Target Market Strategies for positioning - Differentiated - Undifferentiated - Concentrated/Niche

Target Market Strategies for positioning

After the organization has selected its target market, the next stage is to decide how it wants to position itself within that chosen segment. Positioning refers to ‘how organizations want their consumers to see their product’. What message about the product or service is the company trying to put across? Car manufacturer Daewoo in the UK, has successfully positioned themselves as the family value model. The UK car Skoda brand which has been taken over by Volkswagen has been re-positioned as a vehicle which had negative brand associations, to one which regularly wins car of the year awards. The positive comments from the industry and attributes of this vehicle is has changed the perception of consumers about the Skoda brand.

A simple strategy for positioning your firm or product deeply in your target market's mind is a tool called a USP. The term USP has been around for a long time. The letters stand for Unique Selling Proposition.

The idea here is to identify and then communicate a concise statement of your firm's most compelling offer and benefit in a way that the potential client can automatically answer the what's in if for me question. That's all a USP is.

Most everyone is familiar with the original Fedex USP. On time, every time or it's free. At the time this offer was very unique in the shipping industry and literally built the company based on communicating this unique selling proposition. So what's your compelling offer? What can you do and offer that no one else in your industry can offer?

Most consumers view small businesses like commodities. The feeling is that one accountant is like another or that one attorney can get the same result as another.

The problem is that most marketers do nothing to expel that perception. "Buy from us because we've been in business for 20 years," or "we're dependable," go the slogans of many small businesses.

Of course the fact that you are dependable, carry a full line of products, offer fair pricing, or are honest are expectations...they are not points of differentiation.

An effective USP communicates your firm's unique ability to fill an obvious void in the marketplace. The USP shows your target market how your firm is uniquely qualified to solve their pain or increase their gain. A USP can be your firm's single most powerful marketing weapon.

To craft a USP for your firm first make a list of all the benefits of doing business with your firm. Don't leave anything out.

Then cut the list down with these guidelines.

1. What things on your list are unique versus your direct competitors.

2. Which of these benefits is most important to your clients?

3. Which of these would be difficult for other's in your industry to copy?

4. Which of these can be easily communicated?

From this set of guidelines you should be able to narrow your search to the top one or two benefits of doing business with your firm.

From there it is simply a matter of injecting this chief benefit or USP into everything that you do.

Craft headlines that promote your USP, put a USP statement on your stationary and business cards, build your USP into all of your sales presentations.

The ultimate goal is to become known to the market as whatever your USP promotes.

One final word of warning. You must deliver on the big promise communicated in your USP. Failure to do so may actually do more harm then drifting along without any marketing focus.

Developing a positioning strategy

Developing a positioning strategy depends much on how competitors position themselves. Do organisations want to develop ‘a me too’ strategy and position themselves close to their competitors so consumers can make a direct comparison when they purchase? Or does the organisation want to develop a strategy which positions themselves away from their competitors? Offering a benefit which is superior depends much on the marketing mix strategy the organisation adopts. The pricing strategy must reflect the benefit offered and the promotion strategy must communicate this benefit.

Differentiated Marketing

Differentiated Marketing is a market coverage and Market Segmentation strategy in which the product is aimed at two or more specific segments in the market. The firm decides to target several segments and develops distinct products/services with separate Marketing Mix strategies aimed at the varying groups. This technique builds greater loyalty and repeat purchasing by considering customer needs and wants. The company may be trying to sell exactly the same product to different segments but it will change its promotional methods and the image it creates.

Advantages: Separate mix can be developed for each segment, different markets can be easily identified. Typically creates more sales then Undifferentiated Marketing.

Disadvantages: High marketing costs, message may not reach some customers.

Undifferentiated Marketing

Undifferentiated Marketing is a market coverage strategy whereby differences within a market are ignored. Everyone is assumed the same. The company attempts to appeal to the whole market with a single product (line) or service (line) and marketing strategy. A single Marketing Mix is offered to the total market. This approach typically relies on mass manufacturing, mass distribution and mass advertising.

Advantages: very cost effective, low marketing complexity, reaches anyone.

Disadvantages: ignores segmentation, may lead to disappointing sales, can be wasteful.

Undifferentiated marketing is advisable when the competition is (still) scarce and when the product has mass appeal.

Concentrated Marketing

Concentrated Marketing is a market coverage and Market Segmentation strategy in which the product and marketing message is aimed at a (few) well-defined segments of the consumer population in a market.

Advantages: Allows small companies with limited resources to achieve a strong position in the specific market segment it serves, without mass production, mass distribution or mass advertising.

Disadvantages: Requires sophisticated marketing, ignores other areas of the market, can cause problems in future as may make it more difficult for company to expand.

Concentrated Marketing is particularly effective for small companies with limited resources.

The Market Niche

A niche market is a narrowly defined group that includes all of the following:

1. Individuals in the group have the same specialized interests and needs.

2. They have a strong desire for what you offer.

3. You have (or you can create) a compelling reason for prospects in the group to do business with you instead of with someone else.

4. You can easily reach individual prospects within the group.

5. The group is large enough to produce the volume of business you need.

6. The group is small enough that your competition is likely to overlook it.

A niche market enables you to target your sales messages with great precision. The more narrowly you define your niche market the easier it is to cater to the specifically defined interests of people in that market.

 

For example, some businesses describe their target market as "opportunity seekers". But this is a broad audience. You cannot cater to specifically defined personal interests of individuals in this group because it may include all of the following:

•       Executives who want to get out of the corporate environment and start their own business

•       New mothers who want to start a home based business

•       Students who want to generate some extra income

Any promotional message to this group would have to be very general. But people don't respond to general talk. They respond only when they feel you are talking directly to them about their individual needs.

SPECIAL ADVANTAGE: A highly defined, small niche market can insulate you from competition. Other small businesses are likely to overlook it. Large businesses will find the market segment too small to bother with.

Your Own Niche Market

One way to find a good niche market is to evaluate your existing customers. Can you uncover a segment of customers with similar characteristics?

For example, I recently talked with an MLM distributor for a health products company. About a year ago she noticed that many distributors in her down line were health or physical education teachers. She now has a lot of success targeting a niche market of female physical education teachers who are married, have children and are members of the same professional association.

Another way to find a niche market is to work backward from the benefits you offer. Start by listing all the benefits provided by your product or service. Then list some of the characteristics of prospects whose current situation can be dramatically improved by those benefits. You should begin to see a narrowly defined group emerge as a niche market.