Lecture 3 (Marketing)

Lecture 3
STP Strategic Decisions

(Segmentation - Targeting - Positioning)
Copyright: Raja Shuja-ul-Haq (2009)

A Relevant Quote
“Those who want to be

everything for everyone
end-up being nothing for
no one”
Success lies in being “something for

someone” …
What is a “Segment”?
 A segment is a unique group of customers (or potential

customers) who share some common characteristics that
make them different from the other groups of customers in
the market
 People are different and so are customers
 Some segments:
 have different needs

 require different versions of the same product
 pay different prices
 buy in different places; and
 can be reached by different media

What is “Market Segmentation”?
Simply put;
Market Segmentation is the

activity of dividing the “mass
market” into “homogeneous
customer groups” (i.e. market
segments) …

Market Segmentation – Background
 Originally, marketing was “mass” and “undifferentiated”
 Today few markets are undifferentiated
 Segmentation recognizes this and identifies consumers with

similar needs and characteristics (segments)
 These segments can then be targeted using an appropriate

marketing mix

Market Segmentation:
Market Segments
1 2
7 3
Mass Market
6
4
5

Targeting:
1 2
8 3
Position
Product 7
4
Price
Placement 6
Promotion

The first production Model T Ford
(1909 model year) was assembled at
the Piquette Avenue Plant in Detroit on
October 1, 1908. Over the next 19
years relatively few changes were
made to the basic design. By 1926 the
design was so antiquated that the cars
could not compete with more modern
designs from companies like Chevrolet.
In 1926 colours other than black were
offered, in an attempt to boost sales.
Did Henry Ford understood Market Segmentation?
“The buying public could have Model T Fords in any colour,

so long as it's black“
– Henry Ford
Market Segmentation – Leads to
 Greater understanding of customer needs
 Focus of competitive analysis and differentiation
 More effective resource allocation
 Improved customer satisfaction (tailored marketing mix)
 Improved planning through specific segment focus

Why Market
Segmentation? Target Market
Selection
Market Tailored
Differentiation Marketing Mix
Segmentation
Identifying
Opportunities
(and Threats)

Marketing Audit
Marketing Mix
Placement
Channels
Product Target Market Coverage
Product variety Assortment
Quality Locations
Design Inventory
Features Transport
Brand name
Packaging Price Promotion
List price Sales promotion
Discounts Advertising
Allowances Sales forces
Payment period Public relations
Credit terms Direct marketing

Lets consider we are selling a
“Pablo Picasso” painting …

 To some customers, we can sell it for up to 50
pounds
 To the wrong age customers, not even 50 pence
 To the right customer, it can easily fetch us:
50 million pounds !!!

So, the moral of the story …
Why should we waste our effort on

the wrong people ???
Why not target people who want our
product the most and are willing to
pay the highest price for it ???

It is worth spending time considering
who the best customers of your
product are, what segment are they in
and how to reach them best … this is
exactly what market segmentation
has to offer as a marketing tool …

Importance of Segmentation
If you don’t know what you are aiming

at, how can you possibly expect to hit
the target ???

An Important Concern …
Marketers also need to specify who

should really be considered as the
customer ?
Is it the end-user of a product or the person
who signs the cheque made out to the
supplier ?
Is it the householder or the retailer ?

Three levels of markets
(by focus)
Step 1. The Disaggregated Market
C1 C7
C3
C4 C8
C2 C6 C5
The characteristics of individual customers are understood

Step 2. The Segmented Market
S1 S2 S3
C1 C3
C5 C2 C4
C7 C6 C8
Customers are grouped into segments on the basis of having

similar characteristics

Step 3. The Target Market
S1 S2 .S3
C1 C3
C5 C2 C4
Marketing Mix
C7 C6 C8
Segment 3 is judged to be most attractive and a marketing mix

strategy is designed for the target market

Market Segmentation Methods
Market Segmentation - Methods
For Consumers (B2C) For Businesses (B2B)
• Geographic • Location
• Demographic • Industry Type
• Geodemographic • Business Size
• • Business Type
Psychographic
• Application (light / heavy)
• Behavioural
• Loyalty (to brand or supplier)
• Benefits Sought
• DMU (Decision-making Unit)
• Benefits Sought

