Marketing and Sales Management

Learning Modules
Grade 11

MODULE # 3

DEVELOP STRATEGIC MARKETING

ELEMENTS
(SEGMENTATION, TARGETING AND POSITIONING)
Contents
Module Description:...........................................................................................................5
UNIT ONE: MARKET SEGMENTATION..................................................................6
Introduction........................................................................................................................6
1.1................................................................................Meaning of Market Segmentation
...................................................................................................................................7
1.2...................................................................................Levels of Market Segmentation
...................................................................................................................................8
1.3...................................................... Requirements for Effective Market Segmentation
.................................................................................................................................10
1.4..................................................................................Market Segmentation Procedure
.................................................................................................................................11
1.5..................................................................................Consumer Market Segmentation
.................................................................................................................................12
1.6....................................................................................Business Market Segmentation
.................................................................................................................................17
Unit Summary..................................................................................................................19
Unit Review Questions.....................................................................................................21
UNIT TWO: MARKET TARGETING.......................................................................24
Introduction......................................................................................................................24
[Link] of Market Targeting.................................................................................24
[Link] Targeting Process........................................................................................25
[Link] Targeting Strategies....................................................................................30
Unit Summary..................................................................................................................33
Unit Review Questions.....................................................................................................34
UNIT THREE: MARKET POSITIONING................................................................35
Introduction......................................................................................................................36
[Link] of Market Positioning...............................................................................36
3.2Tools for competitive differentiation.......................................................................37
[Link] Positioning Strategy....................................................................................43
Unit Summary..................................................................................................................48
Unit Review Questions.....................................................................................................49
Reference
Project Work
Module Description:

Welcome to the module in titled “Develop Strategic Marketing Elements”. This learning
module was prepared to help you to achieve the required competency in “Marketing and
Sales Management Level I”. This module describes the performance outcomes, skills and
knowledge required to profile a target market or market segments and to develop market
positioning strategies to better meet customer requirements. This competency principally
focused on strategic marketing elements such as market segmentation, market targeting
and market positioning (STP). This module will also assist you to attain the following
learning outcomes:

At the end of the module you will be able to:

 Segment the market

 Target suitable market segment

 Profile the target market

 Develop market positioning strategy

Module Instruction:

Learning Instructions: How to use this Module

For effective use this module you are expected to follow the following module instructions:
 Read the learning outcomes of this module.

 Learn study lessons in the module. Try to understand what are being discussed.
 Accomplish the “Self-checks” which are placed following each topics. Then you are to
get the answer key at the end of the module to correct your answer only after you have
finished answering the Self-checks.
 Accomplish unit review questions and practical activities which are placed at the end of
each unit. Then ask from your teacher/trainer the key to correction (answers key) or you
can request your teacher/trainer to correct your work.
 Complete the ‘Project Work’ sited at the end of the module.
 UNIT ONE
MARKET SEGMENTATION

Unit Coverage
This unit is designed to provide you the necessary information and practice regarding the
following content coverage:
1.1. Meaning of Market Segmentation
1.2. Levels of Market Segmentation
1.3. Requirements for Effective Segmentation
1.4. Market Segmentation Procedure
1.5. Consumer Market Segmentation
1.6. Business Market Segmentation

Unit Learning Outcomes

This unit will also assist you to attain the following learning outcomes. Specifically, upon
completion of this unit, you will be able to:
 Explain Market Segmentation Process
 Identify Levels of Market Segmentation
 Identify the Requirements for Effective Segmentation
 Apply Procedures for segmenting a Market
 Segment Consumer Market
 Segment Business Market

Key Terms: Market Segmentation, Consumer Market, Business Market

Introduction
A company that decides to operate in a broad market recognizes that it normally cannot
serve all customers in that market. The customers are too numerous and diverse in their
buying requirements. Instead of competing everywhere, the company needs to identify
the market segments that it can serve most effectively.
To choose its markets and serve them well, many companies are embracing target
market. In target marketing, sellers distinguish major market segments, target one or
more of those segments, and develop products and marketing programs tailored to each
segment. Instead of scattering their marketing effort they can focus on the buyers whom
they have the greatest chance of satisfying. Therefore, in order to achieve their objective
marketers are required to take three major steps (see figure 1.1)

Market segmentation: - Dividing a market in to distinct groups of buyers with different

needs, characteristics or behavior who might require separate products or marketing
mixes.

Market targeting: - is the process of evaluating each market segment’s attractiveness

and selecting one or more segments to enter.

Market positioning: - is formulating competitive positioning for a product and a detailed

marketing mix.

Market Segmentation Market Targeting Market Positioning

1. Identify segmentation 3. Evaluate the 5. Identify possible positioning

variables and segment attractiveness of each concepts for each target
the market. segment. segment.
2. Develop profile of 4. Select the target 6. Select, develop and
resulting segments. segment(s) communicate the chosen
positioning concept.

Figure 1.1 Steps in market segmentation, targeting and positioning

1.1. Meaning of Market Segmentation

Markets consist of buyers, and buyers differ in one or more ways; in their wants,
resources, locations, buying attitudes and buying practices. Through market segmentation
companies divide large heterogeneous markets into smaller segments that can be reached
more efficiently with products and services that match their unique needs.
 Self-check 1.1

Directions: Answer all the questions listed below. If you have to need some
clarifications feel- free to ask your instructor.
1. Define market segmentation?
2. Why marketers segment a market?
1.2. Levels of Market Segmentation
Market segmentation has four major steps. Which can be depicted as follows

Mass Segment Niche Micro

Marketing Marketing
Marketing Marketing

No segmentation Complete segmentation

Figure 1.2: Levels in the market segmentation

i. Mass Marketing
In mass marketing the seller engages in the mass production, mass distribution and mass
promotion of one product for all buyers. The traditional argument for mass marketing is
that it creates the largest potential market, which leads to the lowest costs, which in turn
can translate in to either lower prices or higher margins. However, many factors now
make mass marketing more difficult.

ii. Segment Marketing

It recognizes that buyers differ in their needs, perceptions buying behaviors, purchasing
power, geographical location, buying habits and attitudes. Therefore, the company tries to
isolate broad segments that make up a market and adapts its offers to more closely match
the needs of one or more segments.

Segmentation is a midpoint between mass marketing and individual marketing. The

consumers belonging to a segment are assumed to be quite similar in their wants and
needs. Yet they are not identical.
Segment marketing offers several benefits over mass marketing such as:

 The company can market more efficiently, target its products or services,
channels and communication programs to ward only consumers that it can serve
best.
 The company can also market more effectively by fine tuning its products, prices
and programs to the needs of carefully defined segments.
 The company may face fewer competitors if fewer competitors are focusing on
this market segment.

iii. Niche Marketing

A niche is a more narrowly defined group, usually identified by dividing a segment into
sub segments or by defining a group with a distinctive set of traits who may seek a
special combination of benefits.

While segments are fairly large and thus normally attract several competitors, niches are
fairly small and normally attract only one or a few competitors. Niches typically attract
smaller companies.

An attractive niche is characterized as follows.

a) Customers have a distinct and complete set of needs.

b) The niche has the required skills to serve the niche in a superior fashion.

c) The niche gain certain economics through specialization.

d) The niche is not likely to attract other competitors.

e) The niche can depend on itself.

f) The niche has sufficient size, profit, and growth potential

iv. Micro Marketing

It is the practice of tailoring products and marketing programs to suit the tastes of specific
individuals and locations. Micro marketing includes local marketing and individual
marketing.
Local marketing: - It involves tailoring brands and promotions to the needs and wants of
local customer groups: cities, neighborhoods and even specific stores. Local marketing
derives certain drawbacks such as: increasing manufacturing and marketing costs,
reduces economics of scale, creates logistical problems and diluted the overall image of
brands. However, the advantages of local marketing overweigh the drawbacks as it is
supported by new developed technologies.

