CHAPTER EIGHT

TARGETING AND POSITIONING

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

1.      Define targeting;

2.      Identify and explain targeting strategies;

3.      Define positioning;

4.      Identify and explain positioning strategies.

TARGETING DEFINED

Targeting is the process of evaluating several segment markets and choosing one or more segment(s) to serve. The prime factor that a company considers in selecting a segment market to serve is the company’s resources.

Targeting strategies

There are three basic targeting strategies: undifferentiated, differentiated, and concentrated targeting.

1.      Undifferentiated targeting: Here, a company targets many or all market segments with similar marketing mix. The philosophy behind this strategy is that consumers that comprise several market segments may still share some basic needs. Thus, a company can produce the same marketing offer for all market segments. Companies that embrace this strategy enjoy internal economies. 

2.      Differentiated targeting: Here, a company recognizes the heterogeneity of each market segment and develop separate marketing offers or programs for each segment. That is, a resolution by a company to serve several segments but each segment with its unique marketing mixes (product, price, promotion and distribution). While this strategy enables a company to serve each segment better and thus increases sales, it is costly to operate. For example, a company that decides to serve three family segments - singles, newly married, and married with children – with toilet soap product may produce three kinds of soaps for each segment market. Singles can be targeted with small-sized soap; newly married couples with medium-sized soap, and married-with-children with big or family-sized soap. In addition, each of these products must have its unique promotion, pricing and distribution strategy, which increases marketing costs. Premier Toilet Soap manufactured by PZ Cusson Nig. Plc comes in two sizes: small and big. While the big Premier soap is targeted at large families, the small Premier soap is targeted at singles and couples. Recently, it lunched Premier Antiseptic Soap for consumers or market segment that is/are health conscious. Thus, only companies with strong financial base can practice differentiated marketing strategy.

3.      Concentrated targeting: Here, a company selects just one segment and targets it with a unique marketing mix. This strategy is suitable for small companies with limited resources. However, companies that adopt this strategy stand the risk of losing sales if competitors enter into the segment market or if consumers’ needs suddenly change. For example, Milo is the old product that provides two in one – milk and cocoa. Promasidor Nig Ltd. – the producers of Cowbell Milk – enters into this market segment with their new product “Cowbell Chocolate flavour” which provides three benefit (3-in-1) (cocoa+milk+sugar). Friesland Foods later lunched a new product – Peak Choco – to compete with Milo and Cowbell Chocolate.

MARKET POSITIONING

Positioning is the last stage in designing a marketing strategy. Positioning complements the company’s segmentation strategy and selection of target market(s). Kotler and Keller (2007) define positioning as the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market. To Kotler and Armstrong (2006), positioning involves implanting the brand’s unique benefits and differentiation in customers’ mind. Impliedly, it is the complex set of perception, impression, and feelings that consumers have for a product, compared to competitors.

Products can be positioned in the minds of consumers to provide quality, low cost, prestige, economy, speed delivery, superb after sales services, etc. For example, First Bank Nig. Plc is positioned as “…truly the first,” African Petrol (AP) as “…leadership through quality”, Oceanic Bank Int. Plc as “experience peace,” and MTN as “your best connection.”

Why positioning?

All companies that compete for customers require positioning strategy for several reasons, including:

1.      When too many companies produce similar products, consumers become more confused and rely more on the product’s image than on its actual attributes in making purchase decisions.

2.      Consumers naturally position products in their minds without the help of marketers. The risk in allowing the consumers to position a product in their minds is that they can have a negative impression about a product. Hence, marketers must intervene by positively positioning a particular product in the minds of the consumers.

3.      Consumers often hold one message in every promotion. Thus, promotion messages should be powerfully designed to stress the added value that a company’s products or services provide.

Principles of positioning  

The four principles of positioning are as follows:

        i.            Set: A company must establish a position in the minds of its targeted customers;

      ii.            Hit: The position should be singular, providing one simple and consistent message;

    iii.            Differentiate: The position must set a company apart from its competitors; and

    iv.            Added value: A company cannot be all things to all people; it must focus its efforts.

