MM- Module 3: Market Segmentation, Targeting, and Product Positioning.

I} SEGMENTATION: According to Philip Kotler, “Market segmentation is the sub-

dividing of market into 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.”

• Criteria for Market segmentation:

1. Identity: The marketing manager must have some means of identifying members of
the segment, that is, some basis for classifying an individual as being or not being a
member of the segment. There must be clear differences between segments.
Members of such segments can be readily identified by common characteristics which
display similar behaviour.

2. Accessibility: It must be possible to reach the different segments in regard to both

promotion and distribution. An organisation must be able to focus its marketing
efforts on the chosen segment. Segments must be accessible in two senses. First,
firms must be able to make them aware of products or services. Secondly, they must
get these products to them through the distribution system at a reasonable cost.
3. Responsiveness: A clearly defined segment must react to changes in any of the
elements of the marketing mix. For instance, if a particular segment is defined as
being cost-conscious, it should react negatively to price rises. If it does not, this is an
indication that the segment needs to be refined.

4. Size: The segment must be reasonably large enough to be a profitable target. It

depends upon the number of people in it and their purchasing power. For example,
makers of luxury goods may appeal to small but wealthy target markets whereas
makers of cheap consumption goods may sell a large number of persons who are
relatively poor. The idea is that enough potential buyers must exist to cover the costs
of production and marketing required in that segment. This is often called as
substantiality.

5. Nature of Demand: It refers to the different quantities demanded by various

segments. Segmentation is required only if there are marked differentiation in terms
of demand.

6. Measurability: The purpose of segmentation is to measure the changing behaviour

pattern of consumers.

• Purpose of Segmentation:
a) Break Down Large Audience: Marketers essentially recognise what people
experience in communication. The more people you try to deliver a message to,
the more potential you have for miscommunication, inattention and complete
avoidance. By segmenting the audience into smaller groups with shared traits,
you can tailor a message to a more manageable group.

b) Create Target Market: Once you identify one or more potential segments or
customer types for your brand, you decide which market to target with a specific
 advertising campaign. By selecting and more thoroughly defining this segment,
the business can figure out which media the audience watches, listens to and
reads, which messages to prepare and what budget is necessary to achieve desired
outcomes such as increased awareness or sales growth.

c) Focused Message: One major purpose/ benefit of segmentation is that you can
present a more focused message. In some cases, a product is used in multiple ways
or offers multiple benefits that appeal in different ways to different customers.

d) Reduced Waste: Segmentation offers the ability to eliminate waste in advertising.

Waste occurs when you pay for ads that reach people with virtually no interest or
need for your product or service. Some waste is a virtual given in advertising, but
reducing this through messages targeted to specific customers through particular
media is key.

e) Grouping of customers on the basis of their homogeneous characteristics, such as

nature, habits, income, behaviour qualities and needs etc.
f) To locate or identify the tastes, buying motives, needs, priorities and preferences
of the customers.
g) To determine marketing strategies, targets, and goals.
h) To make the activities of the firm customer oriented.
i) To identify the areas or sectors where the customers may be created and the
sphere of the market is expanded.

• Process of Market Segmentation:

1) Identify the target market: The first and foremost step is to identify the target
market. The marketers must be very clear about who all should be included in a
common segment. Make sure the individuals have something in common. A male and
a female can’t be included in one segment as they have different needs and
expectations. Segmentation helps the organisations decide on the marketing
strategies and promotional schemes. Eg: The target market for Rado, Omega or Tag
Heuer is the premium segment as compared to Maxima or a Sonata watch.

2) Identify expectations of Target Audience: Once the target market is decided, it is

essential to find out the needs of the target audience. The product must meet the
expectations of the individuals. The marketer must interact with the target audience
to know more about their interests and demands. Eg: Kellogg’s K special was
launched specifically for the individuals who wanted to cut down on their calorie
intake.

3) Create Subgroups: The organisations should ensure their target market is well
defined. Create subgroups within groups for effective results. Eg: Creams and
Lotions for girls between 20-25 years would focus more on fairness. Creams and
lotions for girls between 25 to 35 years promise to reduce the signs of ageing.

4) Review the needs of the target audience: It is essential for the marketer to review the
needs and preferences of individuals belonging to each segment and sub-segment.
The consumers of a particular segment must respond to similar fluctuations in the
market and similar marketing strategies.
5) Name your market Segment: Give an appropriate name to each segment. It makes
implementation of strategies easier. Eg: A kid’s section can have various segments
namely new born, infants, toddlers and so on.

6) Establish the size of the Target Market: It is essential to know the target market
size. Collect necessary data for the same. It helps in sales planning and forecasting.

