STP Strategy For New Product Launch-A Work in Progress: Tahsina Khan
STP Strategy For New Product Launch-A Work in Progress: Tahsina Khan
ABSTRACT : The paper is the literature review of a work in progress on launching of a new product in the
European Market. The paper has seen the light of development as more and more data are being collected from
local and international respondents. This is the secondary work with critical review of the available thoughts on
Segmentation, Targeting an Positioning- the three basic component of product launch decision.
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MARKET SEGMENTATION
2.1. Introduction
Citing the words of Bonnie Gretzner (2007), If you don't understand the details about customer
segmentation, you're most likely letting customers--and sales--slip through your fingers, says one expert.
Nowadays, in customer-oriented era, companies attempt to break down markets into manageable parts of the
consumer groups and treat them according to the similar characteristics, that is called market segmentation. In
this sense, Geoff Lancaster and Paul Reynolds (2002) in the book of Marketing, state that increased
competition, better informed and educated customers, and constant changing demands, urge companies to pay
attention to segmentation issues.
Segmentation has two approaches depending on who are your customers: segmenting organisational
market and segmenting consumer market. Below is presented a diagram of segmentation of consumer market by
Davis Jobber (Figure 2.1). As the study is undertaken on consumer product, looking at the bottled water in
particular, natural mineral water consumers, therefore organisational market segmentation will not be discussed
accordingly.
Consumer
segmentation
Behavioral
Psychographic
Profile
Benefi Purcha Purchas Usage Perceptio Life Personal Demograp Socio- Geograp
Figure
Jobber, (2001)
economi
hic
t 2.1.:s Segmenting
n and D.style
behavio consumer markets
ity
hic
c
soughtofoccasi
beliefs
r Marketing Association,
On the website
the American
William D. Neal (2008) in the article
ofPrinciples of
on
Marketing Segmentation describes two ways of market segmentation: a priori and post hoc.
A priori market segmentation is based on adoption already known and usually used technique of
segmentation. In this case, companies do not conduct any research in order to identify which segment is most
appropriate, but they simply chose specific segmentation approach. On the other hand, post hoc segmentation
infers market segmentation based on the thorough research of the customers evidences that come up as
variables, will become a background of the segmentation.
Author recommends not to use a priori segmentation as an ease job in order not to conduct a research.
As he states, due to dynamic society, a miss-segmented market is often worse for the firm than the massmarket assumption. Whereby, Mr. Neal depicts main variables, which should be considered for the research
purposes. These set of variables are: product attribute preferences; values; product purchase pattern; product
usage pattern; product benefits; brand preference; price sensitivity; brand loyalty; lifestyle; status; attitudes and
opinions toward environment etc.
Market segmentation, according to Frances Brassington and Stephen Pettit (1997) is important issue for
any business, because customers or segments have different characteristics and preferences and these
preferences are defined as variables, which must be considered by companies. Therefore, segmentation is a
stage when the company identifies all clusters of possible consumers by grouping those consumers based on
same needs, demands, requirements and other different characteristics. That consequently will become the pool
of options to be targeted according attractiveness of the market(s).
2.2Types of Marketi Segmentation
Some basic segmentation methods will be discussed in order to identify alternatives for the following
consideration, which is the most appropriate for the natural mineral water Borjomi.
Geographic segmentation means to define customers according the location they live, for instance,
European consumers. Geographical segmentation is very easy to define. It is easy for distribution system and
establishing contacts with customers. But, the drawback of this kind of segmentation, as Douglas and Craig state
in the book of Principles of marketing cited by F. Brassington and S. Pettite (1997), that concentrating only on
the geographical area is not correct, because even in a small location customers can have diverse wants and
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Figure 2.2.: Lifestyle segmentation of the UK Market, 1995, Peter Cheverton, 2004
One of the psychological segmentation is behavioural segmentation, which considers separation of the
customers according to their knowledge, attitudes, responses and uses of the product. P. Kotler and G.
Armstrong (2006) introduce five different varieties of segmentation. Whereby, the first form of segmentation is
occasional segmentation. It means that segmentation is done according the particular product usage. For
example, Kotler and Armstrong bring an example of the orange juice producers, who encouraged drinking
orange juice not only during the breakfast, but also consume at other times as well.
