• In the global context, product lines tend to expand to accommodate the

varying requirements of national markets.

• Each country requires slightly different product characteristics, leading to a
proliferation of models.
• It is critical for a manager of the product line to attempt to limit the number of
products and product lines to the minimum which will satisfy the
requirements of most of his customers.
• Pruning the product line to remove unprofitable or underperforming products
should be a regular activity for marketers.
• While consumer product strategy is similar to business product strategy, there are a
few major differences.
• First, consumer products focus more heavily on brand identity and product
appearance than do strategies related to business products.
• Since most business products are sold with related services like installation, training,
after-sales service, and maintenance, in almost every case a business product must
be offered as a total package.
• Business buyers attempt to minimize the emotional content of their decisions.
• In most cases, they are concerned with specific tangible benefits which can be
measured when they make a buying decision.
• Therefore, designing a business product requires a full understanding of the
customer’s value-creating activities so that the product can be positioned as an
important contributor to the customer’s value chain.
 Microsoft
c

• $50 billion in profits • Innovation is critical to

over 27 years Microsoft’s future
• Early new product success
development relied • Much of R & D efforts
heavily on copying the are Internet related
competition • Many new products and
• $4.2 billion annually services are in
invested in R & D development
Definition
• New Product Development
• Development of original products, product
improvements, product modifications, and new
brands through the firm’s
own R & D efforts.
 Product Development Process

A Product development process

is the entire set of
activities required to bring a new concept to
a state of market readiness.

A Design Process is the set of technical

activities within a product development
process.
It does not include business, financial, or
marketing activities.

6
 Strategies for Obtaining New Product Ideas
New-Product
New-Product Development
Development Strategies
Strategies
Strategies for Obtaining New Product Ideas

Acquired
Acquired Original
Original
Companies
Companies Products
Products

Acquired
Acquired Product
Product
Patents
Patents Improvements
Improvements

Acquired Product
Product
Acquired Modifications
Licenses
Licenses Modifications

New
New
Brands
Brands
New
New Product
Product Development
Development Process
Process

Marketing Business
Strategy Analysis

Concept Product
Development Development
and Testing

Idea Test
Screening Marketing

Idea Commercialization
Generation
New Product Development
Strategy
• New Product Development Process:
• Stage 1: Idea Generation
• Internal idea sources:
•R & D
• External idea sources:
• Customers,
competitors,
distributors, suppliers
3M’s corporate
culture
encourages,
supports, and
rewards new
product ideas
and innovation
 Using the Web to Solicit Product
Ideas
Procter and Gamble
To see how P&G solicits ideas from customers, visit
the Procter and Gamble home page, click on the
Resources and Offers button, then select the Share
Your Thoughts listing.
Procter & Gamble
New
New Product
ProductDevelopment
Development Process
ProcessStep
Step2.
2. Idea
IdeaScreening
Screening

• Many companies have systems for rating and screening

ideas which estimate:
• Market Size
• Product Price
• Development Time & Costs
• Manufacturing Costs
• Rate of Return
• Then, the idea is evaluated against a set of general
company criteria.
• Process to spot good ideas and drop poor ones as soon as
possible.
New
New Product
Product Development
Development Process
Process
Step
Step 3.
3. Concept
Concept Development
Development &
& Testing
Testing

1.
1. Develop
DevelopProduct
ProductIdeas
Ideasinto
into
Alternative
Alternative
Product
ProductConcepts
Concepts

2.
2. Concept
ConceptTesting
Testing--Test
Testthe
the
Product
ProductConcepts
Conceptswith
withGroups
Groups
of
ofTarget
TargetCustomers
Customers

3.
3. Choose
Choosethe
theBest
BestOne
One
New
New Product
Product Development
Development Process
Process
Step
Step 4.
4. Marketing
Marketing Strategy
Strategy Development
Development
Marketing Strategy Statement Formulation

Part
Part One
One Describes
Describes Overall:
Overall:
Target
Target Market
Market
Planned
Planned Product
Product Positioning
Positioning
Sales
Sales &
& Profit
Profit Goals
Goals
Market
Market Share
Share
Part
Part Two
Two Describes
Describes Short-Term:
Short-Term:
Product’s
Product’s Planned
Planned
Price
Price
Distribution
Distribution
Marketing
Marketing Budget
Budget