Individual marketing: - also known as markets-of-one marketing, customized marketing

and one-to-one marketing. It involves tailoring products and marketing programs to the
needs and preferences of individual customers. New technologies permits companies to
consider a return to customized marketing or what is called mass customization. Mass
customization is the ability to prepare on a mass basis individually designed products and
communications to meet each customer’s requirements.

Self-check 1.2

Directions: Answer all the questions listed below. If you have to need some
clarifications feel- free to ask your instructor.
1. Discuss the levels of market segmentation?
2. Explain niche marketing ?.
3. Distinguish Micro marketing and Individual marketing?.

1.3. Requirements for Effective Market Segmentation

To be useful market segments must be:

1. Measurable: - The size, purchasing power and profits of the segment can be
measured.
2. Accessible: - The market segment can be effectively reached and served.
3. Substantial: - The market segments are large or profitable enough to serve.
4. Differentiable: - The segments are conceptually distinguishable and respond
differently to different marketing mix elements and programs.
5. Actionable: - effective programs can be designed for attracting and serving the
segments.
 Self-check 1.3

Directions: Answer all the questions listed below. If you have to need some
clarifications feel- free to ask your instructor.
1. Discuss the requirements for effective market segmentation?

1.4. Market Segmentation Procedure

The three steps procedure for identifying market segments: survey. Analysis, and
profiling.

Step One: - Survey Stage

The researcher conducts exploratory interviews and focus groups to gain insight into
consumer motivations, attitudes, and behavior. Then the researcher prepares a
questionnaire and collects data on attributes and their importance ratings; brand
awareness and brand ratings; product usage patterns, attitudes toward the product
category; and demographics, geographic, psychographics, and media graphics of the
respondents.

Step Two: - Analysis Stage

The researches applies factor analysis to the data to remove highly correlated variables,
then applies cluster analysis to create a specified number of maximally different
segments.

Step Three: - Profiling Stage

Each cluster profiled in terms of its distinguishing attitudes, behavior, demographics,

psychographics, and media patterns. Each segment is given a name based on its dominant
characteristics.

Self-check 1.4

Directions: Answer all the questions listed below. If you have to need some
clarifications feel- free to ask your instructor.
1. What are the steps in market segmentation process?
 2. What activities to be done in the survey stage of market segmentation process?.
3. What activities to be done in the analysis stage of market segmentation process?.
4. What activities to be done in the profiling stage of market segmentation process?.

1.5. Consumer Market Segmentation

Dividing the total market into ultimate consumer and business user segments results in
segments that are still broad and varied for most products.

The customer market may be divided into further segments using the following
characteristics.
1. Geographic
2. Demographic
3. Psychographics
4. Buying Behavior

1.5.1 Geographic Segmentation

Subdividing markets into segments based on geographic distribution –the regions,
countries, cities, and towns where people live and work –is usually used. The reason for
this is simply that consumers wants and products usage often are related to one or more
of these subcategories. Geographic characteristics are also measurable and accessible –
two of the conditions for effective segmentations.

Many firms market this products in a limited number of geographic regions, or they may
market nationally but prepare a separate marketing mix for each region.

The regional distribution of population is important to marketers because people within a

given region generally tend to share the same value, attitude and style preference.
However, significant differences do exist among regions because of differences, in
climate, social customs, and other factors.

1.5.2 Demographic Segmentation

In demographic segmentation, the market is divided into groups on the basis of variable
such as age, family size, family lifecycle, gender, income, occupation, education,
religion, race, generation, nationality, social class.

Demographic variables are the most popular bases for distinguishing customer groups.
One reason is that consumer wants, preferences and usage rates are often associated with
demographic variables. Another is that demographic variables are easier to measure.

Even when the target market is described in non-demographic term (say, a personality
types), the link lack to demographic characteristic is needed in order to estimate the size
of the target market and the media that should be used to reach it efficiently. Here is how
certain demographic variables have been used to segment markets.

1. Age and lifecycle stage

Consumer’s wants and abilities change with age. Photo companies are now applying age
and lifecycle segmentation to the film market. With film sales down, photo companies
are working hard to exploit promising niche markets: moms, kids, and older people.
Nevertheless, age and lifecycle can be tricky variables. For example, the ford motor
company designed its mustang automobile to appeal to young people who wanted an
inexpensive sport car. But ford found that the car was being purchased by all age groups,
It then realized that its target market was not chronologically young but the
psychologically young.

2. Gender
Gender segmentation has long been applied in clothing, hairstyling, cosmetics, and
magazines. Occasionally other marketers notice an opportunity for gender segmentation.
Consider the cigarette market, where brands like Virginia slings have been introduced
accompanied by appropriate flavor, packaging, and advertising cues to reinforce a female
image.

The automobile industry is beginning to recognize gender segmentation. With more

women car owners, some manufacturers are designing certain futures to appeal to
women, although stopping shat of advertising the cars as women’s cars.
 3. Income
Income segmentation is a long-standing practice in such product and service categories as
automobiles, boats, clothing, cosmetics, and travel. However, income does not always
predict the best customs for a given product. Blue-collar workers among the first
purchasers of color television sets. It was cheaper for them to buy these sets than to go to
movies and restaurants.

4. Social Class
Social class has a strong influence on preference in case, clothing, house furnishing,
leisure activities, reading habits, and retailers. Many companies design products and
services for specific social classes.

1.5.3 Behavioral Segmentation

In behavioral segmentation, buyers are divided into groups on the basis of their
knowledge, attitude, use or response to a product. Many marketers believe that behavioral
variables: occasions, benefits, user status, usage rate, loyalty status, buyer readiness
stage, and attitude are the best starting point for constructing market segments.

1. Occasion segmentation
Buyers can be divided into groups according to occasions when buyers get the idea to
buy, actually make their purchase, or use the purchased item. Occasions may include:
vacations, marriage, separation, divorce, acquisition of a home, injury or illness, change
is employment or career, retirement, death of a family member. Occasions may also be
special occasions or regular occasions.
2. Benefit segmentation
This is dividing the market into groups according to the different benefits that consumers
seek from the product. It requires finding the major benefits people look for in the
product class, the kinds of people who look for each benefit and the major brands that
deliver each benefit. For example, while traveling with all airplane, the traveler either of
the three major benefits; comfort, safety and economy or buy any of the three class
tickets; first class, business class and economic class.
 3. User status
Markets can be segmented into groups of nonusers, ex users, potential users, first – line
users and regular users of a product. For example, the blood banks must not rely only on
regular donors to supply blood. They must recruit new first time donors and contact
donors and each will require a different marketing strategy. The company’s position in
the market will also influence its focus. Market share leaders will focus on attracting
potential users, while smaller firms will often focus on attracting current users away from
the market leader.
4. Usage Rate
Markets can be segmented into light, medium and heavy users, Heavy users are often a
small percentage of the market but account for a high percentage of total consumption.
Marketers usually prefer to attract one heavy user to their product or service rather than
several light users.
5. Loyalty status
A market can be segmented by consumer-loyalty patterns. Consumers can be loyal to
brands, stores (sellers). Companies (producers). Buyers can be divided in to groups
according to their degree of loyalty status.