B2C Segmentation
Behavioural Psychographic Profile
 Benefits Sought  Lifestyle  Demographic

 Purchase Occasion  Personality  Socio-Economic
 Purchase Behaviour  Geographic
 Usage
 Perceptions and Beliefs

1. Profile Segmentation: Geographic
Division of a market according to areas or regions;
 Town
 City
 Region (North, Central, South)
 Country
 District / State / Province
 Trading Zone (i.e. NAFTA, EU)

1. Profile Segmentation: Demographic
Division of a market according to age, gender, income-levels, family life-

cycle stages and level of education;
 18-25 age groups, over 55 year olds

 Children, teenagers, young adults, newly weds, married without children,
married with children, married with grown-up children, full nesters and
empty nesters
 Male, Female
 Upper class, upper-middle class, middle class, lower-middle class and
lower class
 Graduate, post-graduate, high school, computer literacy etc.

Family Lifecycle Stages:
Age, Marital Status,
Middle-aged divorced Employment Status
no children and Children
Young divorced Middle-aged married

no children no children
Young couple Middle-aged Empty nesters Empty nesters

At home single Young parents Solitary retired
no children parents married working married retired
Young divorced Middle-aged divorced Middle-aged divorced

On own young
with children with children no dependant children
On own middle-aged

3. Profile Segmentation: Socio-Economic
Division of a market according to socio-economic grades;
 A (Upper Middle Class)

 B (Middle Class)
 C1 (Lower Middle Class)
 C2 (Skilled Working Class)
 D (Manual Working Class)
 E (Lowest Level of Subsistence)

Social Status (an exemplary
application)
Social Grade Social Status Occupation % Families
Upper middle class Higher managerial 3

A professionals
Intermediate
Middle class managerial 10
B professionals
Lower middle class Junior

C1 24
management
supervisory level
Skilled working Skilled manual
C2 30
class workers
Semi / unskilled
Manual workers 25
D manual workers
Lowest level of State pensioners or

E subsistence widows / lowest 8
grade workers

A Common Mistake …
A marketer might immediately consider

socio-demographic segments as being
customer groups; ignoring many other
segmentation possibilities

For Example …
Consider a posh restaurant. One market

segment can be “women aged 25-35 who
prefer eating out and are not too price
sensitive”
Further segmentation possibilities of this
segment can be “lunchtime versus evening
customers”; and “regulars versus infrequents”

2. Behavioural Segmentation
Division of a market according to customer buying habits and

product usage;
 Purchase Behaviour (brand switchers, innovators, bulk buyers,

first-time buyers / point-of-entry customers)
 Purchase Occasion (self buy, gift)
 Product Usage (light users, heavy users, non-users)
 Perceptions and Beliefs (favourable, unfavourable)
 Benefits Sought (image, performance, economy)

Many chocolate brands like Nestle’s Black Magic and “Ferrero
Rocher” target the “gift segment” of the confectionary market

Nokia E90 Communicator targets the “innovator segment” for its
fifth generation of Communicators

3. Psychographic Segmentation
Division of a market according to the customers’ mental orientation;
 Lifestyle (trendsetters, conservatives, sophisticates, health-conscious)

 Personality (youthful, adventurous, freedom-loving, intimate)

Nesvita brand of Nestle targets a distinctive “lifestyle
segment” of “health and fitness conscious young women”
Mountain dew has
targeted a distinctive
“personality segment”
in the softdrink market
Marlboro has done the
same in the cigarette
market …
B2B Market
Macrosegment 2
Macrosegment 1 (medium-sized Macrosegment 3
(large companies) companies) (small companies)
Microsegment 1 Microsegment 2 Microsegment 3

(prime choice (prime choice criterion: (prime choice
criterion: reliability) convenience) criterion: price)