Part
Part Three
Three Describes
Describes Long-Term:
Long-Term:
Sales
Sales &
& Profit
Profit Goals
Goals
Marketing
Marketing Mix
Mix Strategy
Strategy
New
New Product
Product Development
Development Process
Process
Step
Step 5.
5. Business
Business Analysis
Analysis
Step
Step 6.
6. Product
Product Development
Development

Business
BusinessAnalysis
Analysis
Review
Review of
of Product
Product Sales,
Sales, Costs,
Costs,
and
and Profits
Profits Projections
Projections to
to See
See ifif
They
They Meet
Meet Company
Company Objectives
Objectives

IfIf No,
No, Eliminate
Eliminate
Product
Product Concept
Concept

IfIf Yes,
Yes, Move
Move to
to
Product
Product Development
Development
New Product Development Process
Step 7. Test Marketing
Test Marketing is the Stage Where the Product and
Marketing Program are Introduced into More Realistic
Market Settings.
Budget
Budget Levels
Levels Product
Product

Packaging
Packaging Elements that Positioning
Positioning
May be Test
Marketed by a
Branding
Branding Company Advertising
Advertising

Pricing
Pricing Distribution
Distribution
New
New Product
Product Development
Development Process
Process
Step
Step 7.
7. Test
Test Marketing
Marketing

Standard
Standard Controlled
Controlled
Test
Test Market
Market Test
Test Market
Market
Full
Fullmarketing
marketingcampaign
campaign AAfew
fewstores
storesthat
thathave
have
in
inaasmall
smallnumber
numberofof agreed
agreedto
tocarry
carrynew
new
representative cities.
representative cities. products for a fee.
products for a fee.

Simulated
Simulated
Test
Test Market
Market
Test
Testin
inaasimulated
simulated
shopping
shoppingenvironment
environment
to
toaasample
sampleofof
consumers.
consumers.
New
New Product
Product Development
Development Process
Process
Step
Step 8.
8. Commercialization
Commercialization

Commercialization is the
Introduction of the New Product
into the Marketplace.

To
To
When?
When? Where?
Where? Whom? How?
How?
Whom?
 LIFE IS SHORT AND THEN YOU
INTRODUCE A NEW PRODUCT
Product lifetimes are shrinking, as competitors
pressure innovators by offering imitations of
successful, high-margin products.
• Panasonic now replaces electronic consumer
products on a 90-day cycle (with older models
going to discounters)
• the big Japanese car makers are aiming to offer
new models every two years.
(from the New York Times)
Speeding
Speeding Up
Up Development
Development
Sequential Simultaneous

Step 1
Step
Step 11

Step 2
Step
Step 22

Step
Step 33 Step 3

Step
Step 44 Step 4
 Causes
Causes of
of New
New Product
Product Failures
Failures

• Overestimation of Market Size

• Product Design Problems  Insignificant difference
• Product Incorrectly Positioned, Priced or Advertised
• Costs of Product Development
• Competitive Actions
• No access to the market
• Bad timing
To create successful new products, the company must:
• understand it’s customers, markets and competitors
• develop products that deliver superior value to customers.
Alternatives to Development:

•Acquire new Products

•Develop "me-too"
products.
•Revive old products
Product Life-Cycle Strategies

• The Typical Product Life Cycle (PLC)

Has Five Stages
• Product Development, Introduction,
Growth, Maturity, Decline
• Not all products follow this cycle:
• Fads
• Styles
• Fashions
 Sales and Profits
Over A Product’s Life
Product Life Cycle
length
• style - comes, goes, comes back
• fashion - come, goes away slowly
• fad - comes and goes way
quickly
Styles, Fashions, and Fads
Companies want their
products to enjoy a
long life cycle.
Hershey’s actively
promotes the fact that
it has been
“unchanged since
1899”
Product Life-Cycle Strategies

• Additional marketing
investments can move a
product back into the
growth stage, as in the
case of Cracker Jack.
Product Life-Cycle Strategies
• The product life cycle concept can be
applied to a:
• Product class (soft drinks)
• Product form (diet colas)
• Brand (Diet Dr. Pepper)
• Using the PLC to forecast brand
performance or to develop marketing
strategies is problematic
Problems Using the PLC
Trouble identifying
The PLC Concept Can Which Stage of the PLC
the Product Is In
Help in Developing
Good Marketing
Strategies for
Difficult to Forecast the
Different Stages of Sales Level, the Length of
the Product Life-Cycle, Each Stage, and Shape of
the PLC
However Some
Problems Can Strategy
Arise:is Both a
Cause and a Result of
the Product’s Life Cycle
Product Life-Cycle Strategies

