3 Market positioning (copy)

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The Russian space program, also known as Roscosmos, is the national space agency of Russia. It was established in 1992 after the dissolution of the Soviet Union. The program has a rich history and has achieved numerous milestones in space exploration. Some notable achievements include launching the first artificial satellite, Sputnik 1, sending the first human, Yuri Gagarin, into space, and building and operating the International Space Station (ISS) in collaboration with other countries. Roscosmos continues to play a significant role in space exploration, satellite launches, and scientific research.

What is product orientation?asfdasdfasdf

• Businesses focuses on the production processes and the product itself and then selling it

• Businesses put effort into developing and making products that believes that customers will want it and which would sell well

• Ex: production of radios and televisions are product oriented

• Due to competition firms are being forces to take customer’s needs into account

Advantages of product orientation

• Product Excellence: Companies with a product-oriented approach often excel in creating high-quality, innovative products or services that can become industry leaders.

• Operational Efficiency: Focusing on product development can lead to streamlined production processes and cost efficiency.

• Consistency: Product-oriented businesses may maintain consistent quality standards, which can build trust and loyalty among customers.

• Niche Markets: Some products may cater to specific niche markets where customer preferences are well-defined, making it easier to target those customers effectively.

• Innovation: Developing new and improved products can lead to breakthrough innovations that shape markets.

Disadvantages of product orientation:

Customer Neglect: A lack of focus on customer needs and preferences can result in products or services that fail to meet market demand.

Market Risk: Relying solely on product excellence without considering customer feedback can lead to market volatility and potential failure.

Missed Opportunities: Companies may miss opportunities to adapt to changing market conditions or emerging trends if they are too internally focused.

Marketing Challenges: Marketing products based solely on their features and quality can be challenging if they do not align with customer desires or solve specific problems.

Competitive Pressure: In competitive markets, a product-oriented strategy may not be enough to stand out, as competitors may offer similar features and quality.

What is market orientation?

• always identify, review and analyse customer needs and led by the marker

• Consumers are central into the firm’s decision making

• Engage in effected marketing

• One of the first approaches to market orientation was from Henry ford, he did not just design the car but also produce it cheaply and sell it as he believed that people would want affordable options

• Sony, apple are all market oriented

Advantages of market orientation?

• Customer-Centric: Market orientation places customers at the center of decision-making, leading to products and services that better match customer needs and desires.

• Competitive Advantage: By understanding the market and customer trends, companies can develop unique selling propositions and gain a competitive edge.

• innovation: A market-oriented approach encourages innovation to meet changing customer demands, which can lead to the development of new products and services.

• Long-Term Success: Businesses that consistently meet customer expectations tend to enjoy greater customer loyalty and long-term success.

• Flexibility: Market-oriented firms are often more adaptable to market changes, making them resilient in dynamic environments.

Disadvantages of market orientation:

• Costly Research: Conducting market research and staying attuned to customer preferences can be expensive and time-consuming.

• Risk of Over-Customization: Excessive focus on customer preferences may lead to over-customization of products or services, which can increase production costs.

• Short-Term Pressures: Market-oriented companies may face pressure to deliver quick results, potentially sacrificing long-term strategies for short-term gains.

• Misinterpretation: Interpretation of market data is not always accurate, leading to potential misalignment with actual customer needs.

• Competition Intensity: As more companies adopt a market-oriented approach, competition can become intense, making it challenging to stand out.

What effect will taking a market orientated approach have on a business?

• continuously doing market research

• Design products according to the customer wants

• Produce products in quantities that consumers will buy

• Distributing product according to the buying habits and delivery requirements of the consumer

• Setting prices according to how much consumers are willing to buy

What is marketing mix?

• firms produce the right product, right price and in the right place and let consumers know that it is available

• Adoption of Market oriented approach may not always guarantee success

• The failure rate of new products is high even with new companies

• In groceries the failure rate is between 80-94% because people may not want to buy the products based on the taste, pricing and etc

Business focusing on whether the product or the market will depend on different factors:

• Nature of the product

  • When a firm operates in an industry at the edge of the new innovation, it Mut innovate to survive (technology, electronics, pharmaceuticals)

  • Anticipates customers’s demand by just research

• Policy decisions

  • Business have certain objectives- can be set in terms of technical quality or safety

  • Objectives are set in terms of market share and focus on marketing

• The views of those in control

  • Accountants/ managing directors focus on factors such as Cashflow and profit forecasts

  • Production engineer may give technical quality control and have a high priority in research

  • Marketing person would focus Market research and consumer relations

• The degree of completion

  • Companies that face a lack of competition have to use fewer resources to resch and a little concern on market share

  • Businesses in competitive markets are more likely to devote time and resources in research and fear in losing their share of the market

Spectrum for businesses between product and market orientation:

What is Market positioning?