B2B Segmentation
Macrosegmentation Microsegmentation
 Organizational size  Choice criteria (i.e. quality

or price)
 Industry and business type
 Decision-making unit (DMU)
 Geographic location
 Decision-making process
 Application (light / heavy)
 Loyalty (contract / one-off
transaction)
 Innovativeness

B2B Segmentation: Macro
 Organizational Size:
Large, medium, small
 Industry:
Petroleum, financial, hospitality
 Business:
Oil exploration and drilling, banking, hotels
 Geographic:
Local, national, global

B2B Segmentation: Micro
 Choice criteria:
Quality, price, value in use, delivery, servicing, status
 Decision-making unit (DMU) structure:

Centralized (head office level), decentralized (SBU level)
 Decision-making process:
Long, short
 Innovativeness:
Innovator, early adopter, laggard

B2B Segmentation: Micro
 Application:
Light users, heavy users, non-users
 Loyalty:
Contractual work, one-off transaction

The “Strategic Segment”

x
x
x
Target Segment

The “Strategic Segment” is …
Fits Culture
Manageable
Loyal
Stable Most profitable
Measurable Satisfies
customer needs
Appropriate
Strategic Segment
Profitable
Unique
Substantial
Accessible

The “Right Customer”

The “Right Customer”
The “Right Customer” is a customer who:
 really likes doing business with you

 is not too price-sensitive
 doesn’t just buy only when there is a special promotion
 gives useful feedback
 participates in new product developments
 will stay loyal to you for a lifetime, if well-treated
Not all of your customers will fit into this

EXCLUSIVE customer segment …

The Universal Marketing Truth:
“The customer is always

NOT right”
The “Right Customer” is always right !!!

Parameters for Measuring
Segment Attractiveness

 Market Size (usually, the bigger the better)
 Market Growth Rate (the higher the better)
 Concentration of Suppliers (the lesser the better)
 Price Sensitivity (the lesser the better)
 Bargaining Power of Customers and Suppliers (the lower the better)
 Market Entry and Exit Barriers * (usually, the lower the better)
* Market entry barriers may include high marketing expenditure necessary to compete; patents or
high switching costs for customers. Exit barriers may include specialized production facilities that
can not be easily liquidated, or agreements to provide spare parts to customers.

 Competitive Aggression (usually, the lesser the better)
 Competitive Differentiation (the more the better)
 Segment Match to Organizational Capabilities and Capacity

(the more the better)
Segment offers opportunities for the organization to exploit

marketing assets, achieve cost and technological advantages
and meet strategic managerial objectives

What do you think?
Is Pakistan telecom market really

attractive?
Or has it reached maturity???

The 4 Market Segmentation Strategies

Market Segmentation –
1. Undifferentiated Strategy
Organisation
Marketing Mix
Target Market
• Product
• Price
Everybody
• Promotion
• Distribution
Post Office
 One marketing mix for the mass market

(i.e. no segments have been identified)
Such a strategy is utilised by …
Companies going after the whole market with

one market offer
Companies committed to a “one-size-fit-all”

model of working

This strategy works best only where …
Demand is homogenous in nature (no strong

differences in customer characteristics)
Economies of standardized approach to marketing

outweigh any advantage of segmenting markets
Company is seeking to achieve cost economies

(no market research and product development costs)

2. Focused Strategy
Organisation
Independent
DIY Shops
Marketing Mix
• Product
• Price Builders
• Promotion Merchants
Cement
Manufacturer • Distribution
National DIY
Chains
 Marketing mix designed for a niche segment
(i.e. niche segment has been identified, and a
marketing mix is designed for it)
Ideal strategy for small companies, who may
stretch their resources too far by competing in
more than one segment …
Focused strategy allows R&D expenditure to

be concentrated on meeting the needs of one
set of customers, resulting in better customer
satisfaction and even higher profit margins
(customers are willing to pay premium prices for
specialized products / services which “more precisely”
suit their needs) …

Focus strategy can help a company to avoid
competitive rivalry, as compared to committing
“majority fallacy” (i.e. blind pursuit of the
largest, most easily identified market segment)

