Business To Business

Marketing
Application of STP
Learning Objective
• Options to Reach out the Market

• Process Of Target Marketing

• Positioning

• Positioning Process

• Positioning strategies
Business Marketer Options to Reach out the Market

• Undifferentiated Marketing

• Differentiated Marketing

• Focused or Concentrated Marketing

• Target Marketing
Undifferentiated Marketing
• The undifferentiated marketing strategy is characterized by market aggression.

• It treats the whole market as a single unit and they try to tap the entire market with a
single marketing strategy.

• The marketers may be using this strategy due to the standardized products or services sold
to a market. They do not feel the need for differentiation among customers.

• The undifferentiated strategy is advantageous in comparison to the differentiated

marketing strategy since it keeps down the total cost including advertising, marketing
research, inventory and production.

• Such companies are not in a position to build up higher sales in case the competitors follow
a differentiated marketing strategy.
Undifferentiated Marketing

Single
Single
Service
Offer Market

Advantages :

•Concept of Mass Market.

•Low operating cost.
•Fewer offerings
•Uncomplicated communication
 Differentiated Marketing
• The differentiated marketing strategy essentially involves market segmentation and a separate
marketing strategy for each of the target segment.

• It develops a separate marketing strategy for each of its chosen segments.

segments

• Making different marketing strategies for different target markets increases overall costs since
product development, promotional cost, production and administration cost may be separate for
each segment.

• The company achieves its objective of higher sales volume and a better position in the chosen
market segments.

• Hence, the differentiated marketing strategy is always higher in cost but it brings higher sales to
the company.

• Over segmentation must be avoided by the industrial firms.

 Differentiated Marketing

Service Offer version 1

Service Offer version 2 Single Market
Service Offer version 3

Advantages :

• Overcoming negative perception of receiving same core product.

• Successfully targeting broader market with differential base.
 Concentrated Marketing
• In the simplest case, a single segment forms the target market of a company and all
marketing efforts are concentrated on this segment.

• This strategy is normally done by a company whose resources are limited

• Such a company concentrates its knowledge and tailor’s its strategy to service a particular
segment far better than its competitors.

• These companies employ the strategy of a narrow range of products/services

accompanied by high quality, high price and a selective promotional and distribution
strategy.

• This strategy has more risk since all the efforts are made on a particular segment

• In case the demand from that segment declines or the target segment has been
overpowered by a larger competitor, then such companies with limited resources may
find themselves in trouble.
 Focused or Concentrated Marketing

Single
Niche Market
Service Offer

Advantages :

• Marketing resources – Tailored towards special group.

• Small market size and less competition.
• High value.
 Target Marketing

Service Offer 1 Market Segment 1

Service Offer 2 Market Segment 2

Service Offer 3 Market Segment 3

Target Marketing concentrated on :

•Identifying similarities between customers.

•Identifying differences between different groups of customers.
•Identifying differences among members of homogenous groups.
Target Marketing
Benefits :
• Optimum utilization of resources in catering large market.

• Cost-effective

• Smaller firms can survive.

• Can meet customer demands.

• Generated customer loyalty.

Process Of Target Marketing

Market Market Market

Segmentation Targeting Positioning

Identifying similar Deciding which groups Creating a concept to

Groups of customers Of customers to aim for Appeal to the target market.

Stage 1 Stage 2 Stage 3

 Stage 1  Market Segmentation
• Process of dividing a heterogeneous market into
homogeneous sub units.

• Dividing the market into distinct groups of buyers with

different needs, characteristics or behavior.

• Market analyzed for its nature and composition and

then clubbed together with similar needs.

• Customers inside a grouping have similar preferences

and traits.
traits
Requirements for Effective Segmentation

• Measurable and obtainable  Size, purchasing power and

characteristics.

• Accessible

• Substantial & Viable

• Actionable

• Differentiable
 How to Segment a Market
• Survey Stage : Focus group discussions and in-depth
interviews for insights into consumer attitudes, motivation
and behavior. Develop questionnaire to administer the
sample group.

• Analysis Stage : Factor and cluster analysis has to be made

to find out the factors that are the major influencers.

• Profiling Stage : The clusters are then profiled by

demographic, psychographics and usages.
 DEMOGRAPHY-Which Industry to
serve?

Automobile

Rubber tyre industry Trucks

Farm tractors

Fork lift trucks

aircrafts

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 Segmentation
Micro segmentation
(price , service & utility)
(II)
Macro segmentation Government hospitals Low
(I) price &

Medical apparatus Medical collages service

More
reliable
Private hospitals
and
accurate
Soil testing laboratory
Laboratory
apparatus making
industry Fertilizer testing
laboratories
Government labs Low
price &

Tissue culture service

University labs
laboratories
More
Private lab reliable and
accurate
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Tyre Market
Segmentation
Market Segmentation for the Tyre Industry is based on the type of vehicle served.

Indian Tyre
Industry

Commercial Passenger
Others
Vehicles Vehicles

Industrial
MHCV HCV LCV Cars Motorcycles Scooters Farm OTR
Vehicles

MHCV : Medium Heavy Commercial Vehicles

HCV Heavy Commercial Vehicle
LCV Light Commercial Vehicle OTR Off the
Road

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Stage 2  Market Targeting

Market segment 1
Market segment 2
Organization
Market segment 3

Market segment 1
Market segment 2
Organization
Market segment 3
 Market Targeting
• After doing the market segmentation the firm has to evaluate the
segment of their market potential. Then the company has to decide
which and how many segments to serve and how to serve them.