• Begins when the

PLC Stages
company develops a
• Product new-product idea
development • Sales are zero
• Introduction • Investment costs are
high
• Growth
• Profits are negative
• Maturity
• Decline
Product Life-Cycle Strategies

• Low sales
PLC Stages
• High cost per
• Product customer acquired
development • Negative profits
• Introduction • Innovators are
• Growth targeted
• Maturity • Little competition
• Decline
Product Life-Cycle Strategies

• Rapidly rising sales

PLC Stages
• Average cost per
• Product customer
development • Rising profits
• Introduction • Early adopters are
• Growth targeted
• Maturity • Growing competition
• Decline
Product Life-Cycle Strategies

• Sales peak
PLC Stages
• Low cost per
• Product customer
development • High profits
• Introduction • Middle majority are
• Growth targeted
• Maturity • Competition begins
to decline
• Decline
Product Life-Cycle Strategies

• Declining sales
PLC Stages
• Low cost per
• Product customer
development • Declining profits
• Introduction • Laggards are
• Growth targeted
• Declining
• Maturity competition
• Decline
 S ales
R evenues

Introduction Growth Maturity D e clin e

Tim
e
Some questions?????
• The product life cycle gives us a model of what should happen to a product after it is introduced –
• but the emphasis here is on the word “should.”
• Some products simply flop as soon as they are launched – others grow rapidly, then disappear
without trace as a smart competing product appears.
• So how can we time the launch of the next new product?
• How do we know for sure that the last product launch will go according to plan?
• Or that the current one will?
• The answer is of course that we have no way of knowing, because we can’t predict the future.
• So what’s the point?
• Why not just launch when we feel like it, or when the product is ready for market, and let the
products take their chances?
• Or maybe any planning is better than no planning?
• An educated guess is better than a shot in the dark?
Diffusion of Innovation
• Innovators – These are companies who will be willing to try new products or services and
are willing to be the first ones. Rogers identified 2.5 percent of companies as falling into this
category. These firms are the ones who accept the product during the earliest stages of the
product lifecycle.
• Early Adopters – After the innovators try a product, these companies will also try it. They are
generally open to new ideas but want some proof that the product will work. These firms
would be responsible for the growth seen in the Growth phase of the product lifecycle.
• Early Majority – Firms who will buy the product once it is thoroughly tried and tested. These
firms form the backbone of the Maturity phase of the product lifecycle.
• Late Majority – Firms who generally do not wish to try new services or products and wait
until many other firms have accepted the innovation. Firms like this would be responsible for
maintaining the growth of the product in the latter stages of the Maturity phase of the product
lifecycle.
• Laggards – Those who would adopt the product only under duress or not adopt at all.
Speed of acceptance
• Relative advantage: the perception that the idea is better than the one it
supersedes.
• Compatibility: consistency with existing values, past experience and the
needs of a firm’s buyers and influencers.
• Complexity: more complex ideas are adopted more slowly.
• Trialability: if a firm can try out a small aspect of a new idea it will be
accepted more quickly than if a firm has to make a major switch. For
instance, the trialability of a new company-wide computer system would be
extremely low and therefore acceptance would be very slow.
• Observability: if the effects of an innovation can be easily seen this
innovation may be adopted more quickly.
Success – R&D
• The underlying reason for the product lifecycle is the constant development
of new technologies and processes which create opportunities but also pose
threats to firms established with the currently accepted technology.
• In addition, the globalization of trade throughout the world, including the
lowering of barriers to market entry, has allowed new technologies to
penetrate into markets which were formerly blocked.
• No firm can succeed without assuming that its current approach to products
and services is in danger of being replaced by newer, better and less costly
alternatives, and research shows that firms which have vigorous research
and development programs are more successful in the marketplace
 competitive advantage depends on the following factors:

• Project environment. Creating an atmosphere of innovation and a culture of change will foster
new development.
• Skills and resources. Firms which can make full use of the skills of their employees, and the
research facilities at their disposal, will produce more effective new products.
• Project leadership. The ability to motivate staff to give their best, and to direct the process
effectively, is crucial to the successful completion of any project.
• Strategic fit. New products which have a good fit with the overall strategy of the firm will have
more chance of success than those which lie outside the firm’s strategic direction.

