Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 9 SELECTING MARKET TARGETS
to £125 million ( Salmon, 1997 ). In 2002, the brand was promoted through the Lara Croft/
Tomb Raider association. At the time of writing, Lucozade remains number one in the UK 
sports and energy drink market, with a share of over 40 per cent. 
Similarly, Red Bull started as a ‘tonic’ called ‘Krating Daeng’ – basically, Thai for ‘Red 
Bull’ – and was originally developed to keep factory workers and truckers awake and pro-
ductive by the late Chaleo Yoovidhya, founder of TC Pharmaceuticals in Thailand. Aus-
trian entrepreneur Dietrich Mateschitz discovered Krating Daeng accidentally, rebranded 
it Red Bull and made it global by 1997. In fact, the creation of the energy drinks segment 
is attributed to him. The brand is lifestyle orientated with a strong social media input, and 
the product is made part of that lifestyle, which appeals to millennials (to the value of $7.2 
billion dollars and 40 million Facebook fans). 
In its early days, Red Bull was taken to the streets by youth ‘guerilla marketing’ teams. 
Then, careful systematic associations with extreme sports helped boost credibility – for 
example with the company’s ownership of NASCAR and Formula 1 teams, and its spon-
soring of famous athletes. It has now also entered the alcoholic mixer sector ( Bell, 2015 ).
9.6.4 Customised marketing 
When Harrods’ new chief marketing and customer officer, Amanda Hill, says she does not 
believe in segmentation that is because she believes in a customer-centric approach – each 
potentially worthy of a bespoke service. Indeed, consumers increasingly look for something 
specific to them and technology is the great enabler of mass customisation (that is, meet-
ing each customer’s requirements, Wind and Rangaswamy, 2001 ). Although prevalent in the 
service sectors, one-to-one marketing (as it is also known) is growing in other sectors such 
as consumer apparel, where co-creation of products with customers is feasible. Nike, for 
example, is offering NIKE BY YOU (which it qualifies as ‘Just you, us and a million possibili-
ties’) – a customisation service that allows customers to choose from different materials, sole 
designs, colours and more. 3D printing empowers mass customisation by offering customers 
the possibility to create personalised products, from 3D printed jewellery or plastic items to 
hip replacements! 
The most effective strategy to adopt with regard to target market selection will vary from 
market to market. Certain characteristics of both the market and the company, however, 
will serve to suggest the type of strategy that makes most sense in a given situation. 
The classic statement on how to approach the segmentation strategy choice comes from 
Frank et al . (1972) . They propose that the choice of strategy should be based on: 
● 
segment size – to determine its value and prospects;
● 
the incremental costs faced in differentiating between segments – which may be small, 
or may be high enough to undermine a full segmentation strategy;
● 
the extent and durability of segment differences – if segments are only marginally dif-
ferentiated they may not be worth taking as separate targets, and if the differences are 
transitory then the viability of a segmentation strategy may be questionable;
● 
the stability and mutual compatibility of segment targets;
● 
the ‘fit’ between segment characteristics and company strengths (see Chapter 7 ); and
● 
the level and type of competition in the prospective segment targets.
Summary 
The selection of which potential market segment or segments to serve is the crucial step 
in developing a robust and comprehensive marketing strategy. Until the targets have been 
clearly identified, their requirements and motivations fully explored, it is not possible to 
develop a robust competitive positioning.
Summary 

---

251
CASE STUDY
There are no flat bed seats, no free cham-
pagne and no left turn. But Ryanair still 
claims it is offering a business service.
On Wednesday the low-cost Irish airline 
unveiled Business Plus, a service designed 
to lure the famously bare-bones airline pas-
sengers who usually fly business class on 
other carriers and are used to curtain divid-
ers, hot towels, free meals and other perks.
None of those frills will be part of the 
Ryanair package. Instead, according to 
Kenny Jacobs, the airline’s chief market-
ing officer, what potential business class 
travellers want are flexible tickets, mul-
tiple same-day return flights, fast-track 
security, priority boarding and seats near 
the exits and over the wings, which have 
more legroom.
In other words, Business Plus will be 
business-class flying – Ryanair style.
‘There was no demand for some of the 
traditional trappings of the business class 
product – the bad sandwiches, the bad coffee,’ says 
Mr Jacobs. ‘What [passengers] wanted us to do was 
to tweak the schedules to make them more business-
friendly. This is a big segment for us, and we want 
to tailor that service to the needs of business passen-
gers. The numbers stack up from our point of view.’
Ryanair is playing catch-up after admitting that 
rival easyJet has taken the lead in attracting busi-
ness passengers. The Irish airline is trying to make 
inroads into the lucrative market as part of an over-
haul to increase its appeal and soften its image for 
poor service and peremptory treatment of passengers.
The ‘caring, cuddly, sharing’ Ryanair includes 
offering allocated seating and mobile boarding 
passes, revamping its website, as well as giving fami-
lies some incentives such as discounts and warming 
babies’ bottles.
Enticing business class passengers from their cos-
seted ways is tough, as easyJet has found. It has lifted 
the proportion of business travellers it carries from 
18 per cent to 20 per cent over the past few years.
Stephen Furlong, an analyst at Davy, the Dublin 
brokerage, says that for low-fares airlines, winning 
business passengers ‘is a slow, incremental grind’. 
Moreover, some airlines are moving in the opposite 
direction. Aer Lingus and SAS no longer offer the 
full business class service on short-haul flights.
Case study
Mr Jacobs says a quarter of the 86m passengers 
Ryanair has carried over the past year are ‘business 
travellers’, but they are paying standard fares, which 
start at €19.99.
Ryanair will have to convince more of them to pay 
the higher fare – the cheapest Business Plus ticket 
will cost €69.99. That is less than the business ticket 
on traditional carriers, but it does not include incen-
tives such as loyalty programmes.
‘It will be tough to get business class passengers 
on the flag carriers to come across to Ryanair,’ 
says David Holohan, who follows the company 
for Merrion Capital in Dublin. He says that if the 
Ryanair offering succeeds in luring more higher-
paying passengers, the rewards could be signifi-
cant given the gap between Business Plus and 
regular fares.
But he says the airline would be doing well to get 5 
per cent of its passengers to pay the higher business 
product fare regularly.
One factor that may count against Ryanair is that 
it often flies to out-of-the-way airports. EasyJet has 
been building positions at primary airports for years; 
they now account for 70 per cent of its destinations. 
Ryanair is trying to increase its share of primary air-
ports, and says it will move from 35 per cent to 45 per 
cent within two years.
Sales keep plunging in the home market
Source
: Ian G Dagnall/Alamy Stock Photo.