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strategy
This is the first of three lessons based upon SEGMENT - TARGET - POSITION. To get
a product or service to the right person or company, a marketer would firstly
segment the market, then target a single segment or series of segments, and
finally position within the segment
Customer satisfaction providing a value offering that matches the value proposition
considered important by the buyers in a segment.
There are many ways that a segment can be considered. For example, the
auto market could be segmented by: driver age, engine size, model type,
cost, and so on. However the more general bases include:
Process:-
1. Segments
2. Value opportunities
3. Capabilities/segment match
4. Target
5. Positioning
For example, in France Accor has established the highly successful formula 1 hotel
chain by building a new market segment in between the traditional strategic groups
in the hotel market.
In general one –star hotels offer low prices; on the other hand two-star hotels offer
more amenities and charge higher prices.
Accor analysis of customer need found that customer choose the one star hotel
because it is cheap, but trade up from the one star hotel to the two star hotel for
the “sleeping environment “that is clean ,quiet rooms with more comfortable beds –
not all the other amenities that are offered.
While formula 1 provides the superior “sleeping environment” of the two star hotel,
but not the other facilities, which allows it to offer this at the price of the one star
hotel. Formula1 had built a market share larger than sum of the next five largest
competitors.
Matching value opportunities and capabilities
Broad competitive comparisons can be made for the entire product-market, more
penetrating insights about competitive advantage and market opportunity result
from market segment analyses.
1. Attain a closer match between buyer’s value preference’s and the organization’s
capabilities.
For example –Atlas air Inc. ., a transportation company that offers outsourcing
freight services for global air carriers which came up in 1992, the founder identifies
an emerging customer need because carriers were replacing older aircrafts with
fuel efficient planes having half the cargo space of those being replaced. Atlas
customers include British airways, china airlines, KLM Lufthansa, Swissair, and SAS,
all attracted by low cost and reliable services.
Atlas carriers’ flowers and shoes from Amsterdam to Singapore for KLM and fish
cattle, and horses from Taipei to Europe for china air.
There was a time when finding the best customers were like throwing darts in the
dark. Target marketing changed all that. Today’s savvy marketers know that finding
their best prospects and customers hinges on well thought out targeted marketing
strategies.
Defining a target market requires market segmentation, the process of pulling apart
the entire market as a whole and separating it into manageable, disparate units
based on demographics.
Through segmentation, a firm divides the market into many segments. But all these
segments need not form its target market. Target market signifies only those
segments that it wants to adopt as its market. A selection is thus involved in it. In
choosing target market, a firm basically carries out an evaluation of the various
segments and selects those segments that are most appropriate to it. As we know
that the segments must be relevant, accessible, sizable and profitable. The
evaluation of the different segments has to be actually based on these criteria and
only on the basis of such an evaluation should the target segments be selected.
They iterate that any brand is valued by the perception it carries in the prospect or
customer's mind. Each brand has thus to be 'Positioned' in a particular class or
segment.
Example: Mercedes is positioned for luxury segment, Volvo is positioned for safety.
The position of a product is the sum of those attributes normally ascribed to it by
the consumers – its standing, its quality, the type of people who use it, its strengths,
its weaknesses, any other unusual or memorable characteristics it may possess, its
price and the value it represents.
Although there are different definitions of Positioning, probably the most common
is: “A product's position is how potential buyers see the product", and is expressed
relative to the position of competitors. Positioning is a platform for the brand. It
facilitates the brand to get through to the mind of the target consumer .The position
of the brand has thus to be carefully maintained and managed.
Example: When Marlboro cut down its prices, its sales dropped immediately, as it
began being associated with the generic segment. Watches like Rolex are
positioned as luxury segment watches, thus they being one of the most expensive
have become a symbol for accomplishment in life. If Rolex reduces its prices, it
loses its perceived image and hence is in danger of losing its customers.
Product type segmentation is shown by the diffrences in price, quality and features
of shving equipment.Product variant segmentation considers the segments within a
category such as electric razors.
Next ,method of forming segments is decided . this may consist of managers using
judgement and experience to divide the market into segments .Segments can also
formed by using statistical analysis.The availability of customer purchase behaviour
informationin CRM systems.Part of forming segments is deciding whether finer
segments should be used.