• Efficient NPD processes. If the company has set up systems for new product development, the
results are likely to be a great deal better than they would be if NPD is left as an ad-hoc activity.
• Effective product positioning strategies. Ensuring that the new products actually fit into a suitable
niche in the market is essential for any market-oriented firm.
What is a new product?
• New-to-the-world products – These are inventions such as the first automobile or
computer. These are very rare: most new products are in fact simply improvements
on existing products.
• New category entries – Products introduced by firms into a product category where
the firm had not been doing business up to this time.
• Additions to product lines – These are line extensions in the firm’s current markets
such as a tablet computer introduced by Apple.
• Product improvements – Current products made better in some way.
• Repositioning – Taking a current product and attempting to find a new use for it.
• Although not a B2B example, the most famous example of this is Arm and Hammer
Baking Soda which was repositioned many times as a refrigerator deodorant or
carpet cleaner.
NPD Process
• Opportunity identification and selection –Where new product opportunities are identified
and selected for further development.
• Concept generation –Where an attractive opportunity includes research with customers
and preliminary analysis takes place.
• Concept evaluation – Careful review of new product concepts on technical, marketing, and
financial variables. This phase also requires ranking to choose the most promising
concepts to move forward to the next phase.
• Development – In this phase, both technical and marketing development take place.
Prototypes are designed and tested and the production process must be established.
Marketing must develop a full marketing and business plan, including all additional
services and products required by this concept.

• Launch – In this final phase, the product is commercialized. Distribution and sale of the
product begins and the marketing launch plan is put into effect.
Unmet needs-discovery
TABLE 8.3 Approaches used to discover unmet needs and problems

■ Routine M arket Contacts

• sales call reports
• service departm ent
• complaint files
■ Problem Analysis
• list of user problems
• expert opinion
• published sources
• direct inquiry of heavy users, individually or in focus groups
• user panels
• user observations
■ Scenario Analysis
3M- new ideas process encompasses four major steps
• Laying the foundation – A team is formed which identifies the markets to target and the kinds of
innovations they may wish to pursue.
• In this stage the team must gain the support of key managers within the company.
• Determining the trends – In this step, the team talks to experts in the field and attempts to
understand the newest technologies and applications in the area.
• Identifying lead users – The team identifies the most important users who are on the leading
edge of a particular target market.
• They will then gather information from these lead users and develop preliminary product ideas.
• Developing the breakthroughs – The final step is to move the preliminary concepts through
toward completion.
• The first portion of this step is hosting a workshop with several lead users and in- house
marketing and technical people.
• During these workshops, all participants work to design final concepts which will fit the company
as well as the customers’ requirements.
Idea stimulator check list
TABLE 8.4 Checklist of idea stimulators for business to business products

■ Change the physical, thermal, electrical, chemical, or mechanical properties of this product.
■ Any new electrical, electronic, optical, hydraulic, mechanical, or magnetic way of performing
a function?
■ Is this function really necessary?
■ Can we change the power source to make it work better?
■ C an standard com ponents be substituted?
■ How might the product be made more compact?
■ What if it were heat-treated, hardened, alloyed, cured, frozen, plated?
■ Who else could use this operation or its output?
■ Has every step been computerized as much as possible?
■ How can we use the Internet to improve this product/service?
Source: adapted from Crawford, 2003.
Successful product???
• The key to a successful new product process is that a few real winners
emerge while most of the potential losers are eliminated.
• However, no process can eliminate all failures.
• Many managers are quite wary about the highly visible step of introducing a
new product.
• If a manager is hoping to have 100 percent success then this process will
eliminate most of the potential successes while eliminating every potential
failure.
Determinant attributes
• determinant attribute is one which is
both important and differentiating.
p o rt a n c e

