CHAPTER 3SEGMENTATION & POSITIONING

Generic vs Product Market

Narrowing Down to Target Markets

The bicycle-riders product market

A Market Grid Diagram with

Submarkets

Submarket 3Transportation

Riders

Submarket 5Environmentalists

Submarket 4Socializers

Submarket 1Exercisers

Submarket 2Off-Road

Adventurers

Concept: divide a broad product-market (or generic market) into homogeneous submarkets

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 each

segment Combined Target Market Approach

combine submarkets into a single target market develop one marketing mix for the combined target

Criteria for Segmenting

Homogeneous similar responses to marketing mix similar segmenting dimensions

Heterogeneous different responses to marketing mix different segmenting dimensions

Substantial segment is big enough to be profitable

Operational useful for identifying customers helpful in deciding on marketing mix

Some Examples of Possible Segmenting Dimensions and Typical Breakdowns for Consumer Markets Needs (Benefits Sought)

Economic, functional, physiological, social, and more detailed needs Attitudes

Favorable or unfavorable attitudes Lifestyles 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

Examples of Possible Segmenting

Dimensions for Business 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)

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 end user), 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

Possible Segmenting Dimensions for Business/Organizational Markets

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, negotiated contracts, long-term contracts

Possible Segmenting Dimensions for Business/Organizational Markets

Toothpaste Market Segment Description

Segment Name

The sensorysegment

The sociablessegment

The worrierssegment

Theindependent

segmentPrincipal benefit

soughtFlavor, product

appearanceBrightness of

teethDecay

preventionPrice

Demographicstrengths

ChildrenTeens, young

peopleLarge families Men

Specialbehavioral

characteristics

Users ofspearmintflavored

toothpaste

Smokers Heavy users Heavy users

Brandsdisproportion-ately favored

Colgate, StripeMacleans, Plus

White UltraBrite

Crest Brands on sale

PersonalityCharacteristics

High self-involvement

High sociabilityHigh

hypochondriasisHigh autonomy

Life-stylecharacteristics

Hedonistic Active Conservative Value-oriented

Positioning analysis is based on how (potential) customers think about a firm's current or potential offering

Positioning considers how customers think about competitors' offerings as well as the firm’s own offering

Positioning analysis identifies what kind of offering different segments see as ideal

Differentiation focuses on developing a marketing mix that target customers will see as distinct from competing mixes

Positioning and differentiation help with combining and segmenting, by revealing which segments view the market in similar (or dissimilar) ways

Positioning and Differentiation