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UNIT
LEARNING
2

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Learning Objectives

After completing this chapter you should be able to:

 Explain why effective marketing strategy depends on
understanding consumer behavior.
 Identify the keys to adopting a market orientation and a

customer focus.
 Understand the importance of marketing imagination to

business success and know some keys to begin an

imaginative company.

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Learning Objectives (continued)
 Describe marketing segmentation and identify a process
for segmenting markets.
 Identify useful segmentation variables and criteria for

effective market segmentation.

 Describe different kinds of market segmentation strategies

and when they are appropriate.

 Understand the relationship between positioning and

targeting.
 Describe different product positioning strategies.

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Marketing Strategies
 Prospectors
 have a changing product market, a focus on innovation and change,
and a flexible organizational structure headed by younger managers
 Defenders
 firms with a narrow product market, a stable customer group, and an
established organization structure typically managed by older
executives
 Analyzers
 follow a price leadership strategy, also called a low cost/low price
strategy
 Reactors
 do not really have a consistent strategy
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Marketing Concept
a market-focused, customer-oriented, coordinated
marketing effort aimed at generating customer
satisfaction as the key to satisfying organizational
needs
 a business philosophy, an ideal and a policy

statement
 most critical element is customer focus

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Differentiation
 Offer customers something they value that
the competition doesn’t have
 Achieved by analysis

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Analyzing Consumer
Experience
 What are customers doing at each phase of the circle of
consumption?
 Where are customers at each stage of the consumption

chain?
 When are consumers engaged with an element of the

consumption circle?
 Who else is with the customer points in the cycle of

consumption?
 How are consumers' needs and desires being addressed at

each stage of consumption?

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Marketing Orientation
 Don’t confuse information about customers with
knowledge about customers
 Customer focus goes beyond customer research; includes

market intelligence
 Coordinated marketing throughout the organization is

needed
 Environmental conditions may affect importance

 Degree of industry competition affects importance

 Profitability is a consequence of market orientation

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Market Orientation

 The organization-wide generation of market

intelligence, pertaining to current and future
consumer needs, dissemination of the intelligence
across departments and organization-wide
responsiveness to it.
 Mass customization

 Learning relationships

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

A Few Rules for Becoming Market
Focused
 Recognize that ‘customer’ means more than the next step
in the distribution chain. An important corollary: do not
think of your marketplace offering as a commodity.
 Count on your customers for information, not for insight.

 Don’t expect brilliant insights each time you study a

customer. Small operational shifts made from a market-
focused perspective can also add up to significant
improvements.
 Involve all levels of the organization in the drive to
become market focused.

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Marketing Strategy
 Marketing strategies are actions undertaken by an
organization to increase the likelihood of positive
exchanges occurring between the organization
and its target market(s).

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Marketing Strategy and Consumers

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Marketing Strategies
 Avoid a narrow focus
 Global firms must adjust products to variations in
cultures around the world
 consumer tastes/preferences
 infrastructure/customary marketing practices
 distribution channels
 host government rules/regulations

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Strategic Analysis of Consumers

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Strategic Analysis of
Consumers

 Bettersatisfy existing customers

 Develop differentiated products that appeal to

under-served portions of the market

 Pinpoint segments that are not worth trying to

develop

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The Imaginative Company
 Escapes the tyranny of the served marketing
 Searches for innovative product concepts

 Overturns traditional price-performance

assumptions
 Gets out in front of customers

 Rollerblades, Benetton, AOL, Grameen Bank,

Kodak, Cisco Systems

 Others?

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Marketing Segmentation and
Mass Customization
 Market segmentation
 Not everyone wants the same thing

 20th century -- market to the ‘average’

customer
 Mass customization

 cost-effectively manufacture a product tailored

to particular customers
 Saturn, Toyota

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The Market Segmentation Process

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Investing Consumer-Product
Relationships

What kind of environmental factors are

involved in the purchase/consumption
process for the product?
Macro-economic factors

Economic downturn

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Major Segmentation Bases

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Industry Insight
Kellogg Cereals for Health and Nutritional
Needs

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Good Practice
Effective Segmentation Criteria

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 2-23

Choosing Market Segments to

Target
Undifferentiated Segmentation

Differentiated Segmentation or
Multi-Segment Marketing

Concentrated Segmentation
or Niche Marketing

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Choosing a Segmentation
Strategy
Assess skills and resources available

Assess market variability

Ask “Just how variable is the

product?”
Assess stage of product life cycle

Be aware of competitor’s strategies

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Product Positioning
 Product positioning involves deciding how
the organization would like its company
and brands to be perceived and evaluated
by target markets.
 Product positioning requires organizations

to differentiate or distinguish their market

offering in ways that are meaningful to
their target market segments.
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Steps in Product Positioning
 Who are our competitors?
 How are our competitors perceived and

evaluated by consumers?
 How do consumers’ preferences compare

with competitor positions?