 Hard-core loyal:- consumers who buy one brand all the time. It indicates the
strength of the company’s products.
 Split loyal: - Consumers who are loyal to two or more brands. This helps the
company to identify which brands are most competitive with its own.
 Shifting loyal: - Consumers who shift from one brand to another. Here, the
company can learn about its marketing weaknesses and attempt to correct them.
The marketer can attract switchers by running frequent sales.
 Switchers: - Consumers who show no loyalty to any brand. They either want
something different each time they buy or they buy whatever is on sale.

Note:- What appear to be brand loyal purchase patterns may reflect habit, indifference, a
low price, a high switching cost, or the non-availability of other brands. Thus a company
must carefully interpret what is behind the observed purchase patterns. It must determine
whether users are loyal, switcher or emergent, and it must create its marketing campaigns
accordingly.

6. Buyer readiness stage

A market consists of people in different stages of readiness to buy a product. Some are
unaware of the product, some are aware, some are informed, some are interested, some
desire the product and some intend to buy.
Unaware – aware – informed – interested – desire –intend to buy

7. Attitude
Five attitude groups can be found in a market: enthusiastic, positive, indifferent, negative,
and hostile.

Marketers rarely limit their segmentation analysis to only one or a few variables. Rather,
they are increasingly using multiple segmentation bases in an effort to identify smaller,
better-defined target groups.

1.5.4 Psychographics Segmentation

In psychographics segmentation, buyers are divided into different groups on the basis of
lifestyle, social class and personality characteristics. People within the same demographic
group can exhibit very different psychographics profiles.

1. Social class segmentation

Social class segmentation is dividing the market based on the social class they exhibit.
Seven social classes can be identified like: upper uppers, uppers, upper middles (lower
uppers), middle, working class, upper lowers, and lower lowers.

2. Lifestyle segmentation
It involves dividing the market into group’s based on lifestyles they exhibit, based on
three major dimensions: activities (work, hobbies, shopping, sports, and social events),
Interests (food, fashion, family, recreation), opinions (about themselves, social issues,
business, products). Life style captures something more than the person’s social class or
personality. It profiles a person’s whole pattern of acting and interacting in the world like
actualizes, achievers, strivers and strugglers. People’s product interests are influenced by
their lifestyles. In fact, the goods they consume express their lifestyle.
3. Personality and self-concept segmentation
Personality is a person’s distinguishing psychological characteristics that lead to
relatively consistent and lasting responses to his or her own environment. It can be
described in terms of traits such as: self-confidence, dominance, sociability, autonomy,
defensiveness, and adaptability and aggressiveness.

Marketers have used personality variables to segment markets. They endow their
products with brand personalities that correspond to consumer personalities. In the late
fifties fords and Chevrolets were promoted as having different personalities. Ford buyers
were identified as independent, impulsive, masculine, alert to change, and self-confident,
while Chevrolet owners were conservative, thrifty; prestige – conscious, less masculine
and seeking to avoid extremes.

Self-check 1.5

Directions: Answer all the questions listed below. If you have to need some
clarifications feel- free to ask your instructor.
1. Discuss the different basis for segmentingconsumer market?
2. List the demographic segmentation variables for consumer market?
3. List the behavioral segmentation variables for consumer market?
4. List the geographic segmentation variables for consumer market?
5. List the psychographic segmentation variables for consumer market?
1.6. Business Market Segmentation
Business markets can be segmented with many of the same variables employed in
consumer market segmentation such as geography, benefits sought, and usage rate. Yet
business marketers can also use several other variables such as demographic, operating
variables, purchasing approaches, situational factors and personal characteristics. The
demographic variables are the most important, followed by the operating variables,
purchasing approaches, situational factors and finally personal characteristics.
1.6.1. Demographic: it includes
1. Industry: - the type of industry which buy the company’s product or which
industries should we serve?
2. Company size: - the size of the company that buys the company’s product or
what size companies should we serve?
3. Location: - geographical location to focus on or which geographical areas
should we serve?
1.6.2. Operating variables: it includes
1. Technology: - the type of technology customers use and for use required.
2. User status: - should we serve heavy users, medium users, light users, or non-users?
3. Customer capabilities: - should we serve customers needing many or few services?
1.6.3. Purchasing Approaches
1. Purchasing function organization: - should we serve companies with highly
centralized or decentralized purchasing organizations?
2. Power structure: - should we serve companies that are engineering dominated,
financially dominated, and marketing dominated, etc companies or customers.
3. Nature of existing relationships: - should we serve companies with which we
have strong relationships or simply go after the most desirable companies.
4. General purchase policies: - should we serve companies that prefer leasing?
Service contracts? Systems purchases? Sealed bidding?
5. Purchasing criteria: - should we serve companies that are seeking quality?
Service? Price?
1.6.4. Situational factors:- it includes factors such as
1. Urgency: - should we serve companies that need quick and sudden delivery or
service?
2. Specific application: should we focus on certain applications of our product
rather than all applications?
3. Size of order: - should we focus on large or small order?
1.6.5. Personal characteristics:- it includes factors such as
 1. Buyer-seller similarity: - should we serve companies whose people and values
are similar to ours?
2. Attitudes toward risk: - should we serve risk-taking or risk avoiding customers?
3. Loyalty: - should we serve companies that show high loyalty to their suppliers?

Self-check 1.6

Directions: Answer all the questions listed below. If you have to need some
clarifications feel- free to ask your instructor.
1. Discuss the different basis for business market segmentation?
2. List the demographic variables for business market segmentation?
3. List the operating variables for business market segmentation?
4. List the purchasing approach variables for business market segmentation?
5. List the situational variables for business market segmentation?

Unit Summary
A market consists of people or organization with wants, money to spend and the
willingness to spend it. However, with in the markets the buyers’ needs are not identical.
Therefore, a single marketing program for the entire market is unlikely to be successful.

A sound marketing program starts with identifying the deference that exist with in a
market, a process called market segmentation.

Market segmentation is dividing the total market based on homogeneity, which need a
separate or unique marketing mix. Market segmentation enables a company to make
more efficient use of its marketing resources.

The four major bases that may be used for further segmenting the consumer market are

1) Geographic – the distribution of population

2) Demographic – the vital statistics of the population, such as income, age, and gender;
3) Psychographics – personality traits and lifestyles, and
4) Behavioral – benefits desired and product usage rates.
 Firms selling to the business market may use some of these same bases for segmentation.

In addition the business market may be segmented on the bases of (1) type of customer
(2) size of customer, and (3) type of buying situation.

Unit Review Questions

Instruction: Say True or False
1. Culture could be segmented on the bases of Demographic variables. _______
2. The broad bases of segmenting the market is based on Demographic variables.
______
3. In behavioral segmentation, buyers are divided into groups on the basis of this
knowledge, altitude towards use of or response to a product. _______
4. Geographic segmentation calls per dividing the market on such basis as nations,
states, regions, countries, cities etc. _______
5. Market segmentation is identifying and protecting district groups of buyers who
might require separate product or marketing mix. _______

Instruction: Choose the best answer from given alternatives.

