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Customer value
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Market segmentation and positioning [57]
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Core Products Star
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Marginal
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Core
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Star
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Marginal
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Markets
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Figure [38] Classi cation of products and customers
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Star products and customers Marginals should be discarded or in some way offered to competitors as they are a drain on resources Separating customers into core, stars and marginals goes beyond usage segmentation because it measures costs and revenues for groups of customers, thereby capturing their nancial worth to the organization Using a classi cation similar to this one (Zeithaml et al 2001) place customers into four categories ranging from very pro table down to loss makers where the most pro table are heavy users of the product and are not very price sensitive while customers at the bottom of the pyramid cost the organization money The organization, according to these authors, should pamper the highly pro table customers, cultivate some and get rid of others if they cannot be made pro table
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Process of market positioning
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To simplify the buying process customers position organizations and services in their minds A position is a complex set of perceptions, impressions and feelings and it is important to note that customers position the organizations s value offering with or without its help It would seem good advice that organizations should not leave positioning to chance It can strengthen its current position, search for a new unoccupied position valued by customers and focus on commanding that position or it may attempt to reposition competitors brands to its advantage Positioning may be decided on the basis of product attributes, bene ts offered, usage occasions ( Have a break have a Kit-Kat ), users, personalities, country of origin, societal or environmental concerns
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[58] Strategic Marketing
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Market positioning means understanding customer buying criteria and recognizing the performance of each competitor on each of the evaluative criteria identi ed There are two aspects to positioning The rst deals with the customer and the second deals with competitors In positioning a product relative to customer needs and wants, concern rests with introducing products and services to ll identi ed gaps in the market, altering product and service positions already in the market and altering buyer perceptions of the bene ts sought This means focusing on changing the importance customers accord to the bene ts and identifying or emphasizing bene ts previously not recognized Most organizations can refer to an actual or inferred positioning statement that describes the value proposition of the product for the target market segment for whom (the target market); reasons for buying (points of difference); comparison with other products (frame of reference) Positioning is accomplished by using all the elements of the marketing mix with a focus on a few key bene ts, often referred to as the unique selling proposition or value proposition, sometimes modi ed to emotional selling proposition for particular types of luxury brands It is essential, however, that the organization chooses a position it can defend Positioning involves making a clear choice of the target segment to be served, the points of difference compared to competitors and the frame of reference for customers Every successful product offers more than a single bene t and appeals to more than one segment of the market It is important, therefore, to choose the key bene t carefully and to identify for whom it has greatest appeal Positioning also allows the organization to choose with whom it competes A hypothetical example based on Nikon s Coolpix 5000 digital camera as an example illustrates how the framework can be applied: Possible target segments home photography professional photographers architects, engineers Potential points of difference ease of use ease of editing Corresponding frames of reference regular 35 mm SLR cameras Polaroid cameras direct competitors, eg Olympus
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Market segmentation and positioning [59]
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Market positions may need to be changed from time to time to accommodate changes in the target market Customer perceptions of available choices may change and the organization may have to adapt its positioning strategy Frequently, customers change in regard to their wants Competitors rarely remain inactive the organization must take account of changes competitors introduce in their strategy A simple example illustrates the point At one stage the R & A Bailey and Co Ltd dominated the cream liqueur category with its brand Baileys Original Irish Cream by serving an older, more conservative market segment After a number of years dominating this segment the organization believed the Baileys brand was strong enough to withstand the competitive pressures of the mainstream spirits market To move to the younger mainstream market Bailey s introduced its Bailey on Ice campaign drinks on ice being favoured by this large growing segment compared to the Bailey s in a small glass favoured by the declining older segment In some sense brands, products or other marketing stimuli are represented as a set of positions in multidimensional space The axes of this space measure the perceived attributes that characterize the product or brand A multidimensional scaling of perceptions of middle managers of Irish and Scotch whiskies indicates that the two most important dimensions for this group were image and roughness (Figure 39) As may be seen, the management group in the study perceive Jameson, Crested Ten and Famous Grouse to be rough but with a modern image The distance among these brands is a measure of the perceived similarities of the brands for the market segment concerned These three brands are perceived to be relatively similar but very different from Black & White, Haig, Bells and Paddy The Irish whiskey brand, Powers, is perceived to be rough and old-fashioned and holds a unique position at a distance from the remaining brands With this procedure the individual consumer s ideal or preference point can also be identi ed While this was not part of the
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