High
Determinant • The task of the business marketer is
Attributes
both to understand the importance of
u te

each attribute of a product and/or

A ttrib Im

service as it is perceived by his

Low customers
• and whether a particular attribute
differentiates the offering from those of
Non-
Differentiating
Differentiating
from Competition
the competitors.
• As can be seen in the Figure attributes
Differe
ntiation from
must be important and differentiating in
Competition order to be determinant.
New product Funnel

100 New Product Ideas

70 Ideas Discarded
Opportunity Identification
and Selection

20 Ideas Discarded
Concept Generation

5 Ideas Discarded
Concept Evaluation

4 Ideas Discarded
Development

Launch

Ne
w
Pr
Twin streams of development

Original Concept

Product Marketing Plan

E v o lu tio n Evolution

Basic Strategy
Initial Technical Concept Testing (concept
Development statement of
targeting and
positioning)

P ro to t y p e Tactical Plans
(process and Product Testing (brand, pricing,
facilities planning) packaging,
service,
distribution, etc.)

Pilot Plan Product Complete Final

Plan

Market Testing
Manufactured Revised Final Plan
P ro d u c t

Full Launch

The twin
FI G U R E 8.8
streams of
development
Source: adapted from
NPD process-internet
TABLE 8.6 Use of Internet in the NPD process

NPD Activity Internet R ole

■ Opportunity identification ■ More ideas from more sources
■ Concept generation and screening ■ Improve flexibility of process
■ M ore com prehensive screening process
■ Developm ent ■ Improve quality and efficiency of
m anufacturing developm ent
■ Facilitates collaboration among team
members
■ Launch ■ Faster feedback of results
■ Quicker changes of tactics
STP
STP
• Segmentation, Targeting and Positioning (STP) are the basic tools used by the
marketers.
• Each customer has different needs, wants and desires.
• Also, each customer has a different background, education level, and experiences.
• Hence companies need to look for the offerings that can match with the need of
different groups of customers or segments.
• Segmentation: Dividing the heterogeneous market into homogeneous segments by
using one or more attributes.
• Targeting: Deciding the number of segments of the market to pursue.
• Positioning: Creating a distinctive image of product/brand in the mind of consumers.

•Positioning is not what you do to a product; it is what

you do to the mind of a prospect.
STP
• The growing use of the Segmentation, Targeting and
Positioning Process (STP) has occurred as a direct result of the
prevalence of mature markets, the greater diversity in customer
needs, and the ability to reach specialized or niche segments.
• As such marketers are increasingly segmenting markets and
identifying attractive segments (i.e. who to focus on and why?),
• in order to identify new product opportunities, develop suitable
positioning and communications strategies (i.e. what message to
communicate),
• and effectively allocate resources to key marketing activities
(i.e. how much should we spend and where?).
Benefits of Segmentation, Targeting and Positioning
Process

• Enhancing a company’s competitive position by providing

direction and focus for marketing strategies such as targeted
advertising, new product development, and brand
differentiation.
• For example, Coca-Cola identified through market research that
its Diet Coke brand (also marketed as Coca-Cola Lite) was regarded
as ‘girly’ and ‘feminine’ by male consumers.
• As a direct result the company developed a new product, branded
Coke Zero, which is targeted at the health-conscious male segment
of the soft drinks market.
Benefits of Segmentation, Targeting and
Positioning Process
• Examining and identifying growth opportunities in the
market through the identification of new customers, growth
segments, or new product uses.
• For example, Arm & Hammer was able to attract new customers
when existing consumers identified new uses for their baking soda
(Christensen, Cook, and Hall, 2005).
• Lucozade also changed the positioning and targeting from its
original marketing strategy positioned for sick children and
rebranded to target athletes as an energy drink.
Benefits of Segmentation, Targeting and
Positioning Process
• More effective and efficient matching of company resources to
targeted market segments promises the greatest return on
marketing investment (ROMI).
• For example, financial institutions like HSBC and Barclays and
large retailing multinationals such as Tesco and ASDA Wal-Mart are
utilizing data-informed segmentation strategies to effectively target
direct marketing messages and rewards to customers they have
classified as offering long-term value to the company, i.e. they are
profitable customers.
 What is Market Segmentation?