1. Your new employer has asked you, as a new marketing graduate, to develop a group of
potential customers who might respond in a similar way to a given set of marketing
mixes. You have been asked to develop ___________________

A. Target market C. Market strategy

B. Market segment D. Market

2. If TOYOTA Company produces different types of automobiles to suit for cold and hot
climate areas, the basis for segmentation that a company applied was:

A. Geographic segmentation C. Behavioral segmentation

B. Demographic segmentation D. Psychographic segmentation

3. Age and Family Lifecycle stage are segmentation variables categorized under:
 A. Geographic segmentation C. Behavioral segmentation
B. Demographic segmentation D. Psychographic segmentation

4. If Coca Cola Company categorize its customers as nonusers, light users, medium users,
and heavy users. The variables used for segmentation is:

A. User status C. Usage rate

B. Occasions D. Loyalty status

5. Lifestyle, personality and values are segmentation variables included under ______?

A. Geographic segmentation C. Behavioral segmentation

B. Demographic segmentation D. Psychographic segmentation

Instructions:- Give your short answer for the following questions.

1. Define market segmentation? Explain the reasons for segmenting a market?

2. Describe how market segmentation uses for marketers?

3. Describe the four levels of market segmentation?

4. To be useful, market segments must fulfill certain conditions. What are the
criteria/conditions that a market segment should fulfill?

5. What are the geographic variables used to segment the market? And how a marketer
segment a market based on such variables?

6. What are the demographic variables used to segment the market? And how a
marketer segment a market based on such variables?

7. What are the behavioral variables used to segment the market? And how a marketer
segment a market based on such variables?
8. What are the psychographic variables used to segment the market? And how a
marketer segment a market based on such variables?
 9. What are the basis for segmenting business markets?

Instructions: read the case and give your response accordingly.

Assume that you are the marketing manager for a cosmetics company that has just
developed a new line of male cosmetics. The new cosmetics are invisible on the skin,
reduce skin irritations, and provide some protection from the sun. The company is
charging high price to the new cosmetics and planning to offer for Ethiopian market.

As a marketing manager of the company, what segmentation, targeting and positioning

strategies would you recommend? Explain:
 UNIT TWO
MARKET TARGETING

Unit Coverage
This unit is designed to provide you the necessary information and practice regarding the
following content coverage:
2.1. Meaning of Market Targeting.
2.2. Market Targeting Process
2.3. Market Targeting Strategies.

Unit Learning Outcomes

This unit will also assist you to attain the following learning outcomes. Specifically, upon
completion of this unit, you will be able to:
 Evaluate Market Segment Attractiveness.
 Select the Target Market to Serve.
 Apply Market Targeting Strategies.

Key Terms: Market Targeting

Introduction
Once the firm has identified its market-segment opportunities, it has to evaluate the various
segments and decide how many and which to target. We will now examine the process of
evaluating and selecting marketing segments.

2.1. Meaning of Market Targeting

After markets are divided into groups, their respective feasibility should be evaluated. The
process of evaluating the size and attractiveness of market segments in order to choose one or the
other to enter is known as market targeting. That particular chosen segment is known as market
target.

Market Targeting: - is the process of evaluating each market segment’s attractiveness and
selecting one or more segments to enter.
 Self-check 2.1

Directions: Answer all the questions listed below. If you have to need some clarifications feel-
free to ask your instructor.
1. Define market targeting?
2. Discuss the concept of market targeting in relation to market segmentation and
market positioning?
2.2. Market Targeting Process
The process of market targeting involves the following steps.

Step 1: Evaluating the market segments

In evaluating different market segments, a firm must look at three factors: the size and growth of
the segment, the structural attractiveness of the segment, and company’s objectives and
resources.

i. Segment size and growth:-

The right size and growth is a relative matter. The largest, fastest growing segments are not
always the most attractive ones for every company. The firm must ask whether a potential
segment has the characteristics that make it generally attractive, such as size, growth,
profitability, scale economics, low risk and so on. In addition to these we should add other
considerations. For example, how easy will it be to persuade the members of the segment to shift
their purchases? (The company should avoid targeting loyal of other brands or deal – prove
shoppers; rather, it should go after dissatisfied shoppers and those who have not become firmly
brand loyal). How much is their business worth? (The company should target consumers who
will spend a lot on the category, stay loyal, and influence others.).

ii. Segment structural attractiveness:

Structural attractiveness of a segment may be affected by the existence of many strong and
aggressive competitors, the existence of many actual or potential substitute products, the relative
power of buyers and the powerful suppliers who limit cost and quality of ordered goods and
services.
 iii. Company objectives and resources:-
The firm must consider whether investing in the segment makes sense given the firm’s objectives
and resources. Some big, growing and structurally attractive segments could be dismissed
because they do not mesh with the company’s long run objectives even if the segment fits the
company’s objectives, the company must consider whether it possesses the skills and resources it
needs to succeed in that segment. The segment should be dismissed if the company lacks one or
more necessary competences and is in no position to acquire them. But even if the company
possesses the required competences, it needs to develop some superior advantages. Companies
should only-enter segments in which they can develop competitive advantages – offer superior
value to customers.

Step 2: Selecting the Market Segments

After evaluating different segments, the company must now decide which and how many
segments to serve. This is the problem of target market selection. In other words, the company
must decide which segments to target. The company can consider the five patterns of target
market selection. They are presented as follows:

i. Single – Segment Concentration/Concentrated Marketing

This is a market coverage strategy in which a firm goes after a large share of one or a few sub
markets. Instead of going after a small share of a large market, the firm goes after a large share
of one or a few sub markets. This provides an excellent way for small new businesses to get a
foot-hold against larger, more resourceful competitors.

Concentrated marketing helps companies to achieve a strong market positions in the segments or
niches it serves because of its greater knowledge of the segment’s needs and the special
reputation it acquires. Many operating economies are enjoyed by the company because of
specialization in production, distribution and promotion. However, concentrated marketing
involves higher – than – the normal risks. As a particular market segment can turn sour or larger
competitors may decide to enter the same segment. For these reasons, money companies prefer
to operate in more than one segment.
 ii. Selective Specialization
Here the firm selects a number of segments, each objectively attractive and appropriate, given
the firm’s objectives and resources. There may be little or no synergy among the segments, but
each segment promises to be a money maker. This multi-segment coverage strategy has the
advantage of diversifying the firm’s risk. Even if one segment becomes unattractive, the firm can
continue to earn money in other segments.

iii. Product Specialization

Here the firm concentrates on making a certain product that it sells to several segments. The firm
builds a strong reputation in the specific product area. An example, would be a microscope
manufacturer that sells microscopes to university laboratories, government laboratories and
commercial laboratories. The firm makes different microscopes for these different customer
groups, but does not manufacture other instruments that laboratories might use. The downside
risk is that the product may be supplanted by an entirely new technology.

iv. Market Specialization

Here the firm concentrates on serving many needs of a particular customer group. An example
would be a firm that sells an assortment of products for university laboratories, including
microscopes, oscilloscopes, Bunsen burners, and chemical flasks. The firm gains a strong
reputation for specializing in serving this customer group and becomes a channel for all new
products that the customer group could feasibly use. The down – side risk is that the customer
group may have its budgets cut.

v. Full Market Coverage

Here the firm attempts to serve all customer groups with all the products that they might need.
Only large firms can undertake a full market coverage strategy. Large firms can cover a whole
market in two broad ways: through undifferentiated marketing or differentiated marketing.

vi. Undifferentiated marketing: -

In undifferentiated marketing the firm ignores market segment differences and goes after the
whole market with one market offer. It focuses on buyer’s needs rather than differences among
buyers. It designs a product and a marketing program that will appeal to the broadest number of
buyers. It relies on mass distribution and mass advertising. It aims to endow the product with a
superior image in people’s minds.

Undifferentiated marketing is often seen as “the marketing counterpart to standardization and

mass production in manufacturing.” Undifferentiated marketing provides cost economics as such
the narrow product line keeps down production, inventory and transportation costs, mass
advertising program keeps down advertising costs, and research and development costs will be
lower presumably, the company can turn its lower costs into lower prices to win the price –
sensitive segment of the market.

