Marketing and Product

“Your boss has just returned from a Senior Executive Workshop for Marketing Directors. He explains to you that the focus of the workshop was on the importance of the positioning statement to effective strategy development. Full of new-found enthusiasm, he asks you to prepare a short paper on positioning for the next board meeting. He wants you to demonstrate the importance of positioning strategy to business success. Write that paper”

Introduction

STP (Segmentation, Targeting and Positioning) marketing is also called strategic marketing, involves finding correct segment in which to market your product, identify the proper target market and positioning the product to create maximum profits.

The most important of STP marketing is determining exactly what benefits your product offers and who will benefit most from using it.

STP is important for marketer to create a competitive advantage and marketing plan designed specifically for the customers who will be most likely to buy the product. The STP process allows marketer to identify the correct segment to market the product and use the marketing mix to maximize profits.

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Marketing Strategy: Segmentation, Targeting and Positioning

Segmentation, targeting and positioning are essential parts in the marketing strategy that can help company to market their product better using the appropriate marketing mix. The following diagram illustrates the steps and connection between these three important plan that used by marketers to market their product efficiently. [pic]

Diagram 1: The main steps in market segmentation, targeting and positioning Source: Doyle and Stern (2006)

Segmentation

Market consists of customers and customers vary from each other.

The variation are depends on factors such as resources, wants, buying attitude, locations and buying practice. Segmentation means dividing a market by certain criteria such as geographical, demographic, psychographic and behavioral. By dividing the market, a marketer can easily identify what type of segment is suitable for the chosen product and large market can be divided into smaller segments which can be managed more efficiently and effectively.

These criteria or variables that be used for segmentation are as follows:

(1) Geographic Segmentation

It refers to location including regions, continent, country, area size, village, city and the climate. A company needs to put attention on variability of geographic needs and wants.

(2) Demographic Segmentation

It refers to measureable statistics such as income, age, gender, education, occupation, religion, nationality, race, language and family size. It’s crucial to consider the demographic factors while defining market strategy.

(3) Psychographic Segmentation

It refers to a segment of lifestyle, personality, attitudes and values. A segment having demographically grouped customers may have different psychographic characteristics.

(4) Behavioral Segmentation

Other than the above, another basis for segmentation is behavioral segmentation. This is the most favorable segmentation as it uses the variables that really close to the product itself. Buying status, buying role and user type are the common behavioral segmentation. Some customers are brand loyal; they tend to stick with their preferred brand.

Effective segmentation is achieved when customers sharing the similar patterns of demand are grouped together, where each group different in the pattern of demand from other segments in the market. Basically, all the following have to be considered before segmentation: (1) Measureable: Able to measure in terms of potential customers in each segment which means it should be able to tell how many potential customers as well as how many competitors in the same segment.

(2) Accessible: Able to reach selected market targets with its individual marketing efforts which means segment should be accessible through any types of communication method and distribution such as transportation, distributors and internet. (3) Meaningful: Able to differentiate preferences or needs and show clear variations in market behavior and response to each designed marketing mix. (4) Substantial: Able to lead to segments which sufficiently large to be economically and practically served as market targets with selected marketing mix.

Targeting

After segmentation, the next step is targeting. Targeting is the process of selecting a segment to aim. According to Kotler and Armstrong (2004), the following three main strategies that can be used to enter and exploit the segments.

(1) Undifferentiated strategies (mass marketing)

- The aim of the strategy is to offer a basic product that would suit and be used by almost all age groups and lifestyle. (2) Differentiated strategies (segmented marketing)
- Focus on targeting two or more markets, each of them use different marketing programme. (3) Concentrated strategies (niche marketing)
- The company focuses on targeting a large share of one or a few segments. The niche marketing defines the specific product features focus to satisfy specific market needs.

Generally, targeting is depending on several factors as the followings: • The existing level of competition and the ability to meet customer needs.

• The size of the segment (how large and how can it grow). • The strengths of a company that can help to appeal a group customer (company reputation).
• The ability to communicate with the segment.

Basically, the advantages of target marketing are:
• Marketing opportunities and ‘gaps” will be more accurately indentified. The gaps can be the real thing about the product or how customers view the product emotionally. By indentifying this, an appropriate advertising message can be implemented in the minds of customers. • Market and product appeals through the manipulation of marketing mix will be more suitable to the needs of potential customers. • Marketing effort can be focus on the market segment which would be a potential for the company to achieve it’s goal and maximize the profit.