 How should we position ourselves in

consumers’ minds?
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Perceptual Map for Processed
Meats

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Characteristics Used for Processed
Meat Perceptual Mapping
 Perceived quality  Sensory perception
 not exclusive vs. exclusive  bad taste vs. good taste

 cheap vs. expensive  tough vs. tender

 pure meat vs. not pure meat  fit for guests vs. not fit for

 fat vs. lean guests

 not bad for figure vs. bad

for figure
 unwholesome vs.

wholesome

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 Why Are These Mens/Women’s
Cars?

PERCENT PERCEIVING AS FEMININE:

 Toyota Tercel (92%F)

 Geo Storm (64%F)

 Honda Civic (62%F)

PERCENT PERCEIVING AS MASCULINE:

 Ford Mustang (95%M)

 Ford Explorer (85%M)

 Buick Roadmaster (82%M)

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

 Product Positioning
 Positions are perceptual images of marketing offerings relative to:
 Competitors
 Target Consumers
 Attributes of the Offering
 Why Position a brand/store?
 Target Marketing
 Niche Marketing
 Avoiding head to head competition with market leaders
 How is Product Position Determined?
 Marketers
 Consumers
 Measurement via multi-dimensional scaling

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Multidimensional Scaling
Coca Sparletta
Cola Cola Sprite Fanta
Coca -- 1 4 2
Cola
Sparletta -- -- 3 6
Cola
-- -- -- 5
Sprite
-- -- -- --
Fanta

       F           CC    SC                         S

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Multidimensional
Scaling F
C

SC

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Market Positioning Map
12-3

of Selected Automobile Brands

(1984)
Has a touch of class
A car I’d be proud to own
Distinctive looking

• Lincoln BMW • Spirited

Cadillac • 4. • Porsche
Mercedes •
5. performance.
Conservative- • Chrysler 2. Sporty looking
looking. Oldsmobile • • Buick • Pontiac
Appeals to
Ford • • Chevrolet
older people • Datsun
1.
Dodge • • Toyota 3. Fun to drive.
Plymouth •
Appeals to
• VW young people
Very practical
Gives good gas mileage
Affordable
Source: John Koten, “Car Maker’s Use ‘Image’ Map as Tools to Position Products,” The Wall Street Journal,
Exhibit March 22, 1984, pp. 31. Reprinted by permission of The Wall Street Journal, ©1984 Dow Jones & Company,
12.2 Inc. All rights reserved worldwideCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
12-5

Illustration of Joint Space of Ideal Points and

Stimuli (1968)

Sporty
• Jaguar sedan

Ford Mustang •
• AMC Javelin • Ideal point for subject I
Plymouth Mercury • Ford Thunderbird V8
Barracuda• • Cougar
Luxurious
• Lincoln Continental
• Chevrolet Corvette
• Chrysler Imperial
• Ideal point for subject J

• Ford Falcon • Buick Le Sabre

Exhibit Source: Paul E. Green and Donald S. Tull, Research for Marketing Decisions, 3rd ed. (Englewood Cliffs, NJ:
12.6 Prentice Hall, 1975), p. 601. © 1975. Adapted©by
Copyright permission
2002 of Prentice Hall
by The McGraw-Hill Inc., Upper
Companies, Inc. Saddle River,
All rights NJ.
reserved.
12-4

How the Honda Accord Extended the

Product Space, 1985

Cost
• Honda Overall rating
Accord .9
• BMW
.8 320i
.7
• VW • Datsun • Toyota .6
Rabbit 200SX Celica • Mazda • Audi
626 4000
.1 .2 .3 .4 .6 .7 .8 .9
.4
Performance
.3
• Chrysler .2
K-car
• Chevrolet • Ford .1
Citation Mustang

Exhibit Source: Johny K. Johansson and Hans B. Thorelli, “International Product Positioning,” Journal of International Business
12.5 Studies, vol. 16, no. 3, (Fall 1985), pp. 57-75. Reprinted by permission
Copyright of the
© 2002 by The Journal of Companies,
McGraw-Hill InternationalInc.
Business Studies
All rights reserved.
Targeting:
Designing a Market Mix Strategy
 Once a company knows how it wants to be
perceived and evaluated by consumers the
next problem is to design a market mix
strategy that will help them get there or stay
there. This includes developing a program for
communicating the position of the product to
target consumers.

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter Summary

 Customer-oriented marketing strategies improve

the value customers derive from products.
 A customer focus is central to a market

orientation.
 Marketing intelligence and imagination, market

segmentation, targeting and positioning are key

elements of marketing strategies

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.