I. Single segment concentration

II. Selective specialization
III.Product specialization
IV.Market specialization
V. Full market coverage
Market Targeting
• After doing the market segmentation the firm has to evaluate the
segment of their market potential. Then the company has to decide
which and how many segments to serve and how to serve them.

I. Single segment concentration

II. Selective specialization
III.Product specialization
IV.Market specialization
V. Full market coverage
 Evaluating and Selecting The market
Segments
Single Segment Concentration
1)Single product in single market.

2)The farm equipment division of Mahindra And

Mahindra concentrated on tractors, and Primarily M1 M2 M3
targeted agriculture market.

3)The zodiac brand concentrates on formal shirts on P1

executive and professionals. P2
4)Some hospitals focus on certain therapeutic area, P3
Heart specialty ,gynecology
5)Risk in single segment concentration :a particular
market segment can become sour as competitor
may invade the segment.
Source: Marketing management by Kotler, Keller, Koshy, Jha 22
Evaluating and Selecting The market
Segments
Selective specialization
1) Specialized product in specialized M1 M2 M3
market.
P1
2) The firm attempts to serve all P2
customer group
P3

Source: Marketing management by Kotler, Keller, Koshy, Jha

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Evaluating and Selecting The market
Segments
Product Specialization
1)Single product in different markets
M1 M2 M3

2)The firms makes a certain product that it P1

sells to several different market segments
P2
3)E.g. A notebook manufacturer sells to
P3
university, government and commercial
laboratories.

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Evaluating and Selecting The market
Segments
Market specialization
1)Various products in single market. M1 M2 M3

P1

2)The firm concentrates on serving P2

many needs of a particular customer P3
group or market.

3) JK Paper sells bond paper, notebook,

diary to an organization

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Evaluating and Selecting The market
Segments
Full market coverage
1) Different products in different
markets. M1 M2 M3

P1
2) The firm attempts to serve all
customer group with all the products P2
they might need.
P3

3) It is possible for only the large firms

4) Reliance, Tata
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Bridgestone - Market Specialization

M1 M2 M3
(Cars) (Trucks) (2-wheelers)
P1 Touring Tyres

P2 Sport Tyres

P3 Economy Tyres

Bridgestone India has focused on the Passenger Car Segment exclusively as it

offers only radial tyres.
MRF : Compete Market
Coverage
M1 M2 M3
(Cars) (Trucks) (2-wheelers)
P1 Touring Tyres Economy Tyres High Grip Tyres

P2 Sport Tyres Mileage Tyres Touring Tyres

P3 Economy Tyres Endurance Tyres Best Fit Tyres

MRF holds a diversified portfolio of products spanning the entire tyre market.

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Stage 3  Market Positioning
• Chosen segment to be targeted for
acquisition and retention.

• For this customer has to be persuaded of

the uniqueness.

• Offer has to be positioned in the minds of

the customer to recognize as distinct.
 Four Principles of Positioning
• A service firm must position itself in the target segment’s
mind.

• The position would be singular,

singular with one simple consistent
message.

• The position must set the firm and product apart.

• Should focus on certain segments.

Positioning and Differentiation Through
• Offer – Features, packaging, add-ons

• Service and other tangibles.

• Channel/Distribution

• Price

• People – Internal customers

• Image
Process Of Positioning
Identify Target Market
Tangibles( Colour,size, design)
Stage 1
Identify key offer Intangible reputation, guarantees
Service features identification and
characteristics weightage to each of them.

Stage 2
Draw perceptual map
Head-On/ me too

Stage 3
Decide on competitive Position away/avoid competition
strategy

Stage 4
Design offer attributes, USP
Associated imageries

Stage 5
Sustain the
Competitive advantage
Stage 2 Draw a Perceptual Map
• Extremely useful tool to visually depict what consumers
think of the available brands with their features.

• Consists of grid of two axes with product attributes on

each of them.

• Brands spread over the grid, giving indication what market

perceives vis-à-vis others
 Hi Prices
Ritu Beri Collection

Shoppers Stop

Chrome Westside
Pantaloons

Marks & Spencer Narrow

Wide Range
Range Big Bazaar
Dhakeshwari
Bastralaya
Fashion Street Megamart

Low Prices
DANGER ZONES Hi Prices

Competitive
Failure

Low Hi Service
Service

Financial
Failure

Low Prices
Possibility of Failures Hi Turnover

Unattainable

Low Hi Margin
Margin

Failure

Low Turnover
 Stage 3  Decide On Competitive Strategy

• To compete Head – On

• Get away from the competition.

Stage 4 Design Product Attributes & Associated Imagery

This will include :

• Brand Name
• Slogan
• Advertising Themes
• Price Levels
• Distribution Outlet.
Positioning Strategies
Attribute positioning

•Based on certain specific attributes of the product.

•The purpose of positioning on the basis of attribute is to make the target

customer understand the capability of the company to offer various
competing products with respect to important attributes
Positioning Strategies
Benefit positioning

•Any distinctive use of the product becomes the core of positioning like,
low operating cost, energy saving by machine, pollution free product
Positioning Strategies
Cost positioning

•Low cost like low price of the product or the low cost per unit of output
by machine is a very effective positioning factor in business marketing.
Positioning Strategies
Application/ User positioning

•A product may be positioned with reference to its use/application or the

customer group it is meant for. For example: business hotel
Positioning Strategies
Segment positioning

•Products may be positioned with reference to specific segments.

Positioning Strategies
Quality positioning

•Product quality can also be sometimes used for positioning.

Positioning Strategies
Product category positioning

•The positioning strategy is associated with a product class or category.