Second type is benefit segmentation, looking at the benefits, which can be delivered to the customer
according the attributes of the product. For example, tooth companies producing tooth past for customers
concerned to buy such tooth pasts, which are effective for sensitive teeth with whitening features, etc. Benefit
sought by Frances Brasington and Stephen Pettitt (2003) is seen in two scopes one is practical though (e.g.
reliability, economic, etc.) and psychographically oriented (e.g. environmentally friendly, fast, healthier, etc.). In
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Awareness
Interest
Desire
Action
Figure 2.4.: The AIDA response hierarchy model
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III.
TARGETING
3.1. Introduction
David Jobber defines that target market is a chosen segment of market which a company has decided
to serve. This is a convenient technique in order to address identical marketing mix to the same segments
(2001).
According to Tony Davis and Jon Epstein (2005), individuals tend to move from one segment to
another. They state that this happens in a short period of time and in a large number. For effective target
marketing, think bucketisation not segmentation. There is always a bucket of customers with very specific
needs and circumstances and in a readiness state at any point in time but the individuals are only there for a
brief moment.
3.2. Targeting Strategies
In marketing, there is no dogmatic requirement either to segment market or not. It is up to the company
which strategic approach to take. Yet at the targeting stage, segmentation targeting becomes a crucial issue. If
the company decides to segment the market then comes an issue to what extent segmentation is needed. There
are three types of segmentation strategies. Figure 2.5., clearly shows those models as strategy 1 undifferentiated marketing, strategy 2 differentiated marketing and strategy 3 concentrated marketing.
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IV.
POSITIONING
4.1. Introduction
Positioning according to the definition of David Jobber (2001) is the choice of target market (where
the company wishes to compete) and differential advantage (how the company wishes to compete). It is the
art of creating the mental shelf space, which your company and its products occupy in the minds of prospects
and clients (Berry, Wilson, 2000).
After target market has found, now comes brand positioning and value proposition stage. It has great
importance as what kind of information will be given a customer about the product. Particularly this becomes
dilemma for those companies who values correct communication issue. Based on the preliminary planning, it is
expected to get adequate feedback from the message sent to the targeted segment. Company on this stage is
working to gain its image in the customers perceptions, how will consumers accepted in their minds. However,
there is a pitfall of irrelevant or ambiguous positioning, which may have no effect and even negatively affect the
products image.
Great value of positioning is to make the product different from other competitors. This can be
achieved by using different combination of marketing mix. On that issue, William G. Zikmund and Michael
dAmico (1996) define positioning as is to identify a products or brands competitive advantage and to stress
salient product characteristics or consumer benefits that differentiate the product or brand from those of
competitors.
Positioning is all about brand perception by customers, which is determined by variety of different
factors. Academically claimed, positioning means, different brands occupying certain areas in the brain of a
person. Differentiated from each other, perception of the consumer can be affected by product attributes or the
qualities, which is perceived as a benefit for the customer. Yet some brands are clustered within a range of
similar features.
For example, 7-UP is a soft drink. It was advertised as Un-cola. Just changing the name caused
intrigue consumers thoughts and shaped perception that it was not cola, but something different.
Distinction between different products is easy to see in consumer products rather than service industry.
That can be explained by tangibility and visibility of the products. In this case tangible or visible features make
the product standing alone. However, some intangible features have important value on the product as well.
Philip Kotler and Kevin Keller (2006) allude Peter Posts idea about grassroot marketing, who says that the idea
is not to sell something, but to demonstrate how brand can enrich a customers life. Therefore, despite the
products tangibility or intangibility, it is important to keep always in mind that needs and interests of the
customers are prior to the other issues to be considered.
4.2. Different Approaches to Position a Product
Tim Berry and Douglas Wilson (2000) claim that to position product in a particular way requires
answers to several questions, that is to say, for whom the product is designed, what is the products one major
benefit, who are the competitors and how can customer benefit from the difference that the product offers.
Author also introduce six different approaches how to position product:
1.
Positioning by attribute (i.e., associating product with an attribute, feature, or customer benefit).
2.
Positioning by price/quality (i.e., the price /quality attribute is so pervasive that it can be considered a
separate approach to promotion).
3.
Positioning with respect to use or application (i.e., associating the product with a use or application).
4.
Positioning by the product user (i.e., associating a product with a user or a class of users).
5.
Positioning with respect to a product class (e.g., positioning Caress soap as a bath oil product rather than
as soap).
