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Segmentation, Targeting andPositioning
Building The Right Relationships WithThe Right Customers
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Kotler on Marketing
Segment the market but foucs more ontargeting and positioning
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Segment the market but aggregate on yourmarketing effort. And that will give you a
better toehold.
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What have we learned and Whats New?
What marketing is Strategic planning and marketing process
Digitization Customer connection
Complex environments in which marketing operates
Whats New (Key marketing strategy decisions) How to divide up markets into meaningful customer
groups (market segmentation)
Select which customer groups (one or more) to
serve (target marketing) Create marketing offers that best serve targeted
customers (positioning)
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Mass marketing or Market segmentation?
Mass production, mass distribution, mass promotionabout the same product in about the same way to allconsumers. Coca Cola
Why? Lowest cost, highest margin
Market segmentation - distinct needs, characteristics,or behavior who might require separate products ormarketing mixes. P&G laundry detergent, Sunsilkshampoo, Toyota
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Steps in market segmentation, targetingand positioning
Three major steps:
Market segmentation
1. Identify bases
for segmenting
the market
2. Develop
segment profiles
Target marketing
3. Develop measure of
segment
attractiveness
4. Select target segments
Market Positioning
5. Develop positioning for
target segments
6. Develop a marketing
mix for each
segment
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Variables for Segmenting Consumer Market Geographic segmentation: nations, states, regions, cities.
Largest display store in Dhaka, Medium in Chittagong, Sylhet,Small in Rajshahi. Starbucks: more coffee and dessert for theSouthern states customers.
Demographic segmentation: age, gender, family size, familylife cycle, income, occupation, education, religion, race,
generation, and nationality. Most popular and widely usedbases.
Age and life-cycle stage: baby gap, gap kids, gap maternity
Gender: clothing, cosmetics, toiletries, magazines. Facialcleansing, eye brow, mascara
Income:automobiles, clothing, cosmetics, and travel. Targetaffluent customers or low income consumers. Grameen users
Psychographic segmentation: social class, lifestyles orpersonality characteristics. Mercedes. K2 cigarette
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Variables for Segmenting Business Market
Demographical segmentation: dividing groups on thebasis of industry, company size. Swiss color (leatherindustry, garments industry, painting industry)
Operating Variables: many services, fewer services,heavy users or non users
Purchasing Approaches: Engineer dominated,financially dominated, marketing dominated
Situational factors: urgency (quick or suddendelivery)
Personal Characteristics: High loyalty, Buyer-seller similarity.
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Requirements for Effective Segmentation
To be useful market segments must be:
Measurable: size, purchasing power, and profiles can bemeasured. Scattered customers difficult to measure (lefthanded people)
Accessible: effectively reached and served.
Substantial: large or profitable enough to serve.
Differentiable: conceptually distinguishable and responddifferently to different marketing mix elements and programs.
Actionable: Sufficient resources, marketing capabilities I.eeffective marketing programs can be designed forattracting and serving the segments. Staff limitation
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Target Marketing: evaluate and select
The process of evaluating each market segmentsattractiveness and selecting one or more segments toenter.
Evaluating market segments
Three factors:
Segment size and growth: right size and growth.relative
Segment structural attractiveness: strongcompetitors, substitute products, power of buyers,powerful suppliers
Company objectives and resources: make sensefor long run objectives and have requiredresources.
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Target Marketing: evaluate and select
Selecting target market segmentsTarget marketing strategies: Target broadly (undifferentiated / mass marketing):
ignore market segments, go after the whole market withone offer. Coca-cola, keep down cost
Differentiated marketing: target several market segmentsand designs separate offers for each. GM (cars for everypurse, purpose, personality); P&G more total marketshare. Increase cost
Concentrated (niche) marketing: large share of one or afew segments or niches, ignored by larger competitors.limited resources, gain operating economies throughspecialization. Porsche sports car market, Volkswagensmall car market.
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Target Marketing: evaluate and select
Selecting target market segmentsTarget marketing strategies (continued):
Micromarketing: tailor products and
marketing programs to the needs and wantsof specific individuals and local customergroups.
Local Marketing:local customer groups cities,
neighborhoods, Retailers. Customize each storesmerchandise and promotions.
Individual Marketing:individual customers. Dellcomputer.
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Target Marketing: evaluate and select
Choosing a Target Marketing Strategy Depends on:
Company resources: limited resources concentratedmarketing.
Product variability: Uniform products, undifferentiatedmarketing. Steel.Variety products, differentiation or
concentration.Automobiles. Products life-cycle stage: new product, one version,
undifferentiated or concentrated marketing. Mature stage,Differentiated.
Market variability: same tastes, buy same amounts, reactsame way to marketing offers, undifferentiated.
Competitors marketing strategies: competitors usedifferentiated or concentrated, then undifferentiated issuicidal. Competitors use undifferentiated, thendifferentiated gain advantage.
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Positioning for Competitive AdvantageArranging for a product to occupy a clear, distinctive, and
desirable place relative to competing products in the minds oftarget consumers. Bata durable, Tide powerful, Toyotaeconomy, Cadillac/Mercedes luxury, Dettol soap health andhygiene.
Choosing a Positioning Strategy
The positioning task consists of three steps:
Identifying possible competitive advantages: offer consumersgreater value, either through lower prices or by providing morebenefits that justify higher prices. Offer and deliver.
In what specific ways company can differentiate its offer?
Market offer can be differentiated along the lines of product,services, channels, people, or image.
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Positioning for Competitive Advantage Product differentiation: little variation (chicken, steel); highly
differentiated (automobiles, clothing, furniture). Form size, shape (aspirin color, coating, shape)
FeaturesOral B (added blue dye in the center bristles that fades)
Durability vehicles, kitchen appliances, must not be subject to rapidtechnological obsolescence (PC, Video cameras)
Reliability which company, which manufacturer? (real estate) Reparability(auto mobiles)
Services differentiation: speedy, convenient, careful delivery.
Personnel differentiation: better trained personnel. (courteous,professional, smiley)
Channel differentiation: channels coverage, expertise, andperformance. Caterpillar, Dell
Image differentiation: company or brand image Sony
Symbols: McDonalds golden arches, apple for Apple computer.
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Positioning for Competitive Advantage
Choosing the right competitive advantages: Howmany differences to promote and which ones.
How many differences to promote: only one benefit(crest anticavity protection), more than one benefit(Lever 2000 three-in-one bar soap I.e. offeringcleansing, moisturizing and deodorizing benefits).
Must avoid three major positioning errors.Underpositioning, overpositioning, confused positioning
- Which differences to promote: important, distinctive,superior, communicable, preemptive, affordable,profitable (Pepsi crystal Pepsi)
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Positioning for Competitive Advantage
Selecting an overall positioning strategy: valueproposition the full positioning of brand.
Five winning value propositions upon which companiescan position their products:
More for more: upscale product at higher price(Mercedes-Benz automobiles; Haagen-Dazs ice cream)
More for the same: Xs teaching
The same for less: Best Buy, Circuit City
Less for much less: Costco, AUB, Travelers More for less: winning value proposition. P&G laundry
detergent, Dell.
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Positioning for Competitive Advantage
Communicating and Delivering the Chosen PositionOffer and Deliver.
More for more: produce high quality products, chargea high price, distribute through high quality dealers,
advertise in high-quality media, hire and train moreservice people.
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Questions or Comments
Thank You