However, most modern marketers have strong doubts about this strategy. Because no single
marketing effort may not satisfy all consumers and competition will be high in the largest
segments but ignores smaller ones.

vii. Differentiated Marketing.

In differentiated marketing, the firm operates in several market segments and designs different
programs for each segment. Differentiated marketing typically creates more total sales than
undifferentiated marketing. However, it also increases the costs of doing business.

Since differentiated marketing leads to both higher sales and higher costs, nothing general can be
said regarding this strategy’s profitability market. If this happens, they may want to turn to
counter segmentation to broaden its target market for its baby shampoo to include adults. And
Smith Kline Beecham launched its aqua-fresh toothpaste to attract three benefit segments
simultaneously: those seeking fresh breath, whiter teeth, and cavity protection.

Step 3. Choosing a Market – Coverage Strategy

Many factors need to be considered when choosing a market coverage strategy. Which strategy
is best depends on:

i. Company resources: - when the firm’s resources are limited, concentrated marketing
makes the most sense.
ii. The degree of product variability: - If the company produces similar/uniform
products, undifferentiated marketing is appropriate, whereas, as the company
produces different products, differentiated or concentration marketing is appropriate.
iii. The products life-cycle stage: - The market coverage strategy for a product varies at
the different stages of a product life cycle. In the introduction and growth stage,
undifferentiated or concentrated marketing makes the most sense. Whereas, at
maturity and decline stage, differentiated marketing begins to make more sense.
iv. Market variability: - if most buyers have the same tastes, buy the same amounts,
and react the same way to marketing efforts, undifferentiated marketing is
appropriate.
v. Competitor’s marketing strategies: - company’s should see competitors’ market
coverage strategy and develop a counteractive market coverage strategy. For
example, when competitors use segmentation, the company uses differentiation
marketing and when competitors use undifferentiated marketing, the company uses
differentiated or concentrated marketing.
In addition to the above factors marketers must take the following additional
considerations in evaluating and selecting segments.

i. Ethical choice of market targets: - Market targeting sometimes generates

controversy. The public is concerned when marketers take unfair advantage of
vulnerable groups (such as a children) or disadvantaged groups (such as poor people)
or promote potentially harmful products.
ii. Segment Interrelationships and super segments: - Marketers should take into
consideration interrelationships between segments on the cost, performance and
technology being used. A super segment is a set of segments sharing some exploitable
similarity. Therefore, it is better than isolated segments.
iii. Segment – by – segment invasion plans: - Even if the firm plans to target a super
segment, it is wise to enter one segment at a time and conceal its grand plan. The
competitors must not know to what segment(s) the firm will move next.
iv. Inter segment co-operation:- segment managers should not be so segment focused
as to resist co-operation with other company personnel to improve overall company
performance.
 Self-check 2.2

Directions: Answer all the questions listed below. If you have to need some clarifications feel-
free to ask your instructor.
1. Discuss the steps in the market targeting process?
2. In evaluating different market segments, a firm must look at critical factors: briefly discuss
those factors needs to be considered while evaluating segments?.
3. Discuss the five patterns of target market selection?
4. Discuss the factors need to be considered when choosing a market coverage strategy?
5. Distinguish between undifferentiated marketing and differentiated marketing?

2.3. Market Targeting Strategies

Let’s assume that a company has segmented the total market for its product. Now management is
in a position to select one or more segments as its target markets. The company can follow one
of three strategies –market aggregation, single-segment concentration, or multiple –segment
targeting. Four guidelines govern how to determine which segments should be the target
markets. The first is that target markets should be compatible with the organizations goal and
image. The second is to match the market opportunity represented in the target markets with the
company’s resources. Over the long run, a business must generate a profit to survive. This rather
obvious statement translates into our third market –selection –gridline. Fourth, a company
ordering should seek a market more there are the least and smallest competitors.

A seller should not enter a market that is already saturated with competition inters it has save
overriding differential advantage that will enable it to take customers from existing firms. The
alternative strategies for market targeting discussed as follows:

[Link] Strategy
By adopting a market aggregation strategy also known as a mass-market or un-differentiated
market strategy –a seller treats its total market as a single segment.

Single Marketing mix One mass undifferentiated market

An aggregated market numbers are considered to be alike with respect to demand for the
product. Therefore management can develop a single marketing mix and reach most of the
customers in the entire market. That is the company develop a single product for this mass
audience. It develops one pricing structure and one distribution system of its product. And it uses
a single promotional program aimed at the entire market.

This strategy would be appropriate for firms that are marketing an in differentiated, staple
product such as salt or sugar. In the eyes of many people, sugar is sugar. Regardless of the brand,
and all brands of table salt are pretty much alike.

The strength of a market aggregation is in its cost minimization. It enables a company to

produce, distribute, and promote its product very efficiently. Producing and marketing one
product for the entire market means longer production runs at lower unit costs. Inventory costs
are minimized when there is no (or very limited) variety of colors and size of products.
Warehousing and transportation are most efficient when one product is going to one market.
Promotion costs are minimized when the same message is transmitted to all customers.

[Link] Segment Strategy

A single-segment (or concentration) strategy involves selecting one segment from within the
total market as the target market. One marketing mix is developed to reach this single segment.
A company may want to concentrate on a single market segment rather than to take on the
competitors in the broader market.

A single-segment strategy enables a seller to penetrate one market in depth to acquire a repetition
as a specialist or an expert in this limited market. A company can imitate a single-segment
strategy with limited resources. And as long as the single segment remains a small market, large
competitors are likely to leave it alone. However, if the small market should show signs of
becoming a large market, big boys jump in.

Single Marketing Mix  Market Segment A

 Market Segment B

 Market Segment C
The resale and limitation of a simple-segment strategy is that the seller has all its eggs in one
basket. If the market potential of that single segment declines, the seller cars sinter considerably.
Also a seven with a strong name and reputation in one segment may find it very different to
expand in to another segment.

[Link]-Segment strategy
Under a multiple-segment strategy two or more difficult groups of potential customer are
identified as target markets. A separate marketing mix is developed to reach segment.

Marketing mix A  Market segment A

Marketing mix B  Market segment B

Marketing mix C  Market segment C

In a multiple-segment strategy, a seller frequently will develop a different version of the basic
product for each segment. However, market segmentation can also be accomplished with no
change in the product, but rather with separate distribution channels or promotional appeals, each
tailored to a given market segment.

A multiple segment strategy normally results in a greater sales volume than a single segment
strategy. It also is useful for a company facing seasonal demand. A firm with excess production
capacity may well seek additional market segment to absorb this capacity.

Multiple segments can provide benefits to an organization, but the strategy has some drawbacks
with respect to costs and market coverage. In the first place, marketing to multiple segments can
be expensive in both the production and marketing of products. And a multiple-segments
strategy increases marketing expenses in several ways. Total inventory costs go up, because
adequate inventories of each style, color, and the like must be maintained. Advertising costs go
up, because different ads may be required for each market segments. Distribution costs are likely
to increase as efforts are made to make products available to various segments. Finally, general
administrative expenses go up when management must plan and implement several different
marketing programs.
 Self-check 2.3

Directions: Answer all the questions listed below. If you have to need some clarifications feel-
free to ask your instructor.
1. Discuss the alternative strategies for market targeting?

Unit Summary
Normally, in either of the consumer or business market, a seller will use a combination of two or
more segmentation bases.