• Market segmentation can be defined as the process of dividing a

market into distinct subsets of consumers with common needs or
characteristics and selecting one or more segments to target with a
distinct marketing mix.
• Characteristics of Market Segment
• Before going into the segment identification process, we should
first understand that not all segments are profitable.
• To be an effective target segment, it should posses following
characteristics.
Segmentation
• Identifiable
• Marketers divide the market into exclusive segments on the basis of common
need by using the demographic, lifestyle, and other factors.
• These factors are named as bases for segmentation.
• For example, in demographic segmentation marketers use gender, age, ethnicity
to segment the market.
• Sizeable
• A profitable segment should have enough number of consumers. A segment can
be identifiable but may not be sizeable.
• For example, marketer divides the market based on education and wish to target
female consumer having PhD degree in a village setup.
• This segment is identifiable but may not be sizeable in a particular territory.
Segmentation
• Stable and growing
• Marketers look for the segments those are stable and growing in nature.
• For example, students are identifiable and sizeable segment for e-retailers.
• Marketers know that in India a number of the customer using e-retailing will grow very
fast in the coming decade.
• Reachable
• A segment can be identifiable, sizeable and stable/growing, but if it is not reachable then
it is not a target segment.
• Reachable means the ability of a marketer to communicate with customers effectively
and economically.
• Imagine a group of customer living in one of hill area of India has no access to media.
• In this case, marketers cannot reach to the customer effectively and economically.
• On the other hand, If the customer is educated, it makes easy for marketers to reach out
to the customers.
Segmentation
• Congruent with marketer objective and resources
• Marketers may not be willing to target each and every segment,
even if the segments qualify preceding criteria.
• For example, Earlier Mahindra did not consider Scooter segment
as one of the target segment because it was not in congruence
with the Mahindra’s objective.
• Now Mahindra changed its strategy and its marketing objectives,
and launched Mahindra Gusto in Scooter segment.
Segmentation
• Measurable
• Although in many consumer markets measurement is generally a relatively straightforward
exercise, it is often a more difficult process with industrial or technical goods. This is due
largely to the relative lack of specific published data.
• Accessible
• In some cases, it may be possible to identify a sizeable and potentially profitable segment but
then, either because of a lack of finance or in-house expertise, this potential may be difficult
to exploit.
• Substantial
• If the strategist is to justify the development of a segment, the exercise must be cost-
effective.
• The size and value of the segment is, therefore, an important determinant of this decision.
• Size should, of course, be seen in relative rather than absolute terms, since what may be too
small to be considered by one organization may be appropriate to another, smaller, company.
Segmentation
• Unique
• In its response, so that it can be distinguished from other market
segments.

• Appropriate
• To the organization’s objectives and resources.

• Stable
• So that its behaviour in the future can be predicted with a sufficient
degree of confidence.
Bases for Market Segmentation

1.Geographic Segmentation
2.Demographic Segmentation
3.Psychographic Segmentation
4.Behavioural Segmentation
Bases for market segmentation
• Geographical segmentation is one of the oldest and simplest
methods of dividing the customer market on the basis of the
geographical location of the customers.
• For example, lifestyle products sell very well in big cities than in
small towns.
• People living in rural and urban region of the country have different
purchasing or buying habits.
• Therefore services or product have to be designed keeping in mind
the different preferences of each customer group.
Bases for market segmentation
• Demographic segmentation is dividing the customer market on the
basis of several variables such as age, sex, gender, occupation,
income, education, marital status, family life cycle, community,
social status, nationality etc.
• For example buying behavior of car, beauty products, mobile
phones, cards, apparels, are hugely influenced by their
demographics.
Bases for market segmentation
• Psychographic Segmentation is dividing the customer market on
the basis personality, lifestyles, attitudes and habits of an
individual.
• The personality refers to the traits which characterise persons as
introvert, extrovert ambitious etc.
• Lifestyles refer to how a person lives his life and does expenditure.
• For example person having a lavish lifestyle may consider having
an air conditioner in every room as a need, whereas a person living
in the same city but having a conservative lifestyle may consider it
as a luxury.
Bases for market segmentation
• Behavioral Segmentation
• Behavioral Segmentation is dividing the market on the basis of the
individual’s knowledge about the product and the usage of the
product.
• The customer can be segmented into those who know about the
product, those who don’t know about the product, Ex users,
Potential users, Current Users First time users, etc.
• For example, an athlete may prefer to buy running shoes to
participate in marathon race and a non-athlete person may buy it
just because he likes the shoes (light/medium user).
What is Targeting in Marketing?