3. Differentiated Strategy
Utilitarian
Marketing Mix - 1 Customer
Trendy -
Marketing Mix - 2 Casual
Price
Marketing Mix - 3 Shopper
LEVI’s Jeans
Marketing Mix - 4
Mainstream
Marketing Mix - 5
Traditionalist
 Separate marketing mix for each segment

This strategy exploits the difference between
market segments by designing a specific
marketing mix for each segment …
Although this strategy can generate high levels

of customer satisfaction and better resource
allocation, but the company can loose its cost
economies …

4. Customized Strategy
Marketing Mix - 1 Customer 1
Insurance
Company Marketing Mix - 4
Customer 4
Marketing Mix - 5
Customer 5
 Separate marketing mix for each customer

(mass customization)
This strategy designs a “customized” marketing
mix for each individual customer (usually
service customers or B2B buyers)
It is an ideal strategy in markets where the

requirements of individual customers are
unique and their purchasing power is sufficient
(insurance companies, ad agencies, architects,
lawyers, MR agencies, B2B suppliers and
vendors)

Comparing the 4 Strategies
Alternative target marketing strategies
Broad focus
Differentiated Strategy Undifferentiated Strategy
Market Segmentation Mass Marketing
Niche Marketing Mass Customization
Focused Strategy Customized Strategy

Narrow focus
Segments Segments
Identified Unidentified
?
Okapis have serious “targeting” problems ….
They are not really sure who they are attracting!!!

Customer-Benefit
Segmentation (CBS)

3 Key Customer Personality Types
 Sensory Customers - Use only their basic senses to
choose products (like taste, feel, sight);
Example: Children
 Social Customers - Are looking for a social appeal /

self expression in the products they choose;
Example: Young Adults and Teenagers
 Anxious Customers - Care about personal health

and well-being and also the well-being of their family
Example: Adults with Young Children, Nuclear
Families, Health Conscious People

Customer-Benefit Segmentation (CBS)
(of British package holiday
market)
Sensory Sociable Anxious Independent
Kids and Teens Young people, Family with Retired senior

Demographics (7-15) singles and couples Children citizens/ empty
(18-30) (full nesters) nesters, cultural
seekers
Self-involvement, Sociable, looking Hypochondriacs, Idol, carefree, calm

Personality little interest in for a partner, psychocentrics and settled
others allocentrics
Hedonistic – Active, gregarious, Conservative and Comfort , harmony

Lifestyle pleasure and outward-looking, security conscious; and tranquillity.
sensation seeking intimate, social care about family
Fun and Socialising, Spending quality time Experiencing

Required enjoyment / involvements, with family; feeling something different;
participating in a spending intimate of family escaping everyday life,
Benefits “dream-come-true” time with partner, togetherness relaxation, harmony
activity sports and leisure
Required Activity Opportunities to Homely / relaxing Sight seeing; unique /

Features programmes. socialise, sports environment different surroundings
How would you apply CBS to a
Toothpaste Brand?
Product Category: Toothpaste
Sensory Sociable Anxious Independent???
Young people, Family with

Kids and Teens
Demographics (7-15) singles and couples Children
(18-30) (full nesters)
Self-involvement, Sociable, looking Hypochondriacs,
Personality little interest in for a partner, psychocentrics
others allocentrics
Hedonistic – Active, gregarious, Conservative and
Lifestyle pleasure and outward-looking, security conscious;
sensation seeking intimate, social care about family
Required
Benefits
Required
Features
Advanced Market
Segmentation Models
(using two segmentation
parameters)
1) Using Customer Satisfaction and Customer Loyalty

High Customer Loyalty Low
High
Satisfied Stayers Happy Wanderers
Customer
Satisfaction
Hostages Dealers
Low