7) Marketing Strategies: Devise relevant strategies to promote brands amongst each

segment (you can’t have the same strategies for all the segment).. Make sure there is
a connection between the product and the target audience. Eg: Advertisements
promoting female toiletries can’t afford to have a male model, else the purpose gets
nullified.

8) Review the behaviour: Review the behaviour of the target audience frequently. It is
not necessary individuals would have the same requirement (demand) all through the
year. Demands vary, perceptions change and interests differ. A detailed study of the
target audience is essential.

• Bases for segmentation of Consumer Markets:

Consumer markets refers to the markets where people purchase products for
consumption and are not meant for further sale. This market is dominated by the
products which consumer use in their daily life. In consumer market purchasers make
their own decisions to purchase the products and these products can be used for
personal use or can be shared with others.
1. Demographic Characteristics of Consumer Markets: Characteristics of consumer
markets based on demographics include differences in gender, age, ethnic
background, income, occupation, education, household size, religion, generation,
nationality and even social class. Most of these demographic categories are further
defined by a certain range. For example, companies may identify the age of their
consumers in the 18 to 24, 25 to 34, 35 to 54, 55 to 65, and 65+ age groups.
Companies often identify these demographic characteristics through market research
surveys that are used to discover which demographic groups comprise the majority
of their customer base. Companies can then target their advertising towards these
demographic groups.

2. Psychographic Characteristics of Consumer Markets: Psychographic

characteristics of consumers include interests, activities, opinions, values and
attitudes. Obviously, many magazines are geared toward a consumer's interest. For
example, prenatal magazines target expectant mothers who are interested in
learning more about caring for a baby. A company may better understand consumer
opinions and attitudes after conducting a focus group, and can use that information
to tailor advertising or marketing campaigns.

3. Behaviouristic Characteristics of Consumer Markets: Behaviouristic

characteristics of consumer markets include product usage rates, brand loyalty, user
status or how long they have been a customer, and even benefits that consumers
seek. Companies like to know how often their consumers visit their restaurants,
 stores or use their products. Company marketing departments usually try to
distinguish between heavy, medium and light users, whom they can then target with
advertising. Marketers like to know which customers are brand loyalists, as those
consumers usually only buy the company's brand.

4. Geographic Characteristics of Consumer Markets: These geographic

characteristics are often based on market size, region, population density and even
climate. Consumers in different regions of the country also have different tastes in
food and style.

• Region (Northern or Southern India),

Geographic • City (population from 0.5 million and above),
segmentation • Rural and semi-urban areas (popuation
between 10,000 to 50,000)

• Age,
• Family size,
Demographic • Gender,
segmentation • Income,
• Occupation,
• Education

• Socioeconomic classification (SEC),

Psychographic • Lifestyle,
segmentation
• Personality

• Occasions,
• Benefits,
• User status,
Behavioural • Usage rate,
segmentation
• Loyalty status,
• Readiness stage,
• Attitude tpward product

• Market Entry: Activities associated with bringing a product or service to a targeted

market. During the planning stage, a company will consider the barriers to entry, the
costs of marketing, sales and delivery, and the expected outcome of entering the
market.
• The various approaches to market segmentation:

1) Mass Marketing: Offering the same product and applying the same marketing-mix
to all customers assuming that there is no significant difference among consumers in
terms of their needs and wants. The Coca-Cola Company follows this approach,

2) Product Variety Marketing: Once it is learnt that consumers would not accept
standard products, the marketer might try to provide different sizes, colours, shapes,
features, qualities etc. to attract them. For example, when Maruti 800 introduced
into Indian roads, it was a variety product because it used two versions-Standard and
Deluxe with different colours,

3) Target Marketing: Target marketing requires marketers to take three steps: (a)
Market Segmentation; (b) Market Targeting; (c) Market Positioning,

4) Micro Marketing: Micro marketing occurs when target market is further bifurcated
and the needs of the small customer groups are addressed on a local basis. It has four
levels:

a. Segment Marketing: A market segment consists of a large identifiable group

within a market with similar wants, purchasing power, geographical location,
buying attitudes or buying habits.
b. Niche Marketing: A niche is a more narrowly defined group whose needs are not
well served.
c. Local Marketing: Target is leading to marketing programmes being tailored to
the needs and wants of local customers. For example, different editions of
newspapers for different areas cover local news are good examples.
d. Individual Marketing: The ultimate level of segmentation leads to “one-to-
marketing” or “customized marketing”. The concept of service has broadened to
include both breadth of product offerings and the ability to customize to meet
specific needs.
5) Customized Marketing: With the advancement in manufacturing because of
breakthrough in information technology, for instance, use of computer-aided design
and computer aided manufacturing, it has now become possible to manufacture a
product as per the individual customer needs or of a buying organisation. Tailors and
drapers (cloth merchant), boutiques (ladies and children), beauty parlours etc. are
customize products.

