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Market Segmentation
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Market
People or organizations with needs or wants and the ability and willingness to buy
A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.
Market Segment
Market Segmentation
Ms Seema Agarwal
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Why Segmentation?
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Ms Seema Agarwal
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Levels Of Segmentation
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Macro segmentation
Mass marketing (Undifferentiated Marketing) Segment marketing (Differentia ted Marketing)
Micro segmentation
Niche Marketing (Concentrated Marketing)
Local Marketing
Individual Marketing
Ms Seema Agarwal
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Mass Marketing
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Mass marketing engage in the mass production, distribution, and promotion of one product for all buyers.
Henry Ford epitomized this Coca-Cola also used mass marketing strategy when he offered the Model T when it sold only Ford in any one kind of Coke in colour, as long as it a 6.5-ounce bottle. is black.
Ms Seema Agarwal
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Mass Marketing
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Micro-segmentation
Slide 8 in Chapter 9
Segment marketing
Local marketing
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Niche marketing
Individual marketing
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1. Segment Marketing
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Targeting a group of customers who share a similar set of needs and wants.
For example, an automaker may identify four broad segments in the car market: buyers who are primarily seeking (1) basic transportation, (2) high performance, (3) luxury, or (4) safety.
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1. Multisegment Strategy
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1. Segment Marketing..
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Because the needs, preferences, and behaviour of segment members are similar but not identical, marketers should present flexible market offerings instead of one standard offering to all members of a segment.
consists of the product and service elements that all segment members value, plus options (for an additional charge) that some segment members value.
For example, Delta Airlines offers all economy passengers a seat, food, and soft drinks, but it charges extra for alcoholic beverages and earphones.
Ms Seema Agarwal
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2.
Niche Marketing
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A niche is a more narrowly defined group, typically a small market whose needs are not being well served.
Marketers usually identify niches by dividing a segment into sub-segments or by defining a group seeking a distinctive mix of benefits.
For example, a tobacco company might identify two sub segments of heavy smokers: those who are trying to stop smoking, and those who dont care.
Ms Seema Agarwal
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2.
In an attractive niche,
Niche Marketing
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customers have a distinct set of needs; they will pay a premium to the firm that best satisfies their needs; the niche is not likely to attract other competitors; the nicher gains certain economies through specialization; and the niche has size, profit, and growth potential.
Ms Seema Agarwal
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Ms Seema Agarwal
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3.
Local Marketing
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Local marketing is tailored to the needs and wants of local customer groups (trading areas, neighbourhoods, even individual stores).
Ms Seema Agarwal
Citibank, for instance, adjusts its banking services in each branch depending on neighbourhood demographics; Newspapers Times Of India - Mumbai mirror Thane Plus.
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4.
Individual Marketing
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Much business to-business marketing today is customized, in that a manufacturer will customize the offer, logistics, communications, and financial terms for each major account.
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4.
Mass Customization
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Mass customization is the ability to prepare individually designed products and communications on a mass basis to meet each customers requirements.
Mattels Barbie.com site invites girls to log on and design their own Barbie Pal doll by specifying skin tone, eye color, hairdo and hair color, clothes, accessories, and name.
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Diffused preferences
indicating great variance in consumer preferences.
Clustered preferences
The market might reveal distinct preference clusters.
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Creaminess
Creaminess
Sweetness
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Sweetness
Creaminess
Sweetness
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Demographics
Bases Used to Segment Consumer Markets
Behavioral
Psychographics
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Geographic Segmentation
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World region or country - North America, Western Europe, Middle East, Pacific Rim, China, India, Canada, Mexico
Country region -Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New England City or metro size - Under 5,000; 5,00020,000; 20,00050,000; 50,000 100,000; 100,000250,000; 250,000500,000; 500,0001,000,000; 1,000,0004,000,000; over 4,000,000 Density - Urban, suburban, rural
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Many companies today are localizing their products, advertising, promotion, and sales efforts to fit the needs of individual regions, cities, and even neighborhoods.
For example, one consumer products company shipped additional cases of its low-calorie snack foods to stores in neighborhoods near Weight Watchers clinics.
Coca-Cola developed four ready-to-drink canned coffees for the Japanese market, each targeted to a specific geographic region.
Procter & Gamble introduced Curry Pringles in England and Funky Soy Sauce Pringles in Asia.
