cost or the sub-A segment. Competing with bikes for attention may be even tougher job to do, even if it is an affordable 17 upgrade. This would have probably worked in mature markets like Europe and the USA, where bikes are a luxury and an affordable car positioned on the price plank could work well. The concept of commuter bikes, is a very South Asian concept. Price as a strong positioning can’t work in price-sensitive India. Experts point out that to make pricing as positioning element, first it has to occupy the high-price position. So playing with price is to play with fire. Now it is repositioned as a “smart car”. From engineering perspective, it is more refined and has a better steering wheel – a power steering. It has a better suspension for better ride quality y and there is an anti-roll bar in front. It is coming in new vibrant colours, a modern music system with Bluetooth connectivity, and keyless entry. An additional layer has been added to the entire electrical system to prevent fire. Nano Twist’s price takes it into the territory of Maruti Alto. QUESTIONS State, in brief, with reasoning, whether following statements are correct/incorrect: (i) One cannot be everything to everyone, but can be everything to a selected few. (ii) Targeting is the process of grouping of individuals with similar needs. (iii) A Rolls-Royce is not in competition with Maruti Alto. (iv) Segmentation is a battle of minds. (v) Some needs and wants change with age. (vi) Anyone in America is an American only. (vii) Religion influences consumption behaviour. (viii) Since business market segments do not change, hence there is no need to re-segment frequently (ix) A company should not attempt to compete in all segments with the same product. (x) Targeting and positioning strategies are interrelated. (xi) One product or service may be different even when they appear to be identical. (xii) Segmentation is not important for a business. {Answer – Correct (i), (iii), (v), (vii), (ix), (x, (xi); Incorrect: (ii), (iv), (vi), (xii) (iii) Correct, because the two are meant for different segments. (ix) Incorrect. A company should recognise different segments and should develop appropriate products and services, and position and brand them accordingly.) (xi) Correct. It is in the way, marketers position the product or service. (xii) Incorrect. A few companies can be ‘all things to all people’. Segmentation is important because it allows the firm to target its effort on the most promising opportunities.} 2. Choose the correct answer from the given alternatives: (i) Which of the following products do not belong to the same kind of market? (A) Haldiram’s bhujia and Bikanerwala’s bundi (B) Hospital bed and tractor 18  (C) Mechanised watch and Electronic watch (D) A cricket bat and a football (ii) Consolidation of various segments into one large segment, may be an objective if 19