• perception that the customers have about products and categories in which the consumers place the product that defines their position

• Consumers categorise products ts according to the range of factors such as quality, stats and value of money that the product has.

• Position products from business with it competitors

Approaches that businesses use to position its products:

• Benefits offered by the product:

  • Ex: in automobile companies, some focus on the safety while others focus on the style, safety and value of money

• Unique selling point/proposition

  • aspect of products/services that sets apart from its rivals.

• Characteristics/qualities of the product

  • common method to position products

• Origin of the product

  • where the product originates from. Ex; cheese (where it manufactured)

• Classification name of the product:

  • name of the product can be used to Pictionary the product in a market

What to business do in response of change in demand?

• businesses reposition their products by changing the view customers have towards the products by atering its characteristics

• Involves in changing the target market and how can features of the product distinguish from the rivals

Why is it important to have an effective market positioning?

• Helps differentiate a product or brand, communicate its unique value, and target the right audience.

• Crucial element of marketing strategy and involves factors like pricing, messaging, and overall marketing efforts to achieve a competitive advantage.

• Brand positioning is shaped by customer perceptions, not just the company's views. For ex: businesses may see their products as high quality but consumers see it as low quality

What is market mapping?

• Market research helps a business understand how customers perceive their brand relative to competitors and where it is positioned.

• Market research can help decide on product characteristics to succeed in the market, pricing that customers are willing to pay, and promotional strategies for a new brand.

• Market research results can be displayed on market/perceptual maps

• Perceptual maps have limitations, such as only having two-dimensions and can only analyse two qualitatives and more relevant for individual brand than corporate brands.

• Obtaining data for these maps can be costly as it is primary resch and may not always align with the customer’s perception the brand’s benefits.

Do market mapping have to have a detailed study?

• does not have to be detailed

• intuitive maps are sometimes called judgmental or consensus maps are created by markers based on the understanding of the industry and uses it best judgement

Market segmentation

• Markets are divided into segments with similar consumer needs.

• Businesses target specific market segments with their products.

• Some businesses focus on a single product for one segment (e.g., luxury cars for the wealthy).

• Others offer multiple products for different segments.

• Some businesses aim for a broad consumer base (e.g., large food manufacturers).

• Market segmentation helps businesses better meet customer needs.

What is geographic segmentation?

• Different customer groups are likely to have different need depending on where they live

• Geographic segmentation in business involves dividing the target market based on location, climate, population density, culture, time zones, language, and legal factors to customize products and marketing strategies for specific regions.

• Ex: countries with hotter climates would have different needs than colder/mild climates. There also can be different needs in different areas of the country, (in india different regions have different tastes in food)

What is demographic segmentation?

• Demographic segmentation categorizes a target market based on demographic characteristics.

• These characteristics include age, gender, income, education, social status, religion, and ethnicity.

• Businesses use demographic segmentation to customize products and marketing for specific demographic groups.

• It helps companies connect with their target customers and make informed business decisions based on demographic insights.

Different characteristics of demographics in depth:

• Age

  • Different age groups are likely to have different interests and many products are targeted towards different ages.

  • Ex: clothes produced in different styles for different ages

• Gender

  • Men and women targeted by businesses with different products

  • For ex: toys, clothing, magazines hygienic products

• Income

  • Income varies depending on countries, business target products at certain income groups

• Social class

  • business focus on socioeconomic groups (division of people according to social class.

• Ethnicity

  • countries are becoming cosmopolitan (different ethnic groups in the same country)

  • Different ethnic groups are Linley to have different needs and tastes due to different cultures

• Religion

  • Different religions have different needs/wants such as Muslims do not eat pork.

What is psychographic segmentation?

• A marketing strategy that categorizes consumers into distinct groups based on their psychological and lifestyle characteristics, attitudes, values, beliefs, interests, and behaviors.

