Exhibit 4-1: Focusing Marketing Strategy with Segmentation and Positioning

Exhibit 4-2: Relationship between Generic and Product-Market Definitions

Exhibit 4-3: Narrowing Down to Target Markets

Exhibit 4-4: A Market Grid Diagram with Submarkets

Exhibit 4-5: Every Individual Has His or Her Own Unique Position in a Market—Those with Similar Positions Can Be Aggregated into Potential Target Markets

Exhibit 4-5: Every Individual Has His or Her Own Unique Position in a Market—Those with Similar Positions Can Be Aggregated into Potential Target Markets

Exhibit 4-7: Relation of Potential Target Market Dimensions to Marketing Strategy Decision Areas

Exhibit 4-8: Possible Segmenting Dimensions and Typical Breakdowns for Consumer Markets

Exhibit 4-9: Possible Segmenting Dimensions for Business/Organizational Markets

Exhibit 4-10: Finding the Relevant Segmenting Dimensions

A Best Practice Approach for Segmenting Product-Markets

2. Identify potentialcustomer needs

7. Estimate size of eachproduct-market segments

1. Select (name) the broad product-market

3. Form initial homogeneoussubmarkets

4. Identify determiningdimensions

5. Name possibleproduct-markets

6. Evaluate product-marketsegments

BestPractice

Approachfor

SegmentingProduct-Markets

Segmenting Product Markets

Exhibit 4-11: “Product Space” Representing Consumers’ Perceptions for Different Brands of Bar Soap

Exhibit: Segmenting the Broad Product-Market for Motel Guests in a Large Urban Area

Computer Aided Problem

Computer Aided Problem

How changes in the external environments affect segmentation opportunities (Chapter 3) Introduction to market segmentation concepts (Chapter 4)Why demographic variables are useful for segmentation and what they tell us about the size of segments (Chapter 5 and 6)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)

How Readings Relate to Market Segmentation

Customers within a segment should have similar responses to marketing mix, similar segmenting dimensions

Customers in different segments should have different responses to marketing mix, different segmenting dimensions

Segment should be large enough to be profitable

Segmenting dimensions should be useful for identifying customers,helpful in deciding on marketing mix

Criteria for Segmenting

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

Three Ways to Develop Market-Oriented Strategies

There May Be Different Demand Curves in Different Market Segments

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)

Examples of Possible Segmenting Dimensions for Consumer 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)

Examples of Possible Segmenting Dimensions for Business Markets

Qualifying Dimensions– Segmenting dimensions relevant to the product-

market– Are there characteristics typical of customers who

are at least potentially interested in the relevant product type?

Determining Dimensions– Segmenting dimensions that affect the purchase of a

specific product or brand– Why does a potential customer select one brand

over another?

Segmenting Dimensions

Segment Name

The sensory segment

The sociables

segment

The worriers

segment

The independent

segment Principal benefit

sought Flavor, product

appearance Brightness of

teeth Decay

prevention Price

Demographic strengths Children Teens, 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 Ultra Brite Crest Brands on sale

Personality Characteristics

High self-involvement High sociability High

hypochondriasis High autonomy

Life-style characteristics Hedonistic Active Conservative Value-oriented

Toothpaste Market Segment Description

With customer relationship management (CRM) approaches, the seller fine-tunes the marketing effort based on 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 for specific

offer or promotionSome examples– A customer who in the past has purchased shirts from L.L.

Bean may be a good prospect for sweaters, and will receive 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 customer’s account balance is over $2000.

Customer Relationship Management (CRM)

Positioning analysis is based on how (potential) customers think about a firm's current or potential offeringPositioning considers how customers think about competitors' offerings as well as the firm’s own offeringPositioning analysis identifies what kind of offering different segments see as idealDifferentiation focuses on developing a marketing mix that target customers will see as distinct from competing mixesPositioning and differentiation help with combining and segmenting, by revealing which segments view the market in similar (or dissimilar) ways

Positioning and Differentiation