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Differentiation and Positioning

Differentiation and Positioning. Session 9 February 3, 1998. Agenda. SEATING DIAGRAM Reminder (and handout) on the Integration Log: Are you doing the job “right”? Overlap/review of segmentation and targeting Differentiation Positioning. Status Update.

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Differentiation and Positioning

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  1. Differentiation and Positioning Session 9 February 3, 1998

  2. Agenda • SEATING DIAGRAM • Reminder (and handout) on the Integration Log: Are you doing the job “right”? • Overlap/review of segmentation and targeting • Differentiation • Positioning

  3. Status Update Quizzes--Questions appear on ~2 board. Standard is 80% or more correct. Complete the form to indicate where you presently are in terms of meeting course requirements. This is your status update.

  4. Fig. 9.01 T34 Steps in Market Segmentation, Targeting, and Positioning Market Segmentation Market Targeting Market Positioning 1. Identify segmentation variables and segment the market 2. Develop profiles of resulting segments 3. Evaluate attractiveness of each segment 4. Select the target segment(s) 5. Identify possible positioning concepts for each target segment 6. Select, develop, and communicate the chosen positioning concept

  5. Business-to-Business Marketing Business Markets = Individuals and organizations that buy goods for purposes of further production, resale, and/or redistribution

  6. Major Segmentation Variables for Business Markets Demographic (industry, co. size, location) Operating variables (technology, user status, capabilities) Purchasing approaches Situational factors (urgency, application, size of order) Personal characteristics (similarity, attitudes toward risk, loyalty)

  7. Major Segmentation Variables of Consumer Markets • Geographic • Demographic • Psychographic • Behavioral

  8. Requirements for Useful Segmentation (again) • Measurable • Substantial (size, profitability) • Accessible • Differentiable • Actionable • Durable

  9. Difference Between Segmentation and Targeting How might you segment the market for MBA studies? Which segments would be good target segments for MBA study AT SANTA CLARA?

  10. Fig. 9.04 T36 Heavy and Light Users of Common Consumer Products PRODUCT (% USERS) HEAVY HALF LIGHT HALF Soaps and detergents (94%) 75% 25% 71% 29% Toilet tissue (95%) 79% 21% Shampoo (94%) 75% 25% Paper towels (90%) 83% 17% Cake mix (74%) 83% 17% Cola (67%) 87% 13% Beer (41%) 81% 19% Dog food (30%) 95% 5% Bourbon (20%)

  11. AGREE: Why? DISAGREE? Why? “Heavy buyers are the best target for most marketing programs.”

  12. Myth 57(from Clancy & Shulman, 1994) “Heavy buyers are the best target for most marketing programs.”

  13. Rationale • What are the CHARACTERISTICS of heavy users of a product category? • Price-conscious, deal-prone, brand-DISloyal? • Locked into a competing brand? • Different demographic and media-usage profiles--or the same as everyone purchasing in the category? • “The METRO Personals column” • Are heavy users more PROFITABLE? • Usually not (according to Clancy and Shulman)

  14. The Majority Fallacy A B Market Size = Market Size = 1,000,000 customers 100,000 customers Which segment should the firm enter, A or B?

  15. The Majority Fallacy Segment Attractiveness is MORE than SIZE Also consider degree of COMPETITION

  16. Market Targeting • Evaluating the Market Segments • Selecting the Market Segments

  17. Fig. 9.05 T37 Five Patterns of Target Market Selection Single-segment concentration Selective specialization Product specialization M1 M2 M3 M1 M2 M3 M1 M2 M3 P1 P2 P3 P1 P2 P3 P1 P2 P3 Market specialization Full market coverage M1 M2 M3 M1 M2 M3 P1 P2 P3 P1 P2 P3 P = Product M = Market

  18. Targeting: The Case of Century City Hospital • Characteristics of Primary Market Area Income, education, home type • Benefits: Security, privacy, exclusivity Service offered to this segment: “The Pavilion”

  19. Fig. 9.06 T38 Segment-by-SegmentInvasion Plan Customer Groups Airlines Railroads Truckers Large computers Mid-size computers Product Varieties Personal computers Company A Company B Company C

  20. Differentiation

  21. QUESTION In what ways can we differentiate our company and our offer from our competitors?

  22. Types of Differentiation • Product • Service • Personnel • Channels • Image

  23. Product • Features • Performance quality • Conformance quality • Durability • Reliability • Repairability • Style • Design • Price/Cost of Ownership

  24. Service • Order ease • Delivery speed, accuracy, and care • Installation • Customer training • Customer consulting • Maintenance and repair • Miscellaneous services

  25. Personnel • Competence • Courtesy • Credibility • Reliability • Longevity

  26. Channels • Type(s) of channels used • Convenience • Attractiveness • Efficiency of channels

  27. Image • Identity • Symbols • Written and audiovisual media • Atmosphere (of physical space) • Events and sponsorships TOPICS for INTERBRAND, Feb. 12, at 7 and 8:30 pm

  28. Positioning

  29. Positioning Positioning is the act of designing the company’s offer and image so that the target understands and appreciates what the company stands for in relation to its competition.

  30. Steps in Positioning • Identify your competition. • Determine the attributes consumers use to evaluate this type of product/service. • Determine your competitors’ positions on these attributes and your product’s position on these attributes. • Determine the best position and implement activities to establish this position.

  31. Positioning Alternatives • Positioning on an attribute • Positioning on benefits • Positioning on price/quality • Positioning on use or application • Positioning by the product user • Positioning against the competition • Positioning by what the product/service is NOT

  32. Positioning on an attribute

  33. Positioning on benefits

  34. Positioning on price/quality

  35. Positioning on use or application

  36. Positioning by the product user

  37. Positioning against the competition “The French Fries War”

  38. Positioning by what the product/service is NOT

  39. Positioning by what the product/service is NOT

  40. An Effective Positioning Strategy Reflects • Awareness of Competitors • Who they are and what they offer • Customers • What they want and how they appraise you and your competitors • Your Company’s Capabilities

  41. Why Plan a Positioning Strategy? • Choose or lose • Preemption • Market share

  42. Checklist for Positioning Strategies • Important • Distinctive • Superior • Communicable • Preemptive • Affordable • Profitable

  43. T40 Fig. 10.03 Perceptual Map Live shows 1.0 0.8 0.6 0.4 0.2 Easy to reach Little waiting Good food Fantasy Educational, animals Exercise Marineland of the Pacific Fun rides Knott’s Berry Farm Japanese Deer Park Disneyland -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 -0.2 -0.4 -0.6 -0.8 Magic Mountain Lion Country Safari Busch Gardens Economical

  44. T41 Perceptual Map Fig. 10.06 High Quality A G D E C B Low Price High Price F Low Quality

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