The three alternative strategies for selecting a target market are: market aggregation, single
segment, and multiple segment. Market aggregation involves using one marketing mix to reach a
mass, undifferentiated market.

With a single segment strategy, a company still uses only one marketing mix, but it is directed at
only one segment of the total market. A multiple segment strategy entails selecting two or more
segments and developing a separate marketing mix to reach each segment.
 Unit Review Questions
Instructions:- Choose the best answer from given alternatives.
1. What are the factors to be considered while evaluating segment attractiveness and
selecting
target market to serve?

A. Segment size and growth C. Company objectives and resources

B. Segment structural attractiveness D. All of the above

2. Which of the following statement is FALSE about Aggregation Strategy?

A. dividing a heterogeneous market in to different homogeneous groups of customers
B. A strategy that considered the total market as a single segment.
C. A strategy to develop a single marketing mix to reach the entire market.
D. Appropriate for such products as: salt or sugar, coca cola, cement.

3. ____________ is a targeting strategy in which two or more groups of potential customer

are identified as target markets and develop separate marketing mixes for each segment.

A. Single segment strategy C. A multiple-segment strategy

B. Aggregation strategy D. None of the above

4. Segment attractiveness ie measured by?

A. Segment size and growth C. Company objectives and resources
B. Segment structural attractiveness D. All of the above

5. _________ involves developing a single marketing mix and reach most of the customers
in the entire market.
A. Single-segment concentration C. Market aggregation
B. Multiple –segment targeting D. None of the above
Instruction: Say True or False
6. Market targeting calls for identify distinct customer groups that require separate
marketing mix. _____
7. A niche is a more narrowly defined group typically a small market whose needs are
not well served. _______
8. Market targeting calls for selecting one or more market to enter. __________
9. Differentiated marketing calls for designs different programs for each
segment._________
10. In market specialization a firm concentrates on serving many needs of a particular
customer group.

Instructions:- Give your short answer for the following questions.

1. Define is target marketing?

2. Discuss the three target market strategies?
3. Discuss the pattern of target market selections?
4. What are the factors to be considered when evaluating segment attractiveness?
5. Discuss the factors need to be considered when choosing a market coverage strategy?
 UNIT THREE
MARKET POSITIONING

Unit Coverage
This unit is designed to provide you the necessary information and practice regarding the
following content coverage:
3.1. Meaning of Market positioning
3.2. Tools for competitive differentiation
3.3. Market positioning sttrategy

Unit Learning Outcomes

This unit will also assist you to attain the following learning outcomes. Specifically, upon
completion of this unit, you will be able to:
 Understand the meaning and concepts of market positioning
 Develop market positioning sttrategies
 Apply procedures for market positioning

Key Terms: Market Positioning, differentiation strategy, Competitiveness

Introduction
After selecting one or more segments to target, the marketer should design a strategy that
meets the expectation of the target market and develop a competitive advantage over the
competitors in the market. Therefore, market positioning is the act of designing the
company’s offering and image so that they occupy a meaningful and distinct competitive
position in the target customer’s mind.
3.1. Meaning of Market Positioning
After a target market has been selected a company will naturally find others competing in
that segment. The next task is to develop a marketing plan that will enable your product to
compete effectively against them. It is unlikely that success will be achieved with a
marketing program that is virtually identical to competitors for that already have attained a
place in the minds of individuals in the target market and have developed brand loyalty.
Since people have a variety of needs and tastes, market acceptance is more easily achieved
by positioning.

Market Positioning is the act of designing the company’s offering and image so that
they occupy a meaningful and distinct competitive position in the target customer’s mind.

For example, one auto company might choose to differentiate its cars on durability, while
its competitors may choose to emphasize fuel economy, comfort or smoothness of ride.
The end result of positioning is the successful creation of a market – focused value
proposition, a simple clear statement of why the target market should buy the product.

Self-check 3.1

Directions: Answer all the questions listed below. If you have to need some
clarifications feel- free to ask your instructor.
1. Define market positioning?
2. Discuss the reasons for market positioning?

3.2. Tools for competitive differentiation

A company must try to identify the specific way it can differentiate its products to obtain a
competitive advantage. Differentiation is the act of designing a set of meaningful
differences to distinguish the company’s offering from competitors offering.

How exactly can a company differentiate its market offering from competitors? Here we
will examine how a market offering can be differentiated along time dimensions: -
product, services, personnel, channel or image.
 3.2.1. Product Differentiation

Differentiation of physical products takes place along a continuous. At one extreme we

find highly standards products that allow little variation. At the other extreme are products
capable of high differentiation, such as automobiles, commercial holdings, and furniture.
Here the seller faces an abundance of design parameters. The main product
differentiations are features, performance, conformance, durability, reliability,
reparability, style and design.

1. Features: -
Features are characteristics that supplement the products basic function. The starting point
of feature differentiation is a stripped down, or “bare bones”, version of the product. The
company can create additional version by adding extra features. Thus automobile
manufacturers can offer optional features, such as electric windows, air bags, automatic
transmission, and air conditioning. Each features has a chance of capturing the fancy of
additional buyers.

How can a company identify and select appropriate features? One answer is for the
company to contact recent buyers and ask them a series of questions. How do you like the
product? Any bad features? Good features? Are there any features that could be added that
would improve your satisfaction? What are they? How much would you pay for each
feature? How do you feel about each of several features that other customers suggested?
This research will provide the company with a long list of potential features. The next task
is to decide which features one worth adding.

2. Performance Quality
Most products are established initially at one of four performance levels, low, average,
high and superior. Performance quality refers to the level at which the products primary
characteristics operate. The important question here is: Does higher product performance
produce higher profitability?

Quality’s link to profitability does not mean that the firms should always design the
highest performance level possible. There are diminishing returns to level increasing
performance, in that fewer buyers are willing to pay for it. The manufacturer must design
a performance level appropriate to the target market and competitor’s performance levels.

A company must also decide how to manage performance quality through time. Three
strategies are available here. The first, where the manufacture continuously improves the
product, often produces the highest return and market share.

The second strategy is to maintain product quality at a given level. The third strategy is to
reduce product quality through time. Some companies cut quality to offset rising costs,
hoping the buyers will not notice any difference. Others reduce the quality deliberated by
in order to increase this current profits, although this course of action often hurt this long
run profitability.

3. Conformance Quality
Buyers expect products to have a high conformance quality. Conformance quality is the
degree to which all the produced units are identical and meet the promised target
specifications. The problem with low conformance is that the product will felt to deliver
on its promises to many buyers.

4. Durability: -
Durability is a very important product attribute to most buyers. Durability is a measure of
the product’s expected operating life under natural and/or stressful conditions. Buyers will
generally pay more for products that have more durability. However, this rule is subject to
some qualifications. The extra price must not be exclusive. Furthermore, the product must
not be subject to technological obsolescence, in which case the buyer may not pay more
for longer-lined products.

5. Reliability
Buyers normally will pay a premium for product with more reliability. Reliability is a
measure of the probability that a product will not manufacture or fail within a specified
time period. Buyers want to avoid the high costs of product breakdowns and repair time.
 6. Reparability: -
Buyers prefer products that are easy to repair. Reparability is a measure of the ease of
fixing a product that manufactures or fails. Thus 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 or no cost or time lost. The buyer might simply
remove the defective part and insert a replacement part.

7. Style: -
Buyers are normally willing to pay a premium for products that are attractively styled.
Style describes the product’s looks and feel to the buyer. Many car buyers pay a premium
for jaguar automobiles because of this extraordinary look, even though Jaguar had in the
past a poor record of reliability.