High Customer Loyalty Low
Satisfied Stayers Happy Wanderers

High . These customers show every sign of being
satisfied with the quality of the product /
These are the customers who are satisfied by service; but however, they do not give their
the quality of product / service and remain loyalty in return. They may choose to buy
loyal with the company due to this reason. elsewhere since tempting new market offers
Such customers are satisfied with both the attract them. Also, cheaper products
quality of the product and the value-added available in the market can make them
services provided by the company reconsider their future purchase plans
Customer
Satisfaction
Hostages Dealers
These customers are the most loyal ones to the
These customers are not satisfied and shift
company; but are also the most dissatisfied
suppliers frequently. They are on a constant
ones. They are tied to the business by cost of
search for low prices and the best package in
switching (both economical and
the market. Such customer are most sensitive to
psychological), service compatibility, loyalty
the promotions and “price drops” by
incentives, corporate policy (in the case of
competitors. They seek special offers and
business travel, a tour operator might be
seasonal discounts
Low officially contracted by a company) or the
company has a form of monopoly in a
particular niche market

2) Using Customer Relationship Needs and
Desired Level of Intimacy with the company

Long-term Type of relationship customers want Short-term
High
Relationship seekers Relationship exploiters
Intimacy
wanted by
customers in
relationship
Loyal Buyers Arm’s length transaction customers
Low

Long-term Type of relationship customers want Short-term
High
Relationship seekers
.
These customers want a long-term relationship
Relationship exploiters
Such customers would take the maximum

advantage of different “relationship offers”
with the company and also, a high degree of provided by the company, i.e. like loyalty
closeness. They take keen interest in providing incentives and special seasonal offers; but
their views about their product / service however, are likely to defect to the
experience (and even suggestions on improving competition if they are offered better
the quality), which helps companies to improve packages or cheaper rates
Intimacy their product / services overtime
wanted by
customers in
relationship Loyal Buyers Arm’s length transaction customers
These customers want a long-term relationship Such customers shop around for the best
with the company but not a close one. They package offer in the market and also for low
frequently use the products / services of a prices. They are attracted at any company
company, but however, they do not go to which can offer the products / services at the
increasing lengths to facilitate the managers lowest possible price or which offers a
with their feedback, nor are they interested to “unique” product / service. They do not want a
give suggestions to improve quality close relationship with any particular company;
Low in fact they keep a watchful eye for best deals
available in the market

Relationship is important in determining
the value of an account …
A frequent flyer can spend more than 20,000 pounds in
10 years with British Airways
A loyal Visa member can spend more than 50,000
pounds in a relationship

3) Using Market Attractiveness and Market Position

Market Attractiveness:
To what extent the market is attractive to the company …
Market Position:
What position, in terms of market share, the company
occupies in a particular market …

High Market Attractiveness Low
High
Core Business Peripheral Business
Market
Position
Illusion Business Dead-end Business
Low

Table 3.8
High Market Attractiveness Low
High
Core Business
. Peripheral Business
Peripheral business represents the area where

Core business represents the area where the the market is less attractive to the business
market offers the potential to the business to (i.e. there is no growth, competition is tough,
achieve its goals and it also fits the margins are low and so on). These may be
capabilities and competence of the business; areas where the business can continue to
and the business also believes that it can take operate, but unless the market brings other
a strong market position in that area. Such benefits to the business, it is not a high
areas of the market are high priority for priority.
investments.
Market
Position
Illusion Business Dead-end Business
These are highly attractive markets which offer These are the lowest priority because the
everything the business wants; but where the market is not attractive to the business, and the
business can or do take a weak position. These business can only take a weak position in the
markets and segments are an illusion because market.
the market apparently looks great but they
never pay-off.
Low

4) Using Internal Capability and
Market Segment Attractiveness

Internal Capability:
The distinctive competency of a company to serve its
customers
Market Attractiveness:
To what extent the market is attractive to the company …

High Internal capability Low
High
Attractive segments that Attractive segments but with
match with company poor match with company
capabilities capabilities
Market
segment
attractiveness
Unattractive segments but Unattractive segments that

with match to company do not match with company
capabilities capabilities
Low

5) Using Customer Sophistication and Customer Repute

“Right Customer” (Customer Repute):
It is a criteria set by the company to evaluate a customer’s
repute on the basis of customer loyalty, price sensitivity,
involvement (feedback, new product developments),
tendency to give year-round sales, future business
potential etc. We simply examine the extent to which a
customer is our “right customer”
Customer Sophistication:
It refers to the degree of know-how the customer
possesses regarding your product / service and your
competitors (their market offers and prices) …
In simple words, it refers to the “bargaining power” of your
customer to negotiate prices with your company …