6) Personalized Marketing: Although in case of customized marketing, the

requirements for a customer are met by a custom- made product, but still the
customer might not be willing to retain his loyalty with the company because of
competition. For instance, one gets shirts made from a tailor as per personal fitting.
Still, tailors find their customers shifting their loyalty to others.

• Benefits from segmentation are:

1. Segmentation helps in focusing strategies more sharply on target groups,
2. It helps the company to know demand pattern of each segment thus increased the
sale volume of the products,
3. It helps the marketer to understand the needs, behaviour, habits, tastes and
expectation of consumers of different segments. Thus marketing opportunities
increases,
4. It is possible to satisfy a variety of customers with a limited product range by using
different promotional activities,
5. Marketing can be more specialized when there is segmentation as the element of
marketing mix,
6. Segmentation helps in adopting different policies, programmes and strategies for
different markets based on rival’s policies, programmes and strategies,
7. New customers are attracted because of segmentation strategy and thus
opportunities are created for growth,
8. Customers are benefitted as the products that serve customers interest and satisfy
their needs and wants,
9. Segmentation supports the development of niche strategies,
10. It helps to achieve a better competitive position for existing brands,
11. Identify gaps in the market which represent new product opportunities,
12. It is possible to pay proper attention to a particular area.

• Limitations of Market segmentation are:

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, colours, sizes, etc., that result into more
production costs. In the same way, the producers are required to maintain large
inventory for different styles, colours, and sizes of products.

3. 3. 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: 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: 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.

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.

II} TARGETING: Market targeting is a process of selecting the target market from the
entire market. Target market consists of group/groups of buyers to whom the company
wants to satisfy or for whom product is manufactured, price is set, promotion efforts are
made, and distribution network is prepared.

• Targeting mechanism:
To be useful, market segments must rate favourably on 5 key criteria:
a) Measurable: the size, purchasing power, and characteristics of the segment can be
measured,
b) Substantial: segments should be profitable and large to serve. A segment should
be the largest possible homogenous group worth going after with a tailored
marketing programme,
c) Accessible: the segments can be effectively reached and served,
d) Differentiable: the segments are conceptually distinguishable and respond
differently to different market mix elements and programs.
e) Actionable: effective programmes can be formulated for attracting and serving the
segments.

• Market targeting procedure consists of two steps:

1) Evaluating Market Segments: calls for measuring suitability of segments. The
segments are evaluated with certain relevant criteria to determine their feasibility.
To determine overall attractiveness/ suitability of the segment, two factors are used:
 ii. Attractiveness of Segment: In order to determine attractiveness of the
segment, the company must think on characteristics/ conditions which reflect
its attractiveness, such as size, profitability, measurability, accessibility,
actionable, potential for growth, scale of economy, differentiability, etc.
iii. Objectives and Resources of Company: The firm must consider whether the
segment suit the marketing objectives. Similarly, the firm must consider its
resource capacity. The material, technological, and human resources are taken
into account. The segment must be within resource capacity of the firm.

2) Selecting Market Segments: the company decides on which and how many
segments to enter. This task is related with selecting the target market. Target
market consists of various groups of buyers to whom company wants to sell the
product; each tends to be similar in needs or characteristics.

a. Single Segment Concentration: It is the simplest case. The company selects only a
single segment as target market and offers a single product. Here, product is one;
segment is one. Through concentrated marketing, the firm gains a strong knowledge
of the segment’s needs and achieves a strong market presence. It also enjoys
operating economies through specialising in production, distribution, and promotion.
If it captures segment leadership, it can earn high returns on its investments.
However, there are risks. The market segment can turn sour, or other competitors
can invade it.

b. Selective Specialization: A firm selects a number of segments, each objectively

attractive and appropriate. There may be little or no synergy among the segments.
Every segment is capable to promise the profits. This multi-segment coverage
strategy has the advantage of diversifying the firm’s risk. Firm can earn money from
other segments if one or two segments seem unattractive.

c. Product Specialization: In this alternative, a company makes a specific product, which

can be sold to several segments. Here, product is one, but segments are many.
Company offers different models and varieties to meet needs of different segments.
The major benefit is that the company can build a strong reputation in the specific
product area. But the risk is that product may be replaced by an entirely new
technology.

