Segmentation, Targeting, Positioning. 1.Identify segmentation variables and segment the market 2.Develop profiles of resulting SegmentsMarket Segmentatio.

Segmentation, Targeting, Positioning

1. Identifysegmentationvariables andsegment themarket

2. Develop profiles ofresultingSegments

MarketMarketSegmentationSegmentation

3. Evaluateattractivenessof eachsegment

4. Select thetargetsegment(s)

MarketMarketTargetingTargeting

5. Identifypossible

positioningconcepts foreach target

segment

6. Select,develop, andcommunicate

the chosenpositioning

concept

MarketMarketPositioningPositioning

Levels of Market Segmentation

Mass – Marketing

Segment Marketing Niche Marketing Local Marketing Individual Customer Marketing

Levels of Market Segmentation (cont.)

Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached More Efficiently And Effectively With Products and

Services That Match Their Unique Needs.

Mass MarketingSame product to all consumers

(no segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

Niche MarketingDifferent products to subgroups within segments

(more segmentation)

MicromarketingProducts to suit the tastes of individuals and locations

(complete segmentation)

Levels of Market Segmentation (cont.)

Local Marketing

Tailoring brands/ promotions to local customer groups

Individual Marketing

Tailoring products and programs to the needs of

individual customers

Levels of Market Segmentation (cont.)

Niche Marketing

Niches can be identified by dividing a segment into subsegments or by defining a group seeking a distinctive mix of benefits

Niches are fairly small and attract one or a few competitors

Niche marketers understand their niches’ needs so well that their customers willingly pay a price premium

Both small and large companies can practice niche marketing

Levels of Market Segmentation (cont.)

Characteristics of an attractive niche:

The customers in the niche have a distinct set of needs

They will pay a premium to the firm best satisfying their needs

The nicher has the required skills to serve the niche in a superior fashion

The nicher gains certain economies through specialization

The niche has sufficient size, profit and growth potential

Niche MarketingDifferent products to subgroups within segments

(more segmentation)

MicromarketingProducts to suit the tastes of individuals and locations

(complete segmentation)

Levels of Market Segmentation (cont.)

Local Marketing

Tailoring brands/ promotions to local customer groups

Individual Marketing

Tailoring products and programs to the needs of

individual customers

Levels of Market Segmentation (cont.)

Local Marketing Local marketing leads to ğ marketing

programs tailored to the needs and wants of local customer groups

Those in favor of localizing a company’s marketing ğ see national advertising as wasteful since it fails to address local target groups

Those against local marketing ğ argue that it drives up manufacturing and marketing costs by reducing economies of scale

Levels of Market Segmentation (cont.)

Individual Marketing The ultimate level of segmentation leads to ğ

“customized” or “one-to-one marketing” Technological developments ğ permit

companies to return to customized marketing

Mass customization ğ the ability to produce on a mass basis individually designed products to meet each customer’s requirements

Bases for Segmenting Consumer Markets

Geographical segmentation Region, City or Metro Size, Density, Climate

Demographic segmentation Age, Gender, Family size and Family life cycle,

Occupation, Income... Most popular segmentation

Psychographic segmentation Lifestyle, Social class, and Personality

Behavioral segmentation Occasions, Benefits, Uses, Attitudes, ...

Major Segmentation Variables for Consumer Markets

GeographicRegion West North Central, West South Central, East

North Central, East South Central,....

City or metro size

Under 5,000; 5,000-20,000; 20,000-50,000; 50,000-100,000; 100,000-250,000; 250,000-500,000; 500,000-1,000,000; 1,000,000-4,000,000; 4,000,000 or over

Density Urban, suburban, rural

Climate Northern southern

DemographicAge Under 6, 6-11, 12-19, 20-34, 35-49, 50-64,

65+

Family sizeFamily life cycleGender

1-2, 3-4, 5+Young, single; young, married, no children; ....Male, female

Step 1. Market SegmentationGeographic Segmentation

World region or country

Region State City

Neighborhood City Density Climate

Goal 2: List and discuss major bases for segmentation

Step 1. Market SegmentationDemographic Segmentation

Age Gender Family size or

life cycle Income Occupation

Education Religion Race Generation Nationality

Step 1. Market SegmentationPsychographic Segmentation

Social Class

Lifestyle

Personality

“Brand personality”

Step 1. Market SegmentationBehavioral Segmentation

Occasions Benefits User status Usage rate Loyalty status Readiness stage Attitude toward product

Behavioral Segmentation Breakdown

DemographicsDemographics

Operating VariablesOperating Variables

Purchasing ApproachesPurchasing Approaches

Situational FactorsSituational Factors

Personal CharacteristicsPersonal Characteristics

Segmenting Business Markets

Business Marketers Use

Many of the Same

Consumer Variables,

Plus:

Major Segmentation Variables for Business Markets

Demographic1. Industry: Which industries should we serve?2. Company size: What size companies should we

serve?3. Location: What geographical areas should we serve?Operating Variables4. Technology: What customer technologies should we

focus on?5. User or nonuser status: Should we serve heavy users,

medium users, light users, or nonusers?6. Customer capabilities: Should we serve customers

needing many or few services?Purchasing Approaches7. Purchasing-function organization: Should we serve

companies with highly centralized or decentralized purchasing organizations?