High Customer Sophistication Low
High
Sophisticated / Right Customers Unsophisticated / Right Customers
Customer Repute
(loyalty, future
business potential,
price sensitivity)
Sophisticated / Not Right Customers Unsophisticated / Not Right Customers
Low

Positioning
“You must have mindshare
before you can have market
share”
- Christopher M. Knight

Moving from Targeting to Positioning
“Positioning starts with a product, a piece of merchandise,

a service, a company, an institution or even a person. But
positioning is not what you do to the product. Positioning
is what you do to the mind of the potential customer”.
- Ries and Trout

Simply put, positioning is the
activity of placing the product
at a chosen spot in the minds
of the consumers …

The best way to get a view of
the human mind is through
constructing a “Perceptual
Map”

Using perpetual maps to help positioning process
Price
Quality
- +

Using perpetual maps to help positioning process

Perpetual map applied to UK Automobile Market
Prestige, Status
BMW
+
Volvo
Saab
Personal / Ford Basic /

Emotional Rational
- +
Fiat
-
Toyota
Economy
Perpetual map applied to US Painkillers Market

Perceptual Map of Beer Market
(This slide shows only the products)
Old Milwaukee
•
Budweiser
• Beck’s •
Meister Brau • Heineken
• Miller •
•
• Coors
Stroh’s
• Michelob
• Coors
Miller • Light
Lite
•
Old
Milwaukee Light
Perceptual Map of Beer Market cont’d
(This slide shows only the attributes)
Popular
Full Bodied Heavy with
Men
Special
Occasions
Blue Collar Dining Out
Good Value
Premium
Popular
Pale Color with
Women
On a
Budget Light Less Filling
(This slide shows only the attributes)
Heavy Popular
Full Bodied Heavy with
Men
Special
Occasions
Blue Collar Dining Out
Good Value Premium
Budget Premium
Popular
Pale Color with
Women
On a
Budget Light Less Filling
Light
(This slide shows both products & attributes)
Heavy Popular
with
Heavy
Old Milwaukee
Full Bodied
• Men
Budweiser
• Beck’s •
Meister Brau Special • Heineken
• Miller • Occasions
Good Value
Blue Collar
• Dining Out
Premium
• Coors
Stroh’s
Budget Premium
• Michelob
• Coors Popular
Pale Color
Miller • Light with
On a
• Lite Women
Old
Budget Milwaukee Light Light Less Filling
Light
Three Types of Positioning
Positioning
Broad Positioning Specific Positioning Value Positioning
Operational Excellence Single Benefit Positioning More for More

Customer Intimacy Dual Benefit Positioning More for the Same
(Volvo)
Product Leadership Less for Much Less
Triple Benefit Positioning
(Aquafresh) More for Less
Less for More ???

1. Broad Positioning or Customer Value Disciplines
 Operational Excellence : providing reliable products and services at

competitive prices, delivered by minimum difficulty
 Customer Intimacy: tailoring the offerings to meet customers’ demand

very precisely
 Product Leadership: offering leading-edge products and services

2. Specific Positioning
 Companies need to go beyond the broad positioning to express a

more concrete benefit or reason to buy
Some companies advertise a single major benefit, drawing from

such possibilities as: best quality, best performance (BMW), most
reliable, most durable (Land Rover / Volvo), safest (Volvo), fastest
(Ferrari), best value for money (Toyota), least expensive (Hyundai),
most prestigious (Mercedes), best designed or styled (Limousine),
easiest to use or most convenient

2. Specific Positioning
 Companies can also use more than one benefit to position their
products (dual benefit and triple benefit positioning)
 Volvo has a dual benefit positioning as Safest Car (in Europe and
US) and Most Durable Car (in Mexico)
 Aquafresh has a triple benefit positioning i.e. prevents cavities,

gives a fresh breath and whitens teeth (hence the three colours of the
paste to “represent” each of the benefits)