Developing a positioning strategy

Generally, developing a position strategy involves three steps:

  i.            Identifying a competitive advantage: To determine competitive advantage, a company must establish point-of-parity (POP) and point-of-difference (POD). POPs are product attributes and performances that consumers associate with most competing or substitute brands (a company and its competitors’ brands). In other words, the minimal attributes and benefits consumers expect from a given product irrespective of the producer. Consumers perceive these associations as prerequisites in every product for it to worth purchasing. POP is the consumers’ “zone or range of tolerance and acceptance.” Thus, companies’ products must contain these expected attributes as a foundation toward value creation.

PODs are product attributes and benefits that consumers associate with a particular brand and which is absent in competing brands. In other words, PODs are products that consumers view as having unique attributes and provide distinct benefits, compared to its substitutes. These distinct attributes, performance and benefits are the ones that offer added or superior value to customers. By providing superior value, the company has gained a competitive advantage.   

ii.            Selecting a positioning strategy: Selecting brand positioning strategy calls for presentation and consideration of value proposition. Value proposition presents all or mix of benefits that consumer stand to benefit from a brand as indicated in Figure 8.1. It provides answers to customers’ question “why should I purchase your brand?” 

Figure 8.1:  Possible Value Proposition

Source: Adopted from Kotler, P. and Armstrong, G. (2006: 241), Principles of Marketing (11^th ed.), London: Pearson Education Inc.

 

More for More: This positioning strategy calls for offering a higher quality product than competing products and charging a higher price for the additional quality. In every product category you will find one product that is best. For example, among milk products, Peak Milk remains the best and so most expensive. Since consumers express their high economic status, prestige, and royalty and personality (i.e. achievers) by the kind of products they use, producers target these crops of consumers with highest quality product and charge prices that often exceed the actual worth of the added quality. After all, consumers that seeks status and prestige are ready to pay a price for products that the majority cannot afford.

More for The Same: This positioning strategy calls for increasing the quality of a company’s existing product but leaving the old price unchanged. To beat competition (increase sale and market share profitably), a company can reposition itself by improving its product quality to an equal level with a competitor that adopts more-for-more positioning strategy.

The Same for Less: Here, the same product is sold at a lesser price. In other words, the strategy calls for reducing price (either through price slash or price discounts) for a company’s existing product that has not been improved in any way. This is the same as price skimming.

Less for Much Less: This positioning strategy calls for production of a relatively low quality product and charging lesser price. It could also mean slight reduction in the attributes - quantity or quality - of an existing product in ways that only a careful observer will notice. However, the slight product modification is accompanied with wide price cut. Most Chinese electronics tailored for developing countries like Nigeria adopt this strategy. For example, newer Tiger portable generator (TG 950) has low quality compared to old ones but are sold at lower prices. This strategy is suitable for markets where consumers’ purchasing power is very low.

More for Less: To gain market entry, new companies can offer relatively higher quality products at lesser price. This can be likened to market penetration strategy. Companies that adopt this positioning strategy incur loss; at best they can only break even. Thus it is but a short-term approach. In the long run, especially after the company’s product has gained market acceptance, it can switch from more-for- less to more-for-more positioning strategy.

    iii.            Communicating a positioning strategy: When a positioning strategy is chosen, it must be communicated to the target market. This last stage also calls for proper selection and use of promotion strategy. For example, a company that settles for more-for-more strategy must design a superb promotion program and place them in the media that is mostly watched by the target group, e.g. the rich are likely to watch satellite televisions like AIT and CNN, etc.

 

SELF-ASSESSMENT QUESTIONS

1        a. Define targeting.

b. Identify and explain targeting strategies.

      2. a. Define positioning.

a.    State why it is necessary for a company operating in a competitive market to adopt a        positioning strategy.

b.   Highlight the principles of positioning.

c. Identify and explain the positioning strategies