MARKET AND COMPETITION

IM1019 Principles of Marketing

Sem 2, 2023-2024

Adapted from Kotler P. T. & Amstrong G. 2018, Principles of Marketing (17th Global Edition), Pearson.
CONTENTS

P1 MARKET

P2 COMPETITION
CONTENTS

P1 MARKET

P2 COMPETITION
Learning objectives
1. Define the major steps in designing a customer-driven marketing strategy: market
segmentation, targeting, differentiation, and positioning.

2. List and discuss the major bases for segmenting consumer markets.

3. Explain how companies identify attractive market segments and choose a market-
targeting strategy.

4. Discuss how companies differentiate and position their products for maximum
competitive advantage.
RECALL: MARKET
What is market?

How to calculate market demand?

How to estimate market demand?

Marketer’s task:
to identify the number and nature of market
segments and decide which one(s) to target.
Recall: Customer-driven marketing strategy
Market segmentation
 Market segmentation: divides a market into well-defined slices
 Market segmentation requires dividing a market into smaller segments with
distinct needs, characteristics, or behaviors that might require separate
marketing strategies or mixes.
 Segmenting consumer markets
 Segmenting business markets
 Segmenting international markets
 Requirements for effective segmentation
Market segmentation
Market segments for garments industry
Men’s clothing
Women’s clothing
Kids clothing
Industrial clothing
Animal clothing
Market segmentation

 Segmenting consumer markets

 Regardless of which type of segmentation criterion we use, the key is adjusting

the marketing program to recognize customer differences.
Market segmentation
 Segmenting consumer markets
 Demographic segmentation divides the market into segments based on
variables such as age, life-cycle stage, gender, income, occupation, education,
religion, ethnicity, and generation.
• Age and life-cycle stage segmentation divides a market into different age
and life-cycle groups.
• Gender segmentation divides a market into different segments based on
gender (e.g. clothing, cosmetics, toiletries, and magazines)
• Income segmentation divides a market into different income segments
(e.g. automobiles, clothing, cosmetics, financial services, and travel)
Market segmentation

 Segmenting consumer markets

 Psychographic segmentation divides a market into different segments based on
social class, lifestyle, or personality characteristics.
• Social class: working class, middle class, upper middles ...
• Lifestyle: Culture-oriented, sports-oriented, outdoor-oriented …
• Personality: Compulsive, gregarious, authoritarian, ambitious
Market segmentation

 Segmenting consumer markets

 Geographic segmentation divides
the market into different
geographical units such as nations,
regions, states, counties, cities,
neighborhoods, population density
(urban, suburban, rural), climate.
Market segmentation

 Segmenting consumer markets

 Behavioral segmentation divides a market into segments based on consumer
knowledge, attitudes, uses of a product, or responses to a product.
• Occasions: Regular occasion, special occasion
• Benefits sought: Quality, service, economy, speed, convenience
• User status: Nonuser, ex-user, potential user, first-time user, regular user
• Usage rate: Light user, medium user, heavy user
• Loyalty status: None, medium, strong, absolute
Market segmentation

 Segmenting consumer markets

 Multiple segmentation is used to identify smaller, better-defined target groups.
Discussion question

Demographic factors are the most popular bases for segmenting

customer groups. Why is it the case?
Market segmentation
 Effective segmentation criteria
 Measurable - The size, purchasing power, and profiles of the segments can be
measured.
 Substantial - The market segments are large or profitable enough to serve.
 Accessible - The market segments can be effectively reached and served.
 Differentiable - The segments are conceptually distinguishable and respond
differently to different marketing mix elements and programs.
 Actionable - Effective programs can be designed for attracting and serving the
segments.
Market targeting

 Market targeting includes:

 Evaluating different market segments
 Selecting target market segments
Market targeting
 In evaluating different market segments, a firm must look at three factors
 Segment size and growth
 Segment structural attractiveness (e.g. competitors, new entrants, substitute
products, power of buyers relative to sellers, and power of suppliers)
 Company objectives and resources
Market targeting
 Selecting target market segments
 A target market is a set of buyers who share common needs or characteristics
that the company decides to serve.
Market targeting

 Selecting target market segments

 Undifferentiated marketing targets the whole market with one offer.
• Mass marketing
• Focuses on common needs rather than what’s different
 Differentiated marketing targets several different market segments and designs
separate offers for each.
• Goal is to achieve higher sales and stronger position
• More expensive than undifferentiated marketing
Market targeting

 Selecting target market segments

 Concentrated marketing: instead of going after a small share of a large market,
the firm goes after a large share of one or a few smaller segments or niches.
• Limited company resources
• Knowledge of the market
• More effective and efficient
Market targeting

 Selecting target market segments

 Micromarketing is the practice of tailoring products and marketing programs to
suit the tastes of specific individuals and locations.
• Local marketing involves tailoring brands and promotion to the needs and
wants of local customer segments (e.g. cities, neighborhoods, stores)
• Individual marketing involves tailoring products and marketing programs to
the needs and preferences of individual customers (also called one-to-one
marketing, mass customization, markets-of-one marketing)
Market targeting