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Ms Seema Agarwal
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Demographic Segmentation
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Family life cycle : Young, single; young, married, no children; young, married with children; older, married with children; older, married, no children; under 18; older, single; other
Income : Under $10,000; $10,000 $20,000; $20,000$30,000; $30,000$50,000; $50,000 $100,000; $100,000 and over
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INCOME
Income segmentation has long been used by the marketers of products and services such as automobiles, clothing, cosmetics, financial services, real estates and travel.
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Gender segmentation: Nike has recently stepped up its efforts to capture the womens sports apparel market by overhauling its womens apparel lines, revamping the Nikewomen.com Web site, and opening Nike women stores in several major cities. 26
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Demographic Segmentation
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Education : Grade school or less; some high school; high school graduate; some college; college graduate
Nationality: North American, South American, British, French, German, Italian, Japanese
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Psychographic Segmentation
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Social class: Lower lowers, upper lowers, working class, middle class, upper middles, lower uppers, upper uppers
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Behavioural Segmentation
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User status : Nonuser, ex-user, potential user, firsttime user, regular user Readiness stage : Unaware, aware, informed, interested, desirous, intending to buy
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Examples
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OCCASIONS
Some holidays, such as Mothers Day and Fathers Day, were originally promoted partly to increase the sale of candy, flowers, cards, and other gifts.
BENEFITS SOUGHT
One study of travellers uncovered three benefit segments: those who travel to be with family, those who travel for adventure or education, and those who enjoy the gambling and fun aspects of travel.
USER STATUS.
For example, blood banks cannot rely only on regular donors. They must also recruit new first-time donors and remind ex-donorseach will require different marketing appeals.
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USAGE RATE. For example, fast-feeder Burger King targets what it calls Super Fans, young (age 18 to 34), Whopper-
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Attitude.
Five attitude groups can be found in a market: (1) enthusiastic, (2) positive, (3) indifferent, (4) negative, and (5) hostile.
So, for example, workers in a political campaign use the voters attitude to determine how much time to spend with that voter. They may: thank enthusiastic voters and remind them to vote, reinforce those who are positively disposed, try to win the votes of indifferent voters, and spend no time trying to change the attitudes of negative and hostile voters.
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LOYALTY STATUS
Buyers can be divided into four groups according to brand loyalty status:
hard-core loyals (who always buy one brand), split loyals (who are loyal to two or three brands), shifting loyals (who shift from one brand to another, and switchers (who show no loyalty to any brand).
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Consumer loyalty: Macolytes fanatically loyal Apple usershelped keep Apple afloat during the lean years, and they are now at the forefront of Apples burgeoning iPod and iTunes empire.
Ms Seema Agarwal
Occasion segmentation: Peeps creates different shaped marshmallow treats for special holidays when it captures most of its sales but advertises that Peeps are Always in Season to increase the demand for non-holiday occasions. 11/26/2010
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Effective Segmentation
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Measurable:
The size, purchasing power, and characteristics of the segments can be measured.
Large enough to be profitable
Substantial:
Accessible:
Differentiable:
The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.
Actionable:
Ms Seema Agarwal
Effective programs can be formulated for attracting and serving the segments.
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In evaluating segment size and growth, segment structural different attractiveness, and market segments, a company objectives and resources. firm must look at three factors:
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Target Marketing
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identifying market segments, selecting one or more of them, and developing products and
Instead of scattering their marketing efforts (the shotgun approach), firms are focusing on the buyers who have greater interest in the values they create best (the rifle approach).
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Having evaluated different segments, the company can consider five patterns of target market selection :
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Single segment concentration Selective specialization Product specialization Market specialization Full market coverage Undifferentiated marketing Differentiated marketing
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Product Specialization
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An example would be a microscope manufacturer that sells microscopes to university laboratories, government laboratories, and commercial laboratories.
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Market Specialization
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An example would be a firm that sells an assortment of products only to university laboratories, including microscopes, oscilloscopes, and chemical flasks.
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Examples include IBM (computer market), General Motors (vehicle market), and Coca-Cola (drink market).
Large firms can cover a whole market in two broad ways: through undifferentiated marketing or differentiated marketing.
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In undifferentiated marketing, the firm ignores market-segment differences and goes after the whole market with one market offer.
To reach the market, the firm uses mass distribution backed by mass advertising to create a superior product image in peoples minds.
Ms Seema Agarwal
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In differentiated marketing, the firm operates in several market segments and designs different programs for each segment.