Style has the advantage of creating product distinctiveness that is difficult to copy. Under
style differentiation, we must include packaging as a styling weapon, especially in food
products, cosmetics, toiletries, and small-consumer appliances. The package provides the
buyer’s first encounter with the product and is capable of turning the buyer on or off.

8. Design
As competitions intensify, designs will offer one of the most patent ways to differentiate
and position a company’s products and services. Design is the totality of features that
affect how a products look and functions in terms of customer requirements.

Design is particularity important in making and marketing desirable equipment, apparel,

retail services and packaged goods. All of the qualities we’ve discussed under the meaning
“Product differentiation are design parameters. The design has to figure out how much to
invest in feature development, performance, conformance, reliability, reparability, style
and so forth.

3.2.2. Service Differentiation

In addition to differentiating its physical products, a firm can also differentiate its services.
When the physical product cannot easily be differentiated the key to competitive success
and improving their quality. The main service differentiations are ordering ease, delivery,
installation, customer training, customers consulting, maintenance and repair, and a few
others.

1. Ordering Ease: -
Ordering ease refers to how easy it is for the customer to place an order with the company.
For example, some company’s has eased the ordering process by supplying customers
with computer terminals through which they sell orders directly to the seller. Many banks
are now providing home banking software to help customers get information and transact
with the bank more efficiently.

2. Delivery: -
Delivery refers to how well the product or service is delivered to the customers. It includes
the speed, accuracy, and care attending the delivery process. Buyers will often choose the
supplier with a better reputation for on-time delivery.

3. Installation: -
Installation refers to the work done to make a product operational in its planned location.
Buyers of heavy equipment expect good installation service from the vendor. For
examples, some companies deliver all the purchased equipment to the site at the same time
rather than sending in different components at different times.

4. Customer Training: -
Customer training refers to training the customer’s employees to use the vendor’s
equipment properly and efficiently. Some companies are not only selling and installs this
expensive equipment but also takes on the responsibility for training the uses of this
equipment.

5. Customer consulting: -
Customers consulting refer to data, information systems, and advising services that the
seller offers free or for a price to buyers. Some sellers consult their buyers in setting up
accounting and inventory systems, computer ordering systems and so forth.
 6. Maintenance and repair
Maintenance and repair describes the company’s service program for helping customers
keep this purchased product in good working order. Automobile buyers are especially
concerned with the quality of repair service that they can expect from this dealer.

7. Miscellaneous services
Companies can find many other ways to add value by differentiating their customer
services. They can offer a better product warranty or maintenance contract than their
competitors. They can establish patronage awards, as the airlines have done with their
frequent-flyer programs.

3.2.3. Personnel Differentiation

Companies can gain a strong competitive advantage through hiring and training better
people than their competitions do. Better-trained personnel exhibit six characteristics:

 Competence –The employees possess the required skill and knowledge.

 Courtesy –The employees are friendly, respectful and considerate.
 Credibility –The employees are trust worthy.
 Reliability –The employees perform the service consistently and accurately.
 Responsiveness –The employees respond quickly to customer’s requests and
problems.
 Communication –The employees make an effort to understand the customer and
communicate clearly.
3.2.4. Image Differentiation:
A company or brand image should convey the product’s distinctive benefits and
positioning. Image is the way the public perceives the company or its products. An
effective image does three things for a product.
It conveys a singular message that establishes the products character and value
proposition. It conveys this message in a distinctive way so that it is not confused with
similar message from competitors. It delivers emotional power so that it stirs the hearts as
well as the minds of buyers.
Image can be implanted in the public’s mind through: symbols ( a strong image consists
of one or more symbols that trigger company or brand recognition), written and
audiovisual media. The chosen symbol must be worked into advertisement that convey
the company or brand personality, atmosphere (The physical space in which the
organization produces or delivers its products and services), events (a company can build
an identity through the type of events it sponsors.

3.2.5. Channel Differentiation:

Companies can achieve differentiation through the way they shape their distribution
channels, particularly those channels’ coverage, expertise and performance.

Self-check 3.2

Directions: Answer all the questions listed below. If you have to need some
clarifications feel- free to ask your instructor.
1. List thetools for competitive differentiation?
2. Discuss how a marketer use product differentiation?
3. Discuss the specific tools for personnel differentiation?
4. Describe the tools for service differentiation?

3.3. Market Positioning Strategy

3.3.1. Choosing a Positioning Strategy

Marketers can follow several positioning strategies. They can position their products on
specific product attributes such as low price, performance, benefits, usage occasions,
against a competitor and combination of many attribute.

Each firm must differentiated its offer by building a unique bundle of competitive
advantages that appeals to a substantial group within the segment. The positioning task
consists of three steps.

[Link] a set of possible competitive advantages on which to build a position.

[Link] the right competitive advantages
[Link] communicating and delivering the chosen position to the market.
Step 1: Identifying Possible Competitive Advantages
Competitive advantage is an advantage over competitors gained by offering consumers
greater value, either through lower prices or by providing more benefits that justify higher
prices.

Consumers typically choose products and services that give them the greatest value. Thus
the key to winning and keeping customers is to understand their needs and buying
processes rather than competitors do and to deliver more value.

Positioning begins with actually differentiating the company’s marketing offer so that it
will give consumers more value than competitors’ offers do. A company or market offer
can be differentiated alone the lines of product, services, people or image. Differentiation
is the act of designing a set of meaning-full differences to distinguish the company’s
offering from competitors’ offerings. Areas of differentiation could be:

i. Product Differentiation: - Differentiation of physical products takes place along a

continuum.
ii. Service Differentiation: - companies can differentiate their services from
competitors services based on such variables of service.
iii. People Differentiation:- companies can gain a strong competitive advantage
through hiring and training better people than their competitors do.
iv. Image Differentiation:- A company or brand image should convey the product’s
distinctive benefits and positioning. Image is the way the public perceives the
company or its products.
v. Channel Differentiation: - Companies can achieve differentiation through the way
they shape their distribution channels, particularly those channels’ coverage,
expertise and performance.

Step 2: Selecting the Right Competitive Advantages (Developing a Positioning

Strategy):-
A company must carefully select the ways in which it will distinguish itself from
competitors. A difference is worth establishing to the extent that it satisfies the following
criteria:
  Important: - The difference delivers a highly valued benefit to a sufficient
number of buyers.
 Distinctive: - The difference either isn’t offered by others or is offered in a more
distinctive way by the company.
 Superior: - The difference is superior to other ways of obtaining the same benefit.
 Communicable:- The difference is communicable and visible to buyers
 Preemptive: -The difference cannot be easily copied by competitors
 Affordable: - The buyer can offered to pay for the difference.
 Profitable: - The Company will find it profitable to introduce the difference.
Not all brand differences are meaningful or worthwhile. Not every difference makes a
good differentiator. Each difference has the potential to create company costs as well as
customer benefits. Therefore, the company must carefully select the ways in which it will
distinguish itself from competitors.

Step 3: Effectively Communicating and Delivering the Chosen Position to the

Market:
Marketers must decide what to communicate and how to deliver their positioning to the
target market. Many marketers advocate promoting only one benefit to the target market.
Reeves, said that a company develop a unique selling proposition for each brand and stick
to it. Each brand should pick an attribute and tout itself as “number one” on that attributes.

The most commonly promoted number – one positioning are: “Best quality”, “Best
service”, “Lowest price”,” Best value” and “Most advanced technology”. If a company
hammers away at one of these positioning and convincingly delivers on it, it will probably
be best known and recalled for this strength.

