CHAPTER 6

Market Targeting and Strategic

Positioning

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
 Learning Objectives

*Market Targeting Strategy

*Targeting in Different Market
Environments
*Positioning Strategy
*Developing the Positioning Strategy
*Determining Positioning Effectiveness

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
 MARKET TARGETING STRATEGY

The Marketing Targeting Decision Identities the People or

Organizations in a Product-Market Toward Which a Firm
Directs Its Positioning Strategy Guided by an
understanding of:

•The product-market
•Its buyers
•Firm’s capabilities resources
•Competition

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Market Targeting and Strategic Positioning

* Core dimensions of market-driven

strategy: deciding which buyer’s to
target and how to position the firm’s
products

* Effective targeting and positioning

strategies are essential in gaining and
sustaining superior performance
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SEGMENTS

VALUE
OPPORTUNITES

CAPABILITIES/
SEGMENT
MATCH

TARGET(S)

POSTIONING
FOR EACH
TARGET
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 Identify segments
within the product-
market

TARGETING
AND
POSTIONING
Decide and
implement a Decide which
positioning strategy segment(s) to
for each targeted target
segment

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 Market Targeting Alternatives
Segments Clearly Defined

Target Target
Selected Multiple
Selective
Niche(s) Segments
Extensive
Targeting Targeting
Product Product
Specialization Variety

Differentiated But Segments

Not Clearly Defined

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 Factors Influencing Targeting Decisions
* Stage of product – market maturity

* Extent of diversity in preferences

* Industry structure

* Capabilities and resources

* Opportunities to gain competitive

advantage

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TARGETING IN DIFFERENT MARKET ENVIRONMENTS

 Emerging

 Growing
 Mature
 Declining
 Global

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 Emerging Market
Buyer Diversity
* Segmentation limited due to similarity of buyers’
preferences
Industry Structure
* Typically small new organizations
* Limited access to resources
Capabilities and Resources
* Unique benefit (differentiation) strategy rather
than low-cost
* First-mover advantage
Targeting Strategy
* Single target or a few broad segments

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 Growth Market
Buyer Diversity
* Segments should exist
Industry Structure
* Numerous competitors
Capabilities and Resources
* Survival requires aggressive actions by firms that seek large
market positions
* Otherwise select one or a few market segments
Targeting Strategy
* Three possible strategies
1. Extensive market coverage by firms with established
businesses in related markets
2. Selective targeting by firms with diversified product portfolios
3. Very focused targeting strategies by small organizations
serving one or a few market segments.
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 Mature Markets
Buyer Diversity
* Segmentation essential for competitive advantage
Industry Structure
* Intense competition for market share
* Emphasis on cost and service, and pressures on profits
Capabilities and Resources
 Management’s objectives: cost reduction, selective
targeting, product differentiation
Targeting Strategy
 Deciding which segment to serve
 Firms pursuing extensive targeting strategies may decide
to exit from certain segments
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 Global Markets
Global Reach and Standardization
* Identify market segments that span global markets and
serve these needs with global positioning strategies
Local Adaptation
* Consider requirements of domestic buyers
* Buyers’ needs and preferences affected by social, political,
cultural, economic, and language differences
Industry Structure
* Restructuring, acquisitions, mergers, and strategic
alliances altering industries and
competition
Targeting Strategy
* Targeting a single country, regional (multinational)
targeting, or global targeting
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STRATEGIC POSITIONING INITIATIVES
POSITIONING CONCEPT
The desired positioning of the
product (brand) by targeted buyers

MARKET
TARGET
POSITIONING POSITIONING
EFFECTIVENESS STRATEGY
How well The combination of
management’s marketing actions
positioning objectives used to communicate
are achieved for the the positioning concept
market target to targeted buyers

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 How Positioning Works
* Objective
* Match the organization’s distinctive capabilities with
the customer value requirements for the market target
(How do we want to be perceived by targeted
buyers?)
* Desired result
* Gain a relevant, distinct, and enduring position by the
targeted buyers that they consider important.
* Actions by the organization
* Design and implement the positioning strategy
(marketing program) for the market target.
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The Perception or Association that Management Wants Buyers
to Have Concerning the Brand

Symbolic Functional

SELECTING THE
POSITIONING
CONCEPT

Experiential

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 DEVELOPING THE POSITIONING STRATEGY

The Positioning Strategy Places the

Marketing Program (mix)
Components into a Coordinated
Set of Actions Designed to
Deliver Superior Customer
Value
PRODUCT
VALUE CHAIN
PROMOTION
PRICE

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 Positioning Issues
1. The positioning concept applies to a
specific brand rather than all the
competing brands that compose a
product classification
2. The concept is used to guide positioning
decisions over the life of the brand
3. Multiple concepts are likely to confuse
buyers and may weaken the effectiveness
of positioning actions

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The positioning strategy indicates how (and why) the product mix,
line, or brand is to be positioned for each market target. This strategy
includes:
•The product strategy, indicating how the product(s) will be positioned against the
competition in the product-market.

•The value chain (distribution) strategy to be used.

•The pricing strategy, including the role and positioning of price relative to
competition.

•The advertising and sales promotion strategy and the objectives these promotion
components are expected to achieve.

•The sales force strategy, direct marketing strategy, and the Internet strategy,
indicating how they are used in the positioning strategy.

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 Determining Positioning Effectiveness
Customer and
Competitor Research

Methods for
Determining
Positioning
Effectiveness
Analytical
Positioning Test Marketing
Models
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Customer and Competitor Research
* Research Studies
* Preference Maps
Test Marketing
* Generates information about commercial feasibility
and marketing program
* Provides market (sales forecasts) and effectiveness
measures
Positioning Models
* Incorporates research data into formal models of
decision analysis
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 Positioning Errors
* Under-positioning – customers have only
vague ideas about the company and do
not perceive anything distinctive about it
* Over-positioning – Customers have too
narrow an understanding of the company,
product, or brand
* Confused positioning – Frequent changes
and contradictory messages confuse
customers
* Doubtful positioning – claims made for the
product or brand are not regarded as
credible
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 Positioning in Perspective

* Positioning is a central part of business strategy

* Positioning analysis starts with an understanding of the
value proposition for the target segment
* Positioning seeks to differentiate the organization’s offer
from the competition
* Positioning seeks to create a unique perception in
buyers’ minds of the target market segment
* Positioning is the unifying dimension of market-driven
strategy

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Illustrative Impacts of Changes in Business Strategy on Targeting and
Positioning Strategies
Changes in Business Market Targeting Impact
Strategy Positioning Impact
Rapid Growth/ Market scope may not change Substantial changes in resource
Retrenchment although targets may be increased allocation, (e.g. advertising
or reduced. expenditures

Changing the Product Mix No change is necessary unless increase Changes in product strategy, methods of
in product scope creates opportunities distribution, and promotional strategies
in new segments. may be necessary.

Changing the Market Targeting is likely to change to include Positioning strategy must be developed
Scope new targets. for each new target.

Repositioning Should not have a major effect on Product, distribution, price, and
targeting strategy. promotion strategies may be affected.

Value Chain Integration Should have no effect on targeting Primary impact on channel, pricing and
strategy. promotion strategies.

Diversification Targeting strategies must be selected in Positioning strategies must be developed

new business areas. (or acquired for the new business areas.

Strategic Alliance Targeting strategy may be affected Operating relationships and assignment
based on the nature and scope of the or responsibilities must be established.
alliance.
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 Targeting and Positioning
Product Strategy

Positioning Strategy

Promotion Distribution
Strategy Strategy
Market Target

Price Strategy

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