d. Market Specialization: This strategy consists of serving many needs of a particular

segment. Here, products are many but the segment is one. The firm can gain a
strong reputation by specializing in serving the specific segment. Company provides
all new products that the group can feasibly use. But, reduced size of market, reduced
purchase capacity of the segment, or the entry of competitors with superior products
range may affect the company’s position.

e. Full Market Coverage: A company attempts to serve all the customer groups with all
the products they need. Here, all the needs of all the segments are served. Only very
large firm with overall capacity can undertake a full market coverage strategy, and
this can be done in two ways:
i) Undifferentiated Marketing: Company sells the same products to all the customer
groups. It does not consider difference among buyers. Product and marketing
programme remain common for all the segments. The firm relies on mass
production, mass distribution, and mass advertising. So, it can considerably reduce
production, distribution, and promotional costs. Similarly, reduced costs result into
low price and the price-sensitive consumers can be attracted. However, it is
erroneous to believe that all the segments have similar needs. Such strategy may
invite competition to serve larger groups of buyers, and smaller groups are
neglected. People, in different segments, differ significantly in terms of needs,
preference, and advertising appeal.

ii) Differentiated Marketing: Here, company operates in several segments and designs
different marketing programmes for each of the segments. Various groups of
customers are targeted by several types of products and marketing strategies. It is
based on the notion that each group needs different products. This creates more total
sales, but costs of doing business also on increase. Here, costs and sales both increase,
so, profitability is doubtful. However, it is less risky. Loss in one segment can be
offset against profitable segments. Most of companies prefer this option.

• Main evaluation criteria for target markets:

Assessment What to consider? What the firm is seeking

Factor
 Financial Issues
Segment size What is the size of the segment
(mainly in terms of unit and
revenue sales)? And is this
substantial enough for the firm
to consider entering?
Segment At what rate is the segment
growth rate growing (or perhaps
declining)? What is its future
outlook?
Profit margins Is this a high profit margin
segment or one that is price
competitive?
Structural Attractiveness
Competitors How dominant are the
established competitors? What
degree of competitive rivalry
exists? Are there significant
indirect competitors (or close
substitute products)?
Distribution How easy would it be to gain
channels access to the appropriate
distribution channels? What
level of new investment would
be required in this regard?
Strategic Direction
Each firm is likely to have minimum
size requirements for a market segment
to be considered financially viable.
Segments with strong growth rates are
more attractive as firms can gain
market share from primary demand (as
opposed to needing to win business
from established competitors).
Pursuing new target markets typically
requires significant marketing
investment, so target markets with
higher profit margins are always more
attractive.
Generally, firms do not want to
compete in markets where there are
dominant market leaders, as they tend
to be quite aggressive to new
competitors. Therefore, target markets
with a fragmented competition position
are often preferred.
Strong relationships between the
current firms in the distribution
channel would be of concern. The
ability to establish suitable channel
relationships needs to be evident.
 Strategy How well does the proposed
target market fit with the firm’s
strategic direction and growth
goals?
Goals What does the firm have high
or low growth expectations
Marketing Expertise
Resources Does the firm have the financial
position and staff resources to
successfully enter in this
segment?
Capability Does the firm have the
capability to develop
appropriate products in a
supportive marketing mix
Role of brand Would the firm be required to
create a new brand, or could an
existing brand be leveraged
into the new target market, or
is brand relatively
unimportant?
Opportunity Cost
As part of the firm’s mission and
strategy statement, a clear direction of
the future of the organization is
generally understood and planned out.
Therefore, the target market needs to
contribute to the firm’s strategic
future.
The firms with higher growth goals
are more likely to adopt a multiple
target market strategy and will,
therefore, be more willing to enter new
markets.
Firms seek target markets where they
can enter with a comfortable level of
investment, in terms of: financial
investment, staff time, and the
potential disruption to the balance of
their business.
Firms will naturally seek target
markets where they can leverage their
existing skills, capabilities, and
technologies. Target markets that
require the firm to develop new
expertise are generally best avoided.
Establishing a new brand requires time
and money, so that requirement
reduces the attractiveness of a
segment. As does the risk to a brand of
leveraging in into a lower status
segment, such as when targeting
budget conscious consumers.
 Growth options What is a range of other Market development (new target
opportunities available for markets) is simply one growth. An
growth to the firm organization could also consider
market penetration, product
development, and even diversification
or acquisition. Therefore, given the
growth choices available, is the new
target market the best option at this
time?