Specific Positioning Strategies

a. Attribute Positioning:
The company positions its product

on some attribute or feature
i.e. The Thickest Milk, Clear Softdrink (free
of sugar, caffeine and colour)

b. Benefit Positioning:
Product promises a particular

benefit
i.e. Ariel EnzyMax claims it cleans
better even in cold water …

c. Use / Application Positioning:
Product is positioned as the best in

certain application
i.e. Head & Shoulders is positioned as
the best shampoo for dandruff control

d. Quality / Price Positioning:
Product is positioned at a certain quality or

price level …
i.e. Zong is positioning its packages on economy

d. Quality / Price Positioning:
Product is positioned at a certain quality or

price level …
i.e. “The Famous Grouse” is positioned as the finest
whiskey brand in the world

e. User Positioning:
Product is positioned in terms of target user

group …
i.e. “Johnson & Johnson” has positioned all its
products around babies, which has enabled the
consumers to broadly perceived all the company’s
products as “mild and gentle” …

f. Category Positioning:
The company may describe itself as the
category leader
i.e. HP means printers, Xerox means photocopiers,
Gillette means shaving systems

g. Competitor Positioning:
The product suggests its superiority or

difference from a competitor’s product
i.e. 7-Up called itself “the Uncola”, Avis described
itself as a company “that tries harder” (than Hertz,
by implication)

Zong and Mobilink are positioning their upcoming offers
and packages against each other … Zong emphasizing on
low call rates and Mobilink on better network coverage …

Since their presence in the
Pakistan Banking Industry,
Islamic Banks have
positioned their banking
products against those of
conventional banks under the
claim of riba-free banking …
“The only interest

we have is in you”
- Slogan of Meezan Bank Limited.

h. Positioning with Respect to Product Class:
The product is associated with a particular

product class ...
i.e. Margarines position themselves with respect to
butter, Vegetable oils (in Pakistan) position
themselves with respect to “ghee”

Knorr has associated its
“make-a-meal” packaged
Chinese food items with
Chinese food served in
restaurants …

How to make your positioning effective?
Always follow the 4 Cs of effective positioning
CREDIBILITY CLARITY
COMPETITIVENESS
CONSISTANCY

Try to keep your positioning simple
- associate with one or a low number of functional benefits

Case Analysis 2: Black and Decker Drills

 “Black and Decker” are in the drill market
 Or are they ???
 Do people buy drills because they want a drill ???
 No … they buy drills because they want holes

and drills just make hole-making easy

 However, research reveals that some men buy drills
to be “the complete man” by possessing a full
armoury of DIY (do-it-yourself) equipment
 So, in both cases, the benefits sought by the

customer vary from purely functional to purely
emotional
 Both the cases require a different positioning

strategy for “Black and Decker” drills

Positioning Plan
However, the marketing managers of

“Black and Decker” drills should ask
themselves ….
 Should “Black and Decker” be positioned as a highly
functional tool or as a part of a complete man’s
toolkit?
 And what about the female buyers?
 Should it be positioned differently for different

segments?
 Or would it cost too much money?
 Would it dilute the message and cause confusion?

Case Analysis 3: Lucozade Energy Drink

 Lucozade was initially positioned as a “sick child’s
drink” and was sold only in the chemist shops
 Later on, it was repositioned as a “healthy adult’s

drink” in the much faster growing healthy adults’
softdrink market and was then sold everywhere;
sharing freezer-space with Coke and Pepsi
 Due to this successful repositioning strategy,

Lucozade sales took a vertical take-off

Perceptual Map Technique Used by Lucozade’s Marketing Managers
Adult
Sick Healthy
Child

It was revealed from the perceptual map
how Lucozade marketing managers used
age (i.e. adult and child) and the health /
lifestyles to start repositioning their
product in a much faster growing market