• The target segments are groups of customers that the marketer

decides to serve.
• It comprises buyers who share common needs, wants and
preferences, and the marketer decides to serve them.
• The marketer would choose a segment that is viable; and, that he
can cater to effectively and efficiently.
• Targeting is to evaluate potential and commercial attractiveness of
each segments and select one or more segments.
Targeting
• Undifferentiated
• In an undifferentiated approach, there is no delineation between
market segments, and instead, the market is viewed as one mass
market with one marketing strategy for the entire market.
• For example, the Olympics are marketed at a world market or
certain government services.
• The UK postal service uses an undifferentiated marketing strategy,
targeting everyone, although the Post Offices do differentiate
between other products and services.
Targeting
• Differentiated
• A differentiated targeting approach recognizes that there are
several market segments to target, each being attractive to the
marketing organization.
• As such, to exploit market segments, a marketing strategy is
developed for each segment.
• For example, Hewlett Packard has developed its product range
and marketing strategy to target the following user segments of
computing equipment: home office users; small and medium
businesses; large businesses; and health, education, and
government departments.
Targeting
• Concentrated
• A concentrated or niche-marketing strategy recognizes that
there are segments in the market, but implements a concentrated
strategy by focusing on just a few market segments.
• This is often adopted by firms that either has limited resources by
which to fund their marketing strategy, or are adopting a very
exclusive strategy in the market.
• For example, Jordan’s cereal company originally used this
approach to target just consumers interested in organic food
products.
• This approach is also used a lot by small to medium and micro-sized
organizations, given their limited resources: the local electrician.
Targeting
• Customized Target Marketing
• The final approach is a customized targeting strategy in which a
marketing strategy is developed for each customer as opposed to each
market segment.
• This approach is more predominant in B2B markets (e.g. marketing
research or advertising services) or consumer markets with high-value
highly customized products (e.g. purchase of a custom-made car).
• For example, a manufacturer of industrial electronics for assembly
lines might target and customize its product differently for Nissan,
Unilever, and Levi’s, given the differing requirements in assembly line
processes for the manufacture of automobiles, foodstuffs, and
clothing.
What is Positioning?

• Product positioning is how the product is perceived by consumers

based on the number of attributes in the minds of consumers
relative to competing products.
• Therefore, every company must be able to differentiate and
determine the position of bids effectively to achieve competitive
advantage during the life cycle of a product or an offer (Kotler et.
al: 2003).
Positioning process has the following six steps:

1.Defining the market in which product competes, identifying relevant buyers and
competitors.

2.Identification of key attributes of the products and understanding the perception of

consumers for each attribute.

3.Understanding the perception of consumers towards the competitor’s offerings on

relevant attributes.

4.Identifying the target consumers’ preferred combination of attributes.

5.Developing the distinctive, differentiating, and value-based positioning and

communicate each attribute provide the value.

6.Creating a positioning statement focused on the benefits and value that the product
provides and communicates with the target consumers.
Positioning
• Umbrella positioning
• Umbrella positioning is a statement that describes the universal benefits of
the company’s offerings.
• In umbrella positioning, it does not offer the benefits of using a given product.
• It offers the benefits of using all the products from a particular brand.
• For example: LG offers all its products with the positioning and punch line of
“Life’s Goods”.
• Premier positioning
• It is one of the strategies exclusively focused on a particular brand, product
or services.
• For instance, TATA promotes its air conditioner with the exclusive brand
VOLTAS but at the same time using the TATA brand.
Positioning
• Positioning against competition
• In this strategy, companies acknowledge their competitors.
• For example, AAJ TAK claims that they are India’s No 1 Hindi news
channel.
• Un-owned positioning
• Positioning is the image in the mind of consumers; it is not a
physical object that could be owned by anyone.
• For instance, competitors in the market look for the positioning
gap in the market and try to fill that gap, if found profitable.
Positioning
• Repositioning
• Repositioning is the process by which a company strategically
changes the distinct image and identity that its product or brand
occupies in the mind of consumers.
• For example, TATA positioned its NANO as LAKH…. (1 lakh) car but
failed to create a proper consumer base due to its tag cheap car.
• Now TATA is positioning its product as “City’s car” and focus on
driving and parking benefits of NANO in the crowded cities.