Positioning

After segmenting a market and then targeting a customer, the next process is to position a product in the market. Positioning is about 'perception' and creating the image of the product in customer’s mind. In other words, positioning is about delivering the unique selling advantage of the product. Positioning is useful in order to understand what we can offer that the other products are not able to offer. On top of that, the customer’s needs and wants can be satisfied. . A product has to have a clear and distinctive image in the mind of the customer. This is exactly what positioning creates. Basically, the positioning strategy is mainly focusing on the following points:

• Provide value to customer with the competitive advantage, strengths and distinctive competencies. • Market segmentation forms the basis for focused strategies. • Finding the unique selling proposition by distinguishes a brand from its competitors. • Conduct analysis to study on internal, market & competitor.

Positioning is the process of creating, the image the product holds in the mind of customers about the product. For example, Gardenia and Federal Bakery both are in the bakery industry. Although Federal Bakery may try to compete they will still be seen as down market from Gardenia.

Positioning helps customers understand what is unique about the products when compared with the competitors. Gardenia has been positioned based on the process of positioning by direct comparison with other competitors such as Italian Baker (Massimo) and Silverbird (Hi-5), and have positioned their products to benefit their target market. Most people create an image of a product by comparing it to another similar product and the image of that has been positioned by the customers about Gardenia is particularly on the variety that they offers and its healthy ingredients.

The company can use Point of Different (POD) and Point of Parity (PAP) in the effort to make a better positioning strategy. By using POD and PAP, the company would be able to see the difference and similarities between their products and competitor’s brand. It’s important to establish the POD but it’s also important to decrease the competition by matching it on the POP.

[pic]
Diagram 2: Point of Different and Point of Parity

Using Point of Different (POD) and Point of Parity (PAP) for Gardenia and it’s competitors in the bakery industry, the result are as shown below:

Point of Different (POD)
• Large variety of breads such as sunflower seed loaf, honey loaf. • No preservatives and use natural ingredients.

Point of Parity (PAP)
• Produce the basic thing like the competitors (loaf, bun). Some customers prefer to buy Gardenia than it’s competitor such as Federal Bakery, Massimo and Hi-5 because of the differences that other competitors can’t offer. The variety of bread (other than normal white loaf) that they are offerings is not available with competitor’s brand and they also sell other things like waffles and muffins.

The Importance of Positioning

It is important for a successful business to market itself right. Through positioning, a lot of advertising money can be saved. Positioning is about communication of the overall value proposition that has been created and maintains it to the customers. In order to be effective, the basic value proposition by the company has to be something relevant to the target market and it must be differentiated from the competitors. It must also sustainable and communicated clearly to that market. Therefore, differentiation at product, brand or company level is now been recognized as one of the key element of establishing a stable market positioning.

The differentiating can be based on the features or attributes of the product (actual) or based on the image of the product (perceived). Differentiation can be done with different element of the marketing mix. It may involve the features of attributes that gives customers more benefits than the competitor or from the brand unique image itself.

A good and quality product is not a guarantee to be success in the market. The most important is the product has to have a clear and distinctive image in the mind of the customers. This is the reason why positioning needs to be created.

Positioning has to be managed at every aspect where customers have the contact with the company mainly in communication and telephonic interaction. This is one of the effective ways to avoid any confusion about the product in the mind of the customers.

Positioning helps company to give a direction to their marketing plan. Prior to that, what’s important is the company must develop it core competencies before announce to others what it can offer.

[pic]

Diagram 3: Implementing Chosen Image and Appeal to Chosen Segment

Positioning is important when the company wish how it’s products to be viewed by customers. From here, the company can decide where it wants to compete and it would be able to compete. The perception from customers is what they believe about certain product. The product competitive advantage not only related to the features and attributes of the product alone, but also related to it’s perceived image.

For example, Research In Motion (RIM), the company that produces Blackberry phone has chosen to position itself as the maker of Qwerty-Key’s smartphone which enable to compose and read the e-mail better. Hence, RIM has done a lot through it’s advertising to promote the features.

The perceived image of the product is very important if the company wants to compete in the minds of target customers. What customer believes or perceives are actually influence the purchase decision.