Steps involved in the positioning process
 Identify a set of competitive products
 Identify the key product attributes
 Collect information from customers / prospects on perceptions of

the products and their attributes
 Determine product’s position on the perceptual map

(product positioning technique which has been earlier discussed)
 Determine customers’ or prospects’ ideal position (s)
 Examine the fit between product position and market preference
 Select a positioning strategy (a strategic marketing concern)

So, where have we reached ?
 Why? What? How? Where? and When?
 How deep an involvement is needed?
 We can’t market to everyone
 We need to segment our markets
 Through focused or differentiated strategies
 Positioning is all about what the prospect thinks about our product

Some Recommended Literature
Jobber, D., Principles and Practice of Marketing, 3rd edition, Berkshire:

McGraw-Hill
Kolah, A., Essential Law for Marketers Oxford: Butterworth-Heinemann
Kotler, P., and Armstrong, G., Marketing: an introduction,

Prentice-Hall International Edition
Philip R. Cateora & John L. Graham, International Marketing Eleventh

Edition, London: McGraw-Hill
Piercy, N.F., Market-Led Strategic Change, 3rd edition, Oxford: Butterworth-

Heinemann

Lecture 3 (Marketing)

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Lecture 3

STP Strategic Decisions

Copyright: Raja Shuja-ul-Haq (2009)

“Those who want to be

Success lies in being “something for

 A segment is a unique group of customers (or potential

 People are different and so are customers

 have different needs

Copyright: Raja Shuja-ul-Haq (2009)

Market Segmentation is the

Copyright: Raja Shuja-ul-Haq (2009)

 Originally, marketing was “mass” and “undifferentiated”

 Today few markets are undifferentiated

 Segmentation recognizes this and identifies consumers with

 These segments can then be targeted using an appropriate

Copyright: Raja Shuja-ul-Haq (2009)

Copyright: Raja Shuja-ul-Haq (2009)

Copyright: Raja Shuja-ul-Haq (2009)

Did Henry Ford understood Market Segmentation?

“The buying public could have Model T Fords in any colour,

 Greater understanding of customer needs

 Focus of competitive analysis and differentiation

 More effective resource allocation

 Improved customer satisfaction (tailored marketing mix)

 Improved planning through specific segment focus

Copyright: Raja Shuja-ul-Haq (2009)

Copyright: Raja Shuja-ul-Haq (2009)

Copyright: Raja Shuja-ul-Haq (2009)

Copyright: Raja Shuja-ul-Haq (2009)

 To the wrong age customers, not even 50 pence

 To the right customer, it can easily fetch us:

50 million pounds !!!

Copyright: Raja Shuja-ul-Haq (2009)

Why should we waste our effort on

Copyright: Raja Shuja-ul-Haq (2009)

Copyright: Raja Shuja-ul-Haq (2009)

If you don’t know what you are aiming

Copyright: Raja Shuja-ul-Haq (2009)

Marketers also need to specify who

Copyright: Raja Shuja-ul-Haq (2009)

The characteristics of individual customers are understood

Copyright: Raja Shuja-ul-Haq (2009)

Customers are grouped into segments on the basis of having

Copyright: Raja Shuja-ul-Haq (2009)

Segment 3 is judged to be most attractive and a marketing mix

Copyright: Raja Shuja-ul-Haq (2009)

For Consumers (B2C) For Businesses (B2B)

Copyright: Raja Shuja-ul-Haq (2009)

Behavioural Psychographic Profile

 Benefits Sought  Lifestyle  Demographic

Copyright: Raja Shuja-ul-Haq (2009)

Division of a market according to areas or regions;

Copyright: Raja Shuja-ul-Haq (2009)

Division of a market according to age, gender, income-levels, family life-

 18-25 age groups, over 55 year olds

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Young divorced Middle-aged married

Young couple Middle-aged Empty nesters Empty nesters

Young divorced Middle-aged divorced Middle-aged divorced

Copyright: Raja Shuja-ul-Haq (2009)

Division of a market according to socio-economic grades;

 A (Upper Middle Class)

Copyright: Raja Shuja-ul-Haq (2009)