8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentiableDifferentiable

• Segments must be large or profitable enough to serve.

• Segments can be effectively reached and served.

ActionableActionable

• Size, purchasing power, profiles of segments can be measured.

• Segments must respond differently to

different marketing mix elements

• Must be able to attract and serve

the segments.

Effective Segmentation

Step 2. Market Targeting Evaluating Market Segments

Segment Size and Growth Analyze current sales, growth rates and expected

profitability for various segments. Segment Structural Attractiveness

Consider effects of: competitors, availability of substitute products and, the power of buyers & suppliers.

Company Objectives and Resources Company skills & resources needed to succeed in

that segment(s). Look for Competitive Advantages.

Patterns of Target Market Selection

Single-segmentSingle-segmentconcentrationconcentration

ProductProductspecializationspecialization

M1 M2 M3 P1

P2

P3

SelectiveSelectivespecializationspecialization

M1 M2 M3 P1

P2

P3

M1 M2 M3

Full marketFull marketcoveragecoverage

P1

P2

P3

MarketMarketspecializationspecialization

M1 M2 M3 P1

P2

P3

P1

P2

P3

M1 M2 M3

P = ProductP = ProductM= MarketM= Market

Choosing a Target Marketing Strategy

Considerations include: Company resources The degree of product variability Product’s stage in the life-cycle Market variability Competitors’ marketing strategies

Step 3. Choosing a Positioning Strategy

Positioning ğ The place the product occupies in consumers’ minds relative to competing products.

Typically defined by consumers on the basis of important attributes. Involves implanting the brand’s unique benefits

and differentiation in the customer’s mind. Positioning ğ the act of designing the

company’s offering and image, to occupy a distinctive place in the target market’s mind

Step 3. Choosing a Positioning Strategy (cont.)

Definition by Ries and Trout: “Positioning starts with a product. A piece

of merchandise, a service, a company, an institution, or even a person. Perhaps yourself. But positioning is not what you do to a product.

Positioning is what you do to the mind of the prospect.That is, you position the product in the mind of the prospect. ”

Positioning according to Ries and Trout:

Strengthen the current position Grab an unoccupied position De-position Re-position

Step 3. Choosing a Positioning Strategy (cont.)

Step 3. Choosing a Positioning Strategy (cont.)

Step 1. Identifying Possible

Competitive Advantages

Step 2. Selecting the Right

Competitive Advantage

Step 3. Communicating and

Delivering the Chosen Position

Identifying Possible Competitive Advantages

Key to winning and keeping customers is ğ to understand their needs and buying processes better than competitors do, and deliver more value.

Competitive advantage ğ an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits.

Differentiation can be based on : Products, Services, Channels, People, Image,...

Identifying Possible Competitive Advantages Differentiation Variables

Product Services Personne

Channel Image

Form Ordering ease

Competence

Coverage Symbols

Features Delivery Courtesy Expertise Media

Performance Installation Credibility Performance

Atmosphere

Conformance

Customer training

Reliability Events

Durability Customer consulting

Responsive-ness

Positioning ğ successful creation of a “market-focused value proposition” :

A simple statement of why the target market should buy the product.

How many ideas to promote? One benefit – “Unique selling

proposition” (USP) Double-benefit positioning Number-one on an attribute

Selecting the Right Competitive Advantage

Developing a Positioning Statement

Positioning statements summarize the company or brand positioning Example: “to (target segment and

need) our (brand) is (concept) that (point-of-difference)”

Goal 4: Discuss how companies position their products

Choosing an Overall Positioning Strategy

Price

More The same

Less

Benefits

MoreMorefor

More

Morefor thesame

Moreforless

SameThe same

forLess

LessLess formuch less

Positioning Strategies

Attribute positioning Benefit positioning Use or application positioning User positioning Competitor positioning Product category positioning Quality or price positioning

Communicating and Delivering the Chosen Position

Once position is chosen, company must take strong steps to deliver and communicate the desired position to target consumers.

All the company’s marketing mix must support the positioning strategy.

Positioning strategy must be monitored and adapted over time to match changes in consumer needs and competitor’s strategies.