• Unlike geographic or demographic segmentation, which focuses on physical traits or location, psychographic segmentation delves into the psychological and emotional aspects of consumer behaviour .

Objectives

Advantages of psychographic segmentation:

• By segmenting customers based on psychographics, companies can tailor their products, services, and marketing campaigns to resonate with the specific needs and desires of each group ultimately improving their effectiveness in reaching and engaging their target market.

• Provides a deeper understanding of consumer preferences, allowing businesses to create more targeted marketing strategies and product offerings.

• Improves decision making of the business

• By aligning with customers’ values and lifestyles, businesses can foster stronger emotional connections and brand loyalty.

• It helps identify niche markets and untapped opportunities, allowing companies to differentiate themselves from competitors.

• Tailored messaging resonates better with the target audience, leading to more effective communication and engagement.

Disadvantages of psychographic segmentation:

• Gathering psychographic data can be difficult and expensive, requiring surveys, interviews, or data from external sources.

• More complex than demographic or geographic methods, making it challenging to implement for smaller businesses with limited resources.

• It may result in smaller market segments, limiting the overall reach and potential customer base.

• Collecting detailed information about consumers’ attitudes and beliefs can raise privacy concerns and ethical issues.

• Psychographics can change over time, making it necessary for businesses to continually update their understanding of their target audience.

What are the examples of psychographic segmentation?

• • Sports products may target enthusiasts of ‘extreme’ sports like snowboarding.

  • Chocolate manufacturers categorize consumers into ‘Depressive’ chocolate lovers who eat chocolate to unwind in the evening and ‘Energetic’ chocolate eaters who consume it as fast food.

  • People’s attitudes to life may be used to segment the market, ex: Some pension funds cater to those interested in ethical investments

  • Clothing brands may focus on individuals interested in ‘retro’ fashions.

  • Travel companies target families with younger children for holidays.

  • Many newspapers are tailored to readers with specific political views.

What is behavioural segmentation?

• A marketing strategy that categorises consumers into distinct groups based on their observable behaviours, actions, and patterns of interaction with products, services, or brands.

• This approach focuses on understanding how consumers behave rather than their demographic or psychographic characteristics.

• aims to identify commonalities among consumers who share similar purchasing habits, product usage, brand loyalty, and other behavioral traits.

What are the factors of behavioural segmentation:

• Behavioural segmentation categorises consumers based on observable behaviours and actions.

  • Focuses on purchase behaviour , usage rate, brand loyalty, occasion-based behaviour benefits sought, and response to marketing efforts.

  • Businesses use behavioural segmentation to tailor marketing strategies and product offerings.

  • helps improve customer retention and optimise marketing ROI by targeting specific behaviours.

Time and Date of Consumption:

• Consumers often have specific times and dates for consuming products.

• Businesses can enhance their marketing by encouraging consumption at unconventional times.

• For instance, breakfast cereal manufacturers promote evening consumption.

• Restaurants offer deals like student discounts or lunchtime specials to attract different consumer groups.

Drawbacks of Behavioral Segmentation:

• Behavioral segmentation alone may not fully capture a business’s target market.

• Businesses often use a combination of segmentation methods.

• Example: A luxury apartment manufacturer may focus on demographics like single, high-income individuals aged 30-40 in social class AB.

• In this case, behavioral segmentation plays a smaller role due to the exceptional nature of the purchase.

What are the benefits of market segmentation?

• Increased Revenue: Tailoring products to specific segments, like airlines charging more for first-class, boosts overall revenue.

• Enhanced Customer Loyalty: Catering to unique needs fosters greater customer loyalty and retention.

• Resource Efficiency: Targeting products to interested segments avoids wasting promotional resources and ensures cost-effective marketing.

• Diversified Product Range: Developing products for different segments, as seen in car manufacturing, broadens the customer base and meets various preferences.

Market segmentation optimises revenue, loyalty, and resource allocation by tailoring approaches to distinct customer groups and being able to meet the different customer groups.

What is competitive advantage?

• Businesses are more likely to become successful if they can gain a competing advantage

• Gaining a competitive advantage involves identifying and leveraging unique features, strategies, or values that resonate with customers and set the business apart from competitors.

Different ways that a businesses can earn a competitive advantage:

• Product Design:

  • Developing a product with superior design, functionality, or aesthetics can set a business apart.

  • Emphasizing specific design features can differentiate the product from competitors.

• Product Quality:

  • Offering high-quality products allows a business to charge premium prices.