Other marketers think that companies should position themselves on more than one
differentiating factor. (Not everyone agrees that single – benefit positioning is always
best).

Double – benefit positioning may be necessary if two or more firms are claiming to be
best on the same attribute. The intention is to find a special niche within the target
segment. There are even cases of successful triple – benefit positioning: aqua-fresh
(auticauity protection, better breath, and whiter teeth). Clearly many people want all the
three benefits, and the challenge is to convince them that the brand delivers all three. The
company’s solution was to create a toothpaste that squeezed out of the tube in three colors,
thus visually confirming the three benefits. In doing this, the company “counter
segmented”; that is, it attracted three segments instead of one.

However, as companies increase the number of claims for their brands, they risk disbelief
and a loss of clear positioning. In general, a company must avoid your major positioning
errors.

1. Under positioning: - failing to ever really position the company at all. Some
companies discover that buyers have only a vague idea of the company or that
they do not really known anything special about it.
2. Over positioning: - buyers may have too narrow an image of a brand.
3. Confused positioning: - buyers might have a confused image of the brand
resetting from the company’s making too many claims or changing the brand’s
positioning too frequently.
4. Doubtful positioning: - buyers may find it hard to believe the brand claims in
view of the product’s factures, price or manufacturer.

The advantage of solving the positioning problem is that it enables the marketer to solve
the marketing mix problem. The marketing mix-product, price, place, and promotion-is
essentially the working out of the tactical details of the positioning strategy. Thus a firm
that sizes upon the “high quality” position knows that it must produce high – quality
products, charge a high price, distribute through high class dealers, and advertise in high –
quality magazines. This is the primary way to project a consistent and believable high-
quality image. Once the company has developed a clear positioning strategy, it must
communicate that positioning effectively.

3.3.2. Differentiating & Positioning the Market Offering

1. Attribute positioning:- When company’s positions itself on attributes.
2. Benefit positioning: - Here the product is positioned as the leader on a certain
benefits.
3. Use/ Application positioning: - Positioning the product as best for some use or
application.
4. User Positioning: - Positioning the product as best for some user group.
5. Competitor positioning: - Product positions itself as better in some way than a named
or implied competitor.
6. Product category positioning: - Product positioned as the leader in a certain product
category.
7. Quality/Price positioning: - Product positioned as offering the best value.

Self-check 3.3

Directions: Answer all the questions listed below. If you have to need some
clarifications feel- free to ask your instructor.
1. Discuss the steps in market positioning?
2. Discuss how a company differentiating and positioning the market offering?
3. Explain the criterion for selecting the right positioning strategy to pursue?
4. What are the major positioning errors made by the company?

Unit Summary
In a competitive industry, the key to competitive advantage is product differentiation. A
market offering can be differentiated long five dimensions: product (features,
performance, quality, conformance, quality, durability, reliability, reparability, style,
design, services (ordering ease, delivery, installation, customer training, customer
consulting, maintenance, and repair, miscellaneous services), personnel, channel or image
(symbols, written and audiovisual media, atmosphere, and events). Deference is worth
establishing to the extent that it is important, distinctive, superior, communicable,
preemptive, affordable, and profitable.

Many marketers advocate promoting only one product benefit, thus creating a unique
selling preposition as they position their product. People tend to remember “number ever”.
But double benefit positions and triple positioning can also be successful as long as
 marketers take steps to ensure that they do not under position, over positions or create
confused or doubtful positioning.

Once the company has developing a clean positioning strategy, it must communicate that
positioning effectively via marketing mix.
Unit Review Questions
Instructions: - Instruction: Choose the best answer from given alternatives.
1. __________ calls for establishing and communicating the products key distinctive
benefits in the market?
A. Market positioning C. Market targeting
B. Market segmentation D. Market selection
2. If Samsung cell phone manufacturer creates additional versions of cell phone by
adding extra features to its product, the product differentiation lies on:
A. Features C. Style
B. Durability D. Reliability

3. If Ethiopian Air Lines gain a strong competitive advantage through hiring and
training better people than their competitors do in the aviation industry. The
positioning strategy is:
A. Product differentiation C. Personnel differentiation
B. Service differentiation D. Image differentiation

4. Commercial Bank of Ethiopia’s success in the banking industry is based partly on large
number of branches that are found in more locations than competing banks. The
differentiation/positioning strategy adopted by CBE is:
A. Product differentiation C. Channel differentiation
B. Service differentiation D. Image differentiation

5. _________ involves positioning the product as best for some use or application.
A. Attribute positioning
B. Benefit positioning
C. Application positioning
D. User Positioning
Instructions:- Give your short answer for the following questions.
1. Write the tools/strategies for differentiation or positioning?
2. Discuss how a company conduct product differentiation?
3. What are the main service differentiation tools?
4. Discuss how a company perform personnel differentiation?

Instruction: Case study

Assume you are marketing consultant for Ethiopian Airlines. The Airline is now
reposition itself to attain competitive advantage in the market place. Discuss how you can
position the Airline’s services by using personnel differentiation and service
differentiation?
Project work
This ‘project work’ is designed for the competency “Develop Strategic Marketing
Elements” to help you to demonstrate the requisite knowledge, skills and attitudes
described in the module.

Instruction: Develop market segmentation, targeting and positioning for the case company.

Assume yourself as a marketing manager for the newly established athletic shoe
manufacturing PLC. Major competitors have several segmented markets. One segment is
based on gender and another segment is based on the type of sport or activity. They have
different marketing mixes for each segmented market. So that as a marketing manager for
the newly established athletic shoe manufacturing PLC, perform market segmentation,
targeting and positioning.

Task 1: Demonstrate how to segment the entire market for the athletic shoe manufacturing
PLC?
Task 2: Decide which segmentation criteria/variable will be most helpful to you in
segmenting your market? You can use one or combinations of segmentation
basis/variables.
Task 3: Demonstrate how to target the market for the athletic shoe manufacturing PLC?
Task 4: Apply criteria to evaluate each segment attractiveness and select target market to
serve?

Task 5: Demonstrate how to profile the target market for the athletic shoe manufacturing PLC?
Task 6: Identify the demographic, behavioral and psychographic characteristics regarding your
target market.?

Demographic Characteristics for Consumer Market (template)

Age
Income
Gender
Profession
Education
 Family Size
Homeowner
Marital Status

Psychographic Characterize for Consumer Market (template)

Lifestyle
Fun-Seeking
Family Stage
Trendy
Hobbies
Status Seeking
Sports Enthusiasts
Conservative
Forms of
Entertainment
Socially Responsible

Behavioral Characterize for Consumer Market (template)

Reason/Occasion for Purchase?

Number of times they’ll purchase?
Timetable of purchase
(Week/month/quarter)?
Amount of product/service purchased?

How long to make decision to

Purchase?
Where does customer purchase?

Task 7: Demonstrate how to position product to target market for the athletic shoe manufacturing
PLC?
Task 8: Decide which differentiation tools you are using to create competitive advantage
for athletic shoe manufacturing PLC?
Task 9: Select and develop market positioning strategy for athletic shoe manufacturing
PLC?
References:

Ac-ac, Maria Victoria M. Principles of Marketing, Revised Ed., Pasig: Anvil Publishing,
Inc., 2014

th
Armstrong, Gary. Marketing: An introduction 11 , Global ed. Harlow, England:
Pearson, 2013.

Go, Josiah. Contemporary Marketing Strategy in the Philippine Setting, Manila:

National Bookstore, 1996.

Glencoe Marketing Essentials, McGraw-Hill- 2012-