A strong brand positioning direct marketing strategy by explaining the brand details, the uniqueness of the brand and it’s similarity with competitor’s brand in the market. Positioning is the basic strategy for developing and enhancing the knowledge and perception of the customers. For example, Maybelline cosmetics represent youth and excitement to their target customers; young girls who looking for affordable and quality cosmetics.

A systematic positioning can create the brand identity and a proper brand image. The company can increase the market share and company profits if the right positioning used in their marketing strategy. Moreover, it can prevent the company making a wrong positioning.

There are various positioning mistakes such as:

(1) Under Positioning

Under this scenario, customers are unable to get the clear idea of the brand. It happens when the company failed to present a strong central benefits and reason to buy the product. For example, MonaVie Inc is the company that markets a supplement in liquid form called “MonaVie” but many customers do not know what sort of product that they are actually selling. Some customers think that they are selling normal juices.

(2) Over Positioning

Under this scenario, customers have a limited awareness of the brand. It happens when the company makes the product too specific for certain group of customers and other customers may believes that the product is not for them maybe because of the high price or other reasons. For example, ‘Uluwatu”, a clothing brand from Indonesia has position itself as a premium Indonesian boutique although they are also selling medium priced clothes.

(3) Confused Positioning

Under this scenario, customers have a confused opinion of the brand. It is because the company claimed two or more benefits that contradict each other. For example, Tutti Frutti claims that the company is serving a healthy and low fat frozen yogurt but there are certain topping which is from a preserved canned fruits that are not really good for health. Which is more important, the healthy aspect or taste ?

(4) Doubtful Positioning

Under this scenario, customers do not accept the claims of a brand. Customers will doubt on the benefits that the brand can actually deliver. For example, Garnier has market a facial wash that claims to be effective in making a skin fairer but no successful testimonial has been shown so far.

The Approaches in Positing Strategy

Positioning strategy can be developed in object attributes, application, target customers and the characteristics of the product itself. These factors represent a different approach in developing positioning strategy. Once a company decides what approach to be chosen in positioning, it must start to communicate the message to the customer at every contact point. The following are the approaches to position strategy:

(1) Using Product Characteristics or Customer Benefits

The characteristic of the product or customer benefits are the main focus in this strategy. For example, motor vehicles are usually emphasized on product characteristic such as fuel economy, power and other features. Certain products are positioned along with more than single product characteristics at the same time.

(2) Using Pricing

Sometimes, customers tend to relate the price of the products and the quality (price-quality). This is the perception that most of the customers perceive that expensive product is often to have a higher quality than a cheap one. This so called quality approach is important if the marketer wants to set a premium image in their product.

(3) Based on Use or Application

In this type of strategy, a second or third position is using to expand the brand’s market. By introducing the new uses of the product, automatically it will expand the brand market. For example, Milo for many years positioned itself as an energy drink other than normal chocolate drink.

(4) Based on Product Process

Under this strategy, the product is associated with its users or a class of users. For example, Longines, a watch brand has appointed Aishwarya Rai as the product ambassador to develop a fashion and luxury image in their brand. In this case, the expectation is the model or celebrity will influence the product’s image by reflecting their image which communicated as a product user.

(5) Based on Product Class

Some products require critical positioning. For example, coffee powder needed to position itself with creamer or condensed milk. For example, Nescafe has positioned itself with the instant creamer.

(6) Based on Logo / Symbol

Symbol or logo is being used to differentiate their brands from other competitors. Using and implementing trademarks generally follow this type of positioning. For example, Malaysian Airline’s logo which is “traditional kites-wau” logo can be recognized by many peoples.

(7) Based on competitors

In this strategy, one or more competitors are using as a reference. Basically, the similar positioning strategy used by the competitors or use a new strategy by taking the competitor’s strategy as the basis. For example, Celcom has published an advertisement that compares their services with other competitors such as Maxis and Digi using the competitor’s corporate colors.

Brand Positioning: Princess Shoes

One of the most important things in managing a brand positioning is positively compare it with competitor’s brand in the mind of customers in target market. It’s essential for the brand to communicate the key values of the products and the business.

“Princess” is the Malaysian company which produces women shoes for the medium price market segment. Previously known only as a brand that only sells shoes for low income customers, but today it’s already expanded to medium price market segment.

