Post on 30-Dec-2015
Chapter: 6
Objectives Learn the three steps of target marketing,
market segmentation, target marketing, and market positioning
Understand the major bases for segmenting consumer
Know how companies identify attractive market segments and choose target marketing strategy
Realize how companies position their products for maximum competitive advantage in the marketplace
Marketing Process
Research Research customer and customer and
the market the market placeplace
Managing Managing marketing marketing
information information and customer and customer
datadata
Select Select customer to customer to
serve: market serve: market segmentation segmentation and targetingand targeting
Decide on Decide on value value
proposition: proposition: differentiation differentiation
and positioningand positioning
Product and Product and service design: service design:
building a building a strong brandstrong brand
Price Create Price Create real value real value
DistributionDistributionmanage manage
demand and demand and supply chain supply chain
Promotion Promotion Communicating Communicating
the value the value
Customer Customer relationship relationship
management: management: build strong build strong relationship relationship with chosen with chosen customerscustomers
Partner Partner relationship relationship
management : management : build a strong build a strong relationship relationship
with marketing with marketing partners partners
Create satisfied Create satisfied loyal customer loyal customer
Capture Capture customer life customer life time value time value
Increase share Increase share of market and of market and
share of share of customer customer
What Is A Market?
‘A market consist of all the potential customers sharing particular needs and
wants who might be willing to engage in exchange to satisfy their needs and
wants.’
Steps in market segmentation, targeting and positioning
Market Segmentation
“Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing
mixes.”
Segmentation
Why segment?
Identifies opportunities and needs.
Allows firm to focus on specific needs.
Improves marketing mix for each segment.
Allows small firm to exist.
Bases For Segmenting Consumer Markets
Bases For Segmenting Consumer Markets
Consumer Products Usage Category
Heavy Heavy users users
Medium Medium usersusers
LightLight users users
Benefits Of Segmentation To The Customer: The obvious gain to customers is that they can find products
that seem to fit more closely with what they want. To The Marketing Mix: Segmentation helps companies to better understand their
customers and to better allocate their resources. To The Competition:
Segmentation helps companies to position their product toward competitors’ products.
To The Economy Allows small firm to exist.
Requirements for Effective SegmentationTo be useful, market segments should be: Measurable: The size, purchasing power, and
characteristics of the segment can be measured. Substantial: The segments are large and profitable
enough to serve. Accessible: The segments can be effectively reached
and served. Differentiable: The segments are conceptually
distinguishable and respond differently to different marketing-mix programs.
Actionable: Effective programs can be formulated for attracting and serving the segments.
Target Marketing The segmentation reveals the firms segment opportunities.
The firm now has to evaluate the various segments and diced how many and which segment it can serve best.
We now look at how companies evaluate and select target segments
Target MarketConsists of a set of buyers who share
common needs or characteristics that the company decides to serve
Evaluating Market Segments Segment size and growth (according to
company ability) Segment structural attractiveness
● Level of competition● Substitute products● Power of buyers● Powerful suppliers
Company objectives and resources
Target Marketing strategies
Targeting broadly
Targeting narrowly
Selecting Target Market Segments Undifferentiated (mass) marketing The seller engages in the mass production, mass
distribution, and mass promotion of one product for all buyers.
Focuses on what is common in the needs of consumer rather then what is different
Henry Ford epitomised this marketing strategy when he offered the Model T-Ford “in any colours, as long as it is black.”
Selecting Target Market Segments Differentiated (segmented) marketing A firm decides to target several market segments
and design separate offers for each. Developing a stronger position within several
segments creates more total sales then undifferentiated marketing across all segments.
Differentiated marketing increases the cost of doing business.
Vodafone target several segments with different offers and services
Selecting Target Market Segments Concentrated (niche) marketing Niche marketing is especially appealing when company
resources are limited. Instead of going after small share of a large market, then
firms goes after a large share of smaller segments or niche.
A niche is a more narrowly defined group, typically a small market whose needs are not well served.
The customers in the niche have a distinct set of needs and they will pay a premium to the firm that best satisfies their needs.
Selecting Target Market Segments Micromarketing (local or individual)
● The practice of tailoring products and marketing programs to the need and wants of specific individuals and local customer groups – includes local marketing and individual marketing.
● Local marketing: Tailoring brands and promotions to the needs and wants
of local customer groups – cities, neighborhood, and even specific stores.
● Individual marketing: tailoring products and marketing programs to needs and
preferences of individual customers – also labeled “markets-of-one marketing”, “customized marketing”, “one-to-one marketing”, and “mass customization”
Selecting Target Market Segments Product specialization- the firm specializes in a particular product and
tailors it to different market segments.
Market specializationthe firm specializes in serving a particular market
segment and offers that segment an array of different products.
Selecting Target Market Segments
CompanyMarketing
MixMarket
Segment 1
Segment 2
Segment 3
Company Mix 1
Company Mix 2
Company Mix 3
Segment 1Segment 2Segment 3
CompanyMarketing
Mix
(mass marketing) Undifferentiated Marketing
(segmented marketing) Differentiated Marketing
(niche marketing) Concentrated Marketing
Buyer Preference Patterns
Homogeneous preferences: The figure shows a market where all the consumers
have roughly the same preference. The market shows no natural segments.
SWEETNESSSWEETNESS
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-no natural segments-no natural segments-all buyers have same -all buyers have same preferencepreference- Mass marketing is - Mass marketing is more suitable more suitable
Buyer Preference Patterns
Clustered preferences: The figure shows a market where with distinct
preference clusters, called natural market segments.
SWEETNESSSWEETNESS
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-natural segments-natural segments-increases as number of -increases as number of competitors increasescompetitors increases--segmented marketing is more proper
Buyer Preference Patterns
Diffused preferences: The figure shows a market where consumers preferences
are scattered throughout the space, indicating that consumers vary greatly in their preferences.
SWEETNESSSWEETNESS
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-no pattern (or poor -no pattern (or poor research)research)-take center position-take center position- - niche marketing is more appropriate
Choosing Target Market Strategy Considerations include:
Company resources○ Concentrated marketing makes the most since with
limited resources.The degree of product variability
○ Undifferentiated marketing more suited for uniform products
○ Differentiated marketing suited products that vary in design more.
Market variability○ If most buyers have the same tastes, and react the same
way to marketing effort undifferentiated marketing is appropriate.
Choosing Target Market Strategy Considerations include:
Product’s life-cycle stage○ New products with only one version,
undifferentiated marketing or concentrated marketing make the most sense
○ In the mature phase of the product life cycle differentiated marketing begin to make more sense.
Competitors’ marketing strategies○ When competitors use differentiated or
concentrated marketing undifferentiated marketing can be suicidal.
Product Life – Cycle D
olla
rsD
olla
rs
Time in yearsTime in yearsLossLoss
00
ProfitProfit
Sales VolumeSales Volume
INTRODUCTIONINTRODUCTION GROWTHGROWTH MATURITYMATURITY DECLINEDECLINE
Positioning
“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 (the complex set of perceptions, impressions, services and the tangible product) in the customer’s mind.
“products are created in the factory, but brands are created in the mind”
Choosing a positioning strategy Each firm must differentiate its offer by building
a unique bundle of benefits that appeals to substantial group within the segment.
The positioning steps:
Identifying possible competitive advantage “competitive advantage is an advantage over competitors
gained by offering consumers greater value, either through lower price or by providing more benefits that justify higher price”
Marketers must think throw the customer’s entire experience with the company’s products or service
Differentiation can be based on Products Services Channels People Image
Choosing the right competitive advantage
How many differences to promote?Unique selling propositionSeveral benefits
Which differences to promote? Criteria include:ImportantDistinctiveSuperiorCommunicablePreemptiveAffordableProfitable
Selecting an overall positioning strategyThe full positioning of a brand - the full mix of
benefits upon which it is positioned, called the brand’s value proposition.value proposition.
It is the answer to the customer question
“why should I buy your brand”
Selecting an overall positioning strategy Possible value proposition
Be
nefit
s B
ene
fits
Price Price
Selecting an overall positioning strategy
More for More More for the Same More for Less The Same for Less Less for Much Less
Communicating the Positioning Companies must be certain to DELIVER
their value propositions.
Positions must be monitored and adapted over time.