III} PRODUCT POSITIONING: the process of creating an image of a product in the

minds of the consumers is called as ‘positioning’. It is an attempt to project
different/refined/revised product image in the market than one that has been prevailing. It
is the delicate task of relating a product to the market or a market segment. It is that
method that emphasizes the product that proves attractive to the consumers. For instance,
a two-wheeler manufacturer might engineer the product to be safer, more accommodative,
and more fuel-efficient than those of competitors.

• Product Positioning Alternatives:

A company which is to position or reposition its products has at-least four options which
can be used to its individual advantage:

1. By making altogether different claim or USP: The company might have made an
advertising claim earlier; now it can change it or it can be very much different from
those made by competing firms. It can be an effective positioning option as it is
different from earlier one, and from those of competitors,
2. Highlighting the new product features: The company can pin-point the unique
product features not highlighted by the company or the competition firms so far.
3. By entering in new market segment: The company may promote a product in the
market segment which was untouched so far by it, or its competitors,
4. By introducing a new package design: It is possible to equalize the product price
and quality by competitors through homogeneity. Such an attempt leads to
oligopolistic type of competition. Therefore, a price cut is an effort to increase sales
in one followed by the competitors. However, new package design is the strongest
shield against such an attempt. Further, package of a product can be used in effort to
extend the product life-cycle. Updating may help to give the pack a more
contemporary image. New package features are perhaps; more important than
product innovation itself, as it is an integral part of marketing strategy.

• Why is positioning important?

ROLE OF H O W P O SI T I O N I N G CA N B E U S E D
POSITIONING
 Support overall Creating a clear positioning for a brand/product in the marketplace
strategy is often an integral part of an organization’s overall marketing
strategy. (For example, some firms have a strategy of building
strong brands and product positioning helps achieve that result.)
Differentiate Clear positioning helps the consumer differentiate between
offerings competitive offerings (as well as between similar offerings from the
same brand). As we know, part of the key to marketing success is
the ability to differentiate on some important features/benefits to
the target consumer.
Competitive Having a number of clearly positioned products/brands increases
position the competitive strength of the organization in the marketplace.
Their brand equity is stronger and they ‘own’ more market space.

Increase sales and Brands/products that are well understood by consumers will
customer loyalty typically generate higher sales levels, as they are seen as the ideal
product solution for particular consumer needs. As a result, these
customers become less likely to switch to competitive offerings.
Avoid Positioning allows the firm to place more products in a related
cannibalization category, with a reduced risk of cannibalization. This is because
consumers will perceive the difference between the firm’s similar
offerings, rather than viewing them generically.
Clear With clear positioning goals the firm can ensure that its IMC mix
communication and remains consistent, as opposed to the possibility of focusing on
consistency different benefits and offers with various campaigns over time.

Reduce price If a product/brand is clearly positioned as having distinct

sensitivity advantages over its competition, then consumers will see greater
value and will become less sensitive to prices and competitive sales
promotions.
Good for low- Positioning is a great assistance when marketing low-involvement
involvement products. For the purchase of low involvement products,
purchases consumers often rely on their memory to make a quick or impulse
purchase decision. By being well, consumers become more likely to
select the firm’s brand/product.
Good for habitual Many supermarket style products (that is, FMCGs – fast moving
purchases consumer goods) are bought on a habitual basis. If a product is well
positioned on key attributes/benefits, then the consumer can
internally rationalize why they buy the same product on a regular
basis without consideration of the competitive offerings.
Facilitate W-O-M For products that are more prone to word-of-mouth (W-O-M)
communication, being positioned around a few key
 benefits/features makes it much easier for the target market to
communicate the advantages of the product to other consumers

Guide marketing Positioning needs to be implemented by the full range of

mix development the marketing mix, so a firm that outlines clear positioning
intentions will be more likely to implement marketing mix that is
consistent and supports its positioning goals.

• Determinants of Successful Product Positioning:

1) Design creative product proposition: Product proposition means the offer of
benefits accruing from the use of the product. In other words, it concerns it-self with
outstanding product features. The proposition to be perceived by the consumers is
one that is desired by the firm proposing. The results of positioning are increased
satisfaction to the users and profits to the sellers through increased sales. The
product proposal is bound to be impressing and appealing than those of competitors
if a novelty is shown via creativity.

2) Existence of warranted competition: The positioning strategy is likely to be

victorious in case there is competition warranting product positioning. Product
positioning or repositioning is always done in response to the product positioning or
repositioning done by competitors.

3) Sizeable and profitable market segment: Market segments must be large enough
to make it profitable for a manufacturer or marketer to concentrate his resources on
such as market. In effect, therefore, a market segment must contain enough people to
make a profitable market and must be identifiable in order to implement such a
strategy.