Princess has developed elements such as pride and fashion with their product and within its unique selling proposition. They are successfully building their own unique brand image and reaching their target customers. Their marketing objective is to reposition it’s brand (from normal shoes to high fashion shoes) and capturing new markets. The marketing strategy aimed to the follows:

• Introduce the new design which is more up-to-date
• Make customers excited about the brand
• Create a sense of “fashionable” about the brand.

Analyzing the marketing mix (the 4Ps) that they are implementing, basically it’s like the follows:

Target: Low and medium income women.

• Product: Fashionable and comfortable shoes.
• Price: Sell at affordable price.
• Place: Sell at shopping malls and shop lots.
• Promotion: Uses internet and newspaper to announce their new products.

Conclusion

Positioning is how the target market defines the brand in relation with the competitors. It’s what we called the brand identity.

A brand is a relationship between the company and customers. When we form a relationship, we have to show who we are to our customers. Through positioning, the company should be able to communicate with the customers effectively and efficiently.

One of the benefits of good business planning is strategic positioning especially in the modern world where technology is improving from time to time and market grow constantly and become more defined. The marketer can use the business plan with review and revision is done as and when needed,
in order to keep track on the right positioning.

The constant change in segmentation sometimes can happen. Take broadcasting industry as an example, 15 years ago we have not more than 4 channels, now we have various channels under Astro. Therefore, in certain situation, some broadcasting companies have to review and revise their positioning in order to keep on being competitive in the growing markets.

Even when a marketer involve in the process of choosing a brand name, create design, develop promotion strategy and define the pricing strategy, they have to remember the most crucial above all this are a good positioning.

When defining a positioning strategy, the marketer should consider how the positioning makes the brand unique and more importantly, all the qualities can be perceived as value added by the target customers. For example, if one shoes brand is hand made from rare leather, how many customers in the target market actually would see this as strength (in point of different). If they really see this as a unique point, then it can be used as positioning. Otherwise, being different cannot bring any special attraction no value added or benefit to the brand or customers. Indeed, the effort to branding a product is time consuming and positioning is just a first step to build a relationship with the customers.

Before start with the brand positioning, the marketer have to see who are the competitors that already in the market before the unique positioning can be planned. By measuring the competition, the marketer would know whether the customers in the target market already satisfied with competitor’s brand or there is any chance for another brand can take advantage of. For example, if a new brand is going to be marketed although there are 5 brands already in the market, it’s really important for a marketer to think how to compete. Without a strong positioning, the product will be seen as imitator or copycat rather than a fresh new brand. The competitions allow the customers to know what they can expect from certain brand.

The marketer should think how to compete by showing the different to the customers compared to other similar brands in the market. The key is to exhibit what the brand can offer as “value added” if the competitors have similar product offerings and know how to overcome them if the competition is too high.

The purpose of market study is to help the marketer to realize what market and potential customers that they will targeted before making an investment. There are varieties of strategy that the marketer can use when determining positioning. The great thing about this is when the similar product or concept already in the market, the marketer can use a specific positioning strategy and identify the point of different. For example, 100 Plus is positioned as an isotonic drink brand focusing on active lifestyle while the competitor, Excel (another isotonic drink’s brand) is now positioned as “cola flavoured isotonic drink”. They are basically the same products, the base is same which is isotonic drinks, but each of them are focusing on different positioning that giving them a competitive advantage and unique identity.

Having a good product does not guarantee success. Some great products failed in the market because they cannot position themselves correctly. A marketer should think about positioning before anything else like design and packaging.

As a conclusion, the positioning strategy is a must if a product needs to compete in the market. The image that creates in the mind of customer will determine whether the product can be sold because that is one of the reasons before customer make a purchase. By having the comprehensive positioning strategy, the company would survive and more importantly to increase the market share and maximise the profits.

Bibliography

http://en.wikipedia.org

http://www.ehow.com/info_8693419_stp-marketing.html

Kotler, P., and Armstrong, G. (2004) “Principles of marketing”, 10th edition, N.J., Pearson Education.

http://www.managementstudyguide.com/brand-positioning.htm

Callin Gilliam(2010) Marketing Segmentation, Targeting and Posistioning ,p339

http://www.ivoryresearch.com/nicole-johnson.php