General Motors does this with its various vehicle brands and models;
Intel does this with chips and programs for consumer, business, small business, networking, digital imaging, and video markets.
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Procter & Gamble markets six different laundry detergents, including Tideeach with multiple forms and formulationsthat compete with each other on store shelves. Yet together, these multiple brands capture four times the market share of nearest rival Unilever.
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Example
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Differentiated marketing: Este Lauder offers hundreds of different products aimed at carefully defined segments, from its original Este Lauder brand appealing to age 50 baby boomers to Aveda, with earthy origins that appeal to younger new age types.
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Counter-segmentation
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Smith Kline Beecham introduced Aquafresh toothpaste to attract three benefit segments simultaneously:
Next, the company moved deeper into counter segmentation by launching flavoured toothpastes for children, toothpaste for people with sensitive teeth, and other toothpaste products.
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Topic 5 b
DIFFERENTIATION AND POSITIONING
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If the three keys to selling real estate are location, location, location, then the three keys of selling consumer products are differentiation, differentiation, differentiation. Robert Goizueta, former Chairman,
Coca-Cola Company
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Introduction
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In their search for market leadership, companies take to either of the two routes;:
They try to achieve either a low-cost position/ cost leadership; (price route) or A differentiated position through which they can offer superior value to the consumer (differentiation route).
Differentiation helps the firm fight on non-price plank (can claim a premium in the market).
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INTRODUCTION
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competitors when it provides something A firm unique that is differentiates valuable to buyers itself from its beyond simply offering a low price.
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Examples
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L&T, the engineering firm, recruits engineers with excellent qualifications and claims superiority in executing projects.
Caterpillar Tractor, the leader in earthmoving equipment, made a mark through its distribution channel and service.
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EXAMPLES
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IBM differentiated along technology and service, Coke and Pepsi differentiated through brand power and Rolls Royce through superior engineering.
Eureka Forbes, the leader in vacuum cleaners in India, has used personal selling as the sole means of reaching the customer and built up a distinction through its feature.
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A difference is worth establishing to the extent that it satisfies the following criteria:
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Important: The difference delivers a highly valued benefit to a sufficient number of buyers. Distinctive: The difference is delivered in a distinctive way. Superior: The difference is superior to other ways of obtaining the benefit. Preemptive: The difference cannot be copied easily by competitors. Affordable: The buyer can afford to pay for the difference. Profitable: The company will find it profitable to introduce the difference.
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Differentiation Variables
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Conformance Customer training Durability Reliability Customer consulting Maintenance and repair
Miscellaneous
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1. Product Differentiation
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At one extreme we find products that allow little variation: chicken, steel, aspirin.
At the other extreme are products that are capable of high differentiation, such as automobiles and furniture.
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1. Product Differentiation
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Form
the size, shape, or physical structure of a product. Consider the many possible forms taken by products such as aspirin. Although aspirin is essentially a commodity, it can be differentiated by dosage size, shape, coating, and action time. --are the characteristics that supplement the products basic function. Mobile Phones- sleek, camera, large memory, long battery life, touch screen, radio..
Features
Performance quality.
- is the level at which the products primary characteristics operate. Whirlpool designs its dishwasher to run more quietly; Mercedes Benz
-is the degree to which all of the produced units are identical and meet the promised specifications. -Porche 911 is designed to accelerate to 60 miles per hour within 10 seconds)
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Conformance quality.
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1. Product Differentiation
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Reliability
Reparability
-measure of the ease of fixing a product when it malfunctions or fails. An automobile made with standard parts that are easily replaced has high reparability. Ideal reparability would exist if users could fix the product themselves with little cost or time. -the products look and feel to the buyer. Aesthetics have played a key role in such brands as Absolut vodka, Apple computers, Montblanc pens, Godiva chocolate, and Harley-Davidson motorcycles.
-incorporates all of the qualities (form, feature development, performance, conformance, durability, reliability, repairability, and style.) 11/26/2010
Style
Design
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Certain countries are winning on design: Italian design in apparel and furniture; Scandinavian design for functionality, aesthetics and environmental consciousness; Titan Ultra Slim, with a thickness of 3.6mm, is said to be the slimmest watch in the universe. Braun, a German division of Gillette, has elevated design to a high art in its electric shavers, coffeemakers, hairdryers and food processors.