4) Sensitive market segment: A sensitive market segment is one that receives the
communication message transmitted by the company and reacts to it. That is, a
segment should make differential response to the marketing efforts put in by the
company. That is, the efficient marketer is aiming at equal marginal response from
the unit of the marketing effort applied in each market. The communications
designed especially for a segment must be understood; the company wants to
consumers to understand or perceive.

5) Adequate consumer behaviour information: Product positioning presupposes the

availability of adequate, detailed and up-to-date information regarding the
consumers, especially their behaviour. Basically, product positioning is one of the
alternatives for matching the consumer self-image with the company product image.
It is a matter of collecting, analysing and interpreting the consumer behaviour.

• Product Positioning Process:

According to Philip Kotler, product-positioning process consists of three steps/phases

discussed as under:
 1. Identifying Potential Competitive Advantages:
This is the first stage in product positioning process. Product is positioned by highlighting
product benefits/advantages. So, the primary task is to identify which are the potential
competitive advantages that a company can offer. Company can differentiate its product by
competitive advantages.

i. Competitive Advantages Related to Product: Such advantages include product

features or distinctive characteristics, product qualities (including durability,
reliability, design/style and reparability), and product performance.

ii. Competitive Advantages Related to Service: They may cover Easy Ordering;
Speedy, accurate, and careful delivering; Facility for free and safe installation;
Training to customers for effective and safe use of the product; guarantee, warrantee,
credit, and maintenance; Customer consultation, which includes information and
advice, either free or at price to buyers.

iii. Competitive Advantages Related to Personnel: They consist of employees’

competence, courtesy, credibility, responsiveness, communication, etc.

iv. Competitive Advantages Related to Channel: Such advantages may include

coverage, accessibility, regularity, types and quality of services, expertise, and
performance of channel members.

v. Competitive Advantages Related with Image: This type of advantages related to a

company image or brand image. They consist of prestige, status, and identity offered
by the product manufactured and marketed by a well-known and reputed company.

2. Developing Positioning Strategy or Choosing Competitive Advantages: It is

natural that all the benefits stated above are not meaningful or worthwhile.
Therefore, a company must carefully select certain basic competitive advantages.
While selecting the competitive advantages, company must consider some
conditions:
a. The advantages a company wants to position must satisfy following conditions:
i. Advantages must be important to consumers.

ii. They must be distinctive or unique,

iii. They must be superior,

iv. They must be communicable and visible to buyers,

v. They must be pre-emptive (defensive or preventive), cannot be easily copied

by competitors,

vi. They must be affordable to pay by the buyers,

vii. They must be profitable to company.

 b. How Many Advantages to Promote?: This question relates to the number of
competitive advantages. It is a very crucial decision in product positioning. Since
all the competitive advantages are not equally important, a company has to select
a few distinct advantages. Advantages a company wants to promote should be
just adequate and clear (free from confusions or doubts). Depending upon what
the market expects from the product, number of competitive advantages should
be selected. In short, the list should be reasonable to convince the customers the
superiority of the product.

c. Which Advantages to Promote?: The second important question relates to

selection of promising competitive advantages. Each advantage has its value.
Only valued, impressive, distinctive, and novel advantages should be selected.
Only those advantages making difference from competitors’ offerings must be
given place. In fact, the decision of selection of competitive advantages depends
on type of product, types of competitors’ products, and type of customers.

3. Communicating the Company’s (Competitive Advantages) Positioning: This is

the third and the last important phase of product positioning process. This step is
also known as signalizing the competitive advantages. Once the company has decided
on what and how many competitive advantages are to be emphasized for product
positioning, the next task is to communicate them effectively to position them in the
mind of consumers. Appropriate physical signs and cues should be used to make
consumers judge different advantages. For each of the advantages to position,
different methods should be used. Consumers must be explained and convinced the
competitive advantages the product can offer. All the promotional tools –
advertising, personal selling, sales promotion, and publicity – are used for the
purpose.

Effective market communication is an essential condition to reach the mind of people

and convey the message how differently and in which superior way the product
meets their expectations. Competitive advantages, if not successfully communicated,
cannot be positioned, and are of no use. Thus, product positioning plays an important
role to attract and satisfy customers. Company can make a permanent place in the
mind of customers. Successful positioning is not an easy task, the company needs to
study what are the market needs and wants, identify competitive advantages that a
product can offer, and communicate them.

• Determination of the positioning strategy:

The following factors have to be considered:

i. Identify the competitors,

ii. Determine how the competitors are perceived and evaluated,

 iii. Determine the competitors’ positions,

iv. Analyse the customers,

v. Select the position,

vi. Monitor the position.

