Chapter 7

Segmentation, Targeting, and PositioningChapter 7

7- *DefinitionMarket Segmentation:Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

7- *

Steps in Market Segmentation, Targeting, and Positioning

7- *Market SegmentationSegmenting Consumer MarketsSegmenting Business MarketsSegmenting International MarketsRequirements for Effective Segmentation

Geographical segmentationMarketing mixes are customized geographicallyDemographic segmentationPsychographic segmentationBehavioral segmentationUsing multiple segmentation variablesKey Topics

7- *Market SegmentationGeographic Segmentation VariablesExamples:World Region or Country: North America, Western Europe, European Union, Pacific Rim, Mexico, etc.Country Region: Pacific, Mountain, East Coast, etc. City or Metro Size: New York, San FranciscoPopulation Density: rural, suburban, urbanClimate: northern, southern, tropical, semi-tropical

7- *Market SegmentationSegmenting Consumer MarketsSegmenting Business MarketsSegmenting International MarketsRequirements for Effective Segmentation

Geographical segmentsDemographic segmentationMost popular typeDemographics are closely related to needs, wants and usage ratesPsychographic segmentationBehavioral segmentationUsing multiple segmentation variables

Key Topics

7- *Market SegmentationDemographic Segmentation VariablesAgeGenderFamily sizeFamily life cycleIncomeEthnicityOccupationEducationReligionGenerationNationality

Most frequently used segmentation variable. Ease of measurement and high availability.

7- *Market SegmentationSegmenting Consumer MarketsSegmenting Business MarketsSegmenting International MarketsRequirements for Effective Segmentation

Geographic segmentsDemographic segmentation Psychographic segmentationLifestyle, social class, and personality-based segmentationBehavioral segmentationUsing multiple segmentation variablesKey Topics

7- *Market SegmentationSegmenting Consumer MarketsSegmenting Business MarketsSegmenting International MarketsRequirements for Effective Segmentation

Geographic segmentsDemographic segmentation Psychographic segmentationBehavioral segmentationTypically done firstUsing multiple segmentation variables

Key Topics

7- *Behavioral Segmentation VariablesOccasionsSpecial promotions & labels for holidays.Special products for special occasions.BenefitsDifferent segments desire different benefits from the same products.User Status

Loyalty StatusNonusers, ex-users, potential users, first-time users, regular users.Readiness StageAttitude Toward the ProductUser RatesLight, medium, heavy.

7- *Market SegmentationSegmenting Consumer MarketsSegmenting Business MarketsSegmenting International MarketsRequirements for Effective Segmentation

Geographic segmentsDemographic segmentation Psychographic segmentationBehavioral segmentationUsing multiple segmentation variablesKey Topics

7- *Market SegmentationSegmenting Consumer MarketsSegmenting Business MarketsSegmenting International MarketsRequirements for Effective Segmentation

Demographic segmentationIndustry, company size, locationOperating variablesTechnology, usage status, customer capabilitiesPurchasing approachesSituational factorsUrgency, specific application, size of orderPersonal characteristicsBuyer-seller similarity, attitudes toward risk, loyaltyKey Topics

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7- *Market SegmentationSegmenting Consumer MarketsSegmenting Business MarketsSegmenting International MarketsRequirements for Effective Segmentation

Geographic segmentationLocation or regionEconomic factorsPopulation income or level of economic developmentPolitical and legal factorsType / stability of government, monetary regulations, amount of bureaucracy, etc.Cultural factorsLanguage, religion, values, attitudes, customs, behavioral patterns

Key Topics

7- *Market SegmentationSegmenting Consumer MarketsSegmenting Business MarketsSegmenting International MarketsRequirements for Effective Segmentation

MeasurableSize, purchasing power, and profile of segmentAccessibleCan be reached and served SubstantialLarge and profitable enough to serveDifferentiableRespond differentlyActionableEffective programs can be developedKey Topics

7- *Target MarketingEvaluating Market SegmentsSegment size and growthSegment structural attractiveness Level of competition Substitute products Power of buyers Powerful suppliersCompany objectives and resources

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Target Marketing Strategies

Ignores segmentation opportunities

Undifferentiated (Mass) Marketing

Differentiated (Segmented) MarketingTargets several segments and designs separate offers for each.

Coca-Cola (Coke, Sprite, Diet Coke, etc.)Procter & Gamble (Tide, Cheer, Gain, Dreft, etc.)Toyota (Camry, Corolla, Prius, Scion, etc.)

Question du JourShould the same company produce and market brands that compete with each other?

Niche MarketingTargets one or a couple small segmentsNiches have very specialized interests

Tailoring products and marketing programs to suit the tastes of specific individuals and/or locations.

Micromarketing

7- *Target MarketingChoosing a Target- Marketing Strategy Requires Consideration of:Company resourcesThe degree of product variabilityProducts life-cycle stageMarket variabilityCompetitors marketing strategies

7- *PositioningPositioning:The place the product occupies in consumers minds relative to competing products.Typically defined by consumers on the basis of important attributes.

7- *PositioningChoosing a Positioning Strategy:Identifying possible competitive advantages -- many potential sources of differentiation exist: Products Services Channels People Image

7- *PositioningChoosing a Positioning Strategy:Choosing the right competitive advantage How many differences to promote?Unique selling propositionPositioning errors to avoid Which differences to promote?

7- *PositioningCriteria for Meaningful DifferencesImportantSuperiorPreemptiveDistinctiveCommunicableAffordable

Profitable

7- *PositioningChoosing a Positioning Strategy:Communicating and delivering the chosen position Entire marketing mix must support the chosen strategy May require changes to the product, pricing, distribution or promotion.