 Selecting target market segments

 Choosing a targeting strategy depends on
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitor’s marketing strategies
 Differentiation and positioning
Example of value proposition:
 Recall that value proposition relates to how
a company will create differentiated value for Company Target Value Proposition
and Product Customers
targeted segments and what positions it
Hertz (car Busy Fast, convenient way to rent
wants to occupy in those segments. rental) professionals the right type of a car at an
 Product position is the way the product is airport
Volvo Safety-conscious The safest, most durable
defined by consumers on important (station upscale families wagon in which your family
attributes. wagon) can ride
Domino’s Convenience- A delicious hot pizza,
 Positioning: designing a firm’s offering and (pizza) minded pizza delivered promptly to your
image to occupy a distinctive place in the lovers door
minds of the target customers.
Differentiation and positioning

 Positioning maps show consumer perceptions of marketer’s brands versus

competing products on important buying dimensions.
Differentiation and positioning

 Choosing a differentiation and positioning strategy

1. Identifying a set of possible competitive advantages to build a position
2. Choosing the right competitive advantages
3. Selecting an overall positioning strategy
4. Communicating and delivering the chosen position to the market
Differentiation and positioning

 Choosing a differentiation and positioning strategy

 Competitive advantage is an advantage over competitors gained by offering
consumers greater value, either through lower prices or by providing more
benefits that justify higher prices.

Product Service Channel People Image

Differentiation and positioning

 A competitive advantage should be

 Important
 Distinctive
 Superior
 Communicable
 Preemptive
 Affordable
 Profitable
Differentiation and positioning

 Choosing a differentiation and positioning strategy

 Positioning statement summarizes company or brand positioning using this
form: To (target segment and need) our (brand) is (concept) that (point of
difference).
 Example: Evernote
“To busy multitaskers who need help remembering things, Evernote is a digital
content management application that makes it easy to capture and remember
moments and ideas from your everyday life using your computer, phone, tablet,
and the Web”
Differentiation and positioning
 Example
 For athletes in need of high-quality, fashionable athletic wear, Nike provides
customers with top-performing sports apparel and shoes made of the highest
quality materials. Its products are the most advanced in the athletic apparel
industry because of Nike's commitment to innovation and investment in the
latest technologies.
 For individuals looking for a quick service restaurant with an exceptional
customer experience, McDonald's is a leader in the fast food industry, with its
friendly service and consistency across thousands of convenient locations.
McDonald's' dedication to improving operations and customer satisfaction sets it
apart from other fast food restaurants.
Source: https://blog.hubspot.com/sales/positioning-statement
CONTENTS

P1 MARKET

P2 COMPETITION
Learning objectives
1. Discuss the need to understand competitors as well as customers through
competitor analysis.

2. Explain the fundamentals of competitive marketing strategies based on creating

value for customers.
Creating Competitive Advantage

 Competitive advantages require delivering more value and satisfaction to target

consumers than competitors.
 Competitor analysis is the process of identifying, assessing, and selecting key
competitors.
 Competitive marketing strategies are how companies analyze their competitors
and develop value-based strategies for profitable customer relationships.
Competitor Analysis
Competitor Analysis
 Identifying Competitors
Competitors can include:
• All firms making the same product or class of products
• All firms making products that supply the same service
• All firms competing for the same consumer dollars
Competitor Analysis
 Assessing Competitors
Competitors’ Competitors’ strengths Estimating competitors’
Competitors’ strategies
objectives and weaknesses reactions

• Profitability • Strategic group offers the • What can our competitors • What will our competitors
• Market share growth strongest competition do? do?
• Cash flow • Benchmarking
• Technological leadership
• Service leadership
Competitor Analysis
 Selecting Competitors to Attack and Avoid

Customer value analysis determines the benefits that target customers’ value and how
customers rate the relative value of various competitors’ offers.

• Identification of major attributes that customers value and the importance of these values
• Assessment of the company’s and competitors’ performance on the valued attributes
Competitor Strategies
Competitive Positions

Market Market Market nicher

Market leader follower
challenger strategies
strategies strategies
strategies
Competitor Strategies
 Competitor Strategies
 Market Leader Strategies
 Expand total market  Protect market share by:  Expand market share by:
demand by developing: • Fixing or preventing • Increasing profitability
• New users weaknesses that provide with increasing market
• New uses opportunities to share in served markets
competitors
• More usage • Producing high-quality
• Maintaining consistent
products
prices that provide value
• Creating good service
• Keeping strong customer
relationships experiences
• Promoting continuous • Building close
innovation relationships
Competitor Strategies
 Market Challenger Strategies

 Challenge the leader with an aggressive bid for more market share.

 Second mover advantage: Challenger observes what has made the leader successful
and improves on it.
Competitor Strategies
 Market Follower Strategies

• Play along with competitors and not rock the boat

• Copy or improve on leader’s products and programs with less investment
• Bring distinctive advantages
• Keep costs and prices low or quality and services high
Competitor Strategies
 Market Nicher Strategies

An ideal market niche is big enough to be profitable with high growth potential and
has little interest from competitors.

The key to market niching is specialization:

• Market
• Customer
• Product
• Marketing mix
THANK YOU!!!!