• Main Categories of positioning

POSITIONING DE S CR I P T I O N
CA T E G O R Y

By product A product attribute is a specific feature or benefit of the product.

attribute Positioning in this way focuses on one or two of the product’s best
features/benefits, relative to the competitive offerings.
By user This positioning approach highlights the user (the ideal or
representative target consumer) and suggests that the product is the
ideal solution for that type of person and may even contribute to
their social self-identity.
By product class This positioning strategy tends to take a leadership position in the
overall market. Statements with the general message of “we are the
best in our field” are common.
Against With this approach the firm would directly compare (or sometimes
competition just imply), a comparison against certain well-known competitors
(but not generally not the whole product class as above).
By use/application With this approach, the product/brand is positioned in terms of how
it is used in the market by consumers, indicating that the product is
the best solution for that particular task/use.
By quality or value Some firms will position products based on relative high quality, or
based on the claim that they represent significant value.
By using a Some products/brands are positioned using a combination of the
combination of the above positioning options. However, care needs to be taken not to
above options clutter and confuse the message by trying to connect with too many
competitive advantages.

• Which positioning approach to use?

AREA TO Q U E ST I O N S T O A SK
CONSIDER
 Market gaps Where are their gaps in the target market?
Why does the gap exist?
Can we fill the gap?
Substance/support Do we have the capability to deliver on this positioning
promise?
Can we really produce high quality products or compete on
price?
How we will compare to our competition when we get to
market?
Market need Would this positioning space appeal to the target market?
Which features/benefits are of most interest to target
market?
Competitive barrier Will this be a long-term positioning?
How easily could this position be duplicated by our
competitors?
Profitable What level of sales/profits is likely to flow from this
positioning?
Can we develop a supportive marketing mix on a cost-
effective basis?
Communication Is the positioning statement easy to communicate via media?
Will it be simply understood by the target market?

• Over and Under Positioning

A firm that has under-positioned a product has failed to communicate a clear positioning
to the end-consumer. This means that the product positioning is vague or that the firm has
tried to communicate too much about the product (and the consumers are confused about
what the product stands for). In either case, the positioning is quite weak and we have not
effectively communicated any real points-of-difference.

Almost the opposite of that problem, is referred to as over-positioning. This is where we

have over emphasized one or two points of the product and the target market now has been
very narrow perception of what the product offers. So rather than communicating array of
both points-of-parity and points-of-difference, the firm has focused on one point-of-
difference only. The problem here is that the target market may interpret the product as
being a very specialized solution, which would dramatically limit its overall market appeal
and sales potential.

Whether the product is under or over positioned the outcome is still the same; potential
sales will be limited (either because the target market does not clearly understand it or the
market believes it is a very highly specialized product). The solution to both these problems
is careful construction of positioning strategy, with the appropriate mix of points-of-parity
and points-of-difference as discussed above.
• Product repositioning:
Repositioning is the process of changing a brand’s status in comparison to that of the
competing brands. Repositioning is usually affected through a change in the
marketing mix in response to changes in the market place, or due to a failure to reach
the brand’s marketing objectives.
Types of repositioning could include:
a. Increasing relevance to the consumer,
b. Increasing the occasions for use,
c. Making the brand serious,
d. Falling sales,
e. Bringing in new customers,
f. Making the brand contemporary,
g. Differentiating from other brands,
h. Changed market conditions

• Reasons for repositioning:

MAJOR REASON W H Y R E P O SI T I O N ?

Change in consumer needs Over time (say 10-20 years), there are changes in consumer
needs and lifestyles (as the next generation moves
through), which may result in the key benefits of a product
no longer being as relevant to the target market.
New/strong competition A product may be challenged by a new (perhaps more
relevant) or stronger competitor in their positioning space,
requiring the task of repositioning to a less competitive
arena.
Lack of perceived A firm may have found their products with many points-of-
differentiation parity and few points-of-differentiation, requiring a revised
positioning in order to highlight their particular
advantages.
Under or over positioned Under positioned means that the positioning is too vague
or weak and over positioned means that the product is too
narrowly defined. Either way they are problems for the
firm that can be addressed by a repositioning exercise.
Change in macro Significant changes in the macro environment may require
environment products to be repositioned. Economic conditions,
technological advances, and even legislative change may
require the firm to change its product’s positioning.
 Improved product If a firm invests in a substantial product improvement, it is
likely that additional benefits (or relative advantages) will
be delivered, which means that product repositioning could
be warranted.
Poor product launch Any new product that is launched with disappointing
results may be considered for relaunch with a new
positioning (that is, repositioned).
New target market Sometimes alternate target markets may be more
attractive. Therefore, a product may need to be
repositioned to more directly appeal to the newly defined
target market.
Broader/smaller target Some firms, as part of their target market selection process,
market may decide to broaden (or more tightly define) their target
market. This will mean that the firm will probably need to
construct a revised positioning for the product.
Clear market gap A review of a perceptual map may indicate a significant and
uncontested market gap, which may be deemed more
profitable than the product’s current positioning space. In
this case, a repositioning exercise might be considered.
Positioning drift If a product’s positioning is not clearly defined by the firm,
has inadequate support, or is carelessly managed by the
firm over time; then it is likely that the resultant product
positioning will not be in line with positioning goals and
repositioning will be required to correct this ‘drift’.

E.g. 1: Lipton Yellow Label Tea was initially positioned as delicious, sophisticated and
premium tea for the global citizen. The advertisements also echoed this theme. For
instance, all the props and participants in the advertisements were foreign. It is possible
that this approach did not find favour with the customers. The repositioning specifically
addressed the Indian consumer through an Indian idiom.
E.g. 3: Visa Card: Visa Card had to change its positioning to make itself relevant to
customers under changed circumstances. Initially it asked the customer to “pay the way the
world does” (1981). This is to give its card an aura of global reach. But as more and more
cards were launched on the same theme, to put itself in a different league, it positioned itself
as the “world’s most preferred card” (1993). To highlight the services it provided, it shifted
to the platform of “Visa Power” (1995). This focus on explaining the range of services
available with the card continues till date (Visa Power, go get it).

• Brand Dilution:
Brand dilution is the weakening of a brand though its overuse. This frequently
happens as a result of ill-judged brand extension. Price cutting that increases volumes
but moves a brand down-market can be similarly damaging to a brand. Brand dilution
 is an ever-present risk for companies that rely on a strong brand for high margins. A
company that owns a strong brand obviously wants to leverage it to sell as much as
possible, but the very strategies used to purse this bring the danger of brand dilution.
Investors need to look at strategies designed to exploit brands by extension (or
through otherwise increasing the market served by a brand) in order to be warned of
dangers of brand dilution.

• Perceptual Mapping:
A perceptual map is a visual technique designed to show how the average target
market consumer understands the positioning of the competing products in the
marketplace. In other words, it is a tool that attempts to map the consumer’s perceptions
and understandings in a diagram. It basically refers to the consumers’ understanding of
the competing products and their associated attributes. The most common presentation
format for a perceptual map is to use two determinant attributes as the X and Y axes of
a graph, however there are also other formats that are sometimes used.

There are three main formats for a presenting a perceptual map:

a. Using two determinant attributes: The first format simply uses two determinant
attributes on the graph. Below is a simple example of a perceptual map for soft
drinks in this format. The main advantage of this presentation format is that it is
very simple to construct and interpret. e.g. The simple combination of these two
scores (probably obtained from a consumer survey) places the product offering onto
the map. For example on this map, the 7-Up product offering is perceived as having
a moderate level of sugar and being relatively low in caffeine’.

b. Using many product attributes : The second approach to perceptual mapping used
to use a statistical technique called correspondence analysis. Using a computer, a
statistical program (such as SPSS) has the capacity to map multiple product
 attributes at the same time. This type of map is a little bit more confusing and
difficult to interpret, but it does provide a good overview of how the target market
views and connects the various attributes. You will note that there are no defined
axes in this type of perceptual map. Instead the various product attributes are
scattered throughout the map, along with the perceived positioning of the various
product offerings. (How to interpret these maps is discussed in another section of
this marketing study guide.) The following is an example of a perceptual map
formed by correspondence analysis:

c. Joint perceptual maps: Occasionally you will see a perceptual map that also maps
the preferred needs of different market segments, based on the same attributes.
These types of maps are sometimes referred to as joint perceptual maps, as the
perceived product positioning is jointly presented with the needs of the segment.
The addition of market segment needs being placed on the perceptual map allows
the firm to identify how well they are positioned to relative to their
particular target markets. The following is an example of this type of a joint
perceptual map, showing age and gender demographic segments.
• Purposes of Perceptual Map:

Reason Discussion

Check reality To see how the target consumers actually perceive the
various offerings and positions

Impact of campaigns To measure/track the impact of recent marketing

campaigns and any other marketing mix changes

Monitor new products To identify how well any new products have been
positioned into the market

Monitor competition To monitor the impact of various competitive offerings

over time

Look for gaps To assist the company identify market gap as an input
into the new product development process

Understand segments To provide information that will help further understand

different market segments

Track preference changes To track any changes in consumer preferences (and other
environmental factors) over time