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2. Services Differentiation
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consumers can now order and receive groceries without going to the supermarket by using Web-based services. refers to how well the product or service is delivered to the customer, covering speed, accuracy, and customer care. Domino's Pizza promises delivery in less to 30 minutes or reduces the price. Cemex Cement promises to deliver concrete faster than pizza. Buyers of heavy equipment expect good installation service. IBM, for example, is known for its quality installation service. General Electric not only sells and installs expensive X-ray equipment in hospitals, but also gives extensive training to users of this equipment. refers to data, information systems, and advising services that the seller offers to buyers.
describes the service program for helping customers keep purchased products in good working order. 11/26/2010 Water Purifier, Air conditioner
2. Services Differentiation.
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Speed - Speed of service is a competitive advantage used by many firms. Fast food is now common on the world's high streets and malls. In the car market Toyota's two-day policy means that it can supply a well-equipped Lexus within two days, while many other luxury car makers expect prospects to wait several weeks for custom-built cars. The success of courier services like FedEx and DHL shows that many people are willing to pay extra for a quick, secure service.
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3. Personnel differentiation
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Companies can gain a strong competitive advantage through people differentiation hiring and training better people than their competitors do. Well-trained personnel exhibit six characteristics: competence, courtesy, credibility, reliability, responsiveness, and communication
Disney people are known to be friendly and upbeat. For example, Disney trains its theme park people thoroughly to ensure that they are competent, courteous, and friendlyfrom the hotel check-in agents, to the monorail drivers, to the ride attendants, to the people who sweep Main Street USA. Each employee is carefully trained to understand customers and to make people happy. Singapore Airlines enjoys an excellent reputation, largely because of the grace of its flight attendants. The McDonalds people are courteous, The IBM people are professional.
People differentiation requires that a company select its customer-contact people carefully and train them well.
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People differentiation: Singapore Airlines enjoys an excellent reputation, largely because of the grace of its flight attendants.
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4. Channel Differentiation
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Firms that practice channel differentiation gain competitive advantage through the way they design their channels coverage, expertise, and performance.
Amazon.com, Dell, and Amway set themselves apart with their smooth-functioning direct channels.
Caterpillars success in the construction-equipment industry is based on superior channels. Its dealers worldwide are renowned for their first-rate service.
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5. Image Differentiation
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Developing a strong and distinctive image calls for creativity and hard work.
A company cannot implant an image in the public's mind overnight using only a few advertisements.
If 'IBM means service', this image must be supported by everything the company says and does.
Symbols can provide strong company or brand recognition and image differentiation.
Companies design signs and logos that provide instant recognition - such as the Mercedes star, Kodak (yellow).
Thus a bank that wants to distinguish itself as the 'friendly bank' must choose the right building and interior design - layout, colours, materials and furnishings - to reflect these qualities.
A company can also create an image through the types of event it sponsors.-
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POSITIONING
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Positioning
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Positioning is the act of designing the companys offering and image to occupy a distinctive place in the target markets mind.
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Value Proposition
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The end result of positioning is the successful creation of a market-focused value proposition, a cogent reason why the target market should buy the product.
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Target Customers
Benefits
Value Proposition
A vehicle that provides the luxury and comfort of a car and the adventure and thrill of an SUV
Small-car consumers who want a more spacious vehicle Convenience minded pizza lovers
Spaciousness
Dominos, Pizza
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Examples
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In the automobile market, the Maruti, Alto, Santra, are positioned on economy, Mercedes and Cadillac on luxury, and Porsche and BMW on performance.
Toyota positions its fuelefficient, hybrid Prius as a high-tech solution to the energy shortage. How far will you go to save the planet? it asks.
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Positioning Maps
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Perceptual positioning maps shows consumer perceptions of their brands versus competing products on important buying dimensions.
The position of each circle on the map indicates the brands perceived positioning on two dimensionsprice and orientation The size of each circle indicates the brands relative market share.
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Perceptual Mapping--Levis
High Price
Slates Dockers Premium 501 Dockers Classics Red Tab Basics Red Tab Dry Goods Vintage Red Line
Designer
Classic
L2
Low Price
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Positioning strategies
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Sl. no. 1.
2.
Price and quality A product is highlighted in terms of service features or performance. Manufacturer charges high price Application Associating a product or service with a use or application
Associating a product or service with a user or class of users.
3.
4.
Product user
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Positioning strategies
Sl. no . Positioning strategy Definition Advertising claims
Product class
Cultural symbols
Royal
Competitors
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Repositioning
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Thank You!!!
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