  • Maintaining quality may require superior raw materials and higher standards.

• Promotion:

  • Effective and creative advertising can change consumer perceptions and give a competitive edge.

  • Persuasive advertising can influence consumer behavior.

• Customer Service:

  • High-quality customer service can be a key competitive advantage.

  • Convenience, personalized service, or unique offerings like delivery and pickup can attract customers.

• Delivery Times:

  • Fast delivery is crucial for some customers, and businesses that offer prompt service gain an advantage.

  • Meeting just-in-time delivery demands can be a significant selling point.

• Economies of Scale:

  • Efficient production at a low cost allows a business to charge lower prices, gaining a competitive edge.

  • Larger firms are often better positioned to exploit this advantage.

• Flexibility:

  • Flexibility in adapting to customer needs, changing designs, or speeding up production can win market share.

  • Meeting unique customer demands can be a competitive differentiator.

• Ethical Stance:

  • Adopting an ethical position, such as Fairtrade or environmentally conscious sourcing, can attract ethically aware consumers and provide a competitive edge.

• Focusing on Market Segments:

  • Targeting specific market segments not typically catered to by competitors can lead to a competitive advantage.

  • Meeting the unique needs of underserved audiences, like the over-60s or parents with young children in the case of a gym, can be a successful strategy.

What is the purpose of product differentiation?

• Businesses use it to gain a competitive edge in markets with similar products as rivals

• It involves offering goods or services with unique features, physical qualities, or perceived differences.

• Consumers attach a value on products based on the information they receive

• Persuasive advertising can create a perceived difference

Purpose of product differentiation:

Flexible Pricing: Physical differences from rivals can justify higher prices, and perceived value can lead to premium pricing, as seen with perfumes.

• Recognition: It helps products stand out and appeals to consumers who like to be different will be drawn to products that are different from the rivals.

• Extend Product Range: Differentiation allows businesses to serve multiple market segments within the same industry, offering variety to consumers.

• Brand Development: Successful differentiation can lead to strong branding, as exemplified by Coca-Cola.

• Overcoming Competition: It’s a strategy to attract new customers, gain market share, potentially lower costs, and increase profits by differentiating its products

Why do businesses want to add value to the products?

• in highly competitive markets businesses try to add value to the products by adding extra features and go beyond consumer’s expectations

What are the different number of ways that business can add value to their products and services?

• Bundling:

  • Creating packages of benefits or services as a complete product, e.g., offering flights, accommodation, transfers, insurance, childcare, and excursions in the holiday industry for all for one price,

• Customer Service:

  • Well-presented, friendly, and knowledgeable staff can enhance the customer experience. After-sales service like help desks and follow-up calls adds value.

• Speed of Response:

  • Minimizing waiting times for customers, such as allowing first-class passengers to disembark first or providing quick service like a 4-hour garment return in dry-cleaning.

• Packaging:

  • Attractive product packaging and gift-wrapping can enhance the perceived value of products.

• Frequent Buyer Offers:

  • Rewarding repeat customers with benefits like better pricing, more valuable services, and free products, e.g., frequent flyer programs.

• Customization:

  • Personalizing products by adding logos, custom wrapping, or adapting designs to meet individual customer needs.

What are the benefits of adding value to the business?

Higher Pricing:

• Businesses can often charge higher prices by including value-added elements.

• These added values might be disguised to appear as if they are free, such as offering free holiday insurance with a travel package.

  Competitive Differentiation:

• Adding value allows businesses to stand out in the market. For instance, offering excellent customer service can attract customers who value this aspect.

  Protection from Price Competition:

• By providing added value, a business can protect itself from competitors attempting to lure customers solely with lower prices.

  Target Market Focus:

• Adding value enables a business to better cater to its target market. By addressing the specific needs and preferences of customers, a company can build a more loyal customer base.

Checkpoint

1. State two benefits that a market-orientated business might enjoy.

2. What is meant by behavioural segmentation?

.3 State two benefits of market segmentation.

.4 State three ways a business might position its products.

5. Perceptual maps are two dimensional. What does this mean?

6. Why might a business choose to reposition the whole organisation?

.7 State three ways a business might try to gain a competitive advantage in the market.

8. What is a USP?

9. State two reasons why a business should differentiate its product.

10. What si meant by adding value?

1. State three ways a business might add value to products.