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Positioning with respect to a competitor (i.e., making a reference to competition, as in Aviss nowfamous campaign: Were number two, so we try harder.).
Subhash C. Jain (1999) talks about single and multiple brand positioning. And designates that single
brand can be placed in one ore more different segments of market, as well as multiple brands can be placed in
several different segments. Hence, brand positioning will be carried out in accordance to segmentation strategy,
with relation to the placement of the particular products in particular place.
Author denotes advantage of single brand positioning, paying attention on managerial and financial
capabilities of a company. He also states that in comparison with multiple brands, single brand is advantageous
because of the less operations control, which is eventually more profitable. In the same place, he declares, that
in order to be successful in a single brand, two main aspects must be considered: ...it can stand competition
from the toughest rival, and its unique position should be maintained by creation an aura of a distinctive
product. As an example, natural mineral water Perrier is adduced underlining its featuring mystique attached to
its name as an advantage protecting from competitors.
On the other hand partially approves an idea of multi branding by introducing an example of CocaCola. He states that, in spite of such a fame of single product, it was necessary for the Coke to introduce
different products for different segments, such as Diet Coke, Fanta, Sprite, etc. Alternatively, in order to
preserve single brand, he advices multi-branding tactics. In particular, once, Smirnoff vodka was attacked by 1$
less expensive Wolfschmidt. As a reaction to that, instead of decreasing price, Smirnoff increased and increased
amount of money used in advertising. Simultaneously, it introduced a new brand Relska and positioned against
Wolfschmidt (Jain, 1999).
Alan Dutka (2008) is speaking about an importance tight linkage of segmentation and positioning. He
states that it is no more useful to relate single product to unidentified range of customers, because mass
marketing is not working well any more. He remarks first business advantage of General Motors in early 1920 th
the company started to use positioning strategy. He also writes about 1965 Buick advertisement. Buick makes
all kind of cars because there are all kinds of people in this world, inferring that company started to use
diversified positioning approach. Author says that effective product positioning reduces the cost of ineffective
marketing and advertising. Although, there appears another obstacle of increasing expenses by diverse
advertising, product development, research, production, distribution marketing and so on.
Chris Fill (2005) describes positioning from communications prospective. Author states that perception
is important because this is a basic for product evaluation and selection. Consumer decision making is
determined by products physical characteristics and nonphysical characteristics. It is to be considered that
proportion between influence of tangible and intangible features can vary depending on the product. Once new
product appears in the market, customers judge the product by expectations accumulated from the previous
experience of learning. If new product is correctly with exhibiting great distinction, customers will reassess their
expectation. That is a deal of clever communication.
Subroto Sengupta (2005), in the Brand Positioning: strategies for competitive advantage, is talking
about four important components of the positioning concept that should be considered. First, is the product
class, second is consumer segmentation, third is consumers perception about the product in relation to
competitors (perceptual mapping), and finally, offered benefits by the brand.
Positioning is to get the customers mind. Usually, positioning is uses slogans claiming different things.
So the slogan covers meaning of the advantage or benefit or other characteristics of the product or company,
such as great value, good for health, safe and effective, reliable etc., that can catch an attention of the targeted
market and stand out in their minds. Yet, Peter Cheverton describes how works brand within the complexity. He
states that brand is more than the name, slogan and advertisement. Author tries to visualise the circle of the
action of the good brand and reaction to that by customers (Figure 2.6).
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Figure2. 7.: A perceptual map for brands of motor car source: P. Cheverton, 2006
Positioning is broad area of marketing. It has one objective, how to conquer peoples minds. Yet hire
comes the most difficult puzzle. There are different techniques and tools for that. Consumers are influence by
physical and non-physical factors and these factors define consumers perceptions and attitudes towards
particular product. According to the practice, it can be seen that using correct positioning strategy gave
significant benefits to many companies. Even some companies introduced unknown products tailored with
variation of marketing mix and became successful brands. Some products are of less quality and high price, but
still keep an image of the best. Therefore, at the end it can be said that positioning is a combination of
communication and product features, which exhibits a certain product as a distinctive and claims its superiority
over its competitors.
ACKNOWLEDGEMENTS
To the students of American International University-Bangladesh who is the future leader of
Bangladesh. It is a dire call that they realise their true potential and accomplish true moral in life towards
success.
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