MARKET POSITIONING

Product and market orientation

PRODUT ORIENTATION MARKET ORIENTATION

Many businesses in the past and some today
could be described as product orientated
This means that business focuses on the
production process and the product itself
It puts most of its effort into developing and
making products that it believes consumers want
and which will sell well.
In the past, businesses producing radios and
televisions could be said to have been relatively
product orientated.
Product orientated businesses place their
emphasis on developing a technically sound
product, producing that product and then selling
it.
A great deal of pure research for example, with
no regard to consumers’ needs, still takes place in
industry as it does in the development of
pharmaceuticals.
A business that is market orientated is one that
continually identifies, reviews and analyses
consumer needs. It is led by the market.
A business is likely to be engaged in effective
marketing if its market oriented.
Example is iphone 6 by Apple where the product
is being developed in response to the wishes of
consumers.
A more market orientated business can respond
more quickly to changes in the market because it
use market information, will be in a stronger
position to meet the challenge of a new
competition entering the market, more able to
anticipate market changes and more confident of
the launch of the new product being a success.

What effects will be taking a market-oriented approach have on a business?

 Consult the consumer continuously through market research

 Design the product according to the wishes of the consumer
 Produce the product in the quantities that consumers want to buy
 Distribute the product according to the buying habits and delivery requirements of the
consumer
 Set the price of the product at a level that the consumer is prepared to pay.

The business must produce the right product at the right price and in the right place, and it must let the
consumer know that it is available  marketing mix.

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Whether a business places great emphasis on the product or on the market will depend on a number of
factors

Nature of the product

Policy decisions

Views of those in control

Nature and size of the

market

Degree of competition

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Reposition

 As market change in response to shifting consumer demand, some businesses find they need to
reposition their products.
 This involves changing their target market, features of the product or the image of the product
that distinguishes it from the rivals.
 For example, cleaning products originally designed for washing baby nappies fell in demand
when throwaway nappies were introduced.
 Some companies successfully repositioned their brand for a new use – being an ideal washing
powder for tough stains

Market positioning

 Market positioning is concerned with the perceptions consumers have about products
 To simplify the choice from a vast range of products, consumers catergorise them according to
a range of factors.
 Such factors include quality, status, value for money etc.
 Consumers often position a business’s products in relation to those of its competitors. This can
be in the form of pecking order or product ladder.
 Firms will plan marketing activities to shape consumer perceptions and achieve a desired
position.

Some approaches that a business might use to position its products are

The benefits offered by the product

The unique selling point

The characteristics/quality of the product

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 The origin of the product

Market mapping
 The positioning of a brand is influenced by customer perceptions rather than by those of
businesses.
 For example, a business may feel its brand is a high quality upmarket product. But if
customers see it as low quality and down market, it will influence the levels of sales.
 If a business wants to find out where its brand is positioned in the market, it might carry
out market research to understand how customers see the brand in relation to others in
the market.

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Advantages of market mapping

 A business may wish to launch a new brand. Having decided the target market, market research
might show what character tics the brand must have to succeed in that market.
 It could reveal the price that customers are prepared to pay, suggest what sort of promotional
support will be needed.

Disadvantages of market mapping

 The perceptual maps only have two dimensional which means that only two product qualities
can be analysed on the same map.
 They can also be more relevant for individual brands and less helpful for a corporate brand
image.
 The information needed to plot the maps can be expensive to obtain, requiring the use of
primary market research.
 There may be difference between consumers’ perception of the brand’s benefits and the actual
benefits.

Market segmentation

 Markets can be divided into different sections or market segments.

 Each segment is made up of consumers that have similar needs
 Businesses recognize this and target particular market segments with their products.
- Some businesses concentrate on producing one product for one particular segment,
for example, luxury cars targeted at a very wealthy market segment in the car
market
- Some businesses produce a range of different products and target them at several
different segments
- Some businesses aim their product at nearly all consumers, example, agricultural
products.
 However, dividing markets into segments businesses can more easily supply products that meet
customers’ needs.

Geographical and demographic segmentation

Geographical segmentation

 Different customer groups are likely to have different needs depending on where they live.
 Example, groups living in hot climates such as Australia or South Africa will have different needs
to groups living in mild climates such as Denmark.

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Demographic segmentation

 Common for businesses to divide markets according to age, gender, income, social class,
ethnicity or religion of the population

Age

Gender

Income

Social class

Ethnicity

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 Psychographic segmentation
 This groups customers according to their attitudes, opinions and lifestyles.
 However, psychographic segmentation can be difficult for businesses to collect data about the
beliefs, attitudes and lifestyles of consumers in order to do this it may require the help of
specialist businesses.
- Sports products may be aimed at those who are interested in extreme sports such
as snowboarding
- Chocolate manufacturers have identified 2 catergories of chocolate eaters.
Depressive chocolate lovers eat chocolate to unwind, mainly during the evening.
Energetic chocolate eaters eat chocolate as a fast food and live life at a fast pace.
- Travel companies target holidays at families with younger children.

Behavioral segmentation

 Behavioral segmentation attempts to segment markets according to how consumers relate to a

product.

Usage rate This is when consumers are categorized

according to the quantity and frequency of
their purchase
Loyalty Consumers catergorized according to their
product loyalty
Time and date of consumption Consumers often consume particular
products at particular times and dates.
Businesses take advantage of this in order to
improve their marketing. For example,
manufacturers of breakfast cereals, while
recognizing that their product will be primarly
consumed in the morning to consume the
product in the evening.
Similarly, many restaurants seek to
encourage different groups of consumers. For
example, they often have deals for students
or lunchtime deals for local offices.

Benefits of market segmentation

 Generally, a business is more able to meet the needs of different customer groups if the market
is segmented
- Businesses that produce different products for different market segments can
increase revenue. For example, airlines charge first class passengers higher than
economy passengers for the same flight
- Customers may be more loyal to a business hat provides products that are tailored
specifically to them
- Businesses can avoid wasting promotional resources by not targeting products at
customers that do not want them.

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Competitive advantage of a product of service

o A business is likely to be more successful if it can gain a competitive

advantage in the marketplace
o Competitive advantage is a set of unique features of a company at its
products that are perceived by customers as significant and superior to the
competition.

Product
design

Product
quality

Promotion

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 Customer
service

Delivery
times

Economies
of scale

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 Flexibility

Ethical
stance

Focusing on
a particular
market
segment

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The purpose of product differentiation

 Product differentiation is used by businesses to gain a competitive edge over their rivals.

The purpose of product differentiation may include the following

Flexible pricing

recognition

Extend product range

Brand development

Overcome competition

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 Adding value to products and services

 In highly competitive markets a business may try to add value to its products
 This means that the business provides extra features for the customer that goes beyond their
standard expectations.

Bundling

Customer service

Speed of
response to
customers

Packaging

Frequent buyer
offers

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 Customization

Advantages of adding value

 May be possible for a business to charge a higher price.

 Gain a competitive edge
 Help a business protect itself from competitors
 Can focus more closely on its target market by meeting the needs of customers more effectively.

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