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Focusing MarketingStrategy with Segmentation
and Positioning
Chapter Three
Supplementary PowerPoint Archive for use withEssentials of Marketing: A Global-Managerial Approach, 9thedition
by William D. Perreault, Jr. and E. Jerome McCarthy
This file includes images of the photos, ads, and exhibits from thetext for this chapter. Many of these images are also available inthe color acetates or overhead masters. See the Essentials ofMarketing Multimedia Lecture Package for additional information.
For use only with Perreault and McCarthy texts
These images may not be redistributed or used for any
other purpose without permission of the publisher,McGraw-Hill/Irwin, The McGraw-Hill Companies, Inc.
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Competitive Advantage
Competitive advantage: the firm has a marketing
mix that the target market sees as better than a
competitor's mix
A better marketing mix offers target customers
better customer value
Note: customers who are not in the target market
may not see the marketing mix as offering better
value
Requires that the firm:
understand current competitors' offerings
anticipate competitors' likely plans
monitor effects of changes in competition
REALLY understand the target customers' needs
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(left) S.C. Johnson & Son, Inc.; (right) Crme Savers is a trademark owned by Nabisco Brands Company and used by permissionfor use only with Essentials of Marketing
Shout and Crme Saver ads
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Focusing Marketing Strategy and EvaluatingMarket Opportunities
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Marketing Strategy Planning Process
Narrowing down from broad market opportunities that a firm
might pursue to a specific strategy Marketing strategy specifies a specific target market and a
specific marketing mix
Not just some strategy, but one that will offer targetcustomers superior value
Segmentation helps pinpoint a specific target market
Differentiation helps pinpoint a marketing mix that is differentfrom and better than what is available from a competitor
Screening criteria make it clear why you select a specific
strategy (and why others are screened out) S.W.O.T. analysis identifies and lists a firms strengths andweaknesses and its opportunities and threats
S.W.O.T helps identify relevant screening criteria (what isneeded to get a competitive advantage)
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Exhibit 3-1
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Overview of Marketing Strategy PlanningProcess
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7/40Courtesy of Audi of Norway; Agency: Bates Reklamebyra/Oslofor use only with Essentials of Marketing
Audi Quattro ad
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Examples of Different Types of Opportunities
Market Penetration
Arm & Hammer promotes new uses of its baking soda
Market Development
Marriott Hotels target families for weekend "get-
aways" to rent rooms filled by business travelers during
the week
Product Development
Microsoft develops a new version of its Windows
operating system to appeal to the people who bought an
earlier version but now want more features
Diversification
RJR, the cigarette producer, adds baked goods to its
product line to appeal to new customers
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Exhibit 3-2Four Basic Types of Opportunities
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7/31/2019 Archive Chap03 Archive
10/40Courtesy Ilja C. Hendel/The Image Worksfor use only with Essentials of Marketing
Japanese McDonalds photo
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11/40(left and right) Courtesy Unilever P.L.C.; 1999 Barry Lewis/Networkfor use only with Essentials of Marketing
Lipton ad and photo of Asian street scene
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7/31/2019 Archive Chap03 Archive
12/40Courtesy of Hallmark Cards, Inc.for use only with Essentials of Marketing
Hallmark photo
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13/40(left) Courtesy Olympus America, Inc.; (middle) Courtesy of Vivitar Corporation; Potter, Katz, Postal & Ferguson; MGI Software Inc.; (right) Courtesy of Sony Electronics, Inc.for use only with Essentials of
Olympus, Vivitar, and Sony camera ads
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Exhibit 3-3Narrowing Down to Target Markets
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Exhibit 3-4Relationship between Generic andProduct-Market Definitions
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How Readings Relate to Market Segmentation
Introduction to market segmentation concepts(Chapter 3)
How changes in the external environments affect
segmentation opportunities (Chapter 4)
Why demographic variables are useful for
segmentation and what they tell us about the size of
segments (Chapters 4 and 5)
How understanding customer behavior leads to better
segmentation (Chapters 5 and 6)
How to improve the information on which
segmentation decisions are based (Chapter 7)
Estimating (forecasting) segment size and likely
profitability(Appendix B)
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Exhibit 3-5A Market Grid Diagram with Submarkets
The bicycle-riders product market
Submarket 3Transportation
Riders
Submarket 5Environmentalists
Submarket 4
Socializers
Submarket 1Exercisers
Submarket 2
Off-RoadAdventurers
Concept: divide a broad product-market (or generic market) intohomogeneous submarkets
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Exhibit 3-6Every Individual Has His or Her Own Unique Position in aMarketThose with Similar Positions Can Be Aggregated intoPotential Target Markets: A. Product-market showing three
segments, and B. Product-market showing six segments
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19/40Courtesy H. J. Heinz Company. Used with permission.for use only with Essentials of Marketing
Heinz ad
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20/40 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Criteria for Segmenting
Customers within a segment should be
homogeneous
similar responses to marketing mix
similar segmenting dimensions
Customers in different segments are heterogeneous different responses to marketing mix
different segmenting dimensions
Segment is substantial
segment is big enough to be profitable
Segmenting dimensions are operational
useful for identifying customers
helpful in deciding on marketing mix
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Criteria for Segmenting
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Three Ways to Develop Market-Oriented Strategies
Single Target Market Approach
select one homogeneous segment as the target
Multiple Target Market Approach
select two or more target segments
develop a different marketing mix for eachsegment
Combined Target Market Approach
combine submarkets into a single target
market
develop one marketing mix for the combined
target
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Exhibit 3-7Target Marketers Have Specific Aims
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
There May Be Different Demand Curves inDifferent Market Segments
Exhibit 3 8
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Exhibit 3-8Relation of Potential Target Market Dimensionsto Marketing Strategy Decision Areas
Behavioral needs, attitudes, and how present and potential goodsand services fit into customers' consumption patterns. Affects Product (features, packaging, product line assortment, branding)
and Promotion (what potential customers need and want to know about thefirm's offering, and what appeals should be used).
Urgency to get need satisfied and desire and willingness to seekinformation, compare, and shop. Affects Place (how directly products are distributed from producer to
customer, how extensively they are made available, and the level ofservice needed) and Price (how much potential customers are willing topay).
Geographic location and other demographic characteristics ofpotential customers. Affects size of Target Markets (economic potential), Place (where
products should be made available), and Promotion (where and to whom
to target advertising and personal selling).
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Examples of Possible Segmenting Dimensions forConsumer Markets
CUSTOMER RELATED:
Customer needs (automobiles)
Geographic location (tire chains)
Age (insurance policies)
Sex (clothing)
Family size (child care services)
Income (vacation services)
Education (magazines)
SITUATION RELATED: Benefits offered (toothpaste)
Consumption/use patterns (cameras)
Brand familiarity (health care products)
Buying situation (soft drinks)
Exhibit 3 9
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Exhibit 3-9Possible Segmenting Dimensions and TypicalBreakdowns for Consumer Markets
Needs Economic, functional, physiological, social, and more detailed
needs
Attitudes
Favorable or unfavorable attitudes, interests and opinions Purchase relationship
Favorable and ongoing; intermittent; none; bad relationship
Brand familiarity
Insistence, preference, recognition; nonrecognition; rejection Geographic
By country, region, size of city
Income
Under $20,000, $20,000 to $39,999, $40,000 or over
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Examples of Possible Segmenting Dimensions forBusiness Markets
Type of organization (computer software) Closeness of relationship with customer (travel
services)
Size (buildings)
North American Industry Classification System
(NAICS) codes (machinery)
Geographic location (electronic parts)
Type of product (X-ray film) Buying situation (automobile components)
Source loyalty (office supplies)
Reciprocity (transporting services)
Exhibit 3 10
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Exhibit 3-10Possible Segmenting Dimensions forBusiness/Organizational Markets Kind of relationship
Weak loyalty --------> strong loyalty to vendor
Single source --------> multiple vendors
"Arm's length" dealings--------> close partnership
No reciprocity --------> complete reciprocity
Type of customer
Manufacturer, service producer, government agency, military, nonprofit, wholesaler or retailer (when enduser), and so on
Demographics
Geographic location (region of world, country, region within country, urban --------> rural)
Size (number of employees, sales volume)
Primary business or industry (North American Industry Classification System)
Number of facilities
How customer will use product
Installations, accessories, components, raw materials, supplies, professional services
Type of buying situation
Decentralized --------> centralized
Buyer --------> multiple buying influence
Straight rebuy --------> modified rebuy --------> new-task buying
Purchasing methods
Vendor analysis, inspection buying, sampling buying, specification buying, competitive bids, negotiatedcontracts, long-term contracts
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Photographer: Steve Boninifor use only with Essentials of Marketing
Sorel hiking boots ad
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Segmenting Dimensions
Qualifying Dimensions
Segmenting dimensions relevant to the
product-market
Are there characteristics typical of
customers who are at least potentiallyinterested in the relevant product type?
Determining Dimensions
Segmenting dimensions that affect thepurchase of a specific product or brand
Why does a potential customer select one
brand over another?
Exhibit 3 11
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Exhibit 3-11
Finding the Relevant Segmenting Dimensions
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(left) Courtesy Nabisco Brands, Inc.; (right) Courtesy Club Medfor use only with Essentials of Marketing
Ritz and Club Med ads
S i h B d M k f M l
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Segmenting the Broad Market for MotelGuests in a Metropolitan Area
S St A h t S ti
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Seven-Step Approach to SegmentingConsumer Product-Markets
1. Name broad product-market2. List potential customers' needs
3. Form homogeneous submarkets
4. Identify determining dimensions
5. Name possible product-markets
6. Evaluate why segments behave as they do
7. Estimate size of each product-market
segment
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Toothpaste Market Segment Descriptions
Segment Name
The sensory
segment
The sociables
segment
The worriers
segment
Theindependent
segmentPrincipal benefit
sought
Flavor, product
appearance
Brightness of
teeth
Decay
preventionPrice
Demographic
strengths
ChildrenTeens, young
people
Large families Men
Special
behavioral
characteristics
Users of
spearmint
flavored
toothpaste
Smokers Heavy users Heavy users
Brands
disproportion-ately favored Colgate, Stripe
Macleans, Plus
White UltraBrite Crest Brands on sale
Personality
Characteristics
High self-
involvementHigh sociability
High
hypochondriasisHigh autonomy
Life-style
characteristicsHedonistic Active Conservative Value-oriented
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Customer Relationship Management (CRM)
With customer relationship management (CRM)
approaches, the seller fine-tunes the marketing effort basedon information from a detailed customer database
Database often includes information about customer
characteristics, including past purchases and spending
Database may be used to select target customers forspecific offer or promotion
Some examples
A customer who in the past has purchased shirts from
L.L. Bean may be a good prospect for sweaters, and willreceive a special targeted catalog or email.
A bank teller might suggest that a customer open a
savings account or buy a certificate of deposit if the
customers account balance is over $2000.
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(left) Courtesy Grey worldwide/Thailand; (right) Courtesy Target Storesfor use only with Essentials of Marketing
Bic and Target ads
Exhibit 3-12
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2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwinfor use only with Essentials of Marketing
Exhibit 3 12Product Space Representing Consumers
Perceptions for Different Brands of Bar Soap
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