M5-FULL - Marketing Principles and Processes Module 5...

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Marketng Principles and Processes M odule 5 Segmenta t on, Targe t ng and Posi t oning (STP) A Quality func t on deployment matrix for a segment of the pencil market Product positioning for a pencil manufacturer is designing its pencils so that they rate highly on the benefits the segment seeks from using the product. The other positioning component is to fit your contact channels to customer search and shopping behavior and, most importantly, to focus both product design and channel design on your most profitable customers and prospects. Benefits sought, channel preferences and profitability are the three dimensions of customer segmentation. Such segmentation and the resulting product positioning is far more than a way of thinking about customers. As we shall now discover, it must be embedded in product design, the marketing processes and the organization of the company. Peter R. Dickson © Backbone Press 2010
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Profitability, desired features, desired channel 1. M arket segmentation is dividing the market into groups of customers by their profitability and preferences, then determining what drives each group’s profitability and preferences. Positioning is designing the features/functions of your offering to satisfy a customer segment that you have selected to target. In practice, such positioning is called quality function deployment (QFD). You are deploying your quality to improve the functions that are most useful to your target segment, for a product or service. 1. Customer Focus and Positioning Customer focus is about how you focus your efforts to attract, serve and retain customers, and which customers you focus on with such efforts. How you focus your efforts to serve customers is also called targeting or product/service positioning. For example, a computer distributor CDW (www.cdw.com) who has to compete against Dell’s direct marketing targets the small to medium sized business with same-day order shipping and expert sales advice (CDW has lower employee turnover than competitors, thus more experienced employees). CDW salespeople often become the proxy chief technical officer for many of their customers. 1 A company TV advertising theme says it all, “No one provides service like CDW.” With such product advice differentiation and delivery differentiation, features that are both highly desired by many small businesses, CDW has created its own market niche of profitable and loyal customers that it targets and serves. Notice the word “created.” It has created its market opportunity by emphasizing competence in the capabilities that are needed to serve small companies who want their hand held when it comes to IT but are otherwise very profitable businesses. For high service need customers, those who effectively want to outsource some of their IT function, CDW is the best positioned to serve them. It has invested/deployed resources to become very good at serving the needs of this group (segment) of customers.
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This note was uploaded on 04/11/2011 for the course MRKT 3023 taught by Professor Biritella during the Spring '11 term at FIU.

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M5-FULL